Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To List and Trade Shares of the Grayscale Ethereum Trust Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares), 6155-6156 [2024-01860]
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Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99428; File No. SR–
NYSEARCA–2023–70]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change To List and Trade Shares
of the Grayscale Ethereum Trust Under
NYSE Arca Rule 8.201–E (CommodityBased Trust Shares)
January 25, 2024.
On October 10, 2023, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘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 to list and trade shares
(‘‘Shares’’) of the Grayscale Ethereum
Trust (‘‘Trust’’) under NYSE Arca Rule
8.201–E (Commodity-Based Trust
Shares). The proposed rule change was
published for comment in the Federal
Register on October 27, 2023.3
On December 5, 2023, pursuant to
Section 19(b)(2) of the Act,4 the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 This order
institutes proceedings under Section
19(b)(2)(B) of the Act 6 to determine
whether to approve or disapprove the
proposed rule change.
I. Summary of the Proposal
As described in more detail in the
Notice,7 the Exchange proposes to list
and trade the Shares of the Trust under
NYSE Arca Rule 8.201–E, which
governs the listing and trading of
Commodity-Based Trust Shares on the
Exchange.
According to the Exchange, the
investment objective of the Trust is for
the value of the Shares to reflect the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 98780
(Oct. 23, 2023), 88 FR 73892 (‘‘Notice’’). Comments
on the proposed rule change are available at:
https://www.sec.gov/comments/sr-nysearca-202370/srnysearca202370.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 99082,
88 FR 85962 (Dec. 11, 2023). The Commission
designated January 25, 2024, as the date by which
the Commission shall approve or disapprove, or
institute proceedings to determine whether to
disapprove, the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
7 See Notice, supra note 3.
lotter on DSK11XQN23PROD with NOTICES1
2 17
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17:00 Jan 30, 2024
Jkt 262001
value of the Ethereum (‘‘ETH’’) 8 held by
the Trust, determined by reference to
the ‘‘Index Price,’’ less the Trust’s
expenses and other liabilities.9 The
‘‘Index Price’’ is the U.S. dollar value of
an ETH derived from the ‘‘Digital Asset
Exchanges’’ 10 that are reflected in the
‘‘Index,’’ calculated at 4:00 p.m., New
York time, on each business day.11 The
Trust’s assets will consist solely of ETH;
Incidental Rights; 12 IR Virtual
Currency; 13 proceeds from the sale of
ETH, Incidental Rights, and IR Virtual
Currency pending use of such cash for
payment of Additional Trust
Expenses 14 or distribution to
shareholders, and any rights of the Trust
pursuant to any agreements, other than
the trust agreement, to which the Trust
is a party.15 Each Share represents a
proportional interest, based on the total
number of Shares outstanding, in each
of the Trust’s assets as determined by
reference to the Index Price, less the
Trust’s expenses and other liabilities
(which include accrued but unpaid fees
and expenses).16 On each business day
at 4:00 p.m., New York time, or as soon
thereafter as practicable, the Sponsor
will evaluate the ETH held by the Trust
and calculate and publish the ‘‘Digital
8 In its filing, the Exchange defines ‘‘ETH’’ as
‘‘Ethereum’’. See id. at 73893. It, however, also
provides that ‘‘[t]he Ethereum Network allows
people to exchange tokens of value, called Ether,
which are recorded on a public transaction ledger
known as a blockchain.’’ See id. at 73894.
9 See id. at 73894. Grayscale Investments, LLC
(‘‘Sponsor’’) is the sponsor of the Trust and is a
wholly-owned subsidiary of Digital Currency
Group, Inc. See id. at 73893.
10 A ‘‘Digital Asset Exchange’’ is an electronic
marketplace where participants may trade, buy and
sell ETH based on bid-ask trading. See id. at 73894
n.16.
11 See id. at 73894 n.14. The index provider for
the Trust is CoinDesk Indices, Inc. See id. at 73893.
While the Exchange does not name the ‘‘Index’’ that
the Trust would use to value the ETH held by the
Trust, the Exchange provides that the value of the
Index, as well as additional information regarding
the Index, will be available at https://
www.coindesk.com/indices. See id. at 73910.
12 ‘‘Incidental Rights’’ are rights to acquire, or
otherwise establish dominion and control over, any
virtual currency or other asset or right, which rights
are incident to the Trust’s ownership of ETH and
arise without any action of the Trust, or of the
Sponsor or trustee on behalf of the Trust. See id.
at 73893 n.11.
13 ‘‘IR Virtual Currency’’ is any virtual currency
tokens, or other asset or right, acquired by the Trust
through the exercise (subject to the applicable
provisions of the trust agreement) of any Incidental
Right. See id. at 73893 n.12.
14 ‘‘Additional Trust Expenses’’ are any expenses
incurred by the Trust in addition to the Sponsor’s
fee that are not Sponsor-paid expenses. See id. at
73893 n.13.
15 See id. at 73893–94.
16 See id. at 73894.
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Frm 00068
Fmt 4703
Sfmt 4703
6155
Asset Holdings’’ 17 of the Trust.18 When
the Trust sells or redeems its Shares, it
will do so either in ‘‘in-kind’’ or ‘‘incash’’ transactions with authorized
participants in blocks of 100 Shares.19
II. Proceedings To Determine Whether
To Approve or Disapprove SR–
NYSEARCA–2023–70 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 20 to determine
whether the proposed rule change
should be approved or disapproved.
Institution of proceedings is appropriate
at this time in view of the legal and
policy issues raised by the proposed
rule change, as discussed below.
Institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved. Rather, as
described below, the Commission seeks
and encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Act,21 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for
additional analysis of the proposed rule
change’s consistency with Section
6(b)(5) of the Act, which requires,
among other things, that the rules of a
national securities exchange be
‘‘designed to prevent fraudulent and
manipulative acts and practices’’ and
‘‘to protect investors and the public
interest.’’ 22
The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in the
Notice, in addition to any other
comments they may wish to submit
about the proposed rule change. In
particular, the Commission seeks
comment on the following questions
and asks commenters to submit data
where appropriate to support their
views:
1. Given the nature of the underlying
assets held by the Trust, has the
Exchange properly filed its proposal to
list and trade the Shares under NYSE
17 The Exchange does not define this term in the
proposed rule change. Additional information about
the calculation of the Digital Asset Holdings can be
found in the Notice. See id. at 73898.
18 See id.
19 See id. at 73907.
20 15 U.S.C. 78s(b)(2)(B).
21 Id.
22 15 U.S.C. 78f(b)(5).
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31JAN1
6156
Federal Register / Vol. 89, No. 21 / Wednesday, January 31, 2024 / Notices
lotter on DSK11XQN23PROD with NOTICES1
Arca Rule 8.201–E (Commodity-Based
Trust Shares)? 23
2. The Exchange raises substantially
similar arguments to support the listing
and trading of the Shares as those made
in proposals to list and trade spot
bitcoin exchange-traded products
(‘‘Bitcoin ETPs’’). Do commenters agree
that arguments to support the listing of
Bitcoin ETPs apply equally to the
Shares? Are there particular features
related to ETH and its ecosystem,
including its proof of stake consensus
mechanism and concentration of control
or influence by a few individuals or
entities, that raise unique concerns
about ETH’s susceptibility to fraud and
manipulation?
3. What are commenters’ views on
whether the proposed Trust and Shares
would be susceptible to manipulation?
What are commenters’ views generally
on whether the Exchange’s proposal is
designed to prevent fraudulent and
manipulative acts and practices? What
are commenters’ views generally with
respect to the liquidity and transparency
of the ETH markets and the ETH
markets’ susceptibility to manipulation?
4. Based on data and analysis
provided by the Exchange,24 do
commenters agree with the Exchange
that the Chicago Mercantile Exchange
(‘‘CME’’), on which CME ETH futures
trade, represents a regulated market of
significant size related to spot ETH? 25
What are commenters’ views on
whether there is a reasonable likelihood
that a person attempting to manipulate
the Shares would also have to trade on
the CME to manipulate the Shares? 26 Do
commenters agree with the Exchange
that it is unlikely that trading in the
Shares would be the predominant
influence on prices in the CME ETH
futures market? 27
5. Some sponsors of proposed ETH
exchange-traded products (‘‘ETPs’’)
have made statements regarding the
correlation between ETH spot markets
and the CME ETH futures market.28
23 NYSE Arca Rule 8.201–E(c)(1) defines the term
‘‘Commodity-Based Trust Shares’’ as a security (a)
that is issued by a trust that holds (1) a specified
commodity deposited with the trust, or (2) a
specified commodity and, in addition to such
specified commodity, cash; (b) that is issued by
such trust in a specified aggregate minimum
number in return for a deposit of a quantity of the
underlying commodity and/or cash; and (c) that,
when aggregated in the same specified minimum
number, may be redeemed at a holder’s request by
such trust which will deliver to the redeeming
holder the quantity of the underlying commodity
and/or cash.
24 See Notice, 88 FR at 73906–07.
25 See id. at 73906.
26 See id.
27 See id.
28 See, e.g., Notice of Filing of a Proposed Rule
Change to List and Trade Shares of the VanEck
VerDate Sep<11>2014
17:00 Jan 30, 2024
Jkt 262001
What are commenters’ views on the
correlation between the ETH spot
market and the CME ETH futures
market? What are commenters’ views on
the extent to which a surveillancesharing agreement with the CME would
assist in detecting and deterring fraud
and manipulation that impacts an ETP
that holds spot ETH, and on whether
correlation analysis provides any
evidence to this effect? What are
commenters’ views generally on
whether an ETP that holds only CME
ETH futures and an ETP that only holds
spot ETH are similar products?
III. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the Act,
and the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b-4, any request for an
opportunity to make an oral
presentation.29
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposed rule change should be
approved or disapproved by February
21, 2024. Any person who wishes to file
a rebuttal to any other person’s
submission must file that rebuttal by
March 6, 2024.
Comments may be submitted by any
of the following methods:
Ethereum ETF under BZX Rule 14.11(e)(4),
Commodity-Based Trust Shares, Securities
Exchange Act Release No. 98457 (Sept. 20, 2023),
88 FR 66076 (Sept. 26, 2023), 66081 (stating that
‘‘The Sponsor’s research indicates daily correlation
between the spot ETH and the CME ETH Futures
is 0.998 from the period of 9/1/22 through 9/1/
23.’’).
29 Section 19(b)(2) of the Act, as amended by the
Securities Acts Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Acts Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
PO 00000
Frm 00069
Fmt 4703
Sfmt 9990
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–2023–70 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–2023–70. 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–2023–70 and should be
submitted on or before February 21,
2024. Rebuttal comments should be
submitted by March 6, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–01860 Filed 1–30–24; 8:45 am]
BILLING CODE 8011–01–P
30 17
E:\FR\FM\31JAN1.SGM
CFR 200.30–3(a)(57).
31JAN1
]]>Agencies
[Federal Register Volume 89, Number 21 (Wednesday, January 31, 2024)]
[Notices]
[Pages 6155-6156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01860]
[[Page 6155]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99428; File No. SR-NYSEARCA-2023-70]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change To List and Trade Shares of the Grayscale Ethereum Trust
Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares)
January 25, 2024.
On October 10, 2023, NYSE Arca, Inc. (``NYSE Arca'' or
``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 to list and trade shares (``Shares'') of the
Grayscale Ethereum Trust (``Trust'') under NYSE Arca Rule 8.201-E
(Commodity-Based Trust Shares). The proposed rule change was published
for comment in the Federal Register on October 27, 2023.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 98780 (Oct. 23,
2023), 88 FR 73892 (``Notice''). Comments on the proposed rule
change are available at: https://www.sec.gov/comments/sr-nysearca-2023-70/srnysearca202370.htm.
---------------------------------------------------------------------------
On December 5, 2023, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ This order institutes proceedings under Section 19(b)(2)(B)
of the Act \6\ to determine whether to approve or disapprove the
proposed rule change.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 99082, 88 FR 85962
(Dec. 11, 2023). The Commission designated January 25, 2024, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. Summary of the Proposal
As described in more detail in the Notice,\7\ the Exchange proposes
to list and trade the Shares of the Trust under NYSE Arca Rule 8.201-E,
which governs the listing and trading of Commodity-Based Trust Shares
on the Exchange.
---------------------------------------------------------------------------
\7\ See Notice, supra note 3.
---------------------------------------------------------------------------
According to the Exchange, the investment objective of the Trust is
for the value of the Shares to reflect the value of the Ethereum
(``ETH'') \8\ held by the Trust, determined by reference to the ``Index
Price,'' less the Trust's expenses and other liabilities.\9\ The
``Index Price'' is the U.S. dollar value of an ETH derived from the
``Digital Asset Exchanges'' \10\ that are reflected in the ``Index,''
calculated at 4:00 p.m., New York time, on each business day.\11\ The
Trust's assets will consist solely of ETH; Incidental Rights; \12\ IR
Virtual Currency; \13\ proceeds from the sale of ETH, Incidental
Rights, and IR Virtual Currency pending use of such cash for payment of
Additional Trust Expenses \14\ or distribution to shareholders, and any
rights of the Trust pursuant to any agreements, other than the trust
agreement, to which the Trust is a party.\15\ Each Share represents a
proportional interest, based on the total number of Shares outstanding,
in each of the Trust's assets as determined by reference to the Index
Price, less the Trust's expenses and other liabilities (which include
accrued but unpaid fees and expenses).\16\ On each business day at 4:00
p.m., New York time, or as soon thereafter as practicable, the Sponsor
will evaluate the ETH held by the Trust and calculate and publish the
``Digital Asset Holdings'' \17\ of the Trust.\18\ When the Trust sells
or redeems its Shares, it will do so either in ``in-kind'' or ``in-
cash'' transactions with authorized participants in blocks of 100
Shares.\19\
---------------------------------------------------------------------------
\8\ In its filing, the Exchange defines ``ETH'' as ``Ethereum''.
See id. at 73893. It, however, also provides that ``[t]he Ethereum
Network allows people to exchange tokens of value, called Ether,
which are recorded on a public transaction ledger known as a
blockchain.'' See id. at 73894.
\9\ See id. at 73894. Grayscale Investments, LLC (``Sponsor'')
is the sponsor of the Trust and is a wholly-owned subsidiary of
Digital Currency Group, Inc. See id. at 73893.
\10\ A ``Digital Asset Exchange'' is an electronic marketplace
where participants may trade, buy and sell ETH based on bid-ask
trading. See id. at 73894 n.16.
\11\ See id. at 73894 n.14. The index provider for the Trust is
CoinDesk Indices, Inc. See id. at 73893. While the Exchange does not
name the ``Index'' that the Trust would use to value the ETH held by
the Trust, the Exchange provides that the value of the Index, as
well as additional information regarding the Index, will be
available at https://www.coindesk.com/indices. See id. at 73910.
\12\ ``Incidental Rights'' are rights to acquire, or otherwise
establish dominion and control over, any virtual currency or other
asset or right, which rights are incident to the Trust's ownership
of ETH and arise without any action of the Trust, or of the Sponsor
or trustee on behalf of the Trust. See id. at 73893 n.11.
\13\ ``IR Virtual Currency'' is any virtual currency tokens, or
other asset or right, acquired by the Trust through the exercise
(subject to the applicable provisions of the trust agreement) of any
Incidental Right. See id. at 73893 n.12.
\14\ ``Additional Trust Expenses'' are any expenses incurred by
the Trust in addition to the Sponsor's fee that are not Sponsor-paid
expenses. See id. at 73893 n.13.
\15\ See id. at 73893-94.
\16\ See id. at 73894.
\17\ The Exchange does not define this term in the proposed rule
change. Additional information about the calculation of the Digital
Asset Holdings can be found in the Notice. See id. at 73898.
\18\ See id.
\19\ See id. at 73907.
---------------------------------------------------------------------------
II. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEARCA-2023-70 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \20\ to determine whether the proposed rule
change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change, as discussed below. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described below, the Commission seeks and encourages interested persons
to provide comments on the proposed rule change.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\21\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \22\
---------------------------------------------------------------------------
\21\ Id.
\22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on the following questions and asks commenters to submit
data where appropriate to support their views:
1. Given the nature of the underlying assets held by the Trust, has
the Exchange properly filed its proposal to list and trade the Shares
under NYSE
[[Page 6156]]
Arca Rule 8.201-E (Commodity-Based Trust Shares)? \23\
---------------------------------------------------------------------------
\23\ NYSE Arca Rule 8.201-E(c)(1) defines the term ``Commodity-
Based Trust Shares'' as a security (a) that is issued by a trust
that holds (1) a specified commodity deposited with the trust, or
(2) a specified commodity and, in addition to such specified
commodity, cash; (b) that is issued by such trust in a specified
aggregate minimum number in return for a deposit of a quantity of
the underlying commodity and/or cash; and (c) that, when aggregated
in the same specified minimum number, may be redeemed at a holder's
request by such trust which will deliver to the redeeming holder the
quantity of the underlying commodity and/or cash.
---------------------------------------------------------------------------
2. The Exchange raises substantially similar arguments to support
the listing and trading of the Shares as those made in proposals to
list and trade spot bitcoin exchange-traded products (``Bitcoin
ETPs''). Do commenters agree that arguments to support the listing of
Bitcoin ETPs apply equally to the Shares? Are there particular features
related to ETH and its ecosystem, including its proof of stake
consensus mechanism and concentration of control or influence by a few
individuals or entities, that raise unique concerns about ETH's
susceptibility to fraud and manipulation?
3. What are commenters' views on whether the proposed Trust and
Shares would be susceptible to manipulation? What are commenters' views
generally on whether the Exchange's proposal is designed to prevent
fraudulent and manipulative acts and practices? What are commenters'
views generally with respect to the liquidity and transparency of the
ETH markets and the ETH markets' susceptibility to manipulation?
4. Based on data and analysis provided by the Exchange,\24\ do
commenters agree with the Exchange that the Chicago Mercantile Exchange
(``CME''), on which CME ETH futures trade, represents a regulated
market of significant size related to spot ETH? \25\ What are
commenters' views on whether there is a reasonable likelihood that a
person attempting to manipulate the Shares would also have to trade on
the CME to manipulate the Shares? \26\ Do commenters agree with the
Exchange that it is unlikely that trading in the Shares would be the
predominant influence on prices in the CME ETH futures market? \27\
---------------------------------------------------------------------------
\24\ See Notice, 88 FR at 73906-07.
\25\ See id. at 73906.
\26\ See id.
\27\ See id.
---------------------------------------------------------------------------
5. Some sponsors of proposed ETH exchange-traded products
(``ETPs'') have made statements regarding the correlation between ETH
spot markets and the CME ETH futures market.\28\ What are commenters'
views on the correlation between the ETH spot market and the CME ETH
futures market? What are commenters' views on the extent to which a
surveillance-sharing agreement with the CME would assist in detecting
and deterring fraud and manipulation that impacts an ETP that holds
spot ETH, and on whether correlation analysis provides any evidence to
this effect? What are commenters' views generally on whether an ETP
that holds only CME ETH futures and an ETP that only holds spot ETH are
similar products?
---------------------------------------------------------------------------
\28\ See, e.g., Notice of Filing of a Proposed Rule Change to
List and Trade Shares of the VanEck Ethereum ETF under BZX Rule
14.11(e)(4), Commodity-Based Trust Shares, Securities Exchange Act
Release No. 98457 (Sept. 20, 2023), 88 FR 66076 (Sept. 26, 2023),
66081 (stating that ``The Sponsor's research indicates daily
correlation between the spot ETH and the CME ETH Futures is 0.998
from the period of 9/1/22 through 9/1/23.'').
---------------------------------------------------------------------------
III. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\29\
---------------------------------------------------------------------------
\29\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by February 21, 2024. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
March 6, 2024.
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-2023-70 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-2023-70. 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-2023-70 and should
be submitted on or before February 21, 2024. Rebuttal comments should
be submitted by March 6, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01860 Filed 1-30-24; 8:45 am]
BILLING CODE 8011-01-P
