[Federal Register Volume 85, Number 139 (Monday, July 20, 2020)]
[Notices]
[Pages 43932-43938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15553]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89310; File No. SR-NYSEArca-2020-59]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To Amend NYSE Arca Rule 8.201-E (Commodity-
Based Trust Shares) and To Permit the Listing and Trading of Shares of
the United States Gold and Treasury Investment Trust Under NYSE Arca
Rule 8.201-E
July 14, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on June 30, 2020, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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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 (1) to amend NYSE Arca Rule 8.201-E
(``Commodity-Based Trust Shares'') to permit a trust to hold (a) a
specified commodity deposited with the trust, or (b) a specified
commodity and, in addition to such specified commodity, U.S. Department
of Treasury securities and/or cash, and to issue and redeem shares for
such commodity and/or cash; and (2) to list and trade shares of the
United States Gold and Treasury Investment Trust under NYSE Arca Rule
8.201-E as proposed to be amended. The proposed change is available on
the Exchange's website at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes (1) to amend NYSE Arca Rule 8.201-E
(``Commodity-Based Trust Shares'') to permit a trust to hold (a) a
specified commodity deposited with the Trust (defined below), or (b) a
specified commodity and, in addition to such specified commodity, U.S.
Department of Treasury securities and/or cash, and (2) to list and
trade shares (``Shares'') of the United States Gold and Treasury
Investment Trust (``Trust'') under NYSE Arca Rule 8.201-E as proposed
to be amended.\4\
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\4\ On May 8, 2020, the Trust filed Amendment No. 1 to its
registration statement on Form S-1 under the Securities Act of 1933
(15 U.S.C. 77a) (File No. 333-235913) (the ``Registration
Statement''). The description of the operation of the Trust and the
Shares herein is based, in part, on the Registration Statement.
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The Trust will not be registered as an investment company under the
Investment Company Act of 1940, as amended.\5\ The Trust is not a
commodity pool for purposes of the Commodity Exchange Act, as
amended.\6\
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\5\ 15 U.S.C. 80a-1.
\6\ 17 U.S.C. 1.
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The sponsor of the Trust is Wilshire Phoenix Funds LLC
(``Sponsor''). The ``Trustee'' is Delaware Trust Company and the ``Gold
Custodian'' is JPMorgan Chase Bank, N.A. The Bank of New York Mellon
will be the administrator (``Administrator''), transfer agent
(``Transfer Agent'') and cash and treasury custodian (``Treasury
Custodian'') of the Trust. Foreside Fund Services, LLC will be the
Trust's marketing agent (``Marketing Agent'').
The Commission has previously approved listing on the Exchange
under NYSE Arca Rules 5.2-E(j)(5) and 8.201-E of other precious metals
and gold-based commodity trusts, including the GraniteShares Gold
Trust; \7\ Merk Gold Trust; \8\ ETFS Gold Trust; \9\ ETFS
[[Page 43933]]
Platinum Trust \10\ and ETFS Palladium Trust (collectively, the ``ETFS
Trusts''); \11\ APMEX Physical-1 oz. Gold Redeemable Trust; \12\ Sprott
Gold Trust; \13\ SPDR Gold Trust (formerly, streetTRACKS Gold Trust);
iShares Silver Trust; \14\ iShares COMEX Gold Trust; \15\ Long Dollar
Gold Trust; \16\ Euro Gold Trust, Pound Gold Trust and Yen Gold Trust;
\17\ and the Gold Trust.\18\ Prior to their listing on the Exchange,
the Commission approved listing of the streetTRACKS Gold Trust on the
New York Stock Exchange (``NYSE'') \19\ and listing of iShares COMEX
Gold Trust and iShares Silver Trust on the American Stock Exchange
LLC.\20\ In addition, the Commission has approved trading of the
streetTRACKS Gold Trust and iShares Silver Trust on the Exchange
pursuant to UTP.\21\
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\7\ Securities Exchange Act Release No. 81077 (July 5, 2017)
(SR-NYSEArca-2017-55) (order approving listing and trading shares of
the GraniteShares Gold Trust under NYSE Arca Equities Rule 8.201).
\8\ Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
\9\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\10\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\11\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\12\ Securities Exchange Act Release No 66930 (May 7, 2012), 77
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
\13\ Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
\14\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
\15\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\16\ See Securities Exchange Act Release No. 79518 (December 9,
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order
approving listing and trading of shares of the Long Dollar Gold
Trust).
\17\ See Securities Exchange Act Release No. 80840 (June 17,
2017) (SR-NYSEArca-2017-33) (order approving listing and trading of
shares of the Euro Gold Trust, Pound Gold Trust, and the Yen Gold
Trust under NYSE Arca Equities Rule 8.201).
\18\ See Securities Exchange Act Release No. 81918 (October 23,
2017), 82 FR 49884 (October 27, 2017) (SR-NYSEArca-2017-98) (Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1
Thereto, to List and Trade Shares of The Gold Trust under NYSE Arca
Rule 8.201-E).
\19\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE).
\20\ See Securities Exchange Act Release Nos. 51058 (January 19,
2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order
approving listing of iShares COMEX Gold Trust on the American Stock
Exchange LLC); 53521 (March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR-Amex-2005-72) (approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
\21\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
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Proposed Amendment to NYSE Arca Rule 8.201-E
Under NYSE Arca Rule 8.201-E, the Exchange may propose to list and/
or trade pursuant to unlisted trading privileges (``UTP'') ``Commodity-
Based Trust Shares.'' \22\ Rule 8.201-E(c)(1) currently states that
such securities are issued by a trust in a specified aggregate minimum
number in return for a deposit of a quantity of the underlying
commodity, and may be redeemed in the same specified minimum number by
a holder for the quantity of the underlying commodity. The Exchange
proposes to amend Rule 8.201-E(c)(1) to provide as follows: ``The term
``Commodity-Based Trust Shares'' means a security (a) that is issued by
a trust (``Trust'') that holds (1) a specified commodity deposited with
the Trust, or (2) a specified commodity and, in addition to such
specified commodity, U.S. Department of Treasury securities and/or
cash; (b) that is issued by such Trust in a specified aggregate minimum
number in return for a deposit of a quantity of the underlying
commodity and/or cash; and (c) that, when aggregated in the same
specified minimum number, may be redeemed at a holder's request by such
Trust which will deliver to the redeeming holder the quantity of the
underlying commodity and/or cash.''
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\22\ Commodity-Based Trust Shares are securities issued by a
trust that represents investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust. Rule 8.201-E (c)(1) defines the term ``Commodity-Based Trust
Shares'' as follows: ``The term ``Commodity-Based Trust Shares''
means a security (a) that is issued by a trust (``Trust'') that
holds a specified commodity deposited with the Trust; (b) that is
issued by such Trust in a specified aggregate minimum number in
return for a deposit of a quantity of the underlying commodity; and
(c) that, when aggregated in the same specified minimum number, may
be redeemed at a holder's request by such Trust which will deliver
to the redeeming holder the quantity of the underlying commodity.''
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The Commission has previously approved listing and trading on the
Exchange of Commodity-Based Trust Shares that permit issuance and
redemption of shares for cash in whole or part.\23\ The Exchange
believes the proposed change will provide a trust issuing Commodity-
Based Trust Shares and holding a specified commodity with the
flexibility to issue or redeem shares partially or wholly for cash.
Such alternative would allow a trust to structure the procedures for
issuance and redemption of shares in manner that as determined by the
issuer, may provide operational efficiencies and accommodate investors
who may wish to deliver or receive cash rather than, or in addition to,
the underlying commodity upon requesting the issuance or redemption of
shares. In addition, the proposed change will accommodate a trust's
holding U.S. Department of Treasury securities (such as U.S. Treasury
Bills (``T-Bills'')) in addition to a specified commodity in order to
achieve its investment objective. The Exchange, therefore, believes the
proposed change will facilitate the listing and trading of additional
types of exchange-traded derivative securities products that will
enhance competition among market participants, to the benefit of
investors and the marketplace.
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\23\ See, e.g., Securities Exchange Act Release Nos. 61496
(February 4, 2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-
2009-113) (approving listing on the Exchange of Sprott Physical Gold
Trust); 63043 (October 5, 2010), 75 FR 62615 (October 12, 2010) (SR-
NYSEArca-2010-84) (approving listing on the Exchange of the Sprott
Physical Silver Trust); 68430 (December 13, 2012) (SR-NYSEArca-2012-
111) (Order Approving a Proposed Rule Change, as Modified by
Amendment No. 1, to List and Trade Units of the Sprott Physical
Platinum and Palladium Trust Pursuant to NYSE Arca Equities Rule
8.201; 82448 (January 5, 2018) (SR-NYSEArca-2017-131) (Notice of
Filing of Amendment No. 2 and Order Approving on an Accelerated
Basis a Proposed Rule Change, as Modified by Amendment No. 2, to
List and Trade Shares of the Sprott Physical Gold and Silver Trust
under NYSE Arca Rule 8.201-E); 66930 (May 7, 2012), 77 FR 27817 (May
11, 2012) (SR-NYSEArca-2012-18) (order approving listing and trading
shares of the APMEX Physical-1 oz. Gold Redeemable Trust); 50603
October 28, 2004 (SR-NYSE-2004-22) (Order Granting Approval of
Proposed Rule Change and Notice of Filing and Order Granting
Accelerated Approval to Amendments No. 1 and No. 2 Thereto to the
Proposed Rule Change by the New York Stock Exchange, Inc. Regarding
Listing and Trading of streetTRACKS[supreg] Gold Shares).
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The Exchange further proposes to amend Rule 8.201-E(c)(2) to state
that the term ``commodity'' is defined in Section 1a(9) of the
Commodity Exchange Act (rather than Section 1(a)(4) as currently
referenced in Rule 8.201-E (c)(2)) to reflect an amendment to the
Commodity Exchange Act included in the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010.\24\
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\24\ Public Law 111-203, 124 Stat. 1900 (2010).
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Operation of the Trust \25\
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\25\ The description of the operation of the Trust, the Shares
and the gold market contained herein is based, in part, on the
Registration Statement. See note 4, supra.
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According to the Registration Statement, the Trust will have no
assets other than (a) physical gold bullion (``Physical Gold'') and (b)
short term duration T-Bills in proportions that seek to closely
replicate the Gold Treasury Index (the ``Index''), as described below.
[[Page 43934]]
The Trust will also hold U.S. dollars for short periods of time in
connection with (i) the purchase, sale and/or maturity of T-Bills, (ii)
the purchase and sale of Physical Gold, (iii) creations and redemptions
of Shares (as described below), and (iv) to pay fees and expenses of
the Trust.
The investment objective of the Trust is for the Shares to closely
reflect the Index, which is published by the ``Index Calculation
Agent'', less the Trust's liabilities and expenses. The amount of
Physical Gold and T-Bills held by the Trust will be determined by the
Index. On the last business day of each month (the ``Rebalance Date''),
the Index will dynamically calculate its weightings of Physical Gold,
and T-Bills based on the volatility of gold and the volatility of the
U.S. equity markets utilizing a mathematically derived passive rule-
based methodology as discussed further below. The Trust, to closely
replicate the Index, will rebalance its holdings in Physical Gold and
T-Bills on a monthly basis for consistency with the Index weights.\26\
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\26\ With respect to the application of Rule 10A-3 (17 CFR
240.10A-3) under the Act, the Trust relies on the exemption
contained in Rule 10A-3(c)(7).
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The Gold Treasury Index
The Index is calculated and published by the Index Calculation
Agent. The Index value using the London Bullion Market Association
(``LBMA'') Gold Price PM (defined below) \27\ will be calculated and
published daily each business day at approximately 5:00 p.m. (Eastern
time (``E.T.'')). The current Index value will be disseminated by one
or more major market vendors at least every 15 seconds during the
Exchange's Core Trading Session (normally 9:30 a.m. to 4:00 p.m.
Eastern time (``E.T.'').
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\27\ See note 33, infra.
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The Exchange, the Index Calculation Agent or a third party
financial data provider will calculate an intraday indicative value for
the Shares (``IIV'') every fifteen seconds during the Exchange's Core
Trading Session.\28\
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\28\ For purposes of this filing, the IIV is the value
referenced in NYSE Arca Rule 8.201-E(e)(2)(v).
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According to the Registration Statement, the Index has two
components: (i) A notional component representing Physical Gold (the
``Physical Gold Component'') and (ii) a notional component representing
T-Bills (the ``Treasury Component'').
On each Rebalance Date, the Index rebalances its weighting of the
Physical Gold Component and the T-Bill Component utilizing a
mathematically derived passive rules-based methodology. This
methodology employs realized volatility of the LBMA Gold Price PM \29\
and volatility measures of the U.S. equity markets utilizing a look-
back period, among other parameters. At the end of each month, the
Index Calculation Agent calculates the Index's new weights for the
Physical Gold Component and the T-Bill Component based on the
immediately preceding period's LBMA Gold Price PM (defined below) and
volatility measures of the U.S. equity markets.
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\29\ See note 33, infra.
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According to the Registration Statement, the new percentage weight
for the Physical Gold Component will generally be lower than the prior
month if realized volatility is higher than during the previous
calculation, and vice versa. In addition, during times of distress
within the U.S. equity markets, as signaled by volatility measures, the
Index will calculate a higher weight for the overall exposure to gold.
The weights of the Physical Gold Component and the T-Bill Component
will never be negative. The weight for the Physical Gold Component will
not exceed 100%. The combined weights of the Physical Gold Component
and the T-Bill Component will always sum to 100%, and if the weight of
the Physical Gold Component is 100%, then the weight of the T-Bill
Component will be zero.
On each Rebalance Date, following the calculation of the weighting
of the components of the Index, the Trust will rebalance its assets in
order to closely replicate the Index. The Index's weight for the
Physical Gold Component is always positive and therefore represents a
long position in Physical Gold to the extent of the percentage of
Physical Gold represented in the Index.
Index Components
Physical Gold Component
The Physical Gold Component of the Index is a notional component
representing Physical Gold. The price of Physical Gold used to
determine the weighting of the Physical Gold Component and the T-Bill
Component of the Index, as well as the value of Physical Gold held by
the Trust, will be based on the LBMA Gold Price PM. If such day's LBMA
Gold Price PM is not available, the LBMA Gold Price AM (defined below)
is used.\30\ If no LBMA Gold Price (defined below) is available for the
day, the Administrator values the Trust's gold based on the most
recently announced LBMA Gold Price PM or LBMA Gold Price AM.
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\30\ See note 33, infra.
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T-Bill Component
The T-Bill Component of the Index is a notional component
representing T-Bills, which are short-term U.S. Treasury
securities.\31\
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\31\ U.S. Treasury securities are debt obligations issued by,
and backed by the full faith and credit of the U.S. government. U.S.
Treasury securities are highly liquid, have low volatility, and
generally come in three varieties based on maturity: (i) Treasury
bills; (ii) Treasury notes; and (iii) Treasury bonds.
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The Trust's Net Asset Value (``NAV'') and the NAV per Share
According to the Registration Statement, the Trust's NAV will be
equal to the sum of the value of the ``Physical Gold Holdings'' \32\
and the ``Treasury and Cash Holdings,'' \33\ less the expenses and
liabilities of the Trust. The NAV per Share, which will be calculated
by the Administrator on each business day, is equal to the Trust's NAV
divided by the number of outstanding Shares.
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\32\ ``Physical Gold Holdings'' is defined in the Registration
Statement as the Trust's holdings of Physical Gold.
\33\ ``Treasury and Cash Holdings'' is defined in the
Registration Statement as the value of the T-Bills and U.S. dollars
held by the Trust.
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In accordance with the Trust's valuation policy and procedures, the
Administrator will generally determine the price of the Trust's
Physical Gold by reference to the LBMA Gold Price PM.\34\
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\34\ For purposes of calculating the NAV of the Trust, to
ascertain the price of Physical Gold held by the Trust, the prices
(the ``LBMA Gold Price'') obtained from auctions conducted by ICE
Benchmark Administration (``IBA''), a benchmark administrator
appointed by the LBMA, will be used, which are generally conducted
in the morning (London time) (the ``LBMA Gold Price AM'') and in the
afternoon (London time) (the ``LBMA Gold Price PM'').
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The Administrator will determine the fair value of T-Bills based on
the price of each T-Bill held by the Trust plus any cash, which will be
held in U.S. dollars, as of 4:00 p.m., E.T. or as soon thereafter as
practicable, on each business day.
On each business day at 4:00 p.m., E.T., or as soon thereafter as
practicable (the ``Evaluation Time''), the Administrator will evaluate
the Physical Gold held by the Trust and calculate and publish the
Trust's Physical Gold Holdings. To calculate the Trust's Physical Gold
Holdings, the Administrator will:
1. Determine the LBMA Gold Price; and
2. Multiply the LBMA Gold Price by the amount of Physical Gold
owned by the Trust as of the Evaluation Time on such day.
Creation and Redemption of Shares
On any business day (other than business days on which banking
[[Page 43935]]
institutions in the United Kingdom are authorized or permitted by law
to close for all or part of the day or a day on which the London gold
market is closed for all or part of the day), an ``Authorized
Participant'' may place an order with the Marketing Agent to create one
or more ``Creation Units.'' Creation orders must be placed by 9:15
a.m., E.T.\35\ Creation Units are issued on the creation order
settlement date as of 2:45 p.m., E.T. on the business day immediately
following the creation order date at the applicable NAV per Share on
the creation order date, if the required payment has been timely
received. Authorized Participants are the only persons that may place
orders to create and redeem Creation Units. Authorized Participants
must be (1) registered broker-dealers or other securities market
participants, such as banks and other financial institutions, which are
not required to register as broker-dealers to engage in securities
transactions, and (2) participants in the Depository Trust Company
(``DTC'').
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\35\ The Sponsor represents that, for the Trust to fulfill cash
creation and redemption orders on a given business day to reflect
the corresponding NAV on that business day, the Trust must execute
buy or sell orders at price determination times of the assets used
in the NAV calculation. Because the LBMA Gold Price PM fix occurs at
3:00 p.m. London time, which is normally 10:00 a.m., E.T., the cut-
off time for creation and redemption orders is 9:15 a.m., E.T. to
enable the Trust to buy and sell Physical Gold on that day's LBMA
Gold Price PM. An Authorized Participant's arbitrage opportunities
with respect to the price it must pay for a Creation Unit should not
be materially impacted by the requirement that creation and
redemption orders must be received by 9:15 a.m. E.T. on a business
day. After the order cut-off time of 9:15 a.m., E.T., Authorized
Participants can place creation or redemption orders that will occur
at the next business day's NAV. Authorized Participants may also be
able to arbitrage by trading gold futures on COMEX (a division of
CME Group Inc.), which can be traded from 6:00 p.m. to 5:00 p.m.
(E.T.), Sunday through Friday.
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The total payment required to create each Creation Unit is an
amount of cash equal to the NAV of at least 10,000 Shares of the Trust
on the creation order date. The size of a Creation Unit is subject to
change.
Redemption Procedures
The procedures by which an Authorized Participant can redeem one or
more Creation Units mirror the procedures for the creation of Creation
Units. On any business day (other than business days on which the LBMA
Gold Price PM or other applicable benchmark price is not announced), an
Authorized Participant may place an order with the Marketing Agent to
redeem one or more Creation Units. Redemption orders must be placed by
9:15 a.m., E.T.
By placing a redemption order, an Authorized Participant agrees to
deliver the Creation Units to be redeemed through DTC's book-entry
system to the Trust not later than the redemption order settlement date
as of 2:45 p.m., E.T. on the business day immediately following the
redemption order date.
The redemption proceeds from the Trust consist of cash. The amount
of cash included in a redemption is equal to the NAV of the number of
Creation Unit(s) of the Trust requested in the Authorized Participant's
redemption order on the redemption order date. The Transfer Agent will
distribute the cash redemption amount at 2:45 p.m., E.T. on the
redemption order settlement date through DTC to the account of the
Authorized Participant as recorded on DTC's book entry system.
Availability of Information
The IIV for the Shares will be disseminated by one or more major
market data vendors on at least a 15-second delayed basis, as required
by NYSE Arca Rule 8.201-E(e)(2)(v). The IIV will be calculated based on
the amount of Physical Gold and T-Bills held in the Trust's portfolio,
which are derived from updated bids and offers indicative of the spot
price of gold and market prices of T-Bills.\36\
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\36\ The IIV on a per Share basis disseminated during the Core
Trading Session should not be viewed as a real-time update of the
NAV, which is calculated once a day.
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The website for the Trust (www.wshares.com) will contain the
following information, on a per Share basis, for the Trust: (a) The
mid-point of the bid-ask price \37\ at the close of trading (``Bid/Ask
Price''), and a calculation of the premium or discount of such price
against such NAV; and (b) data in chart format displaying the frequency
distribution of discounts and premiums of the Bid/Ask Price against the
NAV, within appropriate ranges, for each of the four previous calendar
quarters. The website for the Trust will also provide the Trust's
prospectus. Finally, the Trust's website will provide the prior day's
closing price of the Shares as traded in the U.S. market. In addition,
information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
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\37\ The bid-ask price of the Shares will be determined using
the highest bid and lowest offer on the Consolidated Tape as of the
time of calculation of the closing day NAV.
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Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity such as gold over the
Consolidated Tape. However, there will be disseminated over the
Consolidated Tape the last sale price for the Shares. In addition,
there is a considerable amount of information about gold and gold
markets available on public websites and through professional and
subscription services.
Investors may obtain on a 24-hour basis gold pricing information
based on the spot price for an ounce of gold from various financial
information service providers. Investors may obtain gold pricing
information based on the spot price for an ounce of gold from various
financial information service providers. Current spot prices also are
generally available with bid/ask spreads from gold bullion dealers. In
addition, the Trust's website will provide pricing information for gold
spot prices and the Shares. Market prices for the Shares will be
available from a variety of sources including brokerage firms,
information websites and other information service providers. The NAV
of the Trust will be published by the Sponsor on each business day and
will be posted on the Trust's website. The current Index value will be
disseminated by one or more major market vendors at least every 15
seconds during the Exchange's Core Trading Session. The IIV relating to
the Shares will be widely disseminated by one or more major market data
vendors at least every 15 seconds during the Exchange's Core Trading
Session (normally 9:30 a.m. to 4:00 p.m., E.T.). In addition, the LBMA
Gold Price is publicly available at no charge at www.lbma.org.uk. The
Trust's website will also provide the Trust's prospectus, as well as
the most recent reports to stockholders.
Criteria for Initial and Continued Listing
The Trust will be subject to the criteria in NYSE Arca Rule 8.201-
E(e) for initial and continued listing of the Shares.
A minimum of 100,000 Shares will be required to be outstanding at
the start of trading. The Exchange believes that the anticipated
minimum number of Shares outstanding at the start of trading is
sufficient to provide adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Trust subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Rule 7.34-
[[Page 43936]]
E(a). The Exchange has appropriate rules to facilitate transactions in
the Shares during all trading sessions. As provided in NYSE Arca Rule
7.6-E, the minimum price variation (``MPV'') for quoting and entry of
orders in equity securities traded on the NYSE Arca Marketplace is
$0.01, with the exception of securities that are priced less than $1.00
for which the MPV for order entry is $0.0001.
Further, NYSE Arca Rule 8.201-E(g) sets forth certain restrictions
on ETP Holders acting as registered Market Makers in the Shares to
facilitate surveillance. Under NYSE Arca Rule 8.201-E(g), an ETP Holder
acting as a registered Market Maker in the Shares is required to
provide the Exchange with information relating to its trading in the
underlying gold, related futures or options on futures, or any other
related derivatives. Commentary .04 of NYSE Arca Rule 11.3-E requires
an ETP Holder acting as a registered Market Maker, and its affiliates,
in the Shares to establish, maintain and enforce written policies and
procedures reasonably designed to prevent the misuse of any material
nonpublic information with respect to such products, any components of
the related products, any physical asset or commodity underlying the
product, applicable currencies, underlying indexes, related futures or
options on futures, and any related derivative instruments (including
the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. A subsidiary or affiliate of an
ETP Holder that does business only in commodities or futures contracts
would not be subject to Exchange jurisdiction, but the Exchange could
obtain information regarding the activities of such subsidiary or
affiliate through surveillance sharing agreements with regulatory
organizations of which such subsidiary or affiliate is a member.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying gold
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\38\ The Exchange will halt trading in the Shares if the
NAV of the Trust is not calculated or disseminated daily. If the IIV or
the official Index value is not being disseminated as required, the
Exchange may halt trading during the day in which the interruption to
the dissemination of the IIV or the official Index value occurs. If the
IIV or the official Index value persists past the trading day in which
it occurred, the Exchange will halt trading in the Shares.
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\38\ See NYSE Arca Rule 7.12-E.
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Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws.\39\ The Exchange represents that
these procedures are adequate to properly monitor Exchange trading of
the Shares in all trading sessions and to deter and detect violations
of Exchange rules and federal securities laws applicable to trading on
the Exchange.
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\39\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
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The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the Intermarket
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of
the Exchange, or both, may obtain trading information regarding trading
in the Shares from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\40\
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\40\ For a list of the current members of ISG, see
www.isgportal.org.
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Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able
to obtain information regarding trading in the Shares and the
underlying gold, gold futures contracts, options on gold futures, or
any other gold derivative, through ETP Holders acting as registered
Market Makers, in connection with such ETP Holders' proprietary or
customer trades through ETP Holders which they effect on any relevant
market.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares of the Trust on the
Exchange.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Trust to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Trust is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Creation Units (including noting
that Shares are not individually redeemable); (2) NYSE Arca Rule 9.2-
E(a), which imposes a duty of due diligence on its ETP Holders to learn
the essential facts relating to every customer prior to trading the
Shares; (3) how information regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting
[[Page 43937]]
premium or discount on the Shares may widen as a result of reduced
liquidity of gold trading during the Core and Late Trading Sessions
after the close of the major world gold markets; and (6) trading
information. The Exchange notes that investors purchasing Shares
directly from the Trust will receive a prospectus. ETP Holders
purchasing Shares from the Trust for resale to investors will deliver a
prospectus to such investors.
In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses as described in the
Registration Statement. The Information Bulletin will also reference
the fact that there is no regulated source of last sale information
regarding physical gold and that the Commission has no jurisdiction
over the trading of gold as a physical commodity.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \41\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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\41\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.201-E. The
Exchange has in place surveillance procedures that are adequate to
properly monitor trading in the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws. The Exchange may obtain information via the ISG from
other exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement.
The Commission has previously approved listing and trading on the
Exchange of Commodity-Based Trust Shares that permit issuance and
redemption of shares for cash in whole or part.\42\ The Exchange
believes the proposed amendment to Rule 8.201-E(c)(1) will provide a
trust issuing Commodity-Based Trust Shares and holding a specified
commodity with the flexibility to issue or redeem shares partially or
wholly for cash. Such alternative would allow a trust to structure the
procedures for issuance and redemption of shares in manner that as
determined by the issuer, may provide operational efficiencies and
accommodate investors who may wish to deliver or receive cash rather
than, or in addition to, the underlying commodity upon requesting the
issuance or redemption of shares. In addition, the proposed change will
accommodate a trust's holding U.S. Department of Treasury Securities
(such as T-Bills) in addition to a specified commodity in order to
achieve its investment objective. The Exchange, therefore, believes the
proposed change will facilitate the listing and trading of additional
types of exchange-traded derivative securities products that will
enhance competition among market participants, to the benefit of
investors and the marketplace.
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\42\ See note 23, supra.
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The Exchange's proposal to amend Rule 8.201-E (c)(2) to state that
the term ``commodity'' is defined in Section 1a(9) of the Commodity
Exchange Act (rather than Section 1(a)(4) as currently referenced in
Rule 8.201-E (c)(2)) reflects an amendment to the Commodity Exchange
Act included in the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of gold price and gold market
information available on public websites and through professional and
subscription services. Investors may obtain on a 24-hour basis gold
pricing information based on the spot price for an ounce of gold from
various financial information service providers. Investors may obtain
gold pricing information based on the spot price for an ounce of gold
from various financial information service providers. Current spot
prices also are generally available with bid/ask spreads from gold
bullion dealers. In addition, the Trust's website will provide pricing
information for gold spot prices and the Shares. Market prices for the
Shares will be available from a variety of sources including brokerage
firms, information websites and other information service providers.
The NAV of the Trust will be published by the Sponsor on each business
day and will be posted on the Trust's website. The IIV relating to the
Shares and the current Index value will be widely disseminated by one
or more major market data vendors at least every 15 seconds during the
Core Trading Session. In addition, the LBMA Gold Price is publicly
available at no charge at www.lbma.org.uk. The Trust's website will
also provide the Trust's prospectus, as well as the most recent reports
to stockholders.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of exchange-traded product related, in part, to
physical gold that will enhance competition among market participants,
to the benefit of investors and the marketplace. As noted above, the
Exchange has in place surveillance procedures relating to trading in
the Shares and may obtain information via ISG from other exchanges that
are members of ISG or with which the Exchange has entered into a
comprehensive surveillance sharing agreement. In addition, as noted
above, investors will have ready access to information regarding gold
pricing.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating, in part, to
physical gold.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
[[Page 43938]]
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-59 on the subject line.
Paper Comments
Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEArca-2020-59. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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-2020-59 and should be submitted
on or before August 10, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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\43\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15553 Filed 7-17-20; 8:45 am]
BILLING CODE 8011-01-P