Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of Shares of the USCF Canadian Crude Oil Index Fund Under NYSE Arca Equities Rule 8.200, 7885-7891 [2017-01297]
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Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices
received no comments on the proposed
rule change.
Section 19(b)(2) of the Act 9 provides
that, after initiating disapproval
proceedings, the Commission shall issue
an order approving or disapproving the
proposed rule change not later than 180
days after the date of publication of
notice of filing of the proposed rule
change. The Commission may extend
the period for issuing an order
approving or disapproving the proposed
rule change, however, by not more than
60 days if the Commission determines
that a longer period is appropriate and
publishes the reasons for such
determination. The proposed rule
change was published for notice and
comment in the Federal Register on July
21, 2016. January 17, 2017 is 180 days
from that date, and March 18, 2017 is
240 days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the proposed rule change
so that it has sufficient time to consider
this proposed rule change. Accordingly,
the Commission, pursuant to Section
19(b)(2) of the Act,10 designates March
18, 2017 as the date by which the
Commission shall either approve or
disapprove the proposed rule change
(File No. SR–NYSEArca–2016–96), as
modified by Amendment No. 2.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
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 the shares of the following under
NYSE Arca Equities Rule 8.200,
Commentary .02 (‘‘Trust Issued
Receipts’’): USCF Canadian Crude Oil
Index Fund. 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
[FR Doc. 2017–01301 Filed 1–19–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79793; File No. SR–
NYSEArca–2016–177]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to the Listing
and Trading of Shares of the USCF
Canadian Crude Oil Index Fund Under
NYSE Arca Equities Rule 8.200
1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the following
under NYSE Arca Equities Rule 8.200,
Commentary .02, which governs the
listing and trading of Trust Issued
Receipts: USCF Canadian Crude Oil
Index Fund (the ‘‘Fund’’).4
The Fund is a new series of the
United States Commodity Index Funds
Trust (the ‘‘Trust’’).5 The Fund is a
7885
commodity pool that continuously
issues common shares of beneficial
interest that may be purchased and sold
on the Exchange. The Trust and the
Fund are managed and controlled by
United States Commodity Funds LLC
(‘‘USCF’’ or ‘‘Sponsor’’), which is
registered as a commodity pool operator
(‘‘CPO’’) with the Commodity Futures
Trading Commission (‘‘CFTC’’) and is a
member of the National Futures
Association (‘‘NFA’’). Brown Brothers
Harriman & Co., Inc. will be the
administrator and custodian
(‘‘Administrator’’ or ‘‘Custodian’’) for
the Fund. ALPS Distributors, Inc. will
be the marketing agent (‘‘Marketing
Agent’’) for the Fund.
The Exchange notes that the
Commission has previously approved
the listing and trading of other issues of
Trust Issued Receipts based on oil on
the Exchange,6 trading on the Exchange
of such issues pursuant to unlisted
trading privileges,7 and listing and
trading of such issues on the American
Stock Exchange LLC (now, NYSE MKT,
LLC).8
Investment Objective and Principal
Investments of the Fund
According to the Registration
Statement, the investment objective of
the Fund is for the daily changes in
percentage terms of its Shares’ per Share
NAV to reflect the daily changes in
percentage terms of the Canadian Crude
Excess Return Index (the ‘‘CCIER’’ or
‘‘Index’’), plus interest income from the
Fund’s short-term fixed income
holdings, less the Fund’s expenses.
The CCIER is owned and maintained
by Auspice Capital Advisors Ltd.
(‘‘Auspice’’) and is designed to measure
the performance of the Canadian crude
oil market. It is calculated and tracked
daily and reported each trading day via
major market data vendors.
The Fund’s investment strategy is
designed to provide investors with a
means of investing indirectly in
Canadian crude oil and to hedge against
movements in the spot price of
Canadian crude oil. Specifically, the
CCIER reflects the returns that an
investor would expect to receive from
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January 13, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
30, 2016, NYSE Arca, Inc. (‘‘Exchange’’
9 15
U.S.C. 78s(b)(2).
10 Id.
11 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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4 Commentary .02 to NYSE Arca Equities Rule
8.200 applies to Trust Issued Receipts that invest
in ‘‘Financial Instruments.’’ The term ‘‘Financial
Instruments,’’ as defined in Commentary .02(b)(4) to
NYSE Arca Equities Rule 8.200, means any
combination of investments, including cash;
securities; options on securities and indices; futures
contracts; options on futures contracts; forward
contracts; equity caps, collars, and floors; and swap
agreements.
5 The Trust is registered under the Securities Act
of 1933. On June 16, 2016, the Trust filed with the
Commission a registration statement on Form S–1
under the Securities Act of 1933 (15 U.S.C. 77a)
PO 00000
Frm 00103
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(‘‘Securities Act’’) relating to the Fund (File No.
333–212089) (‘‘Registration Statement’’). The
description of the operation of the Trust and the
Fund herein is based, in part, on the Registration
Statement.
6 See, e.g., Securities Exchange Act Release No.
58457 (September 3, 2008), 73 FR 52711 (September
10, 2008) (SR–NYSEArca–2008–91).
7 See, e.g., Securities Exchange Act Release No.
58163 (July 15, 2008), 73 FR 42391 (July 21, 2008)
(SR–NYSEArca–2008–73).
8 See, e.g., Securities Exchange Act Release No.
58161 (July 15, 2008), 73 FR 42380 (July 21, 2008)
(SR–Amex–2008–39).
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holding and rolling the futures contracts
that comprise the Index.
The CCIER targets an exposure that
represents an approximately 3 month
rolling position in the following nearby
futures contracts: (i) The ICE Crude
Diff—TMX WCS 1B Index Future (ICE
symbol: TDX) (the ‘‘WCS Future’’); and
(ii) the ICE WTI Crude Future (ICE
symbol: T) (the ‘‘WTI Future’’). The
WCS Futures and WTI Futures that
comprise the CCIER are referred to
herein as ‘‘Benchmark Component
Futures Contracts’’.
The WCS Future is a monthly cash
settled future based on the TMX WCS
(Western Canadian Select) Daily
Weighted Average Price Index (‘‘TMX
WCS 1b Index’’) traded on ICE Futures
Europe. The TMX WCS 1b Index is
expressed as a differential to the
NYMEX WTI 1st Line Future (Calendar
Month Average).
The WTI Future is the ICE West Texas
Intermediate (WTI) Light Sweet Crude
Oil Futures Contract traded on ICE
Futures Europe.9
The Fund will seek to achieve its
investment objective by first entering
into cash-settled over-the-counter
(‘‘OTC’’) total return swap and forward
transactions intended to replicate the
return of the CCIER (‘‘OTC Derivatives
Contracts’’, as described further below)
and, second, to the extent market
conditions are more favorable for such
futures as compared to OTC Derivatives
Contracts, investing in the Benchmark
Component Futures Contracts that
underlie the CCIER. It will support these
investments by holding the amounts of
its margin, collateral and other
requirements relating to these
obligations in short-term obligations of
the United States of two years or less
(‘‘Treasuries’’), cash and cash
equivalents.
Third, if constrained by regulatory
requirements or in view of market
conditions or if one or more of the other
Benchmark Component Futures
Contracts is not available, the Fund may
next invest in exchange traded futures
contracts that are economically identical
or substantially similar to the
Benchmark Component Futures
Contracts, e.g., futures contracts that are
based on changes in the price of WTI oil
traded on the Chicago Mercantile
Exchange (‘‘CME’’).
When, in view of regulatory
requirements and market conditions, the
Fund has invested to the fullest extent
possible in the OTC Derivatives
9 ICE Futures Europe, NYMEX and other futures
exchanges on which the Fund may trade listed
futures contracts are referred to collectively as
‘‘Futures Exchanges’’.
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Contracts and exchange-traded futures
contracts, the Fund may then invest in
other OTC derivative contracts and/or
other contracts and instruments based
on the Benchmark Component Futures
Contracts or on the price of the crude oil
underlying the Benchmark Component
Futures Contracts, such as cash-settled
options, cleared swap contracts and
swap contracts other than cleared swap
contracts.10
Market conditions that USCF
currently anticipates could cause the
Fund to invest in Other Crude OilRelated Investments include those
allowing the Fund to obtain greater
liquidity, to execute transactions with
more favorable pricing, or if the Fund or
USCF exceeds position limits or
accountability levels established by an
exchange.
The Fund will seek to achieve its
investment objective by investing so
that the average daily percentage change
in the Fund’s NAV for any period of 30
successive valuation days will be within
plus/minus 10 percent (10%) of the
average daily percentage change in the
CCIER over the same period. The
Sponsor believes that market arbitrage
opportunities will cause daily changes
in the Fund’s Share price on the NYSE
Arca on a percentage basis to closely
track the daily changes in the Fund’s
per Share NAV on a percentage basis.
The Sponsor also believes that the net
effect of this expected relationship and
the expected relationship described
above between the Fund’s per Share
NAV and the CCIER will be that the
daily changes in the price of the Fund’s
Shares on the NYSE Arca on a
percentage basis will closely track the
daily changes in the CCIER on a
percentage basis, plus interest income
from the Fund’s short-term fixed income
holdings, less the Fund’s expenses.11
The Fund will not seek to achieve its
stated investment objective over a
period of time greater than one day.
10 The Benchmark Component Futures Contracts,
other exchange-traded futures contracts that are
economically identical or substantially similar to
the Benchmark Component Futures Contracts and
other contracts and instruments based on the
Benchmark Component Futures Contracts, are
referred to collectively as ‘‘Other Crude Oil-Related
Investments’’, and together with OTC Derivatives
Contracts, ‘‘Crude Oil Interests’’.
11 While the Fund is composed of, and is
therefore a measure of, the prices of the OTC
Derivatives Contracts based upon futures
comprising the CCIER, there is expected to be a
reasonable degree of correlation between the CCIER
and the cash or spot prices of the commodities
underlying the Benchmark Component Futures
Contracts; but the Fund’s investment objective is
not for its NAV or market price of Shares to equal,
in dollar terms, the spot prices of the commodities
underlying the Benchmark Component Futures
Contracts or the prices of any particular group of
futures contracts.
PO 00000
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This is because natural market forces
called contango and backwardation can
impact the total return on an investment
in the Fund’s Shares relative to a
hypothetical direct investment in crude
oil commodities and, in the future, it is
likely that the relationship between the
market price of the Fund’s Shares and
changes in the spot prices of the
underlying commodities will continue
to be so impacted by contango and
backwardation.
OTC Derivatives Contracts
According to the Registration
Statement, the Fund will primarily
invest in OTC Derivatives Contracts that
are based on Benchmark Component
Futures Contracts and, in the opinion of
the Sponsor, are traded in sufficient
volume to permit the ready taking and
liquidation of positions. Such OTC
Derivatives Contracts, as well as all
other Other Crude Oil-Related
Investments that are OTC derivatives,
will be ‘‘swaps’’ for purposes of Title VII
of the Dodd-Frank Wall Street Reform
and Consumer Protection Act that fall
within the jurisdiction of the
Commodity Futures Trading
Commission.
The OTC Derivatives Contracts will be
entered between two parties, outside of
public exchanges, in private contracts.
Unlike the exchange-traded Benchmark
Component Futures Contracts, each
party to an OTC Derivatives Contract
bears credit risk with respect to the
other party. To reduce such credit risk,
the Fund will generally enter into an
agreement with each counterparty based
on the Master Agreement published by
the International Swaps and Derivatives
Association, Inc. (‘‘ISDA’’) that provides
for the netting of overall exposure
between counterparties.12 In accordance
with the terms and conditions of the
Fund’s ISDA Master Agreement,
pursuant to which the Fund’s OTC
Derivatives Contracts will be entered
into, the Fund will be entitled to
increase or decrease its notional
exposure to the CCIER from time to
time, to among other things, manage
Share purchases and reinvestment of
distributions, Fund Share redemptions
and market repurchases of Shares, and
12 The ISDA Master Agreement allows for parties
to calculate and settle their obligations under the
agreement on a ‘‘net basis’’ with a single payment.
Consequently, the Sponsor’s current obligations (or
rights) under a swap or forward agreement are
generally only equal to the net amount to be paid
or received under the agreement based on the
relative values of such obligations (or rights). In
addition, in connection with the Master
Agreements, the Sponsor will enter into ISDA
Credit Support Annexes (‘‘CSAs’’) with its
counterparties to mitigate counterparty credit
exposure.
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meet other liquidity needs. Reducing
notional exposure may be achieved
through different methods, including
the use of offsetting forwards and partial
terminations of OTC Derivatives
Contracts.
The Sponsor will assess or review, as
appropriate, the creditworthiness of
each potential or existing counterparty
to an OTC Derivatives Contract pursuant
to guidelines approved by the Sponsor’s
board. In respect of the OTC Derivatives
Contracts, the Fund will have the ability
to replace a counterparty or engage
additional counterparties at any time.
The daily marked-to-market value of
an OTC Derivatives Contract will be
based upon the performance of a
notional investment in the CCIER. In
turn, the performance of the CCIER will
be based upon the performance of the
underlying Benchmark Component
Futures Contracts. Under the CSAs, the
parties will be required to determine the
mark-to-market value of the OTC
Derivative Contract(s) on a daily basis.
Subject to a minimum transfer amount,
the party that is ‘‘out of the money’’
would transfer collateral in the form of
cash or U.S. Treasuries to its
counterparty to cover the exposure
under the OTC Derivative Contract.
The Fund may also enter into
multiple OTC Derivatives Contracts for
the purpose of achieving its investment
objective. If an OTC Derivatives
Contract is terminated, the Fund may
either pursue the same or other
alternative investment strategies with an
acceptable counterparty, or make direct
investments in the Benchmark
Component Futures Contracts or other
investments that provide a similar
return to investing in the Benchmark
Component Futures Contracts.
The Fund may also enter into certain
transactions where an OTC component
is exchanged for a corresponding futures
contract (an ‘‘Exchange for Related
Position’’ or ‘‘EFRP’’ transaction).13 The
Fund may also employ spreads or
straddles in its trading to mitigate the
differences in its investment portfolio
and its goal of tracking the price of the
Benchmark Component Futures
Contracts.14
Creation and Redemption of Shares
According to the Registration
Statement, the Fund will create and
redeem Shares from time to time, in one
13 In the most common type of EFRP transaction
entered into by the Fund, the OTC component is the
purchase or sale of one or more baskets of the
Fund’s Shares, as described below.
14 The Fund would use a spread when it chooses
to take simultaneous long and short positions in
futures written on the same underlying asset, but
with different delivery months.
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or more ‘‘Creation Baskets’’ or
‘‘Redemption Baskets’’. The creation
and redemption of baskets will only be
made in exchange for delivery to the
Fund or the distribution by the Fund of
the amount of Treasuries and/or cash
represented by the baskets being created
or redeemed, the amount of which will
be equal to the combined NAV of the
number of Shares included in the
baskets being created or redeemed
determined as of 4:00 p.m. Eastern Time
(‘‘E.T.’’) on the day the order to create
or redeem baskets is properly received.
‘‘Authorized Participants’’ are the
only persons that may place orders to
create and redeem baskets. Authorized
Participants must be (1) registered
broker dealers or other securities market
participants, such as banks and other
financial institutions, that are not
required to register as broker-dealers to
engage in securities transactions
described below, and (2) Depository
Trust and Clearing Participants.
On any business day, an Authorized
Participant may place an order with the
Marketing Agent to create one or more
baskets. By placing a purchase order, an
Authorized Participant agrees to deposit
Treasuries, cash or a combination of
Treasuries and cash with the Trust.
The total deposit required to create
each basket (‘‘Creation Basket Deposit’’)
is the amount of Treasuries and/or cash
that is in the same proportion to the
total assets of the Fund (net of estimated
accrued but unpaid fees, expenses and
other liabilities) on the purchase order
date as the number of Shares to be
created under the purchase order is in
proportion to the total number of Shares
outstanding on the purchase order date.
The amount of cash deposit required is
the difference between the aggregate
market value of the Treasuries required
to be included in a Creation Basket
Deposit as of 4:00 p.m. E.T. on the date
the order to purchase is properly
received and the total required deposit.
The procedures by which an
Authorized Participant can redeem one
or more baskets mirror the procedures
for the creation of baskets. On any
business day, an Authorized Participant
may place an order with the Marketing
Agent to redeem one or more baskets.
Redemption orders must be placed by
10:30 a.m. E.T. or the close of regular
trading on the NYSE Arca, whichever is
earlier.
The Sponsor may, in its discretion,
suspend the right of redemption, or
postpone the redemption settlement
date, (1) for any period during which
NYSE Arca or any of the futures
exchanges upon which a Benchmark
Component Futures Contract is traded is
closed other than customary weekend or
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7887
holiday closings, or trading on NYSE
Arca or such futures exchanges is
suspended or restricted, (2) for any
period during which an emergency
exists as a result of which delivery,
disposal or evaluation of Treasuries is
not reasonably practicable, or (3) for
such other period as the Sponsor
determines to be necessary for the
protection of the shareholders.
Calculating Per Share NAV
According to the Registration
Statement, the Fund’s per Share NAV
will be calculated by taking the current
market value of its total assets;
subtracting any liabilities; and dividing
that total by the total number of
outstanding Shares.
The Administrator will calculate the
NAV of the Fund once each NYSE Arca
trading day. The NAV for a normal
trading day will be released after 4:00
p.m. E.T. Trading during the Core
Trading Session on the NYSE Arca
typically closes at 4:00 p.m. E.T. The
Administrator will use the updated
value of the CCIER calculated shortly
after the determination by the relevant
Futures Exchanges of the closing prices
of the Benchmark Component Futures
Contracts (determined at the earlier of
the close of such exchange or 2:30 p.m.
E.T.) for the contracts traded on the
Futures Exchanges, but calculate or
determine the value of all other
investments of the Fund using market
quotations, if available, or other
information customarily used to
determine the fair value of such
investments as of the earlier of the close
of the NYSE Arca or 4:00 p.m. E.T.
Other information customarily used in
determining fair value includes
information consisting of market data in
the relevant market supplied by one or
more third parties including, without
limitation, relevant rates, prices, yields,
yield curves, volatilities, spreads,
correlations or other market data in the
relevant market; or information of the
types described above from internal
sources if that information is of the
same type used by the Fund in the
regular course of their business for the
valuation of similar transactions. Third
parties supplying quotations or market
data may include, without limitation,
dealers in the relevant markets, endusers of the relevant product,
information vendors, brokers and other
sources of market information.
Derivatives for which market quotes
are readily available will be valued at
market value. Local closing prices will
be used for all instrument valuation
purposes. Swaps traded on exchanges
will use the applicable exchange closing
price where available.
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With respect to specific derivatives,
futures will generally be valued at the
settlement price of the relevant
exchange. A total return swap on the
CCIER will be valued at the publicly
available CCIER price. The CCIER, in
turn, is determined by the applicable
index calculation agent, which generally
values the commodities underlying the
Index at the last reported sale price.
Indicative Fund Value
In addition, in order to provide
updated information relating to the
Fund for use by investors and market
professionals, the NYSE Arca will
calculate and disseminate throughout
the Core Trading Session on each
trading day an updated Indicative Fund
Value (‘‘IFV’’). The IFV will be
calculated by using the prior day’s
closing NAV per Share of the Fund as
a base and updating that value
throughout the trading day to reflect
changes in the most recently reported
trade prices for the Benchmark
Component Futures Contracts as
reported by Bloomberg, L.P. or another
reporting service.
The IFV will be disseminated on a per
Share basis every 15 seconds during
regular NYSE Arca Core Trading
Session hours of 9:30 a.m. E.T. to 4:00
p.m. E.T. The normal trading hours of
the ICE Exchange ends prior to the close
of the Core Trading Session on NYSE
Arca. As a result, there will be a gap in
time at the beginning and/or the end of
each day during which the Fund’s
Shares are traded on the NYSE Arca, but
real-time futures exchange trading
prices for Benchmark Component
Futures Contracts traded on the ICE
Exchange are not available. During such
gaps in time the IFV will be calculated
based on the end of day price of such
Benchmark Component Futures
Contracts from Futures Exchanges
immediately preceding trading session.
In addition, Other Crude Oil-Related
Investments and Treasuries held by the
Fund will be valued by the
Administrator, using rates and points
received from client-approved third
party vendors (such as Reuters and WM
Company) and advisor quotes. These
investments will not be included in the
IFV. The IFV will be available through
on-line information services.
With respect to specific derivatives:
Total return swaps may be valued
intraday using the underlying asset
price, or another proxy as determined to
be appropriate by a third party market
data provider. Exchange listed options
may be valued intraday using the
relevant exchange data, or another
proxy as determined to be appropriate
by a third party market data provider.
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Availability of Information
The NAV for the Fund’s Shares will
be disseminated daily to all market
participants at the same time. The
intraday, closing prices, and settlement
prices of the Benchmark Component
Futures Contracts will be readily
available from automated quotation
systems, published or other public
sources, or major market data vendors.
Complete real-time data for the
Benchmark Component Futures
Contracts is available by subscription
from major market data vendors. ICE
Futures also provides delayed futures
information on current and past trading
sessions and market news free of charge
on its Web site. The specific contract
specifications for the Benchmark
Component Futures Contracts are also
available on such Web site, as well as
other financial informational sources.
Quotation and last-sale information
regarding the Shares will be
disseminated through the facilities of
the CTA. In addition, the Fund’s Web
site, www.uscfinvestments.com, will
display the applicable end of day
closing NAV. The daily holdings of the
Fund will be available on the Fund’s
Web site. The Fund’s total portfolio
composition will be disclosed each
business day that the NYSE Arca is
open for trading, on the Fund’s Web
site. The Web site disclosure of portfolio
holdings will be made daily and will
include, as applicable, (i) the composite
value of the total portfolio, (ii) the name,
percentage weighting, and value of OTC
Derivatives Contracts and each
Benchmark Component Futures
Contract, (iii) the name and value of
each Treasury security and cash
equivalent, and (iv) the amount of cash
held in the Fund’s portfolio. The Fund’s
Web site will be publicly accessible at
no charge. This Web site disclosure of
the portfolio composition of the Fund
will occur at the same time as the
disclosure by the Sponsor of the
portfolio composition to Authorized
Participants so that all market
participants will be provided portfolio
composition information at the same
time. Therefore, the same portfolio
information will be provided on the
public Web site as well as in electronic
files provided to Authorized
Participants. Accordingly, each investor
will have access to the current portfolio
composition of the Fund through the
Fund’s Web site.
Intra-day price information for
exchange-traded derivative instruments
will be available from the applicable
exchange and from major market data
vendors. Intra-day price information for
OTC options, forwards, and OTC
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Sfmt 4703
derivative instruments will be available
from major market data vendors.
Intraday and closing price information
for exchange-traded options and futures
will be available from the applicable
exchange and from major market data
vendors. In addition, intra-day price
information for U.S. exchange-traded
options is available from the Options
Price Reporting Authority.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund.15 Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in NYSE Arca Equities Rule
7.12 have been reached. Trading also
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable.
The Exchange may halt trading during
the day in which an interruption to the
dissemination of the IFV or the value of
the Index occurs. If the interruption to
the dissemination of the IFV, or the
value of the Index persists past the
trading day in which it occurred, the
Exchange will halt trading no later than
the beginning of the trading day
following the interruption. In addition,
if the Exchange becomes aware that the
NAV with respect to the Shares is not
disseminated to all market participants
at the same time, it will halt trading in
the Shares until such time as the NAV
is available to all market participants.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m.
to 8 p.m. E.T. in accordance with NYSE
Arca Equities Rule 7.34 (Opening, Core,
and Late Trading Sessions). The
Exchange has appropriate rules to
facilitate transactions in the Shares
during all trading sessions. As provided
in NYSE Arca Equities Rule 7.6, the
minimum price variation (‘‘MPV’’) for
quoting and entry of orders in equity
securities traded on the NYSE Arca
Marketplace is $0.01, with the exception
of securities that are priced less than
$1.00 for which the MPV for order entry
is $0.0001.
The Shares will conform to the initial
and continued listing criteria under
NYSE Arca Equities Rule 8.200. The
trading of the Shares will be subject to
NYSE Arca Equities Rule 8.200,
15 See
E:\FR\FM\23JAN1.SGM
NYSE Arca Equities Rule 7.12.
23JAN1
Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
Commentary .02(e), which sets forth
certain restrictions on Equity Trading
Permit (‘‘ETP’’) Holders acting as
registered Market Makers in Trust
Issued Receipts to facilitate
surveillance. The Exchange represents
that, for initial and/or continued listing,
the Fund will be in compliance with
Rule 10A–3 16 under the Act, as
provided by NYSE Arca Equities Rule
5.3. A minimum of 100,000 Shares will
be outstanding at the commencement of
trading on the Exchange.
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.17 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 and the
Benchmark Component Futures
Contracts 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 and the Benchmark Component
Futures Contracts from such markets
and other entities. In addition, the
Exchange may obtain information
regarding trading in the Shares and the
Benchmark Component Futures
Contracts from markets and other
entities that are members of ISG or with
which the Exchange has in place a
16 17
CFR 240.10A–3.
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.
17 FINRA
VerDate Sep<11>2014
19:02 Jan 19, 2017
Jkt 241001
comprehensive surveillance sharing
agreement (‘‘CSSA’’).18
Not more than 10% of the net assets
of the Fund in the aggregate invested in
futures contracts shall consist of futures
contracts whose principal market is not
a member of the ISG or is a market with
which the Exchange does not have a
comprehensive surveillance sharing
agreement.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
All statements and representations
made in this filing regarding (a) the
description of the portfolios, and (b)
limitations on portfolio holdings or
reference assets shall constitute
continued listing requirements for
listing the Shares 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 risks
involved in trading the Shares during
the Opening and Late Trading Sessions
when an updated IFV will not be
calculated or publicly disseminated; (2)
the procedures for purchases and
redemptions of Shares in Creation
Baskets and Redemption Baskets (and
that Shares are not individually
redeemable); (3) NYSE Arca Equities
Rule 9.2(a), which imposes a duty of
due diligence on its ETP Holders to
learn the essential facts relating to every
customer prior to trading the Shares; (4)
how information regarding the IFV is
disseminated; (5) that a static IFV will
be disseminated, between the close of
trading on the CME and the close of the
NYSE Arca Core Trading Session; (6)
the requirement that ETP Holders
deliver a prospectus to investors
18 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all
components of the Fund may trade on markets that
are members of ISG or with which the Exchange has
in place a CSSA. The Exchange has in place a CSSA
with ICE Futures Europe.
PO 00000
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Sfmt 4703
7889
purchasing newly issued Shares prior to
or concurrently with the confirmation of
a transaction; and (7) trading
information.
In addition, the Information Bulletin
will advise ETP Holders, prior to the
commencement of trading, of the
prospectus delivery requirements
applicable to the Fund. The Exchange
notes that investors purchasing Shares
directly from the Fund will receive a
prospectus. ETP Holders purchasing
Shares from the Fund for resale to
investors will deliver a prospectus to
such investors. The Information Bulletin
will also discuss any exemptive, noaction, and interpretive relief granted by
the Commission from any rules under
the Act. In addition, the Information
Bulletin will reference that the Fund is
subject to various fees and expenses
described in the Registration Statement.
The Information Bulletin will also
reference that the CFTC has regulatory
jurisdiction over the trading of
Benchmark Component Futures
Contracts and the OTC Derivatives
Contracts.
The Information Bulletin will also
disclose the trading hours of the Shares
that the NAV for the Shares will be
calculated after 4:00 p.m. E.T. each
trading day. The Information Bulletin
will disclose that information about the
Shares will be publicly available on the
Fund’s Web site.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 19 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 8.200. 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 or FINRA, on behalf
of the Exchange, or both, will
communicate as needed regarding
trading in the Shares, and Benchmark
Component Futures Contracts with
19 15
E:\FR\FM\23JAN1.SGM
U.S.C. 78f(b)(5).
23JAN1
mstockstill on DSK3G9T082PROD with NOTICES
7890
Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices
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 and
Benchmark Component Futures
Contracts from such markets and other
entities. In addition, the Exchange may
obtain information regarding trading in
the Shares and Benchmark Component
Futures Contracts from markets and
other entities that are members of ISG or
with which the Exchange has in place
a CSSA.
Not more than 10% of the net assets
of the Fund in the aggregate invested in
futures contracts shall consist of futures
contracts whose principal market is not
a member of the ISG or is a market with
which the Exchange does not have a
CSSA. 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 intraday, closing prices, and
settlement prices of the Benchmark
Component Futures Contracts will be
readily available from the applicable
Futures Exchanges’ Web sites,
automated quotation systems, published
or other public sources, or on-line
information services.
Complete real-time data for the
Benchmark Component Futures
Contracts is available by subscription
from on-line information services. The
Futures Exchanges also provide delayed
futures information on current and past
trading sessions and market news free of
charge on their Web sites. The specific
contract specifications for the
Benchmark Component Futures
Contracts are also available on such
Web sites, as well as other financial
informational sources. Information
regarding exchange-traded cash-settled
options and cleared swap contracts will
be available from the applicable
exchanges and major market data
vendors. Quotation and last-sale
information regarding the Shares will be
disseminated through the facilities of
the CTA. In addition, the Fund’s Web
site, will display the applicable end of
day closing NAV. The Fund’s total
portfolio composition will be disclosed
each business day that the NYSE Arca
is open for trading, on the Fund’s Web
site. The Web site disclosure of portfolio
holdings will be made daily and will
include, as applicable, (i) the composite
value of the total portfolio, (ii) the name,
percentage weighting, and value of OTC
Derivatives Contracts and each
Benchmark Component Futures
Contract, (iii) the name and value of
each Treasury security and cash
VerDate Sep<11>2014
19:02 Jan 19, 2017
Jkt 241001
equivalent, and (iv) the amount of cash
held in the Fund’s portfolio. The Fund’s
disclosure of derivative positions will
include information that market
participants can use to value these
positions intraday.
Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit Holders in an
Information Bulletin of the special
characteristics and risks associated with
trading the Shares. Trading in Shares of
the Fund will be halted if the circuit
breaker parameters in NYSE Arca
Equities Rule 7.12 have been reached or
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable
The proposed rule change is designed
to promote just and equitable principles
of trade and 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 issue of Trust Issued Receipts
based on oil 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 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.
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 purpose of the Act. The Exchange
notes that the proposed rule change will
facilitate the listing and trading of an
additional type of exchange-traded
product that primarily hold derivatives
and futures contracts and that will
enhance competition among market
participants, to the benefit of investors
and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
PO 00000
Frm 00108
Fmt 4703
Sfmt 4703
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–2016–177 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–2016–177. 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
E:\FR\FM\23JAN1.SGM
23JAN1
Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2016–177 and should be
submitted on or before February 13,
2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–01297 Filed 1–19–17; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–79792; File No. SR–
NYSEARCA–2016–176]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to the Listing
and Trading of Shares of the
EtherIndex Ether Trust Under NYSE
Arca Equities Rule 8.201
January 13, 2017.
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 December
30, 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 Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
mstockstill on DSK3G9T082PROD with NOTICES
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 following under
NYSE Arca Equities Rule 8.201:
EtherIndex Ether Trust (‘‘Trust’’). 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
20 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
19:02 Jan 19, 2017
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
VerDate Sep<11>2014
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.
Jkt 241001
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.’’ 4 The
Exchange proposes to list and trade
shares (‘‘Shares’’) of the Trust pursuant
to NYSE Arca Equities Rule 8.201.5
The sponsor of the Trust is EtherIndex
LLC (‘‘Sponsor’’), a Delaware limited
liability company. Delaware Trust
Company is the trustee of the Trust
(‘‘Trustee’’). The Bank of New York
Mellon will be the administrator
(‘‘Administrator’’) and custodian of cash
of the Trust (‘‘Cash Custodian’’).
Coinbase will be the custodian of the
ether of the Trust (‘‘Ether Custodian’’).
According to the Registration
Statement, each Share will represent a
unit of fractional undivided beneficial
interest in and ownership of the Trust.
The activities of the Trust will be
limited to (i) issuing ‘‘Baskets’’ (as
described below) to ‘‘Authorized
Participants’’ (as described below) in
exchange for the cash or, in the
Sponsor’s discretion, ether (as described
below), (ii) selling ether or transferring
ether, at the Sponsor’s discretion, as
necessary to cover the Sponsor’s fee and
as necessary to pay Trust expenses not
assumed by the Sponsor and other
liabilities, (iii) selling or transferring
ether in exchange for Baskets
surrendered for redemption by the
Authorized Participants, (iv) causing the
Administrator to sell ether on the
termination of the Trust and (v)
engaging in all administrative and
custodial procedures necessary to
accomplish such activities in
accordance with the provisions of
relevant agreements.
4 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.
5 On November 28, 2016, the Trust filed an
amended registration statement (‘‘Registration
Statement’’) on Form S–1 under the Securities Act
of 1933 (15 U.S.C. 77a) (File No. 333–212533). The
descriptions of the Trust, the Shares and ether
contained herein are based, in part, on the
Registration Statement.
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7891
According to the Registration
Statement, the Trust is neither an
investment company registered under
the Investment Company Act of 1940, as
amended,6 nor a commodity pool for
purposes of the Commodity Exchange
Act (‘‘CEA’’),7 and neither the Sponsor
nor the Trustee is subject to regulation
as a commodity pool operator or a
commodity trading adviser in
connection with the operation of the
Trust.
Investment Objective
According to the Registration
Statement and as further described
below, the Trust’s purpose will be to
provide shareholders with exposure to
the daily change in the U.S. dollar price
of ether, before expenses and liabilities
of the Trust, as measured by the price
of ether in U.S. dollars as reported by
the Global Digital Asset Exchange
(‘‘GDAX’’) as of 4:00 p.m., Eastern Time
(‘‘E.T.’’), each day (‘‘GDAX Price’’).
The Trust will not be actively
managed. It will not engage in any
activities designed to obtain a profit
from, or to ameliorate losses caused by,
changes in the market prices of ether.
Ether and the Ethereum Network
According to the Registration
Statement, ether is a digital asset similar
to bitcoin. It is not issued by any
government, bank or central
organization but rather is issued by, and
transmitted through, the decentralized,
open source protocol of the peer-to-peer
Ethereum computer network
(‘‘Ethereum Network’’). The Ethereum
Network is a decentralized network of
computers that run applications on a
custom built ‘‘blockchain’’ (‘‘Ethereum
Blockchain’’) that enables developers to
create markets, store registries of debts
or promises, represent the ownership of
property and move funds in accordance
with instructions given in the past, all
without the involvement of an
intermediary or counterparty. The
Ethereum Blockchain is a decentralized
public transaction ledger hosted on the
Ethereum Network on which all ether is
recorded; the blockchain records ether
balances and every ether address
associated with a quantity of ether (see
‘‘Ethereum Blockchain’’ below). No
single entity owns or operates the
Ethereum Network.
According to the Registration
Statement, unlike bitcoin, ether was not
designed to function purely as a store of
value. Instead, ether was meant to pay
for specific actions on the Ethereum
Network. However, ether’s market is
6 15
7 17
E:\FR\FM\23JAN1.SGM
U.S.C. 80a–1.
U.S.C. 1.
23JAN1
]]>Agencies
[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Notices]
[Pages 7885-7891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01297]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79793; File No. SR-NYSEArca-2016-177]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to the Listing and Trading of Shares
of the USCF Canadian Crude Oil Index Fund Under NYSE Arca Equities Rule
8.200
January 13, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on December 30, 2016, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the self-regulatory
organization. The 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 the shares of the following
under NYSE Arca Equities Rule 8.200, Commentary .02 (``Trust Issued
Receipts''): USCF Canadian Crude Oil Index Fund. 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 (``Shares'') of the
following under NYSE Arca Equities Rule 8.200, Commentary .02, which
governs the listing and trading of Trust Issued Receipts: USCF Canadian
Crude Oil Index Fund (the ``Fund'').\4\
---------------------------------------------------------------------------
\4\ Commentary .02 to NYSE Arca Equities Rule 8.200 applies to
Trust Issued Receipts that invest in ``Financial Instruments.'' The
term ``Financial Instruments,'' as defined in Commentary .02(b)(4)
to NYSE Arca Equities Rule 8.200, means any combination of
investments, including cash; securities; options on securities and
indices; futures contracts; options on futures contracts; forward
contracts; equity caps, collars, and floors; and swap agreements.
---------------------------------------------------------------------------
The Fund is a new series of the United States Commodity Index Funds
Trust (the ``Trust'').\5\ The Fund is a commodity pool that
continuously issues common shares of beneficial interest that may be
purchased and sold on the Exchange. The Trust and the Fund are managed
and controlled by United States Commodity Funds LLC (``USCF'' or
``Sponsor''), which is registered as a commodity pool operator
(``CPO'') with the Commodity Futures Trading Commission (``CFTC'') and
is a member of the National Futures Association (``NFA''). Brown
Brothers Harriman & Co., Inc. will be the administrator and custodian
(``Administrator'' or ``Custodian'') for the Fund. ALPS Distributors,
Inc. will be the marketing agent (``Marketing Agent'') for the Fund.
---------------------------------------------------------------------------
\5\ The Trust is registered under the Securities Act of 1933. On
June 16, 2016, the Trust filed with the Commission a registration
statement on Form S-1 under the Securities Act of 1933 (15 U.S.C.
77a) (``Securities Act'') relating to the Fund (File No. 333-212089)
(``Registration Statement''). The description of the operation of
the Trust and the Fund herein is based, in part, on the Registration
Statement.
---------------------------------------------------------------------------
The Exchange notes that the Commission has previously approved the
listing and trading of other issues of Trust Issued Receipts based on
oil on the Exchange,\6\ trading on the Exchange of such issues pursuant
to unlisted trading privileges,\7\ and listing and trading of such
issues on the American Stock Exchange LLC (now, NYSE MKT, LLC).\8\
---------------------------------------------------------------------------
\6\ See, e.g., Securities Exchange Act Release No. 58457
(September 3, 2008), 73 FR 52711 (September 10, 2008) (SR-NYSEArca-
2008-91).
\7\ See, e.g., Securities Exchange Act Release No. 58163 (July
15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
\8\ See, e.g., Securities Exchange Act Release No. 58161 (July
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39).
---------------------------------------------------------------------------
Investment Objective and Principal Investments of the Fund
According to the Registration Statement, the investment objective
of the Fund is for the daily changes in percentage terms of its Shares'
per Share NAV to reflect the daily changes in percentage terms of the
Canadian Crude Excess Return Index (the ``CCIER'' or ``Index''), plus
interest income from the Fund's short-term fixed income holdings, less
the Fund's expenses.
The CCIER is owned and maintained by Auspice Capital Advisors Ltd.
(``Auspice'') and is designed to measure the performance of the
Canadian crude oil market. It is calculated and tracked daily and
reported each trading day via major market data vendors.
The Fund's investment strategy is designed to provide investors
with a means of investing indirectly in Canadian crude oil and to hedge
against movements in the spot price of Canadian crude oil.
Specifically, the CCIER reflects the returns that an investor would
expect to receive from
[[Page 7886]]
holding and rolling the futures contracts that comprise the Index.
The CCIER targets an exposure that represents an approximately 3
month rolling position in the following nearby futures contracts: (i)
The ICE Crude Diff--TMX WCS 1B Index Future (ICE symbol: TDX) (the
``WCS Future''); and (ii) the ICE WTI Crude Future (ICE symbol: T) (the
``WTI Future''). The WCS Futures and WTI Futures that comprise the
CCIER are referred to herein as ``Benchmark Component Futures
Contracts''.
The WCS Future is a monthly cash settled future based on the TMX
WCS (Western Canadian Select) Daily Weighted Average Price Index (``TMX
WCS 1b Index'') traded on ICE Futures Europe. The TMX WCS 1b Index is
expressed as a differential to the NYMEX WTI 1st Line Future (Calendar
Month Average).
The WTI Future is the ICE West Texas Intermediate (WTI) Light Sweet
Crude Oil Futures Contract traded on ICE Futures Europe.\9\
---------------------------------------------------------------------------
\9\ ICE Futures Europe, NYMEX and other futures exchanges on
which the Fund may trade listed futures contracts are referred to
collectively as ``Futures Exchanges''.
---------------------------------------------------------------------------
The Fund will seek to achieve its investment objective by first
entering into cash-settled over-the-counter (``OTC'') total return swap
and forward transactions intended to replicate the return of the CCIER
(``OTC Derivatives Contracts'', as described further below) and,
second, to the extent market conditions are more favorable for such
futures as compared to OTC Derivatives Contracts, investing in the
Benchmark Component Futures Contracts that underlie the CCIER. It will
support these investments by holding the amounts of its margin,
collateral and other requirements relating to these obligations in
short-term obligations of the United States of two years or less
(``Treasuries''), cash and cash equivalents.
Third, if constrained by regulatory requirements or in view of
market conditions or if one or more of the other Benchmark Component
Futures Contracts is not available, the Fund may next invest in
exchange traded futures contracts that are economically identical or
substantially similar to the Benchmark Component Futures Contracts,
e.g., futures contracts that are based on changes in the price of WTI
oil traded on the Chicago Mercantile Exchange (``CME'').
When, in view of regulatory requirements and market conditions, the
Fund has invested to the fullest extent possible in the OTC Derivatives
Contracts and exchange-traded futures contracts, the Fund may then
invest in other OTC derivative contracts and/or other contracts and
instruments based on the Benchmark Component Futures Contracts or on
the price of the crude oil underlying the Benchmark Component Futures
Contracts, such as cash-settled options, cleared swap contracts and
swap contracts other than cleared swap contracts.\10\
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\10\ The Benchmark Component Futures Contracts, other exchange-
traded futures contracts that are economically identical or
substantially similar to the Benchmark Component Futures Contracts
and other contracts and instruments based on the Benchmark Component
Futures Contracts, are referred to collectively as ``Other Crude
Oil-Related Investments'', and together with OTC Derivatives
Contracts, ``Crude Oil Interests''.
---------------------------------------------------------------------------
Market conditions that USCF currently anticipates could cause the
Fund to invest in Other Crude Oil-Related Investments include those
allowing the Fund to obtain greater liquidity, to execute transactions
with more favorable pricing, or if the Fund or USCF exceeds position
limits or accountability levels established by an exchange.
The Fund will seek to achieve its investment objective by investing
so that the average daily percentage change in the Fund's NAV for any
period of 30 successive valuation days will be within plus/minus 10
percent (10%) of the average daily percentage change in the CCIER over
the same period. The Sponsor believes that market arbitrage
opportunities will cause daily changes in the Fund's Share price on the
NYSE Arca on a percentage basis to closely track the daily changes in
the Fund's per Share NAV on a percentage basis. The Sponsor also
believes that the net effect of this expected relationship and the
expected relationship described above between the Fund's per Share NAV
and the CCIER will be that the daily changes in the price of the Fund's
Shares on the NYSE Arca on a percentage basis will closely track the
daily changes in the CCIER on a percentage basis, plus interest income
from the Fund's short-term fixed income holdings, less the Fund's
expenses.\11\
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\11\ While the Fund is composed of, and is therefore a measure
of, the prices of the OTC Derivatives Contracts based upon futures
comprising the CCIER, there is expected to be a reasonable degree of
correlation between the CCIER and the cash or spot prices of the
commodities underlying the Benchmark Component Futures Contracts;
but the Fund's investment objective is not for its NAV or market
price of Shares to equal, in dollar terms, the spot prices of the
commodities underlying the Benchmark Component Futures Contracts or
the prices of any particular group of futures contracts.
---------------------------------------------------------------------------
The Fund will not seek to achieve its stated investment objective
over a period of time greater than one day. This is because natural
market forces called contango and backwardation can impact the total
return on an investment in the Fund's Shares relative to a hypothetical
direct investment in crude oil commodities and, in the future, it is
likely that the relationship between the market price of the Fund's
Shares and changes in the spot prices of the underlying commodities
will continue to be so impacted by contango and backwardation.
OTC Derivatives Contracts
According to the Registration Statement, the Fund will primarily
invest in OTC Derivatives Contracts that are based on Benchmark
Component Futures Contracts and, in the opinion of the Sponsor, are
traded in sufficient volume to permit the ready taking and liquidation
of positions. Such OTC Derivatives Contracts, as well as all other
Other Crude Oil-Related Investments that are OTC derivatives, will be
``swaps'' for purposes of Title VII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act that fall within the jurisdiction of
the Commodity Futures Trading Commission.
The OTC Derivatives Contracts will be entered between two parties,
outside of public exchanges, in private contracts. Unlike the exchange-
traded Benchmark Component Futures Contracts, each party to an OTC
Derivatives Contract bears credit risk with respect to the other party.
To reduce such credit risk, the Fund will generally enter into an
agreement with each counterparty based on the Master Agreement
published by the International Swaps and Derivatives Association, Inc.
(``ISDA'') that provides for the netting of overall exposure between
counterparties.\12\ In accordance with the terms and conditions of the
Fund's ISDA Master Agreement, pursuant to which the Fund's OTC
Derivatives Contracts will be entered into, the Fund will be entitled
to increase or decrease its notional exposure to the CCIER from time to
time, to among other things, manage Share purchases and reinvestment of
distributions, Fund Share redemptions and market repurchases of Shares,
and
[[Page 7887]]
meet other liquidity needs. Reducing notional exposure may be achieved
through different methods, including the use of offsetting forwards and
partial terminations of OTC Derivatives Contracts.
---------------------------------------------------------------------------
\12\ The ISDA Master Agreement allows for parties to calculate
and settle their obligations under the agreement on a ``net basis''
with a single payment. Consequently, the Sponsor's current
obligations (or rights) under a swap or forward agreement are
generally only equal to the net amount to be paid or received under
the agreement based on the relative values of such obligations (or
rights). In addition, in connection with the Master Agreements, the
Sponsor will enter into ISDA Credit Support Annexes (``CSAs'') with
its counterparties to mitigate counterparty credit exposure.
---------------------------------------------------------------------------
The Sponsor will assess or review, as appropriate, the
creditworthiness of each potential or existing counterparty to an OTC
Derivatives Contract pursuant to guidelines approved by the Sponsor's
board. In respect of the OTC Derivatives Contracts, the Fund will have
the ability to replace a counterparty or engage additional
counterparties at any time.
The daily marked-to-market value of an OTC Derivatives Contract
will be based upon the performance of a notional investment in the
CCIER. In turn, the performance of the CCIER will be based upon the
performance of the underlying Benchmark Component Futures Contracts.
Under the CSAs, the parties will be required to determine the mark-to-
market value of the OTC Derivative Contract(s) on a daily basis.
Subject to a minimum transfer amount, the party that is ``out of the
money'' would transfer collateral in the form of cash or U.S.
Treasuries to its counterparty to cover the exposure under the OTC
Derivative Contract.
The Fund may also enter into multiple OTC Derivatives Contracts for
the purpose of achieving its investment objective. If an OTC
Derivatives Contract is terminated, the Fund may either pursue the same
or other alternative investment strategies with an acceptable
counterparty, or make direct investments in the Benchmark Component
Futures Contracts or other investments that provide a similar return to
investing in the Benchmark Component Futures Contracts.
The Fund may also enter into certain transactions where an OTC
component is exchanged for a corresponding futures contract (an
``Exchange for Related Position'' or ``EFRP'' transaction).\13\ The
Fund may also employ spreads or straddles in its trading to mitigate
the differences in its investment portfolio and its goal of tracking
the price of the Benchmark Component Futures Contracts.\14\
---------------------------------------------------------------------------
\13\ In the most common type of EFRP transaction entered into by
the Fund, the OTC component is the purchase or sale of one or more
baskets of the Fund's Shares, as described below.
\14\ The Fund would use a spread when it chooses to take
simultaneous long and short positions in futures written on the same
underlying asset, but with different delivery months.
---------------------------------------------------------------------------
Creation and Redemption of Shares
According to the Registration Statement, the Fund will create and
redeem Shares from time to time, in one or more ``Creation Baskets'' or
``Redemption Baskets''. The creation and redemption of baskets will
only be made in exchange for delivery to the Fund or the distribution
by the Fund of the amount of Treasuries and/or cash represented by the
baskets being created or redeemed, the amount of which will be equal to
the combined NAV of the number of Shares included in the baskets being
created or redeemed determined as of 4:00 p.m. Eastern Time (``E.T.'')
on the day the order to create or redeem baskets is properly received.
``Authorized Participants'' are the only persons that may place
orders to create and redeem baskets. Authorized Participants must be
(1) registered broker dealers or other securities market participants,
such as banks and other financial institutions, that are not required
to register as broker-dealers to engage in securities transactions
described below, and (2) Depository Trust and Clearing Participants.
On any business day, an Authorized Participant may place an order
with the Marketing Agent to create one or more baskets. By placing a
purchase order, an Authorized Participant agrees to deposit Treasuries,
cash or a combination of Treasuries and cash with the Trust.
The total deposit required to create each basket (``Creation Basket
Deposit'') is the amount of Treasuries and/or cash that is in the same
proportion to the total assets of the Fund (net of estimated accrued
but unpaid fees, expenses and other liabilities) on the purchase order
date as the number of Shares to be created under the purchase order is
in proportion to the total number of Shares outstanding on the purchase
order date. The amount of cash deposit required is the difference
between the aggregate market value of the Treasuries required to be
included in a Creation Basket Deposit as of 4:00 p.m. E.T. on the date
the order to purchase is properly received and the total required
deposit.
The procedures by which an Authorized Participant can redeem one or
more baskets mirror the procedures for the creation of baskets. On any
business day, an Authorized Participant may place an order with the
Marketing Agent to redeem one or more baskets. Redemption orders must
be placed by 10:30 a.m. E.T. or the close of regular trading on the
NYSE Arca, whichever is earlier.
The Sponsor may, in its discretion, suspend the right of
redemption, or postpone the redemption settlement date, (1) for any
period during which NYSE Arca or any of the futures exchanges upon
which a Benchmark Component Futures Contract is traded is closed other
than customary weekend or holiday closings, or trading on NYSE Arca or
such futures exchanges is suspended or restricted, (2) for any period
during which an emergency exists as a result of which delivery,
disposal or evaluation of Treasuries is not reasonably practicable, or
(3) for such other period as the Sponsor determines to be necessary for
the protection of the shareholders.
Calculating Per Share NAV
According to the Registration Statement, the Fund's per Share NAV
will be calculated by taking the current market value of its total
assets; subtracting any liabilities; and dividing that total by the
total number of outstanding Shares.
The Administrator will calculate the NAV of the Fund once each NYSE
Arca trading day. The NAV for a normal trading day will be released
after 4:00 p.m. E.T. Trading during the Core Trading Session on the
NYSE Arca typically closes at 4:00 p.m. E.T. The Administrator will use
the updated value of the CCIER calculated shortly after the
determination by the relevant Futures Exchanges of the closing prices
of the Benchmark Component Futures Contracts (determined at the earlier
of the close of such exchange or 2:30 p.m. E.T.) for the contracts
traded on the Futures Exchanges, but calculate or determine the value
of all other investments of the Fund using market quotations, if
available, or other information customarily used to determine the fair
value of such investments as of the earlier of the close of the NYSE
Arca or 4:00 p.m. E.T. Other information customarily used in
determining fair value includes information consisting of market data
in the relevant market supplied by one or more third parties including,
without limitation, relevant rates, prices, yields, yield curves,
volatilities, spreads, correlations or other market data in the
relevant market; or information of the types described above from
internal sources if that information is of the same type used by the
Fund in the regular course of their business for the valuation of
similar transactions. Third parties supplying quotations or market data
may include, without limitation, dealers in the relevant markets, end-
users of the relevant product, information vendors, brokers and other
sources of market information.
Derivatives for which market quotes are readily available will be
valued at market value. Local closing prices will be used for all
instrument valuation purposes. Swaps traded on exchanges will use the
applicable exchange closing price where available.
[[Page 7888]]
With respect to specific derivatives, futures will generally be
valued at the settlement price of the relevant exchange. A total return
swap on the CCIER will be valued at the publicly available CCIER price.
The CCIER, in turn, is determined by the applicable index calculation
agent, which generally values the commodities underlying the Index at
the last reported sale price.
Indicative Fund Value
In addition, in order to provide updated information relating to
the Fund for use by investors and market professionals, the NYSE Arca
will calculate and disseminate throughout the Core Trading Session on
each trading day an updated Indicative Fund Value (``IFV''). The IFV
will be calculated by using the prior day's closing NAV per Share of
the Fund as a base and updating that value throughout the trading day
to reflect changes in the most recently reported trade prices for the
Benchmark Component Futures Contracts as reported by Bloomberg, L.P. or
another reporting service.
The IFV will be disseminated on a per Share basis every 15 seconds
during regular NYSE Arca Core Trading Session hours of 9:30 a.m. E.T.
to 4:00 p.m. E.T. The normal trading hours of the ICE Exchange ends
prior to the close of the Core Trading Session on NYSE Arca. As a
result, there will be a gap in time at the beginning and/or the end of
each day during which the Fund's Shares are traded on the NYSE Arca,
but real-time futures exchange trading prices for Benchmark Component
Futures Contracts traded on the ICE Exchange are not available. During
such gaps in time the IFV will be calculated based on the end of day
price of such Benchmark Component Futures Contracts from Futures
Exchanges immediately preceding trading session. In addition, Other
Crude Oil-Related Investments and Treasuries held by the Fund will be
valued by the Administrator, using rates and points received from
client-approved third party vendors (such as Reuters and WM Company)
and advisor quotes. These investments will not be included in the IFV.
The IFV will be available through on-line information services.
With respect to specific derivatives: Total return swaps may be
valued intraday using the underlying asset price, or another proxy as
determined to be appropriate by a third party market data provider.
Exchange listed options may be valued intraday using the relevant
exchange data, or another proxy as determined to be appropriate by a
third party market data provider.
Availability of Information
The NAV for the Fund's Shares will be disseminated daily to all
market participants at the same time. The intraday, closing prices, and
settlement prices of the Benchmark Component Futures Contracts will be
readily available from automated quotation systems, published or other
public sources, or major market data vendors.
Complete real-time data for the Benchmark Component Futures
Contracts is available by subscription from major market data vendors.
ICE Futures also provides delayed futures information on current and
past trading sessions and market news free of charge on its Web site.
The specific contract specifications for the Benchmark Component
Futures Contracts are also available on such Web site, as well as other
financial informational sources. Quotation and last-sale information
regarding the Shares will be disseminated through the facilities of the
CTA. In addition, the Fund's Web site, www.uscfinvestments.com, will
display the applicable end of day closing NAV. The daily holdings of
the Fund will be available on the Fund's Web site. The Fund's total
portfolio composition will be disclosed each business day that the NYSE
Arca is open for trading, on the Fund's Web site. The Web site
disclosure of portfolio holdings will be made daily and will include,
as applicable, (i) the composite value of the total portfolio, (ii) the
name, percentage weighting, and value of OTC Derivatives Contracts and
each Benchmark Component Futures Contract, (iii) the name and value of
each Treasury security and cash equivalent, and (iv) the amount of cash
held in the Fund's portfolio. The Fund's Web site will be publicly
accessible at no charge. This Web site disclosure of the portfolio
composition of the Fund will occur at the same time as the disclosure
by the Sponsor of the portfolio composition to Authorized Participants
so that all market participants will be provided portfolio composition
information at the same time. Therefore, the same portfolio information
will be provided on the public Web site as well as in electronic files
provided to Authorized Participants. Accordingly, each investor will
have access to the current portfolio composition of the Fund through
the Fund's Web site.
Intra-day price information for exchange-traded derivative
instruments will be available from the applicable exchange and from
major market data vendors. Intra-day price information for OTC options,
forwards, and OTC derivative instruments will be available from major
market data vendors. Intraday and closing price information for
exchange-traded options and futures will be available from the
applicable exchange and from major market data vendors. In addition,
intra-day price information for U.S. exchange-traded options is
available from the Options Price Reporting Authority.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\15\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Equities
Rule 7.12 have been reached. Trading also may be halted because of
market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable.
---------------------------------------------------------------------------
\15\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
The Exchange may halt trading during the day in which an
interruption to the dissemination of the IFV or the value of the Index
occurs. If the interruption to the dissemination of the IFV, or the
value of the Index persists past the trading day in which it occurred,
the Exchange will halt trading no later than the beginning of the
trading day following the interruption. In addition, if the Exchange
becomes aware that the NAV with respect to the Shares is not
disseminated to all market participants at the same time, it will halt
trading in the Shares until such time as the NAV is available to all
market participants.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. in accordance with
NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading
Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, the minimum price variation (``MPV'') for
quoting and entry of orders in equity securities traded on the NYSE
Arca Marketplace is $0.01, with the exception of securities that are
priced less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.200. The trading of the Shares
will be subject to NYSE Arca Equities Rule 8.200,
[[Page 7889]]
Commentary .02(e), which sets forth certain restrictions on Equity
Trading Permit (``ETP'') Holders acting as registered Market Makers in
Trust Issued Receipts to facilitate surveillance. The Exchange
represents that, for initial and/or continued listing, the Fund will be
in compliance with Rule 10A-3 \16\ under the Act, as provided by NYSE
Arca Equities Rule 5.3. A minimum of 100,000 Shares will be outstanding
at the commencement of trading on the Exchange.
---------------------------------------------------------------------------
\16\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------
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.\17\ 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.
---------------------------------------------------------------------------
\17\ 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 and the Benchmark
Component Futures Contracts 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 and the Benchmark Component Futures Contracts from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares and the Benchmark Component
Futures Contracts from markets and other entities that are members of
ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement (``CSSA'').\18\
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\18\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Fund may trade on markets that are members of ISG or with which the
Exchange has in place a CSSA. The Exchange has in place a CSSA with
ICE Futures Europe.
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Not more than 10% of the net assets of the Fund in the aggregate
invested in futures contracts shall consist of futures contracts whose
principal market is not a member of the ISG or is a market with which
the Exchange does not have a comprehensive surveillance sharing
agreement.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding
(a) the description of the portfolios, and (b) limitations on portfolio
holdings or reference assets shall constitute continued listing
requirements for listing the Shares 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 risks involved
in trading the Shares during the Opening and Late Trading Sessions when
an updated IFV will not be calculated or publicly disseminated; (2) the
procedures for purchases and redemptions of Shares in Creation Baskets
and Redemption Baskets (and that Shares are not individually
redeemable); (3) NYSE Arca Equities Rule 9.2(a), which imposes a duty
of due diligence on its ETP Holders to learn the essential facts
relating to every customer prior to trading the Shares; (4) how
information regarding the IFV is disseminated; (5) that a static IFV
will be disseminated, between the close of trading on the CME and the
close of the NYSE Arca Core Trading Session; (6) the requirement that
ETP Holders deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
and (7) trading information.
In addition, the Information Bulletin will advise ETP Holders,
prior to the commencement of trading, of the prospectus delivery
requirements applicable to the Fund. The Exchange notes that investors
purchasing Shares directly from the Fund will receive a prospectus. ETP
Holders purchasing Shares from the Fund for resale to investors will
deliver a prospectus to such investors. The Information Bulletin will
also discuss any exemptive, no-action, and interpretive relief granted
by the Commission from any rules under the Act. In addition, the
Information Bulletin will reference that the Fund is subject to various
fees and expenses described in the Registration Statement. The
Information Bulletin will also reference that the CFTC has regulatory
jurisdiction over the trading of Benchmark Component Futures Contracts
and the OTC Derivatives Contracts.
The Information Bulletin will also disclose the trading hours of
the Shares that the NAV for the Shares will be calculated after 4:00
p.m. E.T. each trading day. The Information Bulletin will disclose that
information about the Shares will be publicly available on the Fund's
Web site.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \19\ 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.
---------------------------------------------------------------------------
\19\ 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
8.200. 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 or FINRA, on behalf of
the Exchange, or both, will communicate as needed regarding trading in
the Shares, and Benchmark Component Futures Contracts with
[[Page 7890]]
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 and Benchmark
Component Futures Contracts from such markets and other entities. In
addition, the Exchange may obtain information regarding trading in the
Shares and Benchmark Component Futures Contracts from markets and other
entities that are members of ISG or with which the Exchange has in
place a CSSA.
Not more than 10% of the net assets of the Fund in the aggregate
invested in futures contracts shall consist of futures contracts whose
principal market is not a member of the ISG or is a market with which
the Exchange does not have a CSSA. 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 intraday, closing prices, and settlement prices of the Benchmark
Component Futures Contracts will be readily available from the
applicable Futures Exchanges' Web sites, automated quotation systems,
published or other public sources, or on-line information services.
Complete real-time data for the Benchmark Component Futures
Contracts is available by subscription from on-line information
services. The Futures Exchanges also provide delayed futures
information on current and past trading sessions and market news free
of charge on their Web sites. The specific contract specifications for
the Benchmark Component Futures Contracts are also available on such
Web sites, as well as other financial informational sources.
Information regarding exchange-traded cash-settled options and cleared
swap contracts will be available from the applicable exchanges and
major market data vendors. Quotation and last-sale information
regarding the Shares will be disseminated through the facilities of the
CTA. In addition, the Fund's Web site, will display the applicable end
of day closing NAV. The Fund's total portfolio composition will be
disclosed each business day that the NYSE Arca is open for trading, on
the Fund's Web site. The Web site disclosure of portfolio holdings will
be made daily and will include, as applicable, (i) the composite value
of the total portfolio, (ii) the name, percentage weighting, and value
of OTC Derivatives Contracts and each Benchmark Component Futures
Contract, (iii) the name and value of each Treasury security and cash
equivalent, and (iv) the amount of cash held in the Fund's portfolio.
The Fund's disclosure of derivative positions will include information
that market participants can use to value these positions intraday.
Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Shares. Trading
in Shares of the Fund will be halted if the circuit breaker parameters
in NYSE Arca Equities Rule 7.12 have been reached or because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable
The proposed rule change is designed to promote just and equitable
principles of trade and 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 issue of Trust Issued Receipts based on oil 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 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.
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 purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of an
additional type of exchange-traded product that primarily hold
derivatives and futures contracts and that will enhance competition
among market participants, to the benefit of investors and the
marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve 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-2016-177 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-2016-177. 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
[[Page 7891]]
available publicly. All submissions should refer to File Number SR-
NYSEArca-2016-177 and should be submitted on or before February 13,
2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01297 Filed 1-19-17; 8:45 am]
BILLING CODE 8011-01-P
