Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the ETFS White Metals Basket Trust, 47655-47661 [2010-19373]
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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19434 Filed 8–5–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62620; File No. SR–
NYSEArca–2010–71]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the ETFS White Metals Basket Trust
July 30, 2010.
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 July 22,
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 White Metals Basket Shares
of the ETFS White Metals Basket Trust
pursuant to NYSE Arca Equities Rule
8.201. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
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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.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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 White Metals Basket Shares
(‘‘Shares’’) of the ETFS White 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
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) (order 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) (order approving trading
on the Exchange pursuant to UTP of the iShares
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47655
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
silver, platinum and palladium in 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
Silver Trust); 51245 (February 23, 2005), 70 FR
10731 (March 4, 2005) (SR–PCX–2004–117) (order
approving trading on the Exchange of the
streetTRACKS Gold Trust pursuant to UTP).
11 See Securities Exchange Act Release Nos.
58956 (November 14, 2008), 73 FR 71074
(November 24, 2008) (SR–NYSEArca–2008–124)
(order 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) (order approving listing on the
American Stock Exchange LLC of the iShares Silver
Trust).
13 See the registration statement for the Trust on
Form S–1, filed with the Commission on May 27,
2010 (No. 333–167166) (‘‘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 (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 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
or a Bullion clearing bank 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
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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).
In determining the NAV of the Trust,
the Trustee will value the prices of
Bullion as determined by the relevant
London Fixes.17 Silver held by the Trust
will be valued on the basis of the price
of an ounce of silver as set at
approximately 12:00 noon London,
England time (London PM Fix) 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 2:00
p.m. London, England time (London PM
Fix) 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 2:00 PM London,
England time (London PM Fix) 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 silver, platinum or palladium
in Zurich on behalf of the Custodian. The Custodian
is responsible for allocating specific bars of physical
silver and specific plates or ingots of physical
platinum and palladium to the Trust’s allocated
Bullion 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
silver bars and 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).
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 Fixes for silver,
platinum and palladium is described in the
registration statements on Form S–1 for the ETFS
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.
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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.
Market Regulation
According to the Registration
Statement, the global 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
this act, all UK-based banks, together
with other investment firms, are subject
to a range of requirements, including
fitness and properness, capital
adequacy, liquidity, and systems and
controls.
The FSA is responsible for regulating
investment products, including
derivatives, and those who deal in
investment products. Regulation of spot,
commercial forwards, and deposits of
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, Inc.
(‘‘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
19 See discussion under ‘‘Operation of the Trust’’,
infra, regarding procedures used when the Sponsor
determines that the Bullion price is inappropriate
to use.
20 Additional information regarding operation of
the silver, platinum and palladium markets, and the
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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
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 50,000 ounces of
silver, 500 ounces of platinum and 400
ounces of palladium per Basket.22 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); 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).
21 7 U.S.C. 1 et seq.
22 As of July 12, 2010, the value of a Basket was
approximately $1,835,525. The value of Bullion
required for the creation of a Basket was
approximately $895,125 for silver ($17.90 per ounce
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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
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 4:00 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 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 PM Fix is not
available or has not been announced by
4:00 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.
Investors may obtain on a 24-hour
basis 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
silver, platinum and palladium spot
prices and the Shares. Market prices for
the Shares will be available from a
variety of sources including brokerage
times 50,000 ounces); $759,000 for platinum
($1,518.00 per ounce times 500 ounces); and
$181,400 for palladium ($453.50 per ounce times
400 ounces). These values represent weightings for
silver, platinum and palladium in a Basket of
approximately 49%, 41%, and 10%, respectively.
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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 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 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 the
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 COMEX, and the
London and Zurich Bullion markets.
While the Shares will trade on the
NYSE Arca until 8 p.m., E.T., liquidity
in the global silver, platinum and
palladium markets will be reduced after
the close of the COMEX at 1:30 p.m.,
E.T. 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
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.
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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.
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 respect of the
deposit bears to the total number of
Shares outstanding on the date such
order is properly received. The Bullion
comprising a deposit shall be in a
proportion equal to 50,000 ounces of
silver, 500 ounces of platinum and 400
ounces of palladium.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
23 The proportion of Bullion comprising a deposit
will remain the same following inception of the
Trust. The amount of 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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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.
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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
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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
On each day that the NYSE Arca is
open for regular trading, as promptly as
practicable after 4 p.m., E.T. on such
day (Evaluation Time), the Trustee will
evaluate the Bullion held by the Trust
and determine both the Adjusted Net
Asset Value (‘‘ANAV’’), as defined
below, 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 PM Fix for
such metal or, if no London PM 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 PM
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
PO 00000
Frm 00136
Fmt 4703
Sfmt 4703
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
silver, platinum and palladium over the
Consolidated Tape. However, there will
be disseminated over the Consolidated
Tape the last sale price for the Shares,
as is the case for all equity securities
traded on the Exchange (including
exchange-traded funds). In addition,
there is a considerable amount of
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
E:\FR\FM\06AUN1.SGM
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sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
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 [sic]
or https://www.thebulliondesk.com.
The Trust’s 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’s Web site
will also provide the NAV of the Trust
as calculated each business day by the
Sponsor. In addition, the Web site for
the Trust will contain the following
information, on a per Share basis, for
the Trust: (a) The NAV as of the close
of the prior business day and the midpoint of the bid-ask price 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’s Web
site will also provide the last sale price
of the Shares as traded in the U.S.
market. The Exchange will provide on
its Web site (https://www.nyx.com) a link
to the Trust’s Web site. In addition, the
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.
VerDate Mar<15>2010
16:35 Aug 05, 2010
Jkt 220001
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 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(g), 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.
Commentary .04 of NYSE Arca Equities
Rule 6.3 requires an ETP Holder acting
as a registered Market Maker, and its
affiliates, in the Shares to establish,
maintain and enforce written policies
and procedures reasonably designed to
prevent the misuse of any material
nonpublic information with respect to
such products, any components of the
related products, any physical asset or
commodity underlying the product,
applicable currencies, underlying
indexes, related futures or options on
futures, and any related derivative
instruments. (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
PO 00000
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Fmt 4703
Sfmt 4703
47659
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
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(g), 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
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. 151 / Friday, August 6, 2010 / Notices
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.
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:
2. Statutory Basis
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
sroberts on DSKD5P82C1PROD with NOTICES
Holders’ proprietary or customer trades
through ETP Holders 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.
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–2010–71 on the
subject line.
27 A list of ISG members is available at [sic]. 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 Bullionrelated OTC transactions in spot, forwards, options
or other derivatives.
VerDate Mar<15>2010
16:35 Aug 05, 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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate 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
28 15
29 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00138
Fmt 4703
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–2010–71. This
file number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing 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–2010–71 and should be
submitted on or before August 27, 2010.
30 17
Sfmt 4703
E:\FR\FM\06AUN1.SGM
CFR 200.30–3(a)(12).
06AUN1
Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19373 Filed 8–5–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62608; File No. SR–FINRA–
2010–038]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to a Stated
Interpretation of the Meaning,
Administration, and Enforcement of
FINRA Rule 11892 and Supplementary
Material .01
July 30, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 29,
2010, the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by FINRA. FINRA has designated the
proposed rule change as ‘‘constituting a
stated policy, practice, or interpretation
with respect to the meaning,
administration, or enforcement of an
existing rule’’ under Section
19(b)(3)(A)(i) of the Act 3 and Rule 19b–
4(f)(1) thereunder,4 which renders the
proposal effective upon receipt of this
filing by the Commission The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
sroberts on DSKD5P82C1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing a stated
interpretation of the meaning,
administration, and enforcement of
FINRA Rule 11892 and Supplementary
Material .01.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(i).
4 17 CFR 240.19b–4(f)(1).
16:35 Aug 05, 2010
In its filing with the Commission,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In light of recent market events, some
exchanges have adopted interpretations
to their clearly erroneous rules
regarding (1) the range of transactions
subject to review and potential
nullification and (2) the date by which
clearly erroneous determinations must
be made.5 FINRA is filing the proposed
rule change to make clear that it will
defer to an exchange’s interpretation of
its clearly erroneous authority in
deciding which over-the-counter trades
in exchange-listed securities are subject
to nullification under FINRA Rule
11892.
FINRA Rule 11892(a)(1) provides that,
in the event of a determination by a
national securities exchange to nullify
one or more transactions in a security
traded on such national securities
exchange, certain FINRA staff may
review any similarly situated
transaction(s) reported through a FINRA
system in such security and declare the
transaction(s) null and void.
Supplementary Material .01 to FINRA
Rule 11892 states that ‘‘FINRA will
generally follow the determination of a
national securities exchange to break a
trade(s) when [the] national securities
exchange has broken a trade(s) at or near
the price range in question at or near the
time in question * * * such that FINRA
breaking such trade(s) would be
consistent with market integrity and
investor protection.’’ These provisions
were adopted to ensure consistent and
transparent determinations of clearly
erroneous transactions.6 To promote
consistency among self-regulatory
organizations, FINRA believes it is
necessary to defer to exchanges’
SR–NYSE–2010–55.
Securities Exchange Act Release No. 61080
(December 1, 2009), 74 FR 64117 (December 7,
2009) (order approving SR–FINRA–2009–068).
interpretations of their clearly erroneous
rules when FINRA makes
determinations of whether to cancel
similarly situated over-the-counter
transactions in exchange-listed
securities under FINRA Rule
11892(a)(1). Consequently, when
making clearly erroneous
determinations under FINRA Rule
11892(a)(1) and Supplementary Material
.01, FINRA will follow the
interpretations of exchanges regarding
the range of transactions subject to
review, and potential nullification, as
clearly erroneous and the date by which
determinations must be made.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,7 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA believes that the
proposed stated interpretation clarifies
that FINRA will exercise its authority to
declare over-the-counter transactions in
exchange-listed securities null and void
under FINRA Rule 11892 and
Supplementary Material .01 consistent
with decisions made by the exchange(s)
trading such securities. FINRA believes
that such an interpretation promotes
just and equitable principles of trade
because it ensures consistent
application of clearly erroneous
determinations across markets.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in 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
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A) 8 of the Act and Rule 19b–
4(f)(1) 9 thereunder. At any time within
the 60-day period beginning on the date
5 See
2 17
VerDate Mar<15>2010
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
6 See
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Sfmt 4703
47661
7 15
U.S.C. 78o–3(b)(6).
U.S.C. 78s(b)(3)(A).
9 17 CFR 240.19b–4(f)(6).
8 15
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]]>Agencies
[Federal Register Volume 75, Number 151 (Friday, August 6, 2010)]
[Notices]
[Pages 47655-47661]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19373]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62620; File No. SR-NYSEArca-2010-71]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the ETFS White
Metals Basket Trust
July 30, 2010.
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 July 22, 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 White Metals Basket
Shares of the ETFS White Metals Basket Trust pursuant to NYSE Arca
Equities Rule 8.201. The text of the proposed rule change is available
at the Exchange, the Commission's Public Reference Room, and https://www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade ETFS White Metals Basket
Shares (``Shares'') of the ETFS White 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\
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\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) (order
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) (order
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) (order approving trading on the Exchange of
the streetTRACKS Gold Trust pursuant to UTP).
\11\ See Securities Exchange Act Release Nos. 58956 (November
14, 2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(order 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) (order
approving listing on the American Stock Exchange LLC of the iShares
Silver Trust).
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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 silver, platinum and palladium in
the proportions held by the Trust, less the expenses of the Trust's
operations.\13\
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\13\ See the registration statement for the Trust on Form S-1,
filed with the Commission on May 27, 2010 (No. 333-167166)
(``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.
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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\
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\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 (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 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 or a Bullion
clearing bank 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
silver and specific plates or ingots of physical platinum and
palladium to the Trust's allocated Bullion 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 silver bars and the platinum
and palladium plates or ingots held in the Trust's allocated Bullion
account.
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[[Page 47656]]
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.
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\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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The NAV of the Trust is the aggregate value of the Trust's assets
less its liabilities (which include estimated accrued but unpaid fees
and expenses). In determining the NAV of the Trust, the Trustee will
value the prices of Bullion as determined by the relevant London
Fixes.\17\ Silver held by the Trust will be valued on the basis of the
price of an ounce of silver as set at approximately 12:00 noon London,
England time (London PM Fix) 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 2:00 p.m.
London, England time (London PM Fix) 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 2:00 PM London, England time (London PM Fix) 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 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.
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\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 Fixes for silver, platinum and
palladium is described in the registration statements on Form S-1
for the ETFS 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 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 this act, all
UK-based banks, together with other investment firms, are subject to a
range of requirements, including fitness and properness, capital
adequacy, liquidity, and systems and controls.
The FSA is responsible for regulating investment products,
including derivatives, and those who deal in investment products.
Regulation of spot, commercial forwards, and deposits of 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, Inc. (``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\
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\20\ Additional information regarding operation of the 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); 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 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.
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\21\ 7 U.S.C. 1 et seq.
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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
50,000 ounces of silver, 500 ounces of platinum and 400 ounces of
palladium per Basket.\22\ The
[[Page 47657]]
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 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.
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\22\ As of July 12, 2010, the value of a Basket was
approximately $1,835,525. The value of Bullion required for the
creation of a Basket was approximately $895,125 for silver ($17.90
per ounce times 50,000 ounces); $759,000 for platinum ($1,518.00 per
ounce times 500 ounces); and $181,400 for palladium ($453.50 per
ounce times 400 ounces). These values represent weightings for
silver, platinum and palladium in a Basket of approximately 49%,
41%, and 10%, respectively.
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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 4:00 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 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 PM Fix is not available or has not been announced
by 4:00 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.
Investors may obtain on a 24-hour basis 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 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
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 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 the 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
COMEX, and the London and Zurich Bullion markets. While the Shares will
trade on the NYSE Arca until 8 p.m., E.T., liquidity in the global
silver, platinum and palladium markets will be reduced after the close
of the COMEX at 1:30 p.m., E.T. 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 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.
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 respect of the deposit bears to the total number of Shares
outstanding on the date such order is properly received. The Bullion
comprising a deposit shall be in a proportion equal to 50,000 ounces of
silver, 500 ounces of platinum and 400 ounces of palladium.\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 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
[[Page 47658]]
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
On each day that the NYSE Arca is open for regular trading, as
promptly as practicable after 4 p.m., E.T. on such day (Evaluation
Time), the Trustee will evaluate the Bullion held by the Trust and
determine both the Adjusted Net Asset Value (``ANAV''), as defined
below, 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 PM Fix for such metal or, if no
London PM 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 PM 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 silver, platinum
and palladium over the Consolidated Tape. However, there will be
disseminated over the Consolidated Tape the last sale price for the
Shares, as is the case for all equity securities traded on the Exchange
(including exchange-traded funds). In addition, there is a considerable
amount of 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
[[Page 47659]]
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 [sic] or
https://www.thebulliondesk.com.
The Trust's 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's 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's Web site will
also provide the last sale price of the Shares as traded in the U.S.
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
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(g), 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. Commentary .04 of
NYSE Arca Equities Rule 6.3 requires an ETP Holder acting as a
registered Market Maker, and its affiliates, in the Shares to
establish, maintain and enforce written policies and procedures
reasonably designed to prevent the misuse of any material nonpublic
information with respect to such products, any components of the
related products, any physical asset or commodity underlying the
product, applicable currencies, underlying indexes, related futures or
options on futures, and any related derivative instruments. (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 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(g), 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
[[Page 47660]]
Holders' proprietary or customer trades through ETP Holders 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 [sic]. 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 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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-2010-71 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-2010-71. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of the filing 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-2010-71 and should be submitted on or before August 27, 2010.
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\30\ 17 CFR 200.30-3(a)(12).
[[Page 47661]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19373 Filed 8-5-10; 8:45 am]
BILLING CODE 8010-01-P
