Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Global Currency Gold Fund Under NYSE Arca Equities Rule 8.201, 40381-40391 [2016-14556]
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Federal Register / Vol. 81, No. 119 / Tuesday, June 21, 2016 / Notices
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEARCA–2016–86 and should be
submitted on or before July 12, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–14557 Filed 6–20–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Robert W. Errett,
Deputy Secretary.
[Release No. 34–78079; File No. SR–
BatsBZX–2016–09]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of
Designation of a Longer Period for
Commission Action on a Proposed
Rule Change to Rule 14.11, Managed
Fund Shares, To List and Trade Shares
of the Pointbreak Agriculture
Commodity Strategy Fund of the
Pointbreak ETF Trust
June 15, 2016.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The Commission is
extending this 45-day time period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to section
19(b)(2) of the Act,5 designates August
1, 2016, as the date by which the
Commission should either approve or
disapprove or institute proceedings to
determine whether to disapprove the
proposed rule change (File Number SR–
BatsBZX–2016–09).
On April 15, 2016, Bats BZX
Exchange, Inc. (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Pointbreak Agriculture
Commodity Strategy Fund of the
Pointbreak ETF Trust under BATS Rule
14.11(i). The proposed rule change was
published for comment in the Federal
Register on May 3, 2016.3 The
Commission received no comment
letters on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 77723
(April 27, 2016), 81 FR 26600.
4 15 U.S.C. 78s(b)(2).
[FR Doc. 2016–14559 Filed 6–20–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78075; File No. SR–
NYSEArca–2016–84]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the Global Currency Gold Fund
Under NYSE Arca Equities Rule 8.201
June 15, 2016.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 1,
2016, 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.
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 Global Currency Gold
10 17
1 15
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5 Id.
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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40381
Fund under NYSE Arca Equities Rule
8.201. The proposed rule change is
available on the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade (‘‘Shares’’) of the Global Currency
Gold Fund (the ‘‘Fund’’), a series of the
Global Gold Currency Trust (Trust’’),
under NYSE Arca Equities Rule 8.201.4
Under NYSE Arca Equities Rule 8.201,
the Exchange may propose to list and/
or trade pursuant to unlisted trading
privileges (‘‘UTP’’) ‘‘Commodity-Based
Trust Shares.’’ 5
The Fund will not be registered as an
investment company under the
Investment Company Act of 1940 6 and
is not required to register under such
act.
The Sponsor of the Fund and the
Trust will be WGC USA Asset
Management Company, LLC (the
‘‘Sponsor’’).7 BNY Mellon Asset
4 On May 26, 2016, the Trust filed with the
Commission an amended registration statement on
Form S–1 under the Securities Act of 1933 (‘‘1933
Act’’) relating to the Fund (File No. 333–206640)
(‘‘Registration Statement’’). The description of the
operation of the Trust and the Fund herein is based,
in part, on the Registration Statement.
5 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
6 15 U.S.C. 80a–1.
7 The Trust will be a Delaware statutory trust
consisting of multiple series, each of which will
issue common units of beneficial interest, which
represent units of fractional undivided beneficial
interest in and ownership of such series. The term
of the Trust and each series will be perpetual
(unless terminated earlier in certain circumstances).
The trustee for the Fund’s trust (‘‘Trustee’’) will be
a Delaware Trust Company, the sole trustee with
respect to the Fund.
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Servicing, a division of The Bank of
New York Mellon (‘‘BNYM’’), will be
the Fund’s administrator
(‘‘Administrator’’) and transfer agent
(‘‘Transfer Agent’’) and will not be
affiliated with the Trust, the Fund or the
Sponsor. BNYM will also serve as the
custodian of the Fund’s cash, if any.
HSBC Bank plc will be the custodian
(the ‘‘Custodian’’) of the Fund’s Gold
(defined below).
The Commission has previously
approved listing on the Exchange under
NYSE Arca Equities Rules 5.2(j)(5) and
8.201 of other precious metals and goldbased commodity trusts, including the
Merk Gold Trust; 8 ETFS Gold Trust,9
ETFS Platinum Trust 10 and ETFS
Palladium Trust (collectively, the
‘‘ETFS Trusts’’); 11APMEX Physical—1
oz. Gold Redeemable Trust; 12 Sprott
Gold Trust; 13 SPDR Gold Trust
(formerly, streetTRACKS Gold Trust);
iShares Silver Trust; 14 and iShares
COMEX Gold Trust.15 Prior to their
listing on the Exchange, the
Commission approved listing of the
streetTRACKS Gold Trust on the New
York Stock Exchange (‘‘NYSE’’) 16 and
listing of iShares COMEX Gold Trust
and iShares Silver Trust on the
American Stock Exchange LLC.17 In
addition, the Commission has approved
8 Securities Exchange Act Release No. 71378
(January 23, 2014), 79 FR 4786 (January 29, 2014)
(SR–NYSEArca–2013–137).
9 Securities Exchange Act Release No. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40).
10 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
11 Securities Exchange Act Release No. 61220
(December 22, 2009), 74 FR 68895 (December 29,
2009) (SR–NYSEArca–2009–94).
12 Securities Exchange Act Release No. 66930
(May 7, 2012), 77 FR 27817 (May 11, 2012) (SR–
NYSEArca–2012–18).
13 Securities Exchange Act Release No. 61496
(February 4, 2010), 75 FR 6758 (February 10, 2010)
(SR–NYSEArca–2009–113).
14 See Securities Exchange Act Release No. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust)).
15 See Securities Exchange Act Release No. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
(SR–NYSEArca–2007–76) (approving listing on the
Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11,
2007), 72 FR 39114 (July 17, 2007) (SR–NYSEArca–
2007–43) (order approving listing on the Exchange
of iShares COMEX Gold Trust).
16 See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
streetTRACKS Gold Trust on NYSE).
17 See Securities Exchange Act Release Nos.
51058 (January 19, 2005), 70 FR 3749 (January 26,
2005) (SR–Amex–2004–38) (order approving listing
of iShares COMEX Gold Trust on the American
Stock Exchange LLC); 53521 (March 20, 2006), 71
FR 14967 (March 24, 2006) (SR–Amex–2005–72)
(approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
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trading of the streetTRACKS Gold Trust
and iShares Silver Trust on the
Exchange pursuant to UTP.18
Operation of the Fund
Gold bullion typically is priced and
traded throughout the world in U.S.
dollars. The Fund has been established
as an alternative to traditional dollarbased gold investing. Although
investors will purchase shares of the
Fund with U.S. dollars, the Fund is
designed to provide investors with the
economic effect of holding gold in terms
of a specific basket of major, non-U.S.
currencies, such as the euro, Japanese
yen and British pound (each, a
‘‘Reference Currency’’), rather than the
U.S. dollar. Specifically, the Fund will
seek to track the performance of the
GLD® Long USD Gold Index, less Fund
expenses. The GLD® Long USD Gold
Index, or the ‘‘Index’’, represents the
daily performance of a long position in
physical gold and a short position in the
FX Basket 19 comprised of each of the
Reference Currencies.20 The Index is
designed to measure daily gold bullion
returns as though an investor had
invested in Gold in terms of the FX
Basket comprised of the Reference
Currencies reflected in the Index. (The
Index is described in more detail below
under the heading ‘‘Description of the
Index’’.)
The U.S. dollar value of an
investment in Shares of the Fund would
therefore be expected to increase when
both the price of Gold goes up and the
value of the U.S. dollar increases against
the value of the Reference Currencies
comprising the FX Basket (as weighted
in the Index). Conversely, the U.S.
dollar value of an investment would be
expected to decrease when the price of
Gold goes down and the value of the
U.S. dollar decreases against the value
of the Reference Currencies comprising
the FX Basket (as weighted in the
Index). If Gold increases and the value
of the U.S. dollar decreases against the
value of the Reference Currencies
comprising the FX Basket, or vice versa,
18 See Securities Exchange Act Release Nos.
53520 (March 20, 2006), 71 FR 14977 (March 24,
2006) (SR–PCX–2005–117) (approving trading on
the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731
(March 4, 2005) (SR–PCX–2004–117) (approving
trading on the Exchange of the streetTRACKS Gold
Trust pursuant to UTP).
19 ‘‘FX Basket’’ means the basket of Reference
Currencies with weighting determined by the Index.
20 ‘‘Gold’’ means gold bullion meeting the
requirements of London Good Delivery Standards.
London Good Delivery Standards are the
specifications for weight dimensions, fineness (or
purity), identifying marks and appearance set forth
in ‘‘The Good Delivery Rules for Gold and Silver
Bars’’ published by the London Bullion Markets
Association (‘‘LBMA’’).
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the net impact of these changes will
determine the value of the Shares of the
Fund on a daily basis.21
The Fund is a passive investment
vehicle and is designed to track the
performance of the Index regardless of:
(i) The value of Gold or any Reference
Currency; (ii) market conditions; and
(iii) whether the Index is increasing or
decreasing in value. The Fund’s
holdings generally will consist entirely
of Gold. Substantially all of the Fund’s
Gold holdings will be delivered by
Authorized Participants (defined below)
in exchange for Fund Shares. The Fund
will not hold any of the Reference
Currencies. The Fund generally will not
hold U.S. dollars (except from time to
time in very limited amounts to pay
expenses). The Fund’s Gold holdings
will not be managed and the Fund will
not have any investment discretion.
The Fund’s net asset value (‘‘NAV’’)
will go up or down each ‘‘Business Day’’
based primarily on two factors.22 The
first is the change in the price of Gold
measured in U.S. dollars from the prior
Business Day. This drives the value of
the Fund’s Gold holdings measured in
U.S. dollars up (as Gold prices increase)
or down (as Gold prices fall). The
second is the change in the value of the
Reference Currencies comprising the FX
Basket against the U.S. dollar from the
prior Business Day. This drives the
value of the Fund’s Gold holdings
measured in the Reference Currencies
comprising the FX Basket up (when the
value of the U.S. dollar against the
Reference Currencies comprising the FX
Basket increases) or down (when the
value of the U.S. dollar against the
Reference Currencies comprising the FX
Basket declines). The value of Gold and
the Reference Currencies comprising the
FX Basket are based on publicly
available, transparent prices—for Gold,
the LBMA Gold Price AM (defined
below), for currencies, the WMR Fix.23
Because the Fund generally will hold
only Gold bullion (and not U.S. dollars
21 For additional information regarding the gold
bullion market, gold futures exchanges, and
regulation of the global gold market, see, e.g.,
Securities Exchange Act Release Nos. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40) (order approving Exchange
listing and trading of the ETFS Gold Trust); and
66627 (March 20, 2012), 77 FR 27817 (May 11,
2012) (SR–NYSE Arca–2012–18) (order approving
Exchange listing and trading of the APMEX
Physical—1 oz. Gold Redeemable Trust).
22 A Business Day with respect to the Fund is any
day the Exchange is open for trading. A Business
Day with respect to the Index generally is any day
on which (i) LBMA Gold prices are established and
(ii) banks are scheduled to be open in the principal
financial center of the jurisdiction in which each
Reference Currency is the lawful currency.
23 The WMR Fix is the World Markets Company
plc foreign exchange benchmark rate.
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or the Reference Currencies), the
economic impact of changes to the value
of the Reference Currencies against the
U.S. dollar from day to day is reflected
in the Fund by moving an amount of
Gold ounces of equivalent value in or
out of the Fund. Therefore, the Fund
will seek to track the performance of the
Index by entering into a transaction
each Business Day with the ‘‘Gold
Delivery Provider’’ pursuant to which
Gold is moved in or out of the Fund.24
The terms of this transaction are set
forth in a written contract between the
Fund and the Gold Delivery Provider
referred to as the ‘‘Gold Delivery
Agreement.’’ Pursuant to the terms of
the Gold Delivery Agreement, the Fund
will deliver Gold to, or receive Gold
from, the Gold Delivery Provider each
Business Day. The amount of Gold
transferred will be equivalent to the
Fund’s profit or loss as if the Fund had
exchanged the Reference Currencies
comprising the FX Basket, in the
proportion in which they are reflected
in the Index, for U.S. dollars in an
amount equal to the Fund’s declared
holdings of Gold on such day. If there
is a currency gain (i.e., the value of the
U.S. dollar against the Reference
Currencies comprising the FX Basket
increases), the Fund will receive Gold.
If there is a currency loss (i.e., the value
of the U.S. dollar against the Reference
Currencies comprising the FX Basket
decreases), the Fund will deliver Gold.25
In this manner, the value of the Gold
held by the Fund will be adjusted to
reflect the daily change in the value of
the Reference Currencies comprising the
FX Basket against the U.S. dollar. The
Gold Delivery Agreement requires Gold
ounces equal to the value of the Gold
Delivery Amount to be delivered to the
custody account of the Fund or Gold
Delivery Provider, as applicable. The fee
that the Fund pays the Gold Delivery
Provider for its services under the Gold
Delivery Agreement will be accrued
daily and reflected in the calculation of
the Gold Delivery Amount.
The Fund does not intend to enter
into any other Gold transactions other
than with the Gold Delivery Provider as
described in the Gold Delivery
24 The Gold Delivery Provider, Merrill Lynch
International, is a company incorporated in England
and Wales and regulated by the Prudential
Regulation Authority (the ‘‘PRA’’) and the Financial
Conduct Authority (the ‘‘FCA’’). The Gold Delivery
Provider will not be affiliated with the Trust, the
Fund, the Sponsor, the Trustee, the Administrator,
the Transfer Agent, the Custodian or the Index
Provider (defined below).
25 If the applicable currency exchange rates did
not change from one day to the next, or the net
impact of such changes was zero, then the Fund
would neither deliver nor receive Gold pursuant to
the Gold Delivery Agreement.
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Agreement (except that the Fund may
sell Gold to cover Fund expenses), and
the Fund does not intend to hold any
Reference Currency or enter into any
currency transactions.
Description of the Index
The Index is maintained and
calculated by a third-party data and
index provider, Solactive AG (the
‘‘Index Provider’’). The Index Provider
will license the Index to the Sponsor for
use in connection with the Trust and
the Fund. The Index Provider is not
affiliated with the Trust, the Fund, the
Sponsor, the trustee for the Trust, the
Administrator, the Transfer Agent, the
Custodian or the Gold Delivery
Provider. The Index Provider is not
affiliated with a broker-dealer. The
Index Provider has adopted policies and
procedures designed to prevent the
spread of material non-public
information about the Index.
The description of the strategy and
methodology underlying the Index,
which will be identified and described
in the Registration Statement, is based
on rules formulated by the Index
Provider (the ‘‘Index Rules’’). The Index
Rules, which will be described in the
Registration Statement, will govern the
calculation and constitution of the
Index and other decisions and actions
related to its maintenance. The Index is
described as a ‘‘notional’’ or ‘‘synthetic’’
portfolio or strategy because there is no
actual portfolio of assets to which any
person is entitled or in which any
person has any ownership interest. The
Index references certain assets (i.e.,
Gold and the Reference Currencies
comprising the FX Basket), the
performance of which will be used as a
reference point for calculating the daily
performance of the Index (the ‘‘Index
Level’’). The Index seeks to track the
daily performance of a long position in
physical Gold and a short position in
the Reference Currencies comprising the
FX Basket (as weighted in the Index). If
the Gold Price (as defined below)
increases and the Reference Currencies
comprising the FX Basket depreciate
against the U.S. dollar, the Index Level
will increase. Conversely, if the Gold
Price decreases and the Reference
Currencies comprising the FX Basket
appreciate against the U.S. dollar, the
Index Level will decrease. In certain
cases, the appreciation of the Gold Price
or the depreciation of the FX Basket
comprised of the Reference Currencies
may be offset by the appreciation of the
FX Basket comprised of the Reference
Currencies or the depreciation of the
Gold Price, as applicable. The net
impact of these changes determines the
Index Level on a daily basis.
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40383
The Index values Gold on a daily
basis using the ‘‘Gold Price.’’ The Gold
Price generally is the LBMA Gold Price
AM. The ‘‘LBMA Gold Price’’ means the
price per troy ounce of Gold stated in
U.S. dollars as set via an electronic
auction process run twice daily at 10:30
a.m. and 3:00 p.m., London time each
Business Day as calculated and
administered by ICE Benchmark
Administration Limited (‘‘IBA’’) and
published by LBMA on its Web site. The
‘‘LBMA Gold Price AM’’ is the 10:30
a.m. LBMA Gold Price. IBA, an
independent specialist benchmark
administrator, provides the price
platform, methodology and the overall
administration and governance for the
LBMA Gold Price.
As noted herein, the term ‘‘Reference
Currencies’’ refers to the following nonU.S. currencies: The euro, Japanese yen,
British pound sterling, Canadian dollar,
Swedish krona and Swiss franc. Each
Reference Currency comprising the FX
Basket is expressed in terms of a
number of foreign currency units
relative to one U.S. dollar (e.g., a
number of Japanese yen per one U.S.
dollar) or in terms of a number of U.S.
dollars per one unit of the reference
currency (e.g., a number of U.S. dollars
per one euro).
The Index references European Union
euro (‘‘euro’’ or ‘‘EUR’’), the Japanese
yen (‘‘JPY’’ or ‘‘yen’’), the British pound
sterling (‘‘GBP’’), the Swiss franc
(‘‘CHF’’), the Canadian dollar (‘‘CAD’’)
and the Swedish Krona (‘‘SEK’’) (each of
which is measured against U.S. dollars).
The weightings of each currency
referenced are as follows: Euro (57.6%),
yen (13.6%), GBP (11.9%), CAD (9.1%),
SEK (4.2%) and CHF (3.6%).
Reference Currency Index values
generally are calculated using the
published WM/Reuters (‘‘WMR’’) Spot
Rate (‘‘Spot Rate’’) as of 9:00 a.m.,
London time associated with each
Reference Currency.26 The ‘‘Spot Rate’’
26 The Spot Rate is calculated by WMR using
observable data from arms-length transactions
between buyers and sellers in the applicable
currency market. The World Markets Company plc
(‘‘WM’’) provides an exchange rate service that
publishes Spot Rates at fixed times throughout the
global trading day. WM does not use a panel or
polling solicitation process to obtain underlying
data in the benchmark calculation process. WM
uses transactional data to set ‘‘Trade Rates,’’
reflecting data from actual transactions entered into
on an arm’s length basis between buyers and sellers
in that market, where that data is available and
reflects sufficient liquidity. In a market where lower
liquidity exists, ‘‘Order Rates’’ will be used to set
the Spot Rate, based predominantly or exclusively
on bid and offer rates, or from prior transactions.
The Thomson Reuters Market Data System is the
primary infrastructure used to source spot foreign
exchange rates used in the calculation of the rates.
Other systems may be used where the appropriate
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Federal Register / Vol. 81, No. 119 / Tuesday, June 21, 2016 / Notices
is the rate at which a Reference
Currency comprising the FX Basket can
be exchanged for U.S. dollars on an
immediate basis, subject to the
applicable settlement cycle. Thus, if an
investor wanted to convert U.S. dollars
into euros, the investor could enter into
a spot transaction at the Spot Rate
(subject to the bid/ask) and would
receive euros in a number of days,
depending on the settlement cycle of
that currency. Generally, the settlement
of a ‘‘spot’’ transaction is two currency
business days (except in the case of
Canadian dollars, which settle on the
next business day). The following table
Reference currency
EUR/USD
USD/JPY
GBP/USD
USD/CAD
USD/SEK
USD/CHF
Reuters page
...........................................................
............................................................
...........................................................
...........................................................
............................................................
............................................................
Market convention for quotation
USDEURFIX=WM ............................................
USDJPYFIX=WM .............................................
USDGBPFIX=WM ............................................
USDCADFIX=WM ............................................
USDSEKFIX=WM ............................................
USDCHFFIX=WM ............................................
Number
Number
Number
Number
Number
Number
of
of
of
of
of
of
USD per one EUR.
JPY per one USD.
USD per one GBP.
CAD per one USD.
SEK per one USD.
CHF per one USD.
the Gold Delivery Agreement is accrued
daily and reflected in the calculation of
the Gold Delivery Amount.
If the Gold Delivery Amount is a
positive number (meaning that the Fund
has experienced a currency gain on the
notional short position in the FX Basket
comprised of Reference Currencies), the
Gold Delivery Provider will transfer to
the Fund’s custody account an amount
of Gold (in ounces) equal to the Gold
Delivery Amount. If the Gold Delivery
Amount is a negative number (meaning
that the Fund has experienced a
currency loss on the notional short
position in the FX Basket comprised of
Reference Currencies), the Fund will
transfer to the Gold Delivery Provider’s
custody account an amount of Gold (in
ounces) equal to the Gold Delivery
Amount.
The Fund has entered into a written
contract with the Gold Delivery
Provider. Subject to the terms of the
Gold Delivery Agreement, on a daily
basis, the Gold Delivery Provider will (i)
calculate the Gold Delivery Amount and
(ii) deliver Gold ounces equal to the
U.S. dollar value of the Gold Delivery
Amount into or out of the Fund. The
Gold Delivery Amount is the amount of
Gold ounces to be delivered into or out
of the Fund on a daily basis to reflect
price movements in the Reference
Currencies comprising the FX Basket
against the U.S. dollar from the prior
Business Day (assuming no Market
Disruption Event or Extraordinary Event
has occurred or is continuing, as
described in more detail below).
On each Business Day, the Gold
Delivery Provider determines the
notional exposure for each Reference
Currency comprising the FX Basket
based upon their respective Index
weights. The total notional exposure for
each Reference Currency on a Business
Day takes into account the NAV of the
Fund (which takes into account creation
and redemption orders received on that
day).
The Gold Delivery Provider then
determines the ‘‘FX PnL’’ which
captures the effect of changes in the
daily value of the Reference Currencies
comprising the FX Basket in their
respective weights by calculating the
change in the Spot Rate from the prior
Business Day to the current Business
Day and adjusting that change to reflect
a notional spot-next trade because
delivery of currencies is not being taken.
The Gold Delivery Provider may use
another rate if any Spot Rate is delayed
or unavailable as set forth in the Gold
Delivery Agreement. The Gold Delivery
Provider generally will make this
calculation outside of U.S. market hours
(at approximately 4:00 a.m. E.T.) based
on the prices of the Reference
Currencies comprising the FX Basket
published at the ‘‘WMR FX Fixing
Time,’’ which is generally at 9:00 a.m.,
London Time.
The FX PnL is divided by the Gold
Price (i.e., the LBMA Gold Price AM) to
determine the Gold Delivery Amount.
The fee that the Fund pays the Gold
Delivery Provider for its services under
rates are not available on the Thomson Reuters
architecture. Over a five-minute fix period, actual
trades executed and bid and offer order rates from
the order matching systems are captured every
second from 2 minutes 30 seconds before to 2
minutes 30 seconds after the time of the fix. From
each data source, a single traded rate will be
captured—this will be identified as a bid or offer
depending on whether the trade is a buy or sell. A
pre-defined spread set for each currency at each fix
will be applied to the Trade Rate to calculate the
opposite bid or offer. All captured trades will be
subjected to validation checks. This may result in
some captured data being excluded from the fix
calculation. The WMR methodology guide is
available at: https://www.wmcompany.com/pdfs/
WMReutersMethodology.pdf.
Settlement in most spot currency
transactions is two currency business
days after the trade date. A ‘‘spot-next
trade’’ effectively extends the spot
settlement cycle by one Business Day
(i.e., the ‘‘next’’ day) and a ‘‘spot-next
forward point’’ represents the difference
in price between a spot transaction and
a spot-next trade. Combining a spot-next
trade with a spot transaction allows for
exposure to the currency without taking
delivery. By entering on each Business
Day into notional spot-next trades that
are closed the next Business Day against
spot transactions, the Index is exposed
to the Reference Currencies comprising
the FX Basket without having to take
delivery of these currencies. The Index
approximates the cost of entering into a
spot-next trade by linearly interpolating
the cost of that trade based on the WM/
Reuters ‘‘SW—Spot Week (One Week)’’
forward rates and a spot transaction.
In general, the Index is calculated by
the Index Provider each Business Day,
unless there is a ‘‘Market Disruption
Event’’ or ‘‘Extraordinary Event’’ as
described below.
The Gold Delivery Agreement
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sets forth the Reference Currencies
comprising the FX Basket (each of
which is measured against U.S. dollars),
the applicable ‘‘Reuters Page’’ for each
Spot Rate referenced by the Index and
the market convention for quoting such
currency.
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Market Disruption and Extraordinary
Events
From time to time, unexpected events
may cause the calculation of the Index
and/or the operation of the Fund to be
disrupted. These events are expected to
be relatively rare, but there can be no
guarantee that these events will not
occur. These events are referred to as
either ‘‘Market Disruption Events’’ or
‘‘Extraordinary Events’’ depending
largely on their significance and
potential impact to the Index and Fund.
Market Disruption Events generally
include disruptions in the trading of
Gold or the Reference Currencies
comprising the FX Basket, delays or
disruptions in the publication of the
LBMA Gold Price or the Reference
Currency prices, and unusual market or
other events that are tied to either the
trading of gold or the Reference
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Currencies comprising the FX Basket or
otherwise have a significant impact on
the trading of gold or the Reference
Currencies comprising the FX Basket.
For example, market conditions or other
events which result in a material
limitation in, or a suspension of, the
trading of physical Gold generally
would be considered Market Disruption
Events, as would material disruptions or
delays in the determination or
publication of the LBMA Gold Price
AM. Similarly, market conditions which
prevent, restrict or delay the Gold
Delivery Provider’s ability to convert a
Reference Currency to U.S. dollars or
deliver a Reference Currency through
customary channels generally would be
considered a Market Disruption Event,
as would material disruptions or delays
in the determination or publication of
WMR spot prices for any Reference
Currency comprising the FX Basket. The
complete definition of a Market
Disruption Event is set forth below.
A ‘‘Market Disruption Event’’ occurs
if either an ‘‘FX Basket Disruption
Event’’ or a ‘‘Gold Disruption Event’’
occurs.
An ‘‘FX Basket Disruption Event’’
occurs if any of the following exist on
any ‘‘Index Business Day’’ 27 with
respect to the Reference Currencies
comprising the FX Basket:
(i) an event, circumstance or cause
(including, without limitation, the
adoption of or any change in any
applicable law or regulation) that has
had or would reasonably be expected to
have a materially adverse effect on the
availability of a market for converting
such Reference Currency to U.S. Dollars
(or vice versa), whether due to market
illiquidity, illegality, the adoption of or
change in any law or other regulatory
instrument, inconvertibility,
establishment of dual exchange rates or
foreign exchange controls or the
occurrence or existence of any other
circumstance or event, as determined by
the Index Sponsor; or
(ii) the failure of Reuters to announce
or publish the relevant spot exchange
rates for any Reference Currency in the
FX Basket; or
(iii) any event or any condition that (I)
results in a lack of liquidity in the
market for trading any Reference
Currency that makes it impossible or
illegal for market participants (a) to
convert from one currency to another
27 An ‘‘Index Business Day’’ is (i) any day that is
a business day in New York and London, (ii) any
day (other than a Saturday or Sunday) on which the
LBMA is scheduled to publish the LBMA Gold
Price AM, and (iii) any day (other than a Saturday
or Sunday) on which WM Company is scheduled
to publish prices for each of the Reference Currency
pairs comprising the FX Basket.
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through customary commercial
channels, (b) to effect currency
transactions in, or to obtain market
values of, such, currency, (c) to obtain
a firm quote for the related exchange
rate, or (d) to obtain the relevant
exchange rate by reference to the
applicable price source; or (II) leads to
any governmental entity imposing rules
that effectively set the prices of any of
the currencies; or
(iv) the declaration of (a) a banking
moratorium or the suspension of
payments by banks, in either case, in the
country of any currency used to
determine any Reference Currency
exchange rate, or (b) capital and/or
currency controls (including, without
limitation, any restriction placed on
assets in or transactions through any
account through which a non-resident
of the country of any currency used to
determine the currency exchange rate
may hold assets or transfer monies
outside the country of that currency,
and any restriction on the transfer of
funds, securities or other assets of
market participants from, within or
outside of the country of any currency
used to determine the applicable
exchange rate.
A ‘‘Gold Disruption Event’’ occurs if
any of the following exist on any Index
Business Day with respect to gold:
(i)(a) the failure of the LBMA to
announce or publish the LBMA Gold
Price (or the information necessary for
determining the price of gold) on that
Index Business Day, (b) the temporary
or permanent discontinuance or
unavailability of the LBMA or the
LBMA Gold Price; or
(ii) the material suspension of, or
material limitation imposed on, trading
in Gold by the LBMA; or
(iii) an event that causes market
participants to be unable to deliver gold
bullion loco London under rules of the
LBMA by credit to an unallocated
account at a member of the LBMA; or
(iv) the permanent discontinuation of
trading of gold on the LBMA or any
successor body thereto, the
disappearance of, or of trading in, gold;
or
(v) a material change in the formula
for or the method of calculating the
price of gold, or a material change in the
content, composition or constitution of
gold.
The occurrence of a Market
Disruption Event for five Index Business
Days generally would be considered an
Extraordinary Event for the Index and
Fund.
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Consequences of a Market Disruption or
Extraordinary Event
On any Index Business Day in which
a Market Disruption Event or
Extraordinary Event has occurred or is
continuing, the Index Provider generally
will calculate the Index based on the
following fallback procedures: (i) Where
the Market Disruption Event is based on
the Gold Price, the Index will be kept at
the same level as the previous Index
Business Day and updated when the
Gold Price is no longer disrupted; (ii)
where the Gold Price is not disrupted
but one of the Reference Currency prices
is disrupted, the Index will be
calculated in the ordinary course except
that the disrupted Reference Currency
will be kept at its value from the
previous Index Business Day and
updated when it is no longer disrupted;
and (iii) if both the Gold Price and a
Reference Currency price are disrupted,
the Index will be kept at the same level
as the previous Index Business Day and
updated when such prices are no longer
disrupted. If a Market Disruption Event
has occurred and is continuing for five
(5) or more consecutive Index Business
Days, the Index Provider will calculate
a substitute price for each index
component that is disrupted. If an
Extraordinary Event has occurred and is
continuing, the Index Provider shall be
responsible for making any decisions
regarding the future composition of the
Index and implement any necessary
adjustments that might be required. If
necessary, the Fund may use alternate
pricing sources to calculate NAV during
the occurrence of any Market Disruption
or Extraordinary event.28 The Fund will
not calculate NAV during the
occurrence of a Market Disruption Event
or Extraordinary Event with respect to
the price of gold.
The London Gold Bullion Market
Although the market for physical gold
is global, most over-the-counter, or
‘‘OTC’’, trades are cleared through
London. In addition to coordinating
market activities, the LBMA acts as the
principal point of contact between the
market and its regulators. A primary
function of the LBMA is its involvement
in the promotion of refining standards
by maintenance of the ‘‘London Good
Delivery Lists,’’ which are the lists of
LBMA accredited melters and assayers
of gold. The LBMA also coordinates
market clearing and vaulting, promotes
good trading practices and develops
standard documentation.
28 The Exchange may suspend trading in the
Shares in the event the Sponsor suspends the right
of redemptions.
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The term ‘‘loco London’’ refers to gold
bars physically held in London that
meet the specifications for weight,
dimensions, fineness (or purity),
identifying marks (including the assay
stamp of a LBMA acceptable refiner)
and appearance set forth in ‘‘The Good
Delivery Rules for Gold and Silver Bars’’
published by the LBMA. Gold bars
meeting these requirements are known
as ‘‘London Good Delivery Bars.’’ All of
the gold held by the Fund will be
London Good Delivery Bars meeting the
specifications for weight, dimensions,
fineness (or purity), identifying marks
and appearance of gold bars as set forth
in ‘‘The Good Delivery Rules for Gold
and Silver Bars’’ published by the
LBMA.
The unit of trade in London is the troy
ounce, whose conversion between
grams is: 1,000 grams = 32.1507465 troy
ounces and 1 troy ounce = 31.1034768
grams. A London Good Delivery Bar is
acceptable for delivery in settlement of
a transaction on the OTC market.
Typically referred to as 400-ounce bars,
a London Good Delivery Bar must
contain between 350 and 430 fine troy
ounces of gold, with a minimum
fineness (or purity) of 995 parts per
1,000 (99.5%), be of good appearance
and be easy to handle and stack. The
fine gold content of a gold bar is
calculated by multiplying the gross
weight of the bar (expressed in units of
0.025 troy ounces) by the fineness of the
bar.
The LBMA Gold Price
IBA hosts a physically settled,
electronic and tradeable auction process
that provides a market-based platform
for buyers and sellers to trade physical
spot Gold. The final auction price is
used and published to the market as the
‘‘LBMA Gold Price benchmark.’’ The
LBMA Gold Price is set twice daily at
10:30 a.m., London time and 3:00 p.m.,
London time in three currencies: U.S.
dollars, euro and British pounds
sterling. The LBMA Gold Price is a
widely used benchmark for the physical
spot price of Gold and is quoted by
various financial information sources.
Participants in the IBA auction
process submit anonymous bids and
offers which are published on screen
and in real-time. Throughout the
auction process, aggregated Gold bids
and offers are updated in real-time with
the imbalance calculated and the price
updated every 45 seconds until the buy
and sell orders are matched. When the
net volume of all participants falls
within a pre-determined tolerance, the
auction is deemed complete and the
applicable LBMA Gold Price is
published. Information about the
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Jkt 238001
auction process (such as aggregated bid
and offer volumes) will be immediately
available after the auction on the IBA’s
Web site.
The LBMA Gold Price replaced the
widely used ‘‘London Gold Fix’’ as of
March 20, 2015.
The Gold Futures Markets
Although the Fund will not invest in
gold futures, information about the gold
futures market is relevant as such
markets contribute to, and provide
evidence of, the liquidity of the overall
market for Gold.
The most significant gold futures
exchange is COMEX, part of the CME
Group, Inc., which began to offer trading
in gold futures contracts in 1974.
TOCOM (Tokyo Commodity Exchange)
is another significant futures exchange
and has been trading gold since 1982.
Trading on these exchanges is based on
fixed delivery dates and transaction
sizes for the futures and options
contracts traded. Trading costs are
negotiable. As a matter of practice, only
a small percentage of the futures market
turnover ever comes to physical
delivery of the gold represented by the
contracts traded. Both exchanges permit
trading on margin. Both COMEX and
TOCOM operate through a central
clearance system and in each case, the
clearing organization acts as a
counterparty for each member for
clearing purposes. Gold futures
contracts also are traded on the
Shanghai Gold Exchange and the
Shanghai Futures Exchange.
The global gold markets are overseen
and regulated by both governmental and
self-regulatory organizations. In
addition, certain trade associations have
established rules and protocols for
market practices and participants.
Net Asset Value
The Administrator will determine the
NAV of Shares of the Fund each
Business Day, unless there is a Market
Disruption Event or Extraordinary Event
based on the Gold Price. The NAV of
Shares of the Fund is the aggregate
value of the Fund’s assets (which
include gold payable, but not yet
delivered, to the Fund) less its liabilities
(which include accrued but unpaid fees
and expenses). The NAV of the Fund
will be calculated based on the price of
Gold per ounce applied against the
number of ounces of Gold owned by the
Fund. The number of ounces of Gold
held by the Fund is adjusted up or
down on a daily basis to reflect the Gold
Delivery Amount. The number of
ounces of Gold held by the Fund also
reflects the amount of Gold delivered
into (or out of) the Fund on a daily basis
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by Authorized Participants (as described
below) creating and redeeming Shares.
In determining the Fund’s NAV, the
Administrator generally will value the
Gold held by the Fund based on the
LBMA Gold Price AM for an ounce of
Gold (though other sources may be used
if the LBMA Gold Price AM is delayed
or unavailable). Although the Fund will
not hold the Reference Currencies, the
Gold Delivery Provider generally will
value the Reference Currencies based on
the rates in effect as of the WMR FX
Fixing Time, which is generally at 9:00
a.m., London Time (though other prices
may be used if the 9:00 a.m. rate is
delayed or unavailable). The
Administrator will also determine the
NAV per Share, which equals the NAV
of the Fund, divided by the number of
outstanding Shares. Unless there is a
Market Disruption Event or
Extraordinary Event with respect to the
price of gold, NAV generally will be
calculated as of 12:00 p.m. E.T.
Creation and Redemption of Shares
The Fund expects to create and
redeem Shares but only in Creation
Units (a Creation Unit equals a block of
10,000 Shares or more). The creation
and redemption of Creation Units
requires the delivery to the Fund (or the
distribution by the Fund in the case of
redemptions) of the amount of Gold and
any cash, if any, represented by the
Creation Units being created or
redeemed. The total amount of Gold and
cash, if any, required for the creation of
Creation Units will be based on the
combined NAV of the number of
Creation Units being created or
redeemed. The initial amount of Gold
required for deposit with the Fund to
create Shares is 1,000 ounces per
Creation Unit. The number of ounces of
Gold required to create a Creation Unit
or to be delivered upon redemption of
a Creation Unit will change over time
depending on Index performance net of
the fees charged by the Fund and the
Gold Delivery Provider. Creation Units
may be created or redeemed only by
‘‘Authorized Participants’’ (as described
below), who may be required to pay a
transaction fee for each order to create
or redeem Creation Units as will be set
forth in the Registration Statement.
Authorized Participants may sell to
other investors all or part of the Shares
included in the Creation Units they
purchase from the Fund.
Creation Procedures—Authorized
Participants
Authorized Participants are the only
persons that may place orders to create
and redeem Creation Units. To become
an Authorized Participant, a person
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must enter into a Participant Agreement.
All Gold bullion must be delivered to
the Fund and distributed by the Fund in
unallocated form through credits and
debits between an Authorized
Participant’s unallocated account
(‘‘Authorized Participant Unallocated
Account’’) and the Fund’s unallocated
account (‘‘Fund Unallocated Account’’)
(except for Gold delivered to or from the
Gold Delivery Provider pursuant to the
Gold Delivery Agreement). All Gold
bullion must be of at least a minimum
fineness (or purity) of 995 parts per
1,000 (99.5%) and otherwise conform to
the rules, regulations practices and
customs of the LBMA, including the
specifications for a London Good
Delivery Bar.
On any Business Day, an Authorized
Participant may place an order with the
Fund to create one or more Creation
Units. Purchase orders must be placed
by 5:30 p.m., Eastern time (‘‘E.T.’’). The
day on which the Fund receives a valid
purchase order is the purchase order
date. By placing a purchase order, an
Authorized Participant agrees to deposit
Gold with the Fund, or a combination
of Gold and cash, if any, as described
below.29 Prior to the delivery of
Creation Units for a purchase order, the
Authorized Participant must also have
wired to the Fund the non-refundable
transaction fee due for the purchase
order.
The total deposit of Gold (and cash,
if any) required to create each Creation
Unit is referred to as the ‘‘Creation Unit
Gold Delivery Amount.’’ The Creation
Unit Gold Delivery Amount is the
number of ounces of Gold required to be
delivered to the Fund by an Authorized
Participant in connection with a
creation order for a single Creation
Unit.30 The Creation Unit Gold Delivery
Amount will be determined on the
Business Day following the date such
creation order is accepted. It is
calculated by multiplying the number of
Shares in a Creation Unit by the number
of ounces of Gold associated with Fund
Shares on the Business Day after the day
the creation order is accepted. In
addition, because the Gold Delivery
Amount for the Fund does not reflect
creation order transactions (see the
section herein entitled ‘‘The Gold
Delivery Agreement’’), the Creation Unit
Gold Delivery Amount is required to
29 The Sponsor anticipates that in the ordinary
course of the Fund’s operations cash generally will
not be part of any Creation Unit.
30 The ‘‘Creation Unit Gold Delivery Amount’’ is
also used to refer to the number of ounces of Gold
to be paid by the Fund to an Authorized Participant
in connection with the redemption of a Creation
Unit. See ‘‘Redemption Procedures—Authorized
Participants’’ herein.
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reflect the Gold Delivery Amount
associated with such creation order.
This amount is determined on the
Business Day following the date such
creation order is accepted.
An Authorized Participant who places
a purchase order is responsible for
crediting its Authorized Participant
Unallocated Account with the required
Gold deposit amount by the end of the
third Business Day in London following
the purchase order date. Upon receipt of
the Gold deposit amount, the Custodian,
after receiving appropriate instructions
from the Authorized Participant and the
Fund, will transfer on the third Business
Day following the purchase order date
the Gold deposit amount from the
Authorized Participant Unallocated
Account to the Fund Unallocated
Account and the Administrator will
direct the Depository Trust Company
(‘‘DTC’’) to credit the number of
Creation Units ordered to the
Authorized Participant’s DTC account.
The expense and risk of delivery,
ownership and safekeeping of Gold
until such Gold has been received by
the Fund will be borne solely by the
Authorized Participant. If Gold is to be
delivered other than as described above,
the Sponsor is authorized to establish
such procedures and to appoint such
custodians and establish such custody
accounts as the Sponsor determines to
be desirable.
Acting on standing instructions given
by the Fund, the Custodian will transfer
the Gold deposit amount from the Fund
Unallocated Account to the Fund’s
allocated account by allocating to the
allocated account specific bars of Gold
which the Custodian holds or
instructing a subcustodian to allocate
specific bars of Gold held by or for the
subcustodian. The Gold bars in an
allocated Gold account are specific to
that account and are identified by a list
which shows, for each Gold bar, the
refiner, assay or fineness, serial number
and gross and fine weight. Gold held in
the Fund’s allocated account is the
property of the Fund and is not traded,
leased or loaned under any
circumstances.
The Custodian will use commercially
reasonable efforts to complete the
transfer of Gold to the Fund’s allocated
account prior to the time by which the
Administrator is to credit the Creation
Unit to the Authorized Participant’s
DTC account; if, however, such transfers
have not been completed by such time,
the number of Creation Units ordered
will be delivered against receipt of the
Gold deposit amount in the Fund’s
unallocated account, and all
Shareholders will be exposed to the
risks of unallocated Gold to the extent
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40387
of that Gold deposit amount until the
Custodian completes the allocation
process.
Redemption Procedures—Authorized
Participants
The procedures by which an
Authorized Participant can redeem one
or more Creation Units mirror the
procedures for the creation of Creation
Units. On any Business Day, an
Authorized Participant may place an
order with the Fund to redeem one or
more Creation Units. Redemption orders
must be placed by 5:30 p.m. E.T. A
redemption order so received is
effective on the date it is received in
satisfactory form by the Fund. An
Authorized Participant may be required
to pay a transaction fee per order to
create or redeem Creation Units as will
be set forth in the Registration
Statement.
The redemption distribution from the
Fund consists of a credit in the amount
of the Creation Unit Gold Delivery
Amount to the Authorized Participant
Unallocated Account of the redeeming
Authorized Participant. The Creation
Unit Delivery Amount for redemptions
is the number of ounces of Gold held by
the Fund associated with the Shares
being redeemed plus, or minus, the cash
redemption amount (if any). The
Sponsor anticipates that in the ordinary
course of the Fund’s operations there
will be no cash distributions made to
Authorized Participants upon
redemptions. In addition, because the
Gold to be paid out in connection with
the redemption order will decrease the
amount of Gold subject to the Gold
Delivery Agreement, the Creation Unit
Gold Delivery Amount reflects the cost
to the Gold Delivery Provider of resizing
(i.e., decreasing) its positions so that it
can fulfill its obligations under the Gold
Delivery Agreement.
The redemption distribution due from
the Fund is delivered to the Authorized
Participant on the third Business Day
following the redemption order date if,
by 10:00 a.m. E.T. on such third
Business Day, the Fund’s DTC account
has been credited with the Creation
Units to be redeemed. If the
Administrator’s DTC account has not
been credited with all of the Creation
Units to be redeemed by such time, the
redemption distribution is delivered to
the extent of whole Creation Units
received. Any remainder of the
redemption distribution is delivered on
the next Business Day to the extent of
remaining whole Creation Units
received if the Administrator receives
the fee applicable to the extension of the
redemption distribution date which the
Administrator may, from time to time,
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determine and the remaining Creation
Units to be redeemed are credited to the
Administrator’s DTC account by 10:00
a.m. E.T. on such next Business Day.
Any further outstanding amount of the
redemption order will be cancelled. The
Administrator is also authorized to
deliver the redemption distribution
notwithstanding that the Creation Units
to be redeemed are not credited to the
Administrator’s DTC account by 10:00
a.m. E.T. on the third Business Day
following the redemption order date if
the Authorized Participant has
collateralized its obligation to deliver
the Creation Units through DTC’s book
entry system on such terms as the
Sponsor and the Administrator may
from time to time agree upon.
The Custodian transfers the
redemption Gold amount from the
Fund’s allocated account to the Fund’s
unallocated account and, thereafter, to
the redeeming Authorized Participant’s
Authorized Participant Unallocated
Account.
The Fund may, in its discretion,
suspend the right of redemption, or
postpone the redemption settlement
date for: (1) Any period during which
NYSE Arca is closed other than
customary weekend or holiday closings,
or trading on NYSE Arca is suspended
or restricted, and (2) any period during
which an emergency exists as a result of
which delivery, disposal or evaluation
of Gold or any Reference Currency is not
reasonably practicable, or (3) such other
period as the Sponsor determines to be
necessary for the protection of the
Shareholders, such as during the
occurrence of a Market Disruption Event
or Extraordinary Event based on the
Gold Price.
The Fund will reject a redemption
order if (i) the order is not in proper
form as described in the Participant
Agreement, (ii) the fulfillment of the
order, in the opinion of its counsel,
might be unlawful, (iii) the order would
have adverse tax consequences to the
Fund or its Shareholders or (iv)
circumstances outside the control of the
Administrator, the Sponsor or the
Custodian make the redemption, for all
practical purposes, not feasible to
process.
Secondary Market Trading
While the Fund’s investment
objective is for the Shares to reflect the
performance of Gold bullion in terms of
the Reference Currencies reflected in the
Index, less the expenses of the Fund, the
Shares may trade in the secondary
market at prices that are lower or higher
relative to their NAV per Share. The
amount of the discount or premium in
the trading price relative to the NAV per
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18:37 Jun 20, 2016
Jkt 238001
Share may be influenced by nonconcurrent trading hours between the
NYSE Arca and the COMEX, London,
Zurich and Singapore. While the Shares
will trade on NYSE Arca until 8:00 p.m.
E.T., liquidity in the global gold market
will be reduced after the close of the
COMEX at 1:30 p.m. E.T. As a result,
during this time, trading spreads, and
the resulting premium or discount, on
the Shares may widen.
Fund Expenses
The Sponsor will receive an annual
fee equal to 0.33% of the daily NAV of
the Fund. In return the Sponsor will be
responsible for the payment of the
ordinary fees and expenses of the Fund,
including the Administrator’s fee, the
Custodian’s fee, the Gold Delivery
Provider’s fee, and the Index Provider’s
fee. This will be the case regardless of
whether the ordinary expenses of the
Fund exceed 0.33% of the daily NAV of
the Fund. In addition, the Fund will pay
the Gold Delivery Provider an annual
fee of 0.17% of the daily NAV, so that
the Fund’s total annual expense ratio
will be equal to 0.50%. The Sponsor’s
fee and payment to the Gold Delivery
Provider are expected to be the only
ordinary recurring expenses of the
Fund.
Availability of Information Regarding
Gold and Reference Currency Prices
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of a commodity, such as
gold, or the spot price of the Reference
Currencies, over the Consolidated Tape.
However, there will be disseminated
over the Consolidated Tape the last sale
price for the Shares, as is the case for
all equity securities traded on the
Exchange (including exchange-traded
funds). In addition, there is a
considerable amount of information
about gold and currency prices and gold
and currency markets available on
public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour
basis gold pricing information based on
the spot price for an ounce of Gold and
pricing information for the Reference
Currencies from various financial
information service providers, such as
Reuters and Bloomberg.
Reuters and Bloomberg, for example,
provide at no charge on their Web sites
delayed information regarding the spot
price of Gold and last sale prices of Gold
futures, as well as information about
news and developments in the gold
market. Reuters and Bloomberg also
offer a professional service to
subscribers for a fee that provides
information on Gold prices directly
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
from market participants. Complete realtime data for Gold futures and options
prices traded on the COMEX are
available by subscription from Reuters
and Bloomberg. There are a variety of
other public Web sites providing
information on gold, ranging from those
specializing in precious metals to sites
maintained by major newspapers. In
addition, the LBMA Gold Price is
publicly available at no charge at
www.lbma.org.uk.
In addition, Reuters and Bloomberg,
for example, provide at no charge on
their Web sites delayed information
regarding the spot price of each
Reference Currency, as well as
information about news and
developments in the currency markets.
Reuters and Bloomberg also offer a
professional service to subscribers for a
fee that provides information on
currency transactions directly from
market participants. Complete real-time
data for currency transactions are
available by subscription from Reuters
and Bloomberg. There are a variety of
other public Web sites providing
information about the Reference
Currencies and currency transactions,
ranging from those specializing in
currency trading to sites maintained by
major newspapers.
Availability of Information
The Fund Web site will provide an
intraday indicative value (‘‘IIV’’) per
Share for the Shares updated every 15
seconds, as calculated by the Exchange
or a third party financial data provider
during the Exchange’s Core Trading
Session (9:30 a.m. to 4:00 p.m. E.T.).
The IIV will be calculated based on the
amount of Gold held by the Fund and
(i) a price of Gold derived from updated
bids and offers indicative of the spot
price of Gold, and (ii) intra-day
exchange rates for each Reference
Currency against the U.S. dollar.31 The
Fund’s Web site will also provide the
Creation Basket Deposit and the NAV of
the Fund as calculated each Business
Day by the Sponsor.
In addition, the Web site for the Fund
will contain the following information,
on a per Share basis, for the Fund: (a)
The mid-point of the bid-ask price 32 at
the close of trading (‘‘Bid/Ask Price’’),
and a calculation of the premium or
discount of such price against such
NAV; and (b) data in chart format
31 The IIV on a per Share basis disseminated
during the Core Trading Session should not be
viewed as a real-time update of the NAV, which is
calculated once a day.
32 The bid-ask price of the Trust will be
determined using the highest bid and lowest offer
on the Consolidated Tape as of the time of
calculation of the closing day NAV.
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displaying the frequency distribution of
discounts and premiums of the Bid/Ask
Price against the NAV, within
appropriate ranges, for each of the four
previous calendar quarters. The Web
site for the Fund will also provide the
Fund’s prospectus, as well as the two
most recent reports to stockholders.
Finally, the Fund Web site will provide
the last sale price of the Shares as traded
in the U.S. market. In addition, the
Exchange will make available over the
Consolidated Tape quotation
information, trading volume, closing
prices and NAV for the Shares from the
previous day. The Index value will be
calculated daily using the daily LBMA
Gold Price AM and the Spot Rate as of
9:00 a.m., London time. The Index value
will be available from major market data
vendors.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Criteria for Initial and Continued Listing
The Fund will be subject to the
criteria in NYSE Arca Equities Rule
8.201(e) for initial and continued listing
of the Shares.
A minimum of 100,000 Shares will be
required to be outstanding at the start of
trading. The minimum number of shares
required to be outstanding is
comparable to requirements that have
been applied to previously listed shares
of the Sprott Physical Gold Trust, ETFS
Trusts, streetTRACKS Gold Trust, the
iShares COMEX Gold Trust, and the
iShares Silver Trust. The Exchange
believes that the anticipated minimum
number of Shares outstanding at the
start of trading is sufficient to provide
adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Fund subject to the Exchange’s
existing rules governing the trading of
equity securities. Trading in the Shares
on the Exchange will occur in
accordance with NYSE Arca Equities
Rule 7.34(a). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. 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.
Further, NYSE Arca Equities Rule
8.201 sets forth certain restrictions on
ETP Holders acting as registered Market
Makers in the Shares to facilitate
surveillance. Pursuant to NYSE Arca
Equities Rule 8.201(g), an ETP Holder
acting as a registered Market Maker in
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18:37 Jun 20, 2016
Jkt 238001
the Shares is required to provide the
Exchange with information relating to
its trading in the underlying gold,
related futures or options on futures, or
any other related derivatives.
Commentary .04 of NYSE Arca Equities
Rule 6.3 requires an ETP Holder acting
as a registered Market Maker, and its
affiliates, in the Shares to establish,
maintain and enforce written policies
and procedures reasonably designed to
prevent the misuse of any material
nonpublic information with respect to
such products, any components of the
related products, any physical asset or
commodity underlying the product,
applicable currencies, underlying
indexes, related futures or options on
futures, and any related derivative
instruments (including the Shares).
As a general matter, the Exchange has
regulatory jurisdiction over its ETP
Holders and their associated persons,
which include any person or entity
controlling an ETP Holder. A subsidiary
or affiliate of an ETP Holder that does
business only in commodities or futures
contracts would not be subject to
Exchange jurisdiction, but the Exchange
could obtain information regarding the
activities of such subsidiary or affiliate
through surveillance sharing agreements
with regulatory organizations of which
such subsidiary or affiliate is a member.
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
Trading on the Exchange in the Shares
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. These may
include: (1) The extent to which
conditions in the underlying gold
market have caused disruptions and/or
lack of trading, or (2) whether other
unusual conditions or circumstances
detrimental to the maintenance of a fair
and orderly market are present. In
addition, trading in Shares will be
subject to trading halts caused by
extraordinary market volatility pursuant
to the Exchange’s ‘‘circuit breaker’’
rule.33 The Exchange will halt trading in
the Shares if the NAV of the Trust is not
calculated or disseminated daily. The
Exchange may halt trading during the
day in which an interruption occurs to
the dissemination of the IIV, as
described above. If the interruption to
the dissemination of the IIV persists
past the trading day in which it occurs,
the Exchange will halt trading no later
than the beginning of the trading day
following the interruption.
33 See
PO 00000
NYSE Arca Equities Rule 7.12.
Frm 00131
Fmt 4703
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40389
Surveillance
The Exchange represents that trading
in the Shares will be subject to the
existing trading surveillances
administered by the Exchange, as well
as cross-market surveillances
administered by the Financial Industry
Regulatory Authority (‘‘FINRA’’) on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws.34 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 federal
securities laws applicable to trading on
the Exchange.
The surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
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 or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares with other markets
and other entities that are members of
the ISG, and the Exchange or FINRA, on
behalf of the Exchange, or both, may
obtain trading information regarding
trading in the Shares from such markets
and other entities. In addition, the
Exchange may obtain information
regarding trading in the Shares from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.35
Also, pursuant to NYSE Arca Equities
Rule 8.201(g), the Exchange is able to
obtain information regarding trading in
the Shares and the underlying gold, gold
futures contracts, options on gold
futures, or any other gold derivative,
through ETP Holders acting as
registered Market Makers, in connection
with such ETP Holders’ proprietary or
customer trades through ETP Holders
which they effect on any relevant
market.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
34 FINRA conducts cross-market surveillances on
behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for
FINRA’s performance under this regulatory services
agreement.
35 For a list of the current members of ISG, see
www.isgportal.org.
E:\FR\FM\21JNN1.SGM
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Federal Register / Vol. 81, No. 119 / Tuesday, June 21, 2016 / Notices
asabaliauskas on DSK3SPTVN1PROD with NOTICES
All statements and representations
made in this filing regarding (a) the
description of the portfolio, (b)
limitations on portfolio holdings or
reference assets, or (c) the applicability
of Exchange rules and surveillance
procedures shall constitute continued
listing requirements for listing the
Shares of the Fund on the Exchange.
The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will monitor for
compliance with the continued listing
requirements. If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Equities Rule 5.5(m).
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Baskets
(including noting that Shares are not
individually redeemable); (2) NYSE
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
ETP Holders to learn the essential facts
relating to every customer prior to
trading the Shares; (3) how information
regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; (5) the possibility that
trading spreads and the resulting
premium or discount on the Shares may
widen as a result of reduced liquidity of
gold trading during the Core and Late
Trading Sessions after the close of the
major world gold markets; and (6)
trading information. For example, the
Information Bulletin will advise ETP
Holders, prior to the commencement of
trading, of the prospectus delivery
requirements applicable to the Fund.
The Exchange notes that investors
purchasing Shares directly from the
Fund (by delivery of the Creation Basket
Deposit) will receive a prospectus. ETP
Holders purchasing Shares from the
Fund for resale to investors will deliver
a prospectus to such investors.
In addition, the Information Bulletin
will reference that the Fund is subject
to various fees and expenses as will be
described in the Registration Statement.
The Information Bulletin will also
VerDate Sep<11>2014
18:37 Jun 20, 2016
Jkt 238001
reference the fact that there is no
regulated source of last sale information
regarding physical gold, that the
Commission has no jurisdiction over the
trading of gold as a physical commodity,
and that the CFTC has regulatory
jurisdiction over the trading of gold
futures contracts and options on gold
futures contracts.
The Information Bulletin will also
discuss any relief, if granted, by the
Commission or the staff from any rules
under the Act.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under section 6(b)(5) 36 that an exchange
have rules that are designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Shares will
be listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Equities
Rule 8.201. The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that there is a
considerable amount of gold price and
gold market information available on
public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour basis
gold pricing information based on the
spot price for an ounce of gold from
various financial information service
providers. Investors may obtain gold
pricing information based on the spot
price for an ounce of gold from various
financial information service providers.
Current spot prices also are generally
available with bid/ask spreads from gold
bullion dealers. In addition, the Fund’s
Web site will provide pricing
information for gold spot prices and the
Shares. Market prices for the Shares will
36 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00132
Fmt 4703
Sfmt 4703
be available from a variety of sources
including brokerage firms, information
Web sites and other information service
providers. The NAV of the Fund will be
published by the Sponsor on each day
that the NYSE Arca is open for regular
trading and will be posted on the Fund’s
Web site. The IIV relating to the Shares
will be widely disseminated by one or
more major market data vendors at least
every 15 seconds during the Core
Trading Session. In addition, the LBMA
Gold Price is publicly available at no
charge at www.lbma.org.uk. The Fund’s
Web site will also provide the Fund’s
prospectus, as well as the two most
recent reports to stockholders. In
addition, the Exchange will make
available over the Consolidated Tape
quotation information, trading volume,
closing prices and NAV for the Shares
from the previous day.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it 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.
As noted above, the Exchange has in
place surveillance procedures relating to
trading in the Shares and may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. In addition, as noted
above, investors will have ready access
to information regarding gold pricing.
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. The
Exchange believes the proposed rule
change will enhance competition by
accommodating Exchange trading of an
additional exchange-traded product
relating to physical gold.
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
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Federal Register / Vol. 81, No. 119 / Tuesday, June 21, 2016 / Notices
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve 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:
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2016–84 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2016–84. This
file number should be included on the
subject line if email 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
VerDate Sep<11>2014
18:37 Jun 20, 2016
Jkt 238001
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2016–84, and should be
submitted on or before July 12, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–14556 Filed 6–20–16; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #14744 and #14745]
Texas Disaster #TX–00472
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for the State of Texas (FEMA–
4272–DR), dated 06/11/2016.
Incident: Severe Storms and Flooding.
Incident Period: 05/26/2016 and
continuing.
Effective Date: 06/11/2016.
Physical Loan Application Deadline
Date: 08/10/2016.
Economic Injury (EIDL) Loan
Application Deadline Date: 03/11/2017.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
06/11/2016, applications for disaster
loans may be filed at the address listed
above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties (Physical Damage and
Economic Injury Loans): Austin,
Brazoria, Brazos, Fort Bend, Grimes,
Hidalgo, Hood, Montgomery, San
Jacinto, Travis, Waller, Washington.
Contiguous Counties (Economic Injury
Loans Only):
Texas: Bastrop, Blanco, Brooks,
Burleson, Burnet, Caldwell,
Cameron, Colorado, Erath, Fayette,
Galveston, Harris, Hays, Johnson,
SUMMARY:
37 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00133
Fmt 4703
Sfmt 4703
40391
Kenedy, Lee, Leon, Liberty,
Madison, Matagorda, Palo Pinto,
Parker, Polk, Robertson, Somervell,
Starr, Trinity, Walker, Wharton,
Willacy, Williamson.
The Interest Rates are:
Percent
For Physical Damage:
Homeowners With Credit Available Elsewhere ......................
Homeowners Without Credit
Available Elsewhere ..............
Businesses With Credit Available Elsewhere ......................
Businesses
Without
Credit
Available Elsewhere ..............
Non-Profit Organizations With
Credit Available Elsewhere ...
Non-Profit Organizations Without Credit Available Elsewhere .....................................
For Economic Injury:
Businesses & Small Agricultural
Cooperatives Without Credit
Available Elsewhere ..............
Non-Profit Organizations Without Credit Available Elsewhere .....................................
3.250
1.625
6.250
4.000
2.625
2.625
4.000
2.625
The number assigned to this disaster
for physical damage is 147446 and for
economic injury is 147450.
(Catalog of Federal Domestic Assistance
Number 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2016–14421 Filed 6–20–16; 8:45 am]
BILLING CODE 8025–01–P
DEPARTMENT OF STATE
[Public Notice: 9612]
Notice of Public Meeting
As required by the Federal
Advisory Committee Act, Public Law
92–463, the Department of State gives
notice of a meeting of the Advisory
Committee on International Postal and
Delivery Services. This Committee will
meet on Wednesday July 20, 2016, from
1:00 p.m. to 5:00 p.m. Eastern Time at
the American Institute of Architects,
Board Room, 1735 New York Avenue
NW., Washington, DC 20006.
Any member of the public interested
in providing input to the meeting
should contact Ms. Shereece Robinson,
whose contact information is listed
below (see the ‘‘for further information’’
section of this notice). Each individual
providing oral input is requested to
limit his or her comments to five
minutes. Requests to be added to the
speakers list must be received in writing
(letter or email) prior to the close of
SUMMARY:
E:\FR\FM\21JNN1.SGM
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]]>Agencies
[Federal Register Volume 81, Number 119 (Tuesday, June 21, 2016)]
[Notices]
[Pages 40381-40391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14556]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78075; File No. SR-NYSEArca-2016-84]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the Global Currency
Gold Fund Under NYSE Arca Equities Rule 8.201
June 15, 2016.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 1, 2016, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the Global
Currency Gold Fund under NYSE Arca Equities Rule 8.201. The proposed
rule change is available on the Exchange's Web site at www.nyse.com, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade (``Shares'') of the Global
Currency Gold Fund (the ``Fund''), a series of the Global Gold Currency
Trust (Trust''), under NYSE Arca Equities Rule 8.201.\4\ Under NYSE
Arca Equities Rule 8.201, the Exchange may propose to list and/or trade
pursuant to unlisted trading privileges (``UTP'') ``Commodity-Based
Trust Shares.'' \5\
---------------------------------------------------------------------------
\4\ On May 26, 2016, the Trust filed with the Commission an
amended registration statement on Form S-1 under the Securities Act
of 1933 (``1933 Act'') relating to the Fund (File No. 333-206640)
(``Registration Statement''). The description of the operation of
the Trust and the Fund herein is based, in part, on the Registration
Statement.
\5\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
---------------------------------------------------------------------------
The Fund will not be registered as an investment company under the
Investment Company Act of 1940 \6\ and is not required to register
under such act.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 80a-1.
---------------------------------------------------------------------------
The Sponsor of the Fund and the Trust will be WGC USA Asset
Management Company, LLC (the ``Sponsor'').\7\ BNY Mellon Asset
[[Page 40382]]
Servicing, a division of The Bank of New York Mellon (``BNYM''), will
be the Fund's administrator (``Administrator'') and transfer agent
(``Transfer Agent'') and will not be affiliated with the Trust, the
Fund or the Sponsor. BNYM will also serve as the custodian of the
Fund's cash, if any. HSBC Bank plc will be the custodian (the
``Custodian'') of the Fund's Gold (defined below).
---------------------------------------------------------------------------
\7\ The Trust will be a Delaware statutory trust consisting of
multiple series, each of which will issue common units of beneficial
interest, which represent units of fractional undivided beneficial
interest in and ownership of such series. The term of the Trust and
each series will be perpetual (unless terminated earlier in certain
circumstances). The trustee for the Fund's trust (``Trustee'') will
be a Delaware Trust Company, the sole trustee with respect to the
Fund.
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The Commission has previously approved listing on the Exchange
under NYSE Arca Equities Rules 5.2(j)(5) and 8.201 of other precious
metals and gold-based commodity trusts, including the Merk Gold Trust;
\8\ ETFS Gold Trust,\9\ ETFS Platinum Trust \10\ and ETFS Palladium
Trust (collectively, the ``ETFS Trusts''); \11\APMEX Physical--1 oz.
Gold Redeemable Trust; \12\ Sprott Gold Trust; \13\ SPDR Gold Trust
(formerly, streetTRACKS Gold Trust); iShares Silver Trust; \14\ and
iShares COMEX Gold Trust.\15\ Prior to their listing on the Exchange,
the Commission approved listing of the streetTRACKS Gold Trust on the
New York Stock Exchange (``NYSE'') \16\ and listing of iShares COMEX
Gold Trust and iShares Silver Trust on the American Stock Exchange
LLC.\17\ In addition, the Commission has approved trading of the
streetTRACKS Gold Trust and iShares Silver Trust on the Exchange
pursuant to UTP.\18\
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\8\ Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
\9\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\10\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\11\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\12\ Securities Exchange Act Release No. 66930 (May 7, 2012), 77
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
\13\ Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
\14\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust)).
\15\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\16\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE).
\17\ See Securities Exchange Act Release Nos. 51058 (January 19,
2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order
approving listing of iShares COMEX Gold Trust on the American Stock
Exchange LLC); 53521 (March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR-Amex-2005-72) (approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
\18\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
---------------------------------------------------------------------------
Operation of the Fund
Gold bullion typically is priced and traded throughout the world in
U.S. dollars. The Fund has been established as an alternative to
traditional dollar-based gold investing. Although investors will
purchase shares of the Fund with U.S. dollars, the Fund is designed to
provide investors with the economic effect of holding gold in terms of
a specific basket of major, non-U.S. currencies, such as the euro,
Japanese yen and British pound (each, a ``Reference Currency''), rather
than the U.S. dollar. Specifically, the Fund will seek to track the
performance of the GLD[supreg] Long USD Gold Index, less Fund expenses.
The GLD[supreg] Long USD Gold Index, or the ``Index'', represents the
daily performance of a long position in physical gold and a short
position in the FX Basket \19\ comprised of each of the Reference
Currencies.\20\ The Index is designed to measure daily gold bullion
returns as though an investor had invested in Gold in terms of the FX
Basket comprised of the Reference Currencies reflected in the Index.
(The Index is described in more detail below under the heading
``Description of the Index''.)
---------------------------------------------------------------------------
\19\ ``FX Basket'' means the basket of Reference Currencies with
weighting determined by the Index.
\20\ ``Gold'' means gold bullion meeting the requirements of
London Good Delivery Standards. London Good Delivery Standards are
the specifications for weight dimensions, fineness (or purity),
identifying marks and appearance set forth in ``The Good Delivery
Rules for Gold and Silver Bars'' published by the London Bullion
Markets Association (``LBMA'').
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The U.S. dollar value of an investment in Shares of the Fund would
therefore be expected to increase when both the price of Gold goes up
and the value of the U.S. dollar increases against the value of the
Reference Currencies comprising the FX Basket (as weighted in the
Index). Conversely, the U.S. dollar value of an investment would be
expected to decrease when the price of Gold goes down and the value of
the U.S. dollar decreases against the value of the Reference Currencies
comprising the FX Basket (as weighted in the Index). If Gold increases
and the value of the U.S. dollar decreases against the value of the
Reference Currencies comprising the FX Basket, or vice versa, the net
impact of these changes will determine the value of the Shares of the
Fund on a daily basis.\21\
---------------------------------------------------------------------------
\21\ For additional information regarding the gold bullion
market, gold futures exchanges, and regulation of the global gold
market, see, e.g., Securities Exchange Act Release Nos. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (order
approving Exchange listing and trading of the ETFS Gold Trust); and
66627 (March 20, 2012), 77 FR 27817 (May 11, 2012) (SR-NYSE Arca-
2012-18) (order approving Exchange listing and trading of the APMEX
Physical--1 oz. Gold Redeemable Trust).
---------------------------------------------------------------------------
The Fund is a passive investment vehicle and is designed to track
the performance of the Index regardless of: (i) The value of Gold or
any Reference Currency; (ii) market conditions; and (iii) whether the
Index is increasing or decreasing in value. The Fund's holdings
generally will consist entirely of Gold. Substantially all of the
Fund's Gold holdings will be delivered by Authorized Participants
(defined below) in exchange for Fund Shares. The Fund will not hold any
of the Reference Currencies. The Fund generally will not hold U.S.
dollars (except from time to time in very limited amounts to pay
expenses). The Fund's Gold holdings will not be managed and the Fund
will not have any investment discretion.
The Fund's net asset value (``NAV'') will go up or down each
``Business Day'' based primarily on two factors.\22\ The first is the
change in the price of Gold measured in U.S. dollars from the prior
Business Day. This drives the value of the Fund's Gold holdings
measured in U.S. dollars up (as Gold prices increase) or down (as Gold
prices fall). The second is the change in the value of the Reference
Currencies comprising the FX Basket against the U.S. dollar from the
prior Business Day. This drives the value of the Fund's Gold holdings
measured in the Reference Currencies comprising the FX Basket up (when
the value of the U.S. dollar against the Reference Currencies
comprising the FX Basket increases) or down (when the value of the U.S.
dollar against the Reference Currencies comprising the FX Basket
declines). The value of Gold and the Reference Currencies comprising
the FX Basket are based on publicly available, transparent prices--for
Gold, the LBMA Gold Price AM (defined below), for currencies, the WMR
Fix.\23\
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\22\ A Business Day with respect to the Fund is any day the
Exchange is open for trading. A Business Day with respect to the
Index generally is any day on which (i) LBMA Gold prices are
established and (ii) banks are scheduled to be open in the principal
financial center of the jurisdiction in which each Reference
Currency is the lawful currency.
\23\ The WMR Fix is the World Markets Company plc foreign
exchange benchmark rate.
---------------------------------------------------------------------------
Because the Fund generally will hold only Gold bullion (and not
U.S. dollars
[[Page 40383]]
or the Reference Currencies), the economic impact of changes to the
value of the Reference Currencies against the U.S. dollar from day to
day is reflected in the Fund by moving an amount of Gold ounces of
equivalent value in or out of the Fund. Therefore, the Fund will seek
to track the performance of the Index by entering into a transaction
each Business Day with the ``Gold Delivery Provider'' pursuant to which
Gold is moved in or out of the Fund.\24\ The terms of this transaction
are set forth in a written contract between the Fund and the Gold
Delivery Provider referred to as the ``Gold Delivery Agreement.''
Pursuant to the terms of the Gold Delivery Agreement, the Fund will
deliver Gold to, or receive Gold from, the Gold Delivery Provider each
Business Day. The amount of Gold transferred will be equivalent to the
Fund's profit or loss as if the Fund had exchanged the Reference
Currencies comprising the FX Basket, in the proportion in which they
are reflected in the Index, for U.S. dollars in an amount equal to the
Fund's declared holdings of Gold on such day. If there is a currency
gain (i.e., the value of the U.S. dollar against the Reference
Currencies comprising the FX Basket increases), the Fund will receive
Gold. If there is a currency loss (i.e., the value of the U.S. dollar
against the Reference Currencies comprising the FX Basket decreases),
the Fund will deliver Gold.\25\ In this manner, the value of the Gold
held by the Fund will be adjusted to reflect the daily change in the
value of the Reference Currencies comprising the FX Basket against the
U.S. dollar. The Gold Delivery Agreement requires Gold ounces equal to
the value of the Gold Delivery Amount to be delivered to the custody
account of the Fund or Gold Delivery Provider, as applicable. The fee
that the Fund pays the Gold Delivery Provider for its services under
the Gold Delivery Agreement will be accrued daily and reflected in the
calculation of the Gold Delivery Amount.
---------------------------------------------------------------------------
\24\ The Gold Delivery Provider, Merrill Lynch International, is
a company incorporated in England and Wales and regulated by the
Prudential Regulation Authority (the ``PRA'') and the Financial
Conduct Authority (the ``FCA''). The Gold Delivery Provider will not
be affiliated with the Trust, the Fund, the Sponsor, the Trustee,
the Administrator, the Transfer Agent, the Custodian or the Index
Provider (defined below).
\25\ If the applicable currency exchange rates did not change
from one day to the next, or the net impact of such changes was
zero, then the Fund would neither deliver nor receive Gold pursuant
to the Gold Delivery Agreement.
---------------------------------------------------------------------------
The Fund does not intend to enter into any other Gold transactions
other than with the Gold Delivery Provider as described in the Gold
Delivery Agreement (except that the Fund may sell Gold to cover Fund
expenses), and the Fund does not intend to hold any Reference Currency
or enter into any currency transactions.
Description of the Index
The Index is maintained and calculated by a third-party data and
index provider, Solactive AG (the ``Index Provider''). The Index
Provider will license the Index to the Sponsor for use in connection
with the Trust and the Fund. The Index Provider is not affiliated with
the Trust, the Fund, the Sponsor, the trustee for the Trust, the
Administrator, the Transfer Agent, the Custodian or the Gold Delivery
Provider. The Index Provider is not affiliated with a broker-dealer.
The Index Provider has adopted policies and procedures designed to
prevent the spread of material non-public information about the Index.
The description of the strategy and methodology underlying the
Index, which will be identified and described in the Registration
Statement, is based on rules formulated by the Index Provider (the
``Index Rules''). The Index Rules, which will be described in the
Registration Statement, will govern the calculation and constitution of
the Index and other decisions and actions related to its maintenance.
The Index is described as a ``notional'' or ``synthetic'' portfolio or
strategy because there is no actual portfolio of assets to which any
person is entitled or in which any person has any ownership interest.
The Index references certain assets (i.e., Gold and the Reference
Currencies comprising the FX Basket), the performance of which will be
used as a reference point for calculating the daily performance of the
Index (the ``Index Level''). The Index seeks to track the daily
performance of a long position in physical Gold and a short position in
the Reference Currencies comprising the FX Basket (as weighted in the
Index). If the Gold Price (as defined below) increases and the
Reference Currencies comprising the FX Basket depreciate against the
U.S. dollar, the Index Level will increase. Conversely, if the Gold
Price decreases and the Reference Currencies comprising the FX Basket
appreciate against the U.S. dollar, the Index Level will decrease. In
certain cases, the appreciation of the Gold Price or the depreciation
of the FX Basket comprised of the Reference Currencies may be offset by
the appreciation of the FX Basket comprised of the Reference Currencies
or the depreciation of the Gold Price, as applicable. The net impact of
these changes determines the Index Level on a daily basis.
The Index values Gold on a daily basis using the ``Gold Price.''
The Gold Price generally is the LBMA Gold Price AM. The ``LBMA Gold
Price'' means the price per troy ounce of Gold stated in U.S. dollars
as set via an electronic auction process run twice daily at 10:30 a.m.
and 3:00 p.m., London time each Business Day as calculated and
administered by ICE Benchmark Administration Limited (``IBA'') and
published by LBMA on its Web site. The ``LBMA Gold Price AM'' is the
10:30 a.m. LBMA Gold Price. IBA, an independent specialist benchmark
administrator, provides the price platform, methodology and the overall
administration and governance for the LBMA Gold Price.
As noted herein, the term ``Reference Currencies'' refers to the
following non-U.S. currencies: The euro, Japanese yen, British pound
sterling, Canadian dollar, Swedish krona and Swiss franc. Each
Reference Currency comprising the FX Basket is expressed in terms of a
number of foreign currency units relative to one U.S. dollar (e.g., a
number of Japanese yen per one U.S. dollar) or in terms of a number of
U.S. dollars per one unit of the reference currency (e.g., a number of
U.S. dollars per one euro).
The Index references European Union euro (``euro'' or ``EUR''), the
Japanese yen (``JPY'' or ``yen''), the British pound sterling
(``GBP''), the Swiss franc (``CHF''), the Canadian dollar (``CAD'') and
the Swedish Krona (``SEK'') (each of which is measured against U.S.
dollars). The weightings of each currency referenced are as follows:
Euro (57.6%), yen (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%) and CHF
(3.6%).
Reference Currency Index values generally are calculated using the
published WM/Reuters (``WMR'') Spot Rate (``Spot Rate'') as of 9:00
a.m., London time associated with each Reference Currency.\26\ The
``Spot Rate''
[[Page 40384]]
is the rate at which a Reference Currency comprising the FX Basket can
be exchanged for U.S. dollars on an immediate basis, subject to the
applicable settlement cycle. Thus, if an investor wanted to convert
U.S. dollars into euros, the investor could enter into a spot
transaction at the Spot Rate (subject to the bid/ask) and would receive
euros in a number of days, depending on the settlement cycle of that
currency. Generally, the settlement of a ``spot'' transaction is two
currency business days (except in the case of Canadian dollars, which
settle on the next business day). The following table sets forth the
Reference Currencies comprising the FX Basket (each of which is
measured against U.S. dollars), the applicable ``Reuters Page'' for
each Spot Rate referenced by the Index and the market convention for
quoting such currency.
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\26\ The Spot Rate is calculated by WMR using observable data
from arms-length transactions between buyers and sellers in the
applicable currency market. The World Markets Company plc (``WM'')
provides an exchange rate service that publishes Spot Rates at fixed
times throughout the global trading day. WM does not use a panel or
polling solicitation process to obtain underlying data in the
benchmark calculation process. WM uses transactional data to set
``Trade Rates,'' reflecting data from actual transactions entered
into on an arm's length basis between buyers and sellers in that
market, where that data is available and reflects sufficient
liquidity. In a market where lower liquidity exists, ``Order Rates''
will be used to set the Spot Rate, based predominantly or
exclusively on bid and offer rates, or from prior transactions. The
Thomson Reuters Market Data System is the primary infrastructure
used to source spot foreign exchange rates used in the calculation
of the rates. Other systems may be used where the appropriate rates
are not available on the Thomson Reuters architecture. Over a five-
minute fix period, actual trades executed and bid and offer order
rates from the order matching systems are captured every second from
2 minutes 30 seconds before to 2 minutes 30 seconds after the time
of the fix. From each data source, a single traded rate will be
captured--this will be identified as a bid or offer depending on
whether the trade is a buy or sell. A pre-defined spread set for
each currency at each fix will be applied to the Trade Rate to
calculate the opposite bid or offer. All captured trades will be
subjected to validation checks. This may result in some captured
data being excluded from the fix calculation. The WMR methodology
guide is available at: https://www.wmcompany.com/pdfs/WMReutersMethodology.pdf.
------------------------------------------------------------------------
Market convention
Reference currency Reuters page for quotation
------------------------------------------------------------------------
EUR/USD..................... USDEURFIX=WM........ Number of USD per
one EUR.
USD/JPY..................... USDJPYFIX=WM........ Number of JPY per
one USD.
GBP/USD..................... USDGBPFIX=WM........ Number of USD per
one GBP.
USD/CAD..................... USDCADFIX=WM........ Number of CAD per
one USD.
USD/SEK..................... USDSEKFIX=WM........ Number of SEK per
one USD.
USD/CHF..................... USDCHFFIX=WM........ Number of CHF per
one USD.
------------------------------------------------------------------------
Settlement in most spot currency transactions is two currency
business days after the trade date. A ``spot-next trade'' effectively
extends the spot settlement cycle by one Business Day (i.e., the
``next'' day) and a ``spot-next forward point'' represents the
difference in price between a spot transaction and a spot-next trade.
Combining a spot-next trade with a spot transaction allows for exposure
to the currency without taking delivery. By entering on each Business
Day into notional spot-next trades that are closed the next Business
Day against spot transactions, the Index is exposed to the Reference
Currencies comprising the FX Basket without having to take delivery of
these currencies. The Index approximates the cost of entering into a
spot-next trade by linearly interpolating the cost of that trade based
on the WM/Reuters ``SW--Spot Week (One Week)'' forward rates and a spot
transaction.
In general, the Index is calculated by the Index Provider each
Business Day, unless there is a ``Market Disruption Event'' or
``Extraordinary Event'' as described below.
The Gold Delivery Agreement
The Fund has entered into a written contract with the Gold Delivery
Provider. Subject to the terms of the Gold Delivery Agreement, on a
daily basis, the Gold Delivery Provider will (i) calculate the Gold
Delivery Amount and (ii) deliver Gold ounces equal to the U.S. dollar
value of the Gold Delivery Amount into or out of the Fund. The Gold
Delivery Amount is the amount of Gold ounces to be delivered into or
out of the Fund on a daily basis to reflect price movements in the
Reference Currencies comprising the FX Basket against the U.S. dollar
from the prior Business Day (assuming no Market Disruption Event or
Extraordinary Event has occurred or is continuing, as described in more
detail below).
On each Business Day, the Gold Delivery Provider determines the
notional exposure for each Reference Currency comprising the FX Basket
based upon their respective Index weights. The total notional exposure
for each Reference Currency on a Business Day takes into account the
NAV of the Fund (which takes into account creation and redemption
orders received on that day).
The Gold Delivery Provider then determines the ``FX PnL'' which
captures the effect of changes in the daily value of the Reference
Currencies comprising the FX Basket in their respective weights by
calculating the change in the Spot Rate from the prior Business Day to
the current Business Day and adjusting that change to reflect a
notional spot-next trade because delivery of currencies is not being
taken. The Gold Delivery Provider may use another rate if any Spot Rate
is delayed or unavailable as set forth in the Gold Delivery Agreement.
The Gold Delivery Provider generally will make this calculation outside
of U.S. market hours (at approximately 4:00 a.m. E.T.) based on the
prices of the Reference Currencies comprising the FX Basket published
at the ``WMR FX Fixing Time,'' which is generally at 9:00 a.m., London
Time.
The FX PnL is divided by the Gold Price (i.e., the LBMA Gold Price
AM) to determine the Gold Delivery Amount. The fee that the Fund pays
the Gold Delivery Provider for its services under the Gold Delivery
Agreement is accrued daily and reflected in the calculation of the Gold
Delivery Amount.
If the Gold Delivery Amount is a positive number (meaning that the
Fund has experienced a currency gain on the notional short position in
the FX Basket comprised of Reference Currencies), the Gold Delivery
Provider will transfer to the Fund's custody account an amount of Gold
(in ounces) equal to the Gold Delivery Amount. If the Gold Delivery
Amount is a negative number (meaning that the Fund has experienced a
currency loss on the notional short position in the FX Basket comprised
of Reference Currencies), the Fund will transfer to the Gold Delivery
Provider's custody account an amount of Gold (in ounces) equal to the
Gold Delivery Amount.
Market Disruption and Extraordinary Events
From time to time, unexpected events may cause the calculation of
the Index and/or the operation of the Fund to be disrupted. These
events are expected to be relatively rare, but there can be no
guarantee that these events will not occur. These events are referred
to as either ``Market Disruption Events'' or ``Extraordinary Events''
depending largely on their significance and potential impact to the
Index and Fund. Market Disruption Events generally include disruptions
in the trading of Gold or the Reference Currencies comprising the FX
Basket, delays or disruptions in the publication of the LBMA Gold Price
or the Reference Currency prices, and unusual market or other events
that are tied to either the trading of gold or the Reference
[[Page 40385]]
Currencies comprising the FX Basket or otherwise have a significant
impact on the trading of gold or the Reference Currencies comprising
the FX Basket. For example, market conditions or other events which
result in a material limitation in, or a suspension of, the trading of
physical Gold generally would be considered Market Disruption Events,
as would material disruptions or delays in the determination or
publication of the LBMA Gold Price AM. Similarly, market conditions
which prevent, restrict or delay the Gold Delivery Provider's ability
to convert a Reference Currency to U.S. dollars or deliver a Reference
Currency through customary channels generally would be considered a
Market Disruption Event, as would material disruptions or delays in the
determination or publication of WMR spot prices for any Reference
Currency comprising the FX Basket. The complete definition of a Market
Disruption Event is set forth below.
A ``Market Disruption Event'' occurs if either an ``FX Basket
Disruption Event'' or a ``Gold Disruption Event'' occurs.
An ``FX Basket Disruption Event'' occurs if any of the following
exist on any ``Index Business Day'' \27\ with respect to the Reference
Currencies comprising the FX Basket:
---------------------------------------------------------------------------
\27\ An ``Index Business Day'' is (i) any day that is a business
day in New York and London, (ii) any day (other than a Saturday or
Sunday) on which the LBMA is scheduled to publish the LBMA Gold
Price AM, and (iii) any day (other than a Saturday or Sunday) on
which WM Company is scheduled to publish prices for each of the
Reference Currency pairs comprising the FX Basket.
---------------------------------------------------------------------------
(i) an event, circumstance or cause (including, without limitation,
the adoption of or any change in any applicable law or regulation) that
has had or would reasonably be expected to have a materially adverse
effect on the availability of a market for converting such Reference
Currency to U.S. Dollars (or vice versa), whether due to market
illiquidity, illegality, the adoption of or change in any law or other
regulatory instrument, inconvertibility, establishment of dual exchange
rates or foreign exchange controls or the occurrence or existence of
any other circumstance or event, as determined by the Index Sponsor; or
(ii) the failure of Reuters to announce or publish the relevant
spot exchange rates for any Reference Currency in the FX Basket; or
(iii) any event or any condition that (I) results in a lack of
liquidity in the market for trading any Reference Currency that makes
it impossible or illegal for market participants (a) to convert from
one currency to another through customary commercial channels, (b) to
effect currency transactions in, or to obtain market values of, such,
currency, (c) to obtain a firm quote for the related exchange rate, or
(d) to obtain the relevant exchange rate by reference to the applicable
price source; or (II) leads to any governmental entity imposing rules
that effectively set the prices of any of the currencies; or
(iv) the declaration of (a) a banking moratorium or the suspension
of payments by banks, in either case, in the country of any currency
used to determine any Reference Currency exchange rate, or (b) capital
and/or currency controls (including, without limitation, any
restriction placed on assets in or transactions through any account
through which a non-resident of the country of any currency used to
determine the currency exchange rate may hold assets or transfer monies
outside the country of that currency, and any restriction on the
transfer of funds, securities or other assets of market participants
from, within or outside of the country of any currency used to
determine the applicable exchange rate.
A ``Gold Disruption Event'' occurs if any of the following exist on
any Index Business Day with respect to gold:
(i)(a) the failure of the LBMA to announce or publish the LBMA Gold
Price (or the information necessary for determining the price of gold)
on that Index Business Day, (b) the temporary or permanent
discontinuance or unavailability of the LBMA or the LBMA Gold Price; or
(ii) the material suspension of, or material limitation imposed on,
trading in Gold by the LBMA; or
(iii) an event that causes market participants to be unable to
deliver gold bullion loco London under rules of the LBMA by credit to
an unallocated account at a member of the LBMA; or
(iv) the permanent discontinuation of trading of gold on the LBMA
or any successor body thereto, the disappearance of, or of trading in,
gold; or
(v) a material change in the formula for or the method of
calculating the price of gold, or a material change in the content,
composition or constitution of gold.
The occurrence of a Market Disruption Event for five Index Business
Days generally would be considered an Extraordinary Event for the Index
and Fund.
Consequences of a Market Disruption or Extraordinary Event
On any Index Business Day in which a Market Disruption Event or
Extraordinary Event has occurred or is continuing, the Index Provider
generally will calculate the Index based on the following fallback
procedures: (i) Where the Market Disruption Event is based on the Gold
Price, the Index will be kept at the same level as the previous Index
Business Day and updated when the Gold Price is no longer disrupted;
(ii) where the Gold Price is not disrupted but one of the Reference
Currency prices is disrupted, the Index will be calculated in the
ordinary course except that the disrupted Reference Currency will be
kept at its value from the previous Index Business Day and updated when
it is no longer disrupted; and (iii) if both the Gold Price and a
Reference Currency price are disrupted, the Index will be kept at the
same level as the previous Index Business Day and updated when such
prices are no longer disrupted. If a Market Disruption Event has
occurred and is continuing for five (5) or more consecutive Index
Business Days, the Index Provider will calculate a substitute price for
each index component that is disrupted. If an Extraordinary Event has
occurred and is continuing, the Index Provider shall be responsible for
making any decisions regarding the future composition of the Index and
implement any necessary adjustments that might be required. If
necessary, the Fund may use alternate pricing sources to calculate NAV
during the occurrence of any Market Disruption or Extraordinary
event.\28\ The Fund will not calculate NAV during the occurrence of a
Market Disruption Event or Extraordinary Event with respect to the
price of gold.
---------------------------------------------------------------------------
\28\ The Exchange may suspend trading in the Shares in the event
the Sponsor suspends the right of redemptions.
---------------------------------------------------------------------------
The London Gold Bullion Market
Although the market for physical gold is global, most over-the-
counter, or ``OTC'', trades are cleared through London. In addition to
coordinating market activities, the LBMA acts as the principal point of
contact between the market and its regulators. A primary function of
the LBMA is its involvement in the promotion of refining standards by
maintenance of the ``London Good Delivery Lists,'' which are the lists
of LBMA accredited melters and assayers of gold. The LBMA also
coordinates market clearing and vaulting, promotes good trading
practices and develops standard documentation.
[[Page 40386]]
The term ``loco London'' refers to gold bars physically held in
London that meet the specifications for weight, dimensions, fineness
(or purity), identifying marks (including the assay stamp of a LBMA
acceptable refiner) and appearance set forth in ``The Good Delivery
Rules for Gold and Silver Bars'' published by the LBMA. Gold bars
meeting these requirements are known as ``London Good Delivery Bars.''
All of the gold held by the Fund will be London Good Delivery Bars
meeting the specifications for weight, dimensions, fineness (or
purity), identifying marks and appearance of gold bars as set forth in
``The Good Delivery Rules for Gold and Silver Bars'' published by the
LBMA.
The unit of trade in London is the troy ounce, whose conversion
between grams is: 1,000 grams = 32.1507465 troy ounces and 1 troy ounce
= 31.1034768 grams. A London Good Delivery Bar is acceptable for
delivery in settlement of a transaction on the OTC market. Typically
referred to as 400-ounce bars, a London Good Delivery Bar must contain
between 350 and 430 fine troy ounces of gold, with a minimum fineness
(or purity) of 995 parts per 1,000 (99.5%), be of good appearance and
be easy to handle and stack. The fine gold content of a gold bar is
calculated by multiplying the gross weight of the bar (expressed in
units of 0.025 troy ounces) by the fineness of the bar.
The LBMA Gold Price
IBA hosts a physically settled, electronic and tradeable auction
process that provides a market-based platform for buyers and sellers to
trade physical spot Gold. The final auction price is used and published
to the market as the ``LBMA Gold Price benchmark.'' The LBMA Gold Price
is set twice daily at 10:30 a.m., London time and 3:00 p.m., London
time in three currencies: U.S. dollars, euro and British pounds
sterling. The LBMA Gold Price is a widely used benchmark for the
physical spot price of Gold and is quoted by various financial
information sources.
Participants in the IBA auction process submit anonymous bids and
offers which are published on screen and in real-time. Throughout the
auction process, aggregated Gold bids and offers are updated in real-
time with the imbalance calculated and the price updated every 45
seconds until the buy and sell orders are matched. When the net volume
of all participants falls within a pre-determined tolerance, the
auction is deemed complete and the applicable LBMA Gold Price is
published. Information about the auction process (such as aggregated
bid and offer volumes) will be immediately available after the auction
on the IBA's Web site.
The LBMA Gold Price replaced the widely used ``London Gold Fix'' as
of March 20, 2015.
The Gold Futures Markets
Although the Fund will not invest in gold futures, information
about the gold futures market is relevant as such markets contribute
to, and provide evidence of, the liquidity of the overall market for
Gold.
The most significant gold futures exchange is COMEX, part of the
CME Group, Inc., which began to offer trading in gold futures contracts
in 1974. TOCOM (Tokyo Commodity Exchange) is another significant
futures exchange and has been trading gold since 1982. Trading on these
exchanges is based on fixed delivery dates and transaction sizes for
the futures and options contracts traded. Trading costs are negotiable.
As a matter of practice, only a small percentage of the futures market
turnover ever comes to physical delivery of the gold represented by the
contracts traded. Both exchanges permit trading on margin. Both COMEX
and TOCOM operate through a central clearance system and in each case,
the clearing organization acts as a counterparty for each member for
clearing purposes. Gold futures contracts also are traded on the
Shanghai Gold Exchange and the Shanghai Futures Exchange.
The global gold markets are overseen and regulated by both
governmental and self-regulatory organizations. In addition, certain
trade associations have established rules and protocols for market
practices and participants.
Net Asset Value
The Administrator will determine the NAV of Shares of the Fund each
Business Day, unless there is a Market Disruption Event or
Extraordinary Event based on the Gold Price. The NAV of Shares of the
Fund is the aggregate value of the Fund's assets (which include gold
payable, but not yet delivered, to the Fund) less its liabilities
(which include accrued but unpaid fees and expenses). The NAV of the
Fund will be calculated based on the price of Gold per ounce applied
against the number of ounces of Gold owned by the Fund. The number of
ounces of Gold held by the Fund is adjusted up or down on a daily basis
to reflect the Gold Delivery Amount. The number of ounces of Gold held
by the Fund also reflects the amount of Gold delivered into (or out of)
the Fund on a daily basis by Authorized Participants (as described
below) creating and redeeming Shares. In determining the Fund's NAV,
the Administrator generally will value the Gold held by the Fund based
on the LBMA Gold Price AM for an ounce of Gold (though other sources
may be used if the LBMA Gold Price AM is delayed or unavailable).
Although the Fund will not hold the Reference Currencies, the Gold
Delivery Provider generally will value the Reference Currencies based
on the rates in effect as of the WMR FX Fixing Time, which is generally
at 9:00 a.m., London Time (though other prices may be used if the 9:00
a.m. rate is delayed or unavailable). The Administrator will also
determine the NAV per Share, which equals the NAV of the Fund, divided
by the number of outstanding Shares. Unless there is a Market
Disruption Event or Extraordinary Event with respect to the price of
gold, NAV generally will be calculated as of 12:00 p.m. E.T.
Creation and Redemption of Shares
The Fund expects to create and redeem Shares but only in Creation
Units (a Creation Unit equals a block of 10,000 Shares or more). The
creation and redemption of Creation Units requires the delivery to the
Fund (or the distribution by the Fund in the case of redemptions) of
the amount of Gold and any cash, if any, represented by the Creation
Units being created or redeemed. The total amount of Gold and cash, if
any, required for the creation of Creation Units will be based on the
combined NAV of the number of Creation Units being created or redeemed.
The initial amount of Gold required for deposit with the Fund to create
Shares is 1,000 ounces per Creation Unit. The number of ounces of Gold
required to create a Creation Unit or to be delivered upon redemption
of a Creation Unit will change over time depending on Index performance
net of the fees charged by the Fund and the Gold Delivery Provider.
Creation Units may be created or redeemed only by ``Authorized
Participants'' (as described below), who may be required to pay a
transaction fee for each order to create or redeem Creation Units as
will be set forth in the Registration Statement. Authorized
Participants may sell to other investors all or part of the Shares
included in the Creation Units they purchase from the Fund.
Creation Procedures--Authorized Participants
Authorized Participants are the only persons that may place orders
to create and redeem Creation Units. To become an Authorized
Participant, a person
[[Page 40387]]
must enter into a Participant Agreement. All Gold bullion must be
delivered to the Fund and distributed by the Fund in unallocated form
through credits and debits between an Authorized Participant's
unallocated account (``Authorized Participant Unallocated Account'')
and the Fund's unallocated account (``Fund Unallocated Account'')
(except for Gold delivered to or from the Gold Delivery Provider
pursuant to the Gold Delivery Agreement). All Gold bullion must be of
at least a minimum fineness (or purity) of 995 parts per 1,000 (99.5%)
and otherwise conform to the rules, regulations practices and customs
of the LBMA, including the specifications for a London Good Delivery
Bar.
On any Business Day, an Authorized Participant may place an order
with the Fund to create one or more Creation Units. Purchase orders
must be placed by 5:30 p.m., Eastern time (``E.T.''). The day on which
the Fund receives a valid purchase order is the purchase order date. By
placing a purchase order, an Authorized Participant agrees to deposit
Gold with the Fund, or a combination of Gold and cash, if any, as
described below.\29\ Prior to the delivery of Creation Units for a
purchase order, the Authorized Participant must also have wired to the
Fund the non-refundable transaction fee due for the purchase order.
---------------------------------------------------------------------------
\29\ The Sponsor anticipates that in the ordinary course of the
Fund's operations cash generally will not be part of any Creation
Unit.
---------------------------------------------------------------------------
The total deposit of Gold (and cash, if any) required to create
each Creation Unit is referred to as the ``Creation Unit Gold Delivery
Amount.'' The Creation Unit Gold Delivery Amount is the number of
ounces of Gold required to be delivered to the Fund by an Authorized
Participant in connection with a creation order for a single Creation
Unit.\30\ The Creation Unit Gold Delivery Amount will be determined on
the Business Day following the date such creation order is accepted. It
is calculated by multiplying the number of Shares in a Creation Unit by
the number of ounces of Gold associated with Fund Shares on the
Business Day after the day the creation order is accepted. In addition,
because the Gold Delivery Amount for the Fund does not reflect creation
order transactions (see the section herein entitled ``The Gold Delivery
Agreement''), the Creation Unit Gold Delivery Amount is required to
reflect the Gold Delivery Amount associated with such creation order.
This amount is determined on the Business Day following the date such
creation order is accepted.
---------------------------------------------------------------------------
\30\ The ``Creation Unit Gold Delivery Amount'' is also used to
refer to the number of ounces of Gold to be paid by the Fund to an
Authorized Participant in connection with the redemption of a
Creation Unit. See ``Redemption Procedures--Authorized
Participants'' herein.
---------------------------------------------------------------------------
An Authorized Participant who places a purchase order is
responsible for crediting its Authorized Participant Unallocated
Account with the required Gold deposit amount by the end of the third
Business Day in London following the purchase order date. Upon receipt
of the Gold deposit amount, the Custodian, after receiving appropriate
instructions from the Authorized Participant and the Fund, will
transfer on the third Business Day following the purchase order date
the Gold deposit amount from the Authorized Participant Unallocated
Account to the Fund Unallocated Account and the Administrator will
direct the Depository Trust Company (``DTC'') to credit the number of
Creation Units ordered to the Authorized Participant's DTC account. The
expense and risk of delivery, ownership and safekeeping of Gold until
such Gold has been received by the Fund will be borne solely by the
Authorized Participant. If Gold is to be delivered other than as
described above, the Sponsor is authorized to establish such procedures
and to appoint such custodians and establish such custody accounts as
the Sponsor determines to be desirable.
Acting on standing instructions given by the Fund, the Custodian
will transfer the Gold deposit amount from the Fund Unallocated Account
to the Fund's allocated account by allocating to the allocated account
specific bars of Gold which the Custodian holds or instructing a
subcustodian to allocate specific bars of Gold held by or for the
subcustodian. The Gold bars in an allocated Gold account are specific
to that account and are identified by a list which shows, for each Gold
bar, the refiner, assay or fineness, serial number and gross and fine
weight. Gold held in the Fund's allocated account is the property of
the Fund and is not traded, leased or loaned under any circumstances.
The Custodian will use commercially reasonable efforts to complete
the transfer of Gold to the Fund's allocated account prior to the time
by which the Administrator is to credit the Creation Unit to the
Authorized Participant's DTC account; if, however, such transfers have
not been completed by such time, the number of Creation Units ordered
will be delivered against receipt of the Gold deposit amount in the
Fund's unallocated account, and all Shareholders will be exposed to the
risks of unallocated Gold to the extent of that Gold deposit amount
until the Custodian completes the allocation process.
Redemption Procedures--Authorized Participants
The procedures by which an Authorized Participant can redeem one or
more Creation Units mirror the procedures for the creation of Creation
Units. On any Business Day, an Authorized Participant may place an
order with the Fund to redeem one or more Creation Units. Redemption
orders must be placed by 5:30 p.m. E.T. A redemption order so received
is effective on the date it is received in satisfactory form by the
Fund. An Authorized Participant may be required to pay a transaction
fee per order to create or redeem Creation Units as will be set forth
in the Registration Statement.
The redemption distribution from the Fund consists of a credit in
the amount of the Creation Unit Gold Delivery Amount to the Authorized
Participant Unallocated Account of the redeeming Authorized
Participant. The Creation Unit Delivery Amount for redemptions is the
number of ounces of Gold held by the Fund associated with the Shares
being redeemed plus, or minus, the cash redemption amount (if any). The
Sponsor anticipates that in the ordinary course of the Fund's
operations there will be no cash distributions made to Authorized
Participants upon redemptions. In addition, because the Gold to be paid
out in connection with the redemption order will decrease the amount of
Gold subject to the Gold Delivery Agreement, the Creation Unit Gold
Delivery Amount reflects the cost to the Gold Delivery Provider of
resizing (i.e., decreasing) its positions so that it can fulfill its
obligations under the Gold Delivery Agreement.
The redemption distribution due from the Fund is delivered to the
Authorized Participant on the third Business Day following the
redemption order date if, by 10:00 a.m. E.T. on such third Business
Day, the Fund's DTC account has been credited with the Creation Units
to be redeemed. If the Administrator's DTC account has not been
credited with all of the Creation Units to be redeemed by such time,
the redemption distribution is delivered to the extent of whole
Creation Units received. Any remainder of the redemption distribution
is delivered on the next Business Day to the extent of remaining whole
Creation Units received if the Administrator receives the fee
applicable to the extension of the redemption distribution date which
the Administrator may, from time to time,
[[Page 40388]]
determine and the remaining Creation Units to be redeemed are credited
to the Administrator's DTC account by 10:00 a.m. E.T. on such next
Business Day. Any further outstanding amount of the redemption order
will be cancelled. The Administrator is also authorized to deliver the
redemption distribution notwithstanding that the Creation Units to be
redeemed are not credited to the Administrator's DTC account by 10:00
a.m. E.T. on the third Business Day following the redemption order date
if the Authorized Participant has collateralized its obligation to
deliver the Creation Units through DTC's book entry system on such
terms as the Sponsor and the Administrator may from time to time agree
upon.
The Custodian transfers the redemption Gold amount from the Fund's
allocated account to the Fund's unallocated account and, thereafter, to
the redeeming Authorized Participant's Authorized Participant
Unallocated Account.
The Fund may, in its discretion, suspend the right of redemption,
or postpone the redemption settlement date for: (1) Any period during
which NYSE Arca is closed other than customary weekend or holiday
closings, or trading on NYSE Arca is suspended or restricted, and (2)
any period during which an emergency exists as a result of which
delivery, disposal or evaluation of Gold or any Reference Currency is
not reasonably practicable, or (3) such other period as the Sponsor
determines to be necessary for the protection of the Shareholders, such
as during the occurrence of a Market Disruption Event or Extraordinary
Event based on the Gold Price.
The Fund will reject a redemption order if (i) the order is not in
proper form as described in the Participant Agreement, (ii) the
fulfillment of the order, in the opinion of its counsel, might be
unlawful, (iii) the order would have adverse tax consequences to the
Fund or its Shareholders or (iv) circumstances outside the control of
the Administrator, the Sponsor or the Custodian make the redemption,
for all practical purposes, not feasible to process.
Secondary Market Trading
While the Fund's investment objective is for the Shares to reflect
the performance of Gold bullion in terms of the Reference Currencies
reflected in the Index, less the expenses of the Fund, the Shares may
trade in the secondary market at prices that are lower or higher
relative to their NAV per Share. The amount of the discount or premium
in the trading price relative to the NAV per Share may be influenced by
non-concurrent trading hours between the NYSE Arca and the COMEX,
London, Zurich and Singapore. While the Shares will trade on NYSE Arca
until 8:00 p.m. E.T., liquidity in the global gold market will be
reduced after the close of the COMEX at 1:30 p.m. E.T. As a result,
during this time, trading spreads, and the resulting premium or
discount, on the Shares may widen.
Fund Expenses
The Sponsor will receive an annual fee equal to 0.33% of the daily
NAV of the Fund. In return the Sponsor will be responsible for the
payment of the ordinary fees and expenses of the Fund, including the
Administrator's fee, the Custodian's fee, the Gold Delivery Provider's
fee, and the Index Provider's fee. This will be the case regardless of
whether the ordinary expenses of the Fund exceed 0.33% of the daily NAV
of the Fund. In addition, the Fund will pay the Gold Delivery Provider
an annual fee of 0.17% of the daily NAV, so that the Fund's total
annual expense ratio will be equal to 0.50%. The Sponsor's fee and
payment to the Gold Delivery Provider are expected to be the only
ordinary recurring expenses of the Fund.
Availability of Information Regarding Gold and Reference Currency
Prices
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity, such as gold, or the
spot price of the Reference Currencies, over the Consolidated Tape.
However, there will be disseminated over the Consolidated Tape the last
sale price for the Shares, as is the case for all equity securities
traded on the Exchange (including exchange-traded funds). In addition,
there is a considerable amount of information about gold and currency
prices and gold and currency markets available on public Web sites and
through professional and subscription services.
Investors may obtain on a 24-hour basis gold pricing information
based on the spot price for an ounce of Gold and pricing information
for the Reference Currencies from various financial information service
providers, such as Reuters and Bloomberg.
Reuters and Bloomberg, for example, provide at no charge on their
Web sites delayed information regarding the spot price of Gold and last
sale prices of Gold futures, as well as information about news and
developments in the gold market. Reuters and Bloomberg also offer a
professional service to subscribers for a fee that provides information
on Gold prices directly from market participants. Complete real-time
data for Gold futures and options prices traded on the COMEX are
available by subscription from Reuters and Bloomberg. There are a
variety of other public Web sites providing information on gold,
ranging from those specializing in precious metals to sites maintained
by major newspapers. In addition, the LBMA Gold Price is publicly
available at no charge at www.lbma.org.uk.
In addition, Reuters and Bloomberg, for example, provide at no
charge on their Web sites delayed information regarding the spot price
of each Reference Currency, as well as information about news and
developments in the currency markets. Reuters and Bloomberg also offer
a professional service to subscribers for a fee that provides
information on currency transactions directly from market participants.
Complete real-time data for currency transactions are available by
subscription from Reuters and Bloomberg. There are a variety of other
public Web sites providing information about the Reference Currencies
and currency transactions, ranging from those specializing in currency
trading to sites maintained by major newspapers.
Availability of Information
The Fund Web site will provide an intraday indicative value
(``IIV'') per Share for the Shares updated every 15 seconds, as
calculated by the Exchange or a third party financial data provider
during the Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m.
E.T.). The IIV will be calculated based on the amount of Gold held by
the Fund and (i) a price of Gold derived from updated bids and offers
indicative of the spot price of Gold, and (ii) intra-day exchange rates
for each Reference Currency against the U.S. dollar.\31\ The Fund's Web
site will also provide the Creation Basket Deposit and the NAV of the
Fund as calculated each Business Day by the Sponsor.
---------------------------------------------------------------------------
\31\ The IIV on a per Share basis disseminated during the Core
Trading Session should not be viewed as a real-time update of the
NAV, which is calculated once a day.
---------------------------------------------------------------------------
In addition, the Web site for the Fund will contain the following
information, on a per Share basis, for the Fund: (a) The mid-point of
the bid-ask price \32\ at the close of trading (``Bid/Ask Price''), and
a calculation of the premium or discount of such price against such
NAV; and (b) data in chart format
[[Page 40389]]
displaying the frequency distribution of discounts and premiums of the
Bid/Ask Price against the NAV, within appropriate ranges, for each of
the four previous calendar quarters. The Web site for the Fund will
also provide the Fund's prospectus, as well as the two most recent
reports to stockholders. Finally, the Fund Web site will provide the
last sale price of the Shares as traded in the U.S. market. In
addition, the Exchange will make available over the Consolidated Tape
quotation information, trading volume, closing prices and NAV for the
Shares from the previous day. The Index value will be calculated daily
using the daily LBMA Gold Price AM and the Spot Rate as of 9:00 a.m.,
London time. The Index value will be available from major market data
vendors.
---------------------------------------------------------------------------
\32\ The bid-ask price of the Trust will be determined using the
highest bid and lowest offer on the Consolidated Tape as of the time
of calculation of the closing day NAV.
---------------------------------------------------------------------------
Criteria for Initial and Continued Listing
The Fund will be subject to the criteria in NYSE Arca Equities Rule
8.201(e) for initial and continued listing of the Shares.
A minimum of 100,000 Shares will be required to be outstanding at
the start of trading. The minimum number of shares required to be
outstanding is comparable to requirements that have been applied to
previously listed shares of the Sprott Physical Gold Trust, ETFS
Trusts, streetTRACKS Gold Trust, the iShares COMEX Gold Trust, and the
iShares Silver Trust. The Exchange believes that the anticipated
minimum number of Shares outstanding at the start of trading is
sufficient to provide adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Fund subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Equities Rule
7.34(a). The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions. 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.
Further, NYSE Arca Equities Rule 8.201 sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Shares to facilitate surveillance. Pursuant to NYSE Arca Equities Rule
8.201(g), an ETP Holder acting as a registered Market Maker in the
Shares is required to provide the Exchange with information relating to
its trading in the underlying gold, related futures or options on
futures, or any other related derivatives. Commentary .04 of NYSE Arca
Equities Rule 6.3 requires an ETP Holder acting as a registered Market
Maker, and its affiliates, in the Shares to establish, maintain and
enforce written policies and procedures reasonably designed to prevent
the misuse of any material nonpublic information with respect to such
products, any components of the related products, any physical asset or
commodity underlying the product, applicable currencies, underlying
indexes, related futures or options on futures, and any related
derivative instruments (including the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. A subsidiary or affiliate of an
ETP Holder that does business only in commodities or futures contracts
would not be subject to Exchange jurisdiction, but the Exchange could
obtain information regarding the activities of such subsidiary or
affiliate through surveillance sharing agreements with regulatory
organizations of which such subsidiary or affiliate is a member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying gold
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\33\ The Exchange will halt trading in the Shares if the
NAV of the Trust is not calculated or disseminated daily. The Exchange
may halt trading during the day in which an interruption occurs to the
dissemination of the IIV, as described above. If the interruption to
the dissemination of the IIV persists past the trading day in which it
occurs, the Exchange will halt trading no later than the beginning of
the trading day following the interruption.
---------------------------------------------------------------------------
\33\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws.\34\ 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 federal securities laws applicable to trading on
the Exchange.
---------------------------------------------------------------------------
\34\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. 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 or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\35\
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\35\ For a list of the current members of ISG, see
www.isgportal.org.
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Also, pursuant to NYSE Arca Equities Rule 8.201(g), the Exchange is
able to obtain information regarding trading in the Shares and the
underlying gold, gold futures contracts, options on gold futures, or
any other gold derivative, through ETP Holders acting as registered
Market Makers, in connection with such ETP Holders' proprietary or
customer trades through ETP Holders which they effect on any relevant
market.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
[[Page 40390]]
All statements and representations made in this filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
rules and surveillance procedures shall constitute continued listing
requirements for listing the Shares of the Fund on the Exchange.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Fund to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Equities Rule 5.5(m).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Baskets (including noting that
Shares are not individually redeemable); (2) NYSE Arca Equities Rule
9.2(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (3) how information regarding the IIV is disseminated; (4)
the requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting premium or discount on the Shares may widen as a
result of reduced liquidity of gold trading during the Core and Late
Trading Sessions after the close of the major world gold markets; and
(6) trading information. For example, the Information Bulletin will
advise ETP Holders, prior to the commencement of trading, of the
prospectus delivery requirements applicable to the Fund. The Exchange
notes that investors purchasing Shares directly from the Fund (by
delivery of the Creation Basket Deposit) will receive a prospectus. ETP
Holders purchasing Shares from the Fund for resale to investors will
deliver a prospectus to such investors.
In addition, the Information Bulletin will reference that the Fund
is subject to various fees and expenses as will be described in the
Registration Statement. The Information Bulletin will also reference
the fact that there is no regulated source of last sale information
regarding physical gold, that the Commission has no jurisdiction over
the trading of gold as a physical commodity, and that the CFTC has
regulatory jurisdiction over the trading of gold futures contracts and
options on gold futures contracts.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under section 6(b)(5) \36\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Equities Rule
8.201. The Exchange has in place surveillance procedures that are
adequate to properly monitor trading in the Shares in all trading
sessions and to deter and detect violations of Exchange rules and
applicable federal securities laws. The Exchange may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of gold price and gold market
information available on public Web sites and through professional and
subscription services. Investors may obtain on a 24-hour basis gold
pricing information based on the spot price for an ounce of gold from
various financial information service providers. Investors may obtain
gold pricing information based on the spot price for an ounce of gold
from various financial information service providers. Current spot
prices also are generally available with bid/ask spreads from gold
bullion dealers. In addition, the Fund's Web site will provide pricing
information for gold spot prices and the Shares. Market prices for the
Shares will be available from a variety of sources including brokerage
firms, information Web sites and other information service providers.
The NAV of the Fund will be published by the Sponsor on each day that
the NYSE Arca is open for regular trading and will be posted on the
Fund's Web site. The IIV relating to the Shares will be widely
disseminated by one or more major market data vendors at least every 15
seconds during the Core Trading Session. In addition, the LBMA Gold
Price is publicly available at no charge at www.lbma.org.uk. The Fund's
Web site will also provide the Fund's prospectus, as well as the two
most recent reports to stockholders. In addition, the Exchange will
make available over the Consolidated Tape quotation information,
trading volume, closing prices and NAV for the Shares from the previous
day.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it 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. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding gold pricing.
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. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating to physical
gold.
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
[[Page 40391]]
up to 90 days (i) as the Commission may designate if it finds such
longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) By order approve 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 email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2016-84 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2016-84. This
file number should be included on the subject line if email 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2016-84, and should
be submitted on or before July 12, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14556 Filed 6-20-16; 8:45 am]
BILLING CODE 8011-01-P
