Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the COtwo Advisors Physical European Carbon Allowance Trust Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares), 5273-5283 [2024-01511]
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Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices
consistent with the protection of
investors and the public interest. For
this reason, the Commission hereby
waives the 30-day operative delay and
designates the proposal operative upon
filing.16
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–NYSEARCA–2024–
04, and should be submitted on or
before February 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
lotter on DSK11XQN23PROD with NOTICES1
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–2024–04. 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
16 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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rule change was published for comment
in the Federal Register on June 26,
2023.4 On August 3, 2023, the
Commission issued an order
temporarily suspending the proposed
rule change pursuant to section
19(b)(3)(C) of the Act 5 and
simultaneously instituting proceedings
under section 19(b)(2)(B) of the Act 6 to
determine whether to approve or
disapprove the proposed rule change.7
On December 20, 2023, pursuant to
section 19(b)(2) of the Exchange Act,8
the Commission designated a longer
period within which to issue an order
approving or disapproving the proposed
rule change.9 On January 17, 2024, the
Exchange withdrew the proposed rule
change (SR–EMERALD–2023–13).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–01509 Filed 1–25–24; 8:45 am]
BILLING CODE 8011–01–P
[FR Doc. 2024–01507 Filed 1–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEARCA–2024–04 on the subject
line.
5273
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99409; File No. SR–
NYSEARCA–2024–05]
[Release No. 34–99407; File No. SR–
EMERALD–2023–13]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the COtwo Advisors Physical
European Carbon Allowance Trust
Under NYSE Arca Rule 8.201–E
(Commodity-Based Trust Shares)
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Withdrawal of
Proposed Rule Change To Increase
Fees for the ToM Market Data Product
and Establish Fees for the cToM
Market Data Product
January 22, 2024.
On June 7, 2023, MIAX Emerald, LLC
(‘‘MIAX Emerald’’ or the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),1 and
Rule 19b–4 thereunder,2 a proposed rule
change (File Number SR–EMERALD–
2023–13) to increase fees for the MIAX
Emerald Top of Market (‘‘ToM’’) market
data product and establish fees for the
MIAX Emerald Complex Top of Market
(‘‘cToM’’) market data product. The
proposed rule change was immediately
effective upon filing with the
Commission pursuant to section
19(b)(3)(A) of the Act.3 The proposed
17 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). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
1 15
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January 22, 2024.
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 January
10, 2024, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release No. 97767
(June 20, 2023), 88 FR 41442 (‘‘Notice’’).
5 15 U.S.C. 78s(b)(3)(C).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 98051,
88 FR 53937 (August 9, 2023) (‘‘Order Instituting
Proceedings’’).
8 15 U.S.C. 78s(b)(2).
9 See Securities Exchange Act Release No. 99209,
88 FR 89485 (December 27, 2023). The Commission
designated February 21, 2024, as the date by which
the Commission shall approve or disapprove the
proposed rule change.
10 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the COtwo Advisors
Physical European Carbon Allowance
Trust under NYSE Arca Rule 8.201–E
(Commodity-Based Trust Shares). The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
lotter on DSK11XQN23PROD with NOTICES1
1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the COtwo
Advisors Physical European Carbon
Allowance Trust (the ‘‘Trust’’), under
NYSE Arca Rule 8.201–E, which
governs the listing and trading of
Commodity-Based Trust Shares.4
The Trust was formed as a Delaware
statutory trust on January 12, 2023.5 The
Trust has no fixed termination date. The
Trust will not be registered as an
investment company under the
Investment Company Act of 1940, as
4 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the trust.
5 On May 12, 2023, the Trust filed with the
Commission a registration statement on Form S–1
(File No. 333–271910) (the ‘‘Registration
Statement’’) under the Securities Act of 1933 (15
U.S.C. 77a) (the ‘‘Securities Act’’). The description
of the operation of the Trust herein is based, in part,
on the Registration Statement. The Registration
Statement in not yet effective and the Shares will
not trade on the Exchange until such time that the
Registration Statement is effective.
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18:02 Jan 25, 2024
Jkt 262001
amended,6 and is not required to
register under such act. The Trust is not
a commodity pool for purposes of the
Commodity Exchange Act, as amended.7
The sponsor of the Trust is COtwo
Advisors LLC, a Delaware limited
liability company (‘‘Sponsor’’). State
Street Bank and Trust Company serves
as the Trust’s administrator (the
‘‘Administrator’’) to perform various
administrative, accounting and
recordkeeping functions on behalf of the
Trust. Wilmington Trust serves as
trustee of the Trust (the ‘‘Trustee’’).
State Street Bank and Trust Company
serves as the Trust’s transfer agent (the
‘‘Transfer Agent’’) and as custodian of
the Trust’s cash, if any (‘‘Cash
Custodian’’).8
The Exchange represents that the
Shares will satisfy the requirements of
NYSE Arca Rule 8.201–E and thereby
will qualify for listing on the Exchange.
Operation of the Trust 9
The investment objective of the Trust
will be for the Shares to reflect the
performance of the price of EU Carbon
Emission Allowances for stationary
installations (‘‘EUAs’’), less the Trust’s
expenses. The Trust intends to achieve
its objective by investing all of its assets
in EUAs on a non-discretionary basis
(i.e., without regard to whether the
value of EUAs is rising or falling over
any particular period). Shares of the
Trust will represent units of fractional
undivided beneficial interest in and
ownership of the Trust. The Trust’s only
ordinary recurring expense will be the
Sponsor’s annual fee. The Trust will not
hold any assets other than EUAs and,
possibly, a very limited amount of cash
to pay Trust expenses. The Trust may
also cause the Sponsor to receive EUAs
from the Trust in such a quantity as may
be necessary to pay the Sponsor’s
annual fee.
The Trust will not invest in futures,
options, options on futures, or swap
contracts. The Trust will not hold or
trade in commodity futures contracts,
‘‘commodity interests,’’ or any other
instruments regulated by the
Commodity Exchange Act. As stated
above, the Trust’s Cash Custodian may
hold cash proceeds from EUA sales to
pay Trust expenses. All EUAs will be
held in the Union Registry (defined
below).
6 15
U.S.C. 80a–1.
U.S.C. 1.
8 The Cash Custodian is responsible for holding
the Trust’s cash as well as receiving and dispensing
cash on behalf of the Trust in connection with the
payment of Trust expenses.
9 The description of the operation of the Trust,
the Shares, and the carbon credit industry
contained herein are based, in part, on the
Registration Statement. See note 5, supra.
7 17
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Frm 00075
Fmt 4703
Sfmt 4703
The Trust is not a proxy for investing
in EUAs. Rather, the Shares are
intended to provide a cost-effective
means of obtaining investment exposure
through the securities markets that is
similar to an investment in EUAs.
Specifically, the Shares are intended to
constitute a simple and cost-efficient
means of gaining investment benefits
similar to those of holding EUAs
directly, by providing investors an
opportunity to participate in the EUA
market through an investment in the
Shares, instead of the traditional means
of purchasing and storing EUAs. Trust
shareholders will be exposed to the
risks of investing in EUAs, as well as to
additional risks that are unrelated to
EUAs. For example, the public trading
price at which an investor buys or sells
Shares during the day from their broker
may be different from the value of the
Trust’s holdings. Price differences may
relate primarily to supply and demand
forces at work in the secondary trading
market for the Trust’s Shares that are
closely related to, but not identical to,
the same forces influencing the prices of
EUAs, cash and cash equivalents that
constitute the Trust’s assets. In addition,
EUAs will have to be sold to pay Trust
expenses that would not be associated
with an investment in EUAs. Additional
risks related to the Trust’s structure, the
Sponsor’s management of the Trust, and
the tax treatment of an investment in
Shares are further in the Registration
Statement.
EUAs and the EUA Industry
Description of EU Emissions Trading
Scheme
According to the Registration
Statement, the European Union
Emissions Trading System (‘‘EU ETS’’)
is a ‘‘cap and trade’’ system that caps
the total volume of greenhouse gas
(‘‘GHG’’) emissions from installations
and aircraft operators responsible for
around 40% of European Union (‘‘EU’’)
GHG emissions.10 The EU ETS is the
largest cap and trade system in the
world and covers more than 11,000
power stations and industrial plants in
31 countries, and flights between
airports of participating countries. The
EU ETS is administered by the EU
Commission, which issues a predefined
amount of EUAs through auctions or
10 There are two types of EU emissions allowance:
(i) general allowances for stationary installations, or
EUA; and (ii) allowances for the aviation sector
(‘‘EUAA’’). The Trust will hold EUAs only.
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Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices
lotter on DSK11XQN23PROD with NOTICES1
free allocation. An EUA represents the
right to emit one metric ton of carbon
dioxide equivalent into the atmosphere
by operators of stationary installations
(‘‘Covered Entities’’). By the end of
April each year, all Covered Entities are
required to surrender EUAs equal to the
total volume of actual emissions from
their installation for the last calendar
year. EU ETS operators can buy or sell
EUAs to achieve EU ETS compliance.
In 2012, EU ETS operations were
centralized into a single EU registry
operated by the EU Commission (the
‘‘Union Registry’’), which covers all
countries participating in the EU ETS.
According to the Registration Statement,
the Union Registry is an online database
that holds accounts for all entities
covered by the EU ETS as well as for
participants (such as the Trust) not
covered under the EU ETS. The Union
Registry can be accessed online in a
similar manner to online banking
systems. An account must be opened in
the Union Registry by a legal or natural
person before being able to participate
in the EU ETS and transact in EUAs.
The European Union Transaction Log
(‘‘EUTL’’) 11 checks, records and
authorizes all transactions that take
place between accounts in the Union
Registry to ensure that transfers are in
accordance with the EU ETS rules. The
Union Registry is at all times
responsible for holding the EUAs. All
EUAs are held in the Union Registry.
Major Holders and Allowance Use Cases
According to the Registration
Statement, while there is limited
publicly available data on individuals or
individual organizations’ holdings in
physical carbon allowances, carbon
allowances are primarily held for three
different use cases:
(a) Complying with the EU ETS:
Companies that need to surrender
allowances under the EU ETS hold
allowances to surrender them annually.
These positions are typically built over
time and ultimately surrendered at time
of compliance. Therefore, the largest
emitters in the EU ETS hold a
significant amount of allowances, which
include entities such as large utilities
with a substantial share of fossil fuel
fired power plants, cement companies,
steel producers, chemical producers, oil
and gas majors and airlines.
(b) Providing financial services for
hedging purposes or speculation, such
11 The EUTL is a central transaction log that
checks and records all transactions taking place
within the EU ETS. It is run by the European
Commission and provides an easy access to
emission trading data contained in the EUTL. See
https://www.eea.europa.eu/data-and-maps/
dashboards/emissions-trading-viewer-1.
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18:02 Jan 25, 2024
Jkt 262001
as clearing houses for the European
Energy Exchange or the Intercontinental
Exchange, or banks holding allowances
for their clients.
(c) Trading on and speculating around
price moves, using physical emission
allowances. This can take many forms,
including ‘‘yield trades’’, which
includes holding a physical allowance
and selling an EUA future at a premium
to gain the yield in the forward curve;
or outright positions for short term or
long term speculation.
In addition to holding physical
allowances, there is a liquid secondary
futures and options market that is
primarily used for hedging future
emissions or speculating.
Trading Location
According to the Registration
Statement, the EU ETS is linked to small
emissions trading systems in Europe
(Norway, Switzerland, Iceland and
Liechtenstein), but not to any other
major cap and trade markets. Therefore,
allowances handed out in the EU ETS
are not transferable to any registry
outside of the EU ETS and cannot be
used for compliance in any other cap
and trade market.
There are a number of other trading
systems globally, and like the EU ETS,
no allowances of any of these systems
can be used in any other system:
(a) Western Climate Initiative (WCI):
The State of California and the Canadian
province Quebec created a linked cap
and trade market, that covers >80% of
emissions.
(b) Regional Greenhouse Gas Initiative
(RGGI): a group of US east coast states
created a linked market that covers
power generators only.
(c) The China National ETS:
Technically not a cap and trade scheme
(as the amount of allowances is not
fixed but calculated according to
historic production of units).
(d) South Korea ETS: A
comprehensive market covering the
majority of Korean emissions.
Pricing of Allowances and Trading
Volume
According to the Registration
Statement, there are currently two
primary avenues for trading EUAs: a
primary market and a secondary market.
The primary market involves
participation in a regularly scheduled
auction. The secondary market involves
transactions between buyers and sellers
on regulated markets. The contracts
offered for trading are the following (1)
instruments with a daily expiry,
including spot EUAs and the Daily EUA
Future (as defined below), (2) futures
contracts with various maturities; and
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
5275
(3) options on futures contracts. There
are also over-the-counter transactions,
but they comprise a negligible
percentage of transactions.
The spot and futures markets for
EUAs have existed since 2005 after the
formal launch of the EU ETS on January
1, 2005. Spot EUA contracts are traded
exclusively on the European Energy
Exchange AG (‘‘EEX’’),12 and futures
contracts are traded on EEX, and ICE
Endex Markets B.V. (‘‘ICE Endex’’) 13
and Nasdaq Oslo, although the latter’s
market share is marginal. Additionally,
options on EUA futures contracts are
traded on EEX and ICE Endex, but not
on Nasdaq Oslo.
According to the Registration
Statement, the EUA markets are
generally liquid. The classifications for
market participants include five basic
categories—(1) investment firms or
credit institutions, (2) investment funds,
(3) other financial institutions, (4)
operators with compliance obligations
and, (5) commercial undertakings which
are non-financial firms without
compliance obligations.14 According to
12 EEX is an exchange under the German
Exchange Act and a Regulated Market (‘‘RM’’), as
defined in the Markets in Financial Instruments
Directive (Directive 2014/65/EC) (‘‘MIFID II’’). As a
RM for spot and derivatives transactions, EEX is
supervised by the Saxon State Ministry for
Economic Affairs, Labour and Transport (the
‘‘Exchange Supervisory Authority’’). The Exchange
Supervisory Authority is in charge of the legal
supervision of EEX and of market supervision of the
trading participants according to the German
Exchange Act. The members of EEX are supervised
by the Federal Financial Supervisory Authority
(BaFin). All trading participants are required to
comply with the market abuse regulations within
the German Securities Trading Act. Beside this
supervision, the market behavior at the spot and
derivatives markets of all exchange participants is
supervised on a daily basis by the Market
Surveillance Office, an independent body of the
exchange according to Section 7 of the German
Exchange Act. See https://www.esma.europa.eu/
sites/default/files/EEX_1.pdf. See also Rules and
Regulations at https://www.eex.com/en/markets/
trading-ressources/rules-and-regulations.
13 ICE Endex is regulated in the Netherlands by
the Dutch Authority for the Financial Markets
(‘‘AFM’’) as a RM, as defined in MIFID II, which
is implemented in Dutch Act on Financial
Supervision (‘‘DFSA’’). The license as a RM is
obtained under Section 5:26(1) of the DFSA,
resulting in an authorization by the Minister of
Dutch Ministry of Finance to operate a RM and
supervised by the AFM. In the UK, ICE Endex is
a Recognized Overseas Investment Exchange by the
Financial Conduct Authority. See https://
www.ice.com/endex/regulation#:∼:text=
The%20Dutch%20Authority
%20for%20Consumers,energy
%20industry%20and%20wholesale%20trading.
ICE Endex is also recognized by the CFTC as an
authorized Foreign Board of Trade. See https://
www.cftc.gov/sites/default/files/idc/groups/public/
@otherif/documents/ifdocs/orgiceeregorder170110.
pdf.
14 See esma70–445–38_final_report_on_emission_
allowances_and_associated_
derivatives.pdf(europa.eu).
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Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices
the European Union Transaction Log,
there are over 18,773 registry
accounts.15 The number of participants
in the market have a direct bearing on
the quality of trading. An Oxera report
indicates that as the number of
participants trading EUA futures has
increased consistently since January
2017, relative spreads, calculated as the
average quoted spread divided by the
closing price, have decreased
significantly—from just under 0.4% in
January 2017 to roughly 0.06% in
October 2021.16 In a February 2023
publication, Refinitiv estimated the total
EUA market size to be Ö751.5 billion, up
10% versus 2021.17 As of January 2023,
the secondary market had average daily
trading volume of Ö2 billion, with the
majority of the liquidity in the futures
market. EUA auctions are held on a
near-daily basis throughout the year,
other than between mid-December to
mid-January, when auctions are paused.
Twenty-eight countries (25 EU member
states plus Liechtenstein, Norway, and
Iceland) have agreed to use EEX to
conduct their regularly scheduled
auctions. Germany and Poland have
opted out of the common auction but
also utilize the EEX for auctions. Hence,
EUA auctions take place exclusively on
EEX. These auctions take place on a
regularly scheduled basis; the number of
allowances being auctioned is disclosed
on a schedule prior to auction. Prices
achieved in these auctions are
published on various publiclyaccessible websites, including the
European Commission’s primary
website.
Below is a discussion of the
secondary markets for EUAs and
associated derivatives. The Trust will
only hold EUAs, and will not hold any
of the related derivatives.
lotter on DSK11XQN23PROD with NOTICES1
Instruments With a Daily Expiry
Instruments with daily expiry include
spot EUAs traded on the EEX and the
Daily EUA Future traded on ICE Endex.
The Exchange notes that the settlement
and economic outcome for a spot
purchase on the EEX and a same day
futures purchase on the ICE Endex are
identical (as further detailed below). In
fact, the European Securities Markets
Authority (‘‘ESMA’’), in its ‘‘Final
15 See
https://ec.europa.eu/clima/ets/.
trading in the European Union: An
economic assessment of market functioning in
2021, Oxera, p. 42 (February 15, 2022); available at
https://www.oxera.com/wp-content/uploads/2022/
02/Oxera-EU-carbon-trading-report-3.pdf.
17 See ‘‘Review of Carbon Markets in 2022’’
(February 2023): available at https://
www.refinitiv.com/content/dam/marketing/en_us/
16 Carbon
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18:02 Jan 25, 2024
Jkt 262001
Report: Emission Allowances and
Associated Derivatives,’’ uses the term
‘‘spot’’ EUAs to include both spot EUAs
traded on EEX and the Daily EUA
Future traded on ICE Endex.18
sources. The EUA End of Day Index
price calculated is then validated
against actual market prices.
Spot EUA Market
As noted above, spot EUA contracts
are traded exclusively on the EEX. The
current value (spot price) for a EUA is
greatly influenced by a number of
factors, including regulatory changes,
world events and general levels of
economic activity. The trading hours for
spot EUAs on EEX are 8:00 a.m. to 6:00
p.m. Central European Time (‘‘C.E.T.’’),
and trade registrations are possible until
6:45 p.m. C.E.T. Trades concluded
before 4:00 p.m. C.E.T. are settled on the
next business day, or T+1, while trades
after 4:00 p.m. C.E.T. are settled on the
day after the first business day, or T+2.
In the year-to-date period ended
December 6, 2023, the average daily,
monthly and annual trading volumes of
spot EUAs on the EEX was 165,000,
3,332,000 and 39,983,000 EUAs,
respectively. Over the same period, spot
EUA contracts traded at their highest
volume of 5,010,000 EUAs on December
1, 2023, and their lowest volume of
1000 EUAs on January 9, 2023.
The EEX calculates and publishes an
EEX end of day index on the price of
EEX EUA spot contracts (the ‘‘EUA End
of Day Index’’). The value of the EUA
End of Day Index is calculated based on
an algorithm using data regarding the
prices of qualifying trades and the
average bids and asks of orders that
meet certain order quantity
requirements. In order for data regarding
trades and orders to be used for
calculating the value of the EUA End of
Day Index, the trades or orders must
satisfy certain requirements regarding (i)
quantity of traded contracts, (ii) quantity
of contracts per order, (iii) minimum
duration of the cumulated valid best bid
and best ask, and (iv) maximum spread
per contract. The EUA End of Day Index
calculation methodology depends on
the number of valid trades and orders
which fulfil the product-specific
parameters.19 The data used for
calculating the EUA End of Day Index
can also come from fair values collected
in a price committee or from other price
Most liquidity in the secondary
market is achieved by trading futures
contracts. These contracts have
expiration going out as far as 2030. A
single day futures contract on EUAs is
exclusively traded on the ICE Endex
(the ‘‘Daily EUA Future’’), which settles
each day at the close of trading.20 The
Daily EUA Future is a deliverable
contract where each person with a
position open at cessation of trading is
obliged to make or take delivery of
EUAs upon the expiration of the
contract at the end of each trading day.
Each Daily EUA Future represents one
lot of 1,000 EUAs, with each EUA
providing an entitlement to emit one ton
of carbon dioxide equivalent gas.
Generally, Daily EUA Futures trade on
ICE Endex from approximately 2:00 a.m.
Eastern Time (‘‘E.T.’’) to approximately
12:00 p.m. E.T. The settlement price is
fixed each business day and is
published by the exchange at
approximately 12:15 E.T. Final cash
settlement occurs the first business day
following the expiry day. In the year-todate period ended December 6, 2023,
the average daily, monthly and annual
trading volumes of Daily EUA Futures
was 3,144, 68,758 and 761,046,
respectively, which represents trading
volumes of 3,144,000, 68,758,000 and
761,046,000 EUAs, respectively. Over
the same period, Daily EUA Futures
traded at their highest volume of 20,473
on July 12, 2023, representing
20,473,000 EUAs, and their lowest
volume of 218 on May 8, 2023,
representing 218,000 EUAs.
documents/gated/reports/carbon-market-year-inreview-2022.pdf. The report presents Refinitiv’s
assessment of the world’s major carbon markets in
2022 and the total EUA market size includes spot,
auctions and futures.
18 See esma70–445–38_final_report_on_emission_
allowances_and_associated_derivatives.pdf
(europa.eu).
19 The EUA End of Day Index methodology is
available at https://www.eex.com/fileadmin/EEX/
Downloads/Trading/Specifications/Indeces/DE/
20211005_Index_Description_v010.pdf.
20 NASDAQ Oslo also offers a single day futures
contract on EUAs, but the contract is not traded. All
references to the ‘‘Daily EUA Future’’ refer to the
single day EUA futures contract traded on ICE
Endex.
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Daily EUA Futures
Comparison of Spot EUA Market and
Daily EUA Futures Market
The daily EUA End of Day Index
value can be expected to be
substantially identical to the daily
settlement price of the Daily EUA
Future. Below is a comparison of the
daily EUA End of Day Index value and
the Daily EUA Future settlement price
over a recent 45 calendar day period.
E:\FR\FM\26JAN1.SGM
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EEX End of
Day Index
Date
Ö68.56
69.58
68.73
68.54
70.26
72.38
70.69
70.87
72.78
73.45
76.37
76.35
74.96
75.12
76.35
76.28
76.73
79.42
78.29
77.14
78.33
77.03
75.33
74.88
75.46
77.24
78.20
78.10
78.59
78.25
78.84
79.14
12/8/23 .........................................................................................................................................
12/7/23 .........................................................................................................................................
12/6/23 .........................................................................................................................................
12/5/23 .........................................................................................................................................
12/4/23 .........................................................................................................................................
12/1/23 .........................................................................................................................................
11/30/23 .......................................................................................................................................
11/29/23 .......................................................................................................................................
11/28/23 .......................................................................................................................................
11/27/23 .......................................................................................................................................
11/24/23 .......................................................................................................................................
11/23/23 .......................................................................................................................................
11/22/23 .......................................................................................................................................
11/21/23 .......................................................................................................................................
11/20/23 .......................................................................................................................................
11/17/23 .......................................................................................................................................
11/16/23 .......................................................................................................................................
11/15/23 .......................................................................................................................................
11/14/23 .......................................................................................................................................
11/13/23 .......................................................................................................................................
11/10/23 .......................................................................................................................................
11/9/23 .........................................................................................................................................
11/8/23 .........................................................................................................................................
11/7/23 .........................................................................................................................................
11/6/23 .........................................................................................................................................
11/3/23 .........................................................................................................................................
11/2/23 .........................................................................................................................................
11/1/23 .........................................................................................................................................
10/31/23 .......................................................................................................................................
10/30/23 .......................................................................................................................................
10/27/23 .......................................................................................................................................
10/26/23 .......................................................................................................................................
lotter on DSK11XQN23PROD with NOTICES1
Additionally, the chart below
illustrates how closely the Daily EUA
Future, in fact, reflects the EUA spot
price during the trading day. This chart
VerDate Sep<11>2014
18:02 Jan 25, 2024
Jkt 262001
shows the spot prices in continuous
trading on the EEX and the intra-day
prices of Daily EUA Futures on ICE
Endex, in EUR/tCO2 from January 2018
PO 00000
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Fmt 4703
Sfmt 4703
ICE final
settlement
Ö68.56
69.58
68.73
68.54
70.26
72.38
70.69
70.87
72.78
73.45
76.37
76.35
74.96
75.12
76.35
76.28
76.73
79.42
78.29
77.14
78.33
77.02
75.33
74.88
75.46
77.24
78.20
78.10
78.59
78.25
78.84
79.14
Difference—
EEX v. ICE
Ö0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
to January 2022. This shows an average
absolute difference of Ö0.015 between
the daily prices for EUAs on the EEX
and ICE Endex.
E:\FR\FM\26JAN1.SGM
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100
90
80
70
60
50
40
30
20
10
Jul-19
Jan-19
Jul-18
Jan-20
Other EUA Futures Contracts
EEX offers monthly EUA futures
contracts for the current and next two
months unless a quarterly or December
future expires at that month’s maturity
date; quarterly futures for the current
and next 11 quarters unless a December
future expires at that quarter’s maturity
date; and yearly, or December, futures
for the next 8 years which mature in
December of each respective year. ICE
Endex offers up to seven December
futures contracts, nine quarterly futures
contracts, three August futures contracts
and two monthly futures contracts.
Nasdaq Oslo offers a quarterly futures
contracts over a rolling six year period.
Options on EUA Futures Contracts
Options on EUA futures contracts are
also traded on EEX and ICE Endex for
the December futures contracts.
lotter on DSK11XQN23PROD with NOTICES1
Creation and Redemption of Shares
According to the Registration
Statement, the Trust will create and
redeem Shares on a continuous basis in
one or more Creation Units. A Creation
Unit equals a block of 50,000 Shares,
which amount may be revised from
time-to-time. The Trust will issue
VerDate Sep<11>2014
18:40 Jan 25, 2024
Jkt 262001
Shares in Creation Units to certain
authorized participants (‘‘Authorized
Participants’’) on an ongoing basis. Each
Authorized Participant must be a
registered broker-dealer or other
securities market participant such as a
bank or other financial institution
which is not required to register as a
broker-dealer to engage in securities
transactions, a participant in The
Depository Trust Company (‘‘DTC’’) and
have entered into an agreement with the
Sponsor and the Transfer Agent (the
‘‘Participant Agreement’’).
Creation Units may be created or
redeemed only by Authorized
Participants. The creation and
redemption of Creation Units is only
made in exchange for the delivery to the
Trust or the distribution by the Trust of
the amount of EUAs represented by the
Creation Units being created or
redeemed. The amount of EUAs
required to be delivered to the Trust in
connection with any creation, or paid
out upon redemption, is based on the
combined net asset value of the number
of Shares included in the Creation Units
being created or redeemed as
determined on the day the order to
create or redeem Creation Units is
properly received and accepted. Orders
must be placed by 11:00 a.m. New York
time. The day on which the
Administrator receives a valid purchase
or redemption order is the order date.
Creation Units may only be issued or
PO 00000
Frm 00079
Jan-21
Jul-21
Jan-22
--ICEEndex
-EEX
(https://www.esma.europa.eu/sites/
default/files/library/esma70-445-38
_final_report_on_emission
_allowances_and
_associated_derivatives.pdf :p37).
Jul-20
Fmt 4703
Sfmt 4703
redeemed on a day that the Exchange is
open for regular trading.
An Authorized Participant who places
a purchase order is responsible for
crediting the Trust’s Union Registry
account with the required EUA deposit
by 2:00 p.m. New York time on the
second business day following the order
date. Upon receipt of the EUA deposit
amount in the Trust’s Union Registry
account, the Union Registry will notify
the Sponsor that the EUAs have been
deposited. Upon receipt of confirmation
from the Union Registry that the EUA
deposit amount has been received, the
Administrator will direct DTC to credit
the number of Shares created to the
Authorized Participant’s DTC account.
According to the Registration
Statement, the redemption distribution
due from the Trust will be delivered
once the Administrator notifies the
Sponsor that the Authorized Participant
has delivered the Shares to be redeemed
to the Trust’s DTC account. The
redemption distribution will be
delivered to the Authorized Participant
on the second business day following
the order date. Once the Administrator
notifies the Sponsor that the Shares
have been received in the Trust’s DTC
account, the Sponsor instructs the
Union Registry to transfer the
redemption EUA amount from the
Trust’s Union Registry account to the
Authorized Participant’s Union Registry
account.
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The Sponsor is the only entity that
may initiate a withdrawal of EUAs from
the Trust’s Union Registry account, and
the only accounts that may receive
EUAs from the Trust’s Union Registry
account are Authorized Participants’ or
the Sponsor’s Union Registry accounts.
lotter on DSK11XQN23PROD with NOTICES1
Net Asset Value (‘‘NAV’’)
The Trust’s NAV is calculated by
taking the current market value of its
total assets, less any liabilities of the
Trust, and dividing that total by the
total number of outstanding Shares.
The Administrator will calculate the
NAV of the Trust once each Exchange
trading day. The NAV for a normal
trading day will be released after the
end of the Core Trading Session, which
is typically 4 p.m. New York time. The
NAV for the Trust’s Shares will be
disseminated daily to all market
participants at the same time. The
Administrator will use that day’s EUA
End of Day Index value, as published by
EEX, to calculate the NAV. The
Administrator also converts the value of
Euro denominated assets into US Dollar
equivalent using published foreign
currency exchange prices by an
independent pricing vendor. Third
parties supplying quotations or market
data may include, without limitation,
dealers in the relevant markets, endusers of the relevant product,
information vendors, brokers and other
sources of market information.
Indicative Fund Value (‘‘IFV’’)
In order to provide updated
information relating to the Trust for use
by investors and market professionals,
an updated IFV will be made available
through on-line information services
throughout the Exchange Core Trading
Session (normally 9:30 a.m. to 4:00 p.m.
E.T.) on each trading day. The IFV will
be calculated by using the prior day’s
closing NAV per Share of the Trust as
a base and updating that value
throughout the trading day to reflect
changes in the most recently reported
bid-ask spread of the spot EUA market
on EEX. The IFV disseminated during
NYSE Arca Core Trading Session hours
should not be viewed as an actual real
time update of the NAV, because the
NAV will be calculated only once at the
end of each trading day based upon the
relevant end of day values of the Trust’s
investments. Although the IFV will be
disseminated throughout the Core
Trading Session, the customary trading
hours for EUAs are 2 a.m. to 12 p.m.
Eastern Time. During the gap in time at
the end of each trading day during
which the Shares are traded on the
Exchange, but real-time trading prices
for EUAs are not available, the IFV will
VerDate Sep<11>2014
18:02 Jan 25, 2024
Jkt 262001
be calculated based on the end of day
price of EUAs immediately preceding
the trading session.
The IFV will be disseminated on a per
Share basis every 15 seconds during
regular NYSE Arca Core Trading
Session.
Availability of Information
The NAV for the Trust’s Shares will
be disseminated daily to all market
participants at the same time. The
intraday, closing prices, and settlement
prices for EUAs will be readily available
from the applicable futures exchange
websites, automated quotation systems,
published or other public sources, or
major market data vendors. The IFV per
Share 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).
Complete real-time data for EUAs and
Daily EUA Futures is available by
subscription through on-line
information services. Quotation and
last-sale information regarding the
Shares will be disseminated through the
facilities of the Consolidated Tape
Association. The IFV will be available
through on-line information services.
The trading prices for EUAs and the
daily EUA End of Day Index value and
historical EUA End of Day Index values
will be disseminated by on-line
subscription services or by one or more
major market data vendors during the
NYSE Arca Core Trading Session of 9:30
a.m. to 4:00 p.m. E.T. The EUA End of
Day Index value is also published daily
on the EEX website.
EEX also provides on its website, on
a daily basis, transaction volumes and
transaction prices for the EUA spot
market. ICE Endex provides on its
website, on a daily basis, transaction
volumes, transaction prices, daily
settlement prices and historical
settlement prices for Daily EUA Futures
that were traded outside of block trades
by EUA futures brokers. In addition,
transaction volumes, transaction prices,
daily settlement prices and historical
settlement prices for Daily EUA Futures
traded in block trades by futures brokers
are available on a daily basis through a
subscription service to ICE Endex.
However, ICE Endex provides the daily
settlement price change of the Daily
EUA Future on its website.
In addition, the Trust’s website
(www.cotwoadvisors.com) will contain
the following information, on a per
Share basis, for the Trust: (a) the prior
business day’s end of day closing NAV;
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5279
(b) the Official Closing Price 21 or the
midpoint of the national best bid and
the national best offer (‘‘NBBO’’) as of
the time the NAV is calculated (‘‘BidAsk Price’’); (c) calculation of the
premium or discount of the Official
Closing Price against the NAV expressed
as a percentage of such NAV; (d) the
prospectus; and (e) other applicable
quantitative information. The Trust will
also provide website disclosure of its
EUA holdings before 9:30 a.m. E.T. on
each trading day.
The Trust’s website will be publicly
available prior to the public offering of
Shares and accessible at no charge. The
website disclosure of the Trust’s daily
holdings will occur at the same time as
the disclosure by the Trust of the daily
holdings to Authorized Participants so
that all market participants are provided
daily holdings information at the same
time. Therefore, the same holdings
information will be provided on the
public website as well as in electronic
files provided to Authorized
Participants. Accordingly, each investor
will have access to the current daily
holdings of the Trust through the Trust’s
website. 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.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Trading in the Shares
on the Exchange will occur in
accordance with NYSE Arca Rule 7.34–
E (Early, Core, and Late Trading
Sessions). 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.
The Shares will conform to the initial
and continued listing criteria under
21 The term ‘‘Official Closing Price’’ is defined in
NYSE Arca Rule 1.1(ll) as the reference price to
determine the closing price in a security for
purposes of Rule 7– E Equities Trading, and the
procedures for determining the Official Closing
Price are set forth in that rule.
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lotter on DSK11XQN23PROD with NOTICES1
NYSE Arca Rule 8.201–E. The trading of
the Shares will be subject to NYSE Arca
Rule 8.201–E(g), which sets forth certain
restrictions on Equity Trading Permit
(‘‘ETP’’) Holders acting as registered
Market Makers in Commodity-Based
Trust Shares to facilitate surveillance.
The Exchange represents that, for initial
and continued listing, the Trust will be
in compliance with Rule 10A–3 22 under
the Act, as provided by NYSE Arca Rule
5.3–E. A minimum of 10,000 Shares will
be outstanding at the commencement of
trading on the Exchange.
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. To the extent
the Exchange may be found to lack
jurisdiction over a subsidiary or affiliate
of an ETP Holder that does business
only in commodities or futures
contracts, 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 carbon
credit 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.23
The Exchange may halt trading during
the day in which an interruption occurs
to the dissemination of the IFV, as
described above. If the interruption to
the dissemination of the IFV persists
past the trading day in which it occurs,
the Exchange will halt trading no later
than the beginning of the trading day
following the interruption. In addition,
if the Exchange becomes aware that the
NAV with respect to the Shares is not
disseminated to all market participants
22 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).
23 See NYSE Arca Rule 7.12–E.
VerDate Sep<11>2014
18:02 Jan 25, 2024
Jkt 262001
at the same time, it will halt trading in
the Shares until such time as the NAV
is available to all market participants.
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 Inc. (‘‘FINRA’’), on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws.24 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 believes that the
proposal is designed to prevent
fraudulent and manipulative acts and
practices and to protect investors and
the public interest, consistent with
section 6(b)(5) of the Act. The
Commission has explained that a
proposal could satisfy the requirements
of the Act in the first instance by
demonstrating that the listing exchange
has entered into a comprehensive
surveillance-sharing agreement
(‘‘CSSA’’) with a regulated ‘‘market of
significant size’’ relating to the
underlying assets.25 The Commission
has further stated that ‘‘[c]onsistent with
the discussion of ‘significant market’
. . . , the Commission has not
previously, and does not now, require
that [a] listing exchange be able to enter
into a surveillance-sharing agreement
with each regulated spot or derivatives
24 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.
25 See Securities Exchange Act Release No. 88284
(February 26, 2020), 85 FR 12595 (March 3, 2020)
(SR–NYSEArca–2019–39) (Order Disapproving a
Proposed Rule Change, as Modified by Amendment
No. 1, to Amend NYSE Arca Rule 8.201–E
(Commodity-Based Trust Shares) and to List and
Trade Shares of the United States Bitcoin and
Treasury Investment Trust Under NYSE Arca Rule
8.201–E).
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Fmt 4703
Sfmt 4703
market relating to an underlying asset,
provided that the market or markets
with which there is such an agreement
constitute a ‘significant market.’ ’’ 26
The Exchange has entered into a
CSSA with ICE Endex. Pursuant to the
CSSA, the Exchange will communicate
as needed regarding trading in the
Shares and Daily EUA Futures with ICE
Endex, and the Exchange may obtain
trading information regarding trading in
the Shares and Daily EUA Futures from
ICE Endex.
The Exchange believes that ICE Endex
is a regulated 27 market of significant
size related to EUAs and that it is
reasonably likely that any bad actor
trying to manipulate the price of the
Trust would have to trade the Daily
EUA Futures traded on ICE Endex.
Therefore, ICE Endex is an appropriate
market to surveil in order to detect and
deter fraud and manipulation of EUAs.
The term ‘‘market of significant size’’
includes a market as to which (a) there
is a reasonable likelihood that a person
attempting to manipulate the Trust
Shares would also have to trade on that
market to successfully manipulate the
Trust Shares, and (b) it is unlikely that
trading in the Trust Shares would be the
predominant influence on prices in that
market.
ICE Endex is the only market for
trading Daily EUA Futures and it
accounts for 95% of the trading volume
for EUAs with ‘‘daily expiry’’ (which, as
described above, includes spot EUAs
and Daily EUA Futures). While the
Trust will hold EUAs traded on EEX,
this is economically equivalent to
holding EUAs received after settling
Daily EUA Futures that trade on ICE
Endex. As described above, the
correlation between the EUA End of Day
Index value that reflects the value of the
spot EUAs traded on EEX and the Daily
EUA Future settlement price is nearly
perfect. Thus, on any given day, the
value of an EUA purchased on EEX or
an EUA received after settling a Daily
EUA Future traded on ICE Endex is the
same.
Given the significant size of ICE
Endex, there is a reasonable likelihood
that a market participant attempting to
manipulate the Trust Shares would also
have to trade on ICE Endex to
successfully manipulate the Trust
Shares. While it is possible that a
potential manipulator could chose to
trade only in the spot EUA market
26 See Securities Exchange Act Release No. 83723
(July 26, 2018), 83 FR 37579 (August 1, 2018)
(Order Setting Aside Action by Delegated Authority
and Disapproving a Proposed Rule Change, as
Modified by Amendments No. 1 and 2, to List and
Trade Shares of the Winklevoss Bitcoin Trust).
27 See note 13, supra.
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lotter on DSK11XQN23PROD with NOTICES1
(EEX), the near-perfect correlation
between the EUA End of Day Index
value and the Daily EUA Future
settlement price means that a price
distortion in the spot EUA market
would be reflected in the Daily EUA
Futures market and vice versa.28
28 The Commission has granted several prior
proposals to list and trade shares of physical
commodity-based exchange-traded products, noting
in every case that there was at least one regulated
market of significant size for trading futures in the
underlying commodity—whether gold, silver,
platinum, palladium or copper—and the product’s
listing exchange has entered into surveillancesharing agreements with, or held Intermarket
Surveillance Group (‘‘ISG’’) membership in
common with, that market. See Securities Exchange
Act Release Nos. 61220 (December 22, 2009), 74 FR
68895, 68896 (December 29, 2009) (SR–NYSEArca–
2009–94) (notice of proposed rule change included
NYSE Arca’s representation that ‘‘[t]he most
significant palladium futures exchanges are the
NYMEX and the Tokyo Commodity Exchange,’’ that
‘‘NYMEX is the largest exchange in the world for
trading precious metals futures and options,’’ and
that NYSE Arca ‘‘may obtain trading information
via the Intermarket Surveillance Group,’’ of which
NYMEX is a member; 61219 (December 22, 2009),
74 FR 68886, 68887–88 (December 29, 2009) (SR–
NYSEArca–2009–95) (notice of proposed rule
change included NYSE Arca’s representation that
‘‘[t]he most significant platinum futures exchanges
are the NYMEX and the Tokyo Commodity
Exchange,’’ that ‘‘NYMEX is the largest exchange in
the world for trading precious metals futures and
options,’’ and that NYSE Arca ‘‘may obtain trading
information via the Intermarket Surveillance
Group,’’ of which NYMEX is a member; 62692
(August 11, 2010), 75 FR 50789, 50790 (August 17,
2010) (SR–NYSEArca–2010–56) (notice of proposed
rule change included NYSE Arca’s representation
that ‘‘the most significant gold, silver, platinum and
palladium futures exchanges are the COMEX and
the TOCOM’’ and that NYSE Arca ‘‘may obtain
trading information via the Intermarket
Surveillance Group,’’ of which COMEX is a
member; 62875 (September 9, 2010), 75 FR 56156,
56158 (September 15, 2010) (SR–NYSEArca–2010–
71) (notice of proposed rule change included NYSE
Arca’s representation that ‘‘the most significant
silver, platinum and palladium futures exchanges
are the COMEX and the TOCOM’’ and that NYSE
Arca ‘‘may obtain trading information via the
Intermarket Surveillance Group,’’ of which COMEX
is a member; 63464 (December 8, 2010), 75 FR
77926, 77928 (December 14, 2010) (SR–NYSEArca–
2010–95) (notice of proposed rule change included
NYSE Arca’s representation that ‘‘the most
significant gold futures exchanges are the COMEX
and the Tokyo Commodity Exchange,’’ that
‘‘COMEX is the largest exchange in the world for
trading precious metals futures and options,’’ and
that NYSE Arca ‘‘may obtain trading information
via the Intermarket Surveillance Group,’’ of which
COMEX is a member; 68430 (December 13, 2012),
77 FR 75239, 75240–41 (December 19, 2012) (SR–
NYSEArca–2012–111) (notice of proposed rule
change included NYSE Arca’s representation that
‘‘[f]utures on platinum and palladium are traded on
two major exchanges: The New York Mercantile
Exchange . . . and Tokyo Commodities Exchange’’
and that NYSE Arca ‘‘may obtain trading
information via the Intermarket Surveillance
Group,’’ of which COMEX is a member; 71378
(January 23, 2014), 79 FR 4786, 4786–87 (January
29, 2014) (SR–NYSEArca–2013–137) (notice of
proposed rule change included NYSE Arca’s
representation that ‘‘COMEX is the largest gold
futures and options exchange’’ and that NYSE Arca
‘‘may obtain trading information via the Intermarket
Surveillance Group,’’ including with respect to
transactions occurring on COMEX pursuant to CME
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It is unlikely that trading in the Trust
Shares would be the predominant
influence on Daily EUA Futures prices
traded on ICE Endex for a number of
reasons, including the significant
volume in and size of the EUA daily
expiry market. The total EUA market
size is approximately Ö695.8 billion
with approximately Ö64.1 billion of that
attributable to the Daily EUA Futures
market. The daily average trading
volume for EUAs across the secondary
market is approximately Ö2 billion, with
approximately Ö264.8 million
attributable to trading in the Daily EUA
Futures market. The Trust has not yet
launched and cannot predict its future
inflows; however, given the size of the
Daily EUA Futures market and the EUA
market, as a whole, the Sponsor does
not anticipate that the Trust will have
available capital to buy and sell EUAs
in an amount that would move the EUA
market.
Based on the foregoing, the Exchange
believes that prices on the Daily EUA
Futures market (ICE Endex) can
reasonably be relied upon to reflect the
effects on the Daily EUA Futures market
caused by a market participant
attempting to manipulate the Trust
Shares whether that attempt is made by
directly trading on ICE Endex or
indirectly by trading on the EUA spot
market (EEX). In other words, to the
extent that the price of Daily EUA
Futures might be affected by trading in
either the futures and spot markets, the
price impact of potential fraud in either
market would be reflected by a
corresponding change to the price of the
Daily EUA Futures Market (with which
the Exchange has a CSSA).
The Exchange represents that all
EUAs held by the Trust will be held and
maintained in the Union Registry and
that the Trust will not invest in futures,
options, options on futures, or swap
contracts. It is possible that EUAs and
Daily EUA Futures may become listed
on other exchanges that are members of
ISG 29 or with which the Exchange has
in place a comprehensive surveillance
sharing agreement. The Exchange
further represents that EEX is the
principal market for all EUAs in which
the Trust may invest, that the Exchange
has a CSSA in place with ICE Endex,
and that, because of the near-perfect
correlation between the EUA End of Day
Index value and the Daily EUA Future
settlement price, the price impact of
potential fraud in the spot market on
and NYMEX’s membership, or from exchanges
‘‘with which [NYSE Arca] has in place a
comprehensive surveillance sharing agreement.’’).
29 For a list of the current members of ISG, see
www.isgportal.org.
PO 00000
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Sfmt 4703
5281
EEX will be reflected in a corresponding
change to the price of futures traded on
ICE Endex.
Also, pursuant to NYSE Arca Rule
8.201–E(g), the Exchange is able to
obtain information regarding accounts
for trading in the Shares in connection
with ETP Holders’ proprietary or
customer trades which they effect
through ETP Holders 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 or reference
assets, (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 on
the Exchange.
The Trust 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 IFV 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 premium or
discount on the Shares may widen as a
result of reduced liquidity of EUAs
during the Core and Late Trading
Sessions; and (6) trading information.
For example, the Information Bulletin
will advise ETP Holders, prior to the
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Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices
commencement of trading, of the
prospectus delivery requirements
applicable to the Trust. 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 will be
described in the Registration Statement.
The Information Bulletin will also
reference the fact that last sale
information regarding EUAs is subject to
regulation by EEX and ICE Endex, that
the Commission and the CFTC do not
have jurisdiction over the trading of
EUAs as a commodity, and that
jurisdiction over the trading of EUAs is
held by the relevant competent
authority of the individual EU member
states in which the trading takes place,
namely the Bundesanstalt fu¨r
Finanzdienstleistungsaufsicht (BaFIN)
in Germany and the Autoriteit
Financie¨le Markten (AFM) in the
Netherlands.30 The Information Bulletin
will also discuss any relief, if granted,
by the Commission or the staff from any
rules under the Act.
The Information Bulletin will also
disclose the trading hours of the Shares
and that the NAV for the Shares will be
calculated after 4:00 p.m. E.T. each
trading day. The Information Bulletin
will disclose that information about the
Shares will be publicly available on the
Trust’s website.
lotter on DSK11XQN23PROD with NOTICES1
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under section 6(b)(5) 31 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
30 Article 22 of Regulation (EU) No. 596/2014 on
market abuse (market abuse regulation) (‘‘MAR’’)
requires each EU member state to designate a single
administrative competent authority to ensure that
the provisions of MAR are applied on its territory.
Commission Regulation 596/2014, 2014 O.J. (L 173)
42. For a list of the competent authorities for each
EU Member State. See https://www.esma.
europa.eu/sites/default/files/mar.pdf.
31 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014
18:02 Jan 25, 2024
Jkt 262001
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 regarding trading in the
Shares and Daily EUA Futures from ICE
Endex with which the Exchange has
entered into a CSSA. The Exchange
represents that all EUAs held by the
Trust will be held and maintained in the
Union Registry and that the Trust will
not invest in futures, options, options
on futures, or swap contracts. The
Exchange further represents that EEX is
the principal market for all EUAs in
which the Trust may invest, and that the
Exchange can monitor those EUAs
through its CSSA with ICE Endex.32
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 information on
EUAs and Daily EUA Futures available
on public websites and through
professional and subscription services.
The trading prices for EUAs and the
daily EUA End of Day Index value and
historical EUA End of Day Index values
will be disseminated by on-line
subscription services or by one or more
major market data vendors during the
NYSE Arca Core Trading Session. The
daily EUA End of Day Index value is
also published on the EEX website. EEX
also provides on its website, on a daily
basis, transaction volumes and
transaction prices for the EUA spot
market. Additionally, ICE Endex
provides on its website, on a daily basis,
transaction volumes, transaction prices,
daily settlement prices and historical
settlement prices for Daily EUA Futures
that were traded outside of block trades
by EUA futures brokers. In addition,
transaction volumes, transaction prices,
daily settlement prices and historical
settlement prices for Daily EUA Futures
traded in block trades by futures brokers
are available on a daily basis through a
subscription service to ICE Endex. ICE
Endex also provides the daily settlement
price change of the Daily EUA Future on
its website.
In addition, the Trust’s website
(www.cotwoadvisors.com) will provide
pricing information for EUAs 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. Quotation and last-sale
information regarding the Shares will be
32 See
the discussion in the ‘‘Surveillance’’
section, supra.
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
disseminated through the facilities of
the Consolidated Tape Association. The
NAV of the Trust will be published on
each day that the NYSE Arca is open for
regular trading and will be posted on
the Trust’s website. The IFV relating to
the Shares will be widely disseminated
by one or more major market data
vendors at least once every 15 seconds
as required by NYSE Arca Rule 8.201–
E(e)(2)(v). The Trust’s website will also
provide its prospectus and other
relevant quantitative information
regarding the Shares. The Trust will also
provide website disclosure of its EUA
holdings before 9:30 a.m. E.T. on each
trading day. In addition, information
regarding market price and trading
volume of the Shares will be continually
available on a real-time basis throughout
the day on brokers’ computer screens
and other electronic services.
Information regarding the previous
day’s closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of an additional type of exchange-traded
product that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
As noted above, the Exchange has in
place surveillance procedures relating to
trading in the Shares and may obtain
information regarding trading in the
Shares, EUAs and Daily EUA Futures
via ISG from other exchanges that are
members of ISG or with which the
Exchange has entered into a CSSA.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change will enhance competition by
accommodating Exchange trading of an
additional exchange-traded product
relating to physical carbon credits.
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.
E:\FR\FM\26JAN1.SGM
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Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices
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.
Sherry R. Haywood,
Assistant Secretary.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEARCA–2024–05 on the subject
line.
lotter on DSK11XQN23PROD with NOTICES1
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–2024–05. 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
a.m. and 3 p.m. Copies of the filing also
VerDate Sep<11>2014
18:02 Jan 25, 2024
Jkt 262001
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSEARCA–2024–05 and should be
submitted on or before February 16,
2024.
For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.33
[FR Doc. 2024–01511 Filed 1–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99411; File No. SR–IEX–
2024–03]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Clarify Two
Aspects of its Recent Post Only Filing
and to Correct One Nonsubstantive
Typographical Error Introduced in the
Post Only Filing
January 22, 2024.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on January
16, 2024, the Investors Exchange LLC
(‘‘IEX’’ or the ‘‘Exchange’’) 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 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 the Substance
of the Proposed Rule Change
Pursuant to the provisions of section
19(b)(1) under the Securities Exchange
Act of 1934 (‘‘Act’’),4 and Rule 19b–4
thereunder,5 Investors Exchange LLC
(‘‘IEX’’ or ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
33 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 15 U.S.C. 78s(b)(1).
5 17 CFR 240.19b–4.
1 15
PO 00000
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Fmt 4703
Sfmt 4703
5283
(‘‘Commission’’) a proposed rule change
to clarify two aspects of its recent Post
Only Filing 6 and to correct one
nonsubstantive typographical error
introduced in the Post Only Filing. The
Exchange has designated this rule
change as ‘‘non-controversial’’ under
section 19(b)(3)(A) of the Act 7 and
provided the Commission with the
notice required by Rule 19b–4(f)(6)
thereunder.8
The text of the proposed rule change
is available at the Exchange’s website at
www.iextrading.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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization 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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange recently filed a rule
change to introduce a Post Only 9 order
parameter instruction and a related
Trade Now 10 order instruction.11 The
Post Only Filing was effective on filing,
and IEX expects to implement the new
functionality in February 2024.12 IEX
will issue a Trading Alert at least ten
(10) days in advance of the
implementation date.13
The Exchange is making this filing to
clarify two aspects of the Post Only
Filing and to correct one nonsubstantive
typographical error introduced in the
Post Only Filing. First, IEX proposes to
amend IEX Rule 11.190(a)(1)(H), which
currently states that a non-displayed
limit order ‘‘May include a Trade Now
instruction. . .,’’ to replace the word
6 See Securities Exchange Act Release No. 98988
(November 20, 2023), 88 FR 82926 (November 27,
2023) (SR–IEX–2023–13) (‘‘Post Only Filing’’).
7 15 U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4.
9 See IEX Rule 11.190(b)(20).
10 See IEX Rule 11.190(b)(21).
11 See supra note 6.
12 See IEX Trading Alert # 2024–002, available at
https://iextrading.com/alerts/#/238.
13 See supra note 6.
E:\FR\FM\26JAN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 18 (Friday, January 26, 2024)]
[Notices]
[Pages 5273-5283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01511]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99409; File No. SR-NYSEARCA-2024-05]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the COtwo Advisors
Physical European Carbon Allowance Trust Under NYSE Arca Rule 8.201-E
(Commodity-Based Trust Shares)
January 22, 2024.
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 January 10, 2024, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and
[[Page 5274]]
III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the COtwo
Advisors Physical European Carbon Allowance Trust under NYSE Arca Rule
8.201-E (Commodity-Based Trust Shares). The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade shares (``Shares'') of the
COtwo Advisors Physical European Carbon Allowance Trust (the
``Trust''), under NYSE Arca Rule 8.201-E, which governs the listing and
trading of Commodity-Based Trust Shares.\4\
---------------------------------------------------------------------------
\4\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
trust.
---------------------------------------------------------------------------
The Trust was formed as a Delaware statutory trust on January 12,
2023.\5\ The Trust has no fixed termination date. The Trust will not be
registered as an investment company under the Investment Company Act of
1940, as amended,\6\ and is not required to register under such act.
The Trust is not a commodity pool for purposes of the Commodity
Exchange Act, as amended.\7\
---------------------------------------------------------------------------
\5\ On May 12, 2023, the Trust filed with the Commission a
registration statement on Form S-1 (File No. 333-271910) (the
``Registration Statement'') under the Securities Act of 1933 (15
U.S.C. 77a) (the ``Securities Act''). The description of the
operation of the Trust herein is based, in part, on the Registration
Statement. The Registration Statement in not yet effective and the
Shares will not trade on the Exchange until such time that the
Registration Statement is effective.
\6\ 15 U.S.C. 80a-1.
\7\ 17 U.S.C. 1.
---------------------------------------------------------------------------
The sponsor of the Trust is COtwo Advisors LLC, a Delaware limited
liability company (``Sponsor''). State Street Bank and Trust Company
serves as the Trust's administrator (the ``Administrator'') to perform
various administrative, accounting and recordkeeping functions on
behalf of the Trust. Wilmington Trust serves as trustee of the Trust
(the ``Trustee''). State Street Bank and Trust Company serves as the
Trust's transfer agent (the ``Transfer Agent'') and as custodian of the
Trust's cash, if any (``Cash Custodian'').\8\
---------------------------------------------------------------------------
\8\ The Cash Custodian is responsible for holding the Trust's
cash as well as receiving and dispensing cash on behalf of the Trust
in connection with the payment of Trust expenses.
---------------------------------------------------------------------------
The Exchange represents that the Shares will satisfy the
requirements of NYSE Arca Rule 8.201-E and thereby will qualify for
listing on the Exchange.
Operation of the Trust \9\
---------------------------------------------------------------------------
\9\ The description of the operation of the Trust, the Shares,
and the carbon credit industry contained herein are based, in part,
on the Registration Statement. See note 5, supra.
---------------------------------------------------------------------------
The investment objective of the Trust will be for the Shares to
reflect the performance of the price of EU Carbon Emission Allowances
for stationary installations (``EUAs''), less the Trust's expenses. The
Trust intends to achieve its objective by investing all of its assets
in EUAs on a non-discretionary basis (i.e., without regard to whether
the value of EUAs is rising or falling over any particular period).
Shares of the Trust will represent units of fractional undivided
beneficial interest in and ownership of the Trust. The Trust's only
ordinary recurring expense will be the Sponsor's annual fee. The Trust
will not hold any assets other than EUAs and, possibly, a very limited
amount of cash to pay Trust expenses. The Trust may also cause the
Sponsor to receive EUAs from the Trust in such a quantity as may be
necessary to pay the Sponsor's annual fee.
The Trust will not invest in futures, options, options on futures,
or swap contracts. The Trust will not hold or trade in commodity
futures contracts, ``commodity interests,'' or any other instruments
regulated by the Commodity Exchange Act. As stated above, the Trust's
Cash Custodian may hold cash proceeds from EUA sales to pay Trust
expenses. All EUAs will be held in the Union Registry (defined below).
The Trust is not a proxy for investing in EUAs. Rather, the Shares
are intended to provide a cost-effective means of obtaining investment
exposure through the securities markets that is similar to an
investment in EUAs. Specifically, the Shares are intended to constitute
a simple and cost-efficient means of gaining investment benefits
similar to those of holding EUAs directly, by providing investors an
opportunity to participate in the EUA market through an investment in
the Shares, instead of the traditional means of purchasing and storing
EUAs. Trust shareholders will be exposed to the risks of investing in
EUAs, as well as to additional risks that are unrelated to EUAs. For
example, the public trading price at which an investor buys or sells
Shares during the day from their broker may be different from the value
of the Trust's holdings. Price differences may relate primarily to
supply and demand forces at work in the secondary trading market for
the Trust's Shares that are closely related to, but not identical to,
the same forces influencing the prices of EUAs, cash and cash
equivalents that constitute the Trust's assets. In addition, EUAs will
have to be sold to pay Trust expenses that would not be associated with
an investment in EUAs. Additional risks related to the Trust's
structure, the Sponsor's management of the Trust, and the tax treatment
of an investment in Shares are further in the Registration Statement.
EUAs and the EUA Industry
Description of EU Emissions Trading Scheme
According to the Registration Statement, the European Union
Emissions Trading System (``EU ETS'') is a ``cap and trade'' system
that caps the total volume of greenhouse gas (``GHG'') emissions from
installations and aircraft operators responsible for around 40% of
European Union (``EU'') GHG emissions.\10\ The EU ETS is the largest
cap and trade system in the world and covers more than 11,000 power
stations and industrial plants in 31 countries, and flights between
airports of participating countries. The EU ETS is administered by the
EU Commission, which issues a predefined amount of EUAs through
auctions or
---------------------------------------------------------------------------
\10\ There are two types of EU emissions allowance: (i) general
allowances for stationary installations, or EUA; and (ii) allowances
for the aviation sector (``EUAA''). The Trust will hold EUAs only.
---------------------------------------------------------------------------
[[Page 5275]]
free allocation. An EUA represents the right to emit one metric ton of
carbon dioxide equivalent into the atmosphere by operators of
stationary installations (``Covered Entities''). By the end of April
each year, all Covered Entities are required to surrender EUAs equal to
the total volume of actual emissions from their installation for the
last calendar year. EU ETS operators can buy or sell EUAs to achieve EU
ETS compliance.
In 2012, EU ETS operations were centralized into a single EU
registry operated by the EU Commission (the ``Union Registry''), which
covers all countries participating in the EU ETS. According to the
Registration Statement, the Union Registry is an online database that
holds accounts for all entities covered by the EU ETS as well as for
participants (such as the Trust) not covered under the EU ETS. The
Union Registry can be accessed online in a similar manner to online
banking systems. An account must be opened in the Union Registry by a
legal or natural person before being able to participate in the EU ETS
and transact in EUAs. The European Union Transaction Log (``EUTL'')
\11\ checks, records and authorizes all transactions that take place
between accounts in the Union Registry to ensure that transfers are in
accordance with the EU ETS rules. The Union Registry is at all times
responsible for holding the EUAs. All EUAs are held in the Union
Registry.
---------------------------------------------------------------------------
\11\ The EUTL is a central transaction log that checks and
records all transactions taking place within the EU ETS. It is run
by the European Commission and provides an easy access to emission
trading data contained in the EUTL. See https://www.eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1.
---------------------------------------------------------------------------
Major Holders and Allowance Use Cases
According to the Registration Statement, while there is limited
publicly available data on individuals or individual organizations'
holdings in physical carbon allowances, carbon allowances are primarily
held for three different use cases:
(a) Complying with the EU ETS: Companies that need to surrender
allowances under the EU ETS hold allowances to surrender them annually.
These positions are typically built over time and ultimately
surrendered at time of compliance. Therefore, the largest emitters in
the EU ETS hold a significant amount of allowances, which include
entities such as large utilities with a substantial share of fossil
fuel fired power plants, cement companies, steel producers, chemical
producers, oil and gas majors and airlines.
(b) Providing financial services for hedging purposes or
speculation, such as clearing houses for the European Energy Exchange
or the Intercontinental Exchange, or banks holding allowances for their
clients.
(c) Trading on and speculating around price moves, using physical
emission allowances. This can take many forms, including ``yield
trades'', which includes holding a physical allowance and selling an
EUA future at a premium to gain the yield in the forward curve; or
outright positions for short term or long term speculation.
In addition to holding physical allowances, there is a liquid
secondary futures and options market that is primarily used for hedging
future emissions or speculating.
Trading Location
According to the Registration Statement, the EU ETS is linked to
small emissions trading systems in Europe (Norway, Switzerland, Iceland
and Liechtenstein), but not to any other major cap and trade markets.
Therefore, allowances handed out in the EU ETS are not transferable to
any registry outside of the EU ETS and cannot be used for compliance in
any other cap and trade market.
There are a number of other trading systems globally, and like the
EU ETS, no allowances of any of these systems can be used in any other
system:
(a) Western Climate Initiative (WCI): The State of California and
the Canadian province Quebec created a linked cap and trade market,
that covers >80% of emissions.
(b) Regional Greenhouse Gas Initiative (RGGI): a group of US east
coast states created a linked market that covers power generators only.
(c) The China National ETS: Technically not a cap and trade scheme
(as the amount of allowances is not fixed but calculated according to
historic production of units).
(d) South Korea ETS: A comprehensive market covering the majority
of Korean emissions.
Pricing of Allowances and Trading Volume
According to the Registration Statement, there are currently two
primary avenues for trading EUAs: a primary market and a secondary
market. The primary market involves participation in a regularly
scheduled auction. The secondary market involves transactions between
buyers and sellers on regulated markets. The contracts offered for
trading are the following (1) instruments with a daily expiry,
including spot EUAs and the Daily EUA Future (as defined below), (2)
futures contracts with various maturities; and (3) options on futures
contracts. There are also over-the-counter transactions, but they
comprise a negligible percentage of transactions.
The spot and futures markets for EUAs have existed since 2005 after
the formal launch of the EU ETS on January 1, 2005. Spot EUA contracts
are traded exclusively on the European Energy Exchange AG
(``EEX''),\12\ and futures contracts are traded on EEX, and ICE Endex
Markets B.V. (``ICE Endex'') \13\ and Nasdaq Oslo, although the
latter's market share is marginal. Additionally, options on EUA futures
contracts are traded on EEX and ICE Endex, but not on Nasdaq Oslo.
---------------------------------------------------------------------------
\12\ EEX is an exchange under the German Exchange Act and a
Regulated Market (``RM''), as defined in the Markets in Financial
Instruments Directive (Directive 2014/65/EC) (``MIFID II''). As a RM
for spot and derivatives transactions, EEX is supervised by the
Saxon State Ministry for Economic Affairs, Labour and Transport (the
``Exchange Supervisory Authority''). The Exchange Supervisory
Authority is in charge of the legal supervision of EEX and of market
supervision of the trading participants according to the German
Exchange Act. The members of EEX are supervised by the Federal
Financial Supervisory Authority (BaFin). All trading participants
are required to comply with the market abuse regulations within the
German Securities Trading Act. Beside this supervision, the market
behavior at the spot and derivatives markets of all exchange
participants is supervised on a daily basis by the Market
Surveillance Office, an independent body of the exchange according
to Section 7 of the German Exchange Act. See https://www.esma.europa.eu/sites/default/files/EEX_1.pdf. See also Rules and
Regulations at https://www.eex.com/en/markets/trading-ressources/rules-and-regulations.
\13\ ICE Endex is regulated in the Netherlands by the Dutch
Authority for the Financial Markets (``AFM'') as a RM, as defined in
MIFID II, which is implemented in Dutch Act on Financial Supervision
(``DFSA''). The license as a RM is obtained under Section 5:26(1) of
the DFSA, resulting in an authorization by the Minister of Dutch
Ministry of Finance to operate a RM and supervised by the AFM. In
the UK, ICE Endex is a Recognized Overseas Investment Exchange by
the Financial Conduct Authority. See https://www.ice.com/endex/
regulation#:~:text=The%20Dutch%20Authority%20for%20Consumers,energy%2
0industry%20and%20wholesale%20trading. ICE Endex is also recognized
by the CFTC as an authorized Foreign Board of Trade. See https://www.cftc.gov/sites/default/files/idc/groups/public/@otherif/documents/ifdocs/orgiceeregorder170110.pdf.
---------------------------------------------------------------------------
According to the Registration Statement, the EUA markets are
generally liquid. The classifications for market participants include
five basic categories--(1) investment firms or credit institutions, (2)
investment funds, (3) other financial institutions, (4) operators with
compliance obligations and, (5) commercial undertakings which are non-
financial firms without compliance obligations.\14\ According to
[[Page 5276]]
the European Union Transaction Log, there are over 18,773 registry
accounts.\15\ The number of participants in the market have a direct
bearing on the quality of trading. An Oxera report indicates that as
the number of participants trading EUA futures has increased
consistently since January 2017, relative spreads, calculated as the
average quoted spread divided by the closing price, have decreased
significantly--from just under 0.4% in January 2017 to roughly 0.06% in
October 2021.\16\ In a February 2023 publication, Refinitiv estimated
the total EUA market size to be [euro]751.5 billion, up 10% versus
2021.\17\ As of January 2023, the secondary market had average daily
trading volume of [euro]2 billion, with the majority of the liquidity
in the futures market. EUA auctions are held on a near-daily basis
throughout the year, other than between mid-December to mid-January,
when auctions are paused. Twenty-eight countries (25 EU member states
plus Liechtenstein, Norway, and Iceland) have agreed to use EEX to
conduct their regularly scheduled auctions. Germany and Poland have
opted out of the common auction but also utilize the EEX for auctions.
Hence, EUA auctions take place exclusively on EEX. These auctions take
place on a regularly scheduled basis; the number of allowances being
auctioned is disclosed on a schedule prior to auction. Prices achieved
in these auctions are published on various publicly-accessible
websites, including the European Commission's primary website.
---------------------------------------------------------------------------
\14\ See esma70-445-
38_final_report_on_emission_allowances_and_associated_derivatives.pdf
(europa.eu).
\15\ See https://ec.europa.eu/clima/ets/.
\16\ Carbon trading in the European Union: An economic
assessment of market functioning in 2021, Oxera, p. 42 (February 15,
2022); available at https://www.oxera.com/wp-content/uploads/2022/02/Oxera-EU-carbon-trading-report-3.pdf.
\17\ See ``Review of Carbon Markets in 2022'' (February 2023):
available at https://www.refinitiv.com/content/dam/marketing/en_us/documents/gated/reports/carbon-market-year-in-review-2022.pdf. The
report presents Refinitiv's assessment of the world's major carbon
markets in 2022 and the total EUA market size includes spot,
auctions and futures.
---------------------------------------------------------------------------
Below is a discussion of the secondary markets for EUAs and
associated derivatives. The Trust will only hold EUAs, and will not
hold any of the related derivatives.
Instruments With a Daily Expiry
Instruments with daily expiry include spot EUAs traded on the EEX
and the Daily EUA Future traded on ICE Endex. The Exchange notes that
the settlement and economic outcome for a spot purchase on the EEX and
a same day futures purchase on the ICE Endex are identical (as further
detailed below). In fact, the European Securities Markets Authority
(``ESMA''), in its ``Final Report: Emission Allowances and Associated
Derivatives,'' uses the term ``spot'' EUAs to include both spot EUAs
traded on EEX and the Daily EUA Future traded on ICE Endex.\18\
---------------------------------------------------------------------------
\18\ See esma70-445-
38_final_report_on_emission_allowances_and_associated_derivatives.pdf
(europa.eu).
---------------------------------------------------------------------------
Spot EUA Market
As noted above, spot EUA contracts are traded exclusively on the
EEX. The current value (spot price) for a EUA is greatly influenced by
a number of factors, including regulatory changes, world events and
general levels of economic activity. The trading hours for spot EUAs on
EEX are 8:00 a.m. to 6:00 p.m. Central European Time (``C.E.T.''), and
trade registrations are possible until 6:45 p.m. C.E.T. Trades
concluded before 4:00 p.m. C.E.T. are settled on the next business day,
or T+1, while trades after 4:00 p.m. C.E.T. are settled on the day
after the first business day, or T+2. In the year-to-date period ended
December 6, 2023, the average daily, monthly and annual trading volumes
of spot EUAs on the EEX was 165,000, 3,332,000 and 39,983,000 EUAs,
respectively. Over the same period, spot EUA contracts traded at their
highest volume of 5,010,000 EUAs on December 1, 2023, and their lowest
volume of 1000 EUAs on January 9, 2023.
The EEX calculates and publishes an EEX end of day index on the
price of EEX EUA spot contracts (the ``EUA End of Day Index''). The
value of the EUA End of Day Index is calculated based on an algorithm
using data regarding the prices of qualifying trades and the average
bids and asks of orders that meet certain order quantity requirements.
In order for data regarding trades and orders to be used for
calculating the value of the EUA End of Day Index, the trades or orders
must satisfy certain requirements regarding (i) quantity of traded
contracts, (ii) quantity of contracts per order, (iii) minimum duration
of the cumulated valid best bid and best ask, and (iv) maximum spread
per contract. The EUA End of Day Index calculation methodology depends
on the number of valid trades and orders which fulfil the product-
specific parameters.\19\ The data used for calculating the EUA End of
Day Index can also come from fair values collected in a price committee
or from other price sources. The EUA End of Day Index price calculated
is then validated against actual market prices.
---------------------------------------------------------------------------
\19\ The EUA End of Day Index methodology is available at
https://www.eex.com/fileadmin/EEX/Downloads/Trading/Specifications/Indeces/DE/20211005_Index_Description_v010.pdf.
---------------------------------------------------------------------------
Daily EUA Futures
Most liquidity in the secondary market is achieved by trading
futures contracts. These contracts have expiration going out as far as
2030. A single day futures contract on EUAs is exclusively traded on
the ICE Endex (the ``Daily EUA Future''), which settles each day at the
close of trading.\20\ The Daily EUA Future is a deliverable contract
where each person with a position open at cessation of trading is
obliged to make or take delivery of EUAs upon the expiration of the
contract at the end of each trading day. Each Daily EUA Future
represents one lot of 1,000 EUAs, with each EUA providing an
entitlement to emit one ton of carbon dioxide equivalent gas.
Generally, Daily EUA Futures trade on ICE Endex from approximately 2:00
a.m. Eastern Time (``E.T.'') to approximately 12:00 p.m. E.T. The
settlement price is fixed each business day and is published by the
exchange at approximately 12:15 E.T. Final cash settlement occurs the
first business day following the expiry day. In the year-to-date period
ended December 6, 2023, the average daily, monthly and annual trading
volumes of Daily EUA Futures was 3,144, 68,758 and 761,046,
respectively, which represents trading volumes of 3,144,000, 68,758,000
and 761,046,000 EUAs, respectively. Over the same period, Daily EUA
Futures traded at their highest volume of 20,473 on July 12, 2023,
representing 20,473,000 EUAs, and their lowest volume of 218 on May 8,
2023, representing 218,000 EUAs.
---------------------------------------------------------------------------
\20\ NASDAQ Oslo also offers a single day futures contract on
EUAs, but the contract is not traded. All references to the ``Daily
EUA Future'' refer to the single day EUA futures contract traded on
ICE Endex.
---------------------------------------------------------------------------
Comparison of Spot EUA Market and Daily EUA Futures Market
The daily EUA End of Day Index value can be expected to be
substantially identical to the daily settlement price of the Daily EUA
Future. Below is a comparison of the daily EUA End of Day Index value
and the Daily EUA Future settlement price over a recent 45 calendar day
period.
[[Page 5277]]
----------------------------------------------------------------------------------------------------------------
EEX End of Day ICE final Difference--EEX
Date Index settlement v. ICE
----------------------------------------------------------------------------------------------------------------
12/8/23........................................................ [euro]68.56 [euro]68.56 [euro]0.00
12/7/23........................................................ 69.58 69.58 0.00
12/6/23........................................................ 68.73 68.73 0.00
12/5/23........................................................ 68.54 68.54 0.00
12/4/23........................................................ 70.26 70.26 0.00
12/1/23........................................................ 72.38 72.38 0.00
11/30/23....................................................... 70.69 70.69 0.00
11/29/23....................................................... 70.87 70.87 0.00
11/28/23....................................................... 72.78 72.78 0.00
11/27/23....................................................... 73.45 73.45 0.00
11/24/23....................................................... 76.37 76.37 0.00
11/23/23....................................................... 76.35 76.35 0.00
11/22/23....................................................... 74.96 74.96 0.00
11/21/23....................................................... 75.12 75.12 0.00
11/20/23....................................................... 76.35 76.35 0.00
11/17/23....................................................... 76.28 76.28 0.00
11/16/23....................................................... 76.73 76.73 0.00
11/15/23....................................................... 79.42 79.42 0.00
11/14/23....................................................... 78.29 78.29 0.00
11/13/23....................................................... 77.14 77.14 0.00
11/10/23....................................................... 78.33 78.33 0.00
11/9/23........................................................ 77.03 77.02 0.01
11/8/23........................................................ 75.33 75.33 0.00
11/7/23........................................................ 74.88 74.88 0.00
11/6/23........................................................ 75.46 75.46 0.00
11/3/23........................................................ 77.24 77.24 0.00
11/2/23........................................................ 78.20 78.20 0.00
11/1/23........................................................ 78.10 78.10 0.00
10/31/23....................................................... 78.59 78.59 0.00
10/30/23....................................................... 78.25 78.25 0.00
10/27/23....................................................... 78.84 78.84 0.00
10/26/23....................................................... 79.14 79.14 0.00
----------------------------------------------------------------------------------------------------------------
Additionally, the chart below illustrates how closely the Daily EUA
Future, in fact, reflects the EUA spot price during the trading day.
This chart shows the spot prices in continuous trading on the EEX and
the intra-day prices of Daily EUA Futures on ICE Endex, in EUR/tCO2
from January 2018 to January 2022. This shows an average absolute
difference of [euro]0.015 between the daily prices for EUAs on the EEX
and ICE Endex.
[[Page 5278]]
[GRAPHIC] [TIFF OMITTED] TN26JA24.005
(https://www.esma.europa.eu/sites/default/files/library/esma70-445-38_final_report_on_emission_allowances_and_associated_derivatives.pdf
:p37).
Other EUA Futures Contracts
EEX offers monthly EUA futures contracts for the current and next
two months unless a quarterly or December future expires at that
month's maturity date; quarterly futures for the current and next 11
quarters unless a December future expires at that quarter's maturity
date; and yearly, or December, futures for the next 8 years which
mature in December of each respective year. ICE Endex offers up to
seven December futures contracts, nine quarterly futures contracts,
three August futures contracts and two monthly futures contracts.
Nasdaq Oslo offers a quarterly futures contracts over a rolling six
year period.
Options on EUA Futures Contracts
Options on EUA futures contracts are also traded on EEX and ICE
Endex for the December futures contracts.
Creation and Redemption of Shares
According to the Registration Statement, the Trust will create and
redeem Shares on a continuous basis in one or more Creation Units. A
Creation Unit equals a block of 50,000 Shares, which amount may be
revised from time-to-time. The Trust will issue Shares in Creation
Units to certain authorized participants (``Authorized Participants'')
on an ongoing basis. Each Authorized Participant must be a registered
broker-dealer or other securities market participant such as a bank or
other financial institution which is not required to register as a
broker-dealer to engage in securities transactions, a participant in
The Depository Trust Company (``DTC'') and have entered into an
agreement with the Sponsor and the Transfer Agent (the ``Participant
Agreement'').
Creation Units may be created or redeemed only by Authorized
Participants. The creation and redemption of Creation Units is only
made in exchange for the delivery to the Trust or the distribution by
the Trust of the amount of EUAs represented by the Creation Units being
created or redeemed. The amount of EUAs required to be delivered to the
Trust in connection with any creation, or paid out upon redemption, is
based on the combined net asset value of the number of Shares included
in the Creation Units being created or redeemed as determined on the
day the order to create or redeem Creation Units is properly received
and accepted. Orders must be placed by 11:00 a.m. New York time. The
day on which the Administrator receives a valid purchase or redemption
order is the order date. Creation Units may only be issued or redeemed
on a day that the Exchange is open for regular trading.
An Authorized Participant who places a purchase order is
responsible for crediting the Trust's Union Registry account with the
required EUA deposit by 2:00 p.m. New York time on the second business
day following the order date. Upon receipt of the EUA deposit amount in
the Trust's Union Registry account, the Union Registry will notify the
Sponsor that the EUAs have been deposited. Upon receipt of confirmation
from the Union Registry that the EUA deposit amount has been received,
the Administrator will direct DTC to credit the number of Shares
created to the Authorized Participant's DTC account.
According to the Registration Statement, the redemption
distribution due from the Trust will be delivered once the
Administrator notifies the Sponsor that the Authorized Participant has
delivered the Shares to be redeemed to the Trust's DTC account. The
redemption distribution will be delivered to the Authorized Participant
on the second business day following the order date. Once the
Administrator notifies the Sponsor that the Shares have been received
in the Trust's DTC account, the Sponsor instructs the Union Registry to
transfer the redemption EUA amount from the Trust's Union Registry
account to the Authorized Participant's Union Registry account.
[[Page 5279]]
The Sponsor is the only entity that may initiate a withdrawal of
EUAs from the Trust's Union Registry account, and the only accounts
that may receive EUAs from the Trust's Union Registry account are
Authorized Participants' or the Sponsor's Union Registry accounts.
Net Asset Value (``NAV'')
The Trust's NAV is calculated by taking the current market value of
its total assets, less any liabilities of the Trust, and dividing that
total by the total number of outstanding Shares.
The Administrator will calculate the NAV of the Trust once each
Exchange trading day. The NAV for a normal trading day will be released
after the end of the Core Trading Session, which is typically 4 p.m.
New York time. The NAV for the Trust's Shares will be disseminated
daily to all market participants at the same time. The Administrator
will use that day's EUA End of Day Index value, as published by EEX, to
calculate the NAV. The Administrator also converts the value of Euro
denominated assets into US Dollar equivalent using published foreign
currency exchange prices by an independent pricing vendor. Third
parties supplying quotations or market data may include, without
limitation, dealers in the relevant markets, end-users of the relevant
product, information vendors, brokers and other sources of market
information.
Indicative Fund Value (``IFV'')
In order to provide updated information relating to the Trust for
use by investors and market professionals, an updated IFV will be made
available through on-line information services throughout the Exchange
Core Trading Session (normally 9:30 a.m. to 4:00 p.m. E.T.) on each
trading day. The IFV will be calculated by using the prior day's
closing NAV per Share of the Trust as a base and updating that value
throughout the trading day to reflect changes in the most recently
reported bid-ask spread of the spot EUA market on EEX. The IFV
disseminated during NYSE Arca Core Trading Session hours should not be
viewed as an actual real time update of the NAV, because the NAV will
be calculated only once at the end of each trading day based upon the
relevant end of day values of the Trust's investments. Although the IFV
will be disseminated throughout the Core Trading Session, the customary
trading hours for EUAs are 2 a.m. to 12 p.m. Eastern Time. During the
gap in time at the end of each trading day during which the Shares are
traded on the Exchange, but real-time trading prices for EUAs are not
available, the IFV will be calculated based on the end of day price of
EUAs immediately preceding the trading session.
The IFV will be disseminated on a per Share basis every 15 seconds
during regular NYSE Arca Core Trading Session.
Availability of Information
The NAV for the Trust's Shares will be disseminated daily to all
market participants at the same time. The intraday, closing prices, and
settlement prices for EUAs will be readily available from the
applicable futures exchange websites, automated quotation systems,
published or other public sources, or major market data vendors. The
IFV per Share 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).
Complete real-time data for EUAs and Daily EUA Futures is available
by subscription through on-line information services. Quotation and
last-sale information regarding the Shares will be disseminated through
the facilities of the Consolidated Tape Association. The IFV will be
available through on-line information services. The trading prices for
EUAs and the daily EUA End of Day Index value and historical EUA End of
Day Index values will be disseminated by on-line subscription services
or by one or more major market data vendors during the NYSE Arca Core
Trading Session of 9:30 a.m. to 4:00 p.m. E.T. The EUA End of Day Index
value is also published daily on the EEX website.
EEX also provides on its website, on a daily basis, transaction
volumes and transaction prices for the EUA spot market. ICE Endex
provides on its website, on a daily basis, transaction volumes,
transaction prices, daily settlement prices and historical settlement
prices for Daily EUA Futures that were traded outside of block trades
by EUA futures brokers. In addition, transaction volumes, transaction
prices, daily settlement prices and historical settlement prices for
Daily EUA Futures traded in block trades by futures brokers are
available on a daily basis through a subscription service to ICE Endex.
However, ICE Endex provides the daily settlement price change of the
Daily EUA Future on its website.
In addition, the Trust's website (www.cotwoadvisors.com) will
contain the following information, on a per Share basis, for the Trust:
(a) the prior business day's end of day closing NAV; (b) the Official
Closing Price \21\ or the midpoint of the national best bid and the
national best offer (``NBBO'') as of the time the NAV is calculated
(``Bid-Ask Price''); (c) calculation of the premium or discount of the
Official Closing Price against the NAV expressed as a percentage of
such NAV; (d) the prospectus; and (e) other applicable quantitative
information. The Trust will also provide website disclosure of its EUA
holdings before 9:30 a.m. E.T. on each trading day.
---------------------------------------------------------------------------
\21\ The term ``Official Closing Price'' is defined in NYSE Arca
Rule 1.1(ll) as the reference price to determine the closing price
in a security for purposes of Rule 7- E Equities Trading, and the
procedures for determining the Official Closing Price are set forth
in that rule.
---------------------------------------------------------------------------
The Trust's website will be publicly available prior to the public
offering of Shares and accessible at no charge. The website disclosure
of the Trust's daily holdings will occur at the same time as the
disclosure by the Trust of the daily holdings to Authorized
Participants so that all market participants are provided daily
holdings information at the same time. Therefore, the same holdings
information will be provided on the public website as well as in
electronic files provided to Authorized Participants. Accordingly, each
investor will have access to the current daily holdings of the Trust
through the Trust's website. 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.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Trading in the Shares
on the Exchange will occur in accordance with NYSE Arca Rule 7.34-E
(Early, Core, and Late Trading Sessions). 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.
The Shares will conform to the initial and continued listing
criteria under
[[Page 5280]]
NYSE Arca Rule 8.201-E. The trading of the Shares will be subject to
NYSE Arca Rule 8.201-E(g), which sets forth certain restrictions on
Equity Trading Permit (``ETP'') Holders acting as registered Market
Makers in Commodity-Based Trust Shares to facilitate surveillance. The
Exchange represents that, for initial and continued listing, the Trust
will be in compliance with Rule 10A-3 \22\ under the Act, as provided
by NYSE Arca Rule 5.3-E. A minimum of 10,000 Shares will be outstanding
at the commencement of trading on the Exchange.
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\22\ 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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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. To the extent the Exchange may be
found to lack jurisdiction over a subsidiary or affiliate of an ETP
Holder that does business only in commodities or futures contracts, 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 carbon
credit 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.\23\
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\23\ See NYSE Arca Rule 7.12-E.
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The Exchange may halt trading during the day in which an
interruption occurs to the dissemination of the IFV, as described
above. If the interruption to the dissemination of the IFV persists
past the trading day in which it occurs, the Exchange will halt trading
no later than the beginning of the trading day following the
interruption. In addition, if the Exchange becomes aware that the NAV
with respect to the Shares is not disseminated to all market
participants at the same time, it will halt trading in the Shares until
such time as the NAV is available to all market participants.
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 Inc. (``FINRA''), on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws.\24\ 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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\24\ 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 believes that the proposal is designed to prevent
fraudulent and manipulative acts and practices and to protect investors
and the public interest, consistent with section 6(b)(5) of the Act.
The Commission has explained that a proposal could satisfy the
requirements of the Act in the first instance by demonstrating that the
listing exchange has entered into a comprehensive surveillance-sharing
agreement (``CSSA'') with a regulated ``market of significant size''
relating to the underlying assets.\25\ The Commission has further
stated that ``[c]onsistent with the discussion of `significant market'
. . . , the Commission has not previously, and does not now, require
that [a] listing exchange be able to enter into a surveillance-sharing
agreement with each regulated spot or derivatives market relating to an
underlying asset, provided that the market or markets with which there
is such an agreement constitute a `significant market.' '' \26\
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\25\ See Securities Exchange Act Release No. 88284 (February 26,
2020), 85 FR 12595 (March 3, 2020) (SR-NYSEArca-2019-39) (Order
Disapproving a Proposed Rule Change, as Modified by Amendment No. 1,
to Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares) and
to List and Trade Shares of the United States Bitcoin and Treasury
Investment Trust Under NYSE Arca Rule 8.201-E).
\26\ See Securities Exchange Act Release No. 83723 (July 26,
2018), 83 FR 37579 (August 1, 2018) (Order Setting Aside Action by
Delegated Authority and Disapproving a Proposed Rule Change, as
Modified by Amendments No. 1 and 2, to List and Trade Shares of the
Winklevoss Bitcoin Trust).
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The Exchange has entered into a CSSA with ICE Endex. Pursuant to
the CSSA, the Exchange will communicate as needed regarding trading in
the Shares and Daily EUA Futures with ICE Endex, and the Exchange may
obtain trading information regarding trading in the Shares and Daily
EUA Futures from ICE Endex.
The Exchange believes that ICE Endex is a regulated \27\ market of
significant size related to EUAs and that it is reasonably likely that
any bad actor trying to manipulate the price of the Trust would have to
trade the Daily EUA Futures traded on ICE Endex. Therefore, ICE Endex
is an appropriate market to surveil in order to detect and deter fraud
and manipulation of EUAs. The term ``market of significant size''
includes a market as to which (a) there is a reasonable likelihood that
a person attempting to manipulate the Trust Shares would also have to
trade on that market to successfully manipulate the Trust Shares, and
(b) it is unlikely that trading in the Trust Shares would be the
predominant influence on prices in that market.
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\27\ See note 13, supra.
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ICE Endex is the only market for trading Daily EUA Futures and it
accounts for 95% of the trading volume for EUAs with ``daily expiry''
(which, as described above, includes spot EUAs and Daily EUA Futures).
While the Trust will hold EUAs traded on EEX, this is economically
equivalent to holding EUAs received after settling Daily EUA Futures
that trade on ICE Endex. As described above, the correlation between
the EUA End of Day Index value that reflects the value of the spot EUAs
traded on EEX and the Daily EUA Future settlement price is nearly
perfect. Thus, on any given day, the value of an EUA purchased on EEX
or an EUA received after settling a Daily EUA Future traded on ICE
Endex is the same.
Given the significant size of ICE Endex, there is a reasonable
likelihood that a market participant attempting to manipulate the Trust
Shares would also have to trade on ICE Endex to successfully manipulate
the Trust Shares. While it is possible that a potential manipulator
could chose to trade only in the spot EUA market
[[Page 5281]]
(EEX), the near-perfect correlation between the EUA End of Day Index
value and the Daily EUA Future settlement price means that a price
distortion in the spot EUA market would be reflected in the Daily EUA
Futures market and vice versa.\28\
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\28\ The Commission has granted several prior proposals to list
and trade shares of physical commodity-based exchange-traded
products, noting in every case that there was at least one regulated
market of significant size for trading futures in the underlying
commodity--whether gold, silver, platinum, palladium or copper--and
the product's listing exchange has entered into surveillance-sharing
agreements with, or held Intermarket Surveillance Group (``ISG'')
membership in common with, that market. See Securities Exchange Act
Release Nos. 61220 (December 22, 2009), 74 FR 68895, 68896 (December
29, 2009) (SR-NYSEArca-2009-94) (notice of proposed rule change
included NYSE Arca's representation that ``[t]he most significant
palladium futures exchanges are the NYMEX and the Tokyo Commodity
Exchange,'' that ``NYMEX is the largest exchange in the world for
trading precious metals futures and options,'' and that NYSE Arca
``may obtain trading information via the Intermarket Surveillance
Group,'' of which NYMEX is a member; 61219 (December 22, 2009), 74
FR 68886, 68887-88 (December 29, 2009) (SR-NYSEArca-2009-95) (notice
of proposed rule change included NYSE Arca's representation that
``[t]he most significant platinum futures exchanges are the NYMEX
and the Tokyo Commodity Exchange,'' that ``NYMEX is the largest
exchange in the world for trading precious metals futures and
options,'' and that NYSE Arca ``may obtain trading information via
the Intermarket Surveillance Group,'' of which NYMEX is a member;
62692 (August 11, 2010), 75 FR 50789, 50790 (August 17, 2010) (SR-
NYSEArca-2010-56) (notice of proposed rule change included NYSE
Arca's representation that ``the most significant gold, silver,
platinum and palladium futures exchanges are the COMEX and the
TOCOM'' and that NYSE Arca ``may obtain trading information via the
Intermarket Surveillance Group,'' of which COMEX is a member; 62875
(September 9, 2010), 75 FR 56156, 56158 (September 15, 2010) (SR-
NYSEArca-2010-71) (notice of proposed rule change included NYSE
Arca's representation that ``the most significant silver, platinum
and palladium futures exchanges are the COMEX and the TOCOM'' and
that NYSE Arca ``may obtain trading information via the Intermarket
Surveillance Group,'' of which COMEX is a member; 63464 (December 8,
2010), 75 FR 77926, 77928 (December 14, 2010) (SR-NYSEArca-2010-95)
(notice of proposed rule change included NYSE Arca's representation
that ``the most significant gold futures exchanges are the COMEX and
the Tokyo Commodity Exchange,'' that ``COMEX is the largest exchange
in the world for trading precious metals futures and options,'' and
that NYSE Arca ``may obtain trading information via the Intermarket
Surveillance Group,'' of which COMEX is a member; 68430 (December
13, 2012), 77 FR 75239, 75240-41 (December 19, 2012) (SR-NYSEArca-
2012-111) (notice of proposed rule change included NYSE Arca's
representation that ``[f]utures on platinum and palladium are traded
on two major exchanges: The New York Mercantile Exchange . . . and
Tokyo Commodities Exchange'' and that NYSE Arca ``may obtain trading
information via the Intermarket Surveillance Group,'' of which COMEX
is a member; 71378 (January 23, 2014), 79 FR 4786, 4786-87 (January
29, 2014) (SR-NYSEArca-2013-137) (notice of proposed rule change
included NYSE Arca's representation that ``COMEX is the largest gold
futures and options exchange'' and that NYSE Arca ``may obtain
trading information via the Intermarket Surveillance Group,''
including with respect to transactions occurring on COMEX pursuant
to CME and NYMEX's membership, or from exchanges ``with which [NYSE
Arca] has in place a comprehensive surveillance sharing
agreement.'').
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It is unlikely that trading in the Trust Shares would be the
predominant influence on Daily EUA Futures prices traded on ICE Endex
for a number of reasons, including the significant volume in and size
of the EUA daily expiry market. The total EUA market size is
approximately [euro]695.8 billion with approximately [euro]64.1 billion
of that attributable to the Daily EUA Futures market. The daily average
trading volume for EUAs across the secondary market is approximately
[euro]2 billion, with approximately [euro]264.8 million attributable to
trading in the Daily EUA Futures market. The Trust has not yet launched
and cannot predict its future inflows; however, given the size of the
Daily EUA Futures market and the EUA market, as a whole, the Sponsor
does not anticipate that the Trust will have available capital to buy
and sell EUAs in an amount that would move the EUA market.
Based on the foregoing, the Exchange believes that prices on the
Daily EUA Futures market (ICE Endex) can reasonably be relied upon to
reflect the effects on the Daily EUA Futures market caused by a market
participant attempting to manipulate the Trust Shares whether that
attempt is made by directly trading on ICE Endex or indirectly by
trading on the EUA spot market (EEX). In other words, to the extent
that the price of Daily EUA Futures might be affected by trading in
either the futures and spot markets, the price impact of potential
fraud in either market would be reflected by a corresponding change to
the price of the Daily EUA Futures Market (with which the Exchange has
a CSSA).
The Exchange represents that all EUAs held by the Trust will be
held and maintained in the Union Registry and that the Trust will not
invest in futures, options, options on futures, or swap contracts. It
is possible that EUAs and Daily EUA Futures may become listed on other
exchanges that are members of ISG \29\ or with which the Exchange has
in place a comprehensive surveillance sharing agreement. The Exchange
further represents that EEX is the principal market for all EUAs in
which the Trust may invest, that the Exchange has a CSSA in place with
ICE Endex, and that, because of the near-perfect correlation between
the EUA End of Day Index value and the Daily EUA Future settlement
price, the price impact of potential fraud in the spot market on EEX
will be reflected in a corresponding change to the price of futures
traded on ICE Endex.
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\29\ 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 accounts for trading in the Shares in
connection with ETP Holders' proprietary or customer trades which they
effect through ETP Holders 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 or reference assets, (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
on the Exchange.
The Trust 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 IFV 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 premium or discount on the Shares may widen as a result of
reduced liquidity of EUAs during the Core and Late Trading Sessions;
and (6) trading information. For example, the Information Bulletin will
advise ETP Holders, prior to the
[[Page 5282]]
commencement of trading, of the prospectus delivery requirements
applicable to the Trust. 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 will be described in the
Registration Statement. The Information Bulletin will also reference
the fact that last sale information regarding EUAs is subject to
regulation by EEX and ICE Endex, that the Commission and the CFTC do
not have jurisdiction over the trading of EUAs as a commodity, and that
jurisdiction over the trading of EUAs is held by the relevant competent
authority of the individual EU member states in which the trading takes
place, namely the Bundesanstalt f[uuml]r Finanzdienstleistungsaufsicht
(BaFIN) in Germany and the Autoriteit Financi[euml]le Markten (AFM) in
the Netherlands.\30\ The Information Bulletin will also discuss any
relief, if granted, by the Commission or the staff from any rules under
the Act.
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\30\ Article 22 of Regulation (EU) No. 596/2014 on market abuse
(market abuse regulation) (``MAR'') requires each EU member state to
designate a single administrative competent authority to ensure that
the provisions of MAR are applied on its territory. Commission
Regulation 596/2014, 2014 O.J. (L 173) 42. For a list of the
competent authorities for each EU Member State. See https://www.esma.europa.eu/sites/default/files/mar.pdf.
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The Information Bulletin will also disclose the trading hours of
the Shares and that the NAV for the Shares will be calculated after
4:00 p.m. E.T. each trading day. The Information Bulletin will disclose
that information about the Shares will be publicly available on the
Trust's website.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under section 6(b)(5) \31\ 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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\31\ 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 regarding trading
in the Shares and Daily EUA Futures from ICE Endex with which the
Exchange has entered into a CSSA. The Exchange represents that all EUAs
held by the Trust will be held and maintained in the Union Registry and
that the Trust will not invest in futures, options, options on futures,
or swap contracts. The Exchange further represents that EEX is the
principal market for all EUAs in which the Trust may invest, and that
the Exchange can monitor those EUAs through its CSSA with ICE
Endex.\32\
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\32\ See the discussion in the ``Surveillance'' section, supra.
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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 information on EUAs and Daily
EUA Futures available on public websites and through professional and
subscription services. The trading prices for EUAs and the daily EUA
End of Day Index value and historical EUA End of Day Index values will
be disseminated by on-line subscription services or by one or more
major market data vendors during the NYSE Arca Core Trading Session.
The daily EUA End of Day Index value is also published on the EEX
website. EEX also provides on its website, on a daily basis,
transaction volumes and transaction prices for the EUA spot market.
Additionally, ICE Endex provides on its website, on a daily basis,
transaction volumes, transaction prices, daily settlement prices and
historical settlement prices for Daily EUA Futures that were traded
outside of block trades by EUA futures brokers. In addition,
transaction volumes, transaction prices, daily settlement prices and
historical settlement prices for Daily EUA Futures traded in block
trades by futures brokers are available on a daily basis through a
subscription service to ICE Endex. ICE Endex also provides the daily
settlement price change of the Daily EUA Future on its website.
In addition, the Trust's website (www.cotwoadvisors.com) will
provide pricing information for EUAs 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. Quotation and last-sale information regarding the Shares
will be disseminated through the facilities of the Consolidated Tape
Association. The NAV of the Trust will be published on each day that
the NYSE Arca is open for regular trading and will be posted on the
Trust's website. The IFV relating to the Shares will be widely
disseminated by one or more major market data vendors at least once
every 15 seconds as required by NYSE Arca Rule 8.201-E(e)(2)(v). The
Trust's website will also provide its prospectus and other relevant
quantitative information regarding the Shares. The Trust will also
provide website disclosure of its EUA holdings before 9:30 a.m. E.T. on
each trading day. In addition, information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services. Information regarding the previous day's closing
price and trading volume information for the Shares will be published
daily in the financial section of newspapers.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
regarding trading in the Shares, EUAs and Daily EUA Futures via ISG
from other exchanges that are members of ISG or with which the Exchange
has entered into a CSSA.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating to physical
carbon credits.
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.
[[Page 5283]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSEARCA-2024-05 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-2024-05. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEARCA-2024-05 and should
be submitted on or before February 16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01511 Filed 1-25-24; 8:45 am]
BILLING CODE 8011-01-P
