Self-Regulatory Organizations; NYSE Arca Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Teucrium WTI Crude Oil Fund Under NYSE Arca Equities Rule 8.200, 807-812 [2010-33363]

Download as PDF Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Notices 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 20549–1090 on official business days between 10 a.m. and 3 p.m. Copies of the filing will also be available for inspection and copying at the Exchange’s principal office. 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–2010–120 and should be submitted on or before January 27, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–33362 Filed 1–5–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63625; File No. SR– NYSEArca–2010–119] Self-Regulatory Organizations; NYSE Arca Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Teucrium WTI Crude Oil Fund Under NYSE Arca Equities Rule 8.200 erowe on DSK5CLS3C1PROD with NOTICES December 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 December 20, 2010, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 15:07 Jan 05, 2011 Jkt 223001 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 shares of the Teucrium WTI Crude Oil Fund under NYSE Arca Equities Rule 8.200. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and https://www.nyse.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose NYSE Arca Equities Rule 8.200, Commentary .02 permits the trading of Trust Issued Receipts (‘‘TIRs’’) either by listing or pursuant to unlisted trading privileges (‘‘UTP’’).3 The Exchange proposes to list and trade shares (‘‘Shares’’) of the Teucrium WTI Crude Oil Fund (the ‘‘Fund’’) pursuant to NYSE Arca Equities Rule 8.200. The Exchange notes that the Commission has previously approved the listing and trading of other issues of Trust Issued Receipts on the American Stock Exchange LLC,4 trading on NYSE Arca pursuant to unlisted trading privileges (‘‘UTP’’),5 and listing on NYSE Arca.6 Among these is the Teucrium 3 Commentary .02 to NYSE Arca Equities Rule 8.200 applies to TIRs that invest in ‘‘Financial Instruments.’’ The term ‘‘Financial Instruments,’’ as defined in Commentary .02(b)(4) to NYSE Arca Equities Rule 8.200, means any combination of investments, including cash; securities; options on securities and indices; futures contracts; options on futures contracts; forward contracts; equity caps, collars and floors; and swap agreements. 4 See, e.g., Securities Exchange Act Release No. 58161 (July 15, 2008), 73 FR 42380 (July 21, 2008) (SR–Amex–2008–39). 5 See, e.g., Securities Exchange Act Release No. 58163 (July 15, 2008), 73 FR 42391 (July 21, 2008) (SR–NYSEArca–2008–73). 6 See, e.g., Securities Exchange Act Release No. 58457 (September 3, 2008), 73 FR 52711 (September 10, 2008) (SR–NYSEArca–2008–91). PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 807 Corn Fund, a series of the Teucrium Commodity Trust (‘‘Trust’’).7 In addition, the Commission has approved other exchange-traded fund-like products linked to the performance of underlying commodities.8 The Shares represent beneficial ownership interests in the Fund, as described in the Registration Statement for the Fund.9 The Fund is a commodity pool that is a series of the Trust, a Delaware statutory trust. The Fund is managed and controlled by Teucrium Trading, LLC (‘‘Sponsor’’). The Sponsor is a Delaware limited liability company that is registered as a commodity pool operator (‘‘CPO’’) with the Commodity Futures Trading Commission (‘‘CFTC’’) and is a member of the National Futures Association. Teucrium WTI Crude Oil Fund According to the Registration Statement, the investment objective of the Fund is to have the daily changes in percentage terms of the Shares’ net asset value (‘‘NAV’’) reflect the daily changes in percentage terms of a weighted average of the closing settlement prices for futures contracts for Western Texas Intermediate (‘‘WTI’’) crude oil, also known as Texas Light Sweet crude oil (‘‘Oil Futures Contracts’’) traded on the New York Mercantile Exchange (‘‘NYMEX’’), specifically (1) the nearest to spot June or December Oil Futures Contract, weighted 35%; (2) the June or December Oil Futures Contract following the aforementioned (1), weighted 30%; and (3) the December Oil Futures Contract following the aforementioned (2),10 weighted 35%; before taking Fund expenses and interest income into account. This weighted average of the three referenced 7 See Securities Exchange Act Release No. 62213 (June 3, 2010), 75 FR 32828 (June 9, 2010) (SR– NYSEArca–2010–22) (order approving listing on the Exchange of Teucrium Corn Fund). 8 See, e.g., Securities Exchange Act Release Nos. 57456 (March 7, 2008), 73 FR 13599 (March 13, 2008) (SR–NYSEArca–2007–91) (order granting accelerated approval for NYSE Arca listing the iShares GS Commodity Trusts); 59781 (April 17, 2009), 74 FR 18771 (April 24, 2009) (SR– NYSEArca–2009–28) (order granting accelerated approval for NYSE Arca listing the ETFS Silver Trust); 59895 (May 8, 2009), 74 FR 22993 (May 15, 2009) (SR–NYSEArca–2009–40) (order granting accelerated approval for NYSE Arca listing the ETFS Gold Trust); 61219 (December 22, 2009), 74 FR 68886 (December 29, 2009) (order approving listing on NYSE Arca of the ETFS Platinum Trust). 9 See registration statement on Amendment No. 1 to Form S–1 for Teucrium Commodity Trust, dated September 7, 2010 (File No. 333–167594) (‘‘Registration Statement’’). The discussion herein relating to the Trust and the Shares is based on the Registration Statement. 10 See e-mail from Michael Cavalier, Chief Counsel, NYSE Euronext, to Christopher W. Chow, Special Counsel, Commission, dated December 22, 2010. E:\FR\FM\06JAN1.SGM 06JAN1 808 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Notices erowe on DSK5CLS3C1PROD with NOTICES Oil Futures Contracts is referred to herein as the ‘‘Oil Benchmark,’’ and the three Oil Futures Contracts that at any given time make up the Oil Benchmark are referred to herein as the ‘‘Oil Benchmark Component Futures Contracts.’’ 11 The Fund seeks to achieve its investment objective by investing under normal market conditions in Oil Benchmark Component Futures Contracts or, in certain circumstances, in other Oil Futures Contracts traded on the NYMEX and to a lesser extent the IntercontinentalExchange (‘‘ICE’’). The Fund may also invest in other kinds of crude oil futures contracts traded on the NYMEX or ICE or on other domestic or foreign exchanges. In addition, and to a limited extent, the Fund will invest in crude oil-based swap agreements that are cleared through the NYMEX or ICE or their affiliated providers of clearing services (‘‘Cleared Oil Swaps’’) in furtherance of the Fund’s investment objective, and to the extent permitted and appropriate in light of the liquidity in the Cleared Oil Swaps market. Once position limits and accountability levels in Oil Futures Contracts are applicable, the Fund’s intention is to invest first in Cleared Oil Swaps to the extent permitted by the position limits and accountability levels applicable to Cleared Oil Swaps and appropriate in light of the liquidity in the Cleared Oil Swaps market,12 and then in contracts or instruments such as cash-settled options on Oil Futures Contracts and forward contracts, swaps other than Cleared Oil Swaps, and other over-thecounter transactions that are based on the price of crude oil and Oil Futures Contracts (collectively, ‘‘Other Oil Interests,’’ and together with Oil Futures Contracts and Cleared Oil Swaps, ‘‘Oil Interests’’).13 The circumstances under 11 Western Texas Intermediate crude oil futures volume on NYMEX for 2009 and 2010 (through November 30, 2010) was 137,352,118 contracts and 156,155,620 contracts, respectively. As of November 30, 2010, NYMEX open interest for Western Texas Intermediate crude oil was 1,342,325 contracts, and open interest for near month futures was 323,184 contracts. The contract price was $84,110 ($84.11 USD per barrel and 1,000 barrels per contract). The approximate value of all outstanding contracts was $112.9 billion. The position limits for all months is 20,000 contracts and the total value of contracts if position limits were reached would be approximately $1.68 billion (based on the $84.11 contract price). Western Texas Intermediate crude oil futures are also traded on ICE and the Singapore Mercantile Exchange. 12 See e-mail from Michael Cavalier, Chief Counsel, NYSE Euronext, to Christopher W. Chow, Special Counsel, Commission, dated December 27, 2010. 13 The Commission has previously approved listing of similar funds which held forward contracts or swaps on the American Stock Exchange (‘‘Amex’’) and NYSE Arca. See, e.g., Securities VerDate Mar<15>2010 15:07 Jan 05, 2011 Jkt 223001 which such investments in Other Oil Interests may be utilized (e.g., imposition of position limits or accountability levels) are discussed below. Light Sweet Crude Oil Futures Contracts traded on the NYMEX are listed for the current year and the next 8 years. However, the nature of the Oil Benchmark is such that the Fund will not hold futures contracts beyond approximately the first 24 months of listed Oil Futures Contracts.14 It is the intent of the Sponsor to never hold the next-to-expire an Oil Benchmark Component Futures Contract (commonly called the ‘‘spot’’ contract). For example, in terms of the Oil Benchmark, in April of a given year, the Oil Benchmark Component Futures Contracts will be the contracts expiring in June (the first-to-expire Oil Benchmark Component Futures Contract), December (the second-toexpire Oil Benchmark Component Futures Contract), and June of the following year (the third-to-expire Oil Benchmark Component Futures Contract). Because the next-to-expire Oil Benchmark Component Futures Contract (the June contract) will become spot on the third-to-last trading day prior to the 25th calendar day in April, the Sponsor will ‘‘roll’’ or change that contract prior to the third-to-last trading day prior to the 25th calendar day in April for a position in December of the following year, not intending to hold any futures contract to spot. According to the Registration Statement, the Fund seeks to achieve its investment objective primarily by investing in Oil Interests such that daily changes in the Fund’s NAV will be expected to closely track the changes in the Oil Benchmark. The Fund’s positions in Oil Interests will be changed or ‘‘rolled’’ on a regular basis in order to track the changing nature of the Oil Benchmark. For example, two times a year (in the month in which an Oil Benchmark Component Futures Contract is set to become the first-toexpire Oil Futures Contract listed on Exchange Act Release Nos. 53582 (March 31, 2006), 71 FR 17510 (April 6, 2006) (SR–Amex–2005–127) (order approving Amex listing of United States Oil Fund, LP); 57188 (January 23, 2008), 73 FR 5607 (January 30, 2008) (SR–Amex–2007–70) (order approving Amex listing of United States Heating Oil Fund, LP and United States Gasoline Fund, LP); 61881 (April 9, 2010), 75 FR 20028 (April 16, 2010) (SR–NYSEArca–2010–14) (order approving listing and trading of United States Brent Oil Fund, LP); and 62527 (July 19, 2010), 75 FR 43606 (July 26, 2010) (order approving listing and trading of United States Commodity Index Fund). 14 See e-mail from Michael Cavalier, Chief Counsel, NYSE Euronext, to Christopher W. Chow, Special Counsel, Commission, dated December 22, 2010. PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 NYMEX), the first-to-expire Oil Benchmark Component Contract will become the next-to-expire (spot) Oil Futures Contract and will no longer be an Oil Benchmark Component Futures Contract, and the Fund’s investments will have to be changed accordingly. In order that the Fund’s trading does not cause unwanted market movements and to make it more difficult for third parties to profit by trading based on such expected market movements, the Fund’s investments typically will not be rolled entirely on that day, but will typically be rolled over a period of several days. Consistent with achieving the Fund’s investment objective of closely tracking the Oil Benchmark, the Sponsor may for certain reasons cause the Fund to enter into or hold Oil Futures Contracts other than Oil Benchmark Component Futures Contracts, Cleared Oil Swaps and/or Other Oil Interests. For example, certain Cleared Oil Swaps have standardized terms similar to, and are priced by reference to, a corresponding Oil Benchmark Component Futures Contract. Additionally, Other Oil Interests that do not have standardized terms and are not exchange-traded can generally be structured as the parties to the Oil Interest contract desire. Therefore, the Fund might enter into multiple Cleared Oil Swaps and/or overthe-counter Other Oil Interests intended to exactly replicate the performance of each of the three Oil Benchmark Component Futures Contracts, or a single over-the-counter Other Oil Interest designed to replicate the performance of the Oil Benchmark as a whole. According to the Registration Statement, assuming that there is no default by a counterparty to an over-thecounter Other Oil Interest, the performance of the Other Oil Interest will necessarily correlate exactly with the performance of the Oil Benchmark or the applicable Oil Benchmark Component Futures Contract.15 The Fund might also enter into or hold Other Oil Interests to facilitate effective trading, consistent with the discussion of the Fund’s ‘‘roll’’ strategy in the preceding paragraph. In addition, the Fund might enter into or hold Oil Interests that would be expected to alleviate overall deviation between the Fund’s performance and that of the Oil Benchmark that may result from certain 15 According to the Registration Statements [sic], the Fund faces the risk of non-performance by the counterparties to over-the-counter contracts. Unlike in futures contracts, the counterparty to these contracts is generally a single bank or other financial institution, rather than a clearing organization backed by a group of financial institutions. As a result, there will be greater counterparty credit risk in these transactions. E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Notices market and trading inefficiencies or other reasons. The Fund invests in Oil Interests to the fullest extent possible without being leveraged or unable to satisfy its expected current or potential margin or collateral obligations with respect to its investments in Oil Interests.16 After fulfilling such margin and collateral requirements, the Fund will invest the remainder of its proceeds from the sale of baskets in obligations of the United States Government (‘‘Treasury Securities’’) or cash equivalents, and/or hold such assets in cash (generally in interest-bearing accounts). Therefore, the focus of the Sponsor in managing the Fund is investing in Oil Interests and in Treasury Securities, cash and/or cash equivalents. The Fund will earn interest income from the Treasury Securities and/or cash equivalents that it purchases and on the cash it holds through each Fund’s custodian, the Bank of New York Mellon (the ‘‘Custodian’’ and the ‘‘Administrator’’). The Sponsor endeavors to place the Fund’s trades in Oil Interests and otherwise manage the Fund’s investments so that the Fund’s average daily tracking error against the Oil Benchmark will be less than 10 percent over any period of 30 trading days. More specifically, the Sponsor will endeavor to manage the Fund so that A will be within plus/minus 10 percent of B, where A is the average daily change in the Fund’s NAV for any period of 30 successive valuation days, i.e., any trading day as of which the Fund calculates its NAV, and B is the average daily change in the Oil Benchmark over the same period.17 According to the Registration Statement, the Sponsor employs a ‘‘neutral’’ investment strategy intended to track the changes in the Oil Benchmark regardless of whether the Oil Benchmark goes up or down. The Fund’s ‘‘neutral’’ investment strategy is designed to permit investors generally to purchase and sell the Fund’s Shares for the purpose of investing indirectly in crude oil in a cost-effective manner. Such investors may include participants in the crude oil market and other erowe on DSK5CLS3C1PROD with NOTICES 16 The Sponsor represents that the Fund will invest in Oil Interests in a manner consistent with the Fund’s investment objective and not to achieve additional leverage. 17 The Sponsor believes that market arbitrage opportunities will cause the Fund’s Share price on the NYSE Arca to closely track the Fund’s NAV per share. The Sponsor believes that the net effect of this expected relationship and the expected relationship described above between the Fund’s NAV and the Benchmark will be that the changes in the price of the Fund’s Shares on the NYSE Arca will closely track, in percentage terms, changes in such Benchmark, less expenses. VerDate Mar<15>2010 15:07 Jan 05, 2011 Jkt 223001 industries seeking to hedge the risk of losses in their crude oil-related transactions, as well as investors seeking exposure to the crude oil market. The Sponsor does not intend to operate the Fund in a fashion such that its per share NAV will equal, in dollar terms, the spot price of a barrel of WTI light, sweet crude oil or the price of any particular Oil Futures Contract. The CFTC and U.S. designated contract markets such as the NYMEX have established accountability levels and position limits on the maximum net long or net short futures contracts in commodity interests that any person or group of persons under common trading control (other than as a hedge) may hold, own or control. For example, the current accountability level for investments at any one time is 20,000 Oil Futures Contracts. While this is not a fixed ceiling, it is a threshold above which the NYMEX may exercise greater scrutiny and control over an investor, including limiting an investor to holding no more than 20,000 Oil Future Contracts. With regard to position limits, the NYMEX limits an investor from holding more than 3,000 net futures in the last 3 days of trading in the near month contract to expire. The Fund, however, does not believe the current position limits imposed by the NYMEX will have any impact on the Fund.18 In addition to accountability levels and position limits, the exchanges set price fluctuation limits on futures contracts. For Oil Futures Contracts, the 18 As stated in the Fund’s Registration Statement, on July 21, 2010, ‘‘The Dodd-Frank Wall Street Reform and Consumer Protection Act’’ (‘‘DoddFrank Act’’) was signed into law. This new law contains broad changes to the financial services industry including provisions changing the regulation of commodity interests. Such changes include the requirement that position limits on energy-based commodity futures contracts be established; new registration, recordkeeping, capital and margin requirements for ‘‘swap dealers’’ and ‘‘major swap participants’’; the forced use of clearinghouse mechanisms for most over-thecounter transactions; and the aggregation, for purposes of position limits, of all positions in energy futures held by a single entity and its affiliates, whether such positions exist on U.S. futures exchanges, non-U.S. futures exchanges, or in over-the-counter contracts; and the aggregation, for purposes of position limits, of all positions in energy futures held by a single entity and its affiliates, whether such positions exist on U.S. futures exchanges, non-U.S. futures exchanges, or in over-the-counter contracts. The CFTC has announced that in accord with the significant amendments introduced to the Commodity Exchange Act of 1936 (‘‘CEA’’) (7 U.S.C. 1) by the Dodd-Frank Act, the CFTC plans to issue a notice of rulemaking proposing position limits for regulated exempt commodity contracts, including energy commodity contracts, as directed by the CEA. See Federal Speculative Position Limits for Referenced Energy Contracts and Associated Regulations, 75 FR 50950 (August 18, 2010). PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 809 price fluctuation limit establishes the maximum amount that the price of futures contracts may vary either up or down from the previous day’s settlement price or from the price at which the limit was last imposed. When a price fluctuation limit has been reached for a particular futures contract, no trades may be made at a price beyond that limit.19 The Fund does not intend to limit the size of the offering and will attempt to expose substantially all of its proceeds to the oil market utilizing Oil Interests. If the Fund encounters position limits, accountability levels, or price fluctuation limits for Oil Futures Contracts on the NYMEX or Cleared Oil Swaps on the NYMEX or ICE, it may then, if permitted under applicable regulatory requirements, purchase Other Oil Interests, including oil futures contracts listed on foreign exchanges. However, the oil futures contracts available on such foreign exchanges may have different underlying sizes, deliveries, and prices. The crude oil futures contracts available on such foreign exchanges may be subject to their own position limits and accountability levels. In any case, notwithstanding the potential availability of these instruments in certain circumstances, position limits and accountability levels could force the Fund to limit the number of Creation Baskets (as defined below) that it sells. Creation and Redemption of Shares The Fund creates and redeems Shares only in blocks called Creation Baskets and Redemption Baskets, respectively, each consisting of 25,000 Shares. Only Authorized Purchasers may purchase or redeem Creation Baskets or Redemption Baskets. An Authorized Purchaser is under no obligation to create or redeem baskets, and an Authorized Purchaser is under no obligation to offer to the public Shares of any baskets it does create. Baskets are generally created when there is a demand for Shares, including, but not limited to, when the market price per share is at (or perceived to be at) a premium to the NAV per share. Similarly, baskets are 19 More specifically, the NYMEX imposes a $10.00 per barrel ($10,000 per contract) price fluctuation limit for Oil Futures Contracts. This limit is initially based off of the previous trading day’s settlement price. If any Oil Futures Contract is traded, bid or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes it begins at the point where the limit was imposed and the limit is reset to be $10.00 per barrel in either direction of that point. If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt. There is no maximum price fluctuation limit during any one trading session. E:\FR\FM\06JAN1.SGM 06JAN1 810 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Notices generally redeemed when the market price per share is at (or perceived to be at) a discount to the NAV per share. Retail investors seeking to purchase or sell Shares on any day are expected to effect such transactions in the secondary market, on the NYSE Arca, at the market price per share, rather than in connection with the creation or redemption of baskets. The total deposit required to create each basket (‘‘Creation Basket Deposit’’) is the amount of Treasury Securities and/or cash that is in the same proportion to the total assets of each Fund (net of estimated accrued but unpaid fees, expenses and other liabilities) on the purchase order date as the number of Shares to be created under the purchase order is in proportion to the total number of Shares outstanding on the purchase order date. The redemption distribution from each Fund will consist of a transfer to the redeeming Authorized Purchaser of an amount of Treasury Securities and/or cash that is in the same proportion to the total assets of the Fund (net of estimated accrued but unpaid fees, expenses and other liabilities) on the date the order to redeem is properly received as the number of Shares to be redeemed under the redemption order is in proportion to the total number of Shares outstanding on the date the order is received. Purchase or redemption orders for Creation and Redemption Baskets must be placed by 12 p.m. E.T. or the close of regular trading on the New York Stock Exchange, whichever is earlier. The Funds will meet the initial and continued listing requirements applicable to Trust Issued Receipts in NYSE Arca Equities Rule 8.200 and Commentary .02 thereto. With respect to application of Rule 10A–3 20 under the Act, the Trust relies on the exception contained in Rule 10A–3(c)(7).21 A minimum of 100,000 Shares for the Fund will be outstanding as of the start of trading on the Exchange. A more detailed description of Oil Interests as well as investment risks, are set forth in the Registration Statement. All terms relating to the Fund that are referred to, but not defined in, this proposed rule change are defined in the Registration Statement. erowe on DSK5CLS3C1PROD with NOTICES Net Asset Value The NAV for the Fund will be calculated by the Administrator once a day and will be disseminated daily to all market participants at the same 20 17 21 17 CFR 240.10A–3. CFR 240.10A–3(c)(7). VerDate Mar<15>2010 15:07 Jan 05, 2011 Jkt 223001 time.22 With respect to the Teucrium WTI Crude Oil Fund, in determining the value of Oil Futures Contracts, the Administrator will use the NYMEX closing price (usually determined as of 2:30 p.m. E.T.). The value of over-thecounter Oil Interests will be determined based on the value of the commodity or futures contract underlying such Oil Interest, except that a fair value may be determined if the Sponsor believes that the Fund is subject to significant credit risk relating to the counterparty to such Oil Interest. Treasury Securities held by the Fund will be valued by the Administrator using values received from recognized third-party vendors and dealer quotes. NAV will include any unrealized profit or loss on open Oil Interests and any other credit or debit accruing to the Fund but unpaid or not received by the Fund. The Exchange also will disseminate on a daily basis via the Consolidated Tape Association (‘‘CTA’’) information with respect to recent NAV, and shares outstanding. The Exchange will also make available on its Web site daily trading volume of each of the Shares, closing prices of such Shares, and the corresponding NAV. Availability of Information Regarding the Shares The Web site for the Fund (https:// www.teucriumoilfund.com) and/or the Exchange, which are publicly accessible at no charge, will contain the following information: (a) The current NAV per share daily and the prior business day’s NAV and the reported closing price; (b) the midpoint of the bid-ask price in relation to the NAV as of the time the NAV is calculated (the ‘‘Bid-Ask Price’’); (c) calculation of the premium or discount of such price against such NAV; (d) the bid-ask price of Shares determined using the highest bid and lowest offer as of the time of calculation of the NAV; (e) data in chart form displaying the frequency distribution of discounts and premiums of the Bid-Ask Price against the NAV, within appropriate ranges for each of the four (4) previous calendar quarters; (f) the prospectus; and (g) other applicable quantitative information. The Fund will 22 The NAV will be calculated by taking the current market value of the Fund’s total assets and subtracting any liabilities. Under the Fund’s current operational procedures, the Administrator will calculate the NAV of the Fund’s Shares as of the earlier of 4 p.m. Eastern Time (‘‘E.T.’’) or the close of the New York Stock Exchange (ordinarily, 4 p.m. E.T.) each day. NYSE Arca will calculate an approximate net asset value every 15 seconds throughout each day that the Fund’s Shares are traded on the NYSE Arca for as long as NYMEX’s main pricing mechanism is open. PO 00000 Frm 00041 Fmt 4703 Sfmt 4703 also disseminate Fund’s holdings on a daily basis on the Fund’s Web site. The closing price and settlement prices of the Oil Futures Contracts are also readily available from the NYMEX (https://www.cmegroup.com) and ICE (https://www.theice.com), automated quotation systems, published or other public sources, or on-line information services such as Bloomberg or Reuters. The Oil Benchmarks [sic] will be disseminated by one or more major market data vendors every 15 seconds during the NYSE Arca Core Trading Session of 9:30 a.m. to 4 p.m. E.T. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the CTA. In addition, the Exchange will provide a hyperlink on its Web site at https://www.nyse.com to each Fund’s Web site, which will display all intraday and closing Oil Benchmark levels, the intraday Indicative Trust Value (see below), and NAV. In addition, various data vendors and news publications publish futures prices and data. The Exchange represents that quotation and last sale information for the Oil Futures Contracts are widely disseminated through a variety of major market data vendors worldwide, including Bloomberg and Reuters. In addition, the Exchange further represents that complete real-time data for the Oil Futures Contracts is available by subscription from Reuters and Bloomberg. The NYMEX and ICE also provide delayed futures information on current and past trading sessions and market news free of charge on their Web sites. The specific contract specifications for the futures contracts are also available at the NYMEX and ICE Web sites, as well as other financial informational sources. The spot price of WTI Crude Oil also is available on a 24hour basis from major market data vendors. Price and volume information for cleared swaps is available from major market data vendors and on the NYMEX Web site. The Fund will provide Web site disclosure of portfolio holdings daily and will include, as applicable, the names, quantity, price and market value of Financial Instruments held by the Fund and the characteristics of such instruments and cash equivalents, and amount of cash held in the portfolio of the Fund. This Web site disclosure of the portfolio composition of the Fund will occur at the same time as the disclosure by the Sponsor of the portfolio composition to Authorized Purchasers so that all market participants are provided portfolio composition information at the same E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Notices time. Therefore, the same portfolio information will be provided on the public Web site as well as in electronic files provided to Authorized Purchasers. Accordingly, each investor will have access to the current portfolio composition of the Fund through the Fund’s Web site. erowe on DSK5CLS3C1PROD with NOTICES Dissemination of Indicative Trust Value In addition, in order to provide updated information relating to the Fund for use by investors and market professionals, an updated Indicative Trust Value (‘‘ITV’’) will be calculated. The ITV is calculated by using the prior day’s closing NAV per share of the Fund as a base and updating that value throughout the trading day to reflect changes in the value of the applicable Oil Benchmark Component Futures Contracts. As stated in the respective Registration Statements [sic], changes in the value of over-the-counter Oil Interests, Treasury Securities and cash equivalents will not be included in the calculation of the ITV. The ITV disseminated during NYSE Arca trading hours should not be viewed as an actual real time update of the NAV, which is calculated only once a day. The ITV will be disseminated on a per Share basis by one or more major market data vendors every 15 seconds during the NYSE Arca Core Trading Session. The normal trading hours for Oil Futures Contracts on NYMEX are 9 a.m. to 2:30 p.m. E.T. The ITV will not be updated, and, therefore, a static ITV will be disseminated, between the close of trading on NYMEX of Oil Futures Contracts and the close of the NYSE Arca Core Trading Session. The value of a Share may be influenced by nonconcurrent trading hours between NYSE Arca and the NYMEX and ICE when the Shares are traded on NYSE Arca after normal trading hours of Oil Futures Contracts. The Exchange believes that dissemination of the ITV provides additional information regarding the Fund that is not otherwise available to the public and is useful to professionals and investors in connection with the related Shares trading on the Exchange or the creation or redemption of such Shares. Trading Rules The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. The Exchange has appropriate rules to facilitate transactions in the Shares during all VerDate Mar<15>2010 15:07 Jan 05, 2011 Jkt 223001 trading sessions. As provided in NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price variation (‘‘MPV’’) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001. The trading of the Shares will be subject to NYSE Arca Equities Rule 8.200, Commentary .02(e), which sets forth certain restrictions on ETP Holders acting as registered Market Makers in Trust Issued Receipts to facilitate surveillance. See ‘‘Surveillance’’ below for more information. 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 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 trading is not occurring in the underlying futures contracts, or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. In addition, trading in Shares will be subject to trading halts caused by extraordinary market volatility pursuant to the Exchange’s ‘‘circuit breaker’’ rule 23 or by the halt or suspension of trading of the underlying futures contracts. The Exchange represents that the Exchange may halt trading during the day in which the interruption to the dissemination of the ITV or the value of the underlying futures contracts occurs. If the interruption to the dissemination of the ITV or the value of the underlying futures contracts persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption. In addition, if the Exchange becomes aware that the NAV with respect to the Shares is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV is available to all market participants. Surveillance The Exchange intends to utilize its existing surveillance procedures applicable to derivative products, including Trust Issued Receipts, 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 23 See PO 00000 NYSE Arca Equities Rule 7.12. Frm 00042 Fmt 4703 Sfmt 4703 811 detect violations of Exchange rules and applicable federal securities laws. The Exchange’s current trading surveillances focus 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. The Exchange is able to obtain information regarding trading in the Shares, the physical commodities included in, or options, futures or options on futures on, Shares through ETP Holders, in connection with such ETP Holders’ proprietary or customer trades through ETP Holders which they effect on any relevant market. The Exchange can obtain market surveillance information, including customer identity information, with respect to transactions occurring on the NYMEX and ICE, which are members of the Intermarket Surveillance Group (‘‘ISG’’). A list of ISG members is available at https://www.isgportal.org.24 In addition, with respect to the Fund’s futures contracts traded on exchanges, not more than 10% of the weight of such futures contracts in the aggregate shall consist of components whose principal trading market is not a member of ISG or is a market with which the Exchange does not have a comprehensive surveillance sharing agreement. The Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. 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 risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated ITV will not be calculated or publicly disseminated; (2) the procedures for purchases and redemptions of Shares in Creation Baskets and Redemption Baskets (and that Shares are not individually redeemable); (3) 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; (4) how information regarding the ITV is 24 The Exchange notes that not all Oil Interests may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. E:\FR\FM\06JAN1.SGM 06JAN1 812 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Notices disseminated; (5) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. In addition, the Information Bulletin will advise ETP Holders, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Fund. The Exchange notes that investors purchasing Shares directly from the Fund will receive a prospectus. ETP Holders purchasing Shares from the Fund for resale to investors will deliver a prospectus to such investors. The Information Bulletin will also discuss any exemptive, noaction and interpretive relief granted by the Commission from any rules under the Act. In addition, the Information Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Information Bulletin will also reference that the CFTC has regulatory jurisdiction over the trading of Oil Futures Contracts traded on U.S. markets. The Information Bulletin will also disclose the trading hours of the Shares of the Fund and that the NAV for the Shares is calculated after 4 p.m. E.T. each trading day. The Bulletin will disclose that information about the Shares of the Fund is publicly available on the Fund’s Web site. erowe on DSK5CLS3C1PROD with NOTICES 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,25 in general, and furthers the objectives of Section 6(b)(5),26 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. The Exchange believes that the proposed rule change will facilitate the listing and trading of an additional type of exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. In addition, the listing and trading criteria set forth in NYSE Equities Rule 8.200 are intended to protect investors and the public interest. 25 15 U.S.C. 78f(b). 26 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 15:07 Jan 05, 2011 Jkt 223001 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 (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove 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: 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 such 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–2010–119 and should be submitted on or before January 27, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–33363 Filed 1–5–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63626; File No. SR–Phlx– 2010–185] 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–2010–119 on the subject line. Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a Pilot Program for Cabinet Trading Below $1.00 Per Contract Until June 1, 2011 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–-2010–119. 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 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1, and Rule 19b–4 2 thereunder, notice is hereby given that on December 21, 2010, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 December 30, 2010. 27 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\06JAN1.SGM 06JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 4 (Thursday, January 6, 2011)]
[Notices]
[Pages 807-812]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-33363]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63625; File No. SR-NYSEArca-2010-119]

Self-Regulatory Organizations; NYSE Arca Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the Teucrium WTI
Crude Oil Fund Under NYSE Arca Equities Rule 8.200

December 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 December 20, 2010, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange proposes to list and trade shares of the Teucrium WTI
Crude Oil Fund under NYSE Arca Equities Rule 8.200. The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and https://www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
NYSE Arca Equities Rule 8.200, Commentary .02 permits the trading
of Trust Issued Receipts (``TIRs'') either by listing or pursuant to
unlisted trading privileges (``UTP'').\3\ The Exchange proposes to list
and trade shares (``Shares'') of the Teucrium WTI Crude Oil Fund (the
``Fund'') pursuant to NYSE Arca Equities Rule 8.200.
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\3\ Commentary .02 to NYSE Arca Equities Rule 8.200 applies to
TIRs that invest in ``Financial Instruments.'' The term ``Financial
Instruments,'' as defined in Commentary .02(b)(4) to NYSE Arca
Equities Rule 8.200, means any combination of investments, including
cash; securities; options on securities and indices; futures
contracts; options on futures contracts; forward contracts; equity
caps, collars and floors; and swap agreements.
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The Exchange notes that the Commission has previously approved the
listing and trading of other issues of Trust Issued Receipts on the
American Stock Exchange LLC,\4\ trading on NYSE Arca pursuant to
unlisted trading privileges (``UTP''),\5\ and listing on NYSE Arca.\6\
Among these is the Teucrium Corn Fund, a series of the Teucrium
Commodity Trust (``Trust'').\7\ In addition, the Commission has
approved other exchange-traded fund-like products linked to the
performance of underlying commodities.\8\
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\4\ See, e.g., Securities Exchange Act Release No. 58161 (July
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39).
\5\ See, e.g., Securities Exchange Act Release No. 58163 (July
15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
\6\ See, e.g., Securities Exchange Act Release No. 58457
(September 3, 2008), 73 FR 52711 (September 10, 2008) (SR-NYSEArca-
2008-91).
\7\ See Securities Exchange Act Release No. 62213 (June 3,
2010), 75 FR 32828 (June 9, 2010) (SR-NYSEArca-2010-22) (order
approving listing on the Exchange of Teucrium Corn Fund).
\8\ See, e.g., Securities Exchange Act Release Nos. 57456 (March
7, 2008), 73 FR 13599 (March 13, 2008) (SR-NYSEArca-2007-91) (order
granting accelerated approval for NYSE Arca listing the iShares GS
Commodity Trusts); 59781 (April 17, 2009), 74 FR 18771 (April 24,
2009) (SR-NYSEArca-2009-28) (order granting accelerated approval for
NYSE Arca listing the ETFS Silver Trust); 59895 (May 8, 2009), 74 FR
22993 (May 15, 2009) (SR-NYSEArca-2009-40) (order granting
accelerated approval for NYSE Arca listing the ETFS Gold Trust);
61219 (December 22, 2009), 74 FR 68886 (December 29, 2009) (order
approving listing on NYSE Arca of the ETFS Platinum Trust).
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The Shares represent beneficial ownership interests in the Fund, as
described in the Registration Statement for the Fund.\9\ The Fund is a
commodity pool that is a series of the Trust, a Delaware statutory
trust. The Fund is managed and controlled by Teucrium Trading, LLC
(``Sponsor''). The Sponsor is a Delaware limited liability company that
is registered as a commodity pool operator (``CPO'') with the Commodity
Futures Trading Commission (``CFTC'') and is a member of the National
Futures Association.
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\9\ See registration statement on Amendment No. 1 to Form S-1
for Teucrium Commodity Trust, dated September 7, 2010 (File No. 333-
167594) (``Registration Statement''). The discussion herein relating
to the Trust and the Shares is based on the Registration Statement.
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Teucrium WTI Crude Oil Fund

According to the Registration Statement, the investment objective
of the Fund is to have the daily changes in percentage terms of the
Shares' net asset value (``NAV'') reflect the daily changes in
percentage terms of a weighted average of the closing settlement prices
for futures contracts for Western Texas Intermediate (``WTI'') crude
oil, also known as Texas Light Sweet crude oil (``Oil Futures
Contracts'') traded on the New York Mercantile Exchange (``NYMEX''),
specifically (1) the nearest to spot June or December Oil Futures
Contract, weighted 35%; (2) the June or December Oil Futures Contract
following the aforementioned (1), weighted 30%; and (3) the December
Oil Futures Contract following the aforementioned (2),\10\ weighted
35%; before taking Fund expenses and interest income into account. This
weighted average of the three referenced

[[Page 808]]

Oil Futures Contracts is referred to herein as the ``Oil Benchmark,''
and the three Oil Futures Contracts that at any given time make up the
Oil Benchmark are referred to herein as the ``Oil Benchmark Component
Futures Contracts.'' \11\
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\10\ See e-mail from Michael Cavalier, Chief Counsel, NYSE
Euronext, to Christopher W. Chow, Special Counsel, Commission, dated
December 22, 2010.
\11\ Western Texas Intermediate crude oil futures volume on
NYMEX for 2009 and 2010 (through November 30, 2010) was 137,352,118
contracts and 156,155,620 contracts, respectively. As of November
30, 2010, NYMEX open interest for Western Texas Intermediate crude
oil was 1,342,325 contracts, and open interest for near month
futures was 323,184 contracts. The contract price was $84,110
($84.11 USD per barrel and 1,000 barrels per contract). The
approximate value of all outstanding contracts was $112.9 billion.
The position limits for all months is 20,000 contracts and the total
value of contracts if position limits were reached would be
approximately $1.68 billion (based on the $84.11 contract price).
Western Texas Intermediate crude oil futures are also traded on ICE
and the Singapore Mercantile Exchange.
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The Fund seeks to achieve its investment objective by investing
under normal market conditions in Oil Benchmark Component Futures
Contracts or, in certain circumstances, in other Oil Futures Contracts
traded on the NYMEX and to a lesser extent the IntercontinentalExchange
(``ICE''). The Fund may also invest in other kinds of crude oil futures
contracts traded on the NYMEX or ICE or on other domestic or foreign
exchanges. In addition, and to a limited extent, the Fund will invest
in crude oil-based swap agreements that are cleared through the NYMEX
or ICE or their affiliated providers of clearing services (``Cleared
Oil Swaps'') in furtherance of the Fund's investment objective, and to
the extent permitted and appropriate in light of the liquidity in the
Cleared Oil Swaps market. Once position limits and accountability
levels in Oil Futures Contracts are applicable, the Fund's intention is
to invest first in Cleared Oil Swaps to the extent permitted by the
position limits and accountability levels applicable to Cleared Oil
Swaps and appropriate in light of the liquidity in the Cleared Oil
Swaps market,\12\ and then in contracts or instruments such as cash-
settled options on Oil Futures Contracts and forward contracts, swaps
other than Cleared Oil Swaps, and other over-the-counter transactions
that are based on the price of crude oil and Oil Futures Contracts
(collectively, ``Other Oil Interests,'' and together with Oil Futures
Contracts and Cleared Oil Swaps, ``Oil Interests'').\13\ The
circumstances under which such investments in Other Oil Interests may
be utilized (e.g., imposition of position limits or accountability
levels) are discussed below.
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\12\ See e-mail from Michael Cavalier, Chief Counsel, NYSE
Euronext, to Christopher W. Chow, Special Counsel, Commission, dated
December 27, 2010.
\13\ The Commission has previously approved listing of similar
funds which held forward contracts or swaps on the American Stock
Exchange (``Amex'') and NYSE Arca. See, e.g., Securities Exchange
Act Release Nos. 53582 (March 31, 2006), 71 FR 17510 (April 6, 2006)
(SR-Amex-2005-127) (order approving Amex listing of United States
Oil Fund, LP); 57188 (January 23, 2008), 73 FR 5607 (January 30,
2008) (SR-Amex-2007-70) (order approving Amex listing of United
States Heating Oil Fund, LP and United States Gasoline Fund, LP);
61881 (April 9, 2010), 75 FR 20028 (April 16, 2010) (SR-NYSEArca-
2010-14) (order approving listing and trading of United States Brent
Oil Fund, LP); and 62527 (July 19, 2010), 75 FR 43606 (July 26,
2010) (order approving listing and trading of United States
Commodity Index Fund).
---------------------------------------------------------------------------

Light Sweet Crude Oil Futures Contracts traded on the NYMEX are
listed for the current year and the next 8 years. However, the nature
of the Oil Benchmark is such that the Fund will not hold futures
contracts beyond approximately the first 24 months of listed Oil
Futures Contracts.\14\
---------------------------------------------------------------------------

\14\ See e-mail from Michael Cavalier, Chief Counsel, NYSE
Euronext, to Christopher W. Chow, Special Counsel, Commission, dated
December 22, 2010.
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It is the intent of the Sponsor to never hold the next-to-expire an
Oil Benchmark Component Futures Contract (commonly called the ``spot''
contract). For example, in terms of the Oil Benchmark, in April of a
given year, the Oil Benchmark Component Futures Contracts will be the
contracts expiring in June (the first-to-expire Oil Benchmark Component
Futures Contract), December (the second-to-expire Oil Benchmark
Component Futures Contract), and June of the following year (the third-
to-expire Oil Benchmark Component Futures Contract). Because the next-
to-expire Oil Benchmark Component Futures Contract (the June contract)
will become spot on the third-to-last trading day prior to the 25th
calendar day in April, the Sponsor will ``roll'' or change that
contract prior to the third-to-last trading day prior to the 25th
calendar day in April for a position in December of the following year,
not intending to hold any futures contract to spot.
According to the Registration Statement, the Fund seeks to achieve
its investment objective primarily by investing in Oil Interests such
that daily changes in the Fund's NAV will be expected to closely track
the changes in the Oil Benchmark. The Fund's positions in Oil Interests
will be changed or ``rolled'' on a regular basis in order to track the
changing nature of the Oil Benchmark. For example, two times a year (in
the month in which an Oil Benchmark Component Futures Contract is set
to become the first-to-expire Oil Futures Contract listed on NYMEX),
the first-to-expire Oil Benchmark Component Contract will become the
next-to-expire (spot) Oil Futures Contract and will no longer be an Oil
Benchmark Component Futures Contract, and the Fund's investments will
have to be changed accordingly. In order that the Fund's trading does
not cause unwanted market movements and to make it more difficult for
third parties to profit by trading based on such expected market
movements, the Fund's investments typically will not be rolled entirely
on that day, but will typically be rolled over a period of several
days.
Consistent with achieving the Fund's investment objective of
closely tracking the Oil Benchmark, the Sponsor may for certain reasons
cause the Fund to enter into or hold Oil Futures Contracts other than
Oil Benchmark Component Futures Contracts, Cleared Oil Swaps and/or
Other Oil Interests. For example, certain Cleared Oil Swaps have
standardized terms similar to, and are priced by reference to, a
corresponding Oil Benchmark Component Futures Contract. Additionally,
Other Oil Interests that do not have standardized terms and are not
exchange-traded can generally be structured as the parties to the Oil
Interest contract desire. Therefore, the Fund might enter into multiple
Cleared Oil Swaps and/or over-the-counter Other Oil Interests intended
to exactly replicate the performance of each of the three Oil Benchmark
Component Futures Contracts, or a single over-the-counter Other Oil
Interest designed to replicate the performance of the Oil Benchmark as
a whole. According to the Registration Statement, assuming that there
is no default by a counterparty to an over-the-counter Other Oil
Interest, the performance of the Other Oil Interest will necessarily
correlate exactly with the performance of the Oil Benchmark or the
applicable Oil Benchmark Component Futures Contract.\15\ The Fund might
also enter into or hold Other Oil Interests to facilitate effective
trading, consistent with the discussion of the Fund's ``roll'' strategy
in the preceding paragraph. In addition, the Fund might enter into or
hold Oil Interests that would be expected to alleviate overall
deviation between the Fund's performance and that of the Oil Benchmark
that may result from certain

[[Page 809]]

market and trading inefficiencies or other reasons.
---------------------------------------------------------------------------

\15\ According to the Registration Statements [sic], the Fund
faces the risk of non-performance by the counterparties to over-the-
counter contracts. Unlike in futures contracts, the counterparty to
these contracts is generally a single bank or other financial
institution, rather than a clearing organization backed by a group
of financial institutions. As a result, there will be greater
counterparty credit risk in these transactions.
---------------------------------------------------------------------------

The Fund invests in Oil Interests to the fullest extent possible
without being leveraged or unable to satisfy its expected current or
potential margin or collateral obligations with respect to its
investments in Oil Interests.\16\ After fulfilling such margin and
collateral requirements, the Fund will invest the remainder of its
proceeds from the sale of baskets in obligations of the United States
Government (``Treasury Securities'') or cash equivalents, and/or hold
such assets in cash (generally in interest-bearing accounts).
Therefore, the focus of the Sponsor in managing the Fund is investing
in Oil Interests and in Treasury Securities, cash and/or cash
equivalents. The Fund will earn interest income from the Treasury
Securities and/or cash equivalents that it purchases and on the cash it
holds through each Fund's custodian, the Bank of New York Mellon (the
``Custodian'' and the ``Administrator'').
---------------------------------------------------------------------------

\16\ The Sponsor represents that the Fund will invest in Oil
Interests in a manner consistent with the Fund's investment
objective and not to achieve additional leverage.
---------------------------------------------------------------------------

The Sponsor endeavors to place the Fund's trades in Oil Interests
and otherwise manage the Fund's investments so that the Fund's average
daily tracking error against the Oil Benchmark will be less than 10
percent over any period of 30 trading days. More specifically, the
Sponsor will endeavor to manage the Fund so that A will be within plus/
minus 10 percent of B, where A is the average daily change in the
Fund's NAV for any period of 30 successive valuation days, i.e., any
trading day as of which the Fund calculates its NAV, and B is the
average daily change in the Oil Benchmark over the same period.\17\
---------------------------------------------------------------------------

\17\ The Sponsor believes that market arbitrage opportunities
will cause the Fund's Share price on the NYSE Arca to closely track
the Fund's NAV per share. The Sponsor believes that the net effect
of this expected relationship and the expected relationship
described above between the Fund's NAV and the Benchmark will be
that the changes in the price of the Fund's Shares on the NYSE Arca
will closely track, in percentage terms, changes in such Benchmark,
less expenses.
---------------------------------------------------------------------------

According to the Registration Statement, the Sponsor employs a
``neutral'' investment strategy intended to track the changes in the
Oil Benchmark regardless of whether the Oil Benchmark goes up or down.
The Fund's ``neutral'' investment strategy is designed to permit
investors generally to purchase and sell the Fund's Shares for the
purpose of investing indirectly in crude oil in a cost-effective
manner. Such investors may include participants in the crude oil market
and other industries seeking to hedge the risk of losses in their crude
oil-related transactions, as well as investors seeking exposure to the
crude oil market. The Sponsor does not intend to operate the Fund in a
fashion such that its per share NAV will equal, in dollar terms, the
spot price of a barrel of WTI light, sweet crude oil or the price of
any particular Oil Futures Contract.
The CFTC and U.S. designated contract markets such as the NYMEX
have established accountability levels and position limits on the
maximum net long or net short futures contracts in commodity interests
that any person or group of persons under common trading control (other
than as a hedge) may hold, own or control. For example, the current
accountability level for investments at any one time is 20,000 Oil
Futures Contracts. While this is not a fixed ceiling, it is a threshold
above which the NYMEX may exercise greater scrutiny and control over an
investor, including limiting an investor to holding no more than 20,000
Oil Future Contracts. With regard to position limits, the NYMEX limits
an investor from holding more than 3,000 net futures in the last 3 days
of trading in the near month contract to expire. The Fund, however,
does not believe the current position limits imposed by the NYMEX will
have any impact on the Fund.\18\
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\18\ As stated in the Fund's Registration Statement, on July 21,
2010, ``The Dodd-Frank Wall Street Reform and Consumer Protection
Act'' (``Dodd-Frank Act'') was signed into law. This new law
contains broad changes to the financial services industry including
provisions changing the regulation of commodity interests. Such
changes include the requirement that position limits on energy-based
commodity futures contracts be established; new registration,
recordkeeping, capital and margin requirements for ``swap dealers''
and ``major swap participants''; the forced use of clearinghouse
mechanisms for most over-the-counter transactions; and the
aggregation, for purposes of position limits, of all positions in
energy futures held by a single entity and its affiliates, whether
such positions exist on U.S. futures exchanges, non-U.S. futures
exchanges, or in over-the-counter contracts; and the aggregation,
for purposes of position limits, of all positions in energy futures
held by a single entity and its affiliates, whether such positions
exist on U.S. futures exchanges, non-U.S. futures exchanges, or in
over-the-counter contracts. The CFTC has announced that in accord
with the significant amendments introduced to the Commodity Exchange
Act of 1936 (``CEA'') (7 U.S.C. 1) by the Dodd-Frank Act, the CFTC
plans to issue a notice of rulemaking proposing position limits for
regulated exempt commodity contracts, including energy commodity
contracts, as directed by the CEA. See Federal Speculative Position
Limits for Referenced Energy Contracts and Associated Regulations,
75 FR 50950 (August 18, 2010).
---------------------------------------------------------------------------

In addition to accountability levels and position limits, the
exchanges set price fluctuation limits on futures contracts. For Oil
Futures Contracts, the price fluctuation limit establishes the maximum
amount that the price of futures contracts may vary either up or down
from the previous day's settlement price or from the price at which the
limit was last imposed. When a price fluctuation limit has been reached
for a particular futures contract, no trades may be made at a price
beyond that limit.\19\
---------------------------------------------------------------------------

\19\ More specifically, the NYMEX imposes a $10.00 per barrel
($10,000 per contract) price fluctuation limit for Oil Futures
Contracts. This limit is initially based off of the previous trading
day's settlement price. If any Oil Futures Contract is traded, bid
or offered at the limit for five minutes, trading is halted for five
minutes. When trading resumes it begins at the point where the limit
was imposed and the limit is reset to be $10.00 per barrel in either
direction of that point. If another halt were triggered, the market
would continue to be expanded by $10.00 per barrel in either
direction after each successive five-minute trading halt. There is
no maximum price fluctuation limit during any one trading session.
---------------------------------------------------------------------------

The Fund does not intend to limit the size of the offering and will
attempt to expose substantially all of its proceeds to the oil market
utilizing Oil Interests. If the Fund encounters position limits,
accountability levels, or price fluctuation limits for Oil Futures
Contracts on the NYMEX or Cleared Oil Swaps on the NYMEX or ICE, it may
then, if permitted under applicable regulatory requirements, purchase
Other Oil Interests, including oil futures contracts listed on foreign
exchanges. However, the oil futures contracts available on such foreign
exchanges may have different underlying sizes, deliveries, and prices.
The crude oil futures contracts available on such foreign exchanges may
be subject to their own position limits and accountability levels. In
any case, notwithstanding the potential availability of these
instruments in certain circumstances, position limits and
accountability levels could force the Fund to limit the number of
Creation Baskets (as defined below) that it sells.

Creation and Redemption of Shares

The Fund creates and redeems Shares only in blocks called Creation
Baskets and Redemption Baskets, respectively, each consisting of 25,000
Shares. Only Authorized Purchasers may purchase or redeem Creation
Baskets or Redemption Baskets. An Authorized Purchaser is under no
obligation to create or redeem baskets, and an Authorized Purchaser is
under no obligation to offer to the public Shares of any baskets it
does create. Baskets are generally created when there is a demand for
Shares, including, but not limited to, when the market price per share
is at (or perceived to be at) a premium to the NAV per share.
Similarly, baskets are

[[Page 810]]

generally redeemed when the market price per share is at (or perceived
to be at) a discount to the NAV per share. Retail investors seeking to
purchase or sell Shares on any day are expected to effect such
transactions in the secondary market, on the NYSE Arca, at the market
price per share, rather than in connection with the creation or
redemption of baskets.
The total deposit required to create each basket (``Creation Basket
Deposit'') is the amount of Treasury Securities and/or cash that is in
the same proportion to the total assets of each Fund (net of estimated
accrued but unpaid fees, expenses and other liabilities) on the
purchase order date as the number of Shares to be created under the
purchase order is in proportion to the total number of Shares
outstanding on the purchase order date. The redemption distribution
from each Fund will consist of a transfer to the redeeming Authorized
Purchaser of an amount of Treasury Securities and/or cash that is in
the same proportion to the total assets of the Fund (net of estimated
accrued but unpaid fees, expenses and other liabilities) on the date
the order to redeem is properly received as the number of Shares to be
redeemed under the redemption order is in proportion to the total
number of Shares outstanding on the date the order is received.
Purchase or redemption orders for Creation and Redemption Baskets
must be placed by 12 p.m. E.T. or the close of regular trading on the
New York Stock Exchange, whichever is earlier.
The Funds will meet the initial and continued listing requirements
applicable to Trust Issued Receipts in NYSE Arca Equities Rule 8.200
and Commentary .02 thereto. With respect to application of Rule 10A-3
\20\ under the Act, the Trust relies on the exception contained in Rule
10A-3(c)(7).\21\ A minimum of 100,000 Shares for the Fund will be
outstanding as of the start of trading on the Exchange.
---------------------------------------------------------------------------

\20\ 17 CFR 240.10A-3.
\21\ 17 CFR 240.10A-3(c)(7).
---------------------------------------------------------------------------

A more detailed description of Oil Interests as well as investment
risks, are set forth in the Registration Statement. All terms relating
to the Fund that are referred to, but not defined in, this proposed
rule change are defined in the Registration Statement.

Net Asset Value

The NAV for the Fund will be calculated by the Administrator once a
day and will be disseminated daily to all market participants at the
same time.\22\ With respect to the Teucrium WTI Crude Oil Fund, in
determining the value of Oil Futures Contracts, the Administrator will
use the NYMEX closing price (usually determined as of 2:30 p.m. E.T.).
The value of over-the-counter Oil Interests will be determined based on
the value of the commodity or futures contract underlying such Oil
Interest, except that a fair value may be determined if the Sponsor
believes that the Fund is subject to significant credit risk relating
to the counterparty to such Oil Interest.
---------------------------------------------------------------------------

\22\ The NAV will be calculated by taking the current market
value of the Fund's total assets and subtracting any liabilities.
Under the Fund's current operational procedures, the Administrator
will calculate the NAV of the Fund's Shares as of the earlier of 4
p.m. Eastern Time (``E.T.'') or the close of the New York Stock
Exchange (ordinarily, 4 p.m. E.T.) each day. NYSE Arca will
calculate an approximate net asset value every 15 seconds throughout
each day that the Fund's Shares are traded on the NYSE Arca for as
long as NYMEX's main pricing mechanism is open.
---------------------------------------------------------------------------

Treasury Securities held by the Fund will be valued by the
Administrator using values received from recognized third-party vendors
and dealer quotes. NAV will include any unrealized profit or loss on
open Oil Interests and any other credit or debit accruing to the Fund
but unpaid or not received by the Fund.
The Exchange also will disseminate on a daily basis via the
Consolidated Tape Association (``CTA'') information with respect to
recent NAV, and shares outstanding. The Exchange will also make
available on its Web site daily trading volume of each of the Shares,
closing prices of such Shares, and the corresponding NAV.

Availability of Information Regarding the Shares

The Web site for the Fund (https://www.teucriumoilfund.com) and/or
the Exchange, which are publicly accessible at no charge, will contain
the following information: (a) The current NAV per share daily and the
prior business day's NAV and the reported closing price; (b) the
midpoint of the bid-ask price in relation to the NAV as of the time the
NAV is calculated (the ``Bid-Ask Price''); (c) calculation of the
premium or discount of such price against such NAV; (d) the bid-ask
price of Shares determined using the highest bid and lowest offer as of
the time of calculation of the NAV; (e) data in chart form displaying
the frequency distribution of discounts and premiums of the Bid-Ask
Price against the NAV, within appropriate ranges for each of the four
(4) previous calendar quarters; (f) the prospectus; and (g) other
applicable quantitative information. The Fund will also disseminate
Fund's holdings on a daily basis on the Fund's Web site.
The closing price and settlement prices of the Oil Futures
Contracts are also readily available from the NYMEX (https://www.cmegroup.com) and ICE (https://www.theice.com), automated quotation
systems, published or other public sources, or on-line information
services such as Bloomberg or Reuters. The Oil Benchmarks [sic] will be
disseminated by one or more major market data vendors every 15 seconds
during the NYSE Arca Core Trading Session of 9:30 a.m. to 4 p.m. E.T.
Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the CTA. In addition, the
Exchange will provide a hyperlink on its Web site at https://www.nyse.com to each Fund's Web site, which will display all intraday
and closing Oil Benchmark levels, the intraday Indicative Trust Value
(see below), and NAV.
In addition, various data vendors and news publications publish
futures prices and data. The Exchange represents that quotation and
last sale information for the Oil Futures Contracts are widely
disseminated through a variety of major market data vendors worldwide,
including Bloomberg and Reuters. In addition, the Exchange further
represents that complete real-time data for the Oil Futures Contracts
is available by subscription from Reuters and Bloomberg. The NYMEX and
ICE also provide delayed futures information on current and past
trading sessions and market news free of charge on their Web sites. The
specific contract specifications for the futures contracts are also
available at the NYMEX and ICE Web sites, as well as other financial
informational sources. The spot price of WTI Crude Oil also is
available on a 24-hour basis from major market data vendors. Price and
volume information for cleared swaps is available from major market
data vendors and on the NYMEX Web site.
The Fund will provide Web site disclosure of portfolio holdings
daily and will include, as applicable, the names, quantity, price and
market value of Financial Instruments held by the Fund and the
characteristics of such instruments and cash equivalents, and amount of
cash held in the portfolio of the Fund. This Web site disclosure of the
portfolio composition of the Fund will occur at the same time as the
disclosure by the Sponsor of the portfolio composition to Authorized
Purchasers so that all market participants are provided portfolio
composition information at the same

[[Page 811]]

time. Therefore, the same portfolio information will be provided on the
public Web site as well as in electronic files provided to Authorized
Purchasers. Accordingly, each investor will have access to the current
portfolio composition of the Fund through the Fund's Web site.

Dissemination of Indicative Trust Value

In addition, in order to provide updated information relating to
the Fund for use by investors and market professionals, an updated
Indicative Trust Value (``ITV'') will be calculated. The ITV is
calculated by using the prior day's closing NAV per share of the Fund
as a base and updating that value throughout the trading day to reflect
changes in the value of the applicable Oil Benchmark Component Futures
Contracts. As stated in the respective Registration Statements [sic],
changes in the value of over-the-counter Oil Interests, Treasury
Securities and cash equivalents will not be included in the calculation
of the ITV. The ITV disseminated during NYSE Arca trading hours should
not be viewed as an actual real time update of the NAV, which is
calculated only once a day.
The ITV will be disseminated on a per Share basis by one or more
major market data vendors every 15 seconds during the NYSE Arca Core
Trading Session. The normal trading hours for Oil Futures Contracts on
NYMEX are 9 a.m. to 2:30 p.m. E.T. The ITV will not be updated, and,
therefore, a static ITV will be disseminated, between the close of
trading on NYMEX of Oil Futures Contracts and the close of the NYSE
Arca Core Trading Session. The value of a Share may be influenced by
non-concurrent trading hours between NYSE Arca and the NYMEX and ICE
when the Shares are traded on NYSE Arca after normal trading hours of
Oil Futures Contracts.
The Exchange believes that dissemination of the ITV provides
additional information regarding the Fund that is not otherwise
available to the public and is useful to professionals and investors in
connection with the related Shares trading on the Exchange or the
creation or redemption of such Shares.

Trading Rules

The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. The Exchange has
appropriate rules to facilitate transactions in the Shares during all
trading sessions. As provided in NYSE Arca Equities Rule 7.6,
Commentary .03, the minimum price variation (``MPV'') for quoting and
entry of orders in equity securities traded on the NYSE Arca
Marketplace is $0.01, with the exception of securities that are priced
less than $1.00 for which the MPV for order entry is $0.0001.
The trading of the Shares will be subject to NYSE Arca Equities
Rule 8.200, Commentary .02(e), which sets forth certain restrictions on
ETP Holders acting as registered Market Makers in Trust Issued Receipts
to facilitate surveillance. See ``Surveillance'' below for more
information.
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 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 trading is not occurring in the underlying futures contracts, or
(2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule \23\ or by the halt or suspension of trading of the
underlying futures contracts.
---------------------------------------------------------------------------

\23\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

The Exchange represents that the Exchange may halt trading during
the day in which the interruption to the dissemination of the ITV or
the value of the underlying futures contracts occurs. If the
interruption to the dissemination of the ITV or the value of the
underlying futures contracts persists past the trading day in which it
occurred, the Exchange will halt trading no later than the beginning of
the trading day following the interruption. In addition, if the
Exchange becomes aware that the NAV with respect to the Shares is not
disseminated to all market participants at the same time, it will halt
trading in the Shares until such time as the NAV is available to all
market participants.

Surveillance

The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products, including Trust Issued
Receipts, 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 surveillances focus 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. The Exchange is able to
obtain information regarding trading in the Shares, the physical
commodities included in, or options, futures or options on futures on,
Shares through ETP Holders, in connection with such ETP Holders'
proprietary or customer trades through ETP Holders which they effect on
any relevant market. The Exchange can obtain market surveillance
information, including customer identity information, with respect to
transactions occurring on the NYMEX and ICE, which are members of the
Intermarket Surveillance Group (``ISG''). A list of ISG members is
available at https://www.isgportal.org.\24\
---------------------------------------------------------------------------

\24\ The Exchange notes that not all Oil Interests may trade on
markets that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

In addition, with respect to the Fund's futures contracts traded on
exchanges, not more than 10% of the weight of such futures contracts in
the aggregate shall consist of components whose principal trading
market is not a member of ISG or is a market with which the Exchange
does not have a comprehensive surveillance sharing agreement.
The Exchange also has a general policy prohibiting the distribution
of material, non-public information by its employees.

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 risks involved
in trading the Shares during the Opening and Late Trading Sessions when
an updated ITV will not be calculated or publicly disseminated; (2) the
procedures for purchases and redemptions of Shares in Creation Baskets
and Redemption Baskets (and that Shares are not individually
redeemable); (3) 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; (4) how
information regarding the ITV is

[[Page 812]]

disseminated; (5) the requirement that ETP Holders deliver a prospectus
to investors purchasing newly issued Shares prior to or concurrently
with the confirmation of a transaction; and (6) trading information.
In addition, the Information Bulletin will advise ETP Holders,
prior to the commencement of trading, of the prospectus delivery
requirements applicable to the Fund. The Exchange notes that investors
purchasing Shares directly from the Fund will receive a prospectus. ETP
Holders purchasing Shares from the Fund for resale to investors will
deliver a prospectus to such investors. The Information Bulletin will
also discuss any exemptive, no-action and interpretive relief granted
by the Commission from any rules under the Act.
In addition, the Information Bulletin will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Bulletin will also reference that the CFTC
has regulatory jurisdiction over the trading of Oil Futures Contracts
traded on U.S. markets.
The Information Bulletin will also disclose the trading hours of
the Shares of the Fund and that the NAV for the Shares is calculated
after 4 p.m. E.T. each trading day. The Bulletin will disclose that
information about the Shares of the Fund is publicly available on the
Fund's Web site.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\25\ in general, and furthers the objectives of Section
6(b)(5),\26\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The Exchange believes that the
proposed rule change will facilitate the listing and trading of an
additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. In addition, the listing and trading criteria set
forth in NYSE Equities Rule 8.200 are intended to protect investors and
the public interest.
---------------------------------------------------------------------------

\25\ 15 U.S.C. 78f(b).
\26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove 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-2010-119 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--2010-119. 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 such 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-2010-119 and should be submitted on or before January 27,
2011.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33363 Filed 1-5-11; 8:45 am]
BILLING CODE 8011-01-P

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