Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the GraniteShares Palladium Trust Under NYSE Arca Rule 8.201-E, 46106-46111 [2017-21161]
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Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices
enterprise or joint arrangement is
consistent with the provisions, policies
and purposes of the Act, and the extent
to which the participation is on a basis
different from or less advantageous than
that of other participants.
2. Rule 17d–3 under the Act provides
an exemption from section 17(d) and
rule 17d–1 to permit open-end
investment companies to enter into
distribution arrangements pursuant to
rule 12b–1 under the Act. Applicants
request an order under section 17(d) and
rule 17d–1 under the Act to the extent
necessary to permit the Fund to impose
asset-based distribution and/or service
fees. Applicants have agreed to comply
with rules 12b–1 and 17d–3 as if those
rules applied to closed-end investment
companies, which they believe will
resolve any concerns that might arise in
connection with a Fund financing the
distribution of its shares through assetbased distribution and/or service fees.
3. For the reasons stated above,
applicants submit that the exemptions
requested under section 6(c) are
necessary and appropriate in the public
interest and are consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act. Applicants further
submit that the relief requested
pursuant to section 23(c)(3) will be
consistent with the protection of
investors and will insure that applicants
do not unfairly discriminate against any
holders of the class of securities to be
purchased. Finally, applicants state that
the Funds’ imposition of asset-based
distribution and/or service fees is
consistent with the provisions, policies
and purposes of the Act and does not
involve participation on a basis different
from or less advantageous than that of
other participants.
Applicants’ Condition:
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Each Fund relying on the order will
comply with the provisions of rules 6c–
10, 12b–1, 17d–3, 18f–3, 22d–1, and,
where applicable, 11a–3 under the Act,
as amended from time to time, as if
those rules applied to closed-end
management investment companies,
and will comply with the FINRA Sales
Charge Rule, as amended from time to
time, as if that rule applied to all closedend management investment
companies.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21156 Filed 10–2–17; 8:45 am]
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81737; File No. SR–
NYSEArca–2017–112]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the GraniteShares Palladium Trust
Under NYSE Arca Rule 8.201–E
September 27, 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
September 12, 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. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the GraniteShares
Palladium Trust under NYSE Arca
Equities Rule 8.201 [sic]. 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,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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of the most significant parts of such
statements.
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1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the
GraniteShares Palladium Trust (the
‘‘Trust’’), under NYSE Arca Equities
Rule 8.201.4 Under NYSE Arca Equities
Rule 8.201 [sic], the Exchange may
propose to list and/or trade pursuant to
unlisted trading privileges (‘‘UTP’’)
Commodity-Based Trust Shares.5
The Trust will not be registered as an
investment company under the
Investment Company Act of 1940, as
amended,6 and is not required to
register under such act. The Trust is not
a commodity pool for purposes of the
Commodity Exchange Act, as amended.7
The Sponsor of the Trust is
GraniteShares LLC, a Delaware limited
liability company. The Bank of New
York Mellon is the trustee of the Trust
(the ‘‘Trustee’’) 8 and ICBC Standard
Bank PLC is the custodian of the Trust
(the ‘‘Custodian’’).9
4 On September 8, 2017, the Trust submitted to
the Commission its draft registration statement on
Form S–1 (the ‘‘Registration Statement’’) under the
Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities
Act’’). The Jumpstart Our Business Startups Act,
enacted on April 5, 2012, added Section 6(e) to the
Securities Act. Section 6(e) of the Securities Act
provides that an ‘‘emerging growth company’’ may
confidentially submit to the Commission a draft
registration statement for confidential, non-public
review by the Commission staff prior to public
filing, provided that the initial confidential
submission and all amendments thereto shall be
publicly filed not later than 21 days before the date
on which the issuer conducts a road show, as such
term is defined in Securities Act Rule 433(h)(4). An
emerging growth company is defined in Section
2(a)(19) of the Securities Act as an issuer with less
than $1,000,000,000 total annual gross revenues
during its most recently completed fiscal year. The
Trust meets the definition of an emerging growth
company and consequently has submitted its Form
S–1 Registration Statement on a confidential basis
with the Commission.
5 Commodity-Based Trust Shares are securities
issued by a trust that represents investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
6 15 U.S.C. 80a–1.
7 17 U.S.C. 1.
8 The Trustee is responsible for the day-to-day
administration of the Trust. The responsibilities of
the Trustee include (1) processing orders for the
creation and redemption of Baskets; (2)
coordinating with the Custodian the receipt and
delivery of palladium transferred to, or by, the Trust
in connection with each issuance and redemption
of Baskets; (3) calculating the net asset value of the
Trust on each business day; and (4) selling the
Trust’s palladium as needed to cover the Trust’s
expenses. The Trust does not have a Board of
Directors or persons acting in a similar capacity.
9 The Custodian is responsible for safekeeping the
palladium owned by the Trust. The Custodian is
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The Commission has previously
approved listing on the Exchange under
NYSE Arca Equities Rule 8.201 [sic] of
other precious metals and palladiumbased commodity trusts, including the
ETFS Platinum Trust,10 the ETFS
Palladium Trust,11 and the Sprott
Physical Platinum and Palladium
Trust.12
The Exchange represents that the
Shares satisfy the requirements of NYSE
Arca Equities Rule 8.201 [sic] and
thereby qualify for listing on the
Exchange.13
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Operation of the Trust 14
The investment objective of the Trust
will be for the Shares to reflect the
performance of the price of palladium,
less the expenses and liabilities of the
Trust. The Trust will issue Shares
which represent units of fractional
undivided beneficial interest in and
ownership of the Trust.
The Trust will not trade in palladium
futures or options on any futures
exchange or over the counter (‘‘OTC’’)
transactions in forwards, options and
other derivatives. The Trust will not
hold or trade in commodity futures
contracts, ‘‘commodity interests’’, or any
other instruments regulated by the
Commodities Exchange Act. The Trust
will take delivery of physical palladium
appointed by the Trustee and is responsible to the
Trustee under the Trust’s palladium custody
agreements. The Custodian will facilitate the
transfer of palladium in and out of the Trust
through the unallocated palladium accounts it may
maintain for each Authorized Participant or
unallocated palladium accounts that may be
maintained for an Authorized Participant by
another palladium-clearing bank approved by the
London Palladium and Palladium Market
(‘‘LPPM’’), and through the unallocated palladium
account it will maintain for the Trust. The
Custodian is responsible for allocating specific bars
of palladium to the Trust Allocated Account. As
used herein, ‘‘Trust Allocated Account’’ means the
loco London account established in the name of the
Trustee and maintained for the benefit of the Trust
by the Custodian on an allocated basis pursuant to
a written custody agreement between the Trustee
and the Custodian. The Custodian will provide the
Trustee with regular reports detailing the palladium
transfers in and out of the Trust Unallocated
Account with the Custodian and identifying the
palladium bars held in the Trust Allocated
Account.
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. 68430
(December 13, 2012), 77 FR 75239 (December 13,
2012) (SR–NYSEArca–2012–111).
13 With respect to the application of Rule 10A–
3 (17 CFR 240.10A–3) under the Act, the Trust
relies on the exemption contained in Rule 10A–
3(c)(7).
14 The description of the operation of the Trust,
the Shares and the palladium market contained
herein are based, in part, on the Registration
Statement. See note 4, supra.
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that complies with the LPPM palladium
delivery rules.
The Shares are intended to constitute
a simple and cost-effective means of
making an investment similar to an
investment in palladium. Although the
Shares are not the exact equivalent of an
investment in palladium, they provide
investors with an alternative that allows
a level of participation in the palladium
market through the securities market.
Operation of the Palladium Market
The global trade in palladium consists
of OTC transactions in spot, forwards,
and options and other derivatives,
together with exchange-traded futures
and options.
Most trading in physical palladium is
conducted on the OTC market,
predominantly in Zurich and London.
The LPPM coordinates various OTC
market activities, including clearing and
vaulting, acts as the principal
intermediary between physical
palladium market participants and the
relevant regulators, promotes good
trading practices and develops standard
market documentation. In addition, the
LPPM promotes refining standards for
the palladium market by maintaining
the ‘‘London/Zurich Good Delivery
List,’’ which are the lists of LPPM
accredited melters and assayers of
palladium.
The basis for settlement and delivery
of a spot trade is payment (generally in
US dollars) two business days after the
trade date against delivery. Delivery of
the palladium can either be by physical
delivery or through the clearing systems
to an unallocated account. The unit of
trade in London and Zurich is the troy
ounce, whose conversion between
grams is: 1,000 grams is equivalent to
32.1507465 troy ounces, and one troy
ounce is equivalent to 31.1034768
grams.
A good delivery palladium plate or
ingot is acceptable for delivery in
settlement of a transaction on the OTC
market (a ‘‘Good Delivery Palladium
Plate or Ingot’’). A Good Delivery
Palladium Plate or Ingot must contain
between 32 and 192 troy ounces of
palladium with a minimum fineness (or
purity) of 999.5 parts per 1,000
(99.95%), be of good appearance, and be
easy to handle and stack. A Good
Delivery Palladium Plate or Ingot must
also bear the stamp of one of the melters
and assayers who are on the LPPM
approved list. Unless otherwise
specified, the palladium spot price
always refers to the ‘‘Good Delivery
Standards’’ set by the LPPM.
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Creation and Redemption of Shares
The Trust will create and redeem
Shares on a continuous basis in one or
more blocks of 15,000 Shares (a block of
15,000 Shares is called a ‘‘Basket’’). As
described below, the Trust will issue
Shares in Baskets to certain authorized
participants (‘‘Authorized Participants’’)
on an ongoing basis. Baskets of Shares
will only be issued or redeemed in
exchange for an amount of palladium
represented by the aggregate number of
Shares redeemed. No Shares will be
issued unless the Custodian has
allocated to the Trust’s account the
corresponding amount of palladium.
Initially, a Basket will require delivery
of 1,500 fine ounces of palladium. The
amount of palladium necessary for the
creation of a Basket, or to be received
upon redemption of a Basket, will
decrease over the life of the Trust, due
to the payment or accrual of fees and
other expenses or liabilities payable by
the Trust.
Baskets may be created or redeemed
only by Authorized Participants. Orders
must be placed by 3:59 p.m. Eastern
Time (‘‘E.T.’’). The day on which a Trust
receives a valid purchase or redemption
order is the order date.
Each Authorized Participant must be
a registered broker-dealer, a participant
in Depository Trust Corporation
(‘‘DTC’’), have entered into an
agreement with the Trustee (the
‘‘Authorized Participant Agreement’’)
and have established a palladium
unallocated account with the Custodian
or a physical palladium clearing bank.
The Authorized Participant Agreement
provides the procedures for the creation
and redemption of Baskets and for the
delivery of palladium in connection
with such creations or redemptions.
According to the Registration
Statement, Authorized Participants may
surrender Baskets of Shares in exchange
for the corresponding Basket Amount
announced by the Trustee. Upon
surrender of such Shares and payment
of the Trustee’s applicable fee and of
any expenses, taxes or charges (such as
stamp taxes or stock transfer taxes or
fees), the Trustee will deliver to the
order of the redeeming Authorized
Participant the amount of palladium
corresponding to the redeemed Baskets.
Shares can only be surrendered for
redemption in Baskets of 15,000 Shares
each.
Before surrendering Baskets of Shares
for redemption, an Authorized
Participant must deliver to the Trustee
a written request indicating the number
of Baskets it intends to redeem. The date
the Trustee receives that order
determines the Basket Amount to be
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received in exchange. However, orders
received by the Trustee after 3:59 p.m.
E.T. on a business day or on a business
day when the LBMA Palladium Price
PM or other applicable benchmark price
is not announced, will not be accepted.
The redemption distribution from the
Trust will consist of a credit to the
redeeming Authorized Participant’s
unallocated account representing the
amount of the palladium held by the
Trust evidenced by the Shares being
redeemed as of the date of the
redemption order.
Net Asset Value
The NAV of the Trust will be
calculated by subtracting the Trust’s
expenses and liabilities on any day from
the value of the palladium owned by the
Trust on that day; the NAV per Share
will be obtained by dividing the NAV of
the Trust on a given day by the number
of Shares outstanding on that day. On
each day on which the Exchange is open
for regular trading, the Trustee will
determine the NAV as promptly as
practicable after 4:00 p.m. E.T. The
Trustee will value the Trust’s palladium
based on the most recently announced
LBMA Palladium Price PM or LBMA
Palladium Price AM. If neither price is
available for that day, the Trustee will
value the Trust’s palladium based on
the most recently announced LBMA
Palladium Price PM or LBMA Palladium
Price AM. If the Sponsor determines
that such price is inappropriate to use,
the Sponsor will identify an alternate
basis for evaluation to be employed by
the Trustee. Further, the Sponsor may
instruct the Trustee to use on an ongoing basis a different publicly available
price which the Sponsor determines to
fairly represent the commercial value of
the Trust’s palladium.
The NAV per Share will be calculated
by taking the current price of the Trust’s
total assets, subtracting any liabilities,
and dividing by the total number of
Shares outstanding. Authorized
Participants will offer Shares at an
offering price that will vary, depending
on, among other factors, the price of
palladium and the trading price of the
Shares on the Exchange at the time of
offer. Authorized Participants will not
receive from the Trust, the Sponsor, the
Trustee or any of their affiliates any fee
or other compensation in connection
with the offering of the Shares.
Secondary Market Trading
While the Trust seeks to reflect
generally the performance of the price of
palladium less the Trust’s expenses and
liabilities, Shares may trade at, above or
below their NAV. The NAV of Shares
will fluctuate with changes in the
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market value of the Trust’s assets. The
trading prices of Shares will fluctuate in
accordance with changes in their NAV
as well as market supply and demand.
The amount of the discount or premium
in the trading price relative to the NAV
may be influenced by non-concurrent
trading hours between the major
palladium markets and the Exchange.
While the Shares trade on the Exchange
until 4:00 p.m. E.T., liquidity in the
market for palladium may be reduced
after the close of the major world
palladium markets, including London,
Zurich and COMEX. As a result, during
this time, trading spreads, and the
resulting premium or discount, on
Shares may widen.
Availability of Information Regarding
Palladium
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of a commodity such as
palladium 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 palladium and palladium markets
available on public Web sites and
through professional and subscription
services.
Investors may obtain palladium
pricing information on a 24-hour basis
based on the spot price for an ounce of
palladium from various financial
information service providers, such as
Reuters and Bloomberg.
Reuters and Bloomberg provide at no
charge on their Web sites delayed
information regarding the spot price of
palladium and last sale prices of
palladium futures, as well as
information about news and
developments in the palladium market.
Reuters and Bloomberg also offer a
professional service to subscribers for a
fee that provides information on
palladium prices directly from market
participants. ICAP plc provides an
electronic trading platform called EBS
for the trading of spot palladium, as
well as a feed of real-time streaming
prices, delivered as record-based digital
data from the EBS platform to its
customer’s market data platform via
Bloomberg or Reuters.
Complete real-time data for palladium
futures and options prices traded on the
COMEX are available by subscription
from Reuters and Bloomberg. The
NYMEX also provides delayed futures
and options information on current and
past trading sessions and market news
free of charge on its Web site. There are
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a variety of other public Web sites
providing information on palladium,
ranging from those specializing in
precious metals to sites maintained by
major newspapers, such as The Wall
Street Journal.
Availability of Information
The intraday indicative value (‘‘IIV’’)
per Share for the Shares will be
disseminated by one or more major
market data vendors at least every 15
seconds during the Core Trading
Session. The IIV will be calculated
based on the amount of palladium held
by the Trust and a price of palladium
derived from updated bids and offers
indicative of the spot price of
palladium.15
The Web site for the Trust
(www.graniteshares.com) will contain
the following information, on a per
Share basis, for the Trust: (a) The midpoint of the bid-ask price 16 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 the Trust will
also provide the Trust’s prospectus.
Finally, the Trust’s Web site will
provide the prior day’s closing price of
the Shares as traded in the U.S. market.
In addition, information regarding
market price and trading volume of the
Shares will be continually available on
a real-time basis throughout the day on
brokers’ computer screens and other
electronic services. Information
regarding the previous day’s closing
price and trading volume information
for the Shares will be published daily in
the financial section of newspapers.
Criteria for Initial and Continued Listing
The Trust will be subject to the
criteria in NYSE Arca Equities Rule
8.201(e) [sic] for initial and continued
listing of the Shares.
A minimum of one Basket or 15,000
Shares will be required to be
outstanding at the start of trading,
which is equivalent to 1,500 fine ounces
of palladium. The Exchange believes
that the anticipated minimum number
of Shares outstanding at the start of
15 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.
16 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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trading is sufficient to provide adequate
market liquidity.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Trust subject to the Exchange’s
existing rules governing the trading of
equity securities. Trading in the Shares
on the Exchange will occur in
accordance with NYSE Arca Equities
Rule 7.34(a). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. As provided in NYSE
Arca Equities Rule 7.6, Commentary .03,
the minimum price variation (‘‘MPV’’)
for quoting and entry of orders in equity
securities traded on the NYSE Arca
Marketplace is $0.01, with the exception
of securities that are priced less than
$1.00 for which the MPV for order entry
is $0.0001.
Further, NYSE Arca Equities Rule
8.201 [sic] sets forth certain restrictions
on ETP Holders acting as registered
Market Makers in the Shares to facilitate
surveillance. Under NYSE Arca Equities
Rule 8.201(g) [sic], an ETP Holder acting
as a registered Market Maker in the
Shares is required to provide the
Exchange with information relating to
its trading in the underlying palladium,
related futures or options on futures, or
any other related derivatives.
Commentary .04 of NYSE Arca Equities
Rule 6.3 requires an ETP Holder acting
as a registered Market Maker, and its
affiliates, in the Shares to establish,
maintain and enforce written policies
and procedures reasonably designed to
prevent the misuse of any material
nonpublic information with respect to
such products, any components of the
related products, any physical asset or
commodity underlying the product,
applicable currencies, underlying
indexes, related futures or options on
futures, and any related derivative
instruments (including the Shares).
As a general matter, the Exchange has
regulatory jurisdiction over its ETP
Holders and their associated persons,
which include any person or entity
controlling an ETP Holder. A subsidiary
or affiliate of an ETP Holder that does
business only in commodities or futures
contracts would not be subject to
Exchange jurisdiction, but the Exchange
could obtain information regarding the
activities of such subsidiary or affiliate
through surveillance sharing agreements
with regulatory organizations of which
such subsidiary or affiliate is a member.
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
Trading on the Exchange in the Shares
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may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. These may
include: (1) The extent to which
conditions in the underlying palladium
market have caused disruptions and/or
lack of trading, or (2) whether other
unusual conditions or circumstances
detrimental to the maintenance of a fair
and orderly market are present. In
addition, trading in Shares will be
subject to trading halts caused by
extraordinary market volatility pursuant
to the Exchange’s ‘‘circuit breaker’’
rule.17 The Exchange will halt trading in
the Shares if the NAV of the Trust is not
calculated or disseminated daily. The
Exchange may halt trading during the
day in which an interruption occurs to
the dissemination of the IIV, as
described above. If the interruption to
the dissemination of the IIV persists
past the trading day in which it occurs,
the Exchange will halt trading no later
than the beginning of the trading day
following the interruption.
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.18 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
17 See
NYSE Arca Equities Rule 7.12.
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.
18 FINRA
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46109
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.19
Also, pursuant to NYSE Arca Equities
Rule 8.201(g) [sic], the Exchange is able
to obtain information regarding trading
in the Shares and the underlying
palladium, palladium futures contracts,
options on palladium futures, or any
other palladium derivative, through ETP
Holders acting as registered Market
Makers, in connection with such ETP
Holders’ proprietary or customer trades
through ETP Holders which they effect
on any relevant market.
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
All statements and representations
made in this filing regarding (a) the
description of the portfolio, (b)
limitations on portfolio holdings or
reference assets, or (c) the applicability
of Exchange listing rules specified in
this rule filing shall constitute
continued listing requirements for
listing the Shares of the Trust on the
Exchange.
The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Trust 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 Trust is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Equities Rule 5.5(m).
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Baskets
(including noting that Shares are not
individually redeemable); (2) NYSE
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
ETP Holders to learn the essential facts
19 For a list of the current members of ISG, see
www.isgportal.org.
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Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
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
palladium trading during the Core and
Late Trading Sessions after the close of
the major world palladium markets; and
(6) trading information. For example,
the Information Bulletin will advise ETP
Holders, prior to the commencement of
trading, of the prospectus delivery
requirements applicable to the Trust.
The Exchange notes that investors
purchasing Shares directly from the
Trust (by delivery of the Creation Basket
Deposit) will receive a prospectus. ETP
Holders purchasing Shares from the
Trust for resale to investors will deliver
a prospectus to such investors.
In addition, the Information Bulletin
will reference that the Trust 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 palladium, that the
Commission has no jurisdiction over the
trading of palladium as a physical
commodity, and that the CFTC has
regulatory jurisdiction over the trading
of palladium futures contracts and
options on palladium futures contracts.
The Information Bulletin will also
discuss any relief, if granted, by the
Commission or the staff from any rules
under the Act.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 20 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 [sic]. The Exchange has in
place surveillance procedures that are
adequate to properly monitor trading in
20 15
U.S.C. 78f(b)(5).
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16:49 Oct 02, 2017
Jkt 244001
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that there is a
considerable amount of palladium price
and palladium market information
available on public Web sites and
through professional and subscription
services. Investors may obtain
palladium pricing information on a 24hour basis based on the spot price for an
ounce of palladium from various
financial information service providers.
Delayed information regarding the spot
price of palladium and last sale prices
of palladium futures, as well as
information about news and
developments in the palladium market,
are also available from financial
information service providers.
Information on palladium prices
directly from market participants is also
available from financial information
service providers. An electronic trading
platform called EBS for the trading of
spot palladium, as well as a feed of realtime streaming prices, is also available
from information service providers.
The NAV of the Trust will be
published by the Sponsor on each day
that the NYSE Arca is open for regular
trading and will be posted on the Trust’s
Web site. The IIV relating to the Shares
will be widely disseminated by one or
more major market data vendors at least
every 15 seconds during the Core
Trading Session. The Trust’s Web site
will also provide the Trust’s prospectus,
as well as the two most recent reports
to stockholders. In addition, information
regarding market price and trading
volume of the Shares will be continually
available on a real-time basis throughout
the day on brokers’ computer screens
and other electronic services.
Information regarding the previous
day’s closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers.
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
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
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 palladium
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 palladium.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2017–112 on the subject
line.
E:\FR\FM\03OCN1.SGM
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Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices
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–2017–112. 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–2017–112, and should be
submitted on or before October 24,
2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21161 Filed 10–2–17; 8:45 am]
asabaliauskas on DSKBBXCHB2PROD with NOTICES
BILLING CODE 8011–01–P
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Withdrawal of a
Proposed Rule Change To Extend the
Implementation Date for Certain
Changes to the NYSE Arca Rule 5 and
Rule 8 Series
to the provisions of Section 19(b)(1) of
the Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to adopt rules
relating to trading in index options. The
proposed rule change was published for
comment in the Federal Register on
August 16, 2017.3 The Commission
received no comments regarding the
proposal. This order approves the
proposed rule change.
September 27, 2017.
II. Description of the Proposal
On August 3, 2017, NYSE Arca, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 1 and Rule 19b–4 thereunder,2 a
proposed rule change to extend the
implementation date for certain changes
to the NYSE Arca Rule 5 and Rule 8
Series relating to continued listing
standards for exchange-traded products.
The proposed rule change was
published for comment in the Federal
Register on August 22, 2017.3 The
Commission received one comment
letter on the proposed rule change.4 On
September 22, 2017, the Exchange
withdrew the proposed rule change
(SR–NYSEArca–2017–84).
A. Overview
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81738; File No. SR–
NYSEArca–2017–84]
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21162 Filed 10–2–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81739; File No. SR–MIAX–
2017–39]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Order Granting Approval of a
Proposed Rule Change To Adopt Rules
Relating to Trading in Index Options
September 27, 2017.
I. Introduction
On August 9, 2017, Miami
International Securities Exchange, LLC
(‘‘MIAX Options’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81411
(August 16, 2017), 82 FR 39929.
4 See letter from Jane Heinrichs, Associate
General Counsel, Investment Company Institute, to
Brent J. Fields, Secretary, Commission, dated
September 1, 2017.
5 17 CFR 200.30–3(a)(12).
2 17
21 17
CFR 200.30–3(a)(12).
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16:49 Oct 02, 2017
Jkt 244001
46111
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
The Exchange proposes to adopt new
Chapter 18 and amend certain rules in
the MIAX Options rulebook. The
purpose of the Exchange’s proposal is to
establish: (1) Trading rules enabling
MIAX Options Members to trade index
options on the Exchange and (2) generic
listing standards and maintenance
standards to permit the Exchange to list
‘‘broad-based’’ and ‘‘narrow-based’’
index options on the Exchange pursuant
to Rule 19b–4(e) under the Act.4 The
proposed generic listing and
maintenance standards for broad-based
indices listed and traded on the
Exchange require, among other things,
that options on the index be a.m.settled; that the index be capitalizationweighted, modified capitalizationweighted, price-weighted, or equal
dollar-weighted; and that the index be
comprised of at least fifty securities, all
of which must be ‘‘NMS stocks,’’ as
defined in Rule 600 of Regulation
NMS.5 The proposed generic listing and
maintenance standards for narrow-based
indices require, among other
characteristics, that the proposed
indices must consist of ten or more
component securities.6
In accordance with the proposal, the
Exchange will need to file additional
proposed rule changes with the
Commission when the Exchange
identifies specific products, because the
rules related to trading options in
indices are product specific in many
areas.7 For purposes of this proposed
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81371
(August 10, 2017), 82 FR 38942 (‘‘Notice’’).
4 17 CFR 240.19b–4(e). The term ‘‘broad-based
index’’ is defined as an index designed to be
representative of a stock market as a whole or of a
range of companies in unrelated industries. See
Proposed Rule 1801(k). The term ‘‘narrow-based
index’’ is defined as an index designed to be
representative of a particular industry or a group of
related industries or an index whose constituents
are all headquartered within a single country. See
Proposed Rule 1801(j).
5 See Proposed Rule 1802(d)(4).
6 See Proposed Rule 1802(b)(2).
7 See Notice, supra note 3, at 38942–43.
2 17
E:\FR\FM\03OCN1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 190 (Tuesday, October 3, 2017)]
[Notices]
[Pages 46106-46111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21161]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81737; File No. SR-NYSEArca-2017-112]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the GraniteShares
Palladium Trust Under NYSE Arca Rule 8.201-E
September 27, 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 September 12, 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. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the GraniteShares
Palladium Trust under NYSE Arca Equities Rule 8.201 [sic]. 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
GraniteShares Palladium Trust (the ``Trust''), under NYSE Arca Equities
Rule 8.201.\4\ Under NYSE Arca Equities Rule 8.201 [sic], the Exchange
may propose to list and/or trade pursuant to unlisted trading
privileges (``UTP'') Commodity-Based Trust Shares.\5\
---------------------------------------------------------------------------
\4\ On September 8, 2017, the Trust submitted to the Commission
its draft registration statement on Form S-1 (the ``Registration
Statement'') under the Securities Act of 1933 (15 U.S.C. 77a)
(``Securities Act''). The Jumpstart Our Business Startups Act,
enacted on April 5, 2012, added Section 6(e) to the Securities Act.
Section 6(e) of the Securities Act provides that an ``emerging
growth company'' may confidentially submit to the Commission a draft
registration statement for confidential, non-public review by the
Commission staff prior to public filing, provided that the initial
confidential submission and all amendments thereto shall be publicly
filed not later than 21 days before the date on which the issuer
conducts a road show, as such term is defined in Securities Act Rule
433(h)(4). An emerging growth company is defined in Section 2(a)(19)
of the Securities Act as an issuer with less than $1,000,000,000
total annual gross revenues during its most recently completed
fiscal year. The Trust meets the definition of an emerging growth
company and consequently has submitted its Form S-1 Registration
Statement on a confidential basis with the Commission.
\5\ Commodity-Based Trust Shares are securities issued by a
trust that represents investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
---------------------------------------------------------------------------
The Trust will not be registered as an investment company under the
Investment Company Act of 1940, as amended,\6\ and is not required to
register under such act. The Trust is not a commodity pool for purposes
of the Commodity Exchange Act, as amended.\7\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 80a-1.
\7\ 17 U.S.C. 1.
---------------------------------------------------------------------------
The Sponsor of the Trust is GraniteShares LLC, a Delaware limited
liability company. The Bank of New York Mellon is the trustee of the
Trust (the ``Trustee'') \8\ and ICBC Standard Bank PLC is the custodian
of the Trust (the ``Custodian'').\9\
---------------------------------------------------------------------------
\8\ The Trustee is responsible for the day-to-day administration
of the Trust. The responsibilities of the Trustee include (1)
processing orders for the creation and redemption of Baskets; (2)
coordinating with the Custodian the receipt and delivery of
palladium transferred to, or by, the Trust in connection with each
issuance and redemption of Baskets; (3) calculating the net asset
value of the Trust on each business day; and (4) selling the Trust's
palladium as needed to cover the Trust's expenses. The Trust does
not have a Board of Directors or persons acting in a similar
capacity.
\9\ The Custodian is responsible for safekeeping the palladium
owned by the Trust. The Custodian is appointed by the Trustee and is
responsible to the Trustee under the Trust's palladium custody
agreements. The Custodian will facilitate the transfer of palladium
in and out of the Trust through the unallocated palladium accounts
it may maintain for each Authorized Participant or unallocated
palladium accounts that may be maintained for an Authorized
Participant by another palladium-clearing bank approved by the
London Palladium and Palladium Market (``LPPM''), and through the
unallocated palladium account it will maintain for the Trust. The
Custodian is responsible for allocating specific bars of palladium
to the Trust Allocated Account. As used herein, ``Trust Allocated
Account'' means the loco London account established in the name of
the Trustee and maintained for the benefit of the Trust by the
Custodian on an allocated basis pursuant to a written custody
agreement between the Trustee and the Custodian. The Custodian will
provide the Trustee with regular reports detailing the palladium
transfers in and out of the Trust Unallocated Account with the
Custodian and identifying the palladium bars held in the Trust
Allocated Account.
---------------------------------------------------------------------------
[[Page 46107]]
The Commission has previously approved listing on the Exchange
under NYSE Arca Equities Rule 8.201 [sic] of other precious metals and
palladium-based commodity trusts, including the ETFS Platinum
Trust,\10\ the ETFS Palladium Trust,\11\ and the Sprott Physical
Platinum and Palladium Trust.\12\
---------------------------------------------------------------------------
\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. 68430 (December 13,
2012), 77 FR 75239 (December 13, 2012) (SR-NYSEArca-2012-111).
---------------------------------------------------------------------------
The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Equities Rule 8.201 [sic] and thereby qualify for listing on
the Exchange.\13\
---------------------------------------------------------------------------
\13\ With respect to the application of Rule 10A-3 (17 CFR
240.10A-3) under the Act, the Trust relies on the exemption
contained in Rule 10A-3(c)(7).
---------------------------------------------------------------------------
Operation of the Trust \14\
The investment objective of the Trust will be for the Shares to
reflect the performance of the price of palladium, less the expenses
and liabilities of the Trust. The Trust will issue Shares which
represent units of fractional undivided beneficial interest in and
ownership of the Trust.
---------------------------------------------------------------------------
\14\ The description of the operation of the Trust, the Shares
and the palladium market contained herein are based, in part, on the
Registration Statement. See note 4, supra.
---------------------------------------------------------------------------
The Trust will not trade in palladium futures or options on any
futures exchange or over the counter (``OTC'') transactions in
forwards, options and other derivatives. The Trust will not hold or
trade in commodity futures contracts, ``commodity interests'', or any
other instruments regulated by the Commodities Exchange Act. The Trust
will take delivery of physical palladium that complies with the LPPM
palladium delivery rules.
The Shares are intended to constitute a simple and cost-effective
means of making an investment similar to an investment in palladium.
Although the Shares are not the exact equivalent of an investment in
palladium, they provide investors with an alternative that allows a
level of participation in the palladium market through the securities
market.
Operation of the Palladium Market
The global trade in palladium consists of OTC transactions in spot,
forwards, and options and other derivatives, together with exchange-
traded futures and options.
Most trading in physical palladium is conducted on the OTC market,
predominantly in Zurich and London. The LPPM coordinates various OTC
market activities, including clearing and vaulting, acts as the
principal intermediary between physical palladium market participants
and the relevant regulators, promotes good trading practices and
develops standard market documentation. In addition, the LPPM promotes
refining standards for the palladium market by maintaining the
``London/Zurich Good Delivery List,'' which are the lists of LPPM
accredited melters and assayers of palladium.
The basis for settlement and delivery of a spot trade is payment
(generally in US dollars) two business days after the trade date
against delivery. Delivery of the palladium can either be by physical
delivery or through the clearing systems to an unallocated account. The
unit of trade in London and Zurich is the troy ounce, whose conversion
between grams is: 1,000 grams is equivalent to 32.1507465 troy ounces,
and one troy ounce is equivalent to 31.1034768 grams.
A good delivery palladium plate or ingot is acceptable for delivery
in settlement of a transaction on the OTC market (a ``Good Delivery
Palladium Plate or Ingot''). A Good Delivery Palladium Plate or Ingot
must contain between 32 and 192 troy ounces of palladium with a minimum
fineness (or purity) of 999.5 parts per 1,000 (99.95%), be of good
appearance, and be easy to handle and stack. A Good Delivery Palladium
Plate or Ingot must also bear the stamp of one of the melters and
assayers who are on the LPPM approved list. Unless otherwise specified,
the palladium spot price always refers to the ``Good Delivery
Standards'' set by the LPPM.
Creation and Redemption of Shares
The Trust will create and redeem Shares on a continuous basis in
one or more blocks of 15,000 Shares (a block of 15,000 Shares is called
a ``Basket''). As described below, the Trust will issue Shares in
Baskets to certain authorized participants (``Authorized
Participants'') on an ongoing basis. Baskets of Shares will only be
issued or redeemed in exchange for an amount of palladium represented
by the aggregate number of Shares redeemed. No Shares will be issued
unless the Custodian has allocated to the Trust's account the
corresponding amount of palladium. Initially, a Basket will require
delivery of 1,500 fine ounces of palladium. The amount of palladium
necessary for the creation of a Basket, or to be received upon
redemption of a Basket, will decrease over the life of the Trust, due
to the payment or accrual of fees and other expenses or liabilities
payable by the Trust.
Baskets may be created or redeemed only by Authorized Participants.
Orders must be placed by 3:59 p.m. Eastern Time (``E.T.''). The day on
which a Trust receives a valid purchase or redemption order is the
order date.
Each Authorized Participant must be a registered broker-dealer, a
participant in Depository Trust Corporation (``DTC''), have entered
into an agreement with the Trustee (the ``Authorized Participant
Agreement'') and have established a palladium unallocated account with
the Custodian or a physical palladium clearing bank. The Authorized
Participant Agreement provides the procedures for the creation and
redemption of Baskets and for the delivery of palladium in connection
with such creations or redemptions.
According to the Registration Statement, Authorized Participants
may surrender Baskets of Shares in exchange for the corresponding
Basket Amount announced by the Trustee. Upon surrender of such Shares
and payment of the Trustee's applicable fee and of any expenses, taxes
or charges (such as stamp taxes or stock transfer taxes or fees), the
Trustee will deliver to the order of the redeeming Authorized
Participant the amount of palladium corresponding to the redeemed
Baskets. Shares can only be surrendered for redemption in Baskets of
15,000 Shares each.
Before surrendering Baskets of Shares for redemption, an Authorized
Participant must deliver to the Trustee a written request indicating
the number of Baskets it intends to redeem. The date the Trustee
receives that order determines the Basket Amount to be
[[Page 46108]]
received in exchange. However, orders received by the Trustee after
3:59 p.m. E.T. on a business day or on a business day when the LBMA
Palladium Price PM or other applicable benchmark price is not
announced, will not be accepted.
The redemption distribution from the Trust will consist of a credit
to the redeeming Authorized Participant's unallocated account
representing the amount of the palladium held by the Trust evidenced by
the Shares being redeemed as of the date of the redemption order.
Net Asset Value
The NAV of the Trust will be calculated by subtracting the Trust's
expenses and liabilities on any day from the value of the palladium
owned by the Trust on that day; the NAV per Share will be obtained by
dividing the NAV of the Trust on a given day by the number of Shares
outstanding on that day. On each day on which the Exchange is open for
regular trading, the Trustee will determine the NAV as promptly as
practicable after 4:00 p.m. E.T. The Trustee will value the Trust's
palladium based on the most recently announced LBMA Palladium Price PM
or LBMA Palladium Price AM. If neither price is available for that day,
the Trustee will value the Trust's palladium based on the most recently
announced LBMA Palladium Price PM or LBMA Palladium Price AM. If the
Sponsor determines that such price is inappropriate to use, the Sponsor
will identify an alternate basis for evaluation to be employed by the
Trustee. Further, the Sponsor may instruct the Trustee to use on an on-
going basis a different publicly available price which the Sponsor
determines to fairly represent the commercial value of the Trust's
palladium.
The NAV per Share will be calculated by taking the current price of
the Trust's total assets, subtracting any liabilities, and dividing by
the total number of Shares outstanding. Authorized Participants will
offer Shares at an offering price that will vary, depending on, among
other factors, the price of palladium and the trading price of the
Shares on the Exchange at the time of offer. Authorized Participants
will not receive from the Trust, the Sponsor, the Trustee or any of
their affiliates any fee or other compensation in connection with the
offering of the Shares.
Secondary Market Trading
While the Trust seeks to reflect generally the performance of the
price of palladium less the Trust's expenses and liabilities, Shares
may trade at, above or below their NAV. The NAV of Shares will
fluctuate with changes in the market value of the Trust's assets. The
trading prices of Shares will fluctuate in accordance with changes in
their NAV as well as market supply and demand. The amount of the
discount or premium in the trading price relative to the NAV may be
influenced by non-concurrent trading hours between the major palladium
markets and the Exchange. While the Shares trade on the Exchange until
4:00 p.m. E.T., liquidity in the market for palladium may be reduced
after the close of the major world palladium markets, including London,
Zurich and COMEX. As a result, during this time, trading spreads, and
the resulting premium or discount, on Shares may widen.
Availability of Information Regarding Palladium
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity such as palladium 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 palladium and palladium markets available on public
Web sites and through professional and subscription services.
Investors may obtain palladium pricing information on a 24-hour
basis based on the spot price for an ounce of palladium from various
financial information service providers, such as Reuters and Bloomberg.
Reuters and Bloomberg provide at no charge on their Web sites
delayed information regarding the spot price of palladium and last sale
prices of palladium futures, as well as information about news and
developments in the palladium market. Reuters and Bloomberg also offer
a professional service to subscribers for a fee that provides
information on palladium prices directly from market participants. ICAP
plc provides an electronic trading platform called EBS for the trading
of spot palladium, as well as a feed of real-time streaming prices,
delivered as record-based digital data from the EBS platform to its
customer's market data platform via Bloomberg or Reuters.
Complete real-time data for palladium futures and options prices
traded on the COMEX are available by subscription from Reuters and
Bloomberg. The NYMEX also provides delayed futures and options
information on current and past trading sessions and market news free
of charge on its Web site. There are a variety of other public Web
sites providing information on palladium, ranging from those
specializing in precious metals to sites maintained by major
newspapers, such as The Wall Street Journal.
Availability of Information
The intraday indicative value (``IIV'') per Share for the Shares
will be disseminated by one or more major market data vendors at least
every 15 seconds during the Core Trading Session. The IIV will be
calculated based on the amount of palladium held by the Trust and a
price of palladium derived from updated bids and offers indicative of
the spot price of palladium.\15\
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\15\ 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.
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The Web site for the Trust (www.graniteshares.com) will contain the
following information, on a per Share basis, for the Trust: (a) The
mid-point of the bid-ask price \16\ 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 the Trust will also provide the Trust's
prospectus. Finally, the Trust's Web site will provide the prior day's
closing price of the Shares as traded in the U.S. market. In addition,
information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
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\16\ 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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Criteria for Initial and Continued Listing
The Trust will be subject to the criteria in NYSE Arca Equities
Rule 8.201(e) [sic] for initial and continued listing of the Shares.
A minimum of one Basket or 15,000 Shares will be required to be
outstanding at the start of trading, which is equivalent to 1,500 fine
ounces of palladium. The Exchange believes that the anticipated minimum
number of Shares outstanding at the start of
[[Page 46109]]
trading is sufficient to provide adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Trust subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Equities Rule
7.34(a). The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions. As provided in NYSE Arca
Equities Rule 7.6, Commentary .03, the minimum price variation
(``MPV'') for quoting and entry of orders in equity securities traded
on the NYSE Arca Marketplace is $0.01, with the exception of securities
that are priced less than $1.00 for which the MPV for order entry is
$0.0001.
Further, NYSE Arca Equities Rule 8.201 [sic] sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Shares to facilitate surveillance. Under NYSE Arca Equities Rule
8.201(g) [sic], an ETP Holder acting as a registered Market Maker in
the Shares is required to provide the Exchange with information
relating to its trading in the underlying palladium, related futures or
options on futures, or any other related derivatives. Commentary .04 of
NYSE Arca Equities Rule 6.3 requires an ETP Holder acting as a
registered Market Maker, and its affiliates, in the Shares to
establish, maintain and enforce written policies and procedures
reasonably designed to prevent the misuse of any material nonpublic
information with respect to such products, any components of the
related products, any physical asset or commodity underlying the
product, applicable currencies, underlying indexes, related futures or
options on futures, and any related derivative instruments (including
the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. A subsidiary or affiliate of an
ETP Holder that does business only in commodities or futures contracts
would not be subject to Exchange jurisdiction, but the Exchange could
obtain information regarding the activities of such subsidiary or
affiliate through surveillance sharing agreements with regulatory
organizations of which such subsidiary or affiliate is a member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying palladium
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\17\ The Exchange will halt trading in the Shares if the
NAV of the Trust is not calculated or disseminated daily. The Exchange
may halt trading during the day in which an interruption occurs to the
dissemination of the IIV, as described above. If the interruption to
the dissemination of the IIV persists past the trading day in which it
occurs, the Exchange will halt trading no later than the beginning of
the trading day following the interruption.
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\17\ See NYSE Arca Equities Rule 7.12.
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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.\18\ 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.
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\18\ 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.
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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.\19\
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\19\ For a list of the current members of ISG, see
www.isgportal.org.
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Also, pursuant to NYSE Arca Equities Rule 8.201(g) [sic], the
Exchange is able to obtain information regarding trading in the Shares
and the underlying palladium, palladium futures contracts, options on
palladium futures, or any other palladium derivative, through ETP
Holders acting as registered Market Makers, in connection with such ETP
Holders' proprietary or customer trades through ETP Holders which they
effect on any relevant market.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares of the Trust on the
Exchange.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Trust 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 Trust is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Equities Rule 5.5(m).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Baskets (including noting that
Shares are not individually redeemable); (2) NYSE Arca Equities Rule
9.2(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts
[[Page 46110]]
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
palladium trading during the Core and Late Trading Sessions after the
close of the major world palladium markets; and (6) trading
information. For example, the Information Bulletin will advise ETP
Holders, prior to the commencement of trading, of the prospectus
delivery requirements applicable to the Trust. The Exchange notes that
investors purchasing Shares directly from the Trust (by delivery of the
Creation Basket Deposit) will receive a prospectus. ETP Holders
purchasing Shares from the Trust for resale to investors will deliver a
prospectus to such investors.
In addition, the Information Bulletin will reference that the Trust
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 palladium, that the Commission has no jurisdiction
over the trading of palladium as a physical commodity, and that the
CFTC has regulatory jurisdiction over the trading of palladium futures
contracts and options on palladium futures contracts.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \20\ 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.
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\20\ 15 U.S.C. 78f(b)(5).
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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
[sic]. The Exchange has in place surveillance procedures that are
adequate to properly monitor trading in the Shares in all trading
sessions and to deter and detect violations of Exchange rules and
applicable federal securities laws. The Exchange may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of palladium price and palladium
market information available on public Web sites and through
professional and subscription services. Investors may obtain palladium
pricing information on a 24-hour basis based on the spot price for an
ounce of palladium from various financial information service
providers. Delayed information regarding the spot price of palladium
and last sale prices of palladium futures, as well as information about
news and developments in the palladium market, are also available from
financial information service providers. Information on palladium
prices directly from market participants is also available from
financial information service providers. An electronic trading platform
called EBS for the trading of spot palladium, as well as a feed of
real-time streaming prices, is also available from information service
providers.
The NAV of the Trust will be published by the Sponsor on each day
that the NYSE Arca is open for regular trading and will be posted on
the Trust's Web site. The IIV relating to the Shares will be widely
disseminated by one or more major market data vendors at least every 15
seconds during the Core Trading Session. The Trust's Web site will also
provide the Trust's prospectus, as well as the two most recent reports
to stockholders. In addition, information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services. Information regarding the previous day's closing
price and trading volume information for the Shares will be published
daily in the financial section of newspapers.
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 palladium 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
palladium.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2017-112 on the subject line.
[[Page 46111]]
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-2017-112. 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-2017-112, and
should be submitted on or before October 24, 2017.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21161 Filed 10-2-17; 8:45 am]
BILLING CODE 8011-01-P
