Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares) and To Permit the Listing and Trading of Shares of the United States Gold and Treasury Investment Trust Under NYSE Arca Rule 8.201-E, 43932-43938 [2020-15553]
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Federal Register / Vol. 85, No. 139 / Monday, July 20, 2020 / Notices
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2020–034 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–CBOE–2020–034. 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–CBOE–2020–034, and
should be submitted on or before
August 10, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–15551 Filed 7–17–20; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89310; File No. SR–
NYSEArca–2020–59]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To Amend NYSE Arca
Rule 8.201–E (Commodity-Based Trust
Shares) and To Permit the Listing and
Trading of Shares of the United States
Gold and Treasury Investment Trust
Under NYSE Arca Rule 8.201–E
July 14, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 30,
2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’) 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 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 (1) to amend
NYSE Arca Rule 8.201–E (‘‘CommodityBased Trust Shares’’) to permit a trust to
hold (a) a specified commodity
deposited with the trust, or (b) a
specified commodity and, in addition to
such specified commodity, U.S.
Department of Treasury securities and/
or cash, and to issue and redeem shares
for such commodity and/or cash; and (2)
to list and trade shares of the United
States Gold and Treasury Investment
Trust under NYSE Arca Rule 8.201–E as
proposed to be amended. The proposed
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.
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
50 17
CFR 200.30–3(a)(12).
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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 (1) to amend
NYSE Arca Rule 8.201–E (‘‘CommodityBased Trust Shares’’) to permit a trust to
hold (a) a specified commodity
deposited with the Trust (defined
below), or (b) a specified commodity
and, in addition to such specified
commodity, U.S. Department of
Treasury securities and/or cash, and (2)
to list and trade shares (‘‘Shares’’) of the
United States Gold and Treasury
Investment Trust (‘‘Trust’’) under NYSE
Arca Rule 8.201–E as proposed to be
amended.4
The Trust will not be registered as an
investment company under the
Investment Company Act of 1940, as
amended.5 The Trust is not a
commodity pool for purposes of the
Commodity Exchange Act, as amended.6
The sponsor of the Trust is Wilshire
Phoenix Funds LLC (‘‘Sponsor’’). The
‘‘Trustee’’ is Delaware Trust Company
and the ‘‘Gold Custodian’’ is JPMorgan
Chase Bank, N.A. The Bank of New
York Mellon will be the administrator
(‘‘Administrator’’), transfer agent
(‘‘Transfer Agent’’) and cash and
treasury custodian (‘‘Treasury
Custodian’’) of the Trust. Foreside Fund
Services, LLC will be the Trust’s
marketing agent (‘‘Marketing Agent’’).
The Commission has previously
approved listing on the Exchange under
NYSE Arca Rules 5.2–E(j)(5) and 8.201–
E of other precious metals and goldbased commodity trusts, including the
GraniteShares Gold Trust; 7 Merk Gold
Trust; 8 ETFS Gold Trust; 9 ETFS
4 On May 8, 2020, the Trust filed Amendment No.
1 to its registration statement on Form S–1 under
the Securities Act of 1933 (15 U.S.C. 77a) (File No.
333–235913) (the ‘‘Registration Statement’’). The
description of the operation of the Trust and the
Shares herein is based, in part, on the Registration
Statement.
5 15 U.S.C. 80a–1.
6 17 U.S.C. 1.
7 Securities Exchange Act Release No. 81077 (July
5, 2017) (SR–NYSEArca–2017–55) (order approving
listing and trading shares of the GraniteShares Gold
Trust under NYSE Arca Equities Rule 8.201).
8 Securities Exchange Act Release No. 71378
(January 23, 2014), 79 FR 4786 (January 29, 2014)
(SR–NYSEArca–2013–137).
9 Securities Exchange Act Release No. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40).
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Platinum Trust 10 and ETFS Palladium
Trust (collectively, the ‘‘ETFS
Trusts’’); 11 APMEX Physical-1 oz. Gold
Redeemable Trust; 12 Sprott Gold
Trust; 13 SPDR Gold Trust (formerly,
streetTRACKS Gold Trust); iShares
Silver Trust; 14 iShares COMEX Gold
Trust; 15 Long Dollar Gold Trust; 16 Euro
Gold Trust, Pound Gold Trust and Yen
Gold Trust; 17 and the Gold Trust.18
Prior to their listing on the Exchange,
the Commission approved listing of the
streetTRACKS Gold Trust on the New
York Stock Exchange (‘‘NYSE’’) 19 and
listing of iShares COMEX Gold Trust
and iShares Silver Trust on the
American Stock Exchange LLC.20 In
addition, the Commission has approved
trading of the streetTRACKS Gold Trust
and iShares Silver Trust on the
Exchange pursuant to UTP.21
10 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
11 Securities Exchange Act Release No. 61220
(December 22, 2009), 74 FR 68895 (December 29,
2009) (SR–NYSEArca–2009–94).
12 Securities Exchange Act Release No 66930
(May 7, 2012), 77 FR 27817 (May 11, 2012) (SR–
NYSEArca–2012–18).
13 Securities Exchange Act Release No. 61496
(February 4, 2010), 75 FR 6758 (February 10, 2010)
(SR–NYSEArca–2009–113).
14 See Securities Exchange Act Release No. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust).
15 See Securities Exchange Act Release No. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
(SR–NYSEArca–2007–76) (approving listing on the
Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11,
2007), 72 FR 39114 (July 17, 2007) (SR–NYSEArca–
2007–43) (order approving listing on the Exchange
of iShares COMEX Gold Trust).
16 See Securities Exchange Act Release No. 79518
(December 9, 2016), 81 FR 90876 (December 15,
2016) (SR–NYSEArca–2016–84) (order approving
listing and trading of shares of the Long Dollar Gold
Trust).
17 See Securities Exchange Act Release No. 80840
(June 17, 2017) (SR–NYSEArca–2017–33) (order
approving listing and trading of shares of the Euro
Gold Trust, Pound Gold Trust, and the Yen Gold
Trust under NYSE Arca Equities Rule 8.201).
18 See Securities Exchange Act Release No. 81918
(October 23, 2017), 82 FR 49884 (October 27, 2017)
(SR–NYSEArca–2017–98) (Order Approving a
Proposed Rule Change, as Modified by Amendment
No. 1 Thereto, to List and Trade Shares of The Gold
Trust under NYSE Arca Rule 8.201–E).
19 See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
streetTRACKS Gold Trust on NYSE).
20 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).
21 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
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Proposed Amendment to NYSE Arca
Rule 8.201–E
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.’’ 22 Rule 8.201–E(c)(1)
currently states that such securities are
issued by a trust in a specified aggregate
minimum number in return for a
deposit of a quantity of the underlying
commodity, and may be redeemed in
the same specified minimum number by
a holder for the quantity of the
underlying commodity. The Exchange
proposes to amend Rule 8.201–E(c)(1) to
provide as follows: ‘‘The term
‘‘Commodity-Based Trust Shares’’
means a security (a) that is issued by a
trust (‘‘Trust’’) that holds (1) a specified
commodity deposited with the Trust, or
(2) a specified commodity and, in
addition to such specified commodity,
U.S. Department of Treasury securities
and/or cash; (b) that is issued by such
Trust in a specified aggregate minimum
number in return for a deposit of a
quantity of the underlying commodity
and/or cash; and (c) that, when
aggregated in the same specified
minimum number, may be redeemed at
a holder’s request by such Trust which
will deliver to the redeeming holder the
quantity of the underlying commodity
and/or cash.’’
The Commission has previously
approved listing and trading on the
Exchange of Commodity-Based Trust
Shares that permit issuance and
redemption of shares for cash in whole
or part.23 The Exchange believes the
(March 4, 2005) (SR–PCX–2004–117) (approving
trading on the Exchange of the streetTRACKS Gold
Trust pursuant to UTP).
22 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. Rule 8.201–E (c)(1) defines the term
‘‘Commodity-Based Trust Shares’’ as follows: ‘‘The
term ‘‘Commodity-Based Trust Shares’’ means a
security (a) that is issued by a trust (‘‘Trust’’) that
holds a specified commodity deposited with the
Trust; (b) that is issued by such Trust in a specified
aggregate minimum number in return for a deposit
of a quantity of the underlying commodity; and (c)
that, when aggregated in the same specified
minimum number, may be redeemed at a holder’s
request by such Trust which will deliver to the
redeeming holder the quantity of the underlying
commodity.’’
23 See, e.g., Securities Exchange Act Release Nos.
61496 (February 4, 2010), 75 FR 6758 (February 10,
2010) (SR–NYSEArca–2009–113) (approving listing
on the Exchange of Sprott Physical Gold Trust);
63043 (October 5, 2010), 75 FR 62615 (October 12,
2010) (SR–NYSEArca–2010–84) (approving listing
on the Exchange of the Sprott Physical Silver
Trust); 68430 (December 13, 2012) (SR–NYSEArca–
2012–111) (Order Approving a Proposed Rule
Change, as Modified by Amendment No. 1, to List
and Trade Units of the Sprott Physical Platinum
and Palladium Trust Pursuant to NYSE Arca
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43933
proposed change will provide a trust
issuing Commodity-Based Trust Shares
and holding a specified commodity with
the flexibility to issue or redeem shares
partially or wholly for cash. Such
alternative would allow a trust to
structure the procedures for issuance
and redemption of shares in manner
that as determined by the issuer, may
provide operational efficiencies and
accommodate investors who may wish
to deliver or receive cash rather than, or
in addition to, the underlying
commodity upon requesting the
issuance or redemption of shares. In
addition, the proposed change will
accommodate a trust’s holding U.S.
Department of Treasury securities (such
as U.S. Treasury Bills (‘‘T-Bills’’)) in
addition to a specified commodity in
order to achieve its investment
objective. The Exchange, therefore,
believes the proposed change will
facilitate the listing and trading of
additional types of exchange-traded
derivative securities products that will
enhance competition among market
participants, to the benefit of investors
and the marketplace.
The Exchange further proposes to
amend Rule 8.201–E(c)(2) to state that
the term ‘‘commodity’’ is defined in
Section 1a(9) of the Commodity
Exchange Act (rather than Section
1(a)(4) as currently referenced in Rule
8.201–E (c)(2)) to reflect an amendment
to the Commodity Exchange Act
included in the Dodd-Frank Wall Street
Reform and Consumer Protection Act of
2010.24
Operation of the Trust 25
According to the Registration
Statement, the Trust will have no assets
other than (a) physical gold bullion
(‘‘Physical Gold’’) and (b) short term
duration T-Bills in proportions that seek
to closely replicate the Gold Treasury
Index (the ‘‘Index’’), as described below.
Equities Rule 8.201; 82448 (January 5, 2018) (SR–
NYSEArca–2017–131) (Notice of Filing of
Amendment No. 2 and Order Approving on an
Accelerated Basis a Proposed Rule Change, as
Modified by Amendment No. 2, to List and Trade
Shares of the Sprott Physical Gold and Silver Trust
under NYSE Arca Rule 8.201–E); 66930 (May 7,
2012), 77 FR 27817 (May 11, 2012) (SR–NYSEArca–
2012–18) (order approving listing and trading
shares of the APMEX Physical-1 oz. Gold
Redeemable Trust); 50603 October 28, 2004 (SR–
NYSE–2004–22) (Order Granting Approval of
Proposed Rule Change and Notice of Filing and
Order Granting Accelerated Approval to
Amendments No. 1 and No. 2 Thereto to the
Proposed Rule Change by the New York Stock
Exchange, Inc. Regarding Listing and Trading of
streetTRACKS® Gold Shares).
24 Public Law 111–203, 124 Stat. 1900 (2010).
25 The description of the operation of the Trust,
the Shares and the gold market contained herein is
based, in part, on the Registration Statement. See
note 4, supra.
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The Trust will also hold U.S. dollars for
short periods of time in connection with
(i) the purchase, sale and/or maturity of
T-Bills, (ii) the purchase and sale of
Physical Gold, (iii) creations and
redemptions of Shares (as described
below), and (iv) to pay fees and
expenses of the Trust.
The investment objective of the Trust
is for the Shares to closely reflect the
Index, which is published by the ‘‘Index
Calculation Agent’’, less the Trust’s
liabilities and expenses. The amount of
Physical Gold and T-Bills held by the
Trust will be determined by the Index.
On the last business day of each month
(the ‘‘Rebalance Date’’), the Index will
dynamically calculate its weightings of
Physical Gold, and T-Bills based on the
volatility of gold and the volatility of the
U.S. equity markets utilizing a
mathematically derived passive rulebased methodology as discussed further
below. The Trust, to closely replicate
the Index, will rebalance its holdings in
Physical Gold and T-Bills on a monthly
basis for consistency with the Index
weights.26
The Gold Treasury Index
The Index is calculated and published
by the Index Calculation Agent. The
Index value using the London Bullion
Market Association (‘‘LBMA’’) Gold
Price PM (defined below) 27 will be
calculated and published daily each
business day at approximately 5:00 p.m.
(Eastern time (‘‘E.T.’’)). The current
Index value will be disseminated by one
or more major market vendors at least
every 15 seconds during the Exchange’s
Core Trading Session (normally 9:30
a.m. to 4:00 p.m. Eastern time (‘‘E.T.’’).
The Exchange, the Index Calculation
Agent or a third party financial data
provider will calculate an intraday
indicative value for the Shares (‘‘IIV’’)
every fifteen seconds during the
Exchange’s Core Trading Session.28
According to the Registration
Statement, the Index has two
components: (i) A notional component
representing Physical Gold (the
‘‘Physical Gold Component’’) and (ii) a
notional component representing T-Bills
(the ‘‘Treasury Component’’).
On each Rebalance Date, the Index
rebalances its weighting of the Physical
Gold Component and the T-Bill
Component utilizing a mathematically
derived passive rules-based
methodology. This methodology
26 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).
27 See note 33, infra.
28 For purposes of this filing, the IIV is the value
referenced in NYSE Arca Rule 8.201–E(e)(2)(v).
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employs realized volatility of the LBMA
Gold Price PM 29 and volatility measures
of the U.S. equity markets utilizing a
look-back period, among other
parameters. At the end of each month,
the Index Calculation Agent calculates
the Index’s new weights for the Physical
Gold Component and the T-Bill
Component based on the immediately
preceding period’s LBMA Gold Price
PM (defined below) and volatility
measures of the U.S. equity markets.
According to the Registration
Statement, the new percentage weight
for the Physical Gold Component will
generally be lower than the prior month
if realized volatility is higher than
during the previous calculation, and
vice versa. In addition, during times of
distress within the U.S. equity markets,
as signaled by volatility measures, the
Index will calculate a higher weight for
the overall exposure to gold. The
weights of the Physical Gold
Component and the T-Bill Component
will never be negative. The weight for
the Physical Gold Component will not
exceed 100%. The combined weights of
the Physical Gold Component and the
T-Bill Component will always sum to
100%, and if the weight of the Physical
Gold Component is 100%, then the
weight of the T-Bill Component will be
zero.
On each Rebalance Date, following
the calculation of the weighting of the
components of the Index, the Trust will
rebalance its assets in order to closely
replicate the Index. The Index’s weight
for the Physical Gold Component is
always positive and therefore represents
a long position in Physical Gold to the
extent of the percentage of Physical
Gold represented in the Index.
Index Components
Physical Gold Component
The Physical Gold Component of the
Index is a notional component
representing Physical Gold. The price of
Physical Gold used to determine the
weighting of the Physical Gold
Component and the T-Bill Component
of the Index, as well as the value of
Physical Gold held by the Trust, will be
based on the LBMA Gold Price PM. If
such day’s LBMA Gold Price PM is not
available, the LBMA Gold Price AM
(defined below) is used.30 If no LBMA
Gold Price (defined below) is available
for the day, the Administrator values the
Trust’s gold based on the most recently
announced LBMA Gold Price PM or
LBMA Gold Price AM.
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29 See
30 See
note 33, infra.
note 33, infra.
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T-Bill Component
The T-Bill Component of the Index is
a notional component representing TBills, which are short-term U.S.
Treasury securities.31
The Trust’s Net Asset Value (‘‘NAV’’)
and the NAV per Share
According to the Registration
Statement, the Trust’s NAV will be
equal to the sum of the value of the
‘‘Physical Gold Holdings’’ 32 and the
‘‘Treasury and Cash Holdings,’’ 33 less
the expenses and liabilities of the Trust.
The NAV per Share, which will be
calculated by the Administrator on each
business day, is equal to the Trust’s
NAV divided by the number of
outstanding Shares.
In accordance with the Trust’s
valuation policy and procedures, the
Administrator will generally determine
the price of the Trust’s Physical Gold by
reference to the LBMA Gold Price PM.34
The Administrator will determine the
fair value of T-Bills based on the price
of each T-Bill held by the Trust plus any
cash, which will be held in U.S. dollars,
as of 4:00 p.m., E.T. or as soon thereafter
as practicable, on each business day.
On each business day at 4:00 p.m.,
E.T., or as soon thereafter as practicable
(the ‘‘Evaluation Time’’), the
Administrator will evaluate the Physical
Gold held by the Trust and calculate
and publish the Trust’s Physical Gold
Holdings. To calculate the Trust’s
Physical Gold Holdings, the
Administrator will:
1. Determine the LBMA Gold Price;
and
2. Multiply the LBMA Gold Price by
the amount of Physical Gold owned by
the Trust as of the Evaluation Time on
such day.
Creation and Redemption of Shares
On any business day (other than
business days on which banking
31 U.S. Treasury securities are debt obligations
issued by, and backed by the full faith and credit
of the U.S. government. U.S. Treasury securities are
highly liquid, have low volatility, and generally
come in three varieties based on maturity: (i)
Treasury bills; (ii) Treasury notes; and (iii) Treasury
bonds.
32 ‘‘Physical Gold Holdings’’ is defined in the
Registration Statement as the Trust’s holdings of
Physical Gold.
33 ‘‘Treasury and Cash Holdings’’ is defined in the
Registration Statement as the value of the T-Bills
and U.S. dollars held by the Trust.
34 For purposes of calculating the NAV of the
Trust, to ascertain the price of Physical Gold held
by the Trust, the prices (the ‘‘LBMA Gold Price’’)
obtained from auctions conducted by ICE
Benchmark Administration (‘‘IBA’’), a benchmark
administrator appointed by the LBMA, will be used,
which are generally conducted in the morning
(London time) (the ‘‘LBMA Gold Price AM’’) and in
the afternoon (London time) (the ‘‘LBMA Gold Price
PM’’).
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institutions in the United Kingdom are
authorized or permitted by law to close
for all or part of the day or a day on
which the London gold market is closed
for all or part of the day), an
‘‘Authorized Participant’’ may place an
order with the Marketing Agent to create
one or more ‘‘Creation Units.’’ Creation
orders must be placed by 9:15 a.m.,
E.T.35 Creation Units are issued on the
creation order settlement date as of 2:45
p.m., E.T. on the business day
immediately following the creation
order date at the applicable NAV per
Share on the creation order date, if the
required payment has been timely
received. Authorized Participants are
the only persons that may place orders
to create and redeem Creation Units.
Authorized Participants must be (1)
registered broker-dealers or other
securities market participants, such as
banks and other financial institutions,
which are not required to register as
broker-dealers to engage in securities
transactions, and (2) participants in the
Depository Trust Company (‘‘DTC’’).
The total payment required to create
each Creation Unit is an amount of cash
equal to the NAV of at least 10,000
Shares of the Trust on the creation order
date. The size of a Creation Unit is
subject to change.
Redemption Procedures
The procedures by which an
Authorized Participant can redeem one
or more Creation Units mirror the
procedures for the creation of Creation
Units. On any business day (other than
business days on which the LBMA Gold
Price PM or other applicable benchmark
price is not announced), an Authorized
Participant may place an order with the
Marketing Agent to redeem one or more
Creation Units. Redemption orders must
be placed by 9:15 a.m., E.T.
By placing a redemption order, an
Authorized Participant agrees to deliver
35 The Sponsor represents that, for the Trust to
fulfill cash creation and redemption orders on a
given business day to reflect the corresponding
NAV on that business day, the Trust must execute
buy or sell orders at price determination times of
the assets used in the NAV calculation. Because the
LBMA Gold Price PM fix occurs at 3:00 p.m.
London time, which is normally 10:00 a.m., E.T.,
the cut-off time for creation and redemption orders
is 9:15 a.m., E.T. to enable the Trust to buy and sell
Physical Gold on that day’s LBMA Gold Price PM.
An Authorized Participant’s arbitrage opportunities
with respect to the price it must pay for a Creation
Unit should not be materially impacted by the
requirement that creation and redemption orders
must be received by 9:15 a.m. E.T. on a business
day. After the order cut-off time of 9:15 a.m., E.T.,
Authorized Participants can place creation or
redemption orders that will occur at the next
business day’s NAV. Authorized Participants may
also be able to arbitrage by trading gold futures on
COMEX (a division of CME Group Inc.), which can
be traded from 6:00 p.m. to 5:00 p.m. (E.T.), Sunday
through Friday.
VerDate Sep<11>2014
18:30 Jul 17, 2020
Jkt 250001
the Creation Units to be redeemed
through DTC’s book-entry system to the
Trust not later than the redemption
order settlement date as of 2:45 p.m.,
E.T. on the business day immediately
following the redemption order date.
The redemption proceeds from the
Trust consist of cash. The amount of
cash included in a redemption is equal
to the NAV of the number of Creation
Unit(s) of the Trust requested in the
Authorized Participant’s redemption
order on the redemption order date. The
Transfer Agent will distribute the cash
redemption amount at 2:45 p.m., E.T. on
the redemption order settlement date
through DTC to the account of the
Authorized Participant as recorded on
DTC’s book entry system.
Availability of Information
The IIV for the Shares will be
disseminated by one or more major
market data vendors on at least a 15second delayed basis, as required by
NYSE Arca Rule 8.201–E(e)(2)(v). The
IIV will be calculated based on the
amount of Physical Gold and T-Bills
held in the Trust’s portfolio, which are
derived from updated bids and offers
indicative of the spot price of gold and
market prices of T-Bills.36
The website for the Trust
(www.wshares.com) 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 prior day’s closing price of the
Shares as traded in the U.S. market. In
addition, information regarding market
price and trading volume of the Shares
will be continually available on a 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.
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.
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
43935
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. 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 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
business day and will be posted on the
Trust’s website. The current Index value
will be disseminated by one or more
major market vendors at least every 15
seconds during the Exchange’s Core
Trading Session. 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
Exchange’s Core Trading Session
(normally 9:30 a.m. to 4:00 p.m., E.T.).
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 most recent reports to
stockholders.
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 of 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–
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Federal Register / Vol. 85, No. 139 / Monday, July 20, 2020 / Notices
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(g)
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 11.3–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.
Trading Halts
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
VerDate Sep<11>2014
18:30 Jul 17, 2020
Jkt 250001
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. If the
IIV or the official Index value is not
being disseminated as required, the
Exchange may halt trading during the
day in which the interruption to the
dissemination of the IIV or the official
Index value occurs. If the IIV or the
official Index value persists past the
trading day in which it occurred, the
Exchange will halt trading in the Shares.
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 Intermarket Surveillance Group
(‘‘ISG’’), and the Exchange or FINRA, on
behalf of the Exchange, or both, may
obtain trading information regarding
trading in the Shares from such markets
and other entities. In addition, the
Exchange may obtain information
regarding trading in the Shares from
markets and other entities that are
members of ISG or with which the
NYSE Arca Rule 7.12–E.
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.
PO 00000
38 See
39 FINRA
Frm 00131
Fmt 4703
Sfmt 4703
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
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–E(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 Creation Units
(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
40 For a list of the current members of ISG, see
www.isgportal.org.
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Federal Register / Vol. 85, No. 139 / Monday, July 20, 2020 / Notices
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. The Exchange
notes that investors purchasing Shares
directly from the Trust 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
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 and that the
Commission has no jurisdiction over the
trading of gold as a physical commodity.
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 the ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement.
The Commission has previously
approved listing and trading on the
Exchange of Commodity-Based Trust
Shares that permit issuance and
redemption of shares for cash in whole
or part.42 The Exchange believes the
proposed amendment to Rule 8.201–
E(c)(1) will provide a trust issuing
41 15
U.S.C. 78f(b)(5).
note 23, supra.
42 See
VerDate Sep<11>2014
18:30 Jul 17, 2020
Jkt 250001
Commodity-Based Trust Shares and
holding a specified commodity with the
flexibility to issue or redeem shares
partially or wholly for cash. Such
alternative would allow a trust to
structure the procedures for issuance
and redemption of shares in manner
that as determined by the issuer, may
provide operational efficiencies and
accommodate investors who may wish
to deliver or receive cash rather than, or
in addition to, the underlying
commodity upon requesting the
issuance or redemption of shares. In
addition, the proposed change will
accommodate a trust’s holding U.S.
Department of Treasury Securities (such
as T-Bills) in addition to a specified
commodity in order to achieve its
investment objective. The Exchange,
therefore, believes the proposed change
will facilitate the listing and trading of
additional types of exchange-traded
derivative securities products that will
enhance competition among market
participants, to the benefit of investors
and the marketplace.
The Exchange’s proposal to amend
Rule 8.201–E (c)(2) to state that the term
‘‘commodity’’ is defined in Section 1a(9)
of the Commodity Exchange Act (rather
than Section 1(a)(4) as currently
referenced in Rule 8.201–E (c)(2))
reflects an amendment to the
Commodity Exchange Act included in
the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010.
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
business day and will be posted on the
Trust’s website. The IIV relating to the
Shares and the current Index value will
be widely disseminated by one or more
major market data vendors at least every
PO 00000
Frm 00132
Fmt 4703
Sfmt 4703
43937
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 most recent
reports to stockholders.
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 related, in part, to physical gold
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, in part, to physical gold.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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Federal Register / Vol. 85, No. 139 / Monday, July 20, 2020 / Notices
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:
• 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–2020–59 on the subject line.
Paper Comments
BILLING CODE 8011–01–P
[Release No. 34–89307; File No. SR–CBOE–
2020–066]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 5.24
July 14, 2020.
• 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–2020–59. 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–2020–59 and
should be submitted on or before
August 10, 2020.
18:30 Jul 17, 2020
[FR Doc. 2020–15553 Filed 7–17–20; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
VerDate Sep<11>2014
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.43
J. Matthew DeLesDernier,
Assistant Secretary.
Jkt 250001
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 July 2,
2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) 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 Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 5.24. The text of the proposed rule
change is provided below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 5.24. Disaster Recovery
(a)–(d) No change.
(e) Loss of Trading Floor. If the Exchange
trading floor becomes inoperable, the
Exchange will continue to operate in a
screen-based only environment using a
floorless configuration of the System that is
operational while the trading floor facility is
inoperable. The Exchange will operate using
this configuration only until the Exchange’s
trading floor facility is operational. Open
PO 00000
43 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
Frm 00133
Fmt 4703
Sfmt 4703
outcry trading will not be available in the
event the trading floor becomes inoperable,
except in accordance with paragraph (2)
below and pursuant to Rule 5.26, as
applicable.
(1) Applicable Rules. In the event that the
trading floor becomes inoperable, trading
will be conducted pursuant to all applicable
System Rules, except that open outcry Rules
will not be in force, including but not limited
to the Rules (or applicable portions of the
Rules) in Chapter 5, Section G, and as follows
(subparagraphs (A) through (E) will be
effective until [June 30]August 31, 2020):
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), at the
Exchange’s Office of the Secretary, 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 aspects 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 amend
Rule 5.24 regarding the Exchange’s
business continuity and disaster
recovery plans. Rule 5.24 describes
which Trading Permit Holders (‘‘TPHs’’)
are required to connect to the
Exchange’s backup systems as well as
certain actions the Exchange may take
as part of its business continuity plans
so that it may maintain fair and orderly
markets if unusual circumstances
occurred that could impact the
Exchange’s ability to conduct business.
This includes what actions the
Exchange would take if its trading floor
became inoperable. Specifically, Rule
5.24(e) states if the Exchange trading
floor becomes inoperable, the Exchange
will continue to operate in a screenbased only environment using a
floorless configuration of the System
that is operational while the trading
floor facility is inoperable. The
Exchange would operate using that
E:\FR\FM\20JYN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 139 (Monday, July 20, 2020)]
[Notices]
[Pages 43932-43938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15553]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89310; File No. SR-NYSEArca-2020-59]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To Amend NYSE Arca Rule 8.201-E (Commodity-
Based Trust Shares) and To Permit the Listing and Trading of Shares of
the United States Gold and Treasury Investment Trust Under NYSE Arca
Rule 8.201-E
July 14, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on June 30, 2020, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
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 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 (1) to amend NYSE Arca Rule 8.201-E
(``Commodity-Based Trust Shares'') to permit a trust to hold (a) a
specified commodity deposited with the trust, or (b) a specified
commodity and, in addition to such specified commodity, U.S. Department
of Treasury securities and/or cash, and to issue and redeem shares for
such commodity and/or cash; and (2) to list and trade shares of the
United States Gold and Treasury Investment Trust under NYSE Arca Rule
8.201-E as proposed to be amended. The proposed 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 Exchange proposes (1) to amend NYSE Arca Rule 8.201-E
(``Commodity-Based Trust Shares'') to permit a trust to hold (a) a
specified commodity deposited with the Trust (defined below), or (b) a
specified commodity and, in addition to such specified commodity, U.S.
Department of Treasury securities and/or cash, and (2) to list and
trade shares (``Shares'') of the United States Gold and Treasury
Investment Trust (``Trust'') under NYSE Arca Rule 8.201-E as proposed
to be amended.\4\
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\4\ On May 8, 2020, the Trust filed Amendment No. 1 to its
registration statement on Form S-1 under the Securities Act of 1933
(15 U.S.C. 77a) (File No. 333-235913) (the ``Registration
Statement''). The description of the operation of the Trust and the
Shares herein is based, in part, on the Registration Statement.
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The Trust will not be registered as an investment company under the
Investment Company Act of 1940, as amended.\5\ The Trust is not a
commodity pool for purposes of the Commodity Exchange Act, as
amended.\6\
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\5\ 15 U.S.C. 80a-1.
\6\ 17 U.S.C. 1.
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The sponsor of the Trust is Wilshire Phoenix Funds LLC
(``Sponsor''). The ``Trustee'' is Delaware Trust Company and the ``Gold
Custodian'' is JPMorgan Chase Bank, N.A. The Bank of New York Mellon
will be the administrator (``Administrator''), transfer agent
(``Transfer Agent'') and cash and treasury custodian (``Treasury
Custodian'') of the Trust. Foreside Fund Services, LLC will be the
Trust's marketing agent (``Marketing Agent'').
The Commission has previously approved listing on the Exchange
under NYSE Arca Rules 5.2-E(j)(5) and 8.201-E of other precious metals
and gold-based commodity trusts, including the GraniteShares Gold
Trust; \7\ Merk Gold Trust; \8\ ETFS Gold Trust; \9\ ETFS
[[Page 43933]]
Platinum Trust \10\ and ETFS Palladium Trust (collectively, the ``ETFS
Trusts''); \11\ APMEX Physical-1 oz. Gold Redeemable Trust; \12\ Sprott
Gold Trust; \13\ SPDR Gold Trust (formerly, streetTRACKS Gold Trust);
iShares Silver Trust; \14\ iShares COMEX Gold Trust; \15\ Long Dollar
Gold Trust; \16\ Euro Gold Trust, Pound Gold Trust and Yen Gold Trust;
\17\ and the Gold Trust.\18\ Prior to their listing on the Exchange,
the Commission approved listing of the streetTRACKS Gold Trust on the
New York Stock Exchange (``NYSE'') \19\ and listing of iShares COMEX
Gold Trust and iShares Silver Trust on the American Stock Exchange
LLC.\20\ In addition, the Commission has approved trading of the
streetTRACKS Gold Trust and iShares Silver Trust on the Exchange
pursuant to UTP.\21\
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\7\ Securities Exchange Act Release No. 81077 (July 5, 2017)
(SR-NYSEArca-2017-55) (order approving listing and trading shares of
the GraniteShares Gold Trust under NYSE Arca Equities Rule 8.201).
\8\ Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
\9\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\10\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\11\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\12\ Securities Exchange Act Release No 66930 (May 7, 2012), 77
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
\13\ Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
\14\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
\15\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\16\ See Securities Exchange Act Release No. 79518 (December 9,
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order
approving listing and trading of shares of the Long Dollar Gold
Trust).
\17\ See Securities Exchange Act Release No. 80840 (June 17,
2017) (SR-NYSEArca-2017-33) (order approving listing and trading of
shares of the Euro Gold Trust, Pound Gold Trust, and the Yen Gold
Trust under NYSE Arca Equities Rule 8.201).
\18\ See Securities Exchange Act Release No. 81918 (October 23,
2017), 82 FR 49884 (October 27, 2017) (SR-NYSEArca-2017-98) (Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1
Thereto, to List and Trade Shares of The Gold Trust under NYSE Arca
Rule 8.201-E).
\19\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE).
\20\ 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).
\21\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
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Proposed Amendment to NYSE Arca Rule 8.201-E
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.'' \22\ Rule 8.201-E(c)(1) currently states that
such securities are issued by a trust in a specified aggregate minimum
number in return for a deposit of a quantity of the underlying
commodity, and may be redeemed in the same specified minimum number by
a holder for the quantity of the underlying commodity. The Exchange
proposes to amend Rule 8.201-E(c)(1) to provide as follows: ``The term
``Commodity-Based Trust Shares'' means a security (a) that is issued by
a trust (``Trust'') that holds (1) a specified commodity deposited with
the Trust, or (2) a specified commodity and, in addition to such
specified commodity, U.S. Department of Treasury securities and/or
cash; (b) that is issued by such Trust in a specified aggregate minimum
number in return for a deposit of a quantity of the underlying
commodity and/or cash; and (c) that, when aggregated in the same
specified minimum number, may be redeemed at a holder's request by such
Trust which will deliver to the redeeming holder the quantity of the
underlying commodity and/or cash.''
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\22\ 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. Rule 8.201-E (c)(1) defines the term ``Commodity-Based Trust
Shares'' as follows: ``The term ``Commodity-Based Trust Shares''
means a security (a) that is issued by a trust (``Trust'') that
holds a specified commodity deposited with the Trust; (b) that is
issued by such Trust in a specified aggregate minimum number in
return for a deposit of a quantity of the underlying commodity; and
(c) that, when aggregated in the same specified minimum number, may
be redeemed at a holder's request by such Trust which will deliver
to the redeeming holder the quantity of the underlying commodity.''
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The Commission has previously approved listing and trading on the
Exchange of Commodity-Based Trust Shares that permit issuance and
redemption of shares for cash in whole or part.\23\ The Exchange
believes the proposed change will provide a trust issuing Commodity-
Based Trust Shares and holding a specified commodity with the
flexibility to issue or redeem shares partially or wholly for cash.
Such alternative would allow a trust to structure the procedures for
issuance and redemption of shares in manner that as determined by the
issuer, may provide operational efficiencies and accommodate investors
who may wish to deliver or receive cash rather than, or in addition to,
the underlying commodity upon requesting the issuance or redemption of
shares. In addition, the proposed change will accommodate a trust's
holding U.S. Department of Treasury securities (such as U.S. Treasury
Bills (``T-Bills'')) in addition to a specified commodity in order to
achieve its investment objective. The Exchange, therefore, believes the
proposed change will facilitate the listing and trading of additional
types of exchange-traded derivative securities products that will
enhance competition among market participants, to the benefit of
investors and the marketplace.
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\23\ See, e.g., Securities Exchange Act Release Nos. 61496
(February 4, 2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-
2009-113) (approving listing on the Exchange of Sprott Physical Gold
Trust); 63043 (October 5, 2010), 75 FR 62615 (October 12, 2010) (SR-
NYSEArca-2010-84) (approving listing on the Exchange of the Sprott
Physical Silver Trust); 68430 (December 13, 2012) (SR-NYSEArca-2012-
111) (Order Approving a Proposed Rule Change, as Modified by
Amendment No. 1, to List and Trade Units of the Sprott Physical
Platinum and Palladium Trust Pursuant to NYSE Arca Equities Rule
8.201; 82448 (January 5, 2018) (SR-NYSEArca-2017-131) (Notice of
Filing of Amendment No. 2 and Order Approving on an Accelerated
Basis a Proposed Rule Change, as Modified by Amendment No. 2, to
List and Trade Shares of the Sprott Physical Gold and Silver Trust
under NYSE Arca Rule 8.201-E); 66930 (May 7, 2012), 77 FR 27817 (May
11, 2012) (SR-NYSEArca-2012-18) (order approving listing and trading
shares of the APMEX Physical-1 oz. Gold Redeemable Trust); 50603
October 28, 2004 (SR-NYSE-2004-22) (Order Granting Approval of
Proposed Rule Change and Notice of Filing and Order Granting
Accelerated Approval to Amendments No. 1 and No. 2 Thereto to the
Proposed Rule Change by the New York Stock Exchange, Inc. Regarding
Listing and Trading of streetTRACKS[supreg] Gold Shares).
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The Exchange further proposes to amend Rule 8.201-E(c)(2) to state
that the term ``commodity'' is defined in Section 1a(9) of the
Commodity Exchange Act (rather than Section 1(a)(4) as currently
referenced in Rule 8.201-E (c)(2)) to reflect an amendment to the
Commodity Exchange Act included in the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010.\24\
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\24\ Public Law 111-203, 124 Stat. 1900 (2010).
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Operation of the Trust \25\
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\25\ The description of the operation of the Trust, the Shares
and the gold market contained herein is based, in part, on the
Registration Statement. See note 4, supra.
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According to the Registration Statement, the Trust will have no
assets other than (a) physical gold bullion (``Physical Gold'') and (b)
short term duration T-Bills in proportions that seek to closely
replicate the Gold Treasury Index (the ``Index''), as described below.
[[Page 43934]]
The Trust will also hold U.S. dollars for short periods of time in
connection with (i) the purchase, sale and/or maturity of T-Bills, (ii)
the purchase and sale of Physical Gold, (iii) creations and redemptions
of Shares (as described below), and (iv) to pay fees and expenses of
the Trust.
The investment objective of the Trust is for the Shares to closely
reflect the Index, which is published by the ``Index Calculation
Agent'', less the Trust's liabilities and expenses. The amount of
Physical Gold and T-Bills held by the Trust will be determined by the
Index. On the last business day of each month (the ``Rebalance Date''),
the Index will dynamically calculate its weightings of Physical Gold,
and T-Bills based on the volatility of gold and the volatility of the
U.S. equity markets utilizing a mathematically derived passive rule-
based methodology as discussed further below. The Trust, to closely
replicate the Index, will rebalance its holdings in Physical Gold and
T-Bills on a monthly basis for consistency with the Index weights.\26\
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\26\ 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 Gold Treasury Index
The Index is calculated and published by the Index Calculation
Agent. The Index value using the London Bullion Market Association
(``LBMA'') Gold Price PM (defined below) \27\ will be calculated and
published daily each business day at approximately 5:00 p.m. (Eastern
time (``E.T.'')). The current Index value will be disseminated by one
or more major market vendors at least every 15 seconds during the
Exchange's Core Trading Session (normally 9:30 a.m. to 4:00 p.m.
Eastern time (``E.T.'').
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\27\ See note 33, infra.
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The Exchange, the Index Calculation Agent or a third party
financial data provider will calculate an intraday indicative value for
the Shares (``IIV'') every fifteen seconds during the Exchange's Core
Trading Session.\28\
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\28\ For purposes of this filing, the IIV is the value
referenced in NYSE Arca Rule 8.201-E(e)(2)(v).
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According to the Registration Statement, the Index has two
components: (i) A notional component representing Physical Gold (the
``Physical Gold Component'') and (ii) a notional component representing
T-Bills (the ``Treasury Component'').
On each Rebalance Date, the Index rebalances its weighting of the
Physical Gold Component and the T-Bill Component utilizing a
mathematically derived passive rules-based methodology. This
methodology employs realized volatility of the LBMA Gold Price PM \29\
and volatility measures of the U.S. equity markets utilizing a look-
back period, among other parameters. At the end of each month, the
Index Calculation Agent calculates the Index's new weights for the
Physical Gold Component and the T-Bill Component based on the
immediately preceding period's LBMA Gold Price PM (defined below) and
volatility measures of the U.S. equity markets.
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\29\ See note 33, infra.
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According to the Registration Statement, the new percentage weight
for the Physical Gold Component will generally be lower than the prior
month if realized volatility is higher than during the previous
calculation, and vice versa. In addition, during times of distress
within the U.S. equity markets, as signaled by volatility measures, the
Index will calculate a higher weight for the overall exposure to gold.
The weights of the Physical Gold Component and the T-Bill Component
will never be negative. The weight for the Physical Gold Component will
not exceed 100%. The combined weights of the Physical Gold Component
and the T-Bill Component will always sum to 100%, and if the weight of
the Physical Gold Component is 100%, then the weight of the T-Bill
Component will be zero.
On each Rebalance Date, following the calculation of the weighting
of the components of the Index, the Trust will rebalance its assets in
order to closely replicate the Index. The Index's weight for the
Physical Gold Component is always positive and therefore represents a
long position in Physical Gold to the extent of the percentage of
Physical Gold represented in the Index.
Index Components
Physical Gold Component
The Physical Gold Component of the Index is a notional component
representing Physical Gold. The price of Physical Gold used to
determine the weighting of the Physical Gold Component and the T-Bill
Component of the Index, as well as the value of Physical Gold held by
the Trust, will be based on the LBMA Gold Price PM. If such day's LBMA
Gold Price PM is not available, the LBMA Gold Price AM (defined below)
is used.\30\ If no LBMA Gold Price (defined below) is available for the
day, the Administrator values the Trust's gold based on the most
recently announced LBMA Gold Price PM or LBMA Gold Price AM.
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\30\ See note 33, infra.
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T-Bill Component
The T-Bill Component of the Index is a notional component
representing T-Bills, which are short-term U.S. Treasury
securities.\31\
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\31\ U.S. Treasury securities are debt obligations issued by,
and backed by the full faith and credit of the U.S. government. U.S.
Treasury securities are highly liquid, have low volatility, and
generally come in three varieties based on maturity: (i) Treasury
bills; (ii) Treasury notes; and (iii) Treasury bonds.
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The Trust's Net Asset Value (``NAV'') and the NAV per Share
According to the Registration Statement, the Trust's NAV will be
equal to the sum of the value of the ``Physical Gold Holdings'' \32\
and the ``Treasury and Cash Holdings,'' \33\ less the expenses and
liabilities of the Trust. The NAV per Share, which will be calculated
by the Administrator on each business day, is equal to the Trust's NAV
divided by the number of outstanding Shares.
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\32\ ``Physical Gold Holdings'' is defined in the Registration
Statement as the Trust's holdings of Physical Gold.
\33\ ``Treasury and Cash Holdings'' is defined in the
Registration Statement as the value of the T-Bills and U.S. dollars
held by the Trust.
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In accordance with the Trust's valuation policy and procedures, the
Administrator will generally determine the price of the Trust's
Physical Gold by reference to the LBMA Gold Price PM.\34\
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\34\ For purposes of calculating the NAV of the Trust, to
ascertain the price of Physical Gold held by the Trust, the prices
(the ``LBMA Gold Price'') obtained from auctions conducted by ICE
Benchmark Administration (``IBA''), a benchmark administrator
appointed by the LBMA, will be used, which are generally conducted
in the morning (London time) (the ``LBMA Gold Price AM'') and in the
afternoon (London time) (the ``LBMA Gold Price PM'').
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The Administrator will determine the fair value of T-Bills based on
the price of each T-Bill held by the Trust plus any cash, which will be
held in U.S. dollars, as of 4:00 p.m., E.T. or as soon thereafter as
practicable, on each business day.
On each business day at 4:00 p.m., E.T., or as soon thereafter as
practicable (the ``Evaluation Time''), the Administrator will evaluate
the Physical Gold held by the Trust and calculate and publish the
Trust's Physical Gold Holdings. To calculate the Trust's Physical Gold
Holdings, the Administrator will:
1. Determine the LBMA Gold Price; and
2. Multiply the LBMA Gold Price by the amount of Physical Gold
owned by the Trust as of the Evaluation Time on such day.
Creation and Redemption of Shares
On any business day (other than business days on which banking
[[Page 43935]]
institutions in the United Kingdom are authorized or permitted by law
to close for all or part of the day or a day on which the London gold
market is closed for all or part of the day), an ``Authorized
Participant'' may place an order with the Marketing Agent to create one
or more ``Creation Units.'' Creation orders must be placed by 9:15
a.m., E.T.\35\ Creation Units are issued on the creation order
settlement date as of 2:45 p.m., E.T. on the business day immediately
following the creation order date at the applicable NAV per Share on
the creation order date, if the required payment has been timely
received. Authorized Participants are the only persons that may place
orders to create and redeem Creation Units. Authorized Participants
must be (1) registered broker-dealers or other securities market
participants, such as banks and other financial institutions, which are
not required to register as broker-dealers to engage in securities
transactions, and (2) participants in the Depository Trust Company
(``DTC'').
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\35\ The Sponsor represents that, for the Trust to fulfill cash
creation and redemption orders on a given business day to reflect
the corresponding NAV on that business day, the Trust must execute
buy or sell orders at price determination times of the assets used
in the NAV calculation. Because the LBMA Gold Price PM fix occurs at
3:00 p.m. London time, which is normally 10:00 a.m., E.T., the cut-
off time for creation and redemption orders is 9:15 a.m., E.T. to
enable the Trust to buy and sell Physical Gold on that day's LBMA
Gold Price PM. An Authorized Participant's arbitrage opportunities
with respect to the price it must pay for a Creation Unit should not
be materially impacted by the requirement that creation and
redemption orders must be received by 9:15 a.m. E.T. on a business
day. After the order cut-off time of 9:15 a.m., E.T., Authorized
Participants can place creation or redemption orders that will occur
at the next business day's NAV. Authorized Participants may also be
able to arbitrage by trading gold futures on COMEX (a division of
CME Group Inc.), which can be traded from 6:00 p.m. to 5:00 p.m.
(E.T.), Sunday through Friday.
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The total payment required to create each Creation Unit is an
amount of cash equal to the NAV of at least 10,000 Shares of the Trust
on the creation order date. The size of a Creation Unit is subject to
change.
Redemption Procedures
The procedures by which an Authorized Participant can redeem one or
more Creation Units mirror the procedures for the creation of Creation
Units. On any business day (other than business days on which the LBMA
Gold Price PM or other applicable benchmark price is not announced), an
Authorized Participant may place an order with the Marketing Agent to
redeem one or more Creation Units. Redemption orders must be placed by
9:15 a.m., E.T.
By placing a redemption order, an Authorized Participant agrees to
deliver the Creation Units to be redeemed through DTC's book-entry
system to the Trust not later than the redemption order settlement date
as of 2:45 p.m., E.T. on the business day immediately following the
redemption order date.
The redemption proceeds from the Trust consist of cash. The amount
of cash included in a redemption is equal to the NAV of the number of
Creation Unit(s) of the Trust requested in the Authorized Participant's
redemption order on the redemption order date. The Transfer Agent will
distribute the cash redemption amount at 2:45 p.m., E.T. on the
redemption order settlement date through DTC to the account of the
Authorized Participant as recorded on DTC's book entry system.
Availability of Information
The IIV for the Shares will be disseminated by one or more major
market data vendors on at least a 15-second delayed basis, as required
by NYSE Arca Rule 8.201-E(e)(2)(v). The IIV will be calculated based on
the amount of Physical Gold and T-Bills held in the Trust's portfolio,
which are derived from updated bids and offers indicative of the spot
price of gold and market prices of T-Bills.\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 (www.wshares.com) 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 prior day's
closing price of the Shares as traded in the U.S. market. In addition,
information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
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\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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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. 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 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 business day and
will be posted on the Trust's website. The current Index value will be
disseminated by one or more major market vendors at least every 15
seconds during the Exchange's Core Trading Session. 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 Exchange's Core Trading
Session (normally 9:30 a.m. to 4:00 p.m., E.T.). 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 most recent reports to stockholders.
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 of 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-
[[Page 43936]]
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(g) 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 11.3-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.
Trading Halts
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. If the IIV or
the official Index value is not being disseminated as required, the
Exchange may halt trading during the day in which the interruption to
the dissemination of the IIV or the official Index value occurs. If the
IIV or the official Index value persists past the trading day in which
it occurred, the Exchange will halt trading in the Shares.
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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 Intermarket
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of
the Exchange, or both, may obtain trading information regarding trading
in the Shares from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\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 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-E(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 Creation Units (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
[[Page 43937]]
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. The Exchange notes that investors purchasing Shares
directly from the Trust 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 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 and that the Commission has no jurisdiction
over the trading of gold as a physical commodity.
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 the ISG from
other exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement.
The Commission has previously approved listing and trading on the
Exchange of Commodity-Based Trust Shares that permit issuance and
redemption of shares for cash in whole or part.\42\ The Exchange
believes the proposed amendment to Rule 8.201-E(c)(1) will provide a
trust issuing Commodity-Based Trust Shares and holding a specified
commodity with the flexibility to issue or redeem shares partially or
wholly for cash. Such alternative would allow a trust to structure the
procedures for issuance and redemption of shares in manner that as
determined by the issuer, may provide operational efficiencies and
accommodate investors who may wish to deliver or receive cash rather
than, or in addition to, the underlying commodity upon requesting the
issuance or redemption of shares. In addition, the proposed change will
accommodate a trust's holding U.S. Department of Treasury Securities
(such as T-Bills) in addition to a specified commodity in order to
achieve its investment objective. The Exchange, therefore, believes the
proposed change will facilitate the listing and trading of additional
types of exchange-traded derivative securities products that will
enhance competition among market participants, to the benefit of
investors and the marketplace.
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\42\ See note 23, supra.
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The Exchange's proposal to amend Rule 8.201-E (c)(2) to state that
the term ``commodity'' is defined in Section 1a(9) of the Commodity
Exchange Act (rather than Section 1(a)(4) as currently referenced in
Rule 8.201-E (c)(2)) reflects an amendment to the Commodity Exchange
Act included in the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010.
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 business
day and will be posted on the Trust's website. The IIV relating to the
Shares and the current Index value 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 most recent reports
to stockholders.
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 related, in part, to
physical gold 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, in part, to
physical gold.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
[[Page 43938]]
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-2020-59 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-2020-59. 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-2020-59 and should be submitted
on or before August 10, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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\43\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15553 Filed 7-17-20; 8:45 am]
BILLING CODE 8011-01-P
