[Federal Register Volume 75, Number 82 (Thursday, April 29, 2010)]
[Notices]
[Pages 22663-22668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9875]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61954; File No. SR-NYSEArca-2010-22]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to Listing of the Teucrium Corn Fund
April 21, 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 March 31, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``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.
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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 the Teucrium Corn
Fund under NYSE Arca Equities Rule 8.200. 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 the
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 shares (``Shares'') of the Teucrium Corn Fund (``Fund'')
pursuant to NYSE Arca Equities Rule 8.200.
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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.
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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,\4\ trading on NYSE Arca pursuant to
unlisted trading privileges (``UTP''),\5\ and listing on NYSE Arca.\6\
In addition, the Commission has approved other exchange-traded fund-
like products linked to the performance of underlying commodities.\7\
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\4\ See, e.g., Securities Exchange Act Release No. 58161 (July
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39).
\5\ See, e.g., Securities Exchange Act Release No. 58163 [sic]
(July 15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
\6\ See, e.g., Securities Exchange Act Release No. 58457
(September 3, 2008), 73 FR 52711 (September 10, 2008) (SR-NYSEArca-
2008-91).
\7\ See, e.g., Securities Exchange Act Release Nos. 57456 (March
7, 2008), 73 FR 13599 (March 13, 2008) (SR-NYSEArca-2007-91) (order
granting accelerated approval for NYSE Arca listing the iShares GS
Commodity Trusts); 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);
61219 (December 22, 2009), 74 FR 68886 (December 29, 2009) (order
approving listing on NYSE Arca of the ETFS Platinum Trust).
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Overview of the Fund
The Shares represent beneficial ownership interests in the Fund, as
described in the Registration Statement for the Fund.\8\ The Fund is a
commodity pool that is a series of the Teucrium Commodity Trust
(``Trust''), a Delaware statutory trust. The Fund is managed and
controlled by Teucrium Trading, LLC (``Sponsor''). The Sponsor is a
Delaware limited liability company that is registered as a commodity
pool operator (``CPO'') with the Commodity Futures Trading Commission
(``CFTC'') and is a member of the National Futures Association.
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\8\ See Amendment No. 3 to the Registration Statement on Form S-
1 for Teucrium Commodity Trust, dated March 29, 2010 (File No. 333-
162033) (``Registration Statement''). The discussion herein relating
to the Trust and the Shares is based on the Registration Statement.
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According to the Registration Statement, the investment objective
of the Fund is to have the daily changes in percentage terms of the
Fund's net asset value (``NAV'') per Share reflect the daily changes in
percentage terms of a weighted average of the closing settlement prices
for three futures contracts for corn (``Corn Futures Contracts'') that
are traded on the Chicago Board of Trade (``CBOT''), specifically (1)
The second-to-expire CBOT Corn Futures Contract, weighted 35%, (2) the
third-to-expire CBOT Corn Futures Contract, weighted 30%, and (3) the
CBOT Corn Futures Contract expiring in the December following the
expiration month of the third-to-expire contract, weighted 35%, less
the Fund's expenses.\9\ (This weighted average of the
[[Page 22664]]
three referenced Corn Futures Contracts is referred to herein as the
``Benchmark,'' and the three Corn Futures Contracts that at any given
time make up the Benchmark are referred to herein as the ``Benchmark
Component Futures Contracts.'')\10\
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\9\ Corn Futures Contracts traded on the CBOT expire on a
specified day in five different months: March, May, July, September
and December. In terms of the Benchmark, in June of a given year,
the next-to-expire or ``spot month'' Corn Futures Contract will
expire in July of that year, and the Benchmark Component Futures
Contracts will be the contracts expiring in September of that year
(the second-to-expire contract), December of that year (the third-
to-expire contract), and December of the following year. In November
of a given year, the Benchmark Component Futures Contracts will be
the contracts expiring in March, May and December of the following
year.
\10\ Corn futures volume on CBOT for 2008 and 2009 (through
November 30, 2009) was 59,934,739 contracts and 47,754,866
contracts, respectively. As of March 16, 2010, CBOT open interest
for corn futures was 1,118,103 contracts, and open interest for near
month futures was 447,554 contracts. The contract price was
$18,337.50 ($3.6675 per bushel and 5,000 bushels per contract). The
approximate value of all outstanding contracts was $20.5 billion.
The position limits for all months is 22,000 contracts and the total
value of contracts if position limits were reached would be
approximately $403.5 million (based on the $18,337.50 contract
price). As of March 16, 2010, open interest in corn swaps cleared on
the CBOT was approximately 2,100 contracts, with an approximate
value of $38.5 million. Corn futures and options are also traded on
NYSE Liffe and corn futures are traded on the Tokyo Grain Exchange.
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The Fund seeks to achieve its investment objective by investing
under normal market conditions in Benchmark Component Futures Contracts
or, in certain circumstances, in other Corn Futures Contracts traded on
the CBOT or on foreign exchanges. In addition, and to a limited extent,
the Fund also may invest in corn-based swap agreements that are cleared
through the CBOT or its affiliated provider of clearing services
(``Cleared Corn Swaps'') in furtherance of the Fund's investment
objective. Once position limits in Corn Futures Contracts are
applicable, the Fund's intention is to invest first in Cleared Corn
Swaps to the extent permitted by the position limits applicable to
Cleared Corn Swaps and appropriate in light of the liquidity in the
Cleared Corn Swap market, and then in contracts and instruments such as
cash-settled options on Corn Futures Contracts and forward contracts,
swaps other than Cleared Corn Swaps, and other over-the-counter
transactions that are based on the price of corn and Corn Futures
Contracts (collectively, ``Other Corn Interests,'' and together with
Corn Futures Contracts and Cleared Corn Swaps, ``Corn Interests''). By
utilizing certain or all of these investments, the Sponsor will
endeavor to cause the Fund's performance, before taking Fund expenses
and any interest income from the cash, cash equivalents and U.S.
Treasury securities held by the Fund into account, to closely track
that of the Benchmark. The Sponsor expects to manage the Fund's
investments directly, although it has been authorized by the Trust to
retain, establish the terms of retention for, and terminate third-party
commodity trading advisors to provide such management. The Sponsor is
also authorized to select futures commission merchants to execute the
Fund's transactions in Corn Futures Contracts.
The Fund's positions in Corn Interests will be changed or
``rolled'' on a regular basis in order to track the changing nature of
the Benchmark. For example, five times a year (on the date on which a
Corn Futures Contract expires), the second-to-expire Corn Futures
Contract will become the next-to-expire Corn Futures Contract and will
no longer be a Benchmark Component Futures Contract, and the Fund's
investments will have to be changed accordingly. In order that the
Fund's trading does not cause unwanted market movements and to make it
more difficult for third parties to profit by trading based on such
expected market movements, the Fund's investments typically will not be
rolled entirely on that day, but rather will typically be rolled over a
period of several days.
Consistent with achieving the Fund's investment objective of
closely tracking the Benchmark, the Sponsor may for certain reasons
cause the Fund to enter into or hold Corn Futures Contracts other than
the Benchmark Component Futures Contracts, Cleared Corn Swaps and/or
Other Corn Interests. Certain Cleared Corn Swaps have standardized
terms similar to, and are priced by reference to, a corresponding
Benchmark Component Futures Contract. Other Corn Interests that do not
have standardized terms and are not exchange-traded, referred to as
``over-the-counter'' Corn Interests, can generally be structured as the
parties to the Corn Interest contract desire. Therefore, the Fund could
enter into multiple Cleared Corn Swaps and/or over-the-counter Corn
Interests intended to exactly replicate the performance of each of the
three Benchmark Component Futures Contracts, or a single over-the-
counter Corn Interest designed to replicate the performance of the
Benchmark as a whole. Assuming that there is no default by a
counterparty to an over-the-counter Corn Interest, the performance of
the Corn Interest will necessarily correlate exactly with the
performance of the Benchmark or the applicable Benchmark Component
Futures Contract.\11\ The Fund could also enter into or hold Corn
Interests other than Benchmark Component Futures Contracts to
facilitate effective trading, consistent with the discussion of the
Fund's ``roll'' strategy in the preceding paragraph. In addition, the
Fund might also enter into or hold Corn Interests that would be
expected to alleviate overall deviation between the Fund's performance
and that of the Benchmark that may result from certain market and
trading inefficiencies or other reasons.
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\11\ According to the Registration Statement, the Fund faces the
risk of non-performance by the counterparties to over-the-counter
contracts. Unlike in futures contracts, the counterparty to these
contracts is generally a single bank or other financial institution,
rather than a clearing organization backed by a group of financial
institutions. As a result, there will be greater counterparty credit
risk in these transactions.
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The Fund invests in Corn Interests to the fullest extent possible
without being leveraged or unable to satisfy its expected current or
potential margin or collateral obligations with respect to its
investments in Corn Interests.\12\ After fulfilling such margin and
collateral requirements, the Fund will invest the remainder of its
proceeds from the sale of baskets in short-term obligations of the
United States government (``Treasury Securities'') or cash equivalents,
and/or merely hold such assets in cash (generally in interest-bearing
accounts). Therefore, the focus of the Sponsor in managing the Fund is
investing in Corn Interests and in Treasury Securities, cash and/or
cash equivalents. The Fund will earn interest income from the Treasury
Securities and/or cash equivalents that it purchases and on the cash it
holds through the Fund's custodian, the Bank of New York Mellon (the
``Custodian'').
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\12\ The Sponsor represents that the Fund will invest in Corn
Interests in a manner consistent with the Fund's investment
objective and not to achieve additional leverage.
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The Sponsor endeavors to place the Fund's trades in Corn Interests
and otherwise manage the Fund's investments so that the Fund's average
daily tracking error against the Benchmark will be less than 10 percent
over any period of 30 trading days. More specifically, the Sponsor will
endeavor to manage the Fund so that A will be within plus/minus 10
percent of B, where A is the average daily change in the Fund's NAV for
any period of 30 successive valuation days, i.e., any trading day as of
which the Fund calculates its NAV, and B is the average daily change in
the Benchmark over the same period.
According to the Registration Statement, the Sponsor believes that
market arbitrage opportunities will
[[Page 22665]]
cause the Fund's Share price on the NYSE Arca to closely track the
Fund's NAV per share. The Sponsor believes that the net effect of this
expected relationship and the expected relationship described above
between the Fund's NAV and the Benchmark will be that the changes in
the price of the Fund's Shares on the NYSE Arca will closely track, in
percentage terms, changes in the Benchmark, less the Fund's expenses.
According to the Registration Statement, the Sponsor employs a
``neutral'' investment strategy intended to track the changes in the
Benchmark regardless of whether the Benchmark goes up or goes down. The
Fund's ``neutral'' investment strategy is designed to permit investors
generally to purchase and sell the Fund's Shares for the purpose of
investing indirectly in the corn market in a cost-effective manner.
Such investors may include participants in the corn industry and other
industries seeking to hedge the risk of losses in their corn-related
transactions, as well as investors seeking exposure to the corn market.
The Fund creates and redeems Shares only in blocks of 100,000
Shares called Creation Baskets and Redemption Baskets, respectively.
Only Authorized Purchasers may purchase or redeem Creation Baskets or
Redemption Baskets.
All proceeds from the sale of Creation Baskets will be invested in
the investments described in the Registration Statement no more than
three business days after the initial Creation Basket is sold.
Investments are held through the Fund's Custodian in accounts with the
Fund's commodity futures brokers or in collateral accounts with respect
to over-the-counter Corn Interests. There is no stated maximum time
period for the Fund's operations and the Fund will continue until all
Shares are redeemed or the Fund is liquidated pursuant to the terms of
the Trust Agreement. In addition, the Custodian also serves as
Administrator for the Fund, performing certain administrative and
accounting services and preparing certain Commission and CFTC reports
on behalf of the Fund.
The Sponsor does not currently intend to purchase and sell corn in
the ``spot market'' for the Fund. In addition, the Sponsor does not
currently intend that the Fund will enter into or hold spot month Corn
Futures Contracts, except that spot month contracts that were formerly
second-to-expire contracts may be held for a brief period until they
can be disposed of in accordance with the Fund's roll strategy.
According to the Registration Statement, position limits and daily
price fluctuation limits set by the CFTC and the futures exchanges have
the potential to cause tracking error, which could cause the price of
Shares to substantially vary from the Benchmark and prevent investors
from being able to effectively use the Fund as a way to hedge against
corn-related losses or as a way to indirectly invest in corn.
According to the Registration Statement, the CFTC and U.S.
designated contract markets such as the CBOT may establish position
limits on the maximum net long or net short futures contracts in
commodity interests that any person or group of persons under common
trading control (other than as a hedge) may hold, own or control. For
example, the current position limits for investments at any one time in
the Corn Futures Contracts traded on CBOT are 600 spot month contracts,
13,500 contracts expiring in any other single month, and 22,000 total
for all months. These position limits are fixed ceilings that the Fund
would not be able to exceed without specific CFTC authorization.
In addition to position limits, the futures exchanges set daily
price fluctuation limits on futures contracts. The daily price
fluctuation limit establishes the maximum amount that the price of
futures contracts may vary either up or down from the previous day's
settlement price. Once the daily price fluctuation limit has been
reached in a particular futures contract, no trades may be made at a
price beyond that limit.
The Fund does not intend to limit the size of the offering and will
attempt to utilize substantially all of its proceeds to purchase Corn
Interests. If the Fund encounters position limits, accountability
levels, or price fluctuation limits for Corn Futures Contracts on the
CBOT, it may then, if permitted under applicable regulatory
requirements, purchase Other Corn Interests and/or Corn Futures
Contracts listed on foreign exchanges. The Corn Futures Contracts
available on such foreign exchanges may have different underlying
sizes, deliveries, and prices. In addition, the Corn Futures Contracts
available on these exchanges may be subject to their own position
limits and accountability levels. In certain circumstances, however,
position limits could force the Fund to limit the number of Creation
Baskets that it sells.
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
\13\ under the Act, the Trust relies on the exception contained in Rule
10A-3(c)(7).\14\ A minimum of 100,000 Shares will be outstanding as of
the start of trading on the Exchange.
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\13\ 17 CFR 240.10A-3.
\14\ 17 CFR 240.10A-3(c)(7).
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A more detailed description of Corn Interests and other aspects of
the corn and Corn Interest markets, as well as investment risks, are
set forth in the Registration Statement. All terms relating to the Fund
that are referred to, but not defined in, this proposed rule change are
defined in the Registration Statement.
Availability of Information Regarding the Shares
The Web site for the Fund (http://www.teucriumcornfund.com) and/or
the Exchange, which are publicly accessible at no charge, will contain
the following information: (a) The current 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
(4) 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 NAV for the Fund will be calculated by the Administrator once a
day and will be disseminated daily to all market participants at the
same time. The Exchange also will disseminate on a daily basis via the
Consolidated Tape Association (``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
price and settlement prices of the Corn Futures Contracts are also
readily available from the CBOT, automated quotation systems, published
or other public sources, or on-line information services such as
Bloomberg or Reuters. The Benchmark will be disseminated by one or more
major market data vendors every 15 seconds during the NYSE Arca Core
Trading Session of 9:30 a.m. to 4
[[Page 22666]]
p.m. Eastern Time (``E.T.''). Quotation and last-sale information
regarding the Shares will be disseminated through the facilities of the
CTA. In addition, the Exchange will provide a hyperlink on its Web site
at http://www.nyx.com to the Fund's Web site at http://www.teucriumcornfund.com, which will display all intraday and closing
Benchmark levels, the intraday Indicative Trust Value (see below), and
NAV.
The daily settlement prices for the Corn Futures Contracts held by
the Fund are publicly available on the Web site of the CBOT (http://www.cmegroup.com). In addition, various data vendors and news
publications publish futures prices and data. The Exchange represents
that quotation and last sale information for the Corn Futures Contracts
are widely disseminated through a variety of major market data vendors
worldwide, including Bloomberg and Reuters. In addition, the Exchange
further represents that complete real-time data for the Corn Futures
Contracts is available by subscription from Reuters and Bloomberg. The
CBOT also provides delayed futures information on current and past
trading sessions and market news free of charge on its Web site. The
specific contract specifications for the futures contracts are also
available at CBOT's Web site, as well as other financial informational
sources. The spot price of corn also is available on a 24-hour basis
from major market data vendors.
The Fund will provide Web site disclosure of portfolio holdings
daily and will include, as applicable, the names, quantity, price and
market value of Financial Instruments and the characteristics of such
instruments and cash equivalents, and amount of cash held in the
portfolio of the Fund. This Web site disclosure of the portfolio
composition of the Fund will occur at the same time as the disclosure
by the Sponsor of the portfolio composition to Authorized Purchasers so
that all market participants are provided portfolio composition
information at the same time. Therefore, the same portfolio information
will be provided on the public Web site as well as in electronic files
provided to Authorized Purchasers. Accordingly, each investor will have
access to the current portfolio composition of the Fund through the
Fund's Web site.
Dissemination of Indicative Trust Value
In addition, in order to provide updated information relating to
the Fund for use by investors and market professionals, an updated
Indicative Trust Value (``ITV'') will be calculated. The ITV 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 Benchmark Component Futures Contracts. As
stated in the Registration Statement, changes in the value of over-the-
counter Corn Interests, Treasury Securities and cash equivalents will
not be included in the calculation of the ITV. The ITV 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 ITV will be disseminated on a per Share basis by one or more
major market data vendors every 15 seconds during the NYSE Arca Core
Trading Session. The normal trading hours for Corn Futures Contracts on
the CBOT are 10:30 a.m. to 2:15 p.m. E.T. The ITV will not be updated,
and, therefore, a static ITV will be disseminated, between the close of
trading on CBOT of Corn Futures Contracts and the close of the NYSE
Arca Core Trading Session. The value of a Share may be influenced by
non-concurrent trading hours between NYSE Arca and the CBOT when the
Shares are traded on NYSE Arca after normal trading hours of Corn
Futures Contracts on CBOT.
The Exchange believes that dissemination of the ITV 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 minimum trading increment for Shares on the
Exchange will be $0.01.
The trading of the Shares will be subject to NYSE Arca Equities
Rule 8.200, Commentary .02(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 \15\ or by the halt or suspension of trading of the
underlying futures contracts.
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\15\ 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 ITV or
the value of the underlying futures contracts occurs. If the
interruption to the dissemination of the ITV 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 which they effect on any relevant
market. The Exchange can obtain market surveillance information,
including customer identity information, with
[[Page 22667]]
respect to transactions occurring on the CBOT in that CBOT is a member
of the Intermarket Surveillance Group (``ISG''). A list of ISG members
is available at http://www.isgportal.org.\16\
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\16\ The Exchange notes that not all Corn Interests 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 ITV 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 ITV 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 trading of Corn Futures Contracts
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 Fund 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,\17\ in general, and furthers the objectives of Section
6(b)(5),\18\ 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 the Shares on the
Exchange, to the benefit of investors and the marketplace. In addition,
the listing and trading criteria set forth in NYSE Equities Rule 8.200
are intended to protect investors and the public interest.
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\17\ 15 U.S.C. 78f(b).
\18\ 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 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 the 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-NYSEArca-2010-22 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-NYSEArca-2010-22. 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 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
available publicly. All submissions
[[Page 22668]]
should refer to File Number SR- NYSEArca-2010-22 and should be
submitted on or before May 20, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-9875 Filed 4-28-10; 8:45 am]
BILLING CODE 8011-01-P