[Federal Register Volume 75, Number 239 (Tuesday, December 14, 2010)]
[Notices]
[Pages 77926-77928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31288]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63464; File No. SR-NYSEArca-2010-95]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Accelerated Approval of a Proposed Rule Change To List and Trade Shares
of the ETFS Asian Gold Trust
December 8, 2010.
On September 22, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities
Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a
proposed rule change to list and trade shares (``Shares'') of the ETFS
Asian Gold Trust (``Trust''). The proposed rule change was published in
the Federal Register on November 12, 2010.\4\ The Commission received
no comments on the proposal. This order approves the proposed rule
change on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ See Securities Exchange Act Release No. 63267 (November 8,
2010), 75 FR 69494 (``Notice'').
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I. Description of the Proposal
The Exchange proposes to list and trade Shares pursuant to NYSE
Arca Equities Rule 8.201, which governs the listing and trading of
Commodity-Based Trust Shares. The Exchange represents that the Shares
satisfy the requirements of NYSE Arca Equities Rule 8.201 and thereby
qualify for listing on the Exchange.
The Trust will issue Shares, which represent units of fractional
undivided beneficial interest in and ownership of the Trust. The
investment objective of the Trust is for the Shares to reflect the
performance of the price of gold bullion, less the expenses of the
Trust's operations.\5\
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\5\ See the Registration Statement for the Trust on Form S-1,
filed with the Commission on July 22, 2010 (No. 333-168277)
(``Registration Statement''). The descriptions of the Trust, the
Shares and the gold market contained in the Notice are based on the
Registration Statement.
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The Exchange deems the Shares to be equity securities, which
subjects the Shares to the Exchange's existing rules
[[Page 77927]]
governing the trading of equity securities, and has represented that
trading of the Shares on the Exchange, will occur in accordance with
NYSE Arca Equities Rule 7.34(a). The Exchange also has represented that
it has appropriate rules to facilitate transactions in the Shares
during all trading sessions.
Additional details regarding the Shares and Trust including, among
other things, creations and redemptions of the Shares, the organization
and structure of the Trust, custody of the Trust's holdings, Trust
expenses, Trust termination events, the Singapore and London gold
markets, the gold futures markets, and the gold markets generally, the
dissemination and availability of information about the underlying
assets, trading halts, applicable trading rules, surveillance, and the
Information Bulletin can be found in the Notice and/or the Registration
Statement.\6\
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\6\ See supra notes 4 and 5.
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II. Discussion and Commission Findings
After careful consideration, the Commission finds that the proposed
rule change to list and trade the Shares is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\7\ In particular, the
Commission finds that the proposed rule change is consistent with the
requirements of Section 6(b)(5) of the Act,\8\ which requires, among
other things, that the Exchange's rules be designed to prevent
fraudulent and manipulative acts and practices, promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest.
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\7\ In approving the proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(5).
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In addition, the Commission finds that the proposal to list and
trade the Shares on the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Act,\9\ which sets forth Congress' finding
that it is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure the
availability to brokers, dealers and investors of information with
respect to quotations for and transactions in securities. The Exchange
states that there is a considerable amount of gold price and gold
market information available on public Web sites and through
professional and subscription services as discussed below. For example,
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, such as Reuters and Bloomberg. Reuters
and Bloomberg provide at no charge on their Web sites delayed
information regarding the spot price of gold and last sale prices of
gold futures, as well as information about news and developments in the
gold market. Reuters and Bloomberg also offer a professional service to
subscribers for a fee that provides information on gold prices directly
from market participants. An organization named EBS provides an
electronic trading platform to institutions such as bullion banks and
dealers for the trading of spot gold, as well as a feed of live
streaming prices to Reuters and Moneyline Telerate subscribers.
Complete real-time data for gold futures and options prices traded on
the COMEX are available by subscription from Reuters and Bloomberg.
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\9\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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In addition, the Trust's Web site will provide the following
information: (1) An intraday indicative value (``IIV'') per share for
the Shares, updated at least every 15 seconds, as calculated by the
Exchange or a third party financial data provider, during the
Exchange's Core Trading Session (9:30 a.m. to 4 p.m., Eastern Standard
Time); and (2) the Creation Basket Deposit and net asset value
(``NAV'') of the Trust as calculated each business day by the Sponsor.
In addition, the Web site for the Trust will contain the following
information, on a per Share basis, for the Trust: (1) The mid-point of
the bid-ask price \10\ at the close of trading in relation to the NAV
as of the time the NAV is calculated (``Bid/Ask Price''), and a
calculation of the premium or discount of such price against such NAV;
and (2) 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 Web site for the Trust will also provide the Trust's prospectus, as
well as the two most recent reports to stockholders. Finally, the Trust
Web site will provide the last sale price of the Shares as traded in
the US market.
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\10\ The bid-ask price of the Trust is 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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The Exchange will provide on its Web site http://www.nyx.com a link
to the Trust's Web site. In addition, the Exchange will make available
over the Consolidated Tape quotation information, trading volume,
closing prices and NAV for the Shares from the previous day. The NYMEX
also provides delayed futures and options information on current and
past trading sessions and market news free of charge on its Web site.
There are a variety of other public Web sites providing information on
gold, ranging from those specializing in precious metals to sites
maintained by major newspapers, such as The Wall Street Journal. In
addition, the London AM Fix and London PM Fix are publicly available at
no charge at or http://www.thebulliondesk.com.
The Commission further believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Exchange states that it will obtain a representation from
the Trust that the NAV will be calculated daily and made available to
all market participants at the same time.\11\
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\11\ See e-mail from Timothy J. Malinowski, Senior Director,
NYSE Euronext, to Christopher W. Chow, Special Counsel, and Steve
Varholik, Special Counsel, Commission, dated December 1, 2010.
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Following the initial 12-month period following commencement of
trading, the Exchange will consider the suspension of trading in Shares
or removing Shares from listing if, among other things: (1) The value
of the underlying commodity is no longer calculated or available on at
least a 15-second delayed basis from a source unaffiliated with the
sponsor, Trust, custodian or the Exchange; (2) the Exchange stops
providing a hyperlink on its Web site to any such unaffiliated
commodity value; or (3) the IIV is no longer made available on at least
a 15-second delayed basis.\12\ Under NYSE Arca Equities Rule
7.34(a)(5), if the Exchange becomes aware that the NAV is not being
disseminated to all market participants at the same time, it must halt
trading on the NYSE Marketplace until such time as the NAV is available
to all market participants. With respect to trading halts, the Exchange
may consider all relevant factors in exercising its discretion to halt
or suspend trading in the Shares. These may include: (1) The extent to
which conditions in the underlying gold
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markets 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.\13\
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\12\ See NYSE Arca Equities Rule 8.201(e)(2).
\13\ See NYSE Arca Equities Rule 7.12.
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Further, NYSE Arca Equities Rule 8.201 sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Shares to facilitate surveillance. Pursuant to NYSE Arca Equities Rule
8.201(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 applicable underlying commodity, related commodity
futures or options on commodity futures, or any other related commodity
derivatives. Commentary .04 of NYSE Arca Equities Rule 6.3 requires an
ETP Holder acting as a registered Market Maker in Commodity-Based Trust
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.
In support of this proposal, the Exchange has made representations,
including the following:
(1) The Shares will be subject to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.201(e).
(2) The Exchange's surveillance 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. In addition, the Exchange may obtain trading
information via the Intermarket Surveillance Group (``ISG'') from other
exchanges who are members of the ISG.
(3) 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: (a)
The procedures for purchases and redemptions of Shares in Baskets
(including noting that Shares are not individually redeemable); (b)
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; (c) how information regarding the
IIV is disseminated; (d) the requirement that ETP Holders deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; (d) the
possibility that trading spreads and the resulting 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 (e) trading information. In addition,
the Information Bulletin will reference that the Trust is subject to
various fees and expenses 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, that
the Commission has no jurisdiction over the trading of gold as a
physical commodity, and that the CFTC has regulatory jurisdiction over
the trading of gold futures contracts and options on gold futures
contracts.
This approval order is based on the Exchange's representations.
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\14\ for approving the proposed rule change prior to the 45th
day after publication of notice in the Federal Register. The Commission
does not believe that the Exchange's proposal to list and trade the
Shares presents any novel regulatory issues. The Commission has
previously approved proposals by the Exchange to list and trade shares
of similar trusts that hold gold bullion pursuant to NYSE Arca Equities
Rule 8.201.\15\ Additionally, the Commission has previously approved
proposals to list and trade shares of trusts that hold other
commodities such as platinum, palladium, and silver pursuant to NYSE
Arca Equities Rule 8.201.\16\
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\14\ 15 U.S.C. 78s(b)(2).
\15\ See, e.g., Securities Exchange Act Release No. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\16\ See Notice, supra note 4, 75 FR at 69495, nn. 5-11.
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III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\17\ that the proposed rule change (SR-NYSEArca-2010-95) be, and it
hereby is, approved on an accelerated basis.
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\17\ 15 U.S.C.78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31288 Filed 12-13-10; 8:45 am]
BILLING CODE 8011-01-P