Notice2021-19293
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Franklin Responsibly Sourced Gold ETF Under NYSE Arca Rule 8.201-E
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 8, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 171 (Wednesday, September 8, 2021)</title>
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[Federal Register Volume 86, Number 171 (Wednesday, September 8, 2021)]
[Notices]
[Pages 50385-50391]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-19293]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92840; File No. SR-NYSEArca-2021-73]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the Franklin
Responsibly Sourced Gold ETF Under NYSE Arca Rule 8.201-E
September 1, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on August 23, 2021, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the Franklin
Responsibly Sourced Gold ETF under NYSE Arca Rule 8.201-E. The proposed
change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
[[Page 50386]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade shares (``Shares'') of the
Franklin Responsibly Sourced Gold ETF (the ``Fund''), under NYSE Arca
Rule 8.201-E.\4\ The Fund is a series of the Franklin Templeton
Holdings Trust, a Delaware statutory trust (the ``Trust''). Under NYSE
Arca Rule 8.201-E, the Exchange may propose to list and/or trade
Commodity-Based Trust Shares pursuant to unlisted trading privileges
(``UTP'').\5\
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\4\ On April 22, 2021, the Trust submitted to the Commission its
confidential draft registration statement on Form S-1 (the
``Registration Statement'') under the Securities Act of 1933 (15
U.S.C. 77a) (the ``Securities Act''). The Jumpstart Our Business
Startups Act, enacted on April 5, 2012, added Section 6(e) to the
Securities Act. Section 6(e) of the Securities Act provides that an
``emerging growth company'' may confidentially submit to the
Commission a draft registration statement for confidential, non-
public review by the Commission staff prior to public filing,
provided that the initial confidential submission and all amendments
thereto shall be publicly filed not later than 21 days before the
date on which the issuer conducts a road show, as such term is
defined in Securities Act Rule 433(h)(4), or 15 days prior to
anticipated effectiveness in the case of an issuer who will not
conduct a road show. An emerging growth company is defined in
Section 2(a)(19) of the Securities Act as an issuer with less than
$1,070,000,000 total annual gross revenues during its most recently
completed fiscal year. The Fund meets the definition of an emerging
growth company and consequently has submitted its Form S-1
Registration Statement on a confidential basis with the Commission.
The Registration Statement in not yet effective and the Shares will
not trade on the Exchange until such time that the Registration
Statement is effective.
\5\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
trust.
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The Fund will not be registered as an investment company under the
Investment Company Act of 1940, as amended,\6\ and is not required to
register under such act. The Fund is not a commodity pool for purposes
of the Commodity Exchange Act, as amended.\7\
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\6\ 15 U.S.C. 80a-1.
\7\ 17 U.S.C. 1.
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The Sponsor of the Fund is Franklin Holdings, LLC, a Delaware
limited liability company. BNY Mellon Asset Servicing, a division of
The Bank of New York Mellon (``BNYM''), serves as the Fund's
administrator (the ``Administrator'') and transfer agent (the
``Transfer Agent''). Delaware Trust Company, a subsidiary of the
Corporation Service Company serves as trustee of the Trust (the
``Trustee''). J.P. Morgan Chase Bank, N.A., London branch is the
custodian of the Fund's Gold Bullion (as defined in the Registration
Statement) (the ``Gold Custodian'').\8\ BNYM will serve as the
custodian of the Fund's cash, if any (the ``Cash Custodian'').
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\8\ The Gold Custodian is responsible for safekeeping the Fund's
gold pursuant to the Allocated Gold Account Agreement and the
Unallocated Gold Account Agreement. The Gold Custodian will
facilitate the transfer of gold in and out of the Fund through (i)
the unallocated gold accounts it may maintain for each Authorized
Participant (as defined below) or unallocated gold accounts that may
be maintained for an Authorized Participant by another London
Precious Metals Clearing Limited clearing bank, and (ii) the
unallocated and allocated gold accounts it will maintain for the
Fund. The Gold Custodian is responsible for allocating specific bars
of gold to the Fund Allocated Account. As used herein, ``Fund
Allocated Account'' means the allocated gold account of the Trust
established with the Gold Custodian on behalf of the Fund by the
Allocated Gold Account Agreement, to be used to hold gold that is
transferred from the Fund Unallocated Account to be held by the Fund
in allocated form; the ``Fund Unallocated Account'' means the
unallocated gold account of the Trust established with the Gold
Custodian on behalf of the Fund by the Unallocated Gold Account
Agreement, to be used to facilitate the transfer of gold in and out
of the Fund. The Gold Custodian will provide the Fund with regular
reports detailing the gold transfers into and out of the Fund
Unallocated Account and the Fund Allocated Account and identifying
the gold bars held in the Fund Allocated Account.
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The Commission has previously approved listing on the Exchange
under NYSE Arca Rules 5.2-E(j)(5) and 8.201-E of other precious metals
and gold-based commodity trusts, including the GraniteShares Gold
MiniBAR Trust; \9\ GraniteShares Gold Trust; \10\ Merk Gold Trust; \11\
ETFS Gold Trust; \12\ ETFS Platinum Trust \13\ and ETFS Palladium Trust
(collectively, the ``ETFS Trusts''); \14\ APMEX Physical-1 oz. Gold
Redeemable Trust; \15\ Sprott Gold Trust; \16\ SPDR Gold Trust
(formerly the streetTRACKS Gold Trust); \17\ iShares Silver Trust; \18\
iShares COMEX Gold Trust; \19\ and Long Dollar Gold Trust.\20\ Prior to
their listing on the Exchange, the Commission approved listing of the
streetTRACKS Gold Trust on the New York Stock Exchange (``NYSE'') \21\
and listing of iShares COMEX Gold Trust and iShares Silver Trust on the
American Stock Exchange LLC.\22\ In addition, the Commission has
approved trading of the streetTRACKS Gold Trust and iShares Silver
Trust on the Exchange pursuant to UTP.\23\
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\9\ Securities Exchange Act Release No. 84257 (September 21,
2018), 83 FR 48877 (September 27, 2018) (SR-NYSEArca-2018-55).
\10\ Securities Exchange Act Release No. 81077 (July 5, 2017),
82 FR 32024 (July 11, 2017) (SR-NYSEArca-2017-55).
\11\ Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
\12\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\13\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\14\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\15\ Securities Exchange Act Release No 66930 (May 7, 2012), 77
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
\16\ Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
\17\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76).
\18\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
\19\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\20\ See Securities Exchange Act Release No. 79518 (December 9,
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order
approving listing and trading of shares of the Long Dollar Gold
Trust).
\21\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on the NYSE).
\22\ See Securities Exchange Act Release Nos. 51058 (January 19,
2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order
approving listing of iShares COMEX Gold Trust on the American Stock
Exchange LLC); 53521 (March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR-Amex-2005-72) (approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
\23\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
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The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Rule 8.201-E and thereby qualify for listing on the
Exchange.\24\
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\24\ With respect to the application of Rule 10A-3 (17 CFR
240.10A-3) under the Act, the Fund relies on the exemption contained
in Rule 10A-3(c)(7).
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[[Page 50387]]
Operation of the Trust and Fund \25\
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\25\ The description of the operation of the Trust, the Fund,
the Shares, and the gold market contained herein are based, in part,
on the Registration Statement. See note 4, supra.
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The investment objective of the Fund will be for the Shares to
reflect the performance of the price of gold bullion, less the expenses
of the Fund's operations. Shares of the Fund will represent units of
fractional undivided beneficial interest in and ownership of the net
assets of the Fund.
The Fund seeks to predominantly hold responsibly sourced gold
bullion, defined as London Good Delivery gold bullion bars produced
after January 2012 in accordance with London Bullion Market
Association's (``LBMA'') Responsible Gold Guidance (the ``Guidance'').
From time to time, in certain circumstances a portion of the Fund's
assets may include pre-2012 LBMA gold bullion (i.e., London Good
Delivery gold bars produced prior to January 2012 which was not subject
to the Guidance), including, for example, due to availability
constraints. In those circumstances, the Gold Custodian will seek to
replace any pre-2012 LBMA gold bullion in the Fund Allocated Account
with LBMA good delivery bars produced after January 2012 as soon as is
practicable.
The Guidance is a mandatory governance framework for the
responsible sourcing of gold applicable to LBMA approved good delivery
refiners that is designed to promote the integrity of the global supply
chain for the wholesale gold markets. Among other things, the Guidance
includes measures to address environmental issues, avoid materials from
conflict-afflicted areas, and combat money laundering, financing of
terrorism, and human rights abuses, including child labor. The Guidance
requires each LBMA good delivery refinery to undergo a comprehensive
audit, at least annually, in order to confirm compliance with the
LBMA's minimum requirements related to the responsible sourcing of gold
and to publicly report results (audits are made available on the LBMA
website). The audits, among other aspects, focus on the refiner's
management systems and controls, and whether they are robust and
appropriate to addressing the refiner's risk profile. Additional
information regarding the LBMA's efforts to promote ethical sourcing of
gold and a copy of the current version of the Guidance is available at
<a href="https://www.lbma.org.uk/responsible-sourcing">https://www.lbma.org.uk/responsible-sourcing</a>.
The Fund will not trade in gold futures, options, or swap contracts
on any futures exchange or over-the-counter (``OTC''). The Fund will
not hold or trade in commodity futures contracts, ``commodity
interests,'' or any other instruments regulated by the Commodity
Exchange Act. The Fund's Cash Custodian may hold cash proceeds from
gold sales and other cash received by the Fund.
The Shares are intended to constitute a simple and cost-efficient
means of gaining investment benefits similar to those of holding gold
bullion directly, by providing investors an opportunity to participate
in the responsibly sourced gold market through an investment in the
Shares, instead of the traditional means of purchasing, storing and
insuring gold.
Operation of the Gold Market
The global gold trading market consists of OTC transactions in
spot, forwards, and options and other derivatives, together with
exchange-traded futures and options.
The OTC gold market includes spot, forward, and option and other
derivative transactions conducted on a principal-to-principal basis.
While this is a global, nearly 24-hour per day market, its main centers
are London, New York, and Zurich.
According to the Registration Statement, most OTC market trades are
cleared through London. The LBMA plays an important role in setting OTC
gold trading industry standards. A London Good Delivery Bar (as
described below), which is acceptable for delivery in settlement of any
OTC transaction, will be acceptable for delivery to the Fund, as
discussed below.
The most significant gold futures exchange is COMEX, operated by
Commodities Exchange, Inc., a subsidiary of New York Mercantile
Exchange, Inc., and a subsidiary of the Chicago Mercantile Exchange
Group (the ``CME Group''). Other commodity exchanges include the Tokyo
Commodity Exchange (``TOCOM''), the Multi Commodity Exchange of India
(``MCX''), the Shanghai Futures Exchange, the Shanghai Gold Exchange,
ICE Futures US (the ``ICE''), and the Dubai Gold & Commodities
Exchange. The CME Group and ICE are members of the Intermarket
Surveillance Group (``ISG'').
The London Gold Bullion Market
According to the Registration Statement, most trading in physical
gold is conducted on the OTC market and is predominantly cleared
through London. In addition to coordinating market activities, the LBMA
acts as the principal point of contact between the market and its
regulators. A primary function of the LBMA is its involvement in the
promotion of refining standards by maintenance of the ``London Good
Delivery Lists,'' which are the lists of LBMA accredited melters and
assayers of gold. The LBMA also coordinates market clearing and
vaulting, promotes good trading practices and develops standard
documentation.
The term ``loco London'' refers to gold bars physically held in
London that meet the specifications for weight, dimensions, fineness
(or purity), identifying marks (including the assay stamp of an LBMA
acceptable refiner), and appearance set forth in the good delivery
rules promulgated by the LBMA from time to time. Gold bars meeting
these requirements are known as ``London Good Delivery Bars.''
The unit of trade in London is the troy ounce, whose conversion
between grams is: 1,000 grams = 32.1507465 troy ounces and 1 troy ounce
= 31.1034768 grams. A London Good Delivery Bar is acceptable for
delivery in settlement of a transaction on the OTC market. Typically
referred to as 400-ounce bars, a London Good Delivery Bar must contain
between 350 and 430 fine troy ounces of gold, with a minimum fineness
(or purity) of 995 parts per 1,000 (99.5%), be of good appearance and
be easy to handle and stack. The fine gold content of a gold bar is
calculated by multiplying the gross weight of the bar (expressed in
units of 0.025 troy ounces) by the fineness of the bar.
Creation and Redemption of Shares
According to the Registration Statement, the Fund will create and
redeem Shares on a continuous basis in one or more Creation Units. A
Creation Unit equals a block of 50,000 Shares. The Fund will issue
Shares in Creation Units to certain authorized participants
(``Authorized Participants'') on an ongoing basis. Each Authorized
Participant must be a registered broker-dealer or other securities
market participant such as a bank or other financial institution which
is not required to register as a broker-dealer to engage in securities
transactions, a participant in The Depository Trust Company (``DTC''),
and have entered into an agreement with the Administrator (the
``Participant Agreement''), and has established an unallocated gold
account with the Gold Custodian or another London Precious Metals
Clearing Limited clearing bank.
Creation Units may be created or redeemed only by Authorized
Participants. The creation and redemption of Creation Units is only
[[Page 50388]]
made in exchange for the delivery to the Fund or the distribution by
the Fund of the amount of gold represented by the Creation Units being
created or redeemed. The amount of gold required to be delivered to the
Fund in connection with any creation, or paid out upon redemption, is
based on the combined NAV of the number of Shares included in the
Creation Units being created or redeemed as determined on the day the
order to create or redeem Creation Units is properly received and
accepted. Orders must be placed by 3:59:59 p.m. New York time. The day
on which the Administrator receives a valid purchase or redemption
order is the order date. Creation Units may only be issued or redeemed
on a day that the Exchange is open for regular trading.
According to the Registration Statement, the total deposit required
to create each Creation Unit, or a Creation Unit Gold Delivery Amount,
is an amount of gold and cash, if any, that is in the same proportion
to the total assets of the Fund (net of estimated accrued expenses and
other liabilities) on the date the order to purchase is properly
received as the number of Shares to be created under the purchase order
is in proportion to the total number of Shares outstanding on the date
the order is received. An Authorized Participant who places a purchase
order is responsible for transferring the Creation Unit Gold Delivery
Amount to the Fund Unallocated Account. Upon receipt, the Administrator
will direct DTC to credit the number of Creation Units ordered to the
Authorized Participant's DTC account. The Gold Custodian will transfer
the Creation Unit Gold Delivery Amount from the Fund Unallocated
Account to the Fund Allocated Account by allocating to the Fund
Allocated Account specific bars of gold which the Gold Custodian holds,
or instructing a sub-custodian to allocate specific bars of gold held
by or for the sub-custodian.
The redemption distribution from the Fund consists of a credit to
the redeeming Authorized Participant's unallocated account in the
amount of the Creation Unit Gold Delivery Amount. The Creation Unit
Gold Delivery Amount for redemptions is the number of ounces of gold
held by the Fund to be paid out upon redemption of a Creation Unit. The
Gold Custodian will transfer the redemption amount from the Fund
Allocated Account to the Fund Unallocated Account and, thereafter, to
the redeeming Authorized Participant's unallocated account.
Net Asset Value
To determine the Fund's NAV, the Administrator will value the gold
held by the Fund on the basis of the LBMA Gold Price PM, as published
by the ICE Benchmark Administration Limited (the ``IBA''). IBA operates
electronic auctions for spot, unallocated loco London gold, providing a
market-based platform for buyers and sellers to trade. The auctions are
run at 10:30 a.m. and 3:00 p.m. London time for gold. The final auction
prices are published to the market as the LBMA Gold Price AM and the
LBMA Gold Price PM, respectively.
The Administrator will calculate the NAV on each day the Exchange
is open for regular trading, at the earlier LBMA Gold Price PM for the
day or 12:00 p.m. New York time. If no LBMA Gold Price (AM or PM) is
made on a particular evaluation day or if the LBMA Gold Price PM has
not been announced by 12:00 p.m. New York time on a particular
evaluation day, the next most recent LBMA Gold Price AM or PM will be
used in the determination of the NAV, unless the Sponsor determines
that such price is inappropriate to use as the basis for such
determination.
Once the value of the gold has been determined, the Administrator
will subtract all estimated accrued expenses and other liabilities of
the Fund from the total value of the gold and all other assets of the
Fund. The resulting figure is the NAV. The Administrator will determine
the NAV per Share by dividing the NAV of the Fund by the number of
Shares outstanding as of the close of trading on the Exchange.
Availability of Information Regarding Gold
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity such as gold over the
Consolidated Tape. However, there will be disseminated over the
Consolidated Tape the last sale price for the Shares, as is the case
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of
information about gold and gold markets available on public websites
and through professional and subscription services.
Investors may obtain gold pricing information on a 24-hour basis
based on the spot price for an ounce of gold from various financial
information service providers, such as Reuters and Bloomberg.
Reuters and Bloomberg, for example, provide at no charge on their
websites 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. Complete real-time
data for gold futures and options prices traded on the COMEX are
available by subscription from Reuters and Bloomberg. There are a
variety of other public websites providing information on gold, ranging
from those specializing in precious metals to sites maintained by major
newspapers. In addition, the LBMA Gold Price is publicly available at
no charge at <a href="http://www.lbma.org">www.lbma.org</a>.uk.
Availability of Information
The intraday indicative value (``IIV'') per Share for the Shares
will be disseminated by one or more major market data vendors. The IIV
will be calculated based on the amount of gold held by the Fund and a
price of gold derived from updated bids and offers indicative of the
spot price of gold.\26\
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\26\ The IIV on a per Share basis disseminated during the
Exchange's Core Trading Session, as defined in NYSE Arca Rule 7.34-
E, should not be viewed as a real-time update of the NAV, which is
calculated once a day.
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The Fund's website will contain the following information, on a per
Share basis: (a) The Official Closing Price \27\ and a calculation of
the premium or discount of such Official Closing Price against the
Fund's NAV; and (b) data in chart format displaying the frequency
distribution of discounts and premiums of the Official Closing Price
against the NAV, within appropriate ranges, for each of the four
previous calendar quarters. The website for the Fund will also provide
its prospectus. In addition, information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services. Information regarding the previous day's closing
price and trading volume information for the Shares will be published
daily in the financial section of newspapers.
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\27\ The term ``Official Closing Price'' is defined in NYSE Arca
Rule 1.1(ll) as the reference price to determine the closing price
in a security for purposes of Rule 7-E Equities Trading, and the
procedures for determining the Official Closing Price are set forth
in that rule.
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Criteria for Initial and Continued Listing
The Fund will be subject to the criteria in NYSE Arca Rule 8.201-
E(e) for initial and continued listing of the Shares.
A minimum of 100,000 Shares will be required to be outstanding at
the start of trading, which is equivalent to 1,384 fine ounces of gold
or approximately $2,500,000 as of July 22, 2021. The Exchange believes
that the anticipated minimum number of Shares outstanding
[[Page 50389]]
at the start of trading is sufficient to provide adequate market
liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Fund subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Rule 7.34-E(a).
The Exchange has appropriate rules to facilitate transactions in the
Shares during all trading sessions. As provided in NYSE Arca Rule 7.6-E
Commentary .03, the minimum price variation (``MPV'') for quoting and
entry of orders in equity securities traded on the NYSE Arca
Marketplace is $0.01, with the exception of securities that are priced
less than $1.00, for which the MPV for order entry is $0.0001.
Further, NYSE Arca Rule 8.201-E sets forth certain restrictions on
ETP Holders acting as registered Market Makers in the Shares to
facilitate surveillance. Under NYSE Arca Rule 8.201-E(g), an ETP Holder
acting as a registered Market Maker in the Shares is required to
provide the Exchange with information relating to its trading in the
underlying gold, any related futures or options on futures, or any
other related derivatives. Commentary .04 of NYSE Arca Rule 11.3-E
requires an ETP Holder acting as a registered Market Maker, and its
affiliates, in the Shares to establish, maintain and enforce written
policies and procedures reasonably designed to prevent the misuse of
any material nonpublic information with respect to such products, any
components of the related products, any physical asset or commodity
underlying the product, applicable currencies, underlying indexes,
related futures or options on futures, and any related derivative
instruments (including the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. To the extent the Exchange may be
found to lack jurisdiction over a subsidiary or affiliate of an ETP
Holder that does business only in commodities or futures contracts, the
Exchange could obtain information regarding the activities of such
subsidiary or affiliate through surveillance sharing agreements with
regulatory organizations of which such subsidiary or affiliate is a
member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying gold
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\28\ The Exchange will halt trading in the Shares if the
NAV of the Fund is not calculated or disseminated daily. The Exchange
may halt trading during the day in which an interruption occurs to the
dissemination of the IIV, as described above. If the interruption to
the dissemination of the IIV persists past the trading day in which it
occurs, the Exchange will halt trading no later than the beginning of
the trading day following the interruption.
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\28\ See NYSE Arca Rule 7.12-E.
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Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority Inc. (``FINRA''), on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws.\29\ The Exchange represents that
these procedures are adequate to properly monitor Exchange trading of
the Shares in all trading sessions and to deter and detect violations
of Exchange rules and federal securities laws applicable to trading on
the Exchange.
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\29\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
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The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\30\
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\30\ For a list of the current members of ISG, see
<a href="http://www.isgportal.org">www.isgportal.org</a>.
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Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able
to obtain information regarding trading in the Shares and the
underlying gold through ETP Holders acting as registered Market Makers,
in connection with such ETP Holders' proprietary or customer trades
through ETP Holders which they effect on any relevant market.
In addition, the Exchange also has a general policy prohibiting the
improper distribution of material, non-public information by its
employees.
All statements and representations made in this filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares of the Fund on the
Exchange.
The Trust has represented to the Exchange that it will advise the
Exchange of any failure by the Fund to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Creation Units (including noting
that Shares are not individually redeemable); (2) NYSE Arca Rule 9.2-
E(a), which imposes a duty of due diligence on its ETP Holders to learn
the essential facts relating to every customer prior to trading the
Shares; (3) how information regarding the IIV is disseminated; (4) the
[[Page 50390]]
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the premium or discount on the Shares may widen as a result of
reduced liquidity of gold trading during the Core and Late Trading
Sessions after the close of the major world gold markets; and (6)
trading information. For example, 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.
In addition, the Information Bulletin will reference that the Fund
is subject to various fees and expenses as will be 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.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \31\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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\31\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.201-E. The
Exchange has in place surveillance procedures that are adequate to
properly monitor trading in the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws. The Exchange may obtain information via ISG from other
exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of gold price and gold market
information available on public websites and through professional and
subscription services. Investors may obtain on a 24-hour basis gold
pricing information based on the spot price for an ounce of gold from
various financial information service providers. Current spot prices
also are generally available with bid/ask spreads from gold bullion
dealers. In addition, the Fund's website will provide pricing
information for gold spot prices and the Shares. Market prices for the
Shares will be available from a variety of sources including brokerage
firms, information websites and other information service providers.
The NAV of the Fund will be published on each day that the NYSE Arca is
open for regular trading and will be posted on the Fund's website. The
IIV relating to the Shares will be widely disseminated by one or more
major market data vendors at least every 15 seconds during the Core
Trading Session. In addition, the LBMA Gold Price is publicly available
at no charge at <a href="http://www.lbma.org">www.lbma.org</a>.uk. The Fund's website will also provide
its prospectus, as well as the two most recent reports to stockholders.
In addition, information regarding market price and trading volume of
the Shares will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services. Information regarding the previous day's closing price and
trading volume information for the Shares will be published daily in
the financial section of newspapers.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding gold pricing.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating to physical
gold.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0f7d7a636a226c6062626a617b7c4f7c6a6c21686079"><span class="__cf_email__" data-cfemail="c8babda4ade5aba7a5a5ada6bcbb88bbadabe6afa7be">[email protected]</span></a>. Please include
File Number SR-NYSEArca-2021-73 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEArca-2021-73. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's
[[Page 50391]]
internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>). Copies of the
submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the Commission,
and all written communications relating to the proposed rule change
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2021-73 and should be submitted
on or before September 29, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19293 Filed 9-7-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 8, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.