Notice2025-07316
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 3, to List and Trade Shares of the COtwo Advisors Physical European Carbon Allowance Trust Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares)
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
April 29, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 81 (Tuesday, April 29, 2025)</title>
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[Federal Register Volume 90, Number 81 (Tuesday, April 29, 2025)]
[Notices]
[Pages 17856-17859]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-07316]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102921; File No. SR-NYSEARCA-2024-70]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of a Proposed Rule Change, as Modified by Amendment No. 3, to
List and Trade Shares of the COtwo Advisors Physical European Carbon
Allowance Trust Under NYSE Arca Rule 8.201-E (Commodity-Based Trust
Shares)
April 23, 2025.
I. Introduction
On August 19, 2024, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the COtwo
Advisors Physical European Carbon Allowance Trust (``Trust'') under
NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares). The proposed
rule change was published for comment in the Federal Register on
September 5, 2024.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 100877 (Aug. 29,
2024), 89 FR 72524. The Commission has not received any comments on
the proposed rule change.
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On October 16, 2024, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On November 22, 2024, the Exchange filed Amendment No. 1 to
the proposed rule change, and on December 3, 2024, the Commission
issued notice of filing of Amendment No. 1 to the proposed rule change
and instituted proceedings pursuant to Section 19(b)(2)(B) of the Act
\6\ to determine whether to approve or disapprove the proposed rule
change, as modified by Amendment No. 1.\7\ On February 20, 2025,
pursuant to Section 19(b)(2) of the Act,\8\ the Commission designated a
longer period for Commission action on the proposed rule change.\9\ On
March 13, 2025, the Exchange filed Amendment No. 2 to the proposed rule
change, and on March 20, 2025, the Exchange withdrew Amendment No. 2.
On March 20, 2025, the Exchange filed Amendment No. 3 to the proposed
rule change, which amended and replaced the proposed rule change, as
modified by Amendment No. 1, in its entirety, and on March 21, 2025,
the Commission issued notice of filing of Amendment No. 3 to the
proposed rule change.\10\ This order grants approval of the proposed
rule change, as modified by Amendment No. 3.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 101360, 89 FR 84406
(Oct. 22, 2024).
\6\ 15 U.S.C. 78s(b)(2)(B).
\7\ See Securities Exchange Act Release No. 101806, 89 FR 97678
(Dec. 9, 2024).
\8\ 15 U.S.C. 78s(b)(2).
\9\ See Securities Exchange Act Release No. 102468, 90 FR 10738
(Feb. 26, 2025). The Commission, pursuant to Section 19(b)(2) of the
Act, designated May 3, 2025, as the date by which the Commission
shall either approve or disapprove the proposed rule change.
\10\ See Securities Exchange Act Release No.102707, 90 FR 13953
(Mar. 27, 2025). Amendment No. 3 is available on the Commission's
website at: <a href="https://www.sec.gov/comments/sr-nysearca-2024-70/srnysearca202470-582995-1678942.pdf">https://www.sec.gov/comments/sr-nysearca-2024-70/srnysearca202470-582995-1678942.pdf</a>.
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II. Description of the Proposal, as Modified by Amendment No. 3
The Exchange proposes to list and trade Shares of the Trust \11\
under NYSE Arca Rule 8.201-E, which governs the listing and trading of
Commodity-Based Trust Shares.\12\ The sponsor of the Trust
[[Page 17857]]
is COtwo Advisors LLC, a Delaware limited liability company
(``Sponsor''); State Street Bank and Trust Company serves as the
Trust's administrator, transfer agent, and custodian of the Trust's
cash, if any (``Cash Custodian''); \13\ and Wilmington Trust serves as
trustee of the Trust.
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\11\ According to the Exchange, on May 12, 2023, the Trust filed
with the Commission a registration statement on Form S-1, as amended
on January 16, 2024, and April 4, 2024 (File No. 333-271910)
(``Registration Statement'') under the Securities Act of 1933. The
Exchange represents that the Registration Statement is not yet
effective, and the Shares will not trade on the Exchange until such
time that the Registration Statement becomes effective. The Exchange
states that the Trust, which was formed as a Delaware statutory
trust on January 12, 2023, will not be registered, and is not
required to register, as an investment company under the Investment
Company Act of 1940, and is not a commodity pool for purposes of the
Commodity Exchange Act, as amended. See Amendment No. 3, supra note
10, 90 FR at 13953.
\12\ See NYSE Arca Rule 8.201-E(c)(1) (defining Commodity-Based
Trust Shares as a security (a) that is issued by a trust that holds
(1) a specified commodity deposited with the trust, or (2) a
specified commodity and, in addition to such specified commodity,
cash; (b) that is issued by such trust in a specified aggregate
minimum number in return for a deposit of a quantity of the
underlying commodity and/or cash; and (c) that, when aggregated in
the same specified minimum number, may be redeemed at a holder's
request by such trust which will deliver to the redeeming holder the
quantity of the underlying commodity and/or cash).
\13\ According to the Exchange, the Cash Custodian is
responsible for holding the Trust's cash, as well as receiving and
dispensing cash on behalf of the Trust. Deposits of cash held by the
Cash Custodian will be used in connection with the purchase of an
applicable amount of EUAs (as defined herein) for creations and
redemptions of Creation Units (as defined in Amendment No. 3) and in
connection with the payment of Trust expenses. See Amendment No. 3,
supra note 10, 90 FR at 13953.
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Operation of the Trust \14\
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\14\ Additional descriptions of the operation of the Trust,
Shares, carbon credit industry and markets, creations and
redemptions, net asset value (``NAV'') and indicative fund value
(``IFV''), availability of information, Exchange trading rules and
halts, surveillance, and information bulletin, among other things,
can be found in Amendment 3 and the Registration Statement, as
applicable. See Amendment No. 3, supra note 10, and Registration
Statement, supra note 11.
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The investment objective of the Trust will be for the Shares to
reflect the performance of the price of EU Carbon Emission Allowances
for stationary installations (``EUAs''), less the Trust's expenses. The
Trust intends to achieve its objective by investing all of its assets
in EUAs on a non-discretionary basis (i.e., without regard to whether
the value of EUAs is rising or falling over any particular period), and
the Trust's only ordinary recurring expense will be the Sponsor's
annual fee.\15\ The Trust may purchase or sell EUAs in connection with
the creation or redemption of Shares, and the Trust also may sell EUAs
to pay the Sponsor's annual fee.\16\ The Exchange represents that the
Trust will not hold any assets other than EUAs and cash, and will not
invest in futures, options, options on futures, or swap contracts, and
will not hold any EUA derivatives.\17\
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\15\ See Amendment No. 3, supra note 10, 90 FR at 13953.
\16\ See Amendment No. 3, supra note 10, 90 FR at 13954.
\17\ According to the Exchange, the Trust will not hold or trade
in commodity futures contracts, ``commodity interests,'' or any
other instruments regulated by the Commodity Exchange Act. See
Amendment No. 3, supra note 10, 90 FR at 13953-13954.
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Description of European Union (``EU'') Emissions Trading Scheme
According to the Exchange, the European Union Emissions Trading
System (``EU ETS'') is a ``cap and trade'' system that caps the total
volume of greenhouse gas (``GHG'') emissions from installations and
aircraft operators responsible for around 40% of EU GHG emissions.\18\
The EU ETS is administered by the EU Commission, which issues a
predefined amount of EUAs through auctions or free allocation.\19\ An
EUA represents the right to emit one metric ton of carbon dioxide
equivalent into the atmosphere by operators of stationary installations
(``Covered Entities'').\20\ By the end of April each year, all Covered
Entities are required to surrender EUAs equal to the total volume of
actual emissions from their installation for the last calendar year. EU
ETS operators can buy or sell EUAs to achieve EU ETS compliance.\21\
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\18\ According to the Exchange, the EU ETS is the largest cap
and trade system in the world and covers more than 11,000 power
stations and industrial plants in 31 countries, and flights between
airports of participating countries. There are two types of EU
emissions allowances: (i) general allowances for stationary
installations, or EUAs; and (ii) allowances for the aviation sector.
The Exchange represents that the Trust will hold EUAs only. See
Amendment No. 3, supra note 10, 90 FR at 13954.
\19\ According to the Exchange, the EU ETS is linked to small
emissions trading systems in Europe, but not to any other major cap
and trade market. Therefore, allowances handed out in the EU ETS are
not transferable to any registry outside of the EU ETS and cannot be
used for compliance in any other cap and trade market. See Amendment
No. 3, supra note 10, 90 FR at 13954.
\20\ See Amendment No. 3, supra note 10, 90 FR at 13954.
\21\ See id.
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In 2012, EU ETS operations were centralized into a single EU
registry operated by the EU Commission (``Union Registry''), which
covers all countries participating in the EU ETS.\22\ According to the
Exchange, the Union Registry is an online database that holds accounts
for all entities covered by the EU ETS, as well as for participants
(such as the Trust) not covered under the EU ETS.\23\ The Union
Registry can be accessed online in a similar manner to online banking
systems. An account must be opened in the Union Registry by a legal or
natural person before being able to participate in the EU ETS and
transact in EUAs.\24\ The European Union Transaction Log (``EUTL'')
\25\ checks, records, and authorizes all transactions that take place
between accounts in the Union Registry to ensure that transfers are in
accordance with the EU ETS rules.\26\ The Exchange represents that the
Union Registry is at all times responsible for holding the EUAs, and
all EUAs are held in the Union Registry, regardless of whether the EUAs
are acquired through transactions on an exchange or in over-the-counter
(``OTC'') transactions.\27\
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\22\ See id.
\23\ See id.
\24\ See id.
\25\ According to the Exchange, the EUTL is a central
transaction log that checks and records all transactions taking
place within the EU ETS. It is run by the EU Commission and provides
access to emission trading data contained in the EUTL. See <a href="https://www.eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1">https://www.eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1</a>.
\26\ See Amendment No. 3, supra note 10, 90 FR at 13954.
\27\ See id.
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Description of EUA Trading Markets
According to the Exchange, there are currently two avenues for
trading EUAs: a primary market and a secondary market. The primary
market involves participation in a regularly scheduled auction.\28\ The
secondary market involves transactions between buyers and sellers on
regulated markets.\29\ The instruments offered for trading are the
following: (1) instruments with a daily expiry, which consist of spot
EUAs and the Daily EUA Future (as defined herein); (2) futures
contracts with various maturities; and (3) options on futures
contracts.\30\ Spot EUAs are traded exclusively on the European Energy
Exchange AG (``EEX''),\31\ and futures contracts and options on futures
contracts are traded on EEX, ICE Endex
[[Page 17858]]
Markets B.V. (``ICE Endex''),\32\ and Nasdaq Oslo.\33\
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\28\ See Amendment No. 3, supra note 10, 90 FR at 13954-13955.
\29\ See Amendment No. 3, supra note 10, 90 FR at 13955.
\30\ According to the Exchange, the spot and futures markets for
EUAs have existed since 2005 after the formal launch of the EU ETS
on January 1, 2005. The Exchange states that there are also OTC
transactions in EUAs, but they comprise a negligible percentage of
transactions. See Amendment No. 3, supra note 10, 90 FR at 13955.
\31\ The Exchange states that EEX is an exchange under the
German Exchange Act and a Regulated Market (``RM''), as defined in
the Markets in Financial Instruments Directive (Directive 2014/65/
EC) (``MIFID II''). As an RM for spot and derivatives transactions,
EEX is supervised by the Saxon State Ministry for Economic Affairs,
Labour and Transport (``Supervisory Authority''). The Supervisory
Authority is in charge of the legal supervision of EEX and of market
supervision of the trading participants according to the German
Exchange Act. The members of EEX are supervised by the Federal
Financial Supervisory Authority (BaFin). All trading participants
are required to comply with the market abuse regulations within the
German Securities Trading Act. Beside this supervision, the market
behavior at the spot and derivatives markets of all exchange
participants is supervised on a daily basis by the Market
Surveillance Office, an independent body of the exchange according
to Section 7 of the German Exchange Act. The Exchange further
represents that EEX is recognized by the Commodity Futures Trading
Commission (``CFTC'') as an authorized Foreign Board of Trade. See
<a href="https://www.cftc.gov/sites/default/files/filings/documents/2019/orgeexregistrationorder11519.pdf">https://www.cftc.gov/sites/default/files/filings/documents/2019/orgeexregistrationorder11519.pdf</a>.
\32\ According to the Exchange, ICE Endex is regulated in the
Netherlands by the Dutch Authority for the Financial Markets (AFM)
as an RM, as defined in MIFID II. The Exchange represents that ICE
Endex is recognized by the CFTC as an authorized Foreign Board of
Trade. See <a href="https://www.cftc.gov/sites/default/files/idc/groups/public/@otherif/documents/ifdocs/orgiceeregorder170110.pdf">https://www.cftc.gov/sites/default/files/idc/groups/public/@otherif/documents/ifdocs/orgiceeregorder170110.pdf</a>.
\33\ According to the Exchange, Nasdaq Oslo offers a single day
futures contract on EUAs, but the contract is not traded. In
addition, the Exchange states that Nasdaq Oslo also offers quarterly
futures contracts over a rolling six-year period, but currently,
there is only de minimis trading volume in such futures, and that
Nasdaq Oslo's market share to date has been marginal. See Amendment
No. 3, supra note 10, 90 FR at 13955.
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According to the Exchange, the single day futures contract on EUAs
(``Daily EUA Future'') is exclusively traded on the ICE Endex, which
settles each day at the close of trading.\34\ The Daily EUA Future is a
deliverable contract where each person with a position open at
cessation of trading is obliged to make or take physical delivery of
EUAs upon the expiration of the contract at the end of each trading
day.\35\ Settlement of the Daily EUA Future does not occur through cash
transactions.\36\ Each Daily EUA Future represents one lot of 1,000
EUAs, with each EUA providing an entitlement to emit one ton of carbon
dioxide equivalent gas.\37\ The Exchange represents that the settlement
and economic outcome for a spot purchase on the EEX and a same day
futures purchase on the ICE Endex are identical.\38\ In addition, the
Exchange states that EEX also offers other monthly EUA futures
contracts with various expirations, and options on EUA futures
contracts also trade on EEX and ICE Endex for many of the available EUA
futures.\39\
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\34\ See Amendment No. 3, supra note 10, 90 FR at 13956.
\35\ See id.
\36\ See id.
\37\ See id.
\38\ See Amendment No. 3, supra note 10, 90 FR at 13958.
\39\ See id.
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Surveillance
The Exchange states that it has entered into a comprehensive
surveillance sharing agreement (``CSSA'') with ICE Endex. Pursuant to
the CSSA, the Exchange will communicate as needed regarding trading in
the Shares and EUA derivatives, including Daily EUA Futures, with ICE
Endex, and the Exchange may obtain trading information regarding
trading in the Shares and EUA derivatives, including Daily EUA Futures,
from ICE Endex.\40\ In addition, the Exchange represents that EEX is a
member of the Intermarket Surveillance Group (``ISG'').\41\ Pursuant to
its membership in ISG, EEX is obligated, and has undertaken a
commitment, to share information, including, without limitation, with
respect to spot EUAs, with other ISG members, including the Exchange,
on an as-needed basis when such surveillance-sharing information is
used for regulatory purposes.\42\
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\40\ See Amendment No. 3, supra note 10, 90 FR at 13963.
\41\ See Amendment No. 3, supra note 10, 90 FR at 13958.
\42\ See Amendment No. 3, supra note 10, 90 FR at 13963.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 3, is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\43\ In particular, the Commission finds that the
proposed rule change, as modified by Amendment No. 3, is consistent
with Section 6(b)(5) of the Act,\44\ which requires, among other
things, that the Exchange's rules be designed to prevent fraudulent and
manipulative acts and practices and, in general, to protect investors
and the public interest; and with Section 11A(a)(1)(C)(iii) of the
Act,\45\ 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.
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\43\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\44\ 15 U.S.C. 78f(b)(5).
\45\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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A. Exchange Act Section 6(b)(5)
The Commission has previously recognized that surveillance-sharing
agreements assist in the detection and deterrence of fraudulent and
manipulative activity.\46\ The Commission also has stated that it
considers two markets that are members of the ISG to have a
comprehensive surveillance-sharing agreement with one another, even if
they do not have a separate bilateral surveillance-sharing
agreement.\47\
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\46\ See, e.g., Securities Exchange Act Release No. 35518 (Mar.
21, 1995), 60 FR 15804, 15807 (Mar. 27, 1995) (SR-Amex-94-30)
(approving the exchange listing and trading of Commodity Linked
Notes). In that matter, the Commission stated that the listing
exchange had comprehensive surveillance-sharing agreements with all
of the exchanges upon which the futures contracts overlying the
notes traded and was able to obtain market surveillance information,
including customer identity information, for transactions occurring
on NYMEX and other futures exchanges. See id. at 15807 n.21; see
also Securities Exchange Act Release No. 36885 (Feb. 26, 1996), 61
FR 8315, 8319 n.17 (Mar. 4, 1996) (SR-Amex-95-50) (approving the
exchange listing and trading of Commodity Indexed Securities, and
stating: (a) that through the comprehensive surveillance-sharing
agreements, the listing exchange was able to obtain market
surveillance information, including customer identity information,
for transactions occurring on NYMEX and COMEX and that, through the
ISG information-sharing agreement, the listing exchange was able to
obtain, upon request, surveillance information with respect to
trades effected on the London Metal Exchange, including client
identity information and (b) that, if a different market were
utilized for purposes of calculating the value of a designated
futures contract, the listing exchange had represented that it would
ensure that it entered into a surveillance-sharing agreement with
respect to the new relevant market). The Commission has made similar
statements about surveillance-sharing agreements with respect to the
listing and trading of stock-index, currency, and currency-index
warrants. See, e.g., Securities Exchange Act Release No. 36166 (Aug.
29, 1995), 60 FR 46660 (Sept. 7, 1995) (SR-PSE-94-28) (approving a
proposal to adopt uniform listing and trading guidelines for stock-
index, currency, and currency-index warrants). Specifically, the
Commission stated that ``a surveillance sharing agreement should
provide the parties with the ability to obtain information necessary
to detect and deter market manipulation and other trading abuses''
and stated that the Commission ``generally requires that a
surveillance sharing agreement require that the parties to the
agreement provide each other, upon request, information about market
trading activity, clearing activity, and the identity of the
ultimate purchasers for securities.'' Id. at 46665 n.35. In
addition, the Commission stated that ``[t]he ability to obtain
relevant surveillance information, including, among other things,
the identity of the ultimate purchasers and sellers of securities,
is an essential and necessary component of a comprehensive
surveillance sharing agreement.'' Id. at 46665 n.36.
\47\ See Amendment to Rule Filing Requirements for Self-
Regulatory Organizations Regarding New Derivative Securities
Products, Securities Exchange Act Release No. 40761 (Dec. 8, 1998),
63 FR 70952, 70959 (Dec. 22, 1998) (stating the importance of ISG,
which ``was formed to coordinate, among other things, effective
surveillance and investigative information sharing arrangements in
the stock and options markets,'' and that, if an exchange trades
component securities underlying a new derivative securities product
and is not a member of the ISG, the exchange seeking to list and
trade such new derivative securities product should enter into a
comprehensive information sharing agreement with the non-ISG market,
and conversely, if an exchange seeks to list and trade a new
derivative securities product and is not a member of the ISG, such
exchange should enter into a comprehensive information sharing
agreement with each market that trades securities underlying the new
derivative securities product).
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As stated in Amendment No. 3, the Trust will seek to achieve its
objective by holding only spot EUAs and possibly cash and will not hold
any EUA derivatives. According to the Exchange, spot EUAs are traded
exclusively on EEX, which is a member of ISG and is registered with the
CFTC as an
[[Page 17859]]
authorized Foreign Board of Trade.\48\ In addition, although the Trust
will not hold any EUA derivatives, the Exchange states that Daily EUA
Futures market is ``the functional equivalent of a `spot' market for
EUAs'' as the ``settlement, functionality and economic outcome for a
spot purchase on the EEX and a Daily EUA future purchase . . . are
identical.'' \49\ ICE Endex offers trading in EUA derivatives,
including Daily EUA Futures traded exclusively on ICE Endex, other EUA
futures, and options on futures.\50\ The Exchange states that it has
entered into CSSA with ICE Endex, which is registered with the CFTC as
an authorized Foreign Board of Trade, and that, pursuant to the CSSA,
the Exchange will communicate as needed regarding trading in the Shares
and EUA derivatives, including Daily EUA Futures, with ICE Endex, and
the Exchange may obtain trading information regarding trading in the
Shares and EUA derivatives, including Daily EUA Futures, from ICE
Endex.
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\48\ See supra note 31 and accompanying text. Pursuant to its
membership in ISG, EEX is obligated, and has undertaken a
commitment, to share information, including, without limitation,
with respect to spot EUAs, with other ISG members, including the
Exchange. See supra note 42 and accompanying text.
\49\ See Amendment No. 3, supra note 10, 90 FR at 13958.
\50\ See supra note 34 and accompanying text. See also supra
note 33 and accompanying text (noting that EUA single day futures
contracts on Nasdaq Oslo are not traded and that there is only de
minimis trading volume on Nasdaq Oslo in certain quarterly futures
contracts). The Commission previously found that ICE Endex is a
significant regulated market with respect to EUA futures. See
Securities Exchange Act Release No. 101641 (Nov. 15, 2024), 89 FR
92252, at 92264-65 (Nov. 21, 2024) (SR-NYSEARCA-2024-27).
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Based on the record before it, the Commission is able to conclude
that the Exchange's surveillance sharing agreement by virtue of EEX's
ISG membership, with respect to the spot EUAs proposed to be held by
the Trust, and the Exchange's CSSA with ICE Endex, with respect to EUA
derivatives, including Daily EUA Futures, can be reasonably expected to
assist in surveilling for fraudulent and manipulative acts and
practices with respect to the spot EUAs proposed to be held by the
Trust. These agreements, whether through ISG membership or CSSAs,
should help to ensure the availability of information necessary to
detect and deter potential manipulations and other trading abuses,
thereby making the Shares of the Trust less readily susceptible to
manipulation. The Commission therefore finds that the proposed rule
change, as modified by Amendment No. 3, is consistent with Section
6(b)(5) of the Act,\51\ which requires, among other things, that the
Exchange's rules be designed to prevent fraudulent and manipulative
acts and practices and, in general, to protect investors and the public
interest.
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\51\ 15 U.S.C. 78f(b)(5). For avoidance of doubt, a
surveillance-sharing agreement is not the only means by which an
exchange may demonstrate consistency with Section 6(b)(5) of the
Act.
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B. Exchange Act Section 11A(a)(1)(C)(iii)
The proposed rule change, as modified by Amendment No. 3, sets
forth aspects of the Trust, including the availability of EUA pricing
and market information, transparency of Trust holdings, and types of
surveillance procedures, that are consistent with other exchange-traded
products that the Commission has approved.\52\ This includes
commitments regarding: the availability via the Consolidated Tape
Association of quotation and last-sale information for the Shares; the
availability on the Trust's website of certain information related to
the Trust and the Shares, including NAV; the dissemination of the IFV
by one or more major market data vendors, updated every 15 seconds
throughout the Exchange's regular trading hours; the Exchange's
surveillance procedures and ability to obtain information regarding
trading in the Shares of the Trust and trading in the spot EUAs traded
on EEX and other EUA derivatives traded on both EEX and ICE Endex; the
conditions under which the Exchange would implement trading halts and
suspensions; and the requirements of registered market makers in the
Shares of the Trust. In addition, the Exchange represents that it deems
the Shares to be equity securities, thus rendering trading in the
Shares subject to the Exchange's rules governing the trading of equity
securities.\53\ Further, the applicable listing rule of the Exchange
requires that all statements and representations made in its filing
regarding, among others, the description of the portfolio or reference
assets, limitations on such portfolio holdings or reference assets, and
the applicability of the Exchange's listing rules specified in the
filing, will constitute continued listing requirements.\54\ Moreover,
the proposed rule change states that the Trust has represented to the
Exchange that it will advise the Exchange of any failure by the Trust
to comply with the applicable continued listing requirements; pursuant
to obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will monitor for compliance with the continued listing requirements;
and if the Exchange becomes aware that the Trust is not in compliance
with the applicable listing requirements, that Exchange will commence
delisting procedures.\55\
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\52\ See, e.g., Securities Exchange Act Release No. 61220 (Dec.
22, 2009), 74 FR 68895 (Dec. 29, 2009) (SR-NYSEARCA-2009-94) (Order
Granting Approval of Proposed Rule Change Relating To Listing and
Trading Shares of the ETFS Palladium Trust); and Securities Exchange
Act Release No. 94518 (Mar. 25, 2022), 87 FR 18837 (Mar. 31, 2022)
(SR-NYSEARCA-2021-65) (Notice of Filing of Amendment No. 1 and Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, To List and Trade Shares of the Sprott ESG Gold
ETF Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares)).
\53\ See Amendment No. 3, supra note 10, 90 FR at 13963.
\54\ See NYSE Arca Rule 8.201-E, Commentary .04. See also
Amendment No. 3, supra note 10, 90 FR at 13964.
\55\ See Amendment No. 3, supra note 10, 90 FR at 13964.
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The Commission therefore finds that the proposed rule change, as
modified by Amendment No. 3, is reasonably designed to promote fair
disclosure of information that may be necessary to price the Shares
appropriately, to prevent trading when a reasonable degree of
transparency cannot be assured, to safeguard material non-public
information relating to the Trust's holdings, and to ensure fair and
orderly markets for the Shares of the Trust.
IV. Conclusion
This approval order is based on all of the Exchange's
representations and descriptions in the proposed rule change, as
modified by Amendment No. 3, which the Commission has carefully
evaluated as discussed above. For the foregoing reasons, the Commission
finds that the proposed rule change, as modified by Amendment No. 3, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange,
and in particular, Section 6(b)(5) and Section 11A(a)(1)(C)(iii) of the
Act.\56\
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\56\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k-1(a)(1)(C)(iii).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\57\ that the proposed rule change (SR-NYSEARCA-2024-70), as
modified by Amendment No. 3, be, and it hereby is, approved.
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\57\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\58\
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\58\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-07316 Filed 4-28-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on April 29, 2025.
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