Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 2 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, 26534-26536 [2017-11750]
Download as PDF
26534
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
should refer toFile Number SR–
NYSEArca–2017–61, and should be
submitted on or before June 28, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–11749 Filed 6–6–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80840; File No. SR–
NYSEArca–2017–33]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by
Amendment No. 2 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
June 1, 2017.
I. Introduction
On March 31, 2017, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Euro Gold Trust,
Pound Gold Trust, and the Yen Gold
Trust (each a ‘‘Fund’’ and, collectively,
the ‘‘Funds’’) under NYSE Arca Equities
Rule 8.201. 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 proposed rule change, as modified
by Amendment No. 1, was published for
comment in the Federal Register on
April 19, 2017.3 On May 23, 2017, the
Exchange filed Amendment No. 2 to the
proposed rule change,4 which amended
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 80457
(April 13, 2017), 82 FR 18492.
4 In Amendment No. 2, the Exchange: (1)
Described further the methodology for each
underlying index; (2) provided additional
information regarding Solactive AG, the ‘‘Index
Provider;’’ (3) further supported its position that
market makers in the Shares will be able to trade
the Shares at prices that are not at a material
discount or premium to net asset value (‘‘NAV’’) per
Share; and (4) made additional statements regarding
the continued listing requirements applicable to the
Shares. The amendments to the proposed rule
change are available at: https://www.sec.gov/
comments/sr-nysearca-2017-33/
nysearca201733.htm. Amendment No. 2 is not
subject to notice and comment because it is a
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1 15
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and replaced the proposed rule change
as modified by Amendment No. 1. The
Commission has not received any
comments on the proposed rule change.
This order approves the proposed rule
change, as modified by Amendment No.
2.
II. The Description of the Proposed
Rule Change, as Modified by
Amendment No. 2 5
The Exchange proposes to list and
trade the Shares, which are a series of
the World Currency Gold Trust
(‘‘Trust’’), under NYSE Arca Equities
Rule 8.201.6 Under NYSE Arca Equities
Rule 8.201, the Exchange may list and
trade, or trade pursuant to unlisted
trading privileges, Commodity-Based
Trust Shares.7
The Sponsor of the Funds and the
Trust will be WGC USA Asset
Management Company, LLC
(‘‘Sponsor’’).8 BNY Mellon Asset
Servicing, a division of The Bank of
New York Mellon (‘‘BNYM’’), will be
the Funds’ administrator
(‘‘Administrator’’) and 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 of the Funds’ gold.
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, which generally is the
London Bullion Markets Association
technical amendment that does not materially alter
the substance of the proposed rule change or raise
any novel regulatory issues.
5 A more detailed description of the Funds, the
Shares, the Indexes and the Gold Delivery
Agreement (as defined in the Notice), as well as
investment risks, creation and redemption
procedures, NAV calculation, availability of values
and other information regarding the Funds, and
fees, among other things, is included in the
Registration Statement, infra note 6, and
Amendment No. 2, supra note 4.
6 On March 30, 2017, the Trust filed with the
Commission its initial registration statement on
Form S–1 under the Securities Act of 1933 relating
to the Funds (File No. 333–217041) (‘‘Registration
Statement’’).
7 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.
8 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.
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
(‘‘LBMA’’) Gold Price AM 9) 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 as
the ‘‘Reference Currencies.’’ Each of the
Solactive GLD® EUR Gold Index,
Solactive GLD® GBP Gold Index, and
Solactive GLD® JPY Gold Index are each
referred to as an ‘‘Index,’’ and are
referred to collectively as the ‘‘Indexes.’’
Generally, each Fund’s holdings will
consist entirely of Gold Bullion.10
Substantially all of each Fund’s Gold
Bullion holdings will delivered by
Authorized Participants 11 in exchange
for Fund Shares. The Funds’ Gold
Bullion holdings will not be managed
and the Funds will not have any
investment discretion. 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).
9 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 and published
by the LBMA on its Web site. The ‘‘LBMA Gold
Price AM’’ is the 10:30 a.m. LBMA Gold Price. See
Amendment No. 2, supra note 4, at 8–9.
10 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 LBMA. See id. at 6, n.19.
11 According to the Exchange, Authorized
Participants are the only persons that may place
orders to create and redeem Creation Units and
such persons must enter into a Participant
Agreement. See id. at 18.
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III. Discussion and Commission
Findings
After careful review, the Commission
finds that the Exchange’s proposed rule
change to list and trade the Shares is
consistent with the Act and the rules
and regulations thereunder applicable to
a national securities exchange.12 In
particular, the Commission finds that
the proposal is consistent with Section
11A(a)(1)(C)(iii) of the Act,13 which sets
forth Congress’ finding that it is in the
public interest and appropriate for the
protection of investors and the
maintenance of fair and orderly markets
to assure the availability to brokers,
dealers, and investors of information
with respect to quotations for and
transactions in securities. Quotation,
last-sale, trading volume, and closing
price information for the Shares will be
available over the Consolidated Tape.
Additionally, the Commission finds
that the proposed rule change is
consistent with Section 6(b)(5) of the
Exchange Act,14 which requires, among
other things, that the Exchange’s rules
be designed to prevent fraudulent and
manipulative acts and practices,
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
Commission believes that the proposed
rule change is reasonably designed to
promote fair disclosure of information
that may be necessary to price the
Shares appropriately. The Funds’ Web
site will provide an indicative intraday
value (‘‘IIV’’) per Share, updated every
15 seconds during the Exchange’s Core
Trading Session. The IIV will be
calculated based on the amount of gold
held by the Fund, a price of gold
derived from updated bids and offers
indicative of the spot price of gold, and
an intra-day exchange rate for each
Reference Currency against the U.S.
dollar.15 The Exchange states that the
IIV will be widely disseminated by one
or more major market data vendors at
least every 15 seconds during the Core
Trading Session.16 Additionally, the
Funds’ Web site will publish the
Creation Basket Deposit and the NAV.17
12 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
13 15 U.S.C. 78k–1(a)(1)(C)(iii).
14 15 U.S.C. 78f(b)(5).
15 See Amendment No. 2, supra note 4, at 23, text
accompanying n.30.
16 See id. at 28.
17 See id. at 23. The Funds also will publish the
following information on their Web site: (1) The
mid-point of the bid-ask price as of the close of
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Each Index value generally will be
calculated daily, using the daily LBMA
Gold Price AM and the Spot Rate 18 as
of 9:00 a.m., London time, and it will be
available from one or more major market
data vendors and will be available
during the Exchange’s Core Trading
Session.
The Exchange represents that market
participants will recalculate
approximate intraday Index values
using reliable intraday prices of gold
and Reference Currencies to identify
arbitrage opportunities that present
themselves during the Exchange’s Core
Trading Session.19 In particular, the
Exchange states that market makers in
the Shares will be able to hedge their
positions in the Shares by entering into
spot gold and spot currency transactions
in the Reference Currencies. Those spot
transactions would take place during
the Exchange’s Core Trading session,
when the currency and gold markets are
highly liquid according to the
Exchange.20 The Exchange expects that
those hedging transactions will facilitate
a market maker’s ability to trade Shares
at a price that is not at a material
discount or premium to the NAV.21
As mentioned above,22 the Index
Values, which impact the NAVs of the
Funds, are calculated using the Spot
Rates. Each Spot Rate is calculated by
WM/Reuters (‘‘WMR’’) using observable
data from arms-length transactions
between buyers and sellers in the
applicable currency market.23 The
Exchange represents that WMR utilizes
the same methodology to calculate the
Spot Rate as it does to calculate the
NAV for certain issues of Currency
Trust Shares, the listing and trading of
which the Commission approved.24 The
trading (‘‘Bid/Ask Price’’), and a calculation of the
premium or discount of such price against such
NAV; (2) 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; (3) the Fund’s prospectus, as well
as the two most recent reports to stockholders; and
(4) the last-sale price of the Shares as traded in the
U.S. market. See id. at 23.
18 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. See id. at 10.
19 See id. at 22.
20 See id. The Exchange states that there is a
considerable amount of information about gold and
currency prices available on public Web sites and
through professional and subscription services. For
example, according to the Exchange, investors may
obtain on a 24-hour basis gold pricing information,
as well as pricing information for the Reference
Currencies from various financial information
service providers. See id.
21 See id.
22 See supra note 18 and accompanying text.
23 See Amendment No. 2, supra note 4, at 11,
n.25.
24 See id. at 11, n.24.
PO 00000
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Fmt 4703
Sfmt 4703
26535
Commission believes that the markets
for the Reference Currencies (i.e., the
Japanese Yen, Euro and British Pound
Sterling) and gold are deep and liquid.
For these reasons, and in light of the
Exchange’s representations that the
Index methodologies are transparent,25
the Commission presently has no reason
to believe that the Indexes are
susceptible to manipulation.
The Commission also believes that the
proposal is reasonably designed to
prevent trading when a reasonable
degree of transparency cannot be
assured. With respect to trading halts,
the Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
The Exchange may halt trading in the
Shares because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. The Exchange will halt
trading in the Shares if the NAV is not
calculated or disseminated daily.26 The
Exchange may halt trading during the
day in which an interruption occurs to
the dissemination of the IIV or the Index
value; if the interruption to the
dissemination of the IIV or the Index
value persists past the trading day in
which it occurs, the Exchange will halt
trading no later than the beginning of
the trading day following the
interruption.27 In addition, trading in
Shares will be subject to trading halts
caused by extraordinary market
volatility pursuant to the Exchange’s
‘‘circuit breaker’’ rule.
Additionally, the Commission notes
that market makers in the Shares would
be subject to the requirements of NYSE
Arca Equities Rule 8.201(g), which
allow the Exchange to ensure that they
do not use their positions to violate the
requirements of Exchange rules or
applicable federal securities laws.28
In support of this proposal, the
Exchange has made the following
additional representations:
(1) 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.
(2) The Exchange deems the Shares to
be equity securities, thus rendering the
25 See
id. at 8.
id. at 25.
27 See id.
28 The Commission notes that Commentary .04 of
NYSE Arca Equities Rule 6.3 requires that an ETP
Holder acting as a registered market maker in the
Shares, and its affiliates, 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.
26 See
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Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
trading of the Shares subject to the
Exchange’s existing rules governing the
trading of equity securities.
(3) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.29
(4) The Exchange also has a general
policy prohibiting the distribution of
material, non-public information by its
employees.30
(5) The Index Provider, which is not
affiliated with a broker-dealer, has
adopted policies and procedures
designed to prevent the spread of
material non-public information about
the Indexes.31
(6) Trading in the Shares will be
subject to the existing trading
surveillances administered by the
Exchange, as well as cross-market
surveillances administered by FINRA on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws, and 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.32
(7) 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 Intermarket Surveillance Group
(‘‘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.33
(8) 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
29 See
id. at 24.
id. at 26.
31 See id. at 8.
32 See id. at 25–26. 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. See id. at 25, n.33.
33 For a list of the current members of ISG, see
www.isgportal.org.
30 See
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16:37 Jun 06, 2017
Jkt 241001
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) ETP Holders
deliver a prospectus to investors
purchasing newly issued Shares prior to
or concurrently with the confirmation of
a transaction; (4) 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 (5)
trading information.
(9) All statements and representations
made in this filing regarding (a) the
description of the applicable Indexes,
portfolios or reference assets, (b)
limitations on Index or portfolio
holdings or reference assets, or (c) the
applicability of Exchange listing rules
specified in this rule filing constitute
continued listing requirements for
listing the Shares on the Exchange.34
(10) 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 the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
the NYSE Arca Equities Rule 5.5(m).
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
Amendment No. 2, and the Exchange’s
description of the Funds.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 2, is consistent with Section 6(b)(5)
of the Act 35 and the rules and
regulations thereunder applicable to a
national securities exchange.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,36
that the proposed rule change (SR–
NYSEArca–2017–33), as modified by
Amendment No. 2 be, and it hereby is,
approved.
34 See
Amendment No. 2, supra note 4, at 26.
U.S.C. 78f(b)(5).
36 15 U.S.C. 78s(b)(2).
35 15
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Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–11750 Filed 6–6–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80831; File No. SR–BOX–
2017–19]
Self-Regulatory Organizations; BOX
Options Exchange LLC; Notice of
Filing of Proposed Rule Change To
Adopt Rule 16100 (Consolidated Audit
Trail—Fee Dispute Resolution) To
Establish the Procedures for Resolving
Potential Disputes Related to CAT
Fees Charged to Industry Members
June 1, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’),1 and Rule 19b–4
thereunder,2 notice is hereby given that
on May 25, 2017, BOX Options
Exchange LLC (the ‘‘Exchange’’ or
‘‘SRO’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) the proposed rule change as
described in Items I and II below, which
Items have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt Rule
16100 (Consolidated Audit Trail—Fee
Dispute Resolution) to establish the
procedures for resolving potential
disputes related to CAT Fees charged to
Industry Members.3 The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
Internet Web site at http://
boxexchange.com.
37 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Unless otherwise specified, capitalized terms
used in this rule filing are defined as set forth
herein, or in the Consolidated Audit Trail Funding
Fees Rule, the CAT Compliance Rule Series or in
the CAT NMS Plan.
1 15
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Agencies
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26534-26536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11750]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80840; File No. SR-NYSEArca-2017-33]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 2 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
June 1, 2017.
I. Introduction
On March 31, 2017, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade shares (``Shares'') of the Euro Gold Trust, Pound Gold
Trust, and the Yen Gold Trust (each a ``Fund'' and, collectively, the
``Funds'') under NYSE Arca Equities Rule 8.201. 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 proposed rule
change, as modified by Amendment No. 1, was published for comment in
the Federal Register on April 19, 2017.\3\ On May 23, 2017, the
Exchange filed Amendment No. 2 to the proposed rule change,\4\ which
amended and replaced the proposed rule change as modified by Amendment
No. 1. The Commission has not received any comments on the proposed
rule change. This order approves the proposed rule change, as modified
by Amendment No. 2.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 80457 (April 13,
2017), 82 FR 18492.
\4\ In Amendment No. 2, the Exchange: (1) Described further the
methodology for each underlying index; (2) provided additional
information regarding Solactive AG, the ``Index Provider;'' (3)
further supported its position that market makers in the Shares will
be able to trade the Shares at prices that are not at a material
discount or premium to net asset value (``NAV'') per Share; and (4)
made additional statements regarding the continued listing
requirements applicable to the Shares. The amendments to the
proposed rule change are available at: https://www.sec.gov/comments/sr-nysearca-2017-33/nysearca201733.htm. Amendment No. 2 is not
subject to notice and comment because it is a technical amendment
that does not materially alter the substance of the proposed rule
change or raise any novel regulatory issues.
---------------------------------------------------------------------------
II. The Description of the Proposed Rule Change, as Modified by
Amendment No. 2 \5\
---------------------------------------------------------------------------
\5\ A more detailed description of the Funds, the Shares, the
Indexes and the Gold Delivery Agreement (as defined in the Notice),
as well as investment risks, creation and redemption procedures, NAV
calculation, availability of values and other information regarding
the Funds, and fees, among other things, is included in the
Registration Statement, infra note 6, and Amendment No. 2, supra
note 4.
---------------------------------------------------------------------------
The Exchange proposes to list and trade the Shares, which are a
series of the World Currency Gold Trust (``Trust''), under NYSE Arca
Equities Rule 8.201.\6\ Under NYSE Arca Equities Rule 8.201, the
Exchange may list and trade, or trade pursuant to unlisted trading
privileges, Commodity-Based Trust Shares.\7\
---------------------------------------------------------------------------
\6\ On March 30, 2017, the Trust filed with the Commission its
initial registration statement on Form S-1 under the Securities Act
of 1933 relating to the Funds (File No. 333-217041) (``Registration
Statement'').
\7\ 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 Sponsor of the Funds and the Trust will be WGC USA Asset
Management Company, LLC (``Sponsor'').\8\ BNY Mellon Asset Servicing, a
division of The Bank of New York Mellon (``BNYM''), will be the Funds'
administrator (``Administrator'') and 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 of the Funds' gold.
---------------------------------------------------------------------------
\8\ 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.
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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, which generally is the London Bullion
Markets Association (``LBMA'') Gold Price AM \9\) and a short position
in the Euro (i.e., a long U.S. dollar (``USD'') exposure versus the
Euro).
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\9\ 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 and published by the LBMA on its Web site.
The ``LBMA Gold Price AM'' is the 10:30 a.m. LBMA Gold Price. See
Amendment No. 2, supra note 4, at 8-9.
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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 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 each referred to as an ``Index,'' and
are referred to collectively as the ``Indexes.''
Generally, each Fund's holdings will consist entirely of Gold
Bullion.\10\ Substantially all of each Fund's Gold Bullion holdings
will delivered by Authorized Participants \11\ in exchange for Fund
Shares. The Funds' Gold Bullion holdings will not be managed and the
Funds will not have any investment discretion. 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).
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\10\ 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 LBMA. See
id. at 6, n.19.
\11\ According to the Exchange, Authorized Participants are the
only persons that may place orders to create and redeem Creation
Units and such persons must enter into a Participant Agreement. See
id. at 18.
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[[Page 26535]]
III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposed rule change to list and trade the Shares is consistent with
the Act and the rules and regulations thereunder applicable to a
national securities exchange.\12\ In particular, the Commission finds
that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the
Act,\13\ which sets forth Congress' finding that it is in the public
interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities. Quotation, last-sale,
trading volume, and closing price information for the Shares will be
available over the Consolidated Tape.
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\12\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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Additionally, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Exchange Act,\14\ which
requires, among other things, that the Exchange's rules be designed to
prevent fraudulent and manipulative acts and practices, promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest. The
Commission believes that the proposed rule change is reasonably
designed to promote fair disclosure of information that may be
necessary to price the Shares appropriately. The Funds' Web site will
provide an indicative intraday value (``IIV'') per Share, updated every
15 seconds during the Exchange's Core Trading Session. The IIV will be
calculated based on the amount of gold held by the Fund, a price of
gold derived from updated bids and offers indicative of the spot price
of gold, and an intra-day exchange rate for each Reference Currency
against the U.S. dollar.\15\ The Exchange states that the IIV will be
widely disseminated by one or more major market data vendors at least
every 15 seconds during the Core Trading Session.\16\ Additionally, the
Funds' Web site will publish the Creation Basket Deposit and the
NAV.\17\ Each Index value generally will be calculated daily, using the
daily LBMA Gold Price AM and the Spot Rate \18\ as of 9:00 a.m., London
time, and it will be available from one or more major market data
vendors and will be available during the Exchange's Core Trading
Session.
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\14\ 15 U.S.C. 78f(b)(5).
\15\ See Amendment No. 2, supra note 4, at 23, text accompanying
n.30.
\16\ See id. at 28.
\17\ See id. at 23. The Funds also will publish the following
information on their Web site: (1) The mid-point of the bid-ask
price as of the close of trading (``Bid/Ask Price''), and a
calculation of the premium or discount of such price against such
NAV; (2) 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; (3) the Fund's prospectus, as well as the two most recent
reports to stockholders; and (4) the last-sale price of the Shares
as traded in the U.S. market. See id. at 23.
\18\ 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. See id. at 10.
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The Exchange represents that market participants will recalculate
approximate intraday Index values using reliable intraday prices of
gold and Reference Currencies to identify arbitrage opportunities that
present themselves during the Exchange's Core Trading Session.\19\ In
particular, the Exchange states that market makers in the Shares will
be able to hedge their positions in the Shares by entering into spot
gold and spot currency transactions in the Reference Currencies. Those
spot transactions would take place during the Exchange's Core Trading
session, when the currency and gold markets are highly liquid according
to the Exchange.\20\ The Exchange expects that those hedging
transactions will facilitate a market maker's ability to trade Shares
at a price that is not at a material discount or premium to the
NAV.\21\
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\19\ See id. at 22.
\20\ See id. The Exchange states that there is a considerable
amount of information about gold and currency prices available on
public Web sites and through professional and subscription services.
For example, according to the Exchange, investors may obtain on a
24-hour basis gold pricing information, as well as pricing
information for the Reference Currencies from various financial
information service providers. See id.
\21\ See id.
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As mentioned above,\22\ the Index Values, which impact the NAVs of
the Funds, are calculated using the Spot Rates. Each Spot Rate is
calculated by WM/Reuters (``WMR'') using observable data from arms-
length transactions between buyers and sellers in the applicable
currency market.\23\ The Exchange represents that WMR utilizes the same
methodology to calculate the Spot Rate as it does to calculate the NAV
for certain issues of Currency Trust Shares, the listing and trading of
which the Commission approved.\24\ The Commission believes that the
markets for the Reference Currencies (i.e., the Japanese Yen, Euro and
British Pound Sterling) and gold are deep and liquid. For these
reasons, and in light of the Exchange's representations that the Index
methodologies are transparent,\25\ the Commission presently has no
reason to believe that the Indexes are susceptible to manipulation.
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\22\ See supra note 18 and accompanying text.
\23\ See Amendment No. 2, supra note 4, at 11, n.25.
\24\ See id. at 11, n.24.
\25\ See id. at 8.
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The Commission also believes that the proposal is reasonably
designed to prevent trading when a reasonable degree of transparency
cannot be assured. With respect to trading halts, the Exchange may
consider all relevant factors in exercising its discretion to halt or
suspend trading in the Shares. The Exchange may halt trading in the
Shares because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. The Exchange will
halt trading in the Shares if the NAV is not calculated or disseminated
daily.\26\ The Exchange may halt trading during the day in which an
interruption occurs to the dissemination of the IIV or the Index value;
if the interruption to the dissemination of the IIV or the Index value
persists past the trading day in which it occurs, the Exchange will
halt trading no later than the beginning of the trading day following
the interruption.\27\ In addition, trading in Shares will be subject to
trading halts caused by extraordinary market volatility pursuant to the
Exchange's ``circuit breaker'' rule.
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\26\ See id. at 25.
\27\ See id.
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Additionally, the Commission notes that market makers in the Shares
would be subject to the requirements of NYSE Arca Equities Rule
8.201(g), which allow the Exchange to ensure that they do not use their
positions to violate the requirements of Exchange rules or applicable
federal securities laws.\28\
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\28\ The Commission notes that Commentary .04 of NYSE Arca
Equities Rule 6.3 requires that an ETP Holder acting as a registered
market maker in the Shares, and its affiliates, 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.
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In support of this proposal, the Exchange has made the following
additional representations:
(1) 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.
(2) The Exchange deems the Shares to be equity securities, thus
rendering the
[[Page 26536]]
trading of the Shares subject to the Exchange's existing rules
governing the trading of equity securities.
(3) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.\29\
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\29\ See id. at 24.
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(4) The Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.\30\
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\30\ See id. at 26.
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(5) The Index Provider, which is not affiliated with a broker-
dealer, has adopted policies and procedures designed to prevent the
spread of material non-public information about the Indexes.\31\
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\31\ See id. at 8.
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(6) Trading in the Shares will be subject to the existing trading
surveillances administered by the Exchange, as well as cross-market
surveillances administered by FINRA on behalf of the Exchange, which
are designed to detect violations of Exchange rules and applicable
federal securities laws, and 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.\32\
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\32\ See id. at 25-26. 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. See id. at 25, n.33.
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(7) 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 Intermarket
Surveillance Group (``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.\33\
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\33\ For a list of the current members of ISG, see
www.isgportal.org.
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(8) 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) ETP Holders deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; (4) 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 (5) trading information.
(9) All statements and representations made in this filing
regarding (a) the description of the applicable Indexes, portfolios or
reference assets, (b) limitations on Index or portfolio holdings or
reference assets, or (c) the applicability of Exchange listing rules
specified in this rule filing constitute continued listing requirements
for listing the Shares on the Exchange.\34\
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\34\ See Amendment No. 2, supra note 4, at 26.
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(10) 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 the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under the NYSE Arca Equities Rule 5.5(m).
This approval order is based on all of the Exchange's
representations, including those set forth above and in Amendment No.
2, and the Exchange's description of the Funds.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 2, is consistent with Section
6(b)(5) of the Act \35\ and the rules and regulations thereunder
applicable to a national securities exchange.
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\35\ 15 U.S.C. 78f(b)(5).
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\36\ that the proposed rule change (SR- NYSEArca-2017-33),
as modified by Amendment No. 2 be, and it hereby is, approved.
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\36\ 15 U.S.C. 78s(b)(2).
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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11750 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P