Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade Shares of the Euro Gold Trust, Pound Gold Trust, and the Yen Gold Trust Under NYSE Arca Equities Rule 8.201, 18492-18502 [2017-07877]
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18492
Federal Register / Vol. 82, No. 74 / Wednesday, April 19, 2017 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 16 and paragraph (f) of Rule
19b–4 thereunder.17 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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:
jstallworth on DSK7TPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
BatsBYX–2017–06 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 No.
SR–BatsBYX–2017–06. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BatsBYX–
2017–06, and should be submitted on or
before May 10, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Brent J. Fields,
Secretary.
[FR Doc. 2017–07868 Filed 4–18–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80457; File No. SR–
NYSEArca–2017–33]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change, as Modified by
Amendment No. 1 Thereto, To List and
Trade Shares of the Euro Gold Trust,
Pound Gold Trust, and the Yen Gold
Trust Under NYSE Arca Equities Rule
8.201
April 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 March
31, 2017, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. On April 12, 2017, the
Exchange filed Amendment No. 1 to the
proposal, which amended and replaced
the proposed rule change in its entirety.
The Commission is publishing this
notice to solicit comments on the
proposed rule change, as modified by
18 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
16 15
17 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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Amendment No. 1, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the Euro Gold Trust,
Pound Gold Trust, and the Yen Gold
Trust under NYSE Arca Equities Rule
8.201. The proposed 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 Euro Gold
Trust, Pound Gold Trust, and the Yen
Gold Trust (each a ‘‘Fund’’ and,
collectively, the ‘‘Funds’’), which are
series of the World Currency Gold Trust
(‘‘Trust’’), under NYSE Arca Equities
Rule 8.201.4 Under NYSE Arca Equities
Rule 8.201, the Exchange may propose
to list and/or trade pursuant to unlisted
trading privileges (‘‘UTP’’)
‘‘Commodity-Based Trust Shares.’’ 5
The Funds will not be registered
investment companies under the
Investment Company Act of 1940 6 and
are not required to register under such
act.
The Sponsor of the Funds and the
Trust will be WGC USA Asset
4 On March 30, 2017, the Trust filed with the
Commission its initial registration statement on
Form S–1 under the Securities Act of 1933 (‘‘1933
Act’’) relating to the Funds (File No. 333–217041)
(‘‘Registration Statement’’). The description of the
operation of the Trust and the Funds herein is
based, in part, on the Registration Statement.
5 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
6 15 U.S.C. 80a–1.
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jstallworth on DSK7TPTVN1PROD with NOTICES
Management Company, LLC (the
‘‘Sponsor’’).7 BNY Mellon Asset
Servicing, a division of The Bank of
New York Mellon (‘‘BNYM’’), will be
the Funds’ administrator
(‘‘Administrator’’) and transfer agent
(‘‘Transfer Agent’’) and will not be
affiliated with the Trust, the Funds or
the Sponsor. BNYM will also serve as
the custodian of the Funds’ cash, if any.
HSBC Bank plc will be the custodian
(the ‘‘Custodian’’) of the Funds’ gold.
The Commission has previously
approved listing on the Exchange under
NYSE Arca Equities Rules 5.2(j)(5) and
8.201 of other precious metals and goldbased commodity trusts, including the
Merk Gold Trust; 8 ETFS Gold Trust,9
ETFS Platinum Trust 10 and ETFS
Palladium Trust (collectively, the
‘‘ETFS Trusts’’); 11APMEX Physical-1
oz. Gold Redeemable Trust; 12 Sprott
Gold Trust; 13 SPDR Gold Trust
(formerly, streetTRACKS Gold Trust);
iShares Silver Trust; 14 iShares COMEX
Gold Trust; 15 and Long Dollar Gold
Trust.16 Prior to their listing on the
Exchange, the Commission approved
listing of the streetTRACKS Gold Trust
on the New York Stock Exchange
7 The Trust will be a Delaware statutory trust
consisting of multiple series, each of which will
issue common units of beneficial interest, which
represent units of fractional undivided beneficial
interest in and ownership of such series. The term
of the Trust and each series will be perpetual
(unless terminated earlier in certain circumstances).
The sole trustee of the Trust will be Delaware Trust
Company (‘‘Trustee’’).
8 Securities Exchange Act Release No. 71378
(January 23, 2014), 79 FR 4786 (January 29, 2014)
(SR–NYSEArca–2013–137).
9 Securities Exchange Act Release No. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40).
10 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
11 Securities Exchange Act Release No. 61220
(December 22, 2009), 74 FR 68895 (December 29,
2009) (SR–NYSEArca–2009–94).
12 Securities Exchange Act Release No. 66930
(May 7, 2012), 77 FR 27817 (May 11, 2012) (SR–
NYSEArca–2012–18).
13 Securities Exchange Act Release No. 61496
(February 4, 2010), 75 FR 6758 (February 10, 2010)
(SR–NYSEArca–2009–113).
14 See Securities Exchange Act Release No. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust).
15 See Securities Exchange Act Release No. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
(SR–NYSEArca–2007–76) (approving listing on the
Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11,
2007), 72 FR 39114 (July 17, 2007) (SR–NYSEArca–
2007–43) (order approving listing on the Exchange
of iShares COMEX Gold Trust).
16 See Securities Exchange Act Release No. 79518
(December 9, 2016), 81 FR 90876 (December 15,
2016) (SR–NYSEArca–2016–84) (order approving
listing and trading of shares of the Long Dollar Gold
Trust).
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(‘‘NYSE’’) 17 and listing of iShares
COMEX Gold Trust and iShares Silver
Trust on the American Stock Exchange
LLC.18 In addition, the Commission has
approved trading of the streetTRACKS
Gold Trust and iShares Silver Trust on
the Exchange pursuant to UTP.19
The Euro Gold Trust will be designed
to track the performance of the Solactive
GLD® EUR Gold Index, less the
expenses of the Fund’s operations. The
Solactive GLD® EUR Gold Index seeks
to track the daily performance of a long
position in physical gold (as represented
by the ‘‘Gold Price’’, as defined below)
and a short position in the Euro (i.e., a
long U.S. dollar (‘‘USD’’) exposure
versus the Euro).
The Pound Gold Trust will be
designed to track the performance of the
Solactive GLD® GBP Gold Index, less
the expenses of the Fund’s operations.
The Solactive GLD® GBP Gold Index
seeks to track the daily performance of
a long position in physical gold (as
represented by the Gold Price) and a
short position in the British Pound
Sterling (i.e., a long USD exposure
versus the British Pound Sterling).
The Yen Gold Trust will be designed
to track the performance of the Solactive
GLD® JPY Gold Index, less the expenses
of the Fund’s operations. The Solactive
GLD® JPY Gold Index seeks to track the
daily performance of a long position in
physical gold (as represented by the
Gold Price) and a short position in the
Japanese Yen (i.e., a long USD exposure
versus the Japanese Yen). The Japanese
Yen, the Euro and the British Pound
Sterling are referred to collectively
herein as the ‘‘Reference Currencies’’.
Each of the Solactive GLD® EUR Gold
Index, Solactive GLD® GBP Gold Index,
and Solactive GLD® JPY Gold Index are
referred to herein as an ‘‘Index’’ and,
collectively, as the ‘‘Indexes’’.
Operation of the Funds
According to the Registration
Statement, each Fund will be a passive
17 See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
streetTRACKS Gold Trust on NYSE).
18 See Securities Exchange Act Release Nos.
51058 (January 19, 2005), 70 FR 3749 (January 26,
2005) (SR–Amex–2004–38) (order approving listing
of iShares COMEX Gold Trust on the American
Stock Exchange LLC); 53521 (March 20, 2006), 71
FR 14967 (March 24, 2006) (SR–Amex–2005–72)
(approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
19 See Securities Exchange Act Release Nos.
53520 (March 20, 2006), 71 FR 14977 (March 24,
2006) (SR–PCX–2005–117) (approving trading on
the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731
(March 4, 2005) (SR–PCX–2004–117) (approving
trading on the Exchange of the streetTRACKS Gold
Trust pursuant to UTP).
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18493
investment vehicle and will be designed
to track the performance of its Index
regardless of: (i) The price of gold or the
corresponding Reference Currency; (ii)
market conditions; and (iii) whether the
Index is increasing or decreasing in
value. Each Fund’s holdings generally
will consist entirely of ‘‘Gold
Bullion’’.20 Substantially all of the
Funds’ Gold Bullion holdings are
delivered by ‘‘Authorized Participants’’
(as described below) in exchange for
Fund Shares. The Funds will not hold
their respective Reference Currencies.
The Funds generally will not hold USDs
(except from time to time in very
limited amounts to pay Fund expenses).
The Funds’ Gold Bullion holdings are
not managed and the Funds do not have
any investment discretion.
Each Fund’s net asset value (‘‘NAV’’)
will go up or down each Business Day 21
based primarily on two factors. The first
is the change in the price of gold
measured in USDs from the prior
Business Day. This drives the value of
the Fund’s Gold Bullion holdings
measured in USDs up (as gold prices
increase) or down (as gold prices fall).
The second is the change in the value
of the Fund’s corresponding Reference
Currency against the USD from the prior
Business Day. This drives the value of
the Fund’s Gold Bullion holdings
measured in the Reference Currency up
(when the value of the USD against the
Reference Currency increases) or down
(when the value of the USD against the
Reference Currency declines). The value
of gold and the Reference Currencies are
based on publicly available, transparent
prices—for gold, the LBMA Gold Price
AM; for currencies, the WMR Fix.22
Because each Fund generally holds
only Gold Bullion (and not USDs or its
Reference Currency), the actual
economic impact of changes in the
value of the Fund’s Reference Currency
against the USD from day to day can be
reflected in the Fund only by moving an
amount of Gold Bullion ounces of
equivalent value into or out of the Fund
on a daily basis. Therefore, each Fund
will seek to track the performance of its
Index by entering into a daily
20 Gold Bullion means (a) gold meeting the
requirements of ‘‘London Good Delivery Standards’’
or (b) credit to an ‘‘Unallocated Account’’
representing the right to receive Gold Bullion
meeting the requirements of London Good Delivery
Standards. London Good Delivery Standards are the
specifications for weight dimensions, fineness (or
purity), identifying marks and appearance set forth
in ‘‘The Good Delivery Rules for Gold and Silver
Bars’’ published by the London Bullion Markets
Association (‘‘LBMA’’).
21 A Business Day with respect to the Funds is
any day the Exchange is open for business.
22 The WMR Fix is the World Markets Company
plc foreign exchange benchmark rate.
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jstallworth on DSK7TPTVN1PROD with NOTICES
transaction with the ‘‘Gold Delivery
Provider’’ as described herein.
As with the Indexes, Fund Shares are
intended to increase in value when the
price of the Gold Bullion held by a Fund
increases (as measured by the Gold
Price) and/or when the price of the USD
increases against the value of the Fund’s
corresponding Reference Currency.
Fund Shares are intended to decrease in
value when the price of the Gold
Bullion held by a Fund decreases (as
measured by the Gold Price) and/or
when the price of the USD declines
against the value of the Fund’s
corresponding Reference Currency. The
net impact of these changes determines
the value of each Fund on a daily basis.
Although investors will purchase Shares
of the Funds in USD, each Fund is
designed to provide investors with the
economic effect of holding gold in terms
of the Fund’s corresponding Reference
Currency, rather than the USD.
Description of the Indexes
Each Index is maintained and
calculated by Solactive AG, the Index
Provider. The description of the strategy
and methodology underlying each Index
is based on rules published by the Index
Provider (the ‘‘Index Rules’’).
Each Index is described as a
‘‘notional’’ or ‘‘synthetic’’ portfolio or
strategy because there is no actual
portfolio of assets to which any person
is entitled or in which any person has
any ownership interest. Each Index
references certain assets (i.e., gold and
one of the Reference Currencies), the
performance of which will be used as a
reference point for calculating the daily
performance of the Index (each, an
‘‘Index Level’’). Each Index seeks to
track the daily performance of a long
position in physical gold and a short
position in its corresponding Reference
Currency relative to USDs (i.e., a long
USD exposure versus the corresponding
Reference Currency). If the Gold Price
(as defined below) increases and the
corresponding Reference Currency
depreciates against the USD, each Index
Level is intended to increase.
Conversely, if the Gold Price decreases
and the corresponding Reference
Currency appreciates against the USD,
each Index Level is intended to
decrease. In certain cases, the
appreciation of the Gold Price or the
depreciation of a Reference Currency
may be offset by the appreciation of
such Reference Currency or the
depreciation of the Gold Price, as
applicable. The net impact of these
changes determines each Index Level on
a daily basis.
Rather than viewing an Index in terms
of percentage weightings of gold and the
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corresponding Reference Currency, it is
more accurate to view the Index as
being weighted 100% in gold with an
overlay of the Reference Currency that
essentially reflects how the gold is
performing in terms of the Reference
Currency. Just as the gold price in terms
of U.S. dollars is not weighted partially
in gold and partially in U.S. dollars, an
Index is not weighted partially in gold
and partially in the corresponding
Reference Currency.
According to the Registration
Statement, the daily price of gold
generally is the primary driver of Index
returns. Fluctuations in the value of
each Reference Currency has
historically typically accounted for less
than 1% of the daily returns of the
corresponding Index. Each Index values
gold on a daily basis using the ‘‘Gold
Price.’’ The Gold Price generally is the
LBMA Gold Price AM. The ‘‘LBMA
Gold Price’’ means the price per troy
ounce of gold stated in USDs as set via
an electronic auction process run twice
daily at 10:30 a.m. and 3:00 p.m.
London time each Business Day as
calculated and administered by the ICE
Benchmark Administration Limited
(‘‘IBA’’) and published by the LBMA on
its Web site. The ‘‘LBMA Gold Price
AM’’ is the 10:30 a.m. LBMA Gold
Price. IBA, an independent specialist
benchmark administrator, provides the
price platform, methodology and the
overall administration and governance
for the LBMA Gold Price.
According to the Registration
Statement, each Index reflects the price
of Gold in U.S. dollars adjusted by the
price of its corresponding Reference
Currency (as specified above) against
the U.S. dollar. Each Index is designed
to measure daily Gold Bullion returns as
though an investor had invested in Gold
Bullion in terms of the Reference
Currency reflected in that Index. In
general, each Index is intended to
increase in value when the price of gold
(as measured by the Gold Price)
increases and/or when the value of the
USD increases against the value of the
corresponding Reference Currency. In
general, each Index is intended to
decrease in value when the price of gold
(as measured by the Gold Price)
decreases and/or when the value of the
USD declines against the value of the
corresponding Reference Currency. The
net impact of these changes determines
the value of each Index on a daily basis.
Each Fund’s Index is maintained and
calculated by the Index Provider.
According to the Registration
Statement, the daily price of gold in
USD generally is the primary driver of
Index returns. Historically, fluctuations
in the price of each Reference Currency
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Sfmt 4703
have accounted for only a small portion
of Index returns. Each Index is not
designed to reflect the price of spot
trades in its corresponding Reference
Currency (which per market convention
assume delivery of the Reference
Currency). Rather, each Index assumes
that positions in its corresponding
Reference Currency are rolled forward
and not physically settled. The Index
does this by approximating what would
occur if spot-next trades were entered
into on each ‘‘Index Business Day’’ and
closed out on the next Index Business
Day against spot transactions.23 Each
Index approximates the cost of entering
into a spot-next trade by linearly
interpolating the cost of that trade based
on the WM/Reuters (‘‘WMR’’) ‘‘SW—
Spot Week (One Week)’’ forward rates
and a spot transaction.24 The ‘‘Spot Next
Forward Points’’ adjust the spot price to
reflect the cost of rolling Reference
Currency positions.
Valuation of the Reference Currency in
an Index
Each Reference Currency is expressed
in the corresponding Index in terms of
a number of foreign currency units
relative to one USD (e.g., a number of
Japanese Yen per one USD) or in terms
of a number of USDs per one unit of the
reference currency (e.g., a number of
USDs per one Euro). In order to reflect
currency returns and for purposes of
calculating each Index, each Index
references the Spot Rate and Spot Next
Forward Points associated with its
Reference Currency.
A ‘‘Spot Rate’’ is the rate at which a
Reference Currency can be exchanged
for USDs on an immediate basis, subject
to the applicable settlement cycle. In
other words, if an investor wanted to
convert USDs into Euros, the investor
could enter into a spot transaction at the
Spot Rate (subject to the bid/ask) and
would receive Euros in a number of
days, depending on the settlement cycle
of that currency. Generally, the
23 An Index Business Day is (i) any day that is a
business day in New York and London, (ii) any day
(other than a Saturday or Sunday) on which the
LBMA is scheduled to publish the LBMA Gold
Price AM, and (iii) any day (other than a Saturday
or Sunday) on which WM Company is scheduled
to publish prices for each Reference Currency pair.
24 WMR provides both intraday and closing fixes
for currency spot rates, forward contracts and nondeliverable forward contracts. WMR rates are
widely utilized by financial institutions in
evaluating global markets. Thomson Reuters
Benchmark Services Limited, the administrator of
the WM/Reuters spot, forward and non-deliverable
foreign exchange benchmark rates, has stated that
it complies with the International Organization of
Securities Commissions (IOSCO) Principles for
Financial Benchmarks. See https://
financial.thomsonreuters.com/content/dam/
openweb/documents/pdf/financial/wm-reutersiosco-principles-statement.pdf.
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settlement of a ‘‘spot’’ transaction is two
currency business days. The following
table sets forth the Reference Currencies
(each of which is measured against
USDs), the applicable Reuters Page for
each Spot Rate referenced by the
applicable Index and the market
convention for quoting such currency.
Reference currency
Reuters page
Market convention for
quotation
EUR/USD .........................................
USD/JPY ..........................................
GBP/USD .........................................
USDEURFIX=WM .......................................................................................
USDJPYFIX=WM ........................................................................................
USDGBPFIX=WM .......................................................................................
Number of USD per one EUR.
Number of JPY per one USD.
Number of USD per one GBP.
jstallworth on DSK7TPTVN1PROD with NOTICES
Each Index generally references the
Spot Rate for its Reference Currency as
of 9:00 a.m. London time, but may use
different fixing times for certain reasons
as described in the Index Rules.
According to the Registration
Statement, the World Markets Company
plc (‘‘WM’’) provides an exchange rate
service that publishes Spot Rates at
fixed times throughout the global
trading day.25 WM does not use a panel
or polling solicitation process to obtain
underlying data in the benchmark
calculation process. WM uses
transactional data to set ‘‘Trade Rates,’’
reflecting data from actual transactions
entered into on an arm’s length basis
between buyers and sellers in that
market, where that data is available and
reflects sufficient liquidity.26
The Thomson Reuters Market Data
System is the primary infrastructure
25 The Commission has previously approved for
Exchange trading issues of Currency Trust Shares
based on the WM/Reuters closing rate. See, e.g.,
Securities Exchange Act Release No. 58365 (August
14, 2008), 73 FR 49522 (August 21, 2008) (SR–
NYSEArca–2008–81) (notice of filing and order
granting accelerated approval of proposed rule
change relating to listing and trading of four
CurrencyShares Trusts). The Sponsor represents
that WM/Reuters utilizes the same methodology in
calculating the Closing Spot Rate and the ‘‘Spot
Rate’’ as defined herein. In addition, the
Commission has approved for Exchange listing and
trading exchange-traded products based on indexes
that use the WM/Reuters Closing Spot Rate to
calculate the applicable foreign currency exchange
rate. See, e.g., Securities Exchange Act Release Nos.
56592 (October 1, 2007), 72 FR 57364 (October 9,
2007) (SR–Amex–2007–60) (order approving
proposed rule change relating to the listing and
trading on the American Stock Exchange of shares
of eight funds of the ProShares Trust based on MSCI
international equity indexes); 55985 (June 29,
2007), 72 FR 37291 (July 9, 2007) (SR–NYSEArca–
2007–47) (notice of filing and order granting
accelerated approval of proposed rule change to list
and trade shares of the iShares FTSE EPRA/NAREIT
Asia Index Funds). See also, Securities Exchange
Act Release Nos. 58458 (September 3, 2008), 73 FR
52717 (September 10, 2008) (SR–NYSEArca–2008–
95) (notice of filing and immediate effectiveness of
proposed rule change relating to a change in net
asset value calculations for CurrencyShares Trusts
to use the WM/Reuters Closing Spot Rate); 79518
(December 9, 2016), 81 FR 90876 (December 15,
2016) (SR–NYSEArca–2016–84) (order approving
listing and trading of shares of the Long Dollar Gold
Trust).
26 The Spot Rate is calculated by WMR using
observable data from arms-length transactions
between buyers and sellers in the applicable
currency market.
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15:06 Apr 18, 2017
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used to source spot foreign exchange
rates used in the calculation of the rates.
Other systems may be used where the
appropriate rates are not available on
the Thomson Reuters architecture.
Over a five-minute fix period, actual
trades executed and bid and offer order
rates from the order matching systems
are captured every second from 2
minutes 30 seconds before to 2 minutes
30 seconds after the time of the fix.
From each data source, a single traded
rate will be captured—this will be
identified as a bid or offer depending on
whether the trade is a buy or sell. A predefined spread set for each currency at
each fix to reflect liquidity at different
times of day will be applied to the Trade
Rate to calculate the opposite bid or
offer. All captured trades will be
subjected to validation checks. This may
result in some captured data being
excluded from the fix calculation.
In most spot currency transactions,
settlement is two currency business
days after the trade date. A spot-next
trade effectively extends the spot
settlement cycle by one Business Day
(i.e., the ‘‘next’’ day) and a Spot-Next
Forward Point represents the difference
in price between a spot transaction and
a spot-next trade. Combining a spot-next
trade with a spot transaction allows for
exposure to the currency without taking
delivery. By entering on each Index
Business Day into notional spot-next
trades that are closed the next Index
Business Day against spot transactions,
each Index is exposed to its
corresponding Reference Currency
without having to take delivery of the
currency. Each Index approximates the
cost of entering into a spot-next trade by
linearly interpolating the cost of that
trade based on the WM/Reuters ‘‘SW—
Spot Week (One Week)’’ forward rates
and a spot transaction.
The following table sets forth the
Reference Currencies (each of which is
measured against USDs) and the
applicable Reuters Page for each SW—
Spot Week (One Week) forward rate
referenced by each Index.
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Reference currency
EUR/USD ......
USD/JPY .......
GBP/USD ......
Reuters page
USDEURSWFIX=WM.
USDJPYSWFIX=WM.
USDGBPSWFIX=WM.
Each Index references the SW—Spot
Week (One Week) forward rate for its
Reference Currency as of 9:00 a.m.
London time.
The Index Provider will publish the
Index Levels (also referred to herein as
‘‘Index values’’) as of each Index
Business Day in accordance with the
Index Rules. If an Index Business Day is
not a Publication Day, the Index
Provider will not publish the Index
Levels and the Index Provider will
resume publishing the Index Levels on
the immediately following Publication
Day, subject to the consequences of the
occurrence of a Market Disruption Event
or Extraordinary Event. A ‘‘Publication
Day’’ is any day that (a) is an Index
Business Day and (b) is not on a day on
which a Market Disruption Event or
Extraordinary Event has occurred or is
continuing.
The Gold Delivery Agreement
Pursuant to the terms of the Gold
Delivery Agreement, each Fund will
enter into a transaction to deliver Gold
Bullion to, or receive Gold Bullion from,
the ‘‘Gold Delivery Provider’’ each
Business Day’’. The amount of Gold
Bullion transferred essentially will be
equivalent to the Fund’s profit or loss as
if the Fund had exchanged the
corresponding Reference Currency for
USDs in an amount equal to the Fund’s
holdings of Gold Bullion on such day.
In general, if there is a currency gain
(i.e., the value of the USD against the
corresponding Reference Currency
increases), the Fund will receive Gold
Bullion.27 In general, if there is a
currency loss (i.e., the value of the USD
against the corresponding Reference
Currency decreases), the Fund will
deliver Gold Bullion. In this manner,
the amount of Gold Bullion held by a
27 The Gold Delivery Provider will not be
affiliated with the Trust, the Funds, the Sponsor,
the Trustee, the Administrator, the Transfer Agent,
the Custodian or the Index Provider.
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jstallworth on DSK7TPTVN1PROD with NOTICES
Fund will be adjusted to reflect the
daily change in the value of the
corresponding Reference Currency
against the USD.28 The Gold Delivery
Agreement requires Gold Bullion
ounces equal to the value of the ‘‘Gold
Delivery Amount’’ to be delivered to the
custody account of a Fund or the Gold
Delivery Provider, as applicable. The fee
that a Fund pays the Gold Delivery
Provider for its services under the Gold
Delivery Agreement is accrued daily
and reflected in the calculation of the
Gold Delivery Amount. The Gold
Delivery Amount is the amount of Gold
Bullion to be delivered into or out of a
Fund on a daily basis to reflect price
movements in the Fund’s corresponding
Reference Currency against the USD,
calculated pursuant to the Gold Delivery
Agreement.
Market Disruption and Extraordinary
Events
From time to time, unexpected events
may cause the calculation of an Index
and/or the operation of a Fund to be
disrupted. These events are expected to
be relatively rare, but there can be no
guarantee that these events will not
occur. These events are referred to as
either ‘‘Market Disruption Events’’ or
‘‘Extraordinary Events’’ depending
largely on their significance and
potential impact to the Index and Fund.
Market Disruption Events with respect
to a Fund generally include disruptions
in the trading of gold or the Fund’s
Reference Currency, delays or
disruptions in the publication of the
LBMA Gold Price or the Reference
Currency prices, and unusual market or
other events that are tied to either the
trading of gold or the Reference
Currency or otherwise have a significant
impact on the trading of gold or the
Reference Currency. For example,
market conditions or other events which
result in a material limitation in, or a
suspension of, the trading of physical
gold generally would be considered
Market Disruption Events, as would
material disruptions or delays in the
determination or publication of the
LBMA Gold Price AM. Similarly, market
conditions which prevent, restrict or
delay the Gold Delivery Provider’s
ability to convert a Reference Currency
to USDs or deliver a Reference Currency
through customary channels generally
would be considered a Market
Disruption Event, as would material
disruptions or delays in the
determination or publication of WMR
28 If the applicable currency exchange rates did
not change from one day to the next, or the net
impact of such changes was zero, then a Fund
would neither deliver nor receive Gold Bullion
pursuant to the Gold Delivery Agreement.
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spot prices for any Reference Currency.
The complete definition of a Market
Disruption Event is set forth below.
A ‘‘Market Disruption Event’’ with
respect to a Fund occurs if either an ‘‘FX
Disruption Event’’ or a ‘‘Gold Disruption
Event’’ occurs.
An ‘‘FX Disruption Event’’ with
respect to a Fund occurs if any of the
following exist on any Index Business
Day with respect to the Fund’s
Reference Currency:
(i) an event, circumstance or cause
(including, without limitation, the
adoption of or any change in any
applicable law or regulation) that has
had or would reasonably be expected to
have a materially adverse effect on the
availability of a market for converting
such Reference Currency to US Dollars
(or vice versa), whether due to market
illiquidity, illegality, the adoption of or
change in any law or other regulatory
instrument, inconvertibility,
establishment of dual exchange rates or
foreign exchange controls or the
occurrence or existence of any other
circumstance or event, as determined by
the Index Provider; or
(ii) the failure of Reuters to announce
or publish the relevant spot exchange
rates for such Reference Currency; or
(iii) any event or any condition that (I)
results in a lack of liquidity in the
market for trading such Reference
Currency that makes it impossible or
illegal for market participants (a) to
convert from one currency to another
through customary commercial
channels, (b) to effect currency
transactions in, or to obtain market
values of, such, currency, (c) to obtain
a firm quote for the related exchange
rate, or (d) to obtain the relevant
exchange rate by reference to the
applicable price source; or (II) leads to
any governmental entity imposing rules
that effectively set the prices of any of
the currencies; or
(iv) the declaration of (a) a banking
moratorium or the suspension of
payments by banks, in either case, in the
country of any currency used to
determine such Reference Currency
exchange rate, or (b) capital and/or
currency controls (including, without
limitation, any restriction placed on
assets in or transactions through any
account through which a non-resident
of the country of any currency used to
determine the currency exchange rate
may hold assets or transfer monies
outside the country of that currency,
and any restriction on the transfer of
funds, securities or other assets of
market participants from, within or
outside of the country of any currency
used to determine the applicable
exchange rate.
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A ‘‘Gold Disruption Event’’ with
respect to a Fund occurs if any of the
following exist on any Index Business
Day with respect to gold:
(i) (a) The failure of the LBMA to
announce or publish the LBMA Gold
Price (or the information necessary for
determining the price of gold) on that
Index Business Day, (b) the temporary
or permanent discontinuance or
unavailability of the LBMA or the
LBMA Gold Price; or
(ii) the material suspension of, or
material limitation imposed on, trading
in gold by the LBMA; or
(iii) an event that causes market
participants to be unable to deliver gold
bullion loco London under rules of the
LBMA by credit to an unallocated
account at a member of the LBMA; or
(iv) the permanent discontinuation of
trading of gold on the LBMA or any
successor body thereto, the
disappearance of, or of trading in, gold;
or
(v) a material change in the formula
for or the method of calculating the
price of gold, or a material change in the
content, composition or constitution of
gold.
The occurrence of a Market
Disruption Event with respect to a Fund
for ten consecutive Index Business Days
generally would be considered an
Extraordinary Event with respect to
such Fund.
Consequences of a Market Disruption or
Extraordinary Event
On any Index Business Day in which
a Market Disruption Event or
Extraordinary Event with respect to a
Fund has occurred or is continuing, the
Index Provider generally will calculate
a Fund’s Index based on the following
fallback procedures: (i) Where the
Market Disruption Event is based on the
Gold Price, the Index will be kept at the
same level as the previous Index
Business Day and updated when the
Gold Price is no longer disrupted; (ii)
where the Gold Price is not disrupted
but the corresponding Reference
Currency price is disrupted, the Index
will be calculated in the ordinary course
except that the Reference Currency will
be kept at its value from the previous
Index Business Day and updated when
it is no longer disrupted; and (iii) if both
the Gold Price and the Reference
Currency price are disrupted, the Index
will be kept at the same level as the
previous Index Business Day and
updated when such prices are no longer
disrupted. If a Market Disruption Event
with respect to a Fund has occurred and
is continuing for ten (10) or more
consecutive Index Business Days, the
Index Provider will calculate a
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substitute price for each index
component that is disrupted. If an
Extraordinary Event with respect to a
Fund has occurred and is continuing,
the Index Provider shall be responsible
for making any decisions regarding the
future composition of the applicable
Index and implement any necessary
adjustments that might be required.
If the LBMA Gold Price AM is
unavailable during the occurrence of a
Market Disruption Event or
Extraordinary Event with respect to a
Fund, a Fund will calculate NAV using
the last published LBMA Gold Price
AM.
jstallworth on DSK7TPTVN1PROD with NOTICES
The London Gold Bullion Market
Although the market for physical gold
is global, most OTC market trades are
cleared through London. In addition to
coordinating market activities, the
LBMA acts as the principal point of
contact between the market and its
regulators. A primary function of the
LBMA is its involvement in the
promotion of refining standards by
maintenance of the ‘‘London Good
Delivery Lists,’’ which are the lists of
LBMA accredited melters and assayers
of gold. The LBMA also coordinates
market clearing and vaulting, promotes
good trading practices and develops
standard documentation.
The term ‘‘loco London’’ refers to gold
bars physically held in London that
meet the specifications for weight,
dimensions, fineness (or purity),
identifying marks (including the assay
stamp of an LBMA acceptable refiner)
and appearance set forth in ‘‘The Good
Delivery Rules for Gold and Silver Bars’’
published by the LBMA. Gold bars
meeting these requirements are known
as ‘‘London Good Delivery Bars.’’ All of
the Gold Bullion will be London Good
Delivery Bars meeting the requirements
of London Good Delivery Standards.
The unit of trade in London is the troy
ounce, whose conversion between
grams is: 1,000 grams = 32.1507465 troy
ounces and 1 troy ounce = 31.1034768
grams. A London Good Delivery Bar is
acceptable for delivery in settlement of
a transaction on the OTC market.
Typically referred to as 400-ounce bars,
a London Good Delivery Bar must
contain between 350 and 430 fine troy
ounces of gold, with a minimum
fineness (or purity) of 995 parts per
1,000 (99.5%), be of good appearance
and be easy to handle and stack. The
fine gold content of a gold bar is
calculated by multiplying the gross
weight of the bar (expressed in units of
0.025 troy ounces) by the fineness of the
bar.
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The LBMA Gold Price
The LBMA Gold Price is determined
twice each Business Day (10:30 a.m. and
3:00 p.m. London time) through an
auction which provides reference gold
prices for that day’s trading. The LBMA
Gold Price was initiated on March 20,
2015 and replaced the London PM Gold
Fix. The auction that determines the
LBMA Gold Price is a physically settled,
electronic and tradeable auction, with
the ability to settle trades in U.S.
dollars, euros or British pounds. The
IBA provides the auction platform and
methodology as well as the overall
administration and governance for the
LBMA Gold Price. Many long-term
contracts are expected to be priced on
the basis of either the morning (AM) or
afternoon (PM) LBMA Gold Price, and
many market participants are expected
to refer to one or the other of these
prices when looking for a basis for
valuations.
Participants in the IBA auction
process submit anonymous bids and
offers which are published on screen
and in real-time. Throughout the
auction process, aggregated gold bids
and offers are updated in real-time with
the imbalance calculated and the price
updated every 45 seconds until the buy
and sell orders are matched. When the
net volume of all participants falls
within a pre-determined tolerance, the
auction is deemed complete and the
applicable LBMA Gold Price is
published. Information about the
auction process (such as aggregated bid
and offer volumes) will be immediately
available after the auction on the IBA’s
Web site.
The Financial Conduct Authority, or
FCA, in the U.K. regulates the LBMA
Gold Price.
The Gold Futures Markets
Although the Fund will not invest in
gold futures, information about the gold
futures market is relevant as such
markets contribute to, and provide
evidence of, the liquidity of the overall
market for gold.
The most significant gold futures
exchange is COMEX, part of the CME
Group, Inc., which began to offer trading
in gold futures contracts in 1974.
TOCOM (Tokyo Commodity Exchange)
is another significant futures exchange
and has been trading gold since 1982.
Trading on these exchanges is based on
fixed delivery dates and transaction
sizes for the futures and options
contracts traded. Trading costs are
negotiable. As a matter of practice, only
a small percentage of the futures market
turnover ever comes to physical
delivery of the gold represented by the
PO 00000
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18497
contracts traded. Both exchanges permit
trading on margin. Both COMEX and
TOCOM operate through a central
clearance system and in each case, the
clearing organization acts as a
counterparty for each member for
clearing purposes. Gold futures
contracts also are traded on the
Shanghai Gold Exchange and the
Shanghai Futures Exchange.
The global gold markets are overseen
and regulated by both governmental and
self-regulatory organizations. In
addition, certain trade associations have
established rules and protocols for
market practices and participants.
Net Asset Value
The Administrator will determine the
NAV of Shares of a Fund on each
Business Day. The NAV of Shares of a
Fund is the aggregate value of the
Fund’s assets (which include gold
payable, but not yet delivered, to the
Fund) less its liabilities (which include
accrued but unpaid fees and expenses).
The NAV of a Fund is calculated based
on the price of gold per ounce applied
against the number of ounces of Gold
Bullion owned by the Fund. For
purposes of calculating NAV, the
number of ounces of Gold Bullion (i) is
adjusted up or down on a daily basis to
reflect the Gold Delivery Amount; and
(ii) reflects the amount of Gold Bullion
delivered into (or out of) a Fund on a
daily basis by Authorized Participants
creating and redeeming Shares. The
number of ounces of Gold Bullion held
by a Fund is adjusted downward by the
Sponsor’s fee and the expenses of the
Gold Delivery Agreement.
In determining a Fund’s NAV, the
Administrator generally will value the
Gold Bullion based on the LBMA Gold
Price AM for an ounce of gold. If no
LBMA Gold Price AM is made on a
particular evaluation day or if the
LBMA Gold Price PM has not been
announced by 12:00 p.m. Eastern time
(‘‘E.T.’’) on a particular evaluation day
(including a Business Day that is not an
Index Business Day), the next most
recent LBMA Gold Price AM generally
will be used in the determination of the
NAV of the Fund, unless the Sponsor
determines that such price is
inappropriate to use as the basis for
such determination. If the Sponsor
determines that such price is
inappropriate to use, it shall identify an
alternate basis for evaluation of the Gold
Bullion held by the Fund. In such case,
the Sponsor would, for example, look to
the current trading price of gold from
other reported sources, such as dealer
quotes, broker quotes or electronic
trading data, to value the Fund’s Shares.
Although the Fund will not hold the
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Reference Currencies, the Gold Delivery
Provider generally will value the
Reference Currencies based on the rates
in effect as of the WMR FX Fixing Time,
which is generally at 9:00 a.m., London
Time (though other prices may be used
if the 9:00 a.m. rate is delayed or
unavailable). The Administrator will
also determine the NAV per Share,
which equals the NAV of the Fund,
divided by the number of outstanding
Shares. Unless there is a Market
Disruption Event or Extraordinary Event
with respect to the price of gold, NAV
generally will be calculated and
disseminated by 12:00 p.m. E.T.
The NAV generally will be calculated
as of 12:00 p.m. E.T. on any Business
Day. The Administrator will also
determine the NAV per Share.
jstallworth on DSK7TPTVN1PROD with NOTICES
Creation and Redemption of Shares
The Funds expect to create and
redeem Shares but only in Creation
Units (a Creation Unit equals a block of
10,000 Shares or more). The creation
and redemption of Creation Units
requires the delivery to a Fund (or the
distribution by a Fund in the case of
redemptions) of the amount of Gold
Bullion and any cash, if any,
represented by the Creation Units being
created or redeemed. The total amount
of Gold Bullion and cash, if any,
required for the creation of Creation
Units will be based on the combined
NAV of the number of Creation Units
being created or redeemed. The initial
amount of Gold Bullion required for
deposit with a Fund to create Shares is
1,000 ounces per Creation Unit. The
number of ounces of Gold Bullion
required to create a Creation Unit or to
be delivered upon redemption of a
Creation Unit will change over time
depending on Index performance net of
the fees charged by a Fund and the Gold
Delivery Provider. Creation Units may
be created or redeemed only by
Authorized Participants (as described
below), who may be required to pay a
transaction fee for each order to create
or redeem Creation Units as will be set
forth in the Registration Statement.
Authorized Participants may sell to
other investors all or part of the Shares
included in the Creation Units they
purchase from a Fund.
Creation Procedures—Authorized
Participants
Authorized Participants are the only
persons that may place orders to create
and redeem Creation Units. To become
an Authorized Participant, a person
must enter into a Participant Agreement.
All Gold Bullion must be delivered to a
Fund and distributed by a Fund in
unallocated form through credits and
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debits between an Authorized
Participant’s unallocated account
(‘‘Authorized Participant Unallocated
Account’’) and a Fund’s unallocated
account (‘‘Fund Unallocated Account’’)
(except for Gold Bullion delivered to or
from the Gold Delivery Provider
pursuant to the Gold Delivery
Agreement). All Gold Bullion must be of
at least a minimum fineness (or purity)
of 995 parts per 1,000 (99.5%) and
otherwise conform to the rules,
regulations practices and customs of the
LBMA, including the specifications for
a London Good Delivery Bar.
On any Business Day, an Authorized
Participant may place an order with a
Fund to create one or more Creation
Units. Purchase orders must be placed
by 5:30 p.m., E.T. The day on which a
Fund receives a valid purchase order is
the purchase order date. By placing a
purchase order, an Authorized
Participant agrees to deposit Gold
Bullion with a Fund, or a combination
of Gold Bullion and cash, if any, as
described below.29 Prior to the delivery
of Creation Units for a purchase order,
the Authorized Participant must also
have wired to a Fund the nonrefundable transaction fee due for the
purchase order.
The total deposit of Gold Bullion (and
cash, if any) required to create each
Creation Unit is referred to as the
‘‘Creation Unit Gold Delivery Amount.’’
The Creation Unit Gold Delivery
Amount is the number of ounces of
Gold Bullion required to be delivered to
a Fund by an Authorized Participant in
connection with a creation order for a
single Creation Unit.30 The Creation
Unit Gold Delivery Amount will be
determined on the Business Day
following the date such creation order is
accepted. It is calculated by multiplying
the number of Shares in a Creation Unit
by the number of ounces of Gold
Bullion associated with Fund Shares on
the Business Day after the day the
creation order is accepted. In addition,
because the Gold Delivery Amount for
a Fund does not reflect creation order
transactions (see the section herein
entitled ‘‘The Gold Delivery
Agreement’’), the Creation Unit Gold
Delivery Amount is required to reflect
the Gold Delivery Amount associated
with such creation order. This amount
is determined on the Business Day
29 The Sponsor anticipates that in the ordinary
course of a Fund’s operations cash generally will
not be part of any Creation Unit.
30 The ‘‘Creation Unit Gold Delivery Amount’’ is
also used to refer to the number of ounces of Gold
to be paid by the Fund to an Authorized Participant
in connection with the redemption of a Creation
Unit. See ‘‘Redemption Procedures—Authorized
Participants’’ herein.
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following the date such creation order is
accepted.
An Authorized Participant who places
a purchase order is responsible for
crediting its Authorized Participant
Unallocated Account with the required
Gold Bullion deposit amount by the end
of the third Business Day in London
following the purchase order date. Upon
receipt of the Gold Bullion deposit
amount, the Custodian, after receiving
appropriate instructions from the
Authorized Participant and a Fund, will
transfer on the third Business Day
following the purchase order date the
Gold Bullion deposit amount from the
Authorized Participant Unallocated
Account to a Fund Unallocated Account
and the Administrator will direct the
Depository Trust Company (‘‘DTC’’) to
credit the number of Creation Units
ordered to the Authorized Participant’s
DTC account. The expense and risk of
delivery, ownership and safekeeping of
Gold Bullion until such Gold Bullion
has been received by a Fund will be
borne solely by the Authorized
Participant. If Gold Bullion is to be
delivered other than as described above,
the Sponsor is authorized to establish
such procedures and to appoint such
custodians and establish such custody
accounts as the Sponsor determines to
be desirable.
Acting on standing instructions given
by a Fund, the Custodian will transfer
the Gold Bullion deposit amount from a
Fund Unallocated Account to a Fund’s
allocated account by allocating to the
allocated account specific bars of Gold
Bullion which the Custodian holds or
instructing a subcustodian to allocate
specific bars of Gold held by or for the
subcustodian. The Gold Bullion bars in
an allocated Gold Bullion account are
specific to that account and are
identified by a list which shows, for
each Gold Bullion bar, the refiner, assay
or fineness, serial number and gross and
fine weight. Gold Bullion held in a
Fund’s allocated account is the property
of a Fund and is not traded, leased or
loaned under any circumstances.
The Custodian will use commercially
reasonable efforts to complete the
transfer of Gold Bullion to a Fund’s
allocated account prior to the time by
which the Administrator is to credit the
Creation Unit to the Authorized
Participant’s DTC account; if, however,
such transfers have not been completed
by such time, the number of Creation
Units ordered will be delivered against
receipt of the Gold Bullion deposit
amount in a Fund’s unallocated
account, and all Shareholders will be
exposed to the risks of unallocated Gold
Bullion to the extent of that Gold
Bullion deposit amount until the
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jstallworth on DSK7TPTVN1PROD with NOTICES
Custodian completes the allocation
process.
Redemption Procedures—Authorized
Participants
The procedures by which an
Authorized Participant can redeem one
or more Creation Units mirror the
procedures for the creation of Creation
Units. On any Business Day, an
Authorized Participant may place an
order with a Fund to redeem one or
more Creation Units. Redemption orders
must be placed by 5:30 p.m. E.T. A
redemption order so received is
effective on the date it is received in
satisfactory form by a Fund. An
Authorized Participant may be required
to pay a transaction fee per order to
create or redeem Creation Units as will
be set forth in the Registration
Statement.
(a) The redemption distribution from
a Fund consists of a credit in the
amount of the Creation Unit Gold
Delivery Amount to the Authorized
Participant Unallocated Account of the
redeeming Authorized Participant. The
Creation Unit Delivery Amount for
redemptions is the number of ounces of
Gold Bullion held by a Fund associated
with the Shares being redeemed plus, or
minus, the cash redemption amount (if
any). The Sponsor anticipates that in the
ordinary course of a Fund’s operations
there will be no cash distributions made
to Authorized Participants upon
redemptions. In addition, because the
Gold Bullion to be paid out in
connection with the redemption order
will decrease the amount of Gold
Bullion subject to the Gold Delivery
Agreement, the Creation Unit Gold
Delivery Amount reflects the cost to the
Gold Delivery Provider of resizing (i.e.,
decreasing) its positions so that it can
fulfill its obligations under the Gold
Delivery Agreement.
The redemption distribution due from
a Fund is delivered to the Authorized
Participant on the third Business Day
following the redemption order date if,
by 10:00 a.m. E.T. on such third
Business Day, a Fund’s DTC account has
been credited with the Creation Units to
be redeemed. If the Administrator’s DTC
account has not been credited with all
of the Creation Units to be redeemed by
such time, the redemption distribution
is delivered to the extent of whole
Creation Units received. Any remainder
of the redemption distribution is
delivered on the next Business Day to
the extent of remaining whole Creation
Units received if the Administrator
receives the fee applicable to the
extension of the redemption distribution
date which the Administrator may, from
time to time, determine and the
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remaining Creation Units to be
redeemed are credited to the
Administrator’s DTC account by 10:00
a.m. E.T. on such next Business Day.
Any further outstanding amount of the
redemption order will be cancelled. The
Administrator is also authorized to
deliver the redemption distribution
notwithstanding that the Creation Units
to be redeemed are not credited to the
Administrator’s DTC account by 10:00
a.m. E.T. on the third Business Day
following the redemption order date if
the Authorized Participant has
collateralized its obligation to deliver
the Creation Units through DTC’s book
entry system on such terms as the
Sponsor and the Administrator may
from time to time agree upon.
The Custodian transfers the
redemption Gold Bullion amount from a
Fund’s allocated account to a Fund’s
unallocated account and, thereafter, to
the redeeming Authorized Participant’s
Authorized Participant Unallocated
Account.
Secondary Market Trading
While a Fund’s investment objective
is for its Shares to reflect the
performance of Gold Bullion in terms of
a Reference Currency reflected in the
applicable Index, less the expenses of a
Fund, the Shares may trade in the
secondary market at prices that are
lower or higher relative to their NAV
per Share. The amount of the discount
or premium in the trading price relative
to the NAV per Share may be influenced
by non-concurrent trading hours
between the NYSE Arca and the
COMEX, London, Zurich and Singapore.
While the Shares will trade on NYSE
Arca until 8:00 p.m. E.T., liquidity in
the global gold market will be reduced
after the close of the COMEX at 1:30
p.m. E.T. As a result, during this time,
trading spreads, and the resulting
premium or discount, on the Shares
may widen.
The Adviser represents that market
makers in the Shares will be able to
efficiently hedge their positions through
use of spot gold transactions and spot
currency transactions in Reference
Currencies. Transactions in spot gold
and spot currencies during the
Exchange’s Core Trading Session (9:30
a.m. to 4:00 p.m. E.T.) take place in a
highly liquid market; such transactions
that hedge the market makers’ positions
in Shares are expected to facilitate the
market maker’s ability to trade Shares at
a price that is not at a material discount
or premium to NAV.
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18499
Availability of Information Regarding
Gold and Reference Currency Prices
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of a commodity, such as
gold, or the spot price of the Reference
Currencies, over the Consolidated Tape.
However, there will be disseminated
over the Consolidated Tape the last sale
price for the Shares, as is the case for
all equity securities traded on the
Exchange (including exchange-traded
funds). In addition, there is a
considerable amount of information
about gold and currency prices and gold
and currency markets available on
public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour
basis gold pricing information based on
the spot price for an ounce of gold and
pricing information for the Reference
Currencies from various financial
information service providers, such as
Reuters and Bloomberg.
Reuters and Bloomberg, for example,
provide at no charge on their Web sites
delayed information regarding the spot
price of gold and last sale prices of gold
futures, as well as information about
news and developments in the gold
market. Reuters and Bloomberg also
offer a professional service to
subscribers for a fee that provides
information on gold prices directly from
market participants. Complete real-time
data for gold futures and options prices
traded on the COMEX are available by
subscription from Reuters and
Bloomberg. There are a variety of other
public Web sites providing information
on gold, ranging from those specializing
in precious metals to sites maintained
by major newspapers. In addition, the
LBMA Gold Price is publicly available
at no charge at www.lbma.org.uk.
In addition, Reuters and Bloomberg,
for example, provide at no charge on
their Web sites delayed information
regarding the spot price of each
Reference Currency, as well as
information about news and
developments in the currency markets.
Reuters and Bloomberg also offer a
professional service to subscribers for a
fee that provides information on
currency transactions directly from
market participants. Complete real-time
data for currency transactions are
available by subscription from Reuters
and Bloomberg. There are a variety of
other public Web sites providing
information about the Reference
Currencies and currency transactions,
ranging from those specializing in
currency trading to sites maintained by
major newspapers.
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Availability of Information
The Funds’ Web site will provide an
intraday indicative value (‘‘IIV’’) per
Share for the Shares updated every 15
seconds, as calculated by the Exchange
or a third party financial data provider
during the Exchange’s Core Trading
Session (9:30 a.m. to 4:00 p.m. E.T.) The
IIV will be calculated based on the
amount of gold held by the Fund and (i)
a price of gold derived from updated
bids and offers indicative of the spot
price of gold, and (ii) intra-day exchange
rates for each Reference Currency
against the U.S. dollar.31 The Funds’
Web site will also provide the Creation
Basket Deposit and the NAV of the Fund
as calculated each Business Day by the
Administrator. The value for each Index
will be disseminated by one or more
major market data vendors each Index
Business Day at approximately 6:00 a.m.
E.T.
In addition, the Web site for each
Fund will contain the following
information, on a per Share basis, for
the Fund: (a) The mid-point of the bidask price 32 at the close of trading (‘‘Bid/
Ask Price’’), and a calculation of the
premium or discount of such price
against such NAV; and (b) data in chart
format displaying the frequency
distribution of discounts and premiums
of the Bid/Ask Price against the NAV,
within appropriate ranges, for each of
the four previous calendar quarters. The
Web site for each Fund will also provide
the Fund’s prospectus, as well as the
two most recent reports to stockholders.
Finally, the Funds’ Web site will
provide the last sale price of the Shares
as traded in the U.S. market. In
addition, the Exchange will make
available over the Consolidated Tape
quotation information, trading volume,
closing prices and NAV for the Shares
from the previous day. The Index value
will be calculated daily using the daily
LBMA Gold Price AM and the Spot Rate
as of 9:00 a.m., London time. The Index
value will be available from one or more
major market data vendors and will be
available during the Exchange’s Core
Trading Session.
jstallworth on DSK7TPTVN1PROD with NOTICES
Criteria for Initial and Continued Listing
The Funds will be subject to the
criteria in NYSE Arca Equities Rule
8.201(e) for initial and continued listing
of the Shares.
31 The IIV on a per Share basis disseminated
during the Core Trading Session should not be
viewed as a real-time update of the NAV, which is
calculated once a day.
32 The bid-ask price of the Shares will be
determined using the highest bid and lowest offer
on the Consolidated Tape as of the time of
calculation of the closing day NAV.
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15:06 Apr 18, 2017
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A minimum of 100,000 Shares will be
required to be outstanding at the start of
trading. The minimum number of shares
required to be outstanding is
comparable to requirements that have
been applied to previously listed shares
of the Sprott Physical Gold Trust, ETFS
Trusts, streetTRACKS Gold Trust, the
iShares COMEX Gold Trust, and the
iShares Silver Trust. The Exchange
believes that the anticipated minimum
number of Shares outstanding at the
start of trading is sufficient to provide
adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares of the Funds subject to the
Exchange’s existing rules governing the
trading of equity securities. Trading in
the Shares on the Exchange will occur
in accordance with NYSE Arca Equities
Rule 7.34(a). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. As provided in NYSE
Arca Equities Rule 7.6, Commentary .03,
the minimum price variation (‘‘MPV’’)
for quoting and entry of orders in equity
securities traded on the NYSE Arca
Marketplace is $0.01, with the exception
of securities that are priced less than
$1.00 for which the MPV for order entry
is $0.0001.
Under NYSE Arca Equities Rule
8.201(g), an ETP Holder acting as a
registered Market Maker in CommodityBased Trust Shares with exposure to
one or more non-U.S. currencies
(‘‘Underlying FX’’) must file with the
Exchange, in a manner prescribed by the
Exchange, and keep current a list
identifying all accounts for trading in
Underlying FX and derivatives
overlying Underlying FX which the
Market Maker may have or over which
it may exercise investment discretion, as
well as a list of all commodity and
commodity-related accounts referenced
above. In addition, no Market Maker in
Commodity-Based Trust Shares shall
trade in a commodity, Underlying FX or
any related derivative in an account that
the Market Maker (1) directly or
indirectly controls trading activities or
has a direct interest in the profits or
losses thereof, (2) is required by this
rule to disclose to the Exchange, and (3)
has not reported to the Exchange. In
addition to the existing obligations
under Exchange rules regarding the
production of books and records, an
ETP Holder acting as a Market Maker in
Commodity-Based Trust Shares shall
make available to the Exchange such
books, records or other information
pertaining to transactions by such entity
or registered or non-registered employee
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Fmt 4703
Sfmt 4703
affiliated with such entity for its or their
own accounts for trading the underlying
physical commodity, related commodity
futures or options on commodity
futures, applicable Underlying FX, or
any other related commodity or
applicable Underlying FX derivatives,
as may be requested by the Exchange.
The Exchange notes that, under NYSE
Arca Equities Rule 10.2, in the course of
an investigation by the Exchange, the
Exchange may request from ETP
Holders documentary materials and
other information, including trading
records, regarding trading in currencies
and currency derivatives. In addition,
Commentary .04 of NYSE Arca Equities
Rule 6.3 requires an ETP Holder acting
as a registered Market Maker, and its
affiliates, in the Shares to establish,
maintain and enforce written policies
and procedures reasonably designed to
prevent the misuse of any material
nonpublic information with respect to
such products, any components of the
related products, any physical asset or
commodity underlying the product,
applicable currencies, underlying
indexes, related futures or options on
futures, and any related derivative
instruments (including the Shares).
As a general matter, the Exchange has
regulatory jurisdiction over its ETP
Holders and their associated persons,
which include any person or entity
controlling an ETP Holder. A subsidiary
or affiliate of an ETP Holder that does
business only in commodities or futures
contracts would not be subject to
Exchange jurisdiction, but the Exchange
could obtain information regarding the
activities of such subsidiary or affiliate
through surveillance sharing agreements
with regulatory organizations of which
such subsidiary or affiliate is a member.
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
Trading on the Exchange in the Shares
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. In addition,
trading in Shares will be subject to
trading halts caused by extraordinary
market volatility pursuant to the
Exchange’s ‘‘circuit breaker’’ rule.33 The
Exchange will halt trading in the Shares
if the NAV of the Trust is not calculated
or disseminated daily. The Exchange
may halt trading during the day in
which an interruption occurs to the
dissemination of the IIV, as described
above, or the Index value. If the
interruption to the dissemination of the
IIV or the Index value persists past the
33 See
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NYSE Arca Equities Rule 7.12.
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jstallworth on DSK7TPTVN1PROD with NOTICES
trading day in which it occurs, the
Exchange will halt trading no later than
the beginning of the trading day
following the interruption.
Surveillance
The Exchange represents that trading
in the Shares will be subject to the
existing trading surveillances
administered by the Exchange, as well
as cross-market surveillances
administered by the Financial Industry
Regulatory Authority (‘‘FINRA’’) on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws.34 The Exchange
represents that these procedures are
adequate to properly monitor Exchange
trading of the Shares in all trading
sessions and to deter and detect
violations of Exchange rules and federal
securities laws applicable to trading on
the Exchange.
The surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares with other markets
and other entities that are members of
the ISG, and the Exchange or FINRA, on
behalf of the Exchange, or both, may
obtain trading information regarding
trading in the Shares from such markets
and other entities. In addition, the
Exchange may obtain information
regarding trading in the Shares from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.35
Also, pursuant to NYSE Arca Equities
Rule 8.201(g), the Exchange is able to
obtain information regarding trading in
the Shares and the underlying gold, gold
futures contracts, options on gold
futures, any other gold derivative,
applicable non-U.S. currencies or
applicable non-U.S. currency
derivatives through ETP Holders acting
as registered Market Makers, in
connection with such ETP Holders’
34 FINRA conducts cross-market surveillances on
behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for
FINRA’s performance under this regulatory services
agreement.
35 For a list of the current members of ISG, see
www.isgportal.org.
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15:06 Apr 18, 2017
Jkt 241001
proprietary or customer trades through
ETP Holders which they effect on any
relevant market.
All statements and representations
made in this filing regarding (a) the
description of the portfolios of the
Funds, (b) limitations on portfolio
holdings, or (c) the applicability of
Exchange listing rules specified in this
rule filing 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 Funds 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 a Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Equities Rule 5.5(m).
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Baskets
(including noting that Shares are not
individually redeemable); (2) NYSE
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
ETP Holders to learn the essential facts
relating to every customer prior to
trading the Shares; (3) how information
regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; (5) the possibility that
trading spreads and the resulting
premium or discount on the Shares may
widen as a result of reduced liquidity of
gold trading during the Core and Late
Trading Sessions after the close of the
major world gold markets; and (6)
trading information. For example, the
Information Bulletin will advise ETP
Holders, prior to the commencement of
trading, of the prospectus delivery
requirements applicable to a Fund. The
Exchange notes that investors
purchasing Shares directly from a Fund
(by delivery of the Creation Basket
Deposit) will receive a prospectus. ETP
Holders purchasing Shares from a Fund
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18501
for resale to investors will deliver a
prospectus to such investors.
In addition, the Information Bulletin
will reference that a Fund is subject to
various fees and expenses as will be
described in the Registration Statement.
The Information Bulletin will also
reference the fact that there is no
regulated source of last sale information
regarding physical gold, that the
Commission has no jurisdiction over the
trading of gold as a physical commodity,
and that the Commodity Futures
Trading Commission has regulatory
jurisdiction over the trading of gold
futures contracts and options on gold
futures contracts.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 36 that an
exchange have rules that are designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest. The Exchange
believes that the proposed rule change
is designed to prevent fraudulent and
manipulative acts and practices in that
the Shares will be listed and traded on
the Exchange pursuant to the initial and
continued listing criteria in NYSE Arca
Equities Rule 8.201. The Exchange has
in place surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. Under NYSE Arca
Equities Rule 10.2, in the course of an
investigation by the Exchange, the
Exchange may request from ETP
Holders documentary materials and
other information, including trading
records, regarding trading in currencies
and currency derivatives. In addition,
Commentary .04 of NYSE Arca Equities
Rule 6.3 requires an ETP Holder acting
as a registered Market Maker, and its
affiliates, in the Shares to establish,
maintain and enforce written policies
and procedures reasonably designed to
prevent the misuse of any material
nonpublic information with respect to
such products, any components of the
related products, any physical asset or
commodity underlying the product,
applicable currencies, underlying
36 15
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U.S.C. 78f(b)(5).
19APN1
jstallworth on DSK7TPTVN1PROD with NOTICES
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Federal Register / Vol. 82, No. 74 / Wednesday, April 19, 2017 / Notices
indexes, related futures or options on
futures, and any related derivative
instruments (including the Shares).
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that there is a
considerable amount of gold price and
gold market information available on
public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour basis
gold pricing information based on the
spot price for an ounce of gold from
various financial information service
providers. Investors may obtain gold
pricing information based on the spot
price for an ounce of gold from various
financial information service providers.
Current spot prices also are generally
available with bid/ask spreads from gold
bullion dealers. In addition, the Funds’
Web site will provide pricing
information for gold spot prices and the
Shares. Market prices for the Shares will
be available from a variety of sources
including brokerage firms, information
Web sites and other information service
providers. The NAV of the Funds will
be published by the Sponsor on each
day that the NYSE Arca is open for
regular trading and will be posted on
the Funds’ Web site. The IIV relating to
the Shares will be widely disseminated
by one or more major market data
vendors at least every 15 seconds during
the Core Trading Session. In addition,
the LBMA Gold Price is publicly
available at no charge at
www.lbma.org.uk. The Funds’ Web site
will also provide the Funds’ prospectus,
as well as the two most recent reports
to stockholders. In addition, the
Exchange will make available over the
Consolidated Tape quotation
information, trading volume, closing
prices and NAV for the Shares from the
previous day.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of exchange-traded
product that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
As noted above, the Exchange has in
place surveillance procedures relating to
trading in the Shares and may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. In addition, as noted
above, investors will have ready access
to information regarding gold pricing.
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15:06 Apr 18, 2017
Jkt 241001
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change will enhance competition by
accommodating Exchange trading of an
additional exchange-traded product
relating to physical gold.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
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, as modified by Amendment No.
1, 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–2017–33 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–2017–33. 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
PO 00000
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Fmt 4703
Sfmt 4703
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2017–33, and should be
submitted on or before May 10, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Brent J. Fields,
Secretary.
[FR Doc. 2017–07877 Filed 4–18–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80456; File No. SR–NYSE–
2017–14]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposal To Adopt a Fee Schedule for
Acquisition Companies
April 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 April 4,
2017, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the self37 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
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19APN1
]]>Agencies
[Federal Register Volume 82, Number 74 (Wednesday, April 19, 2017)]
[Notices]
[Pages 18492-18502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07877]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80457; File No. SR-NYSEArca-2017-33]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To
List and Trade Shares of the Euro Gold Trust, Pound Gold Trust, and the
Yen Gold Trust Under NYSE Arca Equities Rule 8.201
April 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 March 31, 2017, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. On April 12, 2017, the Exchange filed Amendment No. 1 to
the proposal, which amended and replaced the proposed rule change in
its entirety. The Commission is publishing this notice to solicit
comments on the proposed rule change, as modified by Amendment No. 1,
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the Euro Gold
Trust, Pound Gold Trust, and the Yen Gold Trust under NYSE Arca
Equities Rule 8.201. The proposed 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
Euro Gold Trust, Pound Gold Trust, and the Yen Gold Trust (each a
``Fund'' and, collectively, the ``Funds''), which are series of the
World Currency Gold Trust (``Trust''), under NYSE Arca Equities Rule
8.201.\4\ Under NYSE Arca Equities Rule 8.201, the Exchange may propose
to list and/or trade pursuant to unlisted trading privileges (``UTP'')
``Commodity-Based Trust Shares.'' \5\
---------------------------------------------------------------------------
\4\ On March 30, 2017, the Trust filed with the Commission its
initial registration statement on Form S-1 under the Securities Act
of 1933 (``1933 Act'') relating to the Funds (File No. 333-217041)
(``Registration Statement''). The description of the operation of
the Trust and the Funds herein is based, in part, on the
Registration Statement.
\5\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
---------------------------------------------------------------------------
The Funds will not be registered investment companies under the
Investment Company Act of 1940 \6\ and are not required to register
under such act.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 80a-1.
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The Sponsor of the Funds and the Trust will be WGC USA Asset
[[Page 18493]]
Management Company, LLC (the ``Sponsor'').\7\ BNY Mellon Asset
Servicing, a division of The Bank of New York Mellon (``BNYM''), will
be the Funds' administrator (``Administrator'') and transfer agent
(``Transfer Agent'') and will not be affiliated with the Trust, the
Funds or the Sponsor. BNYM will also serve as the custodian of the
Funds' cash, if any. HSBC Bank plc will be the custodian (the
``Custodian'') of the Funds' gold.
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\7\ The Trust will be a Delaware statutory trust consisting of
multiple series, each of which will issue common units of beneficial
interest, which represent units of fractional undivided beneficial
interest in and ownership of such series. The term of the Trust and
each series will be perpetual (unless terminated earlier in certain
circumstances). The sole trustee of the Trust will be Delaware Trust
Company (``Trustee'').
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The Commission has previously approved listing on the Exchange
under NYSE Arca Equities Rules 5.2(j)(5) and 8.201 of other precious
metals and gold-based commodity trusts, including the Merk Gold Trust;
\8\ ETFS Gold Trust,\9\ ETFS Platinum Trust \10\ and ETFS Palladium
Trust (collectively, the ``ETFS Trusts''); \11\APMEX Physical-1 oz.
Gold Redeemable Trust; \12\ Sprott Gold Trust; \13\ SPDR Gold Trust
(formerly, streetTRACKS Gold Trust); iShares Silver Trust; \14\ iShares
COMEX Gold Trust; \15\ and Long Dollar Gold Trust.\16\ Prior to their
listing on the Exchange, the Commission approved listing of the
streetTRACKS Gold Trust on the New York Stock Exchange (``NYSE'') \17\
and listing of iShares COMEX Gold Trust and iShares Silver Trust on the
American Stock Exchange LLC.\18\ In addition, the Commission has
approved trading of the streetTRACKS Gold Trust and iShares Silver
Trust on the Exchange pursuant to UTP.\19\
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\8\ Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
\9\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\10\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\11\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\12\ Securities Exchange Act Release No. 66930 (May 7, 2012), 77
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
\13\ Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
\14\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
\15\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\16\ See Securities Exchange Act Release No. 79518 (December 9,
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order
approving listing and trading of shares of the Long Dollar Gold
Trust).
\17\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE).
\18\ See Securities Exchange Act Release Nos. 51058 (January 19,
2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order
approving listing of iShares COMEX Gold Trust on the American Stock
Exchange LLC); 53521 (March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR-Amex-2005-72) (approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
\19\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
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The Euro Gold Trust will be designed to track the performance of
the Solactive GLD[supreg] EUR Gold Index, less the expenses of the
Fund's operations. The Solactive GLD[supreg] EUR Gold Index seeks to
track the daily performance of a long position in physical gold (as
represented by the ``Gold Price'', as defined below) and a short
position in the Euro (i.e., a long U.S. dollar (``USD'') exposure
versus the Euro).
The Pound Gold Trust will be designed to track the performance of
the Solactive GLD[supreg] GBP Gold Index, less the expenses of the
Fund's operations. The Solactive GLD[supreg] GBP Gold Index seeks to
track the daily performance of a long position in physical gold (as
represented by the Gold Price) and a short position in the British
Pound Sterling (i.e., a long USD exposure versus the British Pound
Sterling).
The Yen Gold Trust will be designed to track the performance of the
Solactive GLD[supreg] JPY Gold Index, less the expenses of the Fund's
operations. The Solactive GLD[supreg] JPY Gold Index seeks to track the
daily performance of a long position in physical gold (as represented
by the Gold Price) and a short position in the Japanese Yen (i.e., a
long USD exposure versus the Japanese Yen). The Japanese Yen, the Euro
and the British Pound Sterling are referred to collectively herein as
the ``Reference Currencies''. Each of the Solactive GLD[supreg] EUR
Gold Index, Solactive GLD[supreg] GBP Gold Index, and Solactive
GLD[supreg] JPY Gold Index are referred to herein as an ``Index'' and,
collectively, as the ``Indexes''.
Operation of the Funds
According to the Registration Statement, each Fund will be a
passive investment vehicle and will be designed to track the
performance of its Index regardless of: (i) The price of gold or the
corresponding Reference Currency; (ii) market conditions; and (iii)
whether the Index is increasing or decreasing in value. Each Fund's
holdings generally will consist entirely of ``Gold Bullion''.\20\
Substantially all of the Funds' Gold Bullion holdings are delivered by
``Authorized Participants'' (as described below) in exchange for Fund
Shares. The Funds will not hold their respective Reference Currencies.
The Funds generally will not hold USDs (except from time to time in
very limited amounts to pay Fund expenses). The Funds' Gold Bullion
holdings are not managed and the Funds do not have any investment
discretion.
---------------------------------------------------------------------------
\20\ Gold Bullion means (a) gold meeting the requirements of
``London Good Delivery Standards'' or (b) credit to an ``Unallocated
Account'' representing the right to receive Gold Bullion meeting the
requirements of London Good Delivery Standards. London Good Delivery
Standards are the specifications for weight dimensions, fineness (or
purity), identifying marks and appearance set forth in ``The Good
Delivery Rules for Gold and Silver Bars'' published by the London
Bullion Markets Association (``LBMA'').
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Each Fund's net asset value (``NAV'') will go up or down each
Business Day \21\ based primarily on two factors. The first is the
change in the price of gold measured in USDs from the prior Business
Day. This drives the value of the Fund's Gold Bullion holdings measured
in USDs up (as gold prices increase) or down (as gold prices fall). The
second is the change in the value of the Fund's corresponding Reference
Currency against the USD from the prior Business Day. This drives the
value of the Fund's Gold Bullion holdings measured in the Reference
Currency up (when the value of the USD against the Reference Currency
increases) or down (when the value of the USD against the Reference
Currency declines). The value of gold and the Reference Currencies are
based on publicly available, transparent prices--for gold, the LBMA
Gold Price AM; for currencies, the WMR Fix.\22\
---------------------------------------------------------------------------
\21\ A Business Day with respect to the Funds is any day the
Exchange is open for business.
\22\ The WMR Fix is the World Markets Company plc foreign
exchange benchmark rate.
---------------------------------------------------------------------------
Because each Fund generally holds only Gold Bullion (and not USDs
or its Reference Currency), the actual economic impact of changes in
the value of the Fund's Reference Currency against the USD from day to
day can be reflected in the Fund only by moving an amount of Gold
Bullion ounces of equivalent value into or out of the Fund on a daily
basis. Therefore, each Fund will seek to track the performance of its
Index by entering into a daily
[[Page 18494]]
transaction with the ``Gold Delivery Provider'' as described herein.
As with the Indexes, Fund Shares are intended to increase in value
when the price of the Gold Bullion held by a Fund increases (as
measured by the Gold Price) and/or when the price of the USD increases
against the value of the Fund's corresponding Reference Currency. Fund
Shares are intended to decrease in value when the price of the Gold
Bullion held by a Fund decreases (as measured by the Gold Price) and/or
when the price of the USD declines against the value of the Fund's
corresponding Reference Currency. The net impact of these changes
determines the value of each Fund on a daily basis. Although investors
will purchase Shares of the Funds in USD, each Fund is designed to
provide investors with the economic effect of holding gold in terms of
the Fund's corresponding Reference Currency, rather than the USD.
Description of the Indexes
Each Index is maintained and calculated by Solactive AG, the Index
Provider. The description of the strategy and methodology underlying
each Index is based on rules published by the Index Provider (the
``Index Rules'').
Each Index is described as a ``notional'' or ``synthetic''
portfolio or strategy because there is no actual portfolio of assets to
which any person is entitled or in which any person has any ownership
interest. Each Index references certain assets (i.e., gold and one of
the Reference Currencies), the performance of which will be used as a
reference point for calculating the daily performance of the Index
(each, an ``Index Level''). Each Index seeks to track the daily
performance of a long position in physical gold and a short position in
its corresponding Reference Currency relative to USDs (i.e., a long USD
exposure versus the corresponding Reference Currency). If the Gold
Price (as defined below) increases and the corresponding Reference
Currency depreciates against the USD, each Index Level is intended to
increase. Conversely, if the Gold Price decreases and the corresponding
Reference Currency appreciates against the USD, each Index Level is
intended to decrease. In certain cases, the appreciation of the Gold
Price or the depreciation of a Reference Currency may be offset by the
appreciation of such Reference Currency or the depreciation of the Gold
Price, as applicable. The net impact of these changes determines each
Index Level on a daily basis.
Rather than viewing an Index in terms of percentage weightings of
gold and the corresponding Reference Currency, it is more accurate to
view the Index as being weighted 100% in gold with an overlay of the
Reference Currency that essentially reflects how the gold is performing
in terms of the Reference Currency. Just as the gold price in terms of
U.S. dollars is not weighted partially in gold and partially in U.S.
dollars, an Index is not weighted partially in gold and partially in
the corresponding Reference Currency.
According to the Registration Statement, the daily price of gold
generally is the primary driver of Index returns. Fluctuations in the
value of each Reference Currency has historically typically accounted
for less than 1% of the daily returns of the corresponding Index. Each
Index values gold on a daily basis using the ``Gold Price.'' The Gold
Price generally is the LBMA Gold Price AM. The ``LBMA Gold Price''
means the price per troy ounce of gold stated in USDs as set via an
electronic auction process run twice daily at 10:30 a.m. and 3:00 p.m.
London time each Business Day as calculated and administered by the ICE
Benchmark Administration Limited (``IBA'') and published by the LBMA on
its Web site. The ``LBMA Gold Price AM'' is the 10:30 a.m. LBMA Gold
Price. IBA, an independent specialist benchmark administrator, provides
the price platform, methodology and the overall administration and
governance for the LBMA Gold Price.
According to the Registration Statement, each Index reflects the
price of Gold in U.S. dollars adjusted by the price of its
corresponding Reference Currency (as specified above) against the U.S.
dollar. Each Index is designed to measure daily Gold Bullion returns as
though an investor had invested in Gold Bullion in terms of the
Reference Currency reflected in that Index. In general, each Index is
intended to increase in value when the price of gold (as measured by
the Gold Price) increases and/or when the value of the USD increases
against the value of the corresponding Reference Currency. In general,
each Index is intended to decrease in value when the price of gold (as
measured by the Gold Price) decreases and/or when the value of the USD
declines against the value of the corresponding Reference Currency. The
net impact of these changes determines the value of each Index on a
daily basis. Each Fund's Index is maintained and calculated by the
Index Provider.
According to the Registration Statement, the daily price of gold in
USD generally is the primary driver of Index returns. Historically,
fluctuations in the price of each Reference Currency have accounted for
only a small portion of Index returns. Each Index is not designed to
reflect the price of spot trades in its corresponding Reference
Currency (which per market convention assume delivery of the Reference
Currency). Rather, each Index assumes that positions in its
corresponding Reference Currency are rolled forward and not physically
settled. The Index does this by approximating what would occur if spot-
next trades were entered into on each ``Index Business Day'' and closed
out on the next Index Business Day against spot transactions.\23\ Each
Index approximates the cost of entering into a spot-next trade by
linearly interpolating the cost of that trade based on the WM/Reuters
(``WMR'') ``SW--Spot Week (One Week)'' forward rates and a spot
transaction.\24\ The ``Spot Next Forward Points'' adjust the spot price
to reflect the cost of rolling Reference Currency positions.
---------------------------------------------------------------------------
\23\ An Index Business Day is (i) any day that is a business day
in New York and London, (ii) any day (other than a Saturday or
Sunday) on which the LBMA is scheduled to publish the LBMA Gold
Price AM, and (iii) any day (other than a Saturday or Sunday) on
which WM Company is scheduled to publish prices for each Reference
Currency pair.
\24\ WMR provides both intraday and closing fixes for currency
spot rates, forward contracts and non-deliverable forward contracts.
WMR rates are widely utilized by financial institutions in
evaluating global markets. Thomson Reuters Benchmark Services
Limited, the administrator of the WM/Reuters spot, forward and non-
deliverable foreign exchange benchmark rates, has stated that it
complies with the International Organization of Securities
Commissions (IOSCO) Principles for Financial Benchmarks. See https://financial.thomsonreuters.com/content/dam/openweb/documents/pdf/financial/wm-reuters-iosco-principles-statement.pdf.
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Valuation of the Reference Currency in an Index
Each Reference Currency is expressed in the corresponding Index in
terms of a number of foreign currency units relative to one USD (e.g.,
a number of Japanese Yen per one USD) or in terms of a number of USDs
per one unit of the reference currency (e.g., a number of USDs per one
Euro). In order to reflect currency returns and for purposes of
calculating each Index, each Index references the Spot Rate and Spot
Next Forward Points associated with its Reference Currency.
A ``Spot Rate'' is the rate at which a Reference Currency can be
exchanged for USDs on an immediate basis, subject to the applicable
settlement cycle. In other words, if an investor wanted to convert USDs
into Euros, the investor could enter into a spot transaction at the
Spot Rate (subject to the bid/ask) and would receive Euros in a number
of days, depending on the settlement cycle of that currency. Generally,
the
[[Page 18495]]
settlement of a ``spot'' transaction is two currency business days. The
following table sets forth the Reference Currencies (each of which is
measured against USDs), the applicable Reuters Page for each Spot Rate
referenced by the applicable Index and the market convention for
quoting such currency.
----------------------------------------------------------------------------------------------------------------
Reference currency Reuters page Market convention for quotation
----------------------------------------------------------------------------------------------------------------
EUR/USD............................. USDEURFIX=WM................ Number of USD per one EUR.
USD/JPY............................. USDJPYFIX=WM................ Number of JPY per one USD.
GBP/USD............................. USDGBPFIX=WM................ Number of USD per one GBP.
----------------------------------------------------------------------------------------------------------------
Each Index generally references the Spot Rate for its Reference
Currency as of 9:00 a.m. London time, but may use different fixing
times for certain reasons as described in the Index Rules.
According to the Registration Statement, the World Markets Company
plc (``WM'') provides an exchange rate service that publishes Spot
Rates at fixed times throughout the global trading day.\25\ WM does not
use a panel or polling solicitation process to obtain underlying data
in the benchmark calculation process. WM uses transactional data to set
``Trade Rates,'' reflecting data from actual transactions entered into
on an arm's length basis between buyers and sellers in that market,
where that data is available and reflects sufficient liquidity.\26\
---------------------------------------------------------------------------
\25\ The Commission has previously approved for Exchange trading
issues of Currency Trust Shares based on the WM/Reuters closing
rate. See, e.g., Securities Exchange Act Release No. 58365 (August
14, 2008), 73 FR 49522 (August 21, 2008) (SR-NYSEArca-2008-81)
(notice of filing and order granting accelerated approval of
proposed rule change relating to listing and trading of four
CurrencyShares Trusts). The Sponsor represents that WM/Reuters
utilizes the same methodology in calculating the Closing Spot Rate
and the ``Spot Rate'' as defined herein. In addition, the Commission
has approved for Exchange listing and trading exchange-traded
products based on indexes that use the WM/Reuters Closing Spot Rate
to calculate the applicable foreign currency exchange rate. See,
e.g., Securities Exchange Act Release Nos. 56592 (October 1, 2007),
72 FR 57364 (October 9, 2007) (SR-Amex-2007-60) (order approving
proposed rule change relating to the listing and trading on the
American Stock Exchange of shares of eight funds of the ProShares
Trust based on MSCI international equity indexes); 55985 (June 29,
2007), 72 FR 37291 (July 9, 2007) (SR-NYSEArca-2007-47) (notice of
filing and order granting accelerated approval of proposed rule
change to list and trade shares of the iShares FTSE EPRA/NAREIT Asia
Index Funds). See also, Securities Exchange Act Release Nos. 58458
(September 3, 2008), 73 FR 52717 (September 10, 2008) (SR-NYSEArca-
2008-95) (notice of filing and immediate effectiveness of proposed
rule change relating to a change in net asset value calculations for
CurrencyShares Trusts to use the WM/Reuters Closing Spot Rate);
79518 (December 9, 2016), 81 FR 90876 (December 15, 2016) (SR-
NYSEArca-2016-84) (order approving listing and trading of shares of
the Long Dollar Gold Trust).
\26\ The Spot Rate is calculated by WMR using observable data
from arms-length transactions between buyers and sellers in the
applicable currency market.
---------------------------------------------------------------------------
The Thomson Reuters Market Data System is the primary
infrastructure used to source spot foreign exchange rates used in the
calculation of the rates. Other systems may be used where the
appropriate rates are not available on the Thomson Reuters
architecture.
Over a five-minute fix period, actual trades executed and bid and
offer order rates from the order matching systems are captured every
second from 2 minutes 30 seconds before to 2 minutes 30 seconds after
the time of the fix. From each data source, a single traded rate will
be captured--this will be identified as a bid or offer depending on
whether the trade is a buy or sell. A pre-defined spread set for each
currency at each fix to reflect liquidity at different times of day
will be applied to the Trade Rate to calculate the opposite bid or
offer. All captured trades will be subjected to validation checks. This
may result in some captured data being excluded from the fix
calculation.
In most spot currency transactions, settlement is two currency
business days after the trade date. A spot-next trade effectively
extends the spot settlement cycle by one Business Day (i.e., the
``next'' day) and a Spot-Next Forward Point represents the difference
in price between a spot transaction and a spot-next trade. Combining a
spot-next trade with a spot transaction allows for exposure to the
currency without taking delivery. By entering on each Index Business
Day into notional spot-next trades that are closed the next Index
Business Day against spot transactions, each Index is exposed to its
corresponding Reference Currency without having to take delivery of the
currency. Each Index approximates the cost of entering into a spot-next
trade by linearly interpolating the cost of that trade based on the WM/
Reuters ``SW--Spot Week (One Week)'' forward rates and a spot
transaction.
The following table sets forth the Reference Currencies (each of
which is measured against USDs) and the applicable Reuters Page for
each SW--Spot Week (One Week) forward rate referenced by each Index.
------------------------------------------------------------------------
Reference currency Reuters page
------------------------------------------------------------------------
EUR/USD................................... USDEURSWFIX=WM.
USD/JPY................................... USDJPYSWFIX=WM.
GBP/USD................................... USDGBPSWFIX=WM.
------------------------------------------------------------------------
Each Index references the SW--Spot Week (One Week) forward rate for
its Reference Currency as of 9:00 a.m. London time.
The Index Provider will publish the Index Levels (also referred to
herein as ``Index values'') as of each Index Business Day in accordance
with the Index Rules. If an Index Business Day is not a Publication
Day, the Index Provider will not publish the Index Levels and the Index
Provider will resume publishing the Index Levels on the immediately
following Publication Day, subject to the consequences of the
occurrence of a Market Disruption Event or Extraordinary Event. A
``Publication Day'' is any day that (a) is an Index Business Day and
(b) is not on a day on which a Market Disruption Event or Extraordinary
Event has occurred or is continuing.
The Gold Delivery Agreement
Pursuant to the terms of the Gold Delivery Agreement, each Fund
will enter into a transaction to deliver Gold Bullion to, or receive
Gold Bullion from, the ``Gold Delivery Provider'' each Business Day''.
The amount of Gold Bullion transferred essentially will be equivalent
to the Fund's profit or loss as if the Fund had exchanged the
corresponding Reference Currency for USDs in an amount equal to the
Fund's holdings of Gold Bullion on such day. In general, if there is a
currency gain (i.e., the value of the USD against the corresponding
Reference Currency increases), the Fund will receive Gold Bullion.\27\
In general, if there is a currency loss (i.e., the value of the USD
against the corresponding Reference Currency decreases), the Fund will
deliver Gold Bullion. In this manner, the amount of Gold Bullion held
by a
[[Page 18496]]
Fund will be adjusted to reflect the daily change in the value of the
corresponding Reference Currency against the USD.\28\ The Gold Delivery
Agreement requires Gold Bullion ounces equal to the value of the ``Gold
Delivery Amount'' to be delivered to the custody account of a Fund or
the Gold Delivery Provider, as applicable. The fee that a Fund pays the
Gold Delivery Provider for its services under the Gold Delivery
Agreement is accrued daily and reflected in the calculation of the Gold
Delivery Amount. The Gold Delivery Amount is the amount of Gold Bullion
to be delivered into or out of a Fund on a daily basis to reflect price
movements in the Fund's corresponding Reference Currency against the
USD, calculated pursuant to the Gold Delivery Agreement.
---------------------------------------------------------------------------
\27\ The Gold Delivery Provider will not be affiliated with the
Trust, the Funds, the Sponsor, the Trustee, the Administrator, the
Transfer Agent, the Custodian or the Index Provider.
\28\ If the applicable currency exchange rates did not change
from one day to the next, or the net impact of such changes was
zero, then a Fund would neither deliver nor receive Gold Bullion
pursuant to the Gold Delivery Agreement.
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Market Disruption and Extraordinary Events
From time to time, unexpected events may cause the calculation of
an Index and/or the operation of a Fund to be disrupted. These events
are expected to be relatively rare, but there can be no guarantee that
these events will not occur. These events are referred to as either
``Market Disruption Events'' or ``Extraordinary Events'' depending
largely on their significance and potential impact to the Index and
Fund. Market Disruption Events with respect to a Fund generally include
disruptions in the trading of gold or the Fund's Reference Currency,
delays or disruptions in the publication of the LBMA Gold Price or the
Reference Currency prices, and unusual market or other events that are
tied to either the trading of gold or the Reference Currency or
otherwise have a significant impact on the trading of gold or the
Reference Currency. For example, market conditions or other events
which result in a material limitation in, or a suspension of, the
trading of physical gold generally would be considered Market
Disruption Events, as would material disruptions or delays in the
determination or publication of the LBMA Gold Price AM. Similarly,
market conditions which prevent, restrict or delay the Gold Delivery
Provider's ability to convert a Reference Currency to USDs or deliver a
Reference Currency through customary channels generally would be
considered a Market Disruption Event, as would material disruptions or
delays in the determination or publication of WMR spot prices for any
Reference Currency. The complete definition of a Market Disruption
Event is set forth below.
A ``Market Disruption Event'' with respect to a Fund occurs if
either an ``FX Disruption Event'' or a ``Gold Disruption Event''
occurs.
An ``FX Disruption Event'' with respect to a Fund occurs if any of
the following exist on any Index Business Day with respect to the
Fund's Reference Currency:
(i) an event, circumstance or cause (including, without limitation,
the adoption of or any change in any applicable law or regulation) that
has had or would reasonably be expected to have a materially adverse
effect on the availability of a market for converting such Reference
Currency to US Dollars (or vice versa), whether due to market
illiquidity, illegality, the adoption of or change in any law or other
regulatory instrument, inconvertibility, establishment of dual exchange
rates or foreign exchange controls or the occurrence or existence of
any other circumstance or event, as determined by the Index Provider;
or
(ii) the failure of Reuters to announce or publish the relevant
spot exchange rates for such Reference Currency; or
(iii) any event or any condition that (I) results in a lack of
liquidity in the market for trading such Reference Currency that makes
it impossible or illegal for market participants (a) to convert from
one currency to another through customary commercial channels, (b) to
effect currency transactions in, or to obtain market values of, such,
currency, (c) to obtain a firm quote for the related exchange rate, or
(d) to obtain the relevant exchange rate by reference to the applicable
price source; or (II) leads to any governmental entity imposing rules
that effectively set the prices of any of the currencies; or
(iv) the declaration of (a) a banking moratorium or the suspension
of payments by banks, in either case, in the country of any currency
used to determine such Reference Currency exchange rate, or (b) capital
and/or currency controls (including, without limitation, any
restriction placed on assets in or transactions through any account
through which a non-resident of the country of any currency used to
determine the currency exchange rate may hold assets or transfer monies
outside the country of that currency, and any restriction on the
transfer of funds, securities or other assets of market participants
from, within or outside of the country of any currency used to
determine the applicable exchange rate.
A ``Gold Disruption Event'' with respect to a Fund occurs if any of
the following exist on any Index Business Day with respect to gold:
(i) (a) The failure of the LBMA to announce or publish the LBMA
Gold Price (or the information necessary for determining the price of
gold) on that Index Business Day, (b) the temporary or permanent
discontinuance or unavailability of the LBMA or the LBMA Gold Price; or
(ii) the material suspension of, or material limitation imposed on,
trading in gold by the LBMA; or
(iii) an event that causes market participants to be unable to
deliver gold bullion loco London under rules of the LBMA by credit to
an unallocated account at a member of the LBMA; or
(iv) the permanent discontinuation of trading of gold on the LBMA
or any successor body thereto, the disappearance of, or of trading in,
gold; or
(v) a material change in the formula for or the method of
calculating the price of gold, or a material change in the content,
composition or constitution of gold.
The occurrence of a Market Disruption Event with respect to a Fund
for ten consecutive Index Business Days generally would be considered
an Extraordinary Event with respect to such Fund.
Consequences of a Market Disruption or Extraordinary Event
On any Index Business Day in which a Market Disruption Event or
Extraordinary Event with respect to a Fund has occurred or is
continuing, the Index Provider generally will calculate a Fund's Index
based on the following fallback procedures: (i) Where the Market
Disruption Event is based on the Gold Price, the Index will be kept at
the same level as the previous Index Business Day and updated when the
Gold Price is no longer disrupted; (ii) where the Gold Price is not
disrupted but the corresponding Reference Currency price is disrupted,
the Index will be calculated in the ordinary course except that the
Reference Currency will be kept at its value from the previous Index
Business Day and updated when it is no longer disrupted; and (iii) if
both the Gold Price and the Reference Currency price are disrupted, the
Index will be kept at the same level as the previous Index Business Day
and updated when such prices are no longer disrupted. If a Market
Disruption Event with respect to a Fund has occurred and is continuing
for ten (10) or more consecutive Index Business Days, the Index
Provider will calculate a
[[Page 18497]]
substitute price for each index component that is disrupted. If an
Extraordinary Event with respect to a Fund has occurred and is
continuing, the Index Provider shall be responsible for making any
decisions regarding the future composition of the applicable Index and
implement any necessary adjustments that might be required.
If the LBMA Gold Price AM is unavailable during the occurrence of a
Market Disruption Event or Extraordinary Event with respect to a Fund,
a Fund will calculate NAV using the last published LBMA Gold Price AM.
The London Gold Bullion Market
Although the market for physical gold is global, most OTC market
trades are cleared through London. In addition to coordinating market
activities, the LBMA acts as the principal point of contact between the
market and its regulators. A primary function of the LBMA is its
involvement in the promotion of refining standards by maintenance of
the ``London Good Delivery Lists,'' which are the lists of LBMA
accredited melters and assayers of gold. The LBMA also coordinates
market clearing and vaulting, promotes good trading practices and
develops standard documentation.
The term ``loco London'' refers to gold bars physically held in
London that meet the specifications for weight, dimensions, fineness
(or purity), identifying marks (including the assay stamp of an LBMA
acceptable refiner) and appearance set forth in ``The Good Delivery
Rules for Gold and Silver Bars'' published by the LBMA. Gold bars
meeting these requirements are known as ``London Good Delivery Bars.''
All of the Gold Bullion will be London Good Delivery Bars meeting the
requirements of London Good Delivery Standards.
The unit of trade in London is the troy ounce, whose conversion
between grams is: 1,000 grams = 32.1507465 troy ounces and 1 troy ounce
= 31.1034768 grams. A London Good Delivery Bar is acceptable for
delivery in settlement of a transaction on the OTC market. Typically
referred to as 400-ounce bars, a London Good Delivery Bar must contain
between 350 and 430 fine troy ounces of gold, with a minimum fineness
(or purity) of 995 parts per 1,000 (99.5%), be of good appearance and
be easy to handle and stack. The fine gold content of a gold bar is
calculated by multiplying the gross weight of the bar (expressed in
units of 0.025 troy ounces) by the fineness of the bar.
The LBMA Gold Price
The LBMA Gold Price is determined twice each Business Day (10:30
a.m. and 3:00 p.m. London time) through an auction which provides
reference gold prices for that day's trading. The LBMA Gold Price was
initiated on March 20, 2015 and replaced the London PM Gold Fix. The
auction that determines the LBMA Gold Price is a physically settled,
electronic and tradeable auction, with the ability to settle trades in
U.S. dollars, euros or British pounds. The IBA provides the auction
platform and methodology as well as the overall administration and
governance for the LBMA Gold Price. Many long-term contracts are
expected to be priced on the basis of either the morning (AM) or
afternoon (PM) LBMA Gold Price, and many market participants are
expected to refer to one or the other of these prices when looking for
a basis for valuations.
Participants in the IBA auction process submit anonymous bids and
offers which are published on screen and in real-time. Throughout the
auction process, aggregated gold bids and offers are updated in real-
time with the imbalance calculated and the price updated every 45
seconds until the buy and sell orders are matched. When the net volume
of all participants falls within a pre-determined tolerance, the
auction is deemed complete and the applicable LBMA Gold Price is
published. Information about the auction process (such as aggregated
bid and offer volumes) will be immediately available after the auction
on the IBA's Web site.
The Financial Conduct Authority, or FCA, in the U.K. regulates the
LBMA Gold Price.
The Gold Futures Markets
Although the Fund will not invest in gold futures, information
about the gold futures market is relevant as such markets contribute
to, and provide evidence of, the liquidity of the overall market for
gold.
The most significant gold futures exchange is COMEX, part of the
CME Group, Inc., which began to offer trading in gold futures contracts
in 1974. TOCOM (Tokyo Commodity Exchange) is another significant
futures exchange and has been trading gold since 1982. Trading on these
exchanges is based on fixed delivery dates and transaction sizes for
the futures and options contracts traded. Trading costs are negotiable.
As a matter of practice, only a small percentage of the futures market
turnover ever comes to physical delivery of the gold represented by the
contracts traded. Both exchanges permit trading on margin. Both COMEX
and TOCOM operate through a central clearance system and in each case,
the clearing organization acts as a counterparty for each member for
clearing purposes. Gold futures contracts also are traded on the
Shanghai Gold Exchange and the Shanghai Futures Exchange.
The global gold markets are overseen and regulated by both
governmental and self-regulatory organizations. In addition, certain
trade associations have established rules and protocols for market
practices and participants.
Net Asset Value
The Administrator will determine the NAV of Shares of a Fund on
each Business Day. The NAV of Shares of a Fund is the aggregate value
of the Fund's assets (which include gold payable, but not yet
delivered, to the Fund) less its liabilities (which include accrued but
unpaid fees and expenses). The NAV of a Fund is calculated based on the
price of gold per ounce applied against the number of ounces of Gold
Bullion owned by the Fund. For purposes of calculating NAV, the number
of ounces of Gold Bullion (i) is adjusted up or down on a daily basis
to reflect the Gold Delivery Amount; and (ii) reflects the amount of
Gold Bullion delivered into (or out of) a Fund on a daily basis by
Authorized Participants creating and redeeming Shares. The number of
ounces of Gold Bullion held by a Fund is adjusted downward by the
Sponsor's fee and the expenses of the Gold Delivery Agreement.
In determining a Fund's NAV, the Administrator generally will value
the Gold Bullion based on the LBMA Gold Price AM for an ounce of gold.
If no LBMA Gold Price AM is made on a particular evaluation day or if
the LBMA Gold Price PM has not been announced by 12:00 p.m. Eastern
time (``E.T.'') on a particular evaluation day (including a Business
Day that is not an Index Business Day), the next most recent LBMA Gold
Price AM generally will be used in the determination of the NAV of the
Fund, unless the Sponsor determines that such price is inappropriate to
use as the basis for such determination. If the Sponsor determines that
such price is inappropriate to use, it shall identify an alternate
basis for evaluation of the Gold Bullion held by the Fund. In such
case, the Sponsor would, for example, look to the current trading price
of gold from other reported sources, such as dealer quotes, broker
quotes or electronic trading data, to value the Fund's Shares. Although
the Fund will not hold the
[[Page 18498]]
Reference Currencies, the Gold Delivery Provider generally will value
the Reference Currencies based on the rates in effect as of the WMR FX
Fixing Time, which is generally at 9:00 a.m., London Time (though other
prices may be used if the 9:00 a.m. rate is delayed or unavailable).
The Administrator will also determine the NAV per Share, which equals
the NAV of the Fund, divided by the number of outstanding Shares.
Unless there is a Market Disruption Event or Extraordinary Event with
respect to the price of gold, NAV generally will be calculated and
disseminated by 12:00 p.m. E.T.
The NAV generally will be calculated as of 12:00 p.m. E.T. on any
Business Day. The Administrator will also determine the NAV per Share.
Creation and Redemption of Shares
The Funds expect to create and redeem Shares but only in Creation
Units (a Creation Unit equals a block of 10,000 Shares or more). The
creation and redemption of Creation Units requires the delivery to a
Fund (or the distribution by a Fund in the case of redemptions) of the
amount of Gold Bullion and any cash, if any, represented by the
Creation Units being created or redeemed. The total amount of Gold
Bullion and cash, if any, required for the creation of Creation Units
will be based on the combined NAV of the number of Creation Units being
created or redeemed. The initial amount of Gold Bullion required for
deposit with a Fund to create Shares is 1,000 ounces per Creation Unit.
The number of ounces of Gold Bullion required to create a Creation Unit
or to be delivered upon redemption of a Creation Unit will change over
time depending on Index performance net of the fees charged by a Fund
and the Gold Delivery Provider. Creation Units may be created or
redeemed only by Authorized Participants (as described below), who may
be required to pay a transaction fee for each order to create or redeem
Creation Units as will be set forth in the Registration Statement.
Authorized Participants may sell to other investors all or part of the
Shares included in the Creation Units they purchase from a Fund.
Creation Procedures--Authorized Participants
Authorized Participants are the only persons that may place orders
to create and redeem Creation Units. To become an Authorized
Participant, a person must enter into a Participant Agreement. All Gold
Bullion must be delivered to a Fund and distributed by a Fund in
unallocated form through credits and debits between an Authorized
Participant's unallocated account (``Authorized Participant Unallocated
Account'') and a Fund's unallocated account (``Fund Unallocated
Account'') (except for Gold Bullion delivered to or from the Gold
Delivery Provider pursuant to the Gold Delivery Agreement). All Gold
Bullion must be of at least a minimum fineness (or purity) of 995 parts
per 1,000 (99.5%) and otherwise conform to the rules, regulations
practices and customs of the LBMA, including the specifications for a
London Good Delivery Bar.
On any Business Day, an Authorized Participant may place an order
with a Fund to create one or more Creation Units. Purchase orders must
be placed by 5:30 p.m., E.T. The day on which a Fund receives a valid
purchase order is the purchase order date. By placing a purchase order,
an Authorized Participant agrees to deposit Gold Bullion with a Fund,
or a combination of Gold Bullion and cash, if any, as described
below.\29\ Prior to the delivery of Creation Units for a purchase
order, the Authorized Participant must also have wired to a Fund the
non-refundable transaction fee due for the purchase order.
---------------------------------------------------------------------------
\29\ The Sponsor anticipates that in the ordinary course of a
Fund's operations cash generally will not be part of any Creation
Unit.
---------------------------------------------------------------------------
The total deposit of Gold Bullion (and cash, if any) required to
create each Creation Unit is referred to as the ``Creation Unit Gold
Delivery Amount.'' The Creation Unit Gold Delivery Amount is the number
of ounces of Gold Bullion required to be delivered to a Fund by an
Authorized Participant in connection with a creation order for a single
Creation Unit.\30\ The Creation Unit Gold Delivery Amount will be
determined on the Business Day following the date such creation order
is accepted. It is calculated by multiplying the number of Shares in a
Creation Unit by the number of ounces of Gold Bullion associated with
Fund Shares on the Business Day after the day the creation order is
accepted. In addition, because the Gold Delivery Amount for a Fund does
not reflect creation order transactions (see the section herein
entitled ``The Gold Delivery Agreement''), the Creation Unit Gold
Delivery Amount is required to reflect the Gold Delivery Amount
associated with such creation order. This amount is determined on the
Business Day following the date such creation order is accepted.
---------------------------------------------------------------------------
\30\ The ``Creation Unit Gold Delivery Amount'' is also used to
refer to the number of ounces of Gold to be paid by the Fund to an
Authorized Participant in connection with the redemption of a
Creation Unit. See ``Redemption Procedures--Authorized
Participants'' herein.
---------------------------------------------------------------------------
An Authorized Participant who places a purchase order is
responsible for crediting its Authorized Participant Unallocated
Account with the required Gold Bullion deposit amount by the end of the
third Business Day in London following the purchase order date. Upon
receipt of the Gold Bullion deposit amount, the Custodian, after
receiving appropriate instructions from the Authorized Participant and
a Fund, will transfer on the third Business Day following the purchase
order date the Gold Bullion deposit amount from the Authorized
Participant Unallocated Account to a Fund Unallocated Account and the
Administrator will direct the Depository Trust Company (``DTC'') to
credit the number of Creation Units ordered to the Authorized
Participant's DTC account. The expense and risk of delivery, ownership
and safekeeping of Gold Bullion until such Gold Bullion has been
received by a Fund will be borne solely by the Authorized Participant.
If Gold Bullion is to be delivered other than as described above, the
Sponsor is authorized to establish such procedures and to appoint such
custodians and establish such custody accounts as the Sponsor
determines to be desirable.
Acting on standing instructions given by a Fund, the Custodian will
transfer the Gold Bullion deposit amount from a Fund Unallocated
Account to a Fund's allocated account by allocating to the allocated
account specific bars of Gold Bullion which the Custodian holds or
instructing a subcustodian to allocate specific bars of Gold held by or
for the subcustodian. The Gold Bullion bars in an allocated Gold
Bullion account are specific to that account and are identified by a
list which shows, for each Gold Bullion bar, the refiner, assay or
fineness, serial number and gross and fine weight. Gold Bullion held in
a Fund's allocated account is the property of a Fund and is not traded,
leased or loaned under any circumstances.
The Custodian will use commercially reasonable efforts to complete
the transfer of Gold Bullion to a Fund's allocated account prior to the
time by which the Administrator is to credit the Creation Unit to the
Authorized Participant's DTC account; if, however, such transfers have
not been completed by such time, the number of Creation Units ordered
will be delivered against receipt of the Gold Bullion deposit amount in
a Fund's unallocated account, and all Shareholders will be exposed to
the risks of unallocated Gold Bullion to the extent of that Gold
Bullion deposit amount until the
[[Page 18499]]
Custodian completes the allocation process.
Redemption Procedures--Authorized Participants
The procedures by which an Authorized Participant can redeem one or
more Creation Units mirror the procedures for the creation of Creation
Units. On any Business Day, an Authorized Participant may place an
order with a Fund to redeem one or more Creation Units. Redemption
orders must be placed by 5:30 p.m. E.T. A redemption order so received
is effective on the date it is received in satisfactory form by a Fund.
An Authorized Participant may be required to pay a transaction fee per
order to create or redeem Creation Units as will be set forth in the
Registration Statement.
(a) The redemption distribution from a Fund consists of a credit in
the amount of the Creation Unit Gold Delivery Amount to the Authorized
Participant Unallocated Account of the redeeming Authorized
Participant. The Creation Unit Delivery Amount for redemptions is the
number of ounces of Gold Bullion held by a Fund associated with the
Shares being redeemed plus, or minus, the cash redemption amount (if
any). The Sponsor anticipates that in the ordinary course of a Fund's
operations there will be no cash distributions made to Authorized
Participants upon redemptions. In addition, because the Gold Bullion to
be paid out in connection with the redemption order will decrease the
amount of Gold Bullion subject to the Gold Delivery Agreement, the
Creation Unit Gold Delivery Amount reflects the cost to the Gold
Delivery Provider of resizing (i.e., decreasing) its positions so that
it can fulfill its obligations under the Gold Delivery Agreement.
The redemption distribution due from a Fund is delivered to the
Authorized Participant on the third Business Day following the
redemption order date if, by 10:00 a.m. E.T. on such third Business
Day, a Fund's DTC account has been credited with the Creation Units to
be redeemed. If the Administrator's DTC account has not been credited
with all of the Creation Units to be redeemed by such time, the
redemption distribution is delivered to the extent of whole Creation
Units received. Any remainder of the redemption distribution is
delivered on the next Business Day to the extent of remaining whole
Creation Units received if the Administrator receives the fee
applicable to the extension of the redemption distribution date which
the Administrator may, from time to time, determine and the remaining
Creation Units to be redeemed are credited to the Administrator's DTC
account by 10:00 a.m. E.T. on such next Business Day. Any further
outstanding amount of the redemption order will be cancelled. The
Administrator is also authorized to deliver the redemption distribution
notwithstanding that the Creation Units to be redeemed are not credited
to the Administrator's DTC account by 10:00 a.m. E.T. on the third
Business Day following the redemption order date if the Authorized
Participant has collateralized its obligation to deliver the Creation
Units through DTC's book entry system on such terms as the Sponsor and
the Administrator may from time to time agree upon.
The Custodian transfers the redemption Gold Bullion amount from a
Fund's allocated account to a Fund's unallocated account and,
thereafter, to the redeeming Authorized Participant's Authorized
Participant Unallocated Account.
Secondary Market Trading
While a Fund's investment objective is for its Shares to reflect
the performance of Gold Bullion in terms of a Reference Currency
reflected in the applicable Index, less the expenses of a Fund, the
Shares may trade in the secondary market at prices that are lower or
higher relative to their NAV per Share. The amount of the discount or
premium in the trading price relative to the NAV per Share may be
influenced by non-concurrent trading hours between the NYSE Arca and
the COMEX, London, Zurich and Singapore. While the Shares will trade on
NYSE Arca until 8:00 p.m. E.T., liquidity in the global gold market
will be reduced after the close of the COMEX at 1:30 p.m. E.T. As a
result, during this time, trading spreads, and the resulting premium or
discount, on the Shares may widen.
The Adviser represents that market makers in the Shares will be
able to efficiently hedge their positions through use of spot gold
transactions and spot currency transactions in Reference Currencies.
Transactions in spot gold and spot currencies during the Exchange's
Core Trading Session (9:30 a.m. to 4:00 p.m. E.T.) take place in a
highly liquid market; such transactions that hedge the market makers'
positions in Shares are expected to facilitate the market maker's
ability to trade Shares at a price that is not at a material discount
or premium to NAV.
Availability of Information Regarding Gold and Reference Currency
Prices
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity, such as gold, or the
spot price of the Reference Currencies, over the Consolidated Tape.
However, there will be disseminated over the Consolidated Tape the last
sale price for the Shares, as is the case for all equity securities
traded on the Exchange (including exchange-traded funds). In addition,
there is a considerable amount of information about gold and currency
prices and gold and currency markets available on public Web sites and
through professional and subscription services.
Investors may obtain on a 24-hour basis gold pricing information
based on the spot price for an ounce of gold and pricing information
for the Reference Currencies from various financial information service
providers, such as Reuters and Bloomberg.
Reuters and Bloomberg, for example, provide at no charge on their
Web sites delayed information regarding the spot price of gold and last
sale prices of gold futures, as well as information about news and
developments in the gold market. Reuters and Bloomberg also offer a
professional service to subscribers for a fee that provides information
on gold prices directly from market participants. Complete real-time
data for gold futures and options prices traded on the COMEX are
available by subscription from Reuters and Bloomberg. There are a
variety of other public Web sites providing information on gold,
ranging from those specializing in precious metals to sites maintained
by major newspapers. In addition, the LBMA Gold Price is publicly
available at no charge at www.lbma.org.uk.
In addition, Reuters and Bloomberg, for example, provide at no
charge on their Web sites delayed information regarding the spot price
of each Reference Currency, as well as information about news and
developments in the currency markets. Reuters and Bloomberg also offer
a professional service to subscribers for a fee that provides
information on currency transactions directly from market participants.
Complete real-time data for currency transactions are available by
subscription from Reuters and Bloomberg. There are a variety of other
public Web sites providing information about the Reference Currencies
and currency transactions, ranging from those specializing in currency
trading to sites maintained by major newspapers.
[[Page 18500]]
Availability of Information
The Funds' Web site will provide an intraday indicative value
(``IIV'') per Share for the Shares updated every 15 seconds, as
calculated by the Exchange or a third party financial data provider
during the Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m.
E.T.) The IIV will be calculated based on the amount of gold held by
the Fund and (i) a price of gold derived from updated bids and offers
indicative of the spot price of gold, and (ii) intra-day exchange rates
for each Reference Currency against the U.S. dollar.\31\ The Funds' Web
site will also provide the Creation Basket Deposit and the NAV of the
Fund as calculated each Business Day by the Administrator. The value
for each Index will be disseminated by one or more major market data
vendors each Index Business Day at approximately 6:00 a.m. E.T.
---------------------------------------------------------------------------
\31\ The IIV on a per Share basis disseminated during the Core
Trading Session should not be viewed as a real-time update of the
NAV, which is calculated once a day.
---------------------------------------------------------------------------
In addition, the Web site for each Fund will contain the following
information, on a per Share basis, for the Fund: (a) The mid-point of
the bid-ask price \32\ at the close of trading (``Bid/Ask Price''), and
a calculation of the premium or discount of such price against such
NAV; and (b) data in chart format displaying the frequency distribution
of discounts and premiums of the Bid/Ask Price against the NAV, within
appropriate ranges, for each of the four previous calendar quarters.
The Web site for each Fund will also provide the Fund's prospectus, as
well as the two most recent reports to stockholders. Finally, the
Funds' Web site will provide the last sale price of the Shares as
traded in the U.S. market. In addition, the Exchange will make
available over the Consolidated Tape quotation information, trading
volume, closing prices and NAV for the Shares from the previous day.
The Index value will be calculated daily using the daily LBMA Gold
Price AM and the Spot Rate as of 9:00 a.m., London time. The Index
value will be available from one or more major market data vendors and
will be available during the Exchange's Core Trading Session.
---------------------------------------------------------------------------
\32\ The bid-ask price of the Shares will be determined using
the highest bid and lowest offer on the Consolidated Tape as of the
time of calculation of the closing day NAV.
---------------------------------------------------------------------------
Criteria for Initial and Continued Listing
The Funds will be subject to the criteria in NYSE Arca Equities
Rule 8.201(e) for initial and continued listing of the Shares.
A minimum of 100,000 Shares will be required to be outstanding at
the start of trading. The minimum number of shares required to be
outstanding is comparable to requirements that have been applied to
previously listed shares of the Sprott Physical Gold Trust, ETFS
Trusts, streetTRACKS Gold Trust, the iShares COMEX Gold Trust, and the
iShares Silver Trust. The Exchange believes that the anticipated
minimum number of Shares outstanding at the start of trading is
sufficient to provide adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares of the Funds subject to the Exchange's
existing rules governing the trading of equity securities. Trading in
the Shares on the Exchange will occur in accordance with NYSE Arca
Equities Rule 7.34(a). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price
variation (``MPV'') for quoting and entry of orders in equity
securities traded on the NYSE Arca Marketplace is $0.01, with the
exception of securities that are priced less than $1.00 for which the
MPV for order entry is $0.0001.
Under NYSE Arca Equities Rule 8.201(g), an ETP Holder acting as a
registered Market Maker in Commodity-Based Trust Shares with exposure
to one or more non-U.S. currencies (``Underlying FX'') must file with
the Exchange, in a manner prescribed by the Exchange, and keep current
a list identifying all accounts for trading in Underlying FX and
derivatives overlying Underlying FX which the Market Maker may have or
over which it may exercise investment discretion, as well as a list of
all commodity and commodity-related accounts referenced above. In
addition, no Market Maker in Commodity-Based Trust Shares shall trade
in a commodity, Underlying FX or any related derivative in an account
that the Market Maker (1) directly or indirectly controls trading
activities or has a direct interest in the profits or losses thereof,
(2) is required by this rule to disclose to the Exchange, and (3) has
not reported to the Exchange. In addition to the existing obligations
under Exchange rules regarding the production of books and records, an
ETP Holder acting as a Market Maker in Commodity-Based Trust Shares
shall make available to the Exchange such books, records or other
information pertaining to transactions by such entity or registered or
non-registered employee affiliated with such entity for its or their
own accounts for trading the underlying physical commodity, related
commodity futures or options on commodity futures, applicable
Underlying FX, or any other related commodity or applicable Underlying
FX derivatives, as may be requested by the Exchange.
The Exchange notes that, under NYSE Arca Equities Rule 10.2, in the
course of an investigation by the Exchange, the Exchange may request
from ETP Holders documentary materials and other information, including
trading records, regarding trading in currencies and currency
derivatives. In addition, Commentary .04 of NYSE Arca Equities Rule 6.3
requires an ETP Holder acting as a registered Market Maker, and its
affiliates, in the Shares to establish, maintain and enforce written
policies and procedures reasonably designed to prevent the misuse of
any material nonpublic information with respect to such products, any
components of the related products, any physical asset or commodity
underlying the product, applicable currencies, underlying indexes,
related futures or options on futures, and any related derivative
instruments (including the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. A subsidiary or affiliate of an
ETP Holder that does business only in commodities or futures contracts
would not be subject to Exchange jurisdiction, but the Exchange could
obtain information regarding the activities of such subsidiary or
affiliate through surveillance sharing agreements with regulatory
organizations of which such subsidiary or affiliate is a member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\33\ The Exchange will halt trading in the Shares if the
NAV of the Trust is not calculated or disseminated daily. The Exchange
may halt trading during the day in which an interruption occurs to the
dissemination of the IIV, as described above, or the Index value. If
the interruption to the dissemination of the IIV or the Index value
persists past the
[[Page 18501]]
trading day in which it occurs, the Exchange will halt trading no later
than the beginning of the trading day following the interruption.
---------------------------------------------------------------------------
\33\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws.\34\ The Exchange represents that
these procedures are adequate to properly monitor Exchange trading of
the Shares in all trading sessions and to deter and detect violations
of Exchange rules and federal securities laws applicable to trading on
the Exchange.
---------------------------------------------------------------------------
\34\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\35\
---------------------------------------------------------------------------
\35\ For a list of the current members of ISG, see
www.isgportal.org.
---------------------------------------------------------------------------
Also, pursuant to NYSE Arca Equities Rule 8.201(g), the Exchange is
able to obtain information regarding trading in the Shares and the
underlying gold, gold futures contracts, options on gold futures, any
other gold derivative, applicable non-U.S. currencies or applicable
non-U.S. currency derivatives through ETP Holders acting as registered
Market Makers, in connection with such ETP Holders' proprietary or
customer trades through ETP Holders which they effect on any relevant
market.
All statements and representations made in this filing regarding
(a) the description of the portfolios of the Funds, (b) limitations on
portfolio holdings, or (c) the applicability of Exchange listing rules
specified in this rule filing 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 Funds 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 a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence delisting
procedures under NYSE Arca Equities Rule 5.5(m).
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Baskets (including noting that
Shares are not individually redeemable); (2) NYSE Arca Equities Rule
9.2(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (3) how information regarding the IIV is disseminated; (4)
the requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting premium or discount on the Shares may widen as a
result of reduced liquidity of gold trading during the Core and Late
Trading Sessions after the close of the major world gold markets; and
(6) trading information. For example, the Information Bulletin will
advise ETP Holders, prior to the commencement of trading, of the
prospectus delivery requirements applicable to a Fund. The Exchange
notes that investors purchasing Shares directly from a Fund (by
delivery of the Creation Basket Deposit) will receive a prospectus. ETP
Holders purchasing Shares from a Fund for resale to investors will
deliver a prospectus to such investors.
In addition, the Information Bulletin will reference that a Fund is
subject to various fees and expenses as will be described in the
Registration Statement. The Information Bulletin will also reference
the fact that there is no regulated source of last sale information
regarding physical gold, that the Commission has no jurisdiction over
the trading of gold as a physical commodity, and that the Commodity
Futures Trading Commission has regulatory jurisdiction over the trading
of gold futures contracts and options on gold futures contracts.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \36\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest. The
Exchange believes that the proposed rule change is designed to prevent
fraudulent and manipulative acts and practices in that the Shares will
be listed and traded on the Exchange pursuant to the initial and
continued listing criteria in NYSE Arca Equities Rule 8.201. The
Exchange has in place surveillance procedures that are adequate to
properly monitor trading in the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws. The Exchange may obtain information via ISG from other
exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement. Under NYSE
Arca Equities Rule 10.2, in the course of an investigation by the
Exchange, the Exchange may request from ETP Holders documentary
materials and other information, including trading records, regarding
trading in currencies and currency derivatives. In addition, Commentary
.04 of NYSE Arca Equities Rule 6.3 requires an ETP Holder acting as a
registered Market Maker, and its affiliates, in the Shares to
establish, maintain and enforce written policies and procedures
reasonably designed to prevent the misuse of any material nonpublic
information with respect to such products, any components of the
related products, any physical asset or commodity underlying the
product, applicable currencies, underlying
[[Page 18502]]
indexes, related futures or options on futures, and any related
derivative instruments (including the Shares).
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\36\ 15 U.S.C. 78f(b)(5).
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The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of gold price and gold market
information available on public Web sites and through professional and
subscription services. Investors may obtain on a 24-hour basis gold
pricing information based on the spot price for an ounce of gold from
various financial information service providers. Investors may obtain
gold pricing information based on the spot price for an ounce of gold
from various financial information service providers. Current spot
prices also are generally available with bid/ask spreads from gold
bullion dealers. In addition, the Funds' Web site will provide pricing
information for gold spot prices and the Shares. Market prices for the
Shares will be available from a variety of sources including brokerage
firms, information Web sites and other information service providers.
The NAV of the Funds will be published by the Sponsor on each day that
the NYSE Arca is open for regular trading and will be posted on the
Funds' Web site. The IIV relating to the Shares will be widely
disseminated by one or more major market data vendors at least every 15
seconds during the Core Trading Session. In addition, the LBMA Gold
Price is publicly available at no charge at www.lbma.org.uk. The Funds'
Web site will also provide the Funds' prospectus, as well as the two
most recent reports to stockholders. In addition, the Exchange will
make available over the Consolidated Tape quotation information,
trading volume, closing prices and NAV for the Shares from the previous
day.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding gold pricing.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating to physical
gold.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period 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, as modified by Amendment No. 1, 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-2017-33 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-2017-33. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2017-33, and should
be submitted on or before May 10, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-07877 Filed 4-18-17; 8:45 am]
BILLING CODE 8011-01-P
