Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Perth Mint Physical Gold ETF Trust Under NYSE Arca Rule 8.201-E, 61601-61608 [2017-27993]
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Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices
more clear that a rebate is not provided
when a fee is charged, the Exchange
wishes to be explicit about this in the
text of the Schedule of Fees. The
Exchange believes that the proposed
change will increase transparency
around the Exchange’s billing to the
benefit of its members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change describes the
INET implementation of the Market
Maker Plus program. While certain
elements of the program are changed
from the prior T7 practice, for the
reasons described in this proposed rule
change the Exchange does not believe
that any members will be significantly
impacted by the changes. The Exchange
therefore believes that the Market Maker
Plus program will continue to encourage
competition by incentivizing Market
Makers to provide liquidity and
maintain tight markets in Select
Symbols. Furthermore, the proposed
rule change explains that rebates are not
provided when a fee is charged for
trading against Priority Customer
complex orders that leg into the regular
order book. This language merely
describes the Exchange’s billing, which
remains unchanged, and will increase
transparency to members without any
impact on competition. The Exchange
operates in a highly competitive market
in which market participants can
readily favor competing venues if they
deem fee levels at a particular venue to
be excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive. Because
competitors are free to modify their own
fees in response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,10 and Rule
19b–4(f)(2) 11 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is: (i)
Necessary or appropriate in the public
interest; (ii) for the protection of
investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or 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–
ISE–2017–108 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–ISE–2017–108. 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 website (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 website viewing and
printing in the Commission’s Public
11 17
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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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–ISE–2017–108 and should
be submitted on or before January 18,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–28081 Filed 12–27–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82372; File No. SR–
NYSEArca–2017–140]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the Perth Mint Physical Gold ETF
Trust Under NYSE Arca Rule 8.201–E
December 21, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
11, 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 Perth Mint Physical
Gold ETF Trust under NYSE Arca Rule
8.201–E. The proposed change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
12 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
10 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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Federal Register / Vol. 82, No. 248 / Thursday, December 28, 2017 / Notices
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
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1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the Perth
Mint Physical Gold ETF Trust (‘‘Trust’’),
under NYSE Arca Rule 8.201–E.4 Under
NYSE Arca Rule 8.201–E, 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 sponsors of the Trust will be Gold
Corporation (the ‘‘Custodial Sponsor’’)
4 On August 30, 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.
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and Exchange Traded Concepts, LLC
(‘‘ETC’’ or the ‘‘Administrative
Sponsor’’ and, together with the
Custodial Sponsor, the ‘‘Sponsors’’).
Gold Corporation, doing business as the
Perth Mint, is a Western Australian
Government owned statutory body
corporate established by the Gold
Corporation Act 1987 (Western
Australia). ETC is an Oklahoma limited
liability company majority owned by
Cottonwood ETF Holdings LLC. ETC is
a registered investment adviser and
provides investment advisory services
to domestic and international equity
and fixed income ETFs. The Trustee
will be the Bank of New York Mellon
(the ‘‘Trustee’’). Gold Corporation will
also serve as custodian of the Trust’s
gold bullion (in such capacity, the
‘‘Custodian’’).8
The Commission has previously
approved listing on the Exchange under
NYSE Arca Rule 5.2–E(j)(5) and 8.201–
E of other precious metals and goldbased commodity trusts, including
GraniteShares Gold Trust; 9 VanEck
Merk Gold Trust (formerly Merk Gold
Trust); 10 ETFS Gold Trust,11 ETFS
Platinum Trust 12 and ETFS Palladium
Trust (collectively, the ‘‘ETFS
8 As Custodian of the Trust’s gold bullion, Gold
Corporation will be responsible for the safekeeping
of the Trust’s gold and supplying inventory
information to the Trustee and the Sponsors. The
Custodian will also be responsible for facilitating
the transfer of gold in and out of the Trust and
facilitating the shipment of Physical Gold to
Delivery Applicants. The Custodian will confirm
the deposit of gold into the Trust Unallocated Metal
Account (as defined herein) received from an
Authorized Participant in exchange for Baskets. The
Custodian will promptly convert the deposit to
allocated Gold held in the Trust Allocated Metal
Account. The Custodian must allocate ownership of
Physical Gold to the Trust such that no amount of
Gold remains standing for the benefit of the Trust
in the Trust Unallocated Metal Account at the
Custodian’s Close of Business on each Business
Day. In the event that the Custodian is unable to
fully effect such allocation by such time, it will use
reasonable efforts to cause such allocation as soon
as possible. The Custodian will safely store Physical
Gold in its own vaulting facilities and any other
vaulting facility as approved by the Custodian and
utilize the services of its appointed secure
transportation provider at the risk of the Custodian.
The Trust’s gold holdings are subject to periodic
audits and, under the Custody Agreement, the
Custodian has agreed to permit auditors to access
all premises during normal business hours to
examine the gold held for the Trust and such
records as they reasonably require.
9 Securities Exchange Act Release No. 81077 (July
5, 2017) 82 FR 32024 (July 11, 2017) (SR–
NYSEArca–2017–55)
10 Securities Exchange Act Release No. 71378
(January 23, 2014), 79 FR 4786 (January 29, 2014)
(SR–NYSEArca–2013–137).
11 Securities Exchange Act Release No. 59895
(May 8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40).
12 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
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Trusts’’); 13 APMEX Physical-1 oz. Gold
Redeemable Trust; 14 Sprott Gold
Trust; 15 SPDR Gold Trust (formerly,
streetTRACKS Gold Trust); iShares
Silver Trust; 16 iShares COMEX Gold
Trust,17 Long Dollar Gold Trust,18 and
Euro Gold Trust, Pound Gold Trust and
Yen Gold Trust.19 Prior to their listing
on the Exchange, the Commission
approved listing of the streetTRACKS
Gold Trust on the New York Stock
Exchange (‘‘NYSE’’) 20 and listing of
iShares COMEX Gold Trust and iShares
Silver Trust on the American Stock
Exchange LLC. 21 In addition, the
Commission has approved trading of the
streetTRACKS Gold Trust and iShares
Silver Trust on the Exchange pursuant
to UTP.22
The Exchange represents that the
Shares satisfy the requirements of NYSE
Arca Rule 8.201–E and thereby qualify
for listing on the Exchange.23
13 Securities Exchange Act Release No. 61220
(December 22, 2009), 74 FR 68895 (December 29,
2009) (SR–NYSEArca–2009–94).
14 Securities Exchange Act Release No 66930
(May 7, 2012), 77 FR 27817 (May 11, 2012) (SR–
NYSEArca–2012–18)
15 Securities Exchange Act Release No. 61496
(February 4, 2010), 75 FR 6758 (February 10, 2010)
(SR–NYSEArca–2009–113).
16 See Securities Exchange Act Release No. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust)).
17 See Securities Exchange Act Release No. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
(SR–NYSEArca–2007–76) (approving listing on the
Exchange of the street TRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11,
2007), 72 FR 39114 (July 17, 2007) (SR–NYSEArca–
2007–43) (order approving listing on the Exchange
of iShares COMEX Gold Trust).
18 See Securities Exchange Act Release No. 79518
(December 9, 2016), 81 FR 90876 (December 15,
2016) (SR–NYSEArca–2016–84) (order approving
listing and trading of shares of the Long Dollar Gold
Trust).
19 See Securities Exchange Act Release No. 80840
(June 1, 2017), 82 FR 26534 (June 7, 2016) (SR–
NYSEArca–2017–33).
20 See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
street TRACKS Gold Trust on NYSE).
21 See Securities Exchange Act Release Nos.
51058 (January 19, 2005), 70 FR 3749 (January 26,
2005) (SR–Amex–2004–38) (order approving listing
of iShares COMEX Gold Trust on the American
Stock Exchange LLC); 53521 (March 20, 2006), 71
FR 14967 (March 24, 2006) (SR–Amex–2005–72)
(approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
22 See Securities Exchange Act Release Nos.
53520 (March 20, 2006), 71 FR 14977 (March 24,
2006) (SR–PCX–2005–117) (approving trading on
the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731
(March 4, 2005) (SR–PCX–2004–117) (approving
trading on the Exchange of the streetTRACKS Gold
Trust pursuant to UTP).
23 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).
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The Trust’s Objectives and
Structure 24
The Trust’s primary objective will be
to provide investors with an
opportunity to invest in gold through
the Shares, have the gold securely
stored by Gold Corporation and, if
requested by an investor, deliver
Physical Gold 25 to such investor in
exchange for its Shares.26
An additional objective of the Trust
will be for the Shares to reflect the
performance of the price of gold less the
expenses of the Trust’s operations. The
Trust provides investors with a
convenient and cost efficient way to buy
and hold gold through an exchange
traded security with the option to take
delivery of the Physical Gold. Although
owning Shares will not be the exact
equivalent of an investment in gold,
such Shares provide investors with an
alternative that allows a level of
participation in the gold market through
the securities market.
To meet its investment objectives and
provide investors with an opportunity
to invest in gold through the Shares and
to be able to take delivery of Physical
Gold in exchange for their Shares, the
Sponsors have structured the Trust as
follows:
Maintaining Allocated Gold. The
Trust will hold its Physical Gold in
allocated form in the Trust Allocated
Metal Account with the Custodian. The
Trust Allocated Metal Account will be
used to hold Physical Gold deposited
with the Trust. The Physical Gold is
held in a segregated fashion in the name
of the Trust, not commingled with other
depositor funds or assets. The Trust will
have full title to the gold with the
Custodian holding it on the Trust’s
behalf. Each investor owns a pro-rata
share of the Trust, and as such holds
pro-rata ownership of the Trust assets,
24 The description of the Trust’s Objectives and
Structure, the Operation of the Gold Market, and
the London Bullion Market Association, are based,
in part, on the Registration Statement. See Ftnt. 4
supra.
25 Physical Gold is defined as London Bars and
all gold products without numismatic value and
having a gold purity of at least 99.5% (including
coins, cast bars and minted bars).
26 According to the Registration Statement, the
Trust does not trade in gold futures contracts on
COMEX or on any other futures exchange. Because
the Trust does not trade in gold futures contracts
on any futures exchange, the Trust is not regulated
by the CFTC under the Commodity Exchange Act
as a ‘‘commodity pool,’’ and is not operated by a
CFTC-regulated commodity pool operator. Investors
in the Trust do not receive the regulatory
protections afforded to investors in regulated
commodity pools, nor may COMEX or any futures
exchange enforce its rules with respect to the
Trust’s activities. In addition, investors in the Trust
do not benefit from the protections afforded to
investors in gold futures contracts on regulated
futures exchanges.
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corresponding to the number of Shares
held. Credits or debits to the holding
will be effected by physical movements
of gold to or from the Trust’s physical
holding. The Trust’s gold holdings are
subject to periodic audits.
Permitting Investors to Take Delivery
of Physical Gold. Delivery Applicants 27
may surrender Shares to the Trust in
exchange for the supply of Physical
Gold subject to any minimum dollar
amount specified by the Custodial
Sponsor from time to time on the Trust’s
website. When surrendering Shares to
facilitate the supply of Physical Gold,
the Custodial Sponsor will require the
submission of Shares that correspond in
net assets to the number of Fine Ounces
contained in the Physical Gold
requested plus any applicable product
premiums, and delivery fees (together
‘‘processing fees’’). The number of
Shares required for submission will be
provided by the Custodial Sponsor,
inclusive of processing fees, in a prepopulated Delivery Application.28
Minimizing Cash Holdings. The Trust
is committed to minimizing the use of
cash, keeping essentially all assets of the
Trust in gold. The Trust will not
normally hold cash or any other assets
besides gold.
Government Guarantee. The
Government Guarantee,29 applies to all
gold held by the Custodian, whether in
the Trust Allocated Metal Account,30
the Trust Unallocated Metal Account 31
or in a Customer Account, for the
benefit of the Trust or a Delivery
Applicant.
Delivery Applicant means a beneficial owner
who is not an Authorized Participant and wishes to
surrender part or all of the Shares he or she holds
for the purpose of taking delivery of Physical Gold.
28 Delivery Application means a document in a
form satisfactory to the Custodian and as set forth
herein that expresses a Delivery Applicant’s
intention to surrender Shares on a Share
Submission Day in exchange for an amount of Gold
on such Share Submission Day.
29 As noted supra, Gold Corporation, doing
business as the Perth Mint, is a Western Australian
Government owned statutory body corporate
established by the Gold Corporation Act 1987
(Western Australia) (the ‘‘WA Act’’). The
Government Guarantee provided by the State of
Western Australia pursuant to Section 22 of the WA
Act provides (amongst other things) that the
payment of the cash equivalent of gold due, payable
and deliverable by the Custodian under the WA Act
is guaranteed by the Treasurer of Western Australia,
in the name and on behalf of the Crown in the right
of the State of Western Australia.
30 Trust Allocated Metal Account means the
account maintained for the Trust by the Custodian
on an allocated basis pursuant to the Trust
Allocated Account Agreement for the purpose of
holding Physical Gold on behalf of the Trust.
31 Trust Unallocated Metal Account means the
account maintained for the Trust by the Custodian
on an unallocated basis pursuant to the Trust
Unallocated Metal Account Agreement.
27
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Operation of the Gold Market
The global trade in gold consists of
over-the-counter (‘‘OTC’’) transactions
in spot, forwards, and options and other
derivatives, together with exchangetraded futures and options.
The OTC market trades on a
continuous basis and accounts for most
global gold trading. Market makers and
participants in the OTC market trade
with each other and their clients on a
principal-to-principal basis.
The main centers of the OTC market
are London, New York and Zurich. Most
OTC market trades are cleared through
London. The LBMA plays an important
role in setting OTC gold trading
industry standards.
Futures Exchanges
Although the Trust will not invest in
gold futures, information about the gold
futures market is relevant as such
markets contribute to, and provide
evidence of, the liquidity of the overall
market for gold.
The most significant gold futures
exchange in the U.S. is COMEX,
operated by Commodities Exchange,
Inc., a subsidiary of New York
Mercantile Exchange, Inc., and a
subsidiary of the Chicago Mercantile
Exchange Group (the ‘‘CME Group’’).
Other commodity exchanges include the
Tokyo Commodity Exchange
(‘‘TOCOM’’), the Multi Commodity
Exchange Of India (‘‘MCX’’), the
Shanghai Futures Exchange, ICE Futures
US (the ‘‘ICE’’), and the Dubai Gold &
Commodities Exchange.32
The London Bullion Market Association
(LBMA)
The LBMA is a trade association that,
among other duties, maintains and
publishes ‘‘Good Delivery’’ lists that
establish a set of criteria that a refiner
and its gold must satisfy before being
accepted for trading. Although the
market for Physical Gold is distributed
globally, most OTC market trades are
cleared through London. The LBMA
coordinates the market for gold and acts
as the principal point of contact
between the market and its regulators.
A primary function of the LBMA is its
involvement in the promotion of
refining standards by maintenance of
the ‘‘London Good Delivery Lists,’’
which are the lists of LBMA accredited
melters and assayers of gold as well as
the specifications to which a bar/ingot
must adhere. The LBMA also
coordinates market clearing and
32 The CME Group and ICE Futures US are
members of the Intermarket Surveillance Group
(‘‘ISG’’).
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vaulting, and promotes good trading
practices.
‘‘Good Delivery’’ is a list of
specifications a bar or ingot must meet
to trade on the London gold markets.
The standards for gold bars meeting the
‘‘London Good Delivery Lists’’ are
published in LBMA’s ‘‘The Good
Delivery Rules for Gold and Silver
Bars’’.
Gold is usually traded on the London
market on a loco London basis. This
means the gold is physically held in
vaults in London or is transferred into
accounts established in London.
Payment upon settlement and delivery
of a loco London spot trade is usually
in US dollars, two business days after
the trade date. Delivery of the gold is
either by physical delivery or through
the LBMA clearing system to an
unallocated account.
Creation and Redemption of Shares by
Authorized Participants
The Trust will issue and redeem
Baskets equal to a block of 100,000
Shares. The Trust issues and redeems
Baskets only to Authorized Participants.
The creation and redemption of Baskets
will only be made in exchange for the
delivery to the Trust or the distribution
by the Trust of the amount of gold
represented by the Baskets being created
or redeemed, the amount of which will
be based on the combined Fine Ounces
represented by the number of Shares
included in the Baskets being created or
redeemed determined on the day the
order to create or redeem Baskets is
properly received.
Orders to create and redeem Baskets
may be placed only by Authorized
Participants. An Authorized Participant
must: (1) Be a registered broker-dealer or
other securities market participant, such
as a bank or other financial institution,
which, but for an exclusion from
registration, would be required to
register as a broker-dealer to engage in
securities transactions, (2) be a
participant in DTC, and (3) must have
an agreement with the Custodian
establishing an account or have an
existing account meeting the standards
described herein.
Gold is delivered to the Trust and
distributed by the Trust through credits
and debits between Authorized
Participants’ accounts, the Trust
Unallocated Metal Account and the
Trust Allocated Metal Account. When
the Trustee requests creation of a basket
at an Authorized Participant’s request,
the Authorized Participant will then
transfer gold to the Trust Unallocated
Metal Account. Once that gold is
received in the Trust Unallocated Metal
Account, the Custodian will then
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allocate the gold to the Trust Allocated
Metal Account where it will be stored
for safekeeping.
All gold represented by a credit to any
Authorized Participant’s unallocated
account represents a right to receive
Fine Ounces of gold. London Bars must
further conform to London Good
Delivery Standards.
Creation Procedures—Authorized
Participants
On any business day, an Authorized
Participant may place an order with the
Trustee to create one or more Baskets.
For purposes of processing both
purchase and redemption orders, a
‘‘business day’’ means any day other
than a day: (1) When the NYSE Arca is
closed for regular trading; or (2) if the
order or other transaction requires the
receipt or delivery, or the confirmation
of receipt or delivery, of gold in the
United Kingdom, Western Australia or
in some other jurisdiction on a
particular day, (A) when banks are
authorized to close in the United
Kingdom, Western Australia or in such
other jurisdiction or when the London
gold market is closed or (B) when banks
in the United Kingdom, Western
Australia or in such other jurisdiction
are, or the London gold market is, not
open for a full business day and the
order or other transaction requires the
execution or completion of procedures
which cannot be executed or completed
by the close of the business day.
Purchase orders must be placed prior to
the Order Cutoff Time on any business
day.33
Determination of Required Deposits
The Trustee shall determine the
Basket Gold Amount for each Business
Day, and each such determination
thereof and the Trustee’s resolution of
questions concerning the composition of
the Basket Gold Amount shall be final
and binding on all persons interested in
the Trust. The initial Basket Gold
Amount is 1,000 Fine Ounces of gold.
After the initial deposit of gold into the
Trust, the Basket Gold Amount for each
Business Day shall be an amount of gold
equal to:
1. Where:
33 ‘‘Order Cutoff Time’’ is defined, with respect
to any business day, as (i) 4:00 p.m. Eastern Time
on such business day or (ii) another time agreed to
by the Sponsors and the Trustee as to which the
Administrative Sponsor has notified registered
owners of Shares and all existing Authorized
Participants.
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Fmt 4703
Sfmt 4703
(a) = the total number of Fine Ounces of gold
held in the Trust as of the opening of
business on such Business Day.
(b) = the number of Fine Ounces of gold
equal in value to the Trust’s unpaid
expense accrual as of the opening of
business on such Business Day
(c) = the total number of Shares outstanding
as of the opening of business on such
Business Day
(d) = 1,000,000 (or other number of Shares in
a Basket for such Business Day).
Delivery of Required Deposits
An Authorized Participant who places
a purchase order is responsible for
crediting the Trust Unallocated Metal
Account with the required gold deposit
amount by 9:00 a.m. London time on the
third business day following the
purchase order date. No Shares will be
issued unless and until the Custodian
has informed the Trustee that it has
credited to the Trust Allocated Metal
Account at the Custodian the
corresponding amount of gold. Upon
transfer of the gold deposit amount to
the Trust Allocated Metal Account, the
Trustee will direct DTC to credit the
number of Baskets ordered to the
Authorized Participant’s DTC account.
Redemption Procedures—Authorized
Participants
The procedures by which an
Authorized Participant can redeem one
or more Baskets will mirror the
procedures for the creation of Baskets.
On any business day, an Authorized
Participant may place an order with the
Trustee to redeem one or more Baskets.
Redemption orders must be placed prior
to the Order Cutoff Time on each
business day the NYSE Arca is open for
regular trading (normally 9:30 a.m.
Eastern Time). A redemption order so
received is effective on the date it is
received in satisfactory form by the
Trustee. The redemption procedures
allow only Authorized Participants to
redeem Baskets. An investor may not
redeem Baskets other than through an
Authorized Participant.
By placing a redemption order, an
Authorized Participant agrees to deliver
the Baskets to be redeemed through
DTC’s book-entry system to the Trust no
later than the third business day
following the effective date of the
redemption order.
The redemption distribution from the
Trust will consist of a credit to the
redeeming Authorized Participant’s
account representing the amount of the
gold held by the Trust evidenced by the
Shares being redeemed as of the date of
the redemption order.
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Delivery of Redemption Distribution
The redemption distribution due from
the Trust is delivered to the Authorized
Participant on the next following
business day after the Trustee’s DTC
account has been credited with the
Baskets to be redeemed.
The Custodian will arrange for the
redemption amount in gold to be
transferred from the Trust Allocated
Metal Account to the Trust Unallocated
Metal Account, and thereafter, as
necessary, to the redeeming Authorized
Participant’s account.
Taking Delivery of Physical Gold—
Delivery Applicants
In exchange for its Shares, a Delivery
Applicant 34 will be entitled to receive
an amount of Physical Gold in return for
such Shares which the Delivery
Applicant’s broker-dealer submits his or
her Shares to the Trust in exchange for
Physical Gold (the ‘‘Share Submission
Day’’). The number of Shares to be
surrendered by a Delivery Applicant
and the corresponding amount of Gold
received for such Shares shall be
specified by the Custodial Sponsor from
time to time and notified by the
Custodial Sponsor to the Delivery
Applicant in a Delivery Application.
Delivery Application
Investors interested in taking delivery
of Physical Gold in exchange for their
Shares in the Trust must duly sign and
submit the Delivery Application to the
Administrative Sponsor within three
Business Days of receipt of the Delivery
ID (the Quotation Window). The
submission of a Delivery Application
expresses the Delivery Applicant’s
intention to surrender Shares on the
Share Submission Day. The Custodian
may reject any Delivery Application.
A Delivery Application will be
available on the Trust’s website.
sradovich on DSK3GMQ082PROD with NOTICES
Valuation of Gold and Computation of
NAV
On each business day that NYSE Arca
is open for regular trading, as promptly
as practicable after 4:00 p.m., Eastern
Time, the Trustee will value the gold
held by the Trust and will determine the
Net Asset Value of the Trust, as
described below.
The NAV of the Trust is the aggregate
value of gold and other assets, if any, of
the Trust (other than any amounts
credited to the Trust’s reserve account,
if any) and cash, if any, less liabilities
of the Trust, which include estimated
accrued but unpaid fees, expenses and
other liabilities.
All gold is valued based on its Fine
Ounce content, calculated by
multiplying the weight of gold by its
purity; the same methodology is applied
independent of the type of gold held by
the Trust. The Trustee values the gold
held by the Trust based on the afternoon
LBMA Gold Price, or the morning
LBMA Gold Price, if such day’s
afternoon LBMA Gold Price is not
available. If no LBMA Gold Price is
available for the day, the Trustee will
value the Trust’s gold based on the most
recently announced afternoon LBMA
Gold Price or morning LBMA Gold
Price. If the Custodial Sponsor
determines that such price is
inappropriate to use, it shall identify an
alternate basis for evaluation to be
employed by the Trustee. The Custodial
Sponsor may instruct the Trustee to use
a different publicly available price
which the Custodial Sponsor
determines to fairly represent the
commercial value of the Trust’s gold.
Once the value of gold has been
determined, the Trustee will subtract all
estimated accrued but unpaid fees,
expenses and other liabilities of the
Trust from the total value of gold and
any other assets of the Trust (other than
any amounts credited to the Trust’s
reserve account), including cash, if any.
The resulting figure is the NAV of the
Trust. The Trustee will also determine
the NAV per share by dividing the NAV
of the Trust by the number of the Shares
outstanding as of the close of trading on
the NYSE Arca (which includes the net
number of any Shares deemed created
or redeemed on such evaluation day).35
Secondary Market Trading
The Shares may trade in the
secondary market on the NYSE Arca at
prices that are lower or higher relative
to their NAV per share. The amount of
the discount or premium in the trading
price relative to the NAV per share may
be influenced by non-concurrent trading
hours between the NYSE Arca and the
COMEX, London and Zurich. While the
Shares will trade on the NYSE Arca
until 4:00 p.m. Eastern Time, liquidity
in the global gold market may be
reduced after the close of the major
world gold markets, including London,
Zurich and COMEX, usually at 1:30
p.m. Eastern Time. As a result, during
this time, trading spreads and the
resulting premium or discount on the
Shares may widen.
The exchange of Shares to facilitate the
delivery of Physical Gold is subject to applicable
product premiums and the delivery fees associated
with the transport of Physical Gold to Delivery
Applicants.
35
34 Delivery Applicant means a beneficial owner
who is not an Authorized Participant and wishes to
surrender part or all of the Shares he or she holds
for the purpose of taking delivery of Physical Gold.
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18:14 Dec 27, 2017
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61605
Availability of Information Regarding
Gold
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of a commodity such as
gold over the Consolidated Tape.
However, there will be disseminated
over the Consolidated Tape the last sale
price for the Shares, as is the case for
all equity securities traded on the
Exchange (including exchange-traded
funds). In addition, there is a
considerable amount of information
about gold and gold markets available
on public websites and through
professional and subscription services.
Investors may obtain gold pricing
information on a 24-hour basis based on
the spot price for an ounce of gold from
various financial information service
providers, such as Reuters and
Bloomberg.
Reuters and Bloomberg, for example,
provide at no charge on their websites
delayed information regarding the spot
price of Gold and last sale prices of Gold
futures, as well as information about
news and developments in the gold
market. Reuters and Bloomberg also
offer a professional service to
subscribers for a fee that provides
information on Gold prices directly
from market participants. Complete realtime data for Gold futures and options
prices traded on the COMEX are
available by subscription from Reuters
and Bloomberg. There are a variety of
other public websites providing
information on gold, ranging from those
specializing in precious metals to sites
maintained by major newspapers. In
addition, the LBMA Gold Price is
publicly available at no charge at
www.lbma.org.uk.
Investors may obtain gold pricing
information based on the spot price for
a Fine Ounce from various financial
information service providers. Current
spot prices also are generally available
with bid/ask spreads from gold bullion
dealers. In addition, the Trust’s website
will provide pricing information for
gold spot prices and the Shares. Market
prices for the Shares will be available
from a variety of sources including
brokerage firms, information websites
and other information service providers.
The NAV of the Trust will be published
by the Sponsor on each day that NYSE
Arca is open for regular trading and will
be posted on the Trust’s website.
Availability of Information
The intraday indicative value (‘‘IIV’’)
per Share for the Shares will be
disseminated by one or more major
market data vendors. The IIV will be
calculated based on the amount of gold
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held by the Trust and a price of gold
derived from updated bids and offers
indicative of the spot price of gold.36
The website for the Trust will contain
the following information, on a per
Share basis, for the Trust: (a) The midpoint of the bid-ask price 37 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 website for the Trust will
also provide the Trust’s prospectus.
Finally, the Trust’s website will provide
the last sale 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.
sradovich on DSK3GMQ082PROD with NOTICES
Criteria for Initial and Continued Listing
The Trust will be subject to the
criteria in NYSE Arca Rule 8.201–E(e)
for initial and continued listing of the
Shares.
A minimum 100,000 Shares will be
required to be outstanding at the start of
trading. The Exchange believes that the
anticipated minimum number of Shares
outstanding at the start of trading is
sufficient to provide adequate market
liquidity.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the 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 Rule 7.34–
E(a). The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions. As
provided in NYSE Arca Rule 7.6–E, 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
36 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.
37 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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18:14 Dec 27, 2017
Jkt 244001
$1.00 for which the MPV for order entry
is $0.0001.
Further, NYSE Arca Rule 8.201–E sets
forth certain restrictions on ETP Holders
acting as registered Market Makers in
the Shares to facilitate surveillance.
Under NYSE Arca Rule 8.201–E(g), an
ETP Holder acting as a registered Market
Maker in the Shares is required to
provide the Exchange with information
relating to its trading in the underlying
gold, related futures or options on
futures, or any other related derivatives.
Commentary .04 of NYSE Arca Rule
6.3–E requires an ETP Holder acting as
a registered Market Maker, and its
affiliates, in the Shares to establish,
maintain and enforce written policies
and procedures reasonably designed to
prevent the misuse of any material
nonpublic information with respect to
such products, any components of the
related products, any physical asset or
commodity underlying the product,
applicable currencies, underlying
indexes, related futures or options on
futures, and any related derivative
instruments (including the Shares).
As a general matter, the Exchange has
regulatory jurisdiction over its ETP
Holders and their associated persons,
which include any person or entity
controlling an ETP Holder. A subsidiary
or affiliate of an ETP Holder that does
business only in commodities or futures
contracts would not be subject to
Exchange jurisdiction, but the Exchange
could obtain information regarding the
activities of such subsidiary or affiliate
through surveillance sharing agreements
with regulatory organizations of which
such subsidiary or affiliate is a member.
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
Trading on the Exchange in the Shares
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. These may
include: (1) The extent to which
conditions in the underlying gold
market have caused disruptions and/or
lack of trading, or (2) whether other
unusual conditions or circumstances
detrimental to the maintenance of a fair
and orderly market are present. In
addition, trading in Shares will be
subject to trading halts caused by
extraordinary market volatility pursuant
to the Exchange’s ‘‘circuit breaker’’
rule.38 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
38 See
PO 00000
NYSE Arca Rule 7.12–E.
Frm 00074
Fmt 4703
Sfmt 4703
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.39 The Exchange
represents that these procedures are
adequate to properly monitor Exchange
trading of the Shares in all trading
sessions and to deter and detect
violations of Exchange rules and federal
securities laws applicable to trading on
the Exchange.
The surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares with other markets
and other entities that are members of
the ISG, and the Exchange or FINRA, on
behalf of the Exchange, or both, may
obtain trading information regarding
trading in the Shares from such markets
and other entities. In addition, the
Exchange may obtain information
regarding trading in the Shares from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.40
Also, pursuant to NYSE Arca Rule
8.201–E(g), the Exchange is able to
obtain information regarding trading in
the Shares and the underlying gold, gold
futures contracts, options on gold
futures, or any other gold derivative,
through ETP Holders acting as
registered Market Makers, in connection
39 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.
40 For a list of the current members of ISG, see
www.isgportal.org.
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sradovich on DSK3GMQ082PROD with NOTICES
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 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 Rule 9.2–E(a), which imposes a
duty of due diligence on its ETP Holders
to learn the essential facts relating to
every customer prior to trading the
Shares; (3) how information regarding
the IIV is disseminated; (4) the
requirement that ETP Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; (5) the possibility that
trading spreads and the resulting
premium or discount on the Shares may
widen as a result of reduced liquidity of
gold trading during the Core and Late
Trading Sessions after the close of the
major world gold markets; and (6)
trading information. For example, the
Information Bulletin will advise ETP
Holders, prior to the commencement of
trading, of the prospectus delivery
requirements applicable to the Trust.
The Exchange notes that investors
purchasing Shares directly from the
Trust (by delivery of the Creation Basket
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18:14 Dec 27, 2017
Jkt 244001
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 gold, that the
Commission has no jurisdiction over the
trading of gold as a physical commodity,
and that the CFTC has regulatory
jurisdiction over the trading of gold
futures contracts and options on gold
futures contracts.
The Information Bulletin will also
discuss any relief, if granted, by the
Commission or the staff from any rules
under the Act.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 41 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 Rule
8.201–E. The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement.
The proposed rule change is designed
to promote just and equitable principles
of trade and to protect investors and the
public interest in that there is a
considerable amount of gold price and
gold market information available on
public websites and through
professional and subscription services.
Investors may obtain on a 24-hour basis
gold pricing information based on the
spot price for an ounce of gold from
various financial information service
providers. Investors may obtain gold
41 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00075
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Sfmt 4703
61607
pricing information based on the spot
price for an ounce of gold from various
financial information service providers.
Current spot prices also are generally
available with bid/ask spreads from gold
bullion dealers. In addition, the Trust’s
website will provide pricing
information for gold spot prices and the
Shares. Market prices for the Shares will
be available from a variety of sources
including brokerage firms, information
websites and other information service
providers. The NAV of the Trust will be
published by the Sponsor on each day
that NYSE Arca is open for regular
trading and will be posted on the Trust’s
website. The IIV relating to the Shares
will be widely disseminated by one or
more major market data vendors at least
every 15 seconds during the Core
Trading Session. In addition, the LBMA
Gold Price is publicly available at no
charge at www.lbma.org.uk. The Trust’s
website 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 realtime 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 gold pricing.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change will enhance competition by
accommodating Exchange trading of an
additional exchange-traded product
relating to physical gold.
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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
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEArca–2017–140, and
should be submitted on or before
January 18, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.42
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27993 Filed 12–27–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82379; File No. SR–
CboeBZX–2017–012]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing of
a Proposed Rule Change To List and
Trade Shares of the LHA Market State®
Tactical U.S. Equity ETF, a Series of
the ETF Series Solutions, Under Rule
14.11(i), Managed Fund Shares
Paper Comments
sradovich on DSK3GMQ082PROD with NOTICES
• 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–2017–140 on the subject
line.
December 21, 2017.
• 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–2017–140. 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 website (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
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
7, 2017, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
VerDate Sep<11>2014
18:14 Dec 27, 2017
Jkt 244001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposed rule
change to list and trade shares of the
42 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
LHA Market State® Tactical U.S. Equity
ETF (the ‘‘Fund’’), a series of the ETF
Series Solutions (the ‘‘Trust’’), under
Rule 14.11(i) (‘‘Managed Fund Shares’’).
The shares of the Fund are referred to
herein as the ‘‘Shares.’’
The text of the proposed rule change
is available at the Exchange’s website at
www.markets.cboe.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
Exchange 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 these
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade the Shares under Rule 14.11(i),
which governs the listing and trading of
Managed Fund Shares on the
Exchange.3 The Fund will be an actively
managed exchange-traded fund that
seeks to provide investment results that
exceed the total return performance of
the broader U.S. equity market on a riskadjusted basis. The Exchange submits
this proposal in order to allow the Fund
to hold listed derivatives, in particular
S&P 500 futures, in a manner that does
not comply with Rule
14.11(i)(4)(C)(iv)(b).4 Otherwise, the
3 The Commission originally approved BZX Rule
14.11(i) in Securities Exchange Act Release No.
65225 (August 30, 2011), 76 FR 55148 (September
6, 2011) (SR–BATS–2011–018) and subsequently
approved generic listing standards for Managed
Fund Shares under Rule 14.11(i) in Securities
Exchange Act Release No. 78396 (July 22, 2016), 81
FR 49698 (July 28, 2016) (SR–BATS–2015–100).
4 Rule 14.11(i)(4)(C)(iv)(b) provides that ‘‘the
aggregate gross notional value of listed derivatives
based on any five or fewer underlying reference
assets shall not exceed 65% of the weight of the
portfolio (including gross notional exposures), and
the aggregate gross notional value of listed
derivatives based on any single underlying
reference asset shall not exceed 30% of the weight
of the portfolio (including gross notional
exposures).’’ The Exchange is proposing that the
Fund be exempt only from the requirement of Rule
14.11(i)(4)(C)(iv)(b) that prevents the aggregate gross
notional value of listed derivatives based on any
single underlying reference asset from exceeding
30% of the weight of the portfolio (including gross
E:\FR\FM\28DEN1.SGM
28DEN1
Agencies
[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Pages 61601-61608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27993]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82372; File No. SR-NYSEArca-2017-140]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the Perth Mint
Physical Gold ETF Trust Under NYSE Arca Rule 8.201-E
December 21, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 11, 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 Perth Mint
Physical Gold ETF Trust under NYSE Arca Rule 8.201-E. The proposed
change is available on the Exchange's website at www.nyse.com, at the
principal office of
[[Page 61602]]
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
Perth Mint Physical Gold ETF Trust (``Trust''), under NYSE Arca Rule
8.201-E.\4\ Under NYSE Arca Rule 8.201-E, the Exchange may propose to
list and/or trade pursuant to unlisted trading privileges (``UTP'')
``Commodity-Based Trust Shares''.\5\
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\4\ On August 30, 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 sponsors of the Trust will be Gold Corporation (the ``Custodial
Sponsor'') and Exchange Traded Concepts, LLC (``ETC'' or the
``Administrative Sponsor'' and, together with the Custodial Sponsor,
the ``Sponsors''). Gold Corporation, doing business as the Perth Mint,
is a Western Australian Government owned statutory body corporate
established by the Gold Corporation Act 1987 (Western Australia). ETC
is an Oklahoma limited liability company majority owned by Cottonwood
ETF Holdings LLC. ETC is a registered investment adviser and provides
investment advisory services to domestic and international equity and
fixed income ETFs. The Trustee will be the Bank of New York Mellon (the
``Trustee''). Gold Corporation will also serve as custodian of the
Trust's gold bullion (in such capacity, the ``Custodian'').\8\
---------------------------------------------------------------------------
\8\ As Custodian of the Trust's gold bullion, Gold Corporation
will be responsible for the safekeeping of the Trust's gold and
supplying inventory information to the Trustee and the Sponsors. The
Custodian will also be responsible for facilitating the transfer of
gold in and out of the Trust and facilitating the shipment of
Physical Gold to Delivery Applicants. The Custodian will confirm the
deposit of gold into the Trust Unallocated Metal Account (as defined
herein) received from an Authorized Participant in exchange for
Baskets. The Custodian will promptly convert the deposit to
allocated Gold held in the Trust Allocated Metal Account. The
Custodian must allocate ownership of Physical Gold to the Trust such
that no amount of Gold remains standing for the benefit of the Trust
in the Trust Unallocated Metal Account at the Custodian's Close of
Business on each Business Day. In the event that the Custodian is
unable to fully effect such allocation by such time, it will use
reasonable efforts to cause such allocation as soon as possible. The
Custodian will safely store Physical Gold in its own vaulting
facilities and any other vaulting facility as approved by the
Custodian and utilize the services of its appointed secure
transportation provider at the risk of the Custodian. The Trust's
gold holdings are subject to periodic audits and, under the Custody
Agreement, the Custodian has agreed to permit auditors to access all
premises during normal business hours to examine the gold held for
the Trust and such records as they reasonably require.
---------------------------------------------------------------------------
The Commission has previously approved listing on the Exchange
under NYSE Arca Rule 5.2-E(j)(5) and 8.201-E of other precious metals
and gold-based commodity trusts, including GraniteShares Gold Trust;
\9\ VanEck Merk Gold Trust (formerly Merk Gold Trust); \10\ ETFS Gold
Trust,\11\ ETFS Platinum Trust \12\ and ETFS Palladium Trust
(collectively, the ``ETFS Trusts''); \13\ APMEX Physical-1 oz. Gold
Redeemable Trust; \14\ Sprott Gold Trust; \15\ SPDR Gold Trust
(formerly, streetTRACKS Gold Trust); iShares Silver Trust; \16\ iShares
COMEX Gold Trust,\17\ Long Dollar Gold Trust,\18\ and Euro Gold Trust,
Pound Gold Trust and Yen Gold Trust.\19\ Prior to their listing on the
Exchange, the Commission approved listing of the streetTRACKS Gold
Trust on the New York Stock Exchange (``NYSE'') \20\ and listing of
iShares COMEX Gold Trust and iShares Silver Trust on the American Stock
Exchange LLC. \21\ In addition, the Commission has approved trading of
the streetTRACKS Gold Trust and iShares Silver Trust on the Exchange
pursuant to UTP.\22\
---------------------------------------------------------------------------
\9\ Securities Exchange Act Release No. 81077 (July 5, 2017) 82
FR 32024 (July 11, 2017) (SR-NYSEArca-2017-55)
\10\ Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
\11\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\12\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\13\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\14\ Securities Exchange Act Release No 66930 (May 7, 2012), 77
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18)
\15\ Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
\16\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust)).
\17\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the street TRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\18\ See Securities Exchange Act Release No. 79518 (December 9,
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order
approving listing and trading of shares of the Long Dollar Gold
Trust).
\19\ See Securities Exchange Act Release No. 80840 (June 1,
2017), 82 FR 26534 (June 7, 2016) (SR-NYSEArca-2017-33).
\20\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of street TRACKS Gold Trust on NYSE).
\21\ See Securities Exchange Act Release Nos. 51058 (January 19,
2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order
approving listing of iShares COMEX Gold Trust on the American Stock
Exchange LLC); 53521 (March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR-Amex-2005-72) (approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
\22\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
---------------------------------------------------------------------------
The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Rule 8.201-E and thereby qualify for listing on the
Exchange.\23\
---------------------------------------------------------------------------
\23\ 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).
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[[Page 61603]]
The Trust's Objectives and Structure \24\
---------------------------------------------------------------------------
\24\ The description of the Trust's Objectives and Structure,
the Operation of the Gold Market, and the London Bullion Market
Association, are based, in part, on the Registration Statement. See
Ftnt. 4 supra.
---------------------------------------------------------------------------
The Trust's primary objective will be to provide investors with an
opportunity to invest in gold through the Shares, have the gold
securely stored by Gold Corporation and, if requested by an investor,
deliver Physical Gold \25\ to such investor in exchange for its
Shares.\26\
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\25\ Physical Gold is defined as London Bars and all gold
products without numismatic value and having a gold purity of at
least 99.5% (including coins, cast bars and minted bars).
\26\ According to the Registration Statement, the Trust does not
trade in gold futures contracts on COMEX or on any other futures
exchange. Because the Trust does not trade in gold futures contracts
on any futures exchange, the Trust is not regulated by the CFTC
under the Commodity Exchange Act as a ``commodity pool,'' and is not
operated by a CFTC-regulated commodity pool operator. Investors in
the Trust do not receive the regulatory protections afforded to
investors in regulated commodity pools, nor may COMEX or any futures
exchange enforce its rules with respect to the Trust's activities.
In addition, investors in the Trust do not benefit from the
protections afforded to investors in gold futures contracts on
regulated futures exchanges.
---------------------------------------------------------------------------
An additional objective of the Trust will be for the Shares to
reflect the performance of the price of gold less the expenses of the
Trust's operations. The Trust provides investors with a convenient and
cost efficient way to buy and hold gold through an exchange traded
security with the option to take delivery of the Physical Gold.
Although owning Shares will not be the exact equivalent of an
investment in gold, such Shares provide investors with an alternative
that allows a level of participation in the gold market through the
securities market.
To meet its investment objectives and provide investors with an
opportunity to invest in gold through the Shares and to be able to take
delivery of Physical Gold in exchange for their Shares, the Sponsors
have structured the Trust as follows:
Maintaining Allocated Gold. The Trust will hold its Physical Gold
in allocated form in the Trust Allocated Metal Account with the
Custodian. The Trust Allocated Metal Account will be used to hold
Physical Gold deposited with the Trust. The Physical Gold is held in a
segregated fashion in the name of the Trust, not commingled with other
depositor funds or assets. The Trust will have full title to the gold
with the Custodian holding it on the Trust's behalf. Each investor owns
a pro-rata share of the Trust, and as such holds pro-rata ownership of
the Trust assets, corresponding to the number of Shares held. Credits
or debits to the holding will be effected by physical movements of gold
to or from the Trust's physical holding. The Trust's gold holdings are
subject to periodic audits.
Permitting Investors to Take Delivery of Physical Gold. Delivery
Applicants \27\ may surrender Shares to the Trust in exchange for the
supply of Physical Gold subject to any minimum dollar amount specified
by the Custodial Sponsor from time to time on the Trust's website. When
surrendering Shares to facilitate the supply of Physical Gold, the
Custodial Sponsor will require the submission of Shares that correspond
in net assets to the number of Fine Ounces contained in the Physical
Gold requested plus any applicable product premiums, and delivery fees
(together ``processing fees''). The number of Shares required for
submission will be provided by the Custodial Sponsor, inclusive of
processing fees, in a pre-populated Delivery Application.\28\
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\27\ Delivery Applicant means a beneficial owner who is not an
Authorized Participant and wishes to surrender part or all of the
Shares he or she holds for the purpose of taking delivery of
Physical Gold.
\28\ Delivery Application means a document in a form
satisfactory to the Custodian and as set forth herein that expresses
a Delivery Applicant's intention to surrender Shares on a Share
Submission Day in exchange for an amount of Gold on such Share
Submission Day.
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Minimizing Cash Holdings. The Trust is committed to minimizing the
use of cash, keeping essentially all assets of the Trust in gold. The
Trust will not normally hold cash or any other assets besides gold.
Government Guarantee. The Government Guarantee,\29\ applies to all
gold held by the Custodian, whether in the Trust Allocated Metal
Account,\30\ the Trust Unallocated Metal Account \31\ or in a Customer
Account, for the benefit of the Trust or a Delivery Applicant.
---------------------------------------------------------------------------
\29\ As noted supra, Gold Corporation, doing business as the
Perth Mint, is a Western Australian Government owned statutory body
corporate established by the Gold Corporation Act 1987 (Western
Australia) (the ``WA Act''). The Government Guarantee provided by
the State of Western Australia pursuant to Section 22 of the WA Act
provides (amongst other things) that the payment of the cash
equivalent of gold due, payable and deliverable by the Custodian
under the WA Act is guaranteed by the Treasurer of Western
Australia, in the name and on behalf of the Crown in the right of
the State of Western Australia.
\30\ Trust Allocated Metal Account means the account maintained
for the Trust by the Custodian on an allocated basis pursuant to the
Trust Allocated Account Agreement for the purpose of holding
Physical Gold on behalf of the Trust.
\31\ Trust Unallocated Metal Account means the account
maintained for the Trust by the Custodian on an unallocated basis
pursuant to the Trust Unallocated Metal Account Agreement.
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Operation of the Gold Market
The global trade in gold consists of over-the-counter (``OTC'')
transactions in spot, forwards, and options and other derivatives,
together with exchange-traded futures and options.
The OTC market trades on a continuous basis and accounts for most
global gold trading. Market makers and participants in the OTC market
trade with each other and their clients on a principal-to-principal
basis.
The main centers of the OTC market are London, New York and Zurich.
Most OTC market trades are cleared through London. The LBMA plays an
important role in setting OTC gold trading industry standards.
Futures Exchanges
Although the Trust will not invest in gold futures, information
about the gold futures market is relevant as such markets contribute
to, and provide evidence of, the liquidity of the overall market for
gold.
The most significant gold futures exchange in the U.S. is COMEX,
operated by Commodities Exchange, Inc., a subsidiary of New York
Mercantile Exchange, Inc., and a subsidiary of the Chicago Mercantile
Exchange Group (the ``CME Group''). Other commodity exchanges include
the Tokyo Commodity Exchange (``TOCOM''), the Multi Commodity Exchange
Of India (``MCX''), the Shanghai Futures Exchange, ICE Futures US (the
``ICE''), and the Dubai Gold & Commodities Exchange.\32\
---------------------------------------------------------------------------
\32\ The CME Group and ICE Futures US are members of the
Intermarket Surveillance Group (``ISG'').
---------------------------------------------------------------------------
The London Bullion Market Association (LBMA)
The LBMA is a trade association that, among other duties, maintains
and publishes ``Good Delivery'' lists that establish a set of criteria
that a refiner and its gold must satisfy before being accepted for
trading. Although the market for Physical Gold is distributed globally,
most OTC market trades are cleared through London. The LBMA coordinates
the market for gold and acts as the principal point of contact between
the market and its regulators.
A primary function of the LBMA is its involvement in the promotion
of refining standards by maintenance of the ``London Good Delivery
Lists,'' which are the lists of LBMA accredited melters and assayers of
gold as well as the specifications to which a bar/ingot must adhere.
The LBMA also coordinates market clearing and
[[Page 61604]]
vaulting, and promotes good trading practices.
``Good Delivery'' is a list of specifications a bar or ingot must
meet to trade on the London gold markets. The standards for gold bars
meeting the ``London Good Delivery Lists'' are published in LBMA's
``The Good Delivery Rules for Gold and Silver Bars''.
Gold is usually traded on the London market on a loco London basis.
This means the gold is physically held in vaults in London or is
transferred into accounts established in London. Payment upon
settlement and delivery of a loco London spot trade is usually in US
dollars, two business days after the trade date. Delivery of the gold
is either by physical delivery or through the LBMA clearing system to
an unallocated account.
Creation and Redemption of Shares by Authorized Participants
The Trust will issue and redeem Baskets equal to a block of 100,000
Shares. The Trust issues and redeems Baskets only to Authorized
Participants. The creation and redemption of Baskets will only be made
in exchange for the delivery to the Trust or the distribution by the
Trust of the amount of gold represented by the Baskets being created or
redeemed, the amount of which will be based on the combined Fine Ounces
represented by the number of Shares included in the Baskets being
created or redeemed determined on the day the order to create or redeem
Baskets is properly received.
Orders to create and redeem Baskets may be placed only by
Authorized Participants. An Authorized Participant must: (1) Be a
registered broker-dealer or other securities market participant, such
as a bank or other financial institution, which, but for an exclusion
from registration, would be required to register as a broker-dealer to
engage in securities transactions, (2) be a participant in DTC, and (3)
must have an agreement with the Custodian establishing an account or
have an existing account meeting the standards described herein.
Gold is delivered to the Trust and distributed by the Trust through
credits and debits between Authorized Participants' accounts, the Trust
Unallocated Metal Account and the Trust Allocated Metal Account. When
the Trustee requests creation of a basket at an Authorized
Participant's request, the Authorized Participant will then transfer
gold to the Trust Unallocated Metal Account. Once that gold is received
in the Trust Unallocated Metal Account, the Custodian will then
allocate the gold to the Trust Allocated Metal Account where it will be
stored for safekeeping.
All gold represented by a credit to any Authorized Participant's
unallocated account represents a right to receive Fine Ounces of gold.
London Bars must further conform to London Good Delivery Standards.
Creation Procedures--Authorized Participants
On any business day, an Authorized Participant may place an order
with the Trustee to create one or more Baskets. For purposes of
processing both purchase and redemption orders, a ``business day''
means any day other than a day: (1) When the NYSE Arca is closed for
regular trading; or (2) if the order or other transaction requires the
receipt or delivery, or the confirmation of receipt or delivery, of
gold in the United Kingdom, Western Australia or in some other
jurisdiction on a particular day, (A) when banks are authorized to
close in the United Kingdom, Western Australia or in such other
jurisdiction or when the London gold market is closed or (B) when banks
in the United Kingdom, Western Australia or in such other jurisdiction
are, or the London gold market is, not open for a full business day and
the order or other transaction requires the execution or completion of
procedures which cannot be executed or completed by the close of the
business day. Purchase orders must be placed prior to the Order Cutoff
Time on any business day.\33\
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\33\ ``Order Cutoff Time'' is defined, with respect to any
business day, as (i) 4:00 p.m. Eastern Time on such business day or
(ii) another time agreed to by the Sponsors and the Trustee as to
which the Administrative Sponsor has notified registered owners of
Shares and all existing Authorized Participants.
---------------------------------------------------------------------------
Determination of Required Deposits
The Trustee shall determine the Basket Gold Amount for each
Business Day, and each such determination thereof and the Trustee's
resolution of questions concerning the composition of the Basket Gold
Amount shall be final and binding on all persons interested in the
Trust. The initial Basket Gold Amount is 1,000 Fine Ounces of gold.
After the initial deposit of gold into the Trust, the Basket Gold
Amount for each Business Day shall be an amount of gold equal to:
[GRAPHIC] [TIFF OMITTED] TN28DE17.000
1. Where:
(a) = the total number of Fine Ounces of gold held in the Trust as
of the opening of business on such Business Day.
(b) = the number of Fine Ounces of gold equal in value to the
Trust's unpaid expense accrual as of the opening of business on such
Business Day
(c) = the total number of Shares outstanding as of the opening of
business on such Business Day
(d) = 1,000,000 (or other number of Shares in a Basket for such
Business Day).
Delivery of Required Deposits
An Authorized Participant who places a purchase order is
responsible for crediting the Trust Unallocated Metal Account with the
required gold deposit amount by 9:00 a.m. London time on the third
business day following the purchase order date. No Shares will be
issued unless and until the Custodian has informed the Trustee that it
has credited to the Trust Allocated Metal Account at the Custodian the
corresponding amount of gold. Upon transfer of the gold deposit amount
to the Trust Allocated Metal Account, the Trustee will direct DTC to
credit the number of Baskets ordered to the Authorized Participant's
DTC account.
Redemption Procedures--Authorized Participants
The procedures by which an Authorized Participant can redeem one or
more Baskets will mirror the procedures for the creation of Baskets. On
any business day, an Authorized Participant may place an order with the
Trustee to redeem one or more Baskets. Redemption orders must be placed
prior to the Order Cutoff Time on each business day the NYSE Arca is
open for regular trading (normally 9:30 a.m. Eastern Time). A
redemption order so received is effective on the date it is received in
satisfactory form by the Trustee. The redemption procedures allow only
Authorized Participants to redeem Baskets. An investor may not redeem
Baskets other than through an Authorized Participant.
By placing a redemption order, an Authorized Participant agrees to
deliver the Baskets to be redeemed through DTC's book-entry system to
the Trust no later than the third business day following the effective
date of the redemption order.
The redemption distribution from the Trust will consist of a credit
to the redeeming Authorized Participant's account representing the
amount of the gold held by the Trust evidenced by the Shares being
redeemed as of the date of the redemption order.
[[Page 61605]]
Delivery of Redemption Distribution
The redemption distribution due from the Trust is delivered to the
Authorized Participant on the next following business day after the
Trustee's DTC account has been credited with the Baskets to be
redeemed.
The Custodian will arrange for the redemption amount in gold to be
transferred from the Trust Allocated Metal Account to the Trust
Unallocated Metal Account, and thereafter, as necessary, to the
redeeming Authorized Participant's account.
Taking Delivery of Physical Gold--Delivery Applicants
In exchange for its Shares, a Delivery Applicant \34\ will be
entitled to receive an amount of Physical Gold in return for such
Shares which the Delivery Applicant's broker-dealer submits his or her
Shares to the Trust in exchange for Physical Gold (the ``Share
Submission Day''). The number of Shares to be surrendered by a Delivery
Applicant and the corresponding amount of Gold received for such Shares
shall be specified by the Custodial Sponsor from time to time and
notified by the Custodial Sponsor to the Delivery Applicant in a
Delivery Application.
---------------------------------------------------------------------------
\34\ Delivery Applicant means a beneficial owner who is not an
Authorized Participant and wishes to surrender part or all of the
Shares he or she holds for the purpose of taking delivery of
Physical Gold.
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Delivery Application
Investors interested in taking delivery of Physical Gold in
exchange for their Shares in the Trust must duly sign and submit the
Delivery Application to the Administrative Sponsor within three
Business Days of receipt of the Delivery ID (the Quotation Window). The
submission of a Delivery Application expresses the Delivery Applicant's
intention to surrender Shares on the Share Submission Day. The
Custodian may reject any Delivery Application.
A Delivery Application will be available on the Trust's website.
Valuation of Gold and Computation of NAV
On each business day that NYSE Arca is open for regular trading, as
promptly as practicable after 4:00 p.m., Eastern Time, the Trustee will
value the gold held by the Trust and will determine the Net Asset Value
of the Trust, as described below.
The NAV of the Trust is the aggregate value of gold and other
assets, if any, of the Trust (other than any amounts credited to the
Trust's reserve account, if any) and cash, if any, less liabilities of
the Trust, which include estimated accrued but unpaid fees, expenses
and other liabilities.
All gold is valued based on its Fine Ounce content, calculated by
multiplying the weight of gold by its purity; the same methodology is
applied independent of the type of gold held by the Trust. The Trustee
values the gold held by the Trust based on the afternoon LBMA Gold
Price, or the morning LBMA Gold Price, if such day's afternoon LBMA
Gold Price is not available. If no LBMA Gold Price is available for the
day, the Trustee will value the Trust's gold based on the most recently
announced afternoon LBMA Gold Price or morning LBMA Gold Price. If the
Custodial Sponsor determines that such price is inappropriate to use,
it shall identify an alternate basis for evaluation to be employed by
the Trustee. The Custodial Sponsor may instruct the Trustee to use a
different publicly available price which the Custodial Sponsor
determines to fairly represent the commercial value of the Trust's
gold. Once the value of gold has been determined, the Trustee will
subtract all estimated accrued but unpaid fees, expenses and other
liabilities of the Trust from the total value of gold and any other
assets of the Trust (other than any amounts credited to the Trust's
reserve account), including cash, if any. The resulting figure is the
NAV of the Trust. The Trustee will also determine the NAV per share by
dividing the NAV of the Trust by the number of the Shares outstanding
as of the close of trading on the NYSE Arca (which includes the net
number of any Shares deemed created or redeemed on such evaluation
day).\35\
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\35\ The exchange of Shares to facilitate the delivery of
Physical Gold is subject to applicable product premiums and the
delivery fees associated with the transport of Physical Gold to
Delivery Applicants.
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Secondary Market Trading
The Shares may trade in the secondary market on the NYSE Arca at
prices that are lower or higher relative to their NAV per share. The
amount of the discount or premium in the trading price relative to the
NAV per share may be influenced by non-concurrent trading hours between
the NYSE Arca and the COMEX, London and Zurich. While the Shares will
trade on the NYSE Arca until 4:00 p.m. Eastern Time, liquidity in the
global gold market may be reduced after the close of the major world
gold markets, including London, Zurich and COMEX, usually at 1:30 p.m.
Eastern Time. As a result, during this time, trading spreads and the
resulting premium or discount on the Shares may widen.
Availability of Information Regarding Gold
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity such as gold over the
Consolidated Tape. However, there will be disseminated over the
Consolidated Tape the last sale price for the Shares, as is the case
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of
information about gold and gold markets available on public websites
and through professional and subscription services.
Investors may obtain gold pricing information on a 24-hour basis
based on the spot price for an ounce of gold from various financial
information service providers, such as Reuters and Bloomberg.
Reuters and Bloomberg, for example, provide at no charge on their
websites delayed information regarding the spot price of Gold and last
sale prices of Gold futures, as well as information about news and
developments in the gold market. Reuters and Bloomberg also offer a
professional service to subscribers for a fee that provides information
on Gold prices directly from market participants. Complete real-time
data for Gold futures and options prices traded on the COMEX are
available by subscription from Reuters and Bloomberg. There are a
variety of other public websites providing information on gold, ranging
from those specializing in precious metals to sites maintained by major
newspapers. In addition, the LBMA Gold Price is publicly available at
no charge at www.lbma.org.uk.
Investors may obtain gold pricing information based on the spot
price for a Fine Ounce from various financial information service
providers. Current spot prices also are generally available with bid/
ask spreads from gold bullion dealers. In addition, the Trust's website
will provide pricing information for gold spot prices and the Shares.
Market prices for the Shares will be available from a variety of
sources including brokerage firms, information websites and other
information service providers. The NAV of the Trust will be published
by the Sponsor on each day that NYSE Arca is open for regular trading
and will be posted on the Trust's website.
Availability of Information
The intraday indicative value (``IIV'') per Share for the Shares
will be disseminated by one or more major market data vendors. The IIV
will be calculated based on the amount of gold
[[Page 61606]]
held by the Trust and a price of gold derived from updated bids and
offers indicative of the spot price of gold.\36\
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\36\ 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 website for the Trust will contain the following information,
on a per Share basis, for the Trust: (a) The mid-point of the bid-ask
price \37\ 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 website for the Trust will also provide the Trust's prospectus.
Finally, the Trust's website will provide the last sale 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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\37\ 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 Rule 8.201-
E(e) for initial and continued listing of the Shares.
A minimum 100,000 Shares will be required to be outstanding at the
start of trading. The Exchange believes that the anticipated minimum
number of Shares outstanding at the start of trading is sufficient to
provide adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the 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 Rule 7.34-E(a).
The Exchange has appropriate rules to facilitate transactions in the
Shares during all trading sessions. As provided in NYSE Arca Rule 7.6-
E, 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 Rule 8.201-E sets forth certain restrictions on
ETP Holders acting as registered Market Makers in the Shares to
facilitate surveillance. Under NYSE Arca Rule 8.201-E(g), an ETP Holder
acting as a registered Market Maker in the Shares is required to
provide the Exchange with information relating to its trading in the
underlying gold, related futures or options on futures, or any other
related derivatives. Commentary .04 of NYSE Arca Rule 6.3-E requires an
ETP Holder acting as a registered Market Maker, and its affiliates, in
the Shares to establish, maintain and enforce written policies and
procedures reasonably designed to prevent the misuse of any material
nonpublic information with respect to such products, any components of
the related products, any physical asset or commodity underlying the
product, applicable currencies, underlying indexes, related futures or
options on futures, and any related derivative instruments (including
the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. A subsidiary or affiliate of an
ETP Holder that does business only in commodities or futures contracts
would not be subject to Exchange jurisdiction, but the Exchange could
obtain information regarding the activities of such subsidiary or
affiliate through surveillance sharing agreements with regulatory
organizations of which such subsidiary or affiliate is a member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying gold
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\38\ 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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\38\ See NYSE Arca Rule 7.12-E.
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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.\39\ 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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\39\ 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.\40\
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\40\ For a list of the current members of ISG, see
www.isgportal.org.
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Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able
to obtain information regarding trading in the Shares and the
underlying gold, gold futures contracts, options on gold futures, or
any other gold derivative, through ETP Holders acting as registered
Market Makers, in connection
[[Page 61607]]
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 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 Rule 9.2-E(a),
which imposes a duty of due diligence on its ETP Holders to learn the
essential facts relating to every customer prior to trading the Shares;
(3) how information regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting premium or discount on the Shares may widen as a
result of reduced liquidity of gold trading during the Core and Late
Trading Sessions after the close of the major world gold markets; and
(6) trading information. For example, the Information Bulletin will
advise ETP Holders, prior to the commencement of trading, of the
prospectus delivery requirements applicable to the 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 gold, that the Commission has no jurisdiction over
the trading of gold as a physical commodity, and that the CFTC has
regulatory jurisdiction over the trading of gold futures contracts and
options on gold futures contracts.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \41\ 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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\41\ 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 Rule 8.201-E. The
Exchange has in place surveillance procedures that are adequate to
properly monitor trading in the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws. The Exchange may obtain information via ISG from other
exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of gold price and gold market
information available on public websites and through professional and
subscription services. Investors may obtain on a 24-hour basis gold
pricing information based on the spot price for an ounce of gold from
various financial information service providers. Investors may obtain
gold pricing information based on the spot price for an ounce of gold
from various financial information service providers. Current spot
prices also are generally available with bid/ask spreads from gold
bullion dealers. In addition, the Trust's website will provide pricing
information for gold spot prices and the Shares. Market prices for the
Shares will be available from a variety of sources including brokerage
firms, information websites and other information service providers.
The NAV of the Trust will be published by the Sponsor on each day that
NYSE Arca is open for regular trading and will be posted on the Trust's
website. The IIV relating to the Shares will be widely disseminated by
one or more major market data vendors at least every 15 seconds during
the Core Trading Session. In addition, the LBMA Gold Price is publicly
available at no charge at www.lbma.org.uk. The Trust's website 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 gold pricing.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating to physical
gold.
[[Page 61608]]
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 [email protected]. Please include
File Number SR-NYSEArca-2017-140 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2017-140. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2017-140, and should be
submitted on or before January 18, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
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\42\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27993 Filed 12-27-17; 8:45 am]
BILLING CODE 8011-01-P