[Federal Register Volume 75, Number 171 (Friday, September 3, 2010)]
[Notices]
[Pages 54199-54204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22111]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62768; File No. SR-NYSEArca-2010-78]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of a Proposed Rule Change Relating to Listing and Trading of Jefferies
Commodity Real Return ETF
August 26, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 17, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the ``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 Exchange. 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\ 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 list and trade shares of Jefferies
Commodity Real Return ETF under NYSE Arca Equities Rule 8.200,
Commentary .02. The text of the proposed rule change is available at
the Exchange, the Commission's Public Reference Room, and http://www.nyse.com.
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
NYSE Arca Equities Rule 8.200, Commentary .02 permits the trading
of Trust Issued Receipts (``TIRs'') either by listing or pursuant to
unlisted trading privileges (``UTP'').\3\ The Exchange proposes to list
and trade the shares (the ``Shares'') of the Jefferies Commodity Real
Return ETF (the ``Fund'') under NYSE Arca Equities Rule 8.200.\4\
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\3\ Commentary .02 to NYSE Arca Equities Rule 8.200 applies to
TIRs that invest in ``Financial Instruments''. The term ``Financial
Instruments'', as defined in Commentary .02(b)(4) to NYSE Arca
Equities Rule 8.200, means any combination of investments, including
cash; securities; options on securities and indices; futures
contracts; options on futures contracts; forward contracts; equity
caps, collars and floors; and swap agreements.
\4\ See the Pre-Effective Amendment No. 1 to Registration
Statement on Form S-1, filed with the Commission on June 29, 2010
(No. 333-164811) (``Registration Statement''). The descriptions of
the Fund and the Shares contained herein are based on the
Registration Statement.
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The Exchange notes that the Commission has previously approved the
listing and trading of other issues of Trust Issued Receipts on the
American Stock Exchange LLC,\5\ trading on NYSE Arca pursuant to
unlisted trading privileges (``UTP''),\6\ and listing on NYSE Arca.\7\
In addition, the Commission has approved other exchange-traded fund-
like products linked to the performance of underlying commodities.\8\
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\5\ See, e.g., Securities Exchange Act Release No. 58161 (July
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39) (order
approving amendments to Amex Rule 1202, Commentary .07 and listing
on Amex of 14 funds of the Commodities and Currency Trust).
\6\ See, e.g., Securities Exchange Act Release No. 58163 (July
15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73) (order
approving UTP trading on NYSE Arca of 14 funds of the Commodities
and Currency Trust).
\7\ See, e.g., Securities Exchange Act Release No. 58457
(September 3, 2008), 73 FR 52711 (September 10, 2008) (SR-NYSEArca-
2008-91) (order approving lising on NYSE Arca of 14 funds of the
Commodities and Currency Trust).
\8\ See, e.g., Securities Exchange Act Release Nos. 56932
(December 7, 2007), 72 FR 71178 (December 14, 2007) (SR-NYSEArca-
2007-112) (order granting accelerated approval to list iShares S&P
GSCI Commodity-Indexed Trust); 59781 (April 17, 2009), 74 FR 18771
(April 24, 2009) (SR-NYSEArca-2009-28) (order granting accelerated
approval for NYSE Arca listing the ETFS Silver Trust); 59895 (May 8,
2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (order
granting accelerated approval for NYSE Arca listing the ETFS Gold
Trust).
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Overview of the Fund \9\
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\9\ Terms relating to the Fund, the Shares and the Index
referred to, but not defined, herein are defined in the Registration
Statement.
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According to the Registration Statement, the Fund will pursue its
[[Page 54200]]
investment objective by investing substantially all of its assets in a
portfolio of exchange traded futures on the commodities comprising its
corresponding index, as described below, or other derivatives. The Fund
establishes long positions in futures contracts on the commodities
comprising the Thomson Reuters/Jefferies CRB 3 Month Forward Index
(``Index''), with a view to tracking the changes, whether positive or
negative, in the level of the Index over time. The Fund also may invest
in one or more forward agreements, swaps, or other over-the-counter
derivatives that reference a particular Index Commodity (``Futures-
Linked Investment''), as described below. The Fund is also intended to
reflect the excess, if any, of its interest income from its investment
in 3-month U.S. Treasury bills, U.S. government issued Treasury
Inflation Protection Securities (``TIPS'')\10\ and other high credit
quality short-term fixed income securities, over its expenses.
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\10\ TIPS are marketable securities issued by the U.S. Treasury
whose principal is adjusted by changes in the Consumer Price Index
(``CPI''). With inflation (a rise in the CPI), the principal
increases. With deflation (a drop in the CPI), the principal
decreases. (Source: http://www.treasurydirect.gov.)
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Jefferies Commodity Investment Services, LLC, a Delaware limited
liability company, is the Fund's promoter, and will serve as Managing
Owner of the Fund (the ``Managing Owner''). The Managing Owner will
serve as the commodity pool operator and commodity trading advisor of
the Fund. The Managing Owner is registered as a commodity pool operator
and commodity trading advisor with the Commodity Futures Trading
Commission (``CFTC'') and is a member of the National Futures
Association. The Bank of New York Mellon will be the administrator,
custodian and transfer agent of the Fund. ALPS Distributors, Inc. will
serve as the Fund's marketing agent.
The Index tracks the changes in the closing levels of the futures
positions that would in three months comprise the Thomson Reuters/
Jefferies CRB Index (``TR/J CRB Index''). The TR/J CRB Index is
designed to track the changes in the closing levels of nearby rolling
futures positions.\11\
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\11\ A rolling futures position is a position where, on a
periodic basis, futures contracts on physical commodities specifying
delivery in a particular month are sold and futures contracts
specifying delivery in a later month are purchased. An investor with
a rolling futures position is able to avoid taking delivery of the
underlying physical commodity while maintaining exposure to those
commodities. To maximize liquidity and transparency, this
``rolling'' process for the Index Commodities for the Index occurs
over the first four Business Days of each month according to a fixed
schedule as described in the Registration Statement.
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The Fund will hold a portfolio of futures contracts on the Index
Commodities (as described below), as well as cash, 3-month U.S.
Treasury bills, TIPS and other high credit quality short-term fixed
income securities, for deposit with the Fund's Clearing Broker (Credit
Suisse Securities (USA) LLC), as margin. The Fund's portfolio will be
traded with a view to tracking the Index over time, whether the Index
is rising, falling or flat over any particular period. The Fund is not
``managed'' by traditional methods, which typically involve effecting
changes in the composition of the Fund's portfolio on the basis of
judgments relating to economic, financial and market considerations
with a view to obtaining positive results under all market conditions.
To maintain the correspondence between the composition and weightings
of the Index Commodities comprising the Index, the Managing Owner
adjusts the Fund's portfolio from time-to-time to conform to periodic
changes in the identity and/or relative weighting of the Index
Commodities. The Managing Owner will aggregate certain of the
adjustments and makes changes to the Fund's portfolio at least monthly
or more frequently in the case of significant changes to the Index.\12\
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\12\ According to the Registration Statement, Jefferies Group,
Inc.'s policy is to implement procedures to prevent the improper
sharing of information between different departments of the company.
Specifically, procedures as described in the Registration Statement
create an information barrier between the personnel within Jefferies
Group, Inc. who sit on the Thomson Reuters/Jefferies CRB Index
Oversight Committee and other Jefferies Group, Inc.'s personnel of
the Managing Owner who are involved in making portfolio management
and trading decisions for the Fund, and also are intended to prevent
the improper sharing of certain Index-related information to others
who could act on the information to the detriment of the Fund.
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According to the Registration Statement, the Index is designed to
provide timely and accurate representation of a long-only, broadly
diversified investment in commodities through a transparent and
disciplined calculation methodology. The Index is currently composed of
futures contracts on the following 19 physical commodities (each, an
``Index Commodity'' and, collectively, ``Index Commodities''):
Aluminum, cocoa, coffee, copper, corn, cotton, crude oil, gold, heating
oil, lean hogs, live cattle, natural gas, nickel, orange juice, silver,
soybeans, sugar, RBOB gasoline, and wheat. The Index Commodities
currently trade on United States futures exchanges, with the exception
of aluminum and nickel, which trade on the London Metal Exchange.
According to the Registration Statement, as the Fund approaches or
reaches position limits with respect to certain futures contracts
comprising the Index and the Managing Owner determines in its
commercially reasonable judgment that it has become impracticable or
inefficient for any reason for the Fund to gain full or partial
exposure to any Index Commodity by investing in a specific futures
contract that is a part of the Index, the Fund may invest in a futures
contract referencing the particular Index Commodity other than the
specific contract that is a part of the Index, or invest in one or more
Futures-Linked Investments referencing the particular Index Commodity,
including forward agreements, swaps, or other OTC derivatives, or in
the alternative, invest in other futures contracts or Futures-Linked
Investments not based on the particular Index Commodity if, in the
commercially reasonable judgment of the Managing Owner, such
replacement instruments tend to exhibit trading prices that correlate
with a futures contract that is a part of the Index.
According to the Registration Statement, the Index uses a four-
tiered approach to allocate among the Index Commodities included in the
Index. Group I includes only petroleum products; Group II includes
seven Index Commodities which are highly liquid; Group III is comprised
of four liquid Index Commodities; Group IV includes Index Commodities
that may provide diversification.
All Index Commodities are equally weighted within Groups II, III
and IV, as provided below.\13\
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\13\ The referenced exchanges with respect to the commodities
for the Fund, as applicable, are as follows: NYMEX (New York
Mercantile Exchange); COMEX (Commodity Exchange Inc.); LME (The
London Metal Exchange Limited); CBOT (Chicago Board of Trade); CME
(Chicago Mercantile Exchange); ICE-US, Inc. (ICE Futures U.S.).
[[Page 54201]]
Thomson Reuters/Jefferies CRB Index--Thomson Reuters/Jefferies CRB 3 Month Forward Index
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Index
Group Index commodity weight Contract months Exchange Trading hours (E.T.)
(%)
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I................... WTI Crude Oil.......... 23 Jan-Dec................ NYMEX............................ 10:00 am--2:30 pm.
Heating Oil............ 5 Jan-Dec................ NYMEX............................ 10:05 am--2:30 pm.
RBOB Gasoline.......... 5 Jan-Dec................ NYMEX............................ 10:05 am--2:30 pm.
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Total........... 33
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II.................. Natural Gas............ 6 Jan-Dec................ NYMEX............................ 10:00 am--2:30 pm.
Corn................... 6 Mar, May, Jul, Sep, Dec CBOT............................. 10:30 am--2:15 pm.
Soybeans............... 6 Jan, Mar, May, Jul, Nov CBOT............................. 10:30 am--2:15 pm.
Live Cattle............ 6 Feb, Apr, Jun, Aug, CME.............................. 10:05 am--2:00 pm.
Oct, Dec.
Gold................... 6 Feb, Apr, Jun, Aug, Dec COMEX............................ 8:20 am--1:30 pm.
Aluminum............... 6 Mar, Jun, Sep, Dec..... LME.............................. 6:55 am--12:00 pm.
Copper................. 6 Mar, May, Jul, Sep, Dec COMEX............................ 8:10 am--1:00 pm.
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Total........... 42
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III................. Sugar.................. 5 Mar, May, Jul, Oct..... ICE-US........................... 3:30 am--2:00 pm.
Cotton................. 5 Mar, May, Jul, Dec..... ICE-US........................... 9:00 pm--2:30 pm.
Cocoa.................. 5 Mar, May, Jul, Sep, Dec ICE-US........................... 4:00 am--2:00 pm.
Coffee................. 5 Mar, May, Jul, Sep, Dec ICE-US........................... 3:30 am--2:00 pm.
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Total........... 20
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IV.................. Nickel................. 1 Mar, Jun, Sep, Dec..... LME.............................. 7:10 am--11:55 am.
Wheat.................. 1 Mar, May, Jul, Sep, Dec CBOT............................. 10:30 am--2:15 pm.
Lean Hogs.............. 1 Feb, Apr, Jun, Jul, CME.............................. 9:10 am--1:00 pm.
Aug, Oct, Dec.
Orange Juice........... 1 Jan, Mar, May, Jul, ICE-US........................... 8:00 am--2:00 pm.
Sep, Nov.
Silver................. 1 Mar, May, Jul, Sep, Dec COMEX............................ 8:25 am--1:25 pm.
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Total........... 5
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The Index is calculated daily by Thomson Reuters (Markets) LLC, a
Thomson Reuters company (``Reuters'' or the ``Index Calculation
Agent''). The Index began publishing in April 2007. The changes in the
closing levels of the Index are reported by a number of major market
data vendors. Reuters is not affiliated with a broker dealer.
Group I of the Index includes only petroleum products--WTI crude
oil, heating oil and RBOB gasoline. According to the Registration
Statement, these Index Commodities are among the most economically
significant and frequently traded and historically have contributed
meaningfully to the return and correlative characteristics of commodity
benchmark indices. In order to reflect the critical role of petroleum
in the global economy and maintain the diversified nature of the Index,
the Index has assigned an Index Weight of 33% to the Group I Index
Commodities, represented by the crude oil, RBOB gasoline and heating
oil contracts traded on the NYMEX.
Group II is comprised of futures contracts on the Index Commodities
that are traded in markets that are highly liquid. These seven markets
represent a diverse cross section across several commodity sectors.
Each Index Commodity is assigned an Index Weight of 6% of the Index. In
turn, Group II constitutes 42% of the Index.
Group III is comprised of futures contracts on Index Commodities
that are traded in markets that are liquid. These four Index
Commodities include a second cross section of diverse and liquid
markets in order to diversify the Index. Each Index Commodity in Group
III is assigned an Index Weight of 5% of the Index. In turn, Group III
constitutes 20% of the Index.
Group IV is comprised of futures contracts on Index Commodities
that may provide additional diversification to the Index by increasing
the exposure of the Index to the Softs, Grains, Industrial Metals,
Meats and Precious Metals markets. Each Index Commodity in Group IV is
assigned an Index Weight of 1% of the Index. In turn, Group IV
constitutes 5% of the Index.
Rebalancing Methodology
According to the Registration Statement, the Index employs
arithmetic averaging with monthly rebalancing, while maintaining a
uniform exposure to the various Index Commodities over time.
The Index Commodities are rebalanced monthly, generally following
the close of business on the sixth Business Day of each month, to
return to the specified dollar weights, referenced as ``Index Weight''
in the table above. This rebalancing is achieved by selling Index
Commodities that have gained in value relative to other Index
Commodities and buying Index Commodities that have lost in value
relative to other Index Commodities. This monthly rebalancing helps to
maintain both the stability and consistency of the Index and the
consistent exposure to the Index Weights of the underlying Index
Commodities over time.
The Fund will meet the initial and continued listing requirements
applicable to Trust Issued Receipts in NYSE Arca Equities Rule 8.200
and Commentary .02 thereto. With respect to application of Rule 10A-3
\14\ under the Act, the Trust relies on the exception contained in Rule
10A-3(c)(7).\15\ A minimum of 100,000 Shares of the Fund will be
outstanding as of the start of trading on the Exchange.
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\14\ 17 CFR 240.10A-3.
\15\ 17 CFR 240.10A-3(c)(7).
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A more detailed description of the Shares, the Fund, the Index and
the Index Commodities, as well as investment risks, is set forth in the
Registration Statement.
[[Page 54202]]
Availability of Information Regarding the Shares
The Web site for the Fund (http://www.jamfunds.com/jcis) and/or the
Exchange, which are publicly accessible at no charge, will contain the
following information: (a) The current net asset value (``NAV'') per
share daily and the prior business day's NAV and the reported closing
price; (b) the midpoint of the bid-ask price in relation to the NAV as
of the time the NAV is calculated (the ``Bid-Ask Price''); (c)
calculation of the premium or discount of such price against such NAV;
(d) the bid-ask price of Shares determined using the highest bid and
lowest offer as of the time of calculation of the NAV; (e) data in
chart form 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; (f) the
prospectus; and (g) other applicable quantitative information. The Fund
will also disseminate Fund holdings on a daily basis on the Fund's Web
site.
The Index Calculation Agent calculates the closing level of each
Index on both an excess return basis and a total return basis. An
excess return index reflects the changes in market value over time,
whether positive or negative, of the Index Commodities. A total return
is the sum of the changes in market value over time, whether positive
or negative, of the Index Commodities incorporating the return of 3-
month U.S. Treasury bills. The Fund is designed to track the Index as
calculated on an excess return, not a total return, basis.
In order to calculate the indicative Index levels, the Index
Calculation Agent determines the real time price of each Index
Commodity every 15 seconds. The Index Calculation Agent then applies a
set of rules to these values to create the indicative level of the
Index. These rules are consistent with the rules which the Index
Calculation Agent applies at the end of each trading day to calculate
the closing levels of the Index.
The Intra-day Indicative Value (``IIV'') per Share of the Fund is
calculated by applying the percentage price change of the Fund's
holdings in futures contracts to the last published NAV of the Fund.
The Index Calculation Agent will publish this value every 15 seconds
through one or more major market data vendors. The Index Calculation
Agent will publish the closing level of the Index daily. The Managing
Owner will publish the NAV of the Fund and the NAV per Share of the
Fund daily. Additionally, the Index Calculation Agent will publish the
intra-day level of the Index, and the Managing Owner will publish the
indicative value per Share of the Fund (quoted in U.S. dollars) once
every fifteen seconds throughout each trading day. All of the foregoing
information will be published as follows:
The intra-day level of the Index and the IIV per Share of the Fund
(each quoted in U.S. dollars) will be published once every fifteen
seconds throughout each trading day through one or more major market
data vendors and on the Managing Owner's Web site.
The most recent end-of-day Index closing level will be published as
of the close of the NYSE Arca each trading day on the consolidated
tape, Reuters and/or Bloomberg and on the Managing Owner's Web site.
The most recent end-of-day NAV of the Fund will be published as of
the close of business by major market data vendors and on the Managing
Owner's Web site. In addition, the most recent end-of-day NAV of the
Fund will be published the following morning on the consolidated tape.
The NAV for the Fund will be disseminated to all market
participants at the same time. The Exchange also will disseminate on a
daily basis via CTA information with respect to recent NAV and shares
outstanding. The Exchange will also make available on its Web site
daily trading volume of each of the Shares, closing prices of such
Shares, and the corresponding NAV. The closing prices and settlement
prices of futures on the Index Commodities are also readily available
from the Web sites of the applicable futures exchanges, automated
quotation systems, published or other public sources, or on-line
information services such as Bloomberg or Reuters. The relevant futures
exchanges also provide delayed futures information on current and past
trading sessions and market news free of charge on their respective Web
sites. The specific contract specifications for the futures contracts
are also available on such Web sites, as well as other financial
informational sources. Quotation and last-sale information regarding
the Shares will be disseminated through the facilities of the CTA.
Dissemination of Intra-Day Indicative Value
In addition, in order to provide updated information relating to
the Fund for use by investors and market professionals, an updated IIV
will be calculated. The IIV is calculated by using the prior day's
closing NAV per share of the Fund as a base and updating that value
throughout the trading day to reflect changes in the value of the Index
Commodities. The IIV disseminated during NYSE Arca trading hours should
not be viewed as an actual real time update of the NAV, which is
calculated only once a day.
The IIV will be disseminated on a per Share basis by one or more
major market data vendors every 15 seconds during NYSE Arca Core
Trading Session of 9:30 a.m. to 4 p.m. Eastern Time (``E.T.''). The
value of a Share may be influenced by non-concurrent trading hours
between NYSE Arca and the applicable futures exchange when the Shares
are traded on NYSE Arca after normal trading hours of such futures
exchanges.
The Exchange believes that dissemination of the IIV provides
additional information regarding the Fund that is not otherwise
available to the public and is useful to professionals and investors in
connection with the related Shares trading on the Exchange or the
creation or redemption of such Shares.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. The Exchange has
appropriate rules to facilitate transactions in the Shares during all
trading sessions.
The trading of the Shares will be subject to NYSE Arca Equities
Rule 8.200(e), which sets forth certain restrictions on ETP Holders
acting as registered Market Makers in Trust Issued Receipts to
facilitate surveillance. See ``Surveillance'' below for more
information.
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 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 trading is not occurring in the underlying futures contracts, 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 \16\ or by the halt or suspension of
[[Page 54203]]
trading of the underlying futures contracts.
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\16\ See NYSE Arca Equities Rule 7.12.
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The Exchange represents that the Exchange may halt trading during
the day in which the interruption to the dissemination of the IIV, the
Index or the value of the underlying futures contracts occurs. If the
interruption to the dissemination of the IIV, the Index or the value of
the underlying futures contracts persists past the trading day in which
it occurred, the Exchange will halt trading no later than the beginning
of the trading day following the interruption. In addition, if the
Exchange becomes aware that the NAV with respect to the Shares is not
disseminated to all market participants at the same time, it will halt
trading in the Shares until such time as the NAV is available to all
market participants.
Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products, including Trust Issued
Receipts, to monitor trading in the Shares. 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 applicable federal securities laws.
The Exchange's current trading surveillances focus on detecting
securities trading outside their normal patterns. 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 is able to
obtain information regarding trading in the Shares, the physical
commodities included in, or options, futures or options on futures on,
Shares through ETP Holders, in connection with such ETP Holders'
proprietary or customer trades through ETP Holders which they effect on
any relevant market. The Exchange can obtain market surveillance
information, including customer identity information, with respect to
transactions occurring on the exchanges that are members of the
Intermarket Surveillance Group (``ISG'').\17\ CME Group, Inc., which
includes CME, CBOT, NYMEX and COMEX, is a member of ISG. In addition,
the Exchange has entered into a comprehensive surveillance sharing
agreement with LME and ICE Futures U.S. that applies with respect to
trading in futures on the applicable Index Commodities. A list of ISG
members is available at http://www.isgportal.org.
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\17\ The Exchange notes that not all futures contracts or other
financial instruments held by the Fund may trade on markets that are
members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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In addition, with respect to Fund assets traded on exchanges, not
more than 10% of the weight of such assets in the aggregate shall
consist of components whose principal trading market is not a member of
ISG or is a market with which the Exchange does not have a
comprehensive surveillance sharing agreement.
The Exchange also has a general policy prohibiting the distribution
of material, non-public information by its employees.
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 risks involved
in trading the Shares during the Opening and Late Trading Sessions when
an updated IIV will not be calculated or publicly disseminated; (2) the
procedures for purchases and redemptions of Shares in Creation Baskets
and Redemption Baskets (and that Shares are not individually
redeemable); (3) NYSE Arca Equities Rule 9.2(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; (4) how
information regarding the IIV is disseminated; (5) the requirement that
ETP Holders deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
and (6) trading information.
In addition, the Information Bulletin will advise ETP Holders,
prior to the commencement of trading, of the prospectus delivery
requirements applicable to the Fund. The Exchange notes that investors
purchasing Shares directly from the Fund will receive a prospectus. ETP
Holders purchasing Shares from the Fund for resale to investors will
deliver a prospectus to such investors. The Information Bulletin will
also discuss any exemptive, no-action and interpretive relief granted
by the Commission from any rules under the Act.
In addition, the Information Bulletin will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Bulletin will also reference that the CFTC
has regulatory jurisdiction over the Index Commodities traded on U.S.
markets.
The Information Bulletin will also disclose the trading hours of
the Shares of the Fund and that the NAV for the Shares is calculated
after 4 p.m. E.T. each trading day. The Bulletin will disclose that
information about the Shares of the Funds is publicly available on the
Fund's Web site.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\18\ in general, and furthers the objectives of Section
6(b)(5),\19\ 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 mechanism of a free and open
market and a national market system. The Exchange believes that the
proposed rule change will permit the listing of an additional issuance
of Trust Issued Receipts on the Exchange that will enhance competition
among market participants, to the benefit of investors and the
marketplace. In addition, the listing and trading criteria set forth in
Rule 8.200 are intended to protect investors and the public interest.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
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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.
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
[[Page 54204]]
(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-NYSEArca-2010-78 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2010-78. 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 inspection
and copying 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 such 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 publicly available. All
submissions should refer to File Number SR-NYSEArca-2010-78 and should
be submitted on or before September 24, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-22111 Filed 9-2-10; 8:45 am]
BILLING CODE 8011-01-P