Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Changes Relating to ProShares Ultra Gold, ProShares UltraShort Gold, ProShares Ultra Silver, and ProShares UltraShort Silver, 66794-66798 [2018-28007]

Download as PDF 66794 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices OCC is AUTHORIZED to implement the proposed change as of the date of this notice or the date of an order by the Commission approving proposed rule change SR–OCC–2018–014, as modified by Partial Amendment No. 1, whichever is later. By the Commission. Brent J. Fields, Secretary. [FR Doc. 2018–28008 Filed 12–26–18; 8:45 am] BILLING CODE P SECURITIES AND EXCHANGE COMMISSION A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [Release No. 34–84853; File No. SR– NYSEArca–2018–91] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Changes Relating to ProShares Ultra Gold, ProShares UltraShort Gold, ProShares Ultra Silver, and ProShares UltraShort Silver December 19, 2018. 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 6, 2018, 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, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. khammond on DSK30JT082PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to reflect changes to the underlying benchmark, net asset value calculation times, and creation and redemption order cut-off times applicable to the ProShares Ultra Gold, ProShares UltraShort Gold, ProShares Ultra Silver, and ProShares UltraShort Silver. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 1 15 U.S.C.78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 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. 1. Purpose The Commission previously approved the listing and trading of the shares (‘‘Shares’’) on the Exchange of the following under Commentary .02 to NYSE Arca Rule 8.200–E,4 which governs the listing and trading of ‘‘Trust Issued Receipts’’ (‘‘TIRs’’) on the Exchange: 5 ProShares Ultra Gold, ProShares UltraShort Gold, ProShares Ultra Silver, and ProShares UltraShort Silver (each a ‘‘Fund’’ and, collectively, the ‘‘Funds’’).6 The Funds are series of ProShares Trust II (‘‘Trust’’). The Bank of New York Mellon Corporation is 4 Commentary .02 to NYSE Arca Rule 8.200–E applies to Trust Issued Receipts that invest in ‘‘Financial Instruments.’’ The term ‘‘Financial Instruments,’’ as defined in Commentary .02(b)(4) to NYSE Arca Rule 8.200–E, means any combination of investments, including cash; securities; options on securities and indices; futures contracts; options on futures contracts; forward contracts; equity caps, collars and floors; and swap agreements. 5 See Securities Exchange Act Release Nos. 58457 (September 3, 2008), (73 FR 52711 (September 10, 2008) (SR–NYSEArca–2008–91) (notice of filing and order granting accelerated approval of proposed rule change regarding listing and trading of shares of 14 funds of the Commodities and Currency Trust (now the ProShares Trust II)); 58162 (July 15, 2008), 73 FR 42391 (July 21, 2008) (SR–NYSEArca–2008– 73) (notice of filing and immediate effectiveness of proposed rule change relating to trading of shares of 14 funds of the Commodities and Currency Trust pursuant to unlisted trading privileges) (‘‘Prior NYSE Arca Notice’’). See also Securities Exchange Act Release Nos. 58161 (July 15, 2008), 73 FR 42380 (July 21, 2008) (SR–Amex–2008–39) (order approving listing and trading on the American Stock Exchange LLC of shares of 14 funds of the Commodities and Currency Trust) (‘‘Prior Amex Order’’); 57932 (June 5, 2008), 73 FR 33467 (June 12, 2008) (notice of proposed rule change regarding listing and trading of shares of 14 funds of the Commodities and Currency Trust) (‘‘Prior Amex Notice’’ and, together with the Prior Amex Order, the ‘‘Prior Amex Releases’’). 6 The ProShares Ultra Gold and ProShares Ultra Silver are referred to herein as ‘‘Ultra Funds’’ and the ProShares UltraShort Gold and ProShares UltraShort Silver are referred to herein as ‘‘UltraShort Funds.’’ PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 custodian for the Trust. SEI Investments Distribution Co. is the distributor for the Funds.7 Shares of the Funds are currently listed and trading on the Exchange. The Exchange is submitting this proposed rule change to reflect a change to the underlying benchmarks, net asset value calculation times, and creation and redemption order cut-off times applicable to the Funds, as described below. Changes to Underlying Benchmarks The Ultra Funds seek daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of their ‘‘Underlying Benchmark’’ (as described below) If each such Fund is successful in meeting its investment objective, the value of the Shares of each such Fund, on a given day, before fees and expenses, should gain approximately two times as much on a percentage basis as the level of each such Fund’s respective Underlying Benchmark when the price of the Underlying Benchmark rises, and should lose approximately two times as much when such price declines on a given day, before fees and expenses. The Ultra Funds do not seek to achieve their stated objective over a period greater than a single day. A ‘‘single day’’ is measured from the time an Ultra Fund calculates its respective NAV to the time of the Ultra Fund’s next NAV calculation. The UltraShort Funds seek daily investment results, before fees and expenses that correspond to two times the inverse (¥2x) of the daily performance of their Underlying Benchmark. If each such Fund is successful in meeting its objective, the value of the Shares of each such Fund, on a given day, before fees and expenses, should gain approximately two times as much, on a percentage basis, when the level of each such Fund’s respective Underlying Benchmark declines, and should decrease approximately two times as much as the respective Underlying 7 On October 1, 2018, the Trust filed with the Commission, registration statements pursuant to Rule 424(b)(3) under the Securities Act of 1933 (‘‘Securities Act’’) (15 U.S.C. 77a) relating to the Ultra Gold and Ultra Silver Funds (File No. 333– 220688) and the UltraShort Silver and UltraShort Gold Funds (File No. 333–223012). The registration statements filed pursuant to Rule 424(b)(3) are collectively referred to herein as the ‘‘Registration Statements.’’ The description of the operation of the Trust and the Funds herein is based, in part, on the Registration Statements. Share of the Funds are currently listed and traded on the Exchange in compliance with all original and continued listing standards of the Exchange and requirements of the Prior NYSE Arca Order and the Prior Amex Releases. E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices khammond on DSK30JT082PROD with NOTICES Benchmark gains when the Underlying Benchmark rises on a given day, before fees and expenses. The UltraShort Funds do not seek to achieve their stated objective over a period greater than a single day. A ‘‘single day’’ is measured from the time an UltraShort Fund calculates its respective NAV to the time of the Ultra Fund’s next NAV calculation. With respect to the ProShares Ultra Gold and ProShares UltraShort Gold, the current Underlying Benchmark is the U.S. dollar price of gold bullion as measured by the LBMA Gold Price (formerly the London Gold Fix).8 With respect to the ProShares Ultra Silver and ProShares UltraShort Silver, the current Underlying Benchmark is the LBMA Silver Price.9 Thus, the ProShares Ultra Gold and ProShares UltraShort Gold seek daily investment results, before fees and expenses, that correspond to a multiple (2x) or inverse multiple (¥2x), as applicable, of the daily performance of gold bullion as measured by the U.S. dollar fixing price for delivery in London. The ProShares Ultra Silver and the ProShares UltraShort Silver seek daily investment results, before fees and expenses, that correspond to a multiple (2x) or inverse multiple (¥2x), as applicable, of the daily performance of silver bullion as measured by the U.S. dollar fixing price for delivery in London. These Funds do not directly or physically hold the underlying gold or silver, as applicable, but instead, seek exposure to gold or silver through the use of ‘‘Financial Instruments’’ based on the price of gold or silver, as applicable, to pursue their respective investment objective.10 The Prior NYSE Arca Notice and the Prior Amex Releases stated that the Adviser would manage each Fund using a strategy designed to correspond to the performance of its respective Underlying Benchmark. In this proposed rule change, the Exchange proposes to reflect a change to the Underlying Benchmarks applicable to the Funds. The new Underlying 8 For a description of the replacement of the LBMA Gold Price for the London Gold Fix, see Securities Exchange Act Release No. 74544 (March 19, 2015), 80 FR 15840 (March 25, 2015) (SR– NYSEArca–2015–19) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the LBMA Gold Price as a Replacement for the London Gold Fix for Certain Gold Related Exchange Traded Products). 9 See Securities Exchange Act Release No. 81792 (October 2, 2017), 82 FR 46867 (October 6, 2017) (SR–NYSEArca–2017–113) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Reflect a Change to the Administrator for the London Bullion Market Association Silver Price to ICE Benchmark Administration). 10 See note 4, supra. VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 Benchmarks will be the Bloomberg Gold Subindex for the ProShares Ultra Gold and the ProShares UltraShort Gold, and the Bloomberg Silver Subindex for the ProShares Ultra Silver and the ProShares UltraShort Silver.11 Upon implementation of the proposed rule change, the Adviser will manage each of ProShares Ultra Gold and ProShares UltraShort Gold to seek daily investment results, before fees and expenses, that correspond to a multiple (2x) or inverse multiple (¥2x), as applicable, of the daily performance of the Bloomberg Gold Subindex. Additionally, the Adviser will manage each of the ProShares Ultra Silver and ProShares UltraShort Silver to seek daily investment results, before fees and expenses, that correspond to a multiple (2x) or inverse multiple (¥2x), as applicable, of the daily performance of the Bloomberg Silver Subindex. The Adviser believes that it is in the best interest of the Funds and their shareholders to replace the Underlying Benchmarks with the Bloomberg Gold Subindex or the Bloomberg Silver Subindex, as applicable, while keeping the Fund’s asset exposure and investment strategies similar, and without changing the Fund’s investment objective (other than to reflect the change to each Fund’s Underlying Benchmark). The Bloomberg Gold Subindex and the Bloomberg Silver Subindex are subindices of the Bloomberg Commodity Index (‘‘BCOM’’) (previously known as the Dow JonesUBS Commodity Index), which is composed of futures contracts on physical commodities.12 The Bloomberg Gold Subindex and Bloomberg Silver Subindex consist of COMEX gold futures contracts and COMEX silver futures contracts, respectively. They are not indexes that reflect the ‘‘spot’’ price of gold or silver. The Bloomberg Gold Subindex and the Bloomberg Silver Subindex are each a ‘‘rolling index.’’ This means the value of the subindex is calculated as if the futures contracts included in the subindex are closed out prior to expiration by making an 11 The changes described herein will be effected contingent upon filing of a prospectus supplement or upon effectiveness of the Trust’s most recent post-effective amendment to its Registration Statements. See note 7, supra. The Adviser represents that the Adviser will not implement the changes described herein until the instant proposed rule change is operative. 12 The Exchange notes that the Commission has previously approved multiple TIRs issued by ProShares Trust II based on sub-indexes within the Dow Jones-AIG Commodity Index (later named the Dow-Jones-UBS Commodity Index, and currently the BCOM). See the Prior Amex Releases, note 5, supra. PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 66795 offsetting sale or purchase of an identical futures contract with a later expiration date. This process is referred to as ‘‘rolling.’’ An investor with a rolling futures position is able to avoid delivering (or taking delivery of) underlying physical commodities while maintaining exposure to those commodities. The futures contracts in each subindex are ‘‘rolled’’ over a period of five business days in certain months according to a pre-determined schedule, generally beginning on the sixth business day of the month and ending on the tenth business day. The Exchange notes that the Commission has approved listing and trading on the Exchange of shares of TIRs with benchmarks based on COMEX gold or silver futures prices. For example, the Direxion Daily Gold Bear 1X Shares, Direxion Daily Gold Bull 3X Shares, and Direxion Daily Gold Bear 3X Shares invest in gold futures contracts traded on COMEX and their benchmark is the daily last sale price occurring on or before 4:00 p.m. Eastern Time of a standard gold futures contract for 100 troy ounces of gold.13 The Direxion Daily Silver Bear 1X Shares, Direxion Daily Silver Bull 3X Shares, and Direxion Daily Silver Bear 3X Shares invest in silver futures contracts traded on COMEX and their benchmark is the daily last sale price occurring on or before 4:00 p.m. Eastern Time of a standard silver futures contract for 5,000 troy ounces of silver.14 13 See Securities Exchange Act Release Nos. 67882 (September 18, 2012) (SR–NYSEArca–2012– 102) (Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of Twelve Funds of the Direxion Shares ETF Trust II under NYSE Arca Equities Rule 8.200) (‘‘Direxion Notice’’); 68165 (November 6, 2012) (SR–NYSEArca–2012– 102) (Order Granting Approval of Proposed Rule Change Relating to the Listing and Trading of Twelve Funds of the Direxion Shares ETF Trust II under NYSE Arca Equities Rule 8.200); 54770 (November 16, 2006) (SR–Amex–2006–76) (Notice of Filing of a Proposed Rule Change and Amendments No. 1 and 2 Thereto Relating to the Listing and Trading of the DB Multi-Sector Commodity Trust); and 55029 (December 29, 2006) (SR–Amex–2006–76) (Order Granting Accelerated Approval to Proposed Rule Change as Modified by Amendments No. 1, 2, 3, and 4 Thereto and Notice of Filing of Amendments No. 3 and 4 Relating to the Listing and Trading of the DB Multi-Sector Commodity Trust). 14 Gold and silver futures contracts traded on COMEX are the global benchmark contracts and most liquid futures contracts in the world for each respective commodity. COMEX is a subsidiary of CME Group, Inc. (‘‘CME’’), a member of the Intermarket Surveillance Group (‘‘ISG’’). As of August 21, 2018, open interest in gold futures contracts and silver futures contracts traded on the CME was $58 billion and $18 billion, respectively. Gold futures contracts and silver futures contracts traded on CME had an average daily trading volume in 2017 of 290,000 contracts and 91,000 contracts, respectively. The trading hours for the gold futures contracts and silver futures contracts are 6 p.m.–5 E:\FR\FM\27DEN1.SGM Continued 27DEN1 khammond on DSK30JT082PROD with NOTICES 66796 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices In addition, the Commission has approved listing and trading on the Exchange of shares of the PowerShares DB Gold Fund (now the Invesco DB Gold Fund) and PowerShares DB Silver Fund (now the Invesco DB Silver Fund). The Invesco DB Gold Fund primarily holds futures contracts on the commodities comprising the DBIQ Optimum Yield Gold Index Excess Return (formerly the Deutsche Bank Liquid Commodity Index—Optimum Yield Gold Excess Return). The Invesco DB Silver Fund primarily holds futures contracts on the commodities comprising the DBIQ Optimum Yield Silver Index Excess Return (formerly the Deutsche Bank Liquid Commodity Index—Optimum Yield Silver Excess Return).15 The gold and silver futures in the indexes underlying the Invesco DB Gold Fund and the Invesco DB Silver Fund, respectively, are traded on the COMEX. The Adviser represents that the replacement of the current Underlying Benchmarks with the Bloomberg Gold Subindex and the Bloomberg Silver Subindex is in the best interest of each Fund’s shareholders. The Funds currently use the LBMA Gold Price or the LBMA Silver Price as their respective Underlying Benchmarks. While these Benchmarks are widely used measures of the spot price of physical gold or silver, as applicable, the Adviser believes that switching Underlying Benchmarks offers several potential benefits. Specifically, the Adviser anticipates that changing to a futures-based gold or silver Benchmark for each Fund could potentially (i) better align each Fund’s portfolio holdings (e.g., futures contracts) with its Underlying Benchmark (COMEX gold or silver futures contracts instead of the spot price of physical gold or silver) and reduce tracking error over time, (iii) better align the trading days and hours of each Fund’s portfolio investments with its Underlying Benchmark (since the trading hours of COMEX gold and silver futures contracts will more closely align with the hours of the Funds’ operation than the timing of the auction process used to determine the LBMA Gold Price and the LBMA Silver Price), and (iv) increase the number of trading counterparties for each Fund, which potentially increases counterparty diversification and helps limit counterparty risk to each Fund. While Commodity-Based Trust Shares holding physical gold or silver utilize the LBMA Gold Price or the LBMA Silver Price as their respective benchmarks,16 other TIRs, which do not hold physical commodities, have utilized COMEX gold or silver futures prices as benchmarks.17 The Adviser believes that changing each Fund’s Underlying Benchmark to the Bloomberg Gold Subindex and the Bloomberg Silver Subindex will allow each Fund to more efficiently track its Underlying Benchmark, reduce tracking error between each Fund’s net asset value (‘‘NAV’’) and Underlying Benchmark, and potentially improve performance.18 p.m. Eastern Time Sunday through Friday on both the CME Globex and CME ClearPort platforms. Daily settlement for gold futures contracts occurs at 1:30 p.m., Eastern time and at 1:25 p.m., Eastern time for silver futures contracts 15 See Securities Exchange Act Release No. 55453(March 13, 2007), 72 FR 13333 (March 21, 2007) (SR–NYSEArca–2006–62) (order approving unlisted trading privileges trading of PowerShares DB Agriculture Fund and other PowerShares commodity-based funds); 58993 (November 21, 2008), 73 FR 72548 (November 28, 2008) (SR– NYSEArca–2008–128) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Listing of PowerShares DB Funds). See also, Securities Exchange Act Release Nos. 60819 (October 13, 2009), 74 FR 53528 (October 19, 2009) (SR–NYSEArca–2009–89) (Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Replacement Indexes for PowerShares DB Commodity Index Tracking Fund and PowerShares DB Agriculture Fund); 79445 (December 1, 2016), 81 FR 88302 (December 7, 2016) (SR–NYSEArca– 2016–152) (Notice of Filing and Immediate Effectiveness of Proposal to Change Representation Regarding Investments by PowerShares DB Trust Issued Receipts Listed Under Commentary .02 to NYSE Arca Equities Rule 8.200). 16 See, e.g., Securities Exchange Act Release Nos. 56224 (August 8, 2007), 72 FR 45850 (August 15, 2007) (SR–NYSEArca–2007–76) (order approving listing on the Exchange of shares of the streetTRACKS Gold Trust; 59895 (May 8, 2009), 74 FR 22993 (May 15, 2009) (SR–NYSEArca–2009–40) (notice of filing and order granting accelerated approval of proposed rule change relating to the listing and trading of shares of the ETFS Gold Trust); 71038(December 11, 2013), 78 FR 76367 (December 17, 2013) (notice of filing of proposed rule change to list and trade shares of the Merk Gold Trust) 71378 (January 23, 2014), 79 FR 4786 (January 29, 2014) (SRNYSEArca–2013–137) (order approving proposed rule change to list and trade shares of the Merk Gold Trust). 17 See notes 13 and 15, supra. 18 The Exchange notes that the Commission previously has issued a notice of filing and immediate effectiveness with respect to a change in the benchmark underlying an issue of CommodityBased Trust Shares listed on the Exchange under Rule 8.201–E from the COMEX settlement price for spot month gold futures to the London PM Fix. See Securities Exchange Act Release No. 63398 (November 30, 2010) (SR–NYSEArca–2010–105) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Calculation of Net Asset Value for the iShares® Gold Trust). VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 Changes to NAV Calculation Times The Prior Amex Releases stated that the NAV Calculation Time for ProShares Ultra Gold and ProShares UltraShort Gold is 10:00 a.m., Eastern Time and the NAV Calculation Time for ProShares Ultra Silver and ProShares UltraShort PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 Silver is 7:00 a.m., Eastern Time. The Exchange proposes to reflect a change in the NAV Calculation Times to 1:30 p.m., Eastern Time for the ProShares Ultra Gold and ProShares UltraShort Gold, and to 1:25 p.m., Eastern Time for the ProShares Ultra Silver and ProShares UltraShort Silver. The change in NAV Calculation Time for each Fund aligns the NAV Calculation Time of each Fund with the settlement time of the futures contracts included in each Fund’s proposed new Underlying Benchmark. The Exchange notes that, in addition to the Commission’s previous approval of the above-referenced NAV Calculation Times for the Funds, the Commission has previously approved listing and trading of TIRs pursuant to Commentary .02 to NYSE Arca Rule 8.200–E for which the NAV calculation time is 2:30 p.m. Eastern Time or earlier.19 Changes to Creation and Redemption Order Cut-off Times The Prior Amex Releases stated that orders to create or redeem Shares of the ProShares Ultra Gold and ProShares UltraShort Gold must be placed by 9:00 a.m., Eastern Time and orders to create or redeem Shares of the ProShares Ultra Silver and ProShares UltraShort Silver must be placed by 6:00 a.m., Eastern Time. The Exchange proposes to reflect a change in the creation and redemption order cutoff times for the Funds to 1:00 p.m., Eastern Time. The Exchange represents that moving the creation and redemption cut-off time will better align the cut-off time with the new NAV times of 1:30 and 1:25, respectively. The Exchange notes that the Commission has previously approved listing and trading of shares of issues of Trust Issued Receipts pursuant to Commentary .02 to NYSE Arca Rule 8.200–E for which the creation and redemption cutoff times are at or earlier than 1:30 p.m., Eastern Time.20 19 See, e.g., Securities Exchange Act Release No. 81686 (September 22, 2017), 82 FR 45643 (September 29, 2017) (SR–NYSEArca–2017–05) (Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 2 and 3 Thereto, to List and Trade Shares of Direxion Daily Crude Oil Bull 3x Shares and Direxion Daily Crude Oil Bear 3x Shares under NYSE Arca Equities Rule 8.200) (stating that each fund will compute its NAV as of 2:30 p.m. Eastern Time, or if the NYSE closes earlier than 2:30 p.m. Eastern Time, each fund will compute its NAV as of the close of trading on the New York Stock Exchange). 20 See, e.g., Securities Exchange Act Release Nos. 65136 (August 15, 2011), 76 FR 52037 (August 19, 2011) (SR–NYSEArca–2011–24) (Order Approving a Proposed Rule Change to List and Trade Shares ProShares Short DJ–UBS Natural Gas, ProShares Ultra DJ–UBS Natural Gas and ProShares UltraShort DJ–UBS Natural Gas) (stating that an order to create or redeem Shares must be placed by 1:30 p.m. Eastern Time); 81655 (September 19, 2017), 82 FR 44678 (September 25, 2017) (SR–NYSEArca–2016– E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices The Adviser represents that the Funds will continue to invest in the same assets referenced in the Prior NYSE Arca Notice and the Prior Amex Releases and will remain subject to, and invest each Fund’s assets in accordance with all of the other requirements and limitations identified in the Prior NYSE Arca Notice and the Prior Amex Releases. As a condition to continued listing and trading Shares of the Funds on the Exchange, the Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Rule 8.200–E. Except for the indicated changes to each Fund’s Underlying Benchmark, NAV Calculation Time and Creation and Redemption Order Cut-Off Times noted herein, all other facts presented and representations made in the Prior NYSE Arca Notice and the Prior Amex Releases are unchanged. khammond on DSK30JT082PROD with NOTICES 2. Statutory Basis The basis under the Exchange Act for this proposed rule change is the requirement under Section 6(b)(5) 21 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 Adviser represents that there is no change to the Funds’ investment objective (other than the change to each Fund’s Underlying Benchmark) or to the securities or other assets identified in the Prior NYSE Arca Notice and the Prior Amex Releases that the Funds utilize in seeking to achieve their respective investment objectives. The Fund’s use of such Financial Instruments will remain subject to all requirements and applicable limitations identified in the Prior NYSE Arca Notice and the Prior Amex Releases. As a condition to the continued listing and trading of the Shares of the Funds on the Exchange, the Funds will continue to comply with all initial and continued listing requirements under NYSE Arca Rule 8.200–E. 177) (Notice of Filing of Amendment No. 4, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 4, Relating to the Listing and Trading of Shares of the USCF Canadian Crude Oil Index Fund under NYSE Arca Rule 8.200–E). See also Amendment No. 4 to SR NYSEArca–2016–177, available at https:// www.sec.gov/comments/sr-nysearca-2016-177/ nysearca2016177-2228753-160788.pdf. (stating that purchase orders and redemption orders must be placed by 10:30 a.m. Eastern Time or the close of regular trading on the NYSE Arca, whichever is earlier.) 21 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 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 the Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Rule 8.200–E. The proposed rule change will permit the Fund to continue to operate in a manner similar to other issues of TIRs with benchmarks based on gold and silver futures contracts traded on COMEX. The Exchange or the Financial Industry Regulatory Authority (‘‘FINRA’’), on behalf of the Exchange, or both, will communicate with CME, as an ISG member, as needed regarding trading in COMEX gold futures and COMEX silver futures, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in such futures from CME. Except for the changes noted above, all other representations made in the Prior NYSE Arca Notice and Prior Amex Releases are unchanged. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Exchange Act. The proposed rule change will permit the continued listing on the Exchange of the Funds following implementation of the changes noted above, and which will enhance competition among issues of TIRs based on gold and silver futures. 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 The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 22 and Rule 19b–4(f)(6) thereunder.23 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of 22 15 23 17 PO 00000 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). Frm 00127 Fmt 4703 Sfmt 4703 66797 investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 24 of the Act to determine whether the proposed rule change 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– NYSEArca–2018–91 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–2018–91. 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, 24 15 E:\FR\FM\27DEN1.SGM U.S.C. 78s(b)(2)(B). 27DEN1 66798 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices 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–2018–91 and should be submitted on or before January 17, 2019. [Release No. 34–84873; File No. SR– NYSEArca–2018–96] Self-Regulatory Organizations; NYSE Arca Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Commentary .02 to Rule 6.72–O in Order To Extend the Penny Pilot in Options Classes in Certain Issues Through June 30, 2019 December 19, 2018. SECURITIES AND EXCHANGE COMMISSION 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 18, 2018, 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. [Release No. 34–84684; File No. SR– NASDAQ–2018–098] I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Brent J. Fields, Secretary. [FR Doc. 2018–28007 Filed 12–26–18; 8:45 am] BILLING CODE 8011–01–P Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate the Exchange’s Pricing Schedule November 29, 2018. Correction In notice document 2018–26400 beginning on page 62936 in the issue of Thursday, December 6, 2018, make the following correction: On page 62938, in the second column, the last line of the first full paragraph ‘‘December 26, 2018’’ should read ‘‘December 27, 2018’’. [FR Doc. C1–2018–26400 Filed 12–26–18; 8:45 am] The Exchange proposes to amend Commentary .02 to Rule 6.72–O in order to extend the Penny Pilot in options classes in certain issues (‘‘Pilot Program’’) previously approved by the Securities and Exchange Commission (‘‘Commission’’) through June 30, 2019. The Pilot Program is currently scheduled to expire on December 31, 2018. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. BILLING CODE 1301–00–D khammond on DSK30JT082PROD with NOTICES SECURITIES AND EXCHANGE COMMISSION 1 15 U.S.C.78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:14 Dec 26, 2018 Jkt 247001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange hereby proposes to amend Commentary .02 to Rule 6.72–O to extend the time period of the Pilot Program, which is currently scheduled to expire on December 31, 2018, through June 30, 2019.4 The Exchange also proposes that the date to replace issues in the Pilot Program that have been delisted be revised to the second trading day following January 1, 2019.5 The Exchange believes that extending the Pilot would allow for further analysis of the Pilot Program and a determination of how the Pilot Program should be structured in the future. This filing does not propose any substantive changes to the Pilot Program: all classes currently participating will remain the same and all minimum increments will remain unchanged. The Exchange believes the benefits to public customers and other market participants who will be able to express their true prices to buy and sell options have been demonstrated to outweigh the increase in quote traffic. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) 6 of the Act, in general, and furthers the objectives of Section 6(b)(5),7 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanisms of a free and open market and a national market system. In particular, the proposed rule change, which extends the Penny Pilot Program for six months, allows the Exchange to continue to participate in a program that has been viewed as beneficial to traders, investors and public customers and viewed as 4 See Securities Exchange Act Release No. 83512 (June 25, 2018), 83 FR 30793 (June 29, 2018) (SR– NYSEArca–2018–48). 5 The month immediately preceding a replacement class’s addition to the Pilot Program (i.e., December) would not be used for purposes of the analysis for determining the replacement class. Thus, a replacement class to be added on the second trading day following January 1, 2019 would be identified based on The Option Clearing Corporation’s trading volume data from June 1, 2018 through November 30, 2018. The Exchange will announce the replacement issues to the Exchange’s membership through a Trader Update. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). E:\FR\FM\27DEN1.SGM 27DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Notices]
[Pages 66794-66798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28007]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84853; File No. SR-NYSEArca-2018-91]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Changes Relating to 
ProShares Ultra Gold, ProShares UltraShort Gold, ProShares Ultra 
Silver, and ProShares UltraShort Silver

December 19, 2018.
    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 6, 2018, 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, II, 
and III 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.
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    \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 reflect changes to the underlying 
benchmark, net asset value calculation times, and creation and 
redemption order cut-off times applicable to the ProShares Ultra Gold, 
ProShares UltraShort Gold, ProShares Ultra Silver, and ProShares 
UltraShort Silver. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission previously approved the listing and trading of the 
shares (``Shares'') on the Exchange of the following under Commentary 
.02 to NYSE Arca Rule 8.200-E,\4\ which governs the listing and trading 
of ``Trust Issued Receipts'' (``TIRs'') on the Exchange: \5\ ProShares 
Ultra Gold, ProShares UltraShort Gold, ProShares Ultra Silver, and 
ProShares UltraShort Silver (each a ``Fund'' and, collectively, the 
``Funds'').\6\ The Funds are series of ProShares Trust II (``Trust''). 
The Bank of New York Mellon Corporation is custodian for the Trust. SEI 
Investments Distribution Co. is the distributor for the Funds.\7\ 
Shares of the Funds are currently listed and trading on the Exchange.
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    \4\ Commentary .02 to NYSE Arca Rule 8.200-E applies to Trust 
Issued Receipts that invest in ``Financial Instruments.'' The term 
``Financial Instruments,'' as defined in Commentary .02(b)(4) to 
NYSE Arca Rule 8.200-E, means any combination of investments, 
including cash; securities; options on securities and indices; 
futures contracts; options on futures contracts; forward contracts; 
equity caps, collars and floors; and swap agreements.
    \5\ See Securities Exchange Act Release Nos. 58457 (September 3, 
2008), (73 FR 52711 (September 10, 2008) (SR-NYSEArca-2008-91) 
(notice of filing and order granting accelerated approval of 
proposed rule change regarding listing and trading of shares of 14 
funds of the Commodities and Currency Trust (now the ProShares Trust 
II)); 58162 (July 15, 2008), 73 FR 42391 (July 21, 2008) (SR-
NYSEArca-2008-73) (notice of filing and immediate effectiveness of 
proposed rule change relating to trading of shares of 14 funds of 
the Commodities and Currency Trust pursuant to unlisted trading 
privileges) (``Prior NYSE Arca Notice''). See also Securities 
Exchange Act Release Nos. 58161 (July 15, 2008), 73 FR 42380 (July 
21, 2008) (SR-Amex-2008-39) (order approving listing and trading on 
the American Stock Exchange LLC of shares of 14 funds of the 
Commodities and Currency Trust) (``Prior Amex Order''); 57932 (June 
5, 2008), 73 FR 33467 (June 12, 2008) (notice of proposed rule 
change regarding listing and trading of shares of 14 funds of the 
Commodities and Currency Trust) (``Prior Amex Notice'' and, together 
with the Prior Amex Order, the ``Prior Amex Releases'').
    \6\ The ProShares Ultra Gold and ProShares Ultra Silver are 
referred to herein as ``Ultra Funds'' and the ProShares UltraShort 
Gold and ProShares UltraShort Silver are referred to herein as 
``UltraShort Funds.''
    \7\ On October 1, 2018, the Trust filed with the Commission, 
registration statements pursuant to Rule 424(b)(3) under the 
Securities Act of 1933 (``Securities Act'') (15 U.S.C. 77a) relating 
to the Ultra Gold and Ultra Silver Funds (File No. 333-220688) and 
the UltraShort Silver and UltraShort Gold Funds (File No. 333-
223012). The registration statements filed pursuant to Rule 
424(b)(3) are collectively referred to herein as the ``Registration 
Statements.'' The description of the operation of the Trust and the 
Funds herein is based, in part, on the Registration Statements. 
Share of the Funds are currently listed and traded on the Exchange 
in compliance with all original and continued listing standards of 
the Exchange and requirements of the Prior NYSE Arca Order and the 
Prior Amex Releases.
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    The Exchange is submitting this proposed rule change to reflect a 
change to the underlying benchmarks, net asset value calculation times, 
and creation and redemption order cut-off times applicable to the 
Funds, as described below.
Changes to Underlying Benchmarks
    The Ultra Funds seek daily investment results, before fees and 
expenses, that correspond to two times (2x) the daily performance of 
their ``Underlying Benchmark'' (as described below) If each such Fund 
is successful in meeting its investment objective, the value of the 
Shares of each such Fund, on a given day, before fees and expenses, 
should gain approximately two times as much on a percentage basis as 
the level of each such Fund's respective Underlying Benchmark when the 
price of the Underlying Benchmark rises, and should lose approximately 
two times as much when such price declines on a given day, before fees 
and expenses. The Ultra Funds do not seek to achieve their stated 
objective over a period greater than a single day. A ``single day'' is 
measured from the time an Ultra Fund calculates its respective NAV to 
the time of the Ultra Fund's next NAV calculation.
    The UltraShort Funds seek daily investment results, before fees and 
expenses that correspond to two times the inverse (-2x) of the daily 
performance of their Underlying Benchmark. If each such Fund is 
successful in meeting its objective, the value of the Shares of each 
such Fund, on a given day, before fees and expenses, should gain 
approximately two times as much, on a percentage basis, when the level 
of each such Fund's respective Underlying Benchmark declines, and 
should decrease approximately two times as much as the respective 
Underlying

[[Page 66795]]

Benchmark gains when the Underlying Benchmark rises on a given day, 
before fees and expenses. The UltraShort Funds do not seek to achieve 
their stated objective over a period greater than a single day. A 
``single day'' is measured from the time an UltraShort Fund calculates 
its respective NAV to the time of the Ultra Fund's next NAV 
calculation.
    With respect to the ProShares Ultra Gold and ProShares UltraShort 
Gold, the current Underlying Benchmark is the U.S. dollar price of gold 
bullion as measured by the LBMA Gold Price (formerly the London Gold 
Fix).\8\ With respect to the ProShares Ultra Silver and ProShares 
UltraShort Silver, the current Underlying Benchmark is the LBMA Silver 
Price.\9\
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    \8\ For a description of the replacement of the LBMA Gold Price 
for the London Gold Fix, see Securities Exchange Act Release No. 
74544 (March 19, 2015), 80 FR 15840 (March 25, 2015) (SR-NYSEArca-
2015-19) (Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to the LBMA Gold Price as a Replacement for the 
London Gold Fix for Certain Gold Related Exchange Traded Products).
    \9\ See Securities Exchange Act Release No. 81792 (October 2, 
2017), 82 FR 46867 (October 6, 2017) (SR-NYSEArca-2017-113) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change to 
Reflect a Change to the Administrator for the London Bullion Market 
Association Silver Price to ICE Benchmark Administration).
---------------------------------------------------------------------------

    Thus, the ProShares Ultra Gold and ProShares UltraShort Gold seek 
daily investment results, before fees and expenses, that correspond to 
a multiple (2x) or inverse multiple (-2x), as applicable, of the daily 
performance of gold bullion as measured by the U.S. dollar fixing price 
for delivery in London. The ProShares Ultra Silver and the ProShares 
UltraShort Silver seek daily investment results, before fees and 
expenses, that correspond to a multiple (2x) or inverse multiple (-2x), 
as applicable, of the daily performance of silver bullion as measured 
by the U.S. dollar fixing price for delivery in London. These Funds do 
not directly or physically hold the underlying gold or silver, as 
applicable, but instead, seek exposure to gold or silver through the 
use of ``Financial Instruments'' based on the price of gold or silver, 
as applicable, to pursue their respective investment objective.\10\
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    \10\ See note 4, supra.
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    The Prior NYSE Arca Notice and the Prior Amex Releases stated that 
the Adviser would manage each Fund using a strategy designed to 
correspond to the performance of its respective Underlying Benchmark. 
In this proposed rule change, the Exchange proposes to reflect a change 
to the Underlying Benchmarks applicable to the Funds. The new 
Underlying Benchmarks will be the Bloomberg Gold Subindex for the 
ProShares Ultra Gold and the ProShares UltraShort Gold, and the 
Bloomberg Silver Subindex for the ProShares Ultra Silver and the 
ProShares UltraShort Silver.\11\ Upon implementation of the proposed 
rule change, the Adviser will manage each of ProShares Ultra Gold and 
ProShares UltraShort Gold to seek daily investment results, before fees 
and expenses, that correspond to a multiple (2x) or inverse multiple (-
2x), as applicable, of the daily performance of the Bloomberg Gold 
Subindex. Additionally, the Adviser will manage each of the ProShares 
Ultra Silver and ProShares UltraShort Silver to seek daily investment 
results, before fees and expenses, that correspond to a multiple (2x) 
or inverse multiple (-2x), as applicable, of the daily performance of 
the Bloomberg Silver Subindex.
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    \11\ The changes described herein will be effected contingent 
upon filing of a prospectus supplement or upon effectiveness of the 
Trust's most recent post-effective amendment to its Registration 
Statements. See note 7, supra. The Adviser represents that the 
Adviser will not implement the changes described herein until the 
instant proposed rule change is operative.
---------------------------------------------------------------------------

    The Adviser believes that it is in the best interest of the Funds 
and their shareholders to replace the Underlying Benchmarks with the 
Bloomberg Gold Subindex or the Bloomberg Silver Subindex, as 
applicable, while keeping the Fund's asset exposure and investment 
strategies similar, and without changing the Fund's investment 
objective (other than to reflect the change to each Fund's Underlying 
Benchmark).
    The Bloomberg Gold Subindex and the Bloomberg Silver Subindex are 
subindices of the Bloomberg Commodity Index (``BCOM'') (previously 
known as the Dow Jones-UBS Commodity Index), which is composed of 
futures contracts on physical commodities.\12\ The Bloomberg Gold 
Subindex and Bloomberg Silver Subindex consist of COMEX gold futures 
contracts and COMEX silver futures contracts, respectively. They are 
not indexes that reflect the ``spot'' price of gold or silver. The 
Bloomberg Gold Subindex and the Bloomberg Silver Subindex are each a 
``rolling index.'' This means the value of the subindex is calculated 
as if the futures contracts included in the subindex are closed out 
prior to expiration by making an offsetting sale or purchase of an 
identical futures contract with a later expiration date. This process 
is referred to as ``rolling.'' An investor with a rolling futures 
position is able to avoid delivering (or taking delivery of) underlying 
physical commodities while maintaining exposure to those commodities. 
The futures contracts in each subindex are ``rolled'' over a period of 
five business days in certain months according to a pre-determined 
schedule, generally beginning on the sixth business day of the month 
and ending on the tenth business day.
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    \12\ The Exchange notes that the Commission has previously 
approved multiple TIRs issued by ProShares Trust II based on sub-
indexes within the Dow Jones-AIG Commodity Index (later named the 
Dow-Jones-UBS Commodity Index, and currently the BCOM). See the 
Prior Amex Releases, note 5, supra.
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    The Exchange notes that the Commission has approved listing and 
trading on the Exchange of shares of TIRs with benchmarks based on 
COMEX gold or silver futures prices. For example, the Direxion Daily 
Gold Bear 1X Shares, Direxion Daily Gold Bull 3X Shares, and Direxion 
Daily Gold Bear 3X Shares invest in gold futures contracts traded on 
COMEX and their benchmark is the daily last sale price occurring on or 
before 4:00 p.m. Eastern Time of a standard gold futures contract for 
100 troy ounces of gold.\13\ The Direxion Daily Silver Bear 1X Shares, 
Direxion Daily Silver Bull 3X Shares, and Direxion Daily Silver Bear 3X 
Shares invest in silver futures contracts traded on COMEX and their 
benchmark is the daily last sale price occurring on or before 4:00 p.m. 
Eastern Time of a standard silver futures contract for 5,000 troy 
ounces of silver.\14\
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    \13\ See Securities Exchange Act Release Nos. 67882 (September 
18, 2012) (SR-NYSEArca-2012-102) (Notice of Filing of Proposed Rule 
Change Relating to the Listing and Trading of Twelve Funds of the 
Direxion Shares ETF Trust II under NYSE Arca Equities Rule 8.200) 
(``Direxion Notice''); 68165 (November 6, 2012) (SR-NYSEArca-2012-
102) (Order Granting Approval of Proposed Rule Change Relating to 
the Listing and Trading of Twelve Funds of the Direxion Shares ETF 
Trust II under NYSE Arca Equities Rule 8.200); 54770 (November 16, 
2006) (SR-Amex-2006-76) (Notice of Filing of a Proposed Rule Change 
and Amendments No. 1 and 2 Thereto Relating to the Listing and 
Trading of the DB Multi-Sector Commodity Trust); and 55029 (December 
29, 2006) (SR-Amex-2006-76) (Order Granting Accelerated Approval to 
Proposed Rule Change as Modified by Amendments No. 1, 2, 3, and 4 
Thereto and Notice of Filing of Amendments No. 3 and 4 Relating to 
the Listing and Trading of the DB Multi-Sector Commodity Trust).
    \14\ Gold and silver futures contracts traded on COMEX are the 
global benchmark contracts and most liquid futures contracts in the 
world for each respective commodity. COMEX is a subsidiary of CME 
Group, Inc. (``CME''), a member of the Intermarket Surveillance 
Group (``ISG''). As of August 21, 2018, open interest in gold 
futures contracts and silver futures contracts traded on the CME was 
$58 billion and $18 billion, respectively. Gold futures contracts 
and silver futures contracts traded on CME had an average daily 
trading volume in 2017 of 290,000 contracts and 91,000 contracts, 
respectively. The trading hours for the gold futures contracts and 
silver futures contracts are 6 p.m.-5 p.m. Eastern Time Sunday 
through Friday on both the CME Globex and CME ClearPort platforms. 
Daily settlement for gold futures contracts occurs at 1:30 p.m., 
Eastern time and at 1:25 p.m., Eastern time for silver futures 
contracts

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[[Page 66796]]

    In addition, the Commission has approved listing and trading on the 
Exchange of shares of the PowerShares DB Gold Fund (now the Invesco DB 
Gold Fund) and PowerShares DB Silver Fund (now the Invesco DB Silver 
Fund). The Invesco DB Gold Fund primarily holds futures contracts on 
the commodities comprising the DBIQ Optimum Yield Gold Index Excess 
Return (formerly the Deutsche Bank Liquid Commodity Index--Optimum 
Yield Gold Excess Return). The Invesco DB Silver Fund primarily holds 
futures contracts on the commodities comprising the DBIQ Optimum Yield 
Silver Index Excess Return (formerly the Deutsche Bank Liquid Commodity 
Index--Optimum Yield Silver Excess Return).\15\ The gold and silver 
futures in the indexes underlying the Invesco DB Gold Fund and the 
Invesco DB Silver Fund, respectively, are traded on the COMEX.
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    \15\ See Securities Exchange Act Release No. 55453(March 13, 
2007), 72 FR 13333 (March 21, 2007) (SR-NYSEArca-2006-62) (order 
approving unlisted trading privileges trading of PowerShares DB 
Agriculture Fund and other PowerShares commodity-based funds); 58993 
(November 21, 2008), 73 FR 72548 (November 28, 2008) (SR-NYSEArca-
2008-128) (Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change Relating to Listing of PowerShares DB 
Funds). See also, Securities Exchange Act Release Nos. 60819 
(October 13, 2009), 74 FR 53528 (October 19, 2009) (SR-NYSEArca-
2009-89) (Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change Relating to Replacement Indexes for 
PowerShares DB Commodity Index Tracking Fund and PowerShares DB 
Agriculture Fund); 79445 (December 1, 2016), 81 FR 88302 (December 
7, 2016) (SR-NYSEArca-2016-152) (Notice of Filing and Immediate 
Effectiveness of Proposal to Change Representation Regarding 
Investments by PowerShares DB Trust Issued Receipts Listed Under 
Commentary .02 to NYSE Arca Equities Rule 8.200).
---------------------------------------------------------------------------

    The Adviser represents that the replacement of the current 
Underlying Benchmarks with the Bloomberg Gold Subindex and the 
Bloomberg Silver Subindex is in the best interest of each Fund's 
shareholders. The Funds currently use the LBMA Gold Price or the LBMA 
Silver Price as their respective Underlying Benchmarks. While these 
Benchmarks are widely used measures of the spot price of physical gold 
or silver, as applicable, the Adviser believes that switching 
Underlying Benchmarks offers several potential benefits. Specifically, 
the Adviser anticipates that changing to a futures-based gold or silver 
Benchmark for each Fund could potentially (i) better align each Fund's 
portfolio holdings (e.g., futures contracts) with its Underlying 
Benchmark (COMEX gold or silver futures contracts instead of the spot 
price of physical gold or silver) and reduce tracking error over time, 
(iii) better align the trading days and hours of each Fund's portfolio 
investments with its Underlying Benchmark (since the trading hours of 
COMEX gold and silver futures contracts will more closely align with 
the hours of the Funds' operation than the timing of the auction 
process used to determine the LBMA Gold Price and the LBMA Silver 
Price), and (iv) increase the number of trading counterparties for each 
Fund, which potentially increases counterparty diversification and 
helps limit counterparty risk to each Fund. While Commodity-Based Trust 
Shares holding physical gold or silver utilize the LBMA Gold Price or 
the LBMA Silver Price as their respective benchmarks,\16\ other TIRs, 
which do not hold physical commodities, have utilized COMEX gold or 
silver futures prices as benchmarks.\17\ The Adviser believes that 
changing each Fund's Underlying Benchmark to the Bloomberg Gold 
Subindex and the Bloomberg Silver Subindex will allow each Fund to more 
efficiently track its Underlying Benchmark, reduce tracking error 
between each Fund's net asset value (``NAV'') and Underlying Benchmark, 
and potentially improve performance.\18\
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    \16\ See, e.g., Securities Exchange Act Release Nos. 56224 
(August 8, 2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-
76) (order approving listing on the Exchange of shares of the 
streetTRACKS Gold Trust; 59895 (May 8, 2009), 74 FR 22993 (May 15, 
2009) (SR-NYSEArca-2009-40) (notice of filing and order granting 
accelerated approval of proposed rule change relating to the listing 
and trading of shares of the ETFS Gold Trust); 71038(December 11, 
2013), 78 FR 76367 (December 17, 2013) (notice of filing of proposed 
rule change to list and trade shares of the Merk Gold Trust) 71378 
(January 23, 2014), 79 FR 4786 (January 29, 2014) (SRNYSEArca-2013-
137) (order approving proposed rule change to list and trade shares 
of the Merk Gold Trust).
    \17\ See notes 13 and 15, supra.
    \18\ The Exchange notes that the Commission previously has 
issued a notice of filing and immediate effectiveness with respect 
to a change in the benchmark underlying an issue of Commodity-Based 
Trust Shares listed on the Exchange under Rule 8.201-E from the 
COMEX settlement price for spot month gold futures to the London PM 
Fix. See Securities Exchange Act Release No. 63398 (November 30, 
2010) (SR-NYSEArca-2010-105) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Relating to the Calculation of 
Net Asset Value for the iShares[supreg] Gold Trust).
---------------------------------------------------------------------------

Changes to NAV Calculation Times
    The Prior Amex Releases stated that the NAV Calculation Time for 
ProShares Ultra Gold and ProShares UltraShort Gold is 10:00 a.m., 
Eastern Time and the NAV Calculation Time for ProShares Ultra Silver 
and ProShares UltraShort Silver is 7:00 a.m., Eastern Time. The 
Exchange proposes to reflect a change in the NAV Calculation Times to 
1:30 p.m., Eastern Time for the ProShares Ultra Gold and ProShares 
UltraShort Gold, and to 1:25 p.m., Eastern Time for the ProShares Ultra 
Silver and ProShares UltraShort Silver. The change in NAV Calculation 
Time for each Fund aligns the NAV Calculation Time of each Fund with 
the settlement time of the futures contracts included in each Fund's 
proposed new Underlying Benchmark. The Exchange notes that, in addition 
to the Commission's previous approval of the above-referenced NAV 
Calculation Times for the Funds, the Commission has previously approved 
listing and trading of TIRs pursuant to Commentary .02 to NYSE Arca 
Rule 8.200-E for which the NAV calculation time is 2:30 p.m. Eastern 
Time or earlier.\19\
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    \19\ See, e.g., Securities Exchange Act Release No. 81686 
(September 22, 2017), 82 FR 45643 (September 29, 2017) (SR-NYSEArca-
2017-05) (Order Granting Approval of a Proposed Rule Change, as 
Modified by Amendment Nos. 2 and 3 Thereto, to List and Trade Shares 
of Direxion Daily Crude Oil Bull 3x Shares and Direxion Daily Crude 
Oil Bear 3x Shares under NYSE Arca Equities Rule 8.200) (stating 
that each fund will compute its NAV as of 2:30 p.m. Eastern Time, or 
if the NYSE closes earlier than 2:30 p.m. Eastern Time, each fund 
will compute its NAV as of the close of trading on the New York 
Stock Exchange).
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Changes to Creation and Redemption Order Cut-off Times
    The Prior Amex Releases stated that orders to create or redeem 
Shares of the ProShares Ultra Gold and ProShares UltraShort Gold must 
be placed by 9:00 a.m., Eastern Time and orders to create or redeem 
Shares of the ProShares Ultra Silver and ProShares UltraShort Silver 
must be placed by 6:00 a.m., Eastern Time. The Exchange proposes to 
reflect a change in the creation and redemption order cutoff times for 
the Funds to 1:00 p.m., Eastern Time. The Exchange represents that 
moving the creation and redemption cut-off time will better align the 
cut-off time with the new NAV times of 1:30 and 1:25, respectively. The 
Exchange notes that the Commission has previously approved listing and 
trading of shares of issues of Trust Issued Receipts pursuant to 
Commentary .02 to NYSE Arca Rule 8.200-E for which the creation and 
redemption cutoff times are at or earlier than 1:30 p.m., Eastern 
Time.\20\
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    \20\ See, e.g., Securities Exchange Act Release Nos. 65136 
(August 15, 2011), 76 FR 52037 (August 19, 2011) (SR-NYSEArca-2011-
24) (Order Approving a Proposed Rule Change to List and Trade Shares 
ProShares Short DJ-UBS Natural Gas, ProShares Ultra DJ-UBS Natural 
Gas and ProShares UltraShort DJ-UBS Natural Gas) (stating that an 
order to create or redeem Shares must be placed by 1:30 p.m. Eastern 
Time); 81655 (September 19, 2017), 82 FR 44678 (September 25, 2017) 
(SR-NYSEArca-2016-177) (Notice of Filing of Amendment No. 4, and 
Order Granting Accelerated Approval of a Proposed Rule Change, as 
Modified by Amendment No. 4, Relating to the Listing and Trading of 
Shares of the USCF Canadian Crude Oil Index Fund under NYSE Arca 
Rule 8.200-E). See also Amendment No. 4 to SR NYSEArca-2016-177, 
available at https://www.sec.gov/comments/sr-nysearca-2016-177/nysearca2016177-2228753-160788.pdf. (stating that purchase orders 
and redemption orders must be placed by 10:30 a.m. Eastern Time or 
the close of regular trading on the NYSE Arca, whichever is 
earlier.)

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[[Page 66797]]

    The Adviser represents that the Funds will continue to invest in 
the same assets referenced in the Prior NYSE Arca Notice and the Prior 
Amex Releases and will remain subject to, and invest each Fund's assets 
in accordance with all of the other requirements and limitations 
identified in the Prior NYSE Arca Notice and the Prior Amex Releases. 
As a condition to continued listing and trading Shares of the Funds on 
the Exchange, the Fund will continue to comply with all initial and 
continued listing requirements under NYSE Arca Rule 8.200-E.
    Except for the indicated changes to each Fund's Underlying 
Benchmark, NAV Calculation Time and Creation and Redemption Order Cut-
Off Times noted herein, all other facts presented and representations 
made in the Prior NYSE Arca Notice and the Prior Amex Releases are 
unchanged.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \21\ 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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    \21\ 15 U.S.C. 78f(b)(5).
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    The Adviser represents that there is no change to the Funds' 
investment objective (other than the change to each Fund's Underlying 
Benchmark) or to the securities or other assets identified in the Prior 
NYSE Arca Notice and the Prior Amex Releases that the Funds utilize in 
seeking to achieve their respective investment objectives. The Fund's 
use of such Financial Instruments will remain subject to all 
requirements and applicable limitations identified in the Prior NYSE 
Arca Notice and the Prior Amex Releases. As a condition to the 
continued listing and trading of the Shares of the Funds on the 
Exchange, the Funds will continue to comply with all initial and 
continued listing requirements under NYSE Arca Rule 8.200-E.
    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 the Fund will continue to comply with all 
initial and continued listing requirements under NYSE Arca Rule 8.200-
E. The proposed rule change will permit the Fund to continue to operate 
in a manner similar to other issues of TIRs with benchmarks based on 
gold and silver futures contracts traded on COMEX. The Exchange or the 
Financial Industry Regulatory Authority (``FINRA''), on behalf of the 
Exchange, or both, will communicate with CME, as an ISG member, as 
needed regarding trading in COMEX gold futures and COMEX silver 
futures, and the Exchange or FINRA, on behalf of the Exchange, or both, 
may obtain trading information regarding trading in such futures from 
CME. Except for the changes noted above, all other representations made 
in the Prior NYSE Arca Notice and Prior Amex Releases are unchanged.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Exchange Act. The proposed rule 
change will permit the continued listing on the Exchange of the Funds 
following implementation of the changes noted above, and which will 
enhance competition among issues of TIRs based on gold and silver 
futures.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \22\ and Rule 19b-4(f)(6) thereunder.\23\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \22\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \23\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \24\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2018-91 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-2018-91. 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,

[[Page 66798]]

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-2018-91 and should 
be submitted on or before January 17, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28007 Filed 12-26-18; 8:45 am]
BILLING CODE 8011-01-P

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