[Federal Register Volume 85, Number 102 (Wednesday, May 27, 2020)]
[Notices]
[Pages 31826-31828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11286]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88912; File No. SR-NYSEArca-2020-42]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend
Representations Relating to the Redemption Procedures Applicable to the
Sprott Physical Gold Trust and the Sprott Physical Silver Trust
May 20, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on May 6, 2020, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend representations relating to the
redemption procedures applicable to the Sprott Physical Gold Trust and
the Sprott Physical Silver Trust (each a ``Trust''), as contained in
the respective rule change filed with and approved by the Securities
and Exchange Commission (``Commission'') relating to listing and
trading of ``Units'' of each Trust on the Exchange. Units of the Trusts
are currently listed and traded on the Exchange under NYSE Arca Rule
8.201-E. The proposed rule change is available on the Exchange's
website at www.nyse.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission has approved proposed rule changes relating to
listing and trading on the Exchange of Units of the Sprott Physical
Gold Trust and the Sprott Physical Silver Trust under NYSE Arca Rule
8.201-E (``Commodity-Based Trust Shares'').\4\ The Exchange proposes to
amend a representation relating to the procedure for the redemption of
Units of each Trust for gold or silver bullion, respectively, as
contained in the Prior Releases. Units of the Sprott Physical Gold
Trust and the Sprott Physical Silver Trust commenced trading on the
Exchange on February 25, 2010 and October 27, 2010, respectively.
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\4\ See Securities Exchange Act Release Nos. 61236 (December 23,
2009), 75 FR 170 (January 4, 2019) (SR-NYSEArca-2009-113) (Notice of
Filing of Proposed Rule Change for the Listing and Trading of Sprott
Physical Gold Trust) (``Sprott Gold Notice''); 61496 (February 10,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113) (Order
Granting Approval of a Proposed Rule Change to List and Trade Sprott
Physical Gold Trust) (``Sprott Gold Order''); 63043 (October 5,
2010), 75 FR 62615 (October 12, 2010) (SR-NYSEArca-2010-84) (Notice
of Filing and Order Approving Proposed Rule Change to List and Trade
Shares of Sprott Physical Silver Trust) (``Sprott Silver Order''
and, together with the Sprott Gold Notice and Sprott Gold Order, the
``Prior Releases'').
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The manager of each Trust is Sprott Asset Management LP
(``Manager'').\5\ The Trust custodian for a Trust's physical gold and
silver bullion, respectively, is the Royal Canadian Mint
(``Custodian''). RBC Investor Services Trust (``RBC'') (formerly RBC
Dexia Investor Services Trust) is the trustee and valuation agent of
each Trust and the custodian of each Trust's assets other than physical
gold and silver bullion.
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\5\ The Sprott Physical Gold Trust and the Sprott Physical
Silver Trust filed with the Commission registration statements on
Form F-10 under the Securities Act of 1933, as amended, relating to
the Trusts on June 20, 2018 (as amended and supplemented) (File No.
333-225771)) and June 20, 2018 (as amended and supplemented) (File
No. 333-225772), respectively (together, the ``Registration
Statements''). The description of the operation of the Trusts herein
is based, in part, on the Registration Statements.
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Change to Procedures for Redemption of Units for Gold or Silver
The Sprott Gold Notice stated that ``[a] redemption notice to
redeem Units for physical gold bullion must be received by the Trust's
transfer agent no later than 4:00 p.m., Toronto time, on the 15th day
of the calendar month in which the redemption notice will be processed
or, if such day is not a day on which banks located in New York, New
York, are open for the transaction of banking business (a ``Business
Day''), then on the immediately following day that is a Business Day.
Any redemption notice received after such time will be processed in the
next month.'' The Sprott Gold Notice stated further that ``[p]hysical
gold bullion received by a Unitholder as a result of a redemption of
Units will be delivered by armored transportation service carrier
pursuant to delivery instructions provided by the Unitholder'' and that
``[t]he armored transportation service carrier will receive gold
bullion in connection with a redemption of Units approximately 10
Business Days after the end of the month in which the redemption notice
is processed.''
[[Page 31827]]
Similarly, the Sprott Silver Order stated that ``[a] redemption
notice to redeem Units for physical silver bullion must be received by
the Trust's transfer agent no later than 4:00 p.m. Toronto time, on the
15th day of the calendar month in which the redemption notice will be
processed or, if such day is not a day on which banks located in New
York, New York, are open for the transaction of banking business (a
``Business Day''), then on the immediately following day that is a
Business Day. Any redemption notice received after such time will be
processed in the next month. The Sprott Silver Order stated further
that ``[p]hysical silver bullion received by a Unitholder as a result
of a redemption of Units will be delivered by armored transportation
service carrier pursuant to delivery instructions provided by the
Unitholder'' and that ``[t]he armored transportation service carrier
will receive silver bullion in connection with a redemption of Units
approximately 10 Business Days after the end of the month in which the
redemption notice is processed.''
The Exchange proposes to delete the preceding statements relating
to receipt of bullion by the armored transportation service carrier in
connection with a redemption of Units approximately 10 Business Days
after the end of the month in which the redemption notice is processed
in accordance with a pending amendment to the ``Trust Agreement'' for
each Trust (the ``Amendments'').\6\
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\6\ The Exchange notes that the proposed deletions are
substantively identical to those included in a proposed rule change
relating to redemption procedures of the Sprott Physical Gold and
Silver Trust. See Securities Exchange Act Release No. 84282
(September 25, 2018), 83 FR 49442 (October 1, 2018) (SR-NYSEArca-
2018-69) (Notice of Filing and Immediate Effectiveness of Proposed
Rule Change to Amend a Representation Relating to the Redemption
Procedures Applicable to the Sprott Physical Gold and Silver Trust).
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The Manager represents that the actual timing of receipt of bullion
by the armored transportation service carrier varies based on the
number of redemption requests received in a given month, the redemption
amount per request and the amount of gold and silver bullion redeemed,
as applicable. The Manager represents that, in the event of large
numbers or volumes of redemption requests, the Custodian and the
armored transportation service carrier experience severe constraints in
performing their required actions within the existing time period
(i.e., approximately 10 Business Days).\7\ A high frequency of
shipments in a short period of time places a significant strain on the
operational and security resources necessary to prepare such shipments,
resulting in additional expenses and risk to the Trust and the
Custodian. The Manager and the Custodian expect that the Amendments
will decrease operational expenses and risk caused by the 10 Business
Day term currently provided by the applicable Trust Agreement. The
Manager represents that by mitigating such expenses and risk, it is
anticipated that the Amendments will allow the Custodian to continue to
provide each Trust with low custody pricing. The Amendments thereby may
result in narrowing of the spread between the trading price of Units,
which price reflects the performance of the trading prices of gold and
silver, respectively, less the expenses of a Trust's operations, and
the trading prices of gold and silver in accordance with each Trust's
objectives. Pursuant to the terms of the Trust Agreements and the
applicable laws of the Province of Ontario, the Amendments are being
effected on the ground that they provide added protection or benefit to
``Unitholders.'' \8\
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\7\ The Commission has previously approved the listing and
trading of other gold-based commodity trusts that include a physical
redemption feature but do not specify any minimum deadline for
physical delivery of the commodity to the redeeming investor
following a redemption request. See, e.g., Securities Exchange Act
Release Nos. 71378 (January 23, 2014), 79 FR 4786 (January 29, 2014)
(SR-NYSEArca-2013-137) (Order Approving a Proposed Rule Change, as
Modified by Amendment No. 1 Thereto, to List and Trade Shares of the
Merk Gold Trust Pursuant to NYSE Arca Equities Rule 8.201); 82593
(January 26, 2018), 83 FR 4718 (February 1, 2018) (SR-NYSEArca-2017-
140) (Order Approving a Proposed Rule Change to List and Trade
Shares of the Perth Mint Physical Gold ETF Trust Pursuant to NYSE
Arca Rule 8.201-E).
\8\ Each Trust will file an amendment to its respective Trust
Agreement or an amended and restated Trust Agreement, as
appropriate, in Canada on SEDAR (System for Electronic Document
Analysis and Retrieval), the electronic filing system for the
disclosure documents of issuers across Canada. In addition, a brief
description of the amendment will be included in a Trust's quarterly
disclosures. Such filings or disclosures would be furnished to the
Commission under cover of Form 6-K in accordance with Rules 13a-1
and/or 13a-3 under the Exchange Act. Pursuant to the terms of the
applicable Trust Agreement, a Unitholder vote is not required to
effect the amendment.
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The Manager represents that the proposed change described above is
consistent with each Trust's investment objective, and will further
assist the Manager to achieve such investment objective. Except for the
changes noted above, all other representations made in the Prior
Releases remained unchanged.\9\
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\9\ See note 4, supra. All terms referenced but not defined
herein are defined in the Prior Releases.
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2. Statutory Basis
The basis under the Exchange Act for this proposed rule change is
the requirement under Section 6(b)(5) \10\ 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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\10\ 15 U.S.C. 78f(b)(5).
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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. The Exchange believes that the Amendments may provide
potential benefits to investors by decreasing operational expenses and
risk caused by the 10 Business Day time frame currently provided by the
applicable Trust Agreement. The Manager represents that by mitigating
such expenses and risk, it is anticipated that the Amendments will
allow the Custodian to continue to provide each Trust with low custody
pricing and may result in the narrowing of the spread between the
trading price of Units, which price reflects the performance of the
trading prices of gold or silver, respectively less the expenses of a
Trust's operations, and the trading prices of gold or silver in
accordance with a Trust's objectives.
The Manager represents that the proposed changes described above
are consistent with each Trust's investment objective, and will further
assist the Manager to achieve such investment objectives. The Manager
also represents that all Unitholders will be subject to the Amendments;
that the Manager has determined that the Amendments will provide added
protection or benefit to Unitholders; and that the Amendments are being
proposed to mitigate the practical constraints associated with the high
volume of redemption requests.
Except for the changes noted above, all other representations made
in the Prior Releases remained unchanged.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The Exchange
believes the proposed rule change, by decreasing each Trust's
operational expenses and risk relating to redemptions, will enhance
competition among issues of Commodity-Based Trust Shares relating to
physical gold and silver.
[[Page 31828]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange states that
waiver of the 30-day operative delay is consistent with the protection
of investors and the public interest because the Commission has
previously approved the listing and trading of gold-based commodity
trusts that include a physical redemption feature but do not specify
any minimum deadline for physical delivery of the commodity to the
redeeming investor following a redemption request,\16\ and the proposed
changes are substantively identical to those in another proposed rule
change relating to redemption procedures.\17\ In addition, the Exchange
believes the proposed rule change may benefit investors by decreasing
operational expenses and risk caused by the 10 Business Day timeframe
(as described above) currently provided by the Trust Agreements.
Furthermore, the Exchange represents that, in the absence of large
numbers or volumes of redemption requests or other factors causing
delay, the armored transportation service carrier will typically
receive physical gold and silver bullion in accordance with the 10
Business Day time frame contained in the Prior Releases, and the
Commission notes that Units of the Trusts have commenced trading on the
Exchange. The Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest for these reasons. Accordingly, the Commission hereby waives
the 30-day operative delay and designates the proposed rule change
operative upon filing.\18\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See note 7, supra.
\17\ See note 6, supra (relating to redemption procedures of the
Sprott Physical Gold and Silver Trust).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will 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:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-42 on the subject line.
Paper Comments
Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEArca-2020-42. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2020-42 and should be submitted
on or before June 17, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11286 Filed 5-26-20; 8:45 am]
BILLING CODE 8011-01-P