[Federal Register Volume 75, Number 107 (Friday, June 4, 2010)]
[Notices]
[Pages 31823-31825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13437]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62193; File No. SR-CBOE-2010-043]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change To Enable the
Listing and Trading of Options on the Sprott Physical Gold Trust
May 28, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 11, 2010, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend certain rules to enable the listing and
trading on the Exchange of options on the Sprott Physical Gold Trust.
The text of the rule proposal is available on the Exchange's Web site
(http://www.cboe.org/legal), at the Exchange's Office of the Secretary
and at the Commission.
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
Recently the U.S. Securities and Exchange Commission (``SEC'' or
``Commission'') authorized CBOE to list and trade options on the SPDR
Gold Trust,\3\ the iShares COMEX Gold Trust, the iShares Silver
Trust,\4\ the ETFS Silver Trust and the ETFS Gold Trust,\5\ the ETFS
Palladium Trust and the ETFS Platinum Trust.\6\ Now, the Exchange
proposes to list and trade options on the Sprott Physical Gold Trust
(``PHYS'').
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 57897 (May 30,
2008), 73 FR 32061 (June 5, 2008) (order approving SR-CBOE-2005-11).
\4\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 75148 (December 10, 2008) (order approving SR-CBOE-
2008-72).
\5\ See Securities Exchange Act Release No. 61483 (February 3,
2010) (order approving SR-CBOE-2010-007).
\6\ See Securities Exchange Act Release No. 61892 (April 13,
2010), 75 FR 20649 (April 20, 2010) (order approving SR-CBOE-2010-
015).
---------------------------------------------------------------------------
Under current Rule 5.3, only Units (also referred to herein as
exchange traded fund (``ETFs'')) representing (i) interests in
registered investment companies (or series thereof) organized as open-
end management investment companies, unit investment trusts or similar
entities that hold portfolios of securities and/or financial
instruments including, but not limited to, stock index futures
contracts, options on futures, options on securities and indexes,
equity caps, collars and floors, swap agreements, forward contracts,
repurchase agreements and reverse purchase agreements (the ``Financial
Instruments''), and money market instruments, including, but not
limited to, U.S. government securities and repurchase agreements (the
``Money Market Instruments'') comprising or otherwise based on or
representing investments in indexes or portfolios of securities and/or
Financial Instruments and Money Market Instruments (or that hold
securities in one or more other registered investment companies that
themselves hold such portfolios of securities and/or Financial
Instruments and Money Market Instruments); or (ii) interests in a trust
or similar entity that holds a specified non-U.S. currency deposited
with the trust or similar entity when aggregated in some specified
minimum number may be surrendered to the trust by the beneficial owner
to receive the specified non-U.S. currency and pays the beneficial
owner interest and other distributions on deposited non-U.S. currency,
if any, declared and paid by the trust; or (iii) commodity pool
interests principally engaged, directly or indirectly, in holding and/
or managing portfolios or baskets of securities, commodity futures
contracts, options on commodity futures contracts, swaps, forward
contracts and/or options on physical commodities and/or non-U.S.
currency (``Commodity Pool Units''); or (iv) represent interests in the
streetTRACKS Gold Trust or the iShares COMEX Gold Trust or the iShares
Silver Trust or the ETFS Silver Trust or the ETFS Gold Trust or the
ETFS Palladium Trust or the ETFS Platinum Trust; or (v) represents an
interest in a registered investment company (``Investment Company'')
organized as an open-end management investment company or similar
entity, that invests in a portfolio of securities selected by the
Investment Company's investment adviser consistent with the Investment
Company's investment objectives and policies, which is issued in a
specified aggregate minimum number in return for a deposit of a
specified portfolio of securities and/or a cash amount with a value
equal to the next determined net asset value (``NAV''), and when
aggregated in the same specified minimum number, may be redeemed at a
holder's request, which holder will be paid a specified portfolio of
securities and/or cash with a value equal to the next determined NAV
(``Managed Fund Share'') are eligible as underlying securities for
options traded on the Exchange.\7\ This rule change proposes to expand
the types of ETFs that may be approved for options trading on the
Exchange to include the Sprott Physical Gold Trust.
---------------------------------------------------------------------------
\7\ See Interpretation and Policy .06 to Rule 5.3.
---------------------------------------------------------------------------
Apart from allowing Sprott Physical Gold Trust to be an underlying
for options traded on the Exchange as described above, the listing
standards for ETFs will remain unchanged from those that apply under
current Exchange rules. ETFs on which options may be listed and traded
must still be listed and traded on a national securities exchange and
must satisfy the other listing standards set forth in Interpretation
and Policy .06 to Rule 5.3.
Specifically, in addition to satisfying the aforementioned listing
requirements, Units must meet either (1) the criteria and guidelines
under Rule 5.3 and Interpretation and Policy .01 to Rule 5.3, Criteria
for Underlying Securities; or (2) they must be available for creation
or redemption each
[[Page 31824]]
business day from or through the issuer in cash or in kind at a price
related to net asset value, and the issuer must be obligated to issue
Units in a specified aggregate number even if some or all of the
investment assets required to be deposited have not been received by
the issuer, subject to the condition that the person obligated to
deposit the investments has undertaken to deliver the investment assets
as soon as possible and such undertaking is secured by the delivery and
maintenance of collateral consisting of cash or cash equivalents
satisfactory to the issuer, as provided in the respective prospectus.
The Exchange states that the current continued listing standards
for options on ETFs will apply to options on the Sprott Physical Gold
Trust. Specifically, under Interpretation and Policy .08 to Rule 5.4,
options on Units may be subject to the suspension of opening
transactions as follows: (1) Following the initial twelve-month period
beginning upon the commencement of trading of the Units, there are
fewer than 50 record and/or beneficial holders of the Units for 30 or
more consecutive trading days; (2) the value of the index or portfolio
of securities, non-U.S. currency, or portfolio of commodities including
commodity futures contracts, options on commodity futures contracts,
swaps, forward contracts and/or options on physical commodities and/or
Financial Instruments and Money Market Instruments on which Units are
based is no longer calculated or available; or (3) such other event
occurs or condition exists that in the opinion of the Exchange makes
further dealing on the Exchange inadvisable.
Additionally, the Sprott Physical Gold Trust shall not be deemed to
meet the requirements for continued approval, and the Exchange shall
not open for trading any additional series of option contracts of the
class covering the Sprott Physical Gold Trust, if the Sprott Physical
Gold Trust ceases to be an ``NMS stock'' as provided for in paragraph
(f) of Interpretation and Policy .01 of Rule 5.4 or the Sprott Physical
Gold Trust is halted from trading on its primary market.
The addition of the Sprott Physical Gold Trust to Interpretation
and Policy .06 to Rule 5.3 will not have any effect on the rules
pertaining to position and exercise limits \8\ or margin.\9\
---------------------------------------------------------------------------
\8\ See Rules 4.11, Position Limits, and 4.12, Exercise Limits.
\9\ See Rule 12.3, Margin Requirements.
---------------------------------------------------------------------------
The Exchange represents that its surveillance procedures applicable
to trading in options on the Sprott Physical Gold Trust will be similar
to those applicable to all other options on other Units currently
traded on the Exchange. The Exchange represents that its surveillance
procedures applicable to trading in options on the Sprott Physical Gold
Trust will be similar to those applicable to all other options on other
ETFs currently traded on the Exchange. Also, the Exchange may obtain
information from the New York Mercantile Exchange, Inc. (``NYMEX'') (a
member of the Intermarket Surveillance Group) related to any financial
instrument that is based, in whole or in part, upon an interest in or
performance of gold.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \10\ of the Act, in general, and furthers the objectives
of Section 6(b)(5) \11\ in particular in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market in a manner consistent with the protection of investors and the
public interest. In particular, the Exchange believes that amending its
rules to accommodate the listing and trading of options on the Sprott
Physical Gold Trust will benefit investors by providing them with
valuable risk management tools.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date 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 such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-CBOE-2010-043 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2010-043. This file
number should be included on the subject line if e-mail 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 Web site (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 Web site 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. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make
[[Page 31825]]
available publicly. All submissions should refer to File Number SR-
CBOE-2010-043 and should be submitted on or before June 25, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13437 Filed 6-3-10; 8:45 am]
BILLING CODE 8011-01-P