Notice2025-10441
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade Shares of 21Shares SUI ETF Under Nasdaq Rule 5711(d) (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
June 10, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 110 (Tuesday, June 10, 2025)</title>
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[Federal Register Volume 90, Number 110 (Tuesday, June 10, 2025)]
[Notices]
[Pages 24433-24441]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10441]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103187; File No. SR-NASDAQ-2025-042]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To List and Trade Shares of
21Shares SUI ETF Under Nasdaq Rule 5711(d) (Commodity-Based Trust
Shares)
June 4, 2025.
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 May 23, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' 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\ 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 21Shares SUI ETF
(the ``Trust'') under Nasdaq Rule 5711(d) (``Commodity-Based Trust
Shares''). The shares of the Trust are referred to herein as the
``Shares.''
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings</a>, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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 Exchange 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 these 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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade the Shares under Nasdaq
Rule 5711(d), which governs the listing and trading of Commodity-Based
Trust Shares on the Exchange.\3\ 21Shares US LLC (the ``Sponsor'') is
the sponsor of the Trust. Any statements or representations included in
this proposal regarding: (a) the description of the reference assets or
trust holdings; (b) limitations on the reference assets or trust
holdings; (c) dissemination and availability of the reference asset or
intraday indicative value; or (d) the applicability of Nasdaq listing
rules specified in this proposal shall constitute continued listing
standards for the Shares listed on the Exchange.
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\3\ The Commission approved Nasdaq Rule 5711 in Securities
Exchange Act Release No. 66648 (March 23, 2012), 77 FR 19428 (March
30, 2012) (SR-NASDAQ-2012-013).
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Overview of the Trust and the Shares
According to the Registration Statement, the Trust is a Delaware
statutory trust and will operate pursuant to a trust agreement (the
``Trust Agreement''), as amended and/or restated from time to time.\4\
CSC Delaware Trust Company, a Delaware trust company, is the Delaware
trustee of the Trust (the ``Trustee''). The Trust is managed and
controlled by 21Shares US LLC (the ``Sponsor''). A third party to be
appointed by the Sponsor and/or the Trustee will be the administrator
of the Trust (the ``Administrator'').
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\4\ See Registration Statement on Form S-1, dated April 30, 2025
filed with the Commission on behalf of the Trust. The descriptions
of the Trust, the Shares, the Pricing Benchmark (as defined below),
and Trust's holdings contained herein are based, in part, on
information in the Registration Statement. 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.
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The Trust is a passive investment vehicle that does not seek to
generate returns beyond tracking the price of SUI tokens (``SUI''), the
native token of the Sui Network (as defined below). This means the
Sponsor does not speculatively sell SUI at times when its price is high
or speculatively acquire SUI at low prices in the expectation of future
price increases. It also means the Trust will not utilize leverage,
derivatives or any similar arrangements in seeking to meet its
investment objective. The Trust's investment objective is to seek to
track the performance of SUI, as measured by the performance of the CME
CF Sui--Dollar Reference Rate--New York Variant (the ``Pricing
Benchmark''), adjusted for the Trust's expenses and other liabilities.
The Pricing Benchmark is calculated by CF Benchmarks Ltd. (the
``Benchmark Provider'') based on an aggregation of executed trade flow
of major SUI trading platforms (``Constituent Exchanges''). The Pricing
Benchmark is designed to reflect the performance of SUI in U.S.
dollars. In seeking to achieve its investment objective, the Trust will
hold SUI and will value its Shares daily based on the Pricing
Benchmark. Each of BitGo New York Trust Company, LLC and Coinbase
Custody Trust Company, LLC (each a ``SUI Custodian'') is anticipated to
be a SUI custodian for the Trust and will hold all of the Trust's SUI
on the Trust's behalf.
When the Trust sells or redeems its Shares, SUI will be transferred
into or out of the Trust, as applicable, in exchange for blocks of
10,000 Shares (a ``Basket'') that are based on the quantity of SUI
attributable to each Share of the Trust (net of accrued but unpaid
Sponsor fees and any accrued but unpaid extraordinary expenses or
liabilities).
Financial firms that are authorized to purchase Shares from or
redeem Shares to the Trust (known as ``Authorized Participants'')
purchase Shares by depositing cash in the Trust's account with the Cash
Custodian (as defined below). This will cause the Sponsor, on behalf of
the Trust, to automatically instruct a designated third party, who is
not an Authorized Participant but who may be an affiliate of an
Authorized Participant and with whom the Sponsor has entered into an
agreement on behalf of the Trust (a ``SUI Counterparty''), to (i)
purchase the amount of SUI equivalent in value to the cash deposit
amount associated with the order and (ii) deposit the resulting SUI
amount in the Trust's account with the SUI Custodian, resulting in the
Transfer Agent crediting the applicable amount of Shares to the
Authorized Participant.
When such an Authorized Participant redeems its Shares, the
Sponsor, on behalf of the Trust will direct the SUI Custodian to
transfer SUI to a SUI Counterparty, who will sell the SUI to be
executed at the Pricing Benchmark price used by the Trust to calculate
its net asset value (``NAV''), taking into account any spread,
commissions, or other trading costs and deposit the cash proceeds of
such sale in the Trust's account with the Cash Custodian for settlement
with the Authorized Participant. Any slippage incurred (including, but
not limited to, any trading fees, spreads, or commissions),
[[Page 24434]]
on a cash equivalent basis, will be the responsibility of the
Authorized Participant and not of the Trust or Sponsor.
Authorized Participants will deliver only cash to create Shares and
will receive only cash when redeeming Shares. Further, Authorized
Participants will not directly or indirectly purchase, hold, deliver,
or receive SUI as part of the creation or redemption process or
otherwise direct the Trust or a SUI Counterparty with respect to
purchasing, holding, delivering, or receiving SUI as part of the
creation or redemption process.
The SUI Counterparty is a designated third party with whom the
Sponsor has entered into an agreement on behalf of the Trust that will
deliver, receive or convert to U.S. dollars the SUI related to the
Authorized Participant's creation or redemption order. The Sponsor
performs extensive due diligence as part of its SUI Counterparty
selection and onboarding process. As part of this process, the Sponsor
assesses SUI Counterparty candidates against various criteria,
including those relating to candidates' (1) financials, (2) reputation,
(3) settlement history with the Sponsor, and (4) their regulatory
oversight. The Trust will create Shares by receiving SUI from a SUI
Counterparty that is not the Authorized Participant, and the Trust--not
the Authorized Participant--is responsible for selecting the SUI
Counterparty to deliver the SUI. Further, the SUI Counterparty will not
be acting as an agent of the Authorized Participant with respect to the
delivery of the SUI to the Trust or acting at the direction of the
Authorized Participant with respect to the delivery of the SUI to the
Trust. The SUI Counterparty is not contractually obligated to
participate in cash orders for creations or redemptions. The SUI
Counterparty reserves the right to refuse or to cancel any pending
creation or redemption order at any time before the Sponsor places a
purchase order.
According to the Registration Statement, the Trust is not an
investment company registered under the Investment Company Act of 1940,
as amended (the ``1940 Act''), and is not subject to regulation under
the 1940 Act. The Trust is not a commodity pool for purposes of the
Commodity Exchange Act of 1936, as amended (the ``CEA''), and the
Sponsor is not subject to regulation by the Commodity Futures Trading
Commission (the ``CFTC'') as a commodity pool operator or a commodity
trading advisor.
Neither the Trust, nor the Sponsor, nor the SUI Custodian, nor any
other person associated with the Trust will, directly or indirectly,
engage in action where any portion of the Trust's SUI is used to earn
additional SUI or generate rewards or other income. The Trust will not
acquire and will disclaim any incidental right (``IR'') or IR asset
received, for example as a result of forks or airdrops, and such assets
will not be taken into account for purposes of determining the Trust's
NAV.
Investment Objective
According to the Registration Statement, the Trust's investment
objective is to seek to track the performance of SUI, as measured by
the Pricing Benchmark, adjusted for the Trust's expenses and other
liabilities. In seeking to achieve its investment objective, the Trust
will hold SUI and will value its Shares daily as of 4:00 p.m. ET based
on the Pricing Benchmark.
The Trust does not provide investors with direct exposure to SUI,
and an investment in the Trust is not a direct investment in SUI.
Rather, the Trust provides investors with the opportunity to indirectly
access the market for SUI through a traditional brokerage account
without the potential barriers to entry or risks involved with holding
or transferring SUI directly or acquiring it from a SUI spot market.
SUI and the Sui Network
According to the Registration Statement, SUI is a digital asset
that is created and transmitted through the operations of the ``Sui
Network,'' an online, distributed computing platform that operates on a
peer-to-peer basis. The Sui Network is a decentralized blockchain
platform designed to support a wide range of applications, particularly
in the realm of decentralized finance (``DeFi''), non-fungible tokens
(``NFTs''), and other blockchain-based services. The network aims to
address scalability and efficiency issues that have plagued earlier
blockchain networks like Bitcoin and Ethereum. By leveraging advanced
consensus mechanisms and innovative data structures, the Sui Network
seeks to provide a more scalable, secure, and user-friendly environment
for developers and users alike. The Sui Network employs a unique
consensus algorithm that allows it to process a large number of
transactions per second (``TPS''), making it suitable for applications
that require high throughput, such as gaming and high-frequency
trading.
The Sui Network's architecture combines continuous monitoring of
external blockchains, strategic validator key registrations, and a
quadratic stake-based consensus mechanism to facilitate secure and
decentralized cross-chain interactions. The Sui Network uses advanced
cryptographic techniques to ensure the security and integrity of
transactions. The distributed nature of the network makes it resistant
to attacks and censorship. The Sui Network is also designed to be
highly interoperable with other blockchain networks, allowing assets
and data to be easily transferred between SUI and other blockchains,
facilitating a more connected and versatile ecosystem.
No single entity owns or operates the Sui Network, the
infrastructure of which is collectively maintained by a broad user
base. The Sui Network allows people to exchange tokens of value, called
SUI, which are recorded on a public transaction ledger known as a
blockchain. SUI can be used to pay for transaction fees and network
operations, including computational power on the Sui Network, or it can
be converted to fiat currencies, such as the U.S. dollar, at rates
determined on digital asset trading platforms or in individual end-
user-to-end-user transactions under a barter system. Furthermore, the
Sui Network was designed to allow users to write and implement smart
contracts--that is, general-purpose code that executes on the network
and can instruct the transmission of information and value based on a
sophisticated set of logical conditions. Using smart contracts, users
can create markets, store registries of debts or promises, represent
the ownership of property, move funds in accordance with conditional
instructions and create digital assets other than SUI on the Sui
Network. Smart contract operations are executed on the Sui blockchain
in exchange for payment of SUI. Like the Ethereum network, the Sui
Network is one of a number of projects intended to expand blockchain
use beyond just a peer-to-peer money system.
The Sui Network primarily uses a delegated proof-of-stake consensus
mechanism to incentivize SUI holders to validate transactions. Unlike
proof-of-work, in which miners expend computational resources to
compete to validate transactions and are rewarded coins in proportion
to the amount of computational resources expended, in proof-of-stake,
validators risk or ``stake'' coins to compete to be randomly selected
to validate transactions and are rewarded coins in proportion to the
amount of coins staked. Any malicious activity, such as disagreeing
with the eventual consensus or otherwise violating protocol rules,
results in the forfeiture or ``slashing'' of a portion of the staked
coins. Proof-of-stake is
[[Page 24435]]
viewed as more energy efficient and scalable than proof-of-work and is
sometimes referred to as ``virtual mining''.
Unlike many other smart contract platforms that batch transaction
into blocks, Sui validators individually validate transactions. Sui
uses ``Narwhal'' and ``Bullshark'' as its memory pool and consensus
engines, respectively, which supplement proof-of-stake by allowing
transactions performed on the Sui Network to be verified and executed
in parallel, rather than sequentially like in prominent blockchains
like Bitcoin and Ethereum. Under Narwhal, instead of a proposing
validator broadcasting all transactions in a block to the other
validators, the proposing validators send references to transactions
that other validators have already received in their local memory
pools. These memory pools serve as logs of unprocessed transactions
awaiting verification and execution on a blockchain. The transaction
data can thus bypass the full consensus process, removing the large
data transmission step which often impedes proof-of-stake consensus and
introduces latency. Further unlike traditional blockchains, which add
transactions in a single, linear sequence, Bullshark uses a structure
whereby each transaction points to multiple previous transactions,
allowing many transactions to be processed at the same time. The
purpose of Narwhal and Bullshark is to increase scalability of a
blockchain allowing for parallel processing of transactions and
increasing transaction speed.
The SUI token serves four purposes on the Sui Network. First, SUI
can be staked within an ``epoch'' (which is a roughly 24-hour time
period) in order to participate in the proof-of-stake mechanism.
Second, SUI is the asset denomination needed for paying the ``gas
fees'' to execute transactions or other operations on the Sui Network.
Third, SUI can be used as a versatile and liquid asset for various
applications including the standard features of money--a unit of
account, a medium of exchange, or a store of value--and more complex
functionality enabled by smart contracts, interoperability, and
composability across the Sui ecosystem. Fourth, and finally, SUI plays
an important role in governance by acting as a right to participate in
on-chain voting on issues such as protocol upgrades. The total supply
of SUI on the Sui Network's ``mainnet'' is capped at 10,000,000,000
(ten billion), the supply of which is dependent upon designed unlocking
schedules and other circulation variables.
SUI is ``stored'' on a blockchain and is linked to a unique digital
address, or wallet, that is associated with a public key and a private
key. The public key is used to generate the address that is available
to other users of the Sui Network. The address serves as the location
to which SUI can be transferred and from which SUI can be sent. The
private key authorizes the transfer or ``spending'' of SUI from its
associated public address. Ownership of SUI is established by recording
on Sui Network's blockchain the unique address and the amount of SUI
held. The wallet thus holds the cryptographic keys associated with SUI,
rather than the SUI itself. SUI cannot be transferred by a holder
unless that holder provides the private key.
Pricing Benchmark
According to the Registration Statement, the net assets of the
Trust and its Shares are valued on a daily basis with reference to the
Pricing Benchmark, a standardized reference rate published by the
Benchmark Provider, which is designed to reflect the performance of SUI
in U.S. dollars. The Pricing Benchmark is calculated daily and
aggregates the notional value of SUI trading activity across major SUI
spot exchanges. The Benchmark Provider is the administrator of the
Pricing Benchmark. The Trust also uses the Pricing Benchmark to
calculate its NAV, which is the aggregate U.S. dollar value of SUI in
the Trust, based on the Pricing Benchmark, less the Trust's liabilities
and expenses. ``NAV per Share'' is calculated by dividing NAV by the
number of Shares currently outstanding.
The Pricing Benchmark was created to facilitate financial products
based on SUI and provides a U.S. dollar-denominated reference rate for
the spot price of SUI. The Pricing Benchmark leverages real-time prices
from multiple Constituent Exchanges to provide a representative spot
price.\5\ Each constituent exchange is weighted proportionally to its
trailing 24-hour liquidity with adjustments for price variance and
inactivity.
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\5\ As set out in the Registration Statement, a trading venue is
eligible as a Constituent Exchange if it offers a market that
facilitates the spot trading of the relevant base digital asset
against the corresponding quote asset, (the ``Relevant Pair'') and
makes trade data and order data available through an Automatic
Programming Interface (``API'') with sufficient reliability, detail
and timeliness. Furthermore, in the opinion of the Benchmark
Provider's oversight committee, to be a Constituent Exchange, a
venue must fulfills the specified criteria, including: (1) the
venue's Relevant Pair spot trading volume for an index must meet the
minimum thresholds for it to be admitted as a constituent exchange;
(2) the average daily volume the venue would have contributed during
the observation window for the Reference Rate of the Relevant Pair
exceeds 3% for two consecutive calendar quarters; (3) the venue has
policies to ensure fair and transparent market conditions at all
times and has processes in place to identify and impede illegal,
unfair or manipulative trading practices; (4) the venue complies
with applicable law and regulation, including, but not limited to,
capital markets regulations, money transmission regulations, client
money custody regulations, KYC and AML regulations; (5) the venue
does not impose undue barriers to entry or restrictions on market
participants, and utilizing the venue does not expose market
participants to undue credit risk, operational risk, legal risk or
other risks; and (6) the venue cooperates with inquiries and
investigations of regulators and the Administrator upon request and
must execute data sharing agreements with CME Group. Once admitted,
a Constituent Exchange must demonstrate that it continues to fulfill
criteria 2 to 5 inclusive. Should the average daily contribution of
a Constituent Exchange fall below 3% for any Reference Rate, then
the continued inclusion of the venue as a constituent exchange to
the Relevant Pair shall be assessed by the oversight committee.
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The Sponsor believes that the use of the Pricing Benchmark is
reflective of a reasonable valuation of the average spot price of SUI
and that resistance to manipulation is a priority aim of its design
methodology. The methodology: (i) takes an observation period and
divides it into equal partitions of time; (ii) then calculates the
volume-weighted median of all transactions within each partition; and
(iii) the value is determined from the arithmetic mean of the volume-
weighted medians, equally weighted. By employing the foregoing steps,
the Pricing Benchmark thereby seeks to ensure that transactions in SUI
conducted at outlying prices do not have an undue effect on the value
of a specific partition, large trades or clusters of trades transacted
over a short period of time will not have an undue influence on the
index or benchmark level, as applicable, and the effect of large trades
at prices that deviate from the prevailing price are mitigated from
having an undue influence on the benchmark level.
In addition, the Sponsor notes that an oversight function is
implemented by the Benchmark Provider in seeking to ensure that the
Pricing Benchmark is administered through codified policies for Pricing
Benchmark integrity, which include a conflicts of interest policy, a
control framework, an accountability framework, and an input data
policy. It is also subject to the UK Benchmarks Regulation (``BMR''),
compliance with which regulations has been subject to a Limited
Assurance Audit under the ISAE 3000 standards of September 12, 2022.
The Sponsor has selected the Pricing Benchmark for its quality and
rigor as well as its broad, well-balanced
[[Page 24436]]
universe, which the Sponsor believes best reflects the market price of
SUI.
As of the date of this filing, the Constituent Exchanges included
in the Pricing Benchmark that is utilized by the Trust are Kraken and
Coinbase. As of May 16, 2025, Coinbase makes up 94.47% of the volume of
the Pricing Benchmark, with Kraken holding the remaining 5.3%.
Net Asset Value
The Administrator calculates the Trust's NAV and NAV per Share once
each Exchange trading day. The Trust's NAV per Share is calculated by:
<bullet> taking the current market value of its total assets based
on the SUI price determined by the Pricing Benchmark;
<bullet> subtracting any liabilities; and
<bullet> dividing that total by the total number of outstanding
Shares.
The NAV for a normal trading day will be released after 4:00 p.m.
Eastern Time (``ET''). Trading during the regular market session on the
Exchange closes at 4:00 p.m. ET. However, NAVs are not officially
struck until later in the day (often by 5:30 p.m. ET and almost always
by 8:00 p.m. EST). The pause between 4:00 p.m. ET and 5:30 p.m. ET (or
later) provides an opportunity for the Administrator to algorithmically
detect, flag, investigate, and correct unusual pricing should it occur.
Any such correction could adversely affect the value of the Shares. If
the Pricing Benchmark is not available, or if the Sponsor determines in
good faith that the Pricing Benchmark does not reflect an accurate SUI
price, then the Administrator will determine NAV by reference to the
Trust's principal market.\6\
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\6\ Such alternative method will only be employed on an ad hoc
basis. Any permanent change to the calculation of the NAV would
require a proposed rule change under Rule 19b-4.
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Availability of Information and Intraday Indicative Value
In addition to the price transparency of the Index, the Trust will
provide information regarding the Trust's SUI holdings as well as
additional data regarding the Trust. The website for the Trust, which
will be publicly accessible at no charge, will contain the following
information: (a) the prior business day's NAV per Share; (b) the prior
business day's Nasdaq official closing price; (c) calculation of the
premium or discount of such Exchange official closing price against
such NAV per Share; (d) data in chart form displaying the frequency
distribution of discounts and premiums of the Exchange's official
closing price against the NAV, within appropriate ranges for each of
the four previous calendar quarters (or for the life of the Trust, if
shorter); (e) the prospectus; and (f) other applicable quantitative
information. The Trust will also disseminate the Trust's holdings on a
daily basis on the Trust's website. Quotation and last sale information
regarding the Shares will be disseminated through the facilities of the
relevant securities information processor.
The intraday indicative value (``IIV'') will be calculated by using
the prior day's closing NAV per Share as a base and updating that value
during the Exchange's regular market session of 9:30 a.m. to 4:00 p.m.
ET (the ``Regular Market Session'') to reflect changes in the value of
the Trust's SUI holdings during the trading day. The IIV disseminated
during the Regular Market Session should not be viewed as an actual
real-time update of the NAV, because NAV per Share is calculated only
once at the end of each Exchange trading day based upon the relevant
end-of-day values of the Trust's investments. The IIV will be widely
disseminated on a per-Share basis every 15 seconds during the Regular
Market Session through the facilities of the relevant securities
information processor by market data vendors. In addition, the IIV will
be available through online information services, such as Bloomberg and
Reuters.
Quotation and last sale information for SUI is disseminated through
a variety of major market data vendors. Information related to trading,
including price and volume information, in SUI is available from major
market data vendors and from the trading platforms on which SUI are
traded. The normal trading hours for SUI trading platforms are 24 hours
per day, every day of the year.
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 Nasdaq official closing price and trading
volume information for the Shares will be published daily in the
financial section of newspapers.
Creation and Redemption of Shares
According to the Registration Statement, the Trust creates and
redeems Shares from time to time, but only in one or more Baskets.
Baskets are only made in exchange for delivery to the Trust or the
distribution by the Trust of the amount of cash equivalent to the
amount of SUI represented by the Baskets being created or redeemed, the
amount of which is based on the quantity of SUI attributable to each
Share of the Trust (net of accrued but unpaid Sponsor fees and any
accrued but unpaid extraordinary expenses or liabilities) being created
or redeemed determined as of 4:00 p.m. ET on the day the order to
create or redeem Baskets is properly received.
Authorized Participants are the only persons that may place orders
to create and redeem Baskets. Authorized Participants must be (1)
registered broker-dealers or other securities market participants, such
as banks and other financial institutions, which are not required to
register as broker-dealers to engage in securities transactions
described below, and (2) DTC Participants.
Authorized Participants will deliver only cash to create shares and
will receive only cash when redeeming Shares. Further, Authorized
Participants will not directly or indirectly purchase, hold, deliver,
or receive SUI as part of the creation or redemption process or
otherwise direct the Trust or a SUI Counterparty with respect to
purchasing, holding, delivering, or receiving SUI as part of the
creation or redemption process.
The SUI Counterparty is a designated third party with whom the
Sponsor has entered into an agreement on behalf of the Trust that will
deliver, receive or convert to U.S. dollars the SUI related to the
Authorized Participant's creation or redemption order. The Sponsor
performs extensive due diligence as part of its SUI Counterparty
selection and onboarding process. As part of this process, the Sponsor
assesses SUI Counterparty candidates against various criteria,
including those relating to candidates' (1) financials, (2) reputation,
(3) settlement history with the Sponsor, and (4) their regulatory
oversight. The Trust will create Shares by receiving SUI from a SUI
Counterparty that is not the Authorized Participant, and the Trust--not
the Authorized Participant--is responsible for selecting the SUI
Counterparty to deliver the SUI. Further, the SUI Counterparty will not
be acting as an agent of the Authorized Participant with respect to the
delivery of the SUI to the Trust or acting at the direction of the
Authorized Participant with respect to the delivery of the SUI to the
Trust.
The Trust will redeem Shares by delivering SUI to a SUI
Counterparty that is not the Authorized Participant and the Trust--not
the Authorized Participant--is responsible for selecting the SUI
Counterparty to receive the SUI. Further, the SUI Counterparty will not
be acting as an agent of the Authorized
[[Page 24437]]
Participant with respect to the receipt of the SUI from the Trust.
Each Authorized Participant will be required to be registered as a
broker-dealer under the Exchange Act and a member in good standing with
FINRA, or exempt from being or otherwise not required to be licensed as
a broker-dealer or a member of FINRA, and will be qualified to act as a
broker or dealer in the states or other jurisdictions where the nature
of its business so requires. Certain Authorized Participants may also
be regulated under federal and state banking laws and regulations. Each
Authorized Participant has its own set of rules and procedures,
internal controls and information barriers as it determines is
appropriate in light of its own regulatory regime.
According to the Registration Statement, on any business day,\7\ an
Authorized Participant may place an order to create one or more Baskets
via a cash transaction. Purchase orders must be placed by 12:00 p.m.
ET, the close of regular trading on the Exchange, or another time
determined by the Sponsor. The day on which an order is received by the
Transfer Agent is considered the purchase order date. The total deposit
of cash required is based on the combined NAV of the number of Shares
included in the Baskets being created determined as of 4:00 p.m. ET on
the date the order to purchase is properly received. The Administrator
determines the quantity of SUI associated with a Basket for a given day
by dividing the number of SUI held by the Trust as of the opening of
business on that business day, adjusted for the amount of SUI
constituting estimated accrued but unpaid fees and expenses of the
Trust as of the opening of business on that business day, by the
quotient of the number of Shares outstanding at the opening of business
on that business day, divided by the number of Shares in a Basket.
---------------------------------------------------------------------------
\7\ The Registration Statement defines a ``business day'' as
each day other than a day when the Exchange or the New York Stock
Exchange is closed for regular trading.
---------------------------------------------------------------------------
The procedures by which an Authorized Participant can redeem one or
more Baskets mirror the procedures for the creation of Baskets.
The Sponsor will maintain ownership and control of SUI in a manner
consistent with good delivery requirements for spot commodity
transactions.
Applicable Standard
Since 2017, the Commission has approved or disapproved exchange
filings to list and trade series of Trust Issued Receipts, including
spot-based Commodity-Based Trust Shares, on the basis of whether the
listing exchange has in place a comprehensive surveillance sharing
agreement with a regulated market of significant size related to the
underlying commodity to be held.\8\ The Commission has also
consistently recognized, however, that this is not the exclusive means
by which a listing exchange for an exchange-traded product (``ETP'')
can meet this statutory obligation.\9\ An ETP listing exchange could,
alternatively, demonstrate that ``other means to prevent fraudulent and
manipulative acts and practices will be sufficient'' to justify
dispensing with a surveillance-sharing agreement with a regulated
market of significant size.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release Nos. 78262 (July 8,
2016), 81 FR 78262 (July 14, 2016) (the ``Winklevoss Proposal'').
The Winklevoss Proposal was subsequently disapproved by the
Commission. See Securities Exchange Act Release No. 83723 (July 26,
2018), 83 FR 37579 (August 1, 2018) (the ``Winklevoss Order'').
Prior orders from the Commission have pointed out that in every
prior approval order for Commodity-Based Trust Shares, there has
been a derivatives market that represents the regulated market of
significant size, generally a Commodity Futures Trading Commission
(the ``CFTC'') regulated futures market. Further to this point, the
Commission's prior orders have noted that the spot commodities and
currency markets for which it has previously approved spot ETPs are
generally unregulated and that the Commission relied on the
underlying futures market as the regulated market of significant
size that formed the basis for approving the series of Currency and
Commodity-Based Trust Shares, including gold, silver, platinum,
palladium, copper, and other commodities and currencies. The
Commission specifically noted in the Winklevoss Order that the
approval order issued related to the first spot gold ETP ``was based
on an assumption that the currency market and the spot gold market
were largely unregulated.'' See Winklevoss Order at 37592. As such,
the regulated market of significant size test does not require that
the spot market be regulated in order for the Commission to approve
this proposal, and precedent makes clear that an underlying market
for a spot commodity or currency being a regulated market would
actually be an exception to the norm. These largely unregulated
currency and commodity markets do not provide the same protections
as the markets that are subject to the Commission's oversight, but
the Commission has consistently looked to surveillance sharing
agreements with the underlying futures market in order to determine
whether such products were consistent with the Act. See Securities
Exchange Act No. 99306 (January 10, 2024), 89 FR 3008 (January 17,
2024) (Self-Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq
Stock Market LLC; Cboe BZX Exchange, Inc.; Order Granting
Accelerated Approval of Proposed Rule Changes, as Modified by
Amendments Thereto, To List and Trade Bitcoin-Based Commodity-Based
Trust Shares and Trust Units) (the ``Spot Bitcoin ETP Approval
Order''); 100224 (May 23, 2024), 89 FR 46937 (May 30, 2024) (Self-
Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq Stock Market
LLC; Cboe BZX Exchange, Inc.; Order Granting Accelerated Approval of
Proposed Rule Changes, as Modified by Amendments Thereto, To List
and Trade Shares of Ether-Based Exchange-Traded Products) (the
``Spot ETH ETP Approval Order'').
\9\ See Winklevoss Order, 83 FR 37580; see Spot Bitcoin ETP
Approval Order, 89 FR 3009; see Spot ETH ETP Approval Order 89 FR
46938.
---------------------------------------------------------------------------
The Commission recently issued orders granting approval for
proposals to list bitcoin- and ether-based commodity trust shares and
bitcoin-based, ether-based, and a combination of bitcoin- and ether-
based trust issued receipts (these proposed funds are nearly identical
to the Trust, but proposed to hold bitcoin and/or ether, respectively,
instead of SUI) (``Spot Bitcoin ETPs'' and ``Spot ETH ETPs''). In both
the Spot Bitcoin ETP Approval Order and Spot ETH ETP Approval Order,
the Commission found that sufficient ``other means'' of preventing
fraud and manipulation had been demonstrated that justified dispensing
with a surveillance-sharing agreement with a market of significant
size. Specifically, the Commission found that while the Chicago
Mercantile Exchange (``CME'') futures market for both bitcoin and ether
were not of ``significant size'' with respect to the spot market, the
Exchange demonstrated that other means could be reasonably expected to
assist in surveilling for fraudulent and manipulative acts and
practices in the specific context of the proposals.
As further discussed below, both the Exchange and the Sponsor
believe that this proposal and the analysis to be included are
sufficient to establish that there are sufficient ``other means'' of
preventing fraud and manipulation that warrant dispensing with the
surveillance-sharing agreement with a regulated market of significant
size, as was done with both Spot Bitcoin ETPs and Spot ETH ETPs, and
that this proposal should be approved.
The Commission has approved numerous series of Trust Issued
Receipts,\10\ including Commodity-Based Trust Shares,\11\ to be listed
on U.S.
[[Page 24438]]
national securities exchanges. In order for any proposed rule change
from an exchange to be approved, the Commission must determine that,
among other things, the proposal is consistent with the requirements of
Section 6(b)(5) of the Act, specifically including: (i) the requirement
that a national securities exchange's rules are designed to prevent
fraudulent and manipulative acts and practices; and (ii) the
requirement that an exchange proposal be designed, in general, to
protect investors and the public interest. The Exchange believes that
this proposal is consistent with the requirements of Section 6(b)(5) of
the Act.
---------------------------------------------------------------------------
\10\ Pursuant to Nasdaq Rule 5720(a), the term ``Trust Issued
Receipt'' means a security (a) that is issued by a trust which holds
specified securities deposited with the trust; (b) that, when
aggregated in some specified minimum number, may be surrendered to
the trust by the beneficial owner to receive the securities; and (c)
that pays beneficial owners dividends and other distributions on the
deposited securities, if any are declared and paid to the trustee by
an issuer of the deposited securities
\11\ Pursuant to Nasdaq Rule 5711(d)(iv), the term ``Commodity-
Based Trust Shares'' means a security (1) that is issued by a trust
that holds (a) a specified commodity deposited with the trust, or
(b) a specified commodity and, in addition to such specified
commodity, cash; (2) 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 (3) 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.
---------------------------------------------------------------------------
As noted above, the Commission has recognized that the ``regulated
market of significant size'' standard is not the only means for
satisfying Section 6(b)(5) of the Act, specifically providing that a
listing exchange could demonstrate that ``other means to prevent
fraudulent and manipulative acts and practices'' are sufficient to
justify dispensing with the requisite surveillance-sharing
agreement.\12\ While there is currently no regulated futures market for
SUI, the Exchange and Sponsor note that in approving the Spot Bitcoin
ETPs, the Commission found that ``sufficient `other means' of
preventing fraud and manipulation had been demonstrated that justified
dispensing with a surveillance sharing agreement with a regulated
market of significant size.\13\ The Exchange and Sponsor believe that
this proposal provides for sufficient other means of preventing fraud
and manipulation to justify dispensing with a surveillance sharing
agreement with a regulated market of significant size.
---------------------------------------------------------------------------
\12\ See Winklevoss Order at 37580. The Commission has also
specifically noted that it ``is not applying a `cannot be
manipulated' standard; instead, the Commission is examining whether
the proposal meets the requirements of the Exchange Act and,
pursuant to its Rules of Practice, places the burden on the listing
exchange to demonstrate the validity of its contentions and to
establish that the requirements of the Exchange Act have been met.''
Id. at 37582.
\13\ See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008 (January 17, 2024) (Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments
Thereto, To List and Trade Shares of Bitcoin-Based Commodity-Based
Trust Shares and Trust Units). The SEC made substantially similar
findings in the approval order for Spot ETH ETPs. See Securities
Exchange Act Release No. 100224 (May 23, 2024), 89 FR 46937 (May 30,
2024) (Order Granting Accelerated Approval of Proposed Rule Changes,
as Modified by Amendments Thereto, To List and Trade Shares of
Ether-Based Exchange-Traded Products).
---------------------------------------------------------------------------
Over the past two years, U.S. investor exposure to SUI, through
digital asset trading platforms, has grown to billions of dollars with
a market capitalization greater than $12 billion as of the date of this
filing. The Exchange believes that approving this proposal (and
comparable proposals) provides the Commission with the opportunity to
allow U.S. investors with access to SUI in a regulated and transparent
exchange-traded vehicle that would act to limit risk to U.S. investors
by: (i) reducing premium and discount volatility; (ii) reducing
management fees through meaningful competition; and (iii) providing an
alternative to the custody of spot SUI.
The policy concerns that the Exchange Act is designed to address
are also otherwise mitigated by the fact that the size of the market
for the underlying reference asset (greater than $12 billion as of the
date of this filing) and the nature of the SUI ecosystem reduces its
susceptibility to manipulation. The geographically diverse and
continuous nature of SUI trading, along with trading volume across
multiple venues, makes it difficult and prohibitively costly to
manipulate the price of SUI. There are a number of reasons this is the
case, including that manipulation of the price on any single venue
would require manipulation of the global SUI price in order to be
effective; SUI's character as a continuously traded digital asset
traded without interruption across the world provides constant
arbitrage opportunities across all trading venues; and it is unlikely
that any one actor could obtain a dominant market share.
Further, the Exchange believes that the fragmentation across SUI
trading platforms and adoption of SUI, as displayed through user
engagement and trading volumes, and the Sui Network make manipulation
of SUI prices through continuous trading activity more difficult.
Moreover, the linkage between the SUI markets and the presence of
arbitrageurs in those markets means that the manipulation of the price
of SUI on any single venue would require manipulation of the global SUI
price in order to be effective. Arbitrageurs must have funds
distributed across multiple SUI trading platforms in order to take
advantage of temporary price dislocations, thereby making it unlikely
that there will be strong concentration of funds on any particular SUI
trading platform. As a result, the potential for manipulation on a
particular SUI trading platform would require overcoming the liquidity
supply of such arbitrageurs who are effectively eliminating any cross-
market pricing differences. The Exchange therefore believes that the
above considerations can effectively address concerns around potential
fraud and manipulation.
Initial and Continued Listing
The Shares will be subject to Nasdaq Rule 5711(d)(vi), which sets
forth the initial and continued listing criteria applicable to
Commodity-Based Trust Shares. The Exchange will obtain a representation
that the Trust's NAV per Share will be calculated daily and will be
made available to all market participants at the same time. A minimum
of 40,000 Shares will be required to be outstanding at the time of
commencement of trading on the Exchange. Upon termination of the Trust,
the Shares will be removed from listing. The Trustee will be a trust
company having substantial capital and surplus and the experience and
facilities for handling corporate trust business, as required under
Nasdaq Rule 5711(d)(vi)(D) and no change will be made to the Trustee
without prior notice to and approval of the Exchange.
As required in Nasdaq Rule 5711(d)(viii), the Exchange notes that
any registered market maker (``Market Maker'') in the Shares must file
with the Exchange, in a manner prescribed by the Exchange, and keep
current a list identifying all accounts for trading the underlying
commodity, related futures or options on futures, or any other related
derivatives, which the registered Market Maker may have or over which
it may exercise investment discretion. No registered Market Maker in
the Shares shall trade in the underlying commodity, related futures or
options on futures, or any other related derivatives, in an account in
which a registered Market Maker, directly or indirectly, controls
trading activities, or has a direct interest in the profits or losses
thereof, which has not been reported to the Exchange as required by
Nasdaq Rule 5711(d). In addition to the existing obligations under
Exchange rules regarding the production of books and records, the
registered Market Maker in the Shares shall make available to the
Exchange such books, records or other information pertaining to
transactions by such entity or any limited partner, officer or approved
person thereof, registered or non-registered employee affiliated with
such entity for its or their own accounts in the underlying commodity,
related futures or options on futures, or any other related
derivatives, as may be requested by the Exchange.
The Exchange is able to obtain information regarding trading in the
Shares and the underlying SUI or any SUI derivative through members
acting as registered Market Makers, in connection with their
proprietary or customer trades.
[[Page 24439]]
As a general matter, the Exchange has regulatory jurisdiction over
its members, and their associated persons. The Exchange also has
regulatory jurisdiction over any person or entity controlling a member,
as well as a subsidiary or affiliate of a member that is in the
securities business. A subsidiary or affiliate of a member organization
that does business only in commodities would not be subject to Exchange
jurisdiction, but 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.
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. The Exchange will
allow trading in the Shares from 4:00 a.m. to 8:00 p.m. ET. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. The Shares of the Trust will conform to
the initial and continued listing criteria set forth in Nasdaq Rule
5711(d) and will comply with the requirements of Rule 10A-3 of the Act.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. The Exchange will halt trading in the Shares
under the conditions specified in Nasdaq Rules 4120 and 4121, including
without limitation the conditions specified in Nasdaq Rule 4120(a)(9)
and (10) and the trading pauses under Nasdaq Rules 4120(a)(11) and
(12).
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 SUI underlying the Shares; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.
If the IIV or the value of the Index is not being disseminated as
required, the Exchange may halt trading during the day on which the
interruption to the dissemination of the IIV or the value of the Index
occurs. If the interruption to the dissemination of the IIV or the
value of the Index persists past the trading day on 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 per Share
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 per Share is available to all market participants.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. The surveillance
program includes real-time patterns for price and volume movements and
post-trade surveillance patterns (e.g., spoofing, marking the close,
pinging, phishing). Trading of Shares on the Exchange will be subject
to the Exchange's surveillance program for derivative products, as well
as cross-market surveillances administered by FINRA, on behalf of the
Exchange pursuant to a regulatory services agreement, which are also
designed to detect violations of Exchange rules and applicable federal
securities laws. The Exchange is responsible for FINRA's performance
under this regulatory services agreement.
The Exchange will require the Trust to represent to the Exchange
that it will advise the Exchange of any failure by the Trust to comply
with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing requirements. If
the Trust is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under the
Nasdaq 5800 Series. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
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 Intermarket
Surveillance Group (``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. The Exchange also
may obtain information regarding trading in the Shares via the ISG,
from other exchanges who are members or affiliates of the ISG, or with
which the Exchange has entered into a comprehensive surveillance
sharing agreement.
Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an information circular (``Information Circular'') of the
special characteristics and risks associated with trading the Shares.
Specifically, the Information Circular will discuss the following: (1)
the procedures for creations and redemptions of Shares in Baskets (and
that Shares are not individually redeemable); (2) Section 10 of Nasdaq
General Rule 9, which imposes suitability obligations on Nasdaq members
with respect to recommending transactions in the Shares to customers;
(3) how information regarding the IIV and NAV is disseminated; (4) the
risks involved in trading the Shares during the pre-market and post-
market sessions when an updated IIV will not be calculated or publicly
disseminated; (5) the requirement that members deliver a prospectus to
investors purchasing newly issued Shares prior to or concurrently with
the confirmation of a transaction; and (6) trading information. The
Information Circular will also discuss any exemptive, no action and
interpretive relief granted by the Commission from any rules under the
Act.
The Information Circular will also reference the fact that there is
no regulated source of last sale information regarding SUI, and that
the Commission has no jurisdiction over the trading of SUI as a
commodity.
Additionally, the Information Circular will reference that the
Trust is subject to various fees and expenses described in the
Registration Statement. The Information Circular will also disclose the
trading hours of the Shares. The Information Circular will disclose
that information about the Shares will be publicly available on the
Trust's website.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\14\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\15\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission has approved numerous series of Trust Issued
Receipts, including Commodity-Based Trust Shares, to be listed on U.S.
[[Page 24440]]
national securities exchanges. In order for any proposed rule change
from an exchange to be approved, the Commission must determine that,
among other things, the proposal is consistent with the requirements of
Section 6(b)(5) of the Act, specifically including: (i) the requirement
that a national securities exchange's rules are designed to prevent
fraudulent and manipulative acts and practices; and (ii) the
requirement that an exchange proposal be designed, in general, to
protect investors and the public interest. The Exchange believes that
this proposal is consistent with the requirements of Section 6(b)(5) of
the Act.
As noted above, the Commission has recognized that the ``regulated
market of significant size'' standard is not the only means for
satisfying Section 6(b)(5) of the Act, specifically recognizing that a
listing exchange could demonstrate that ``other means to prevent
fraudulent and manipulative acts and practices'' are sufficient to
justify dispensing with the requisite surveillance-sharing agreement
with the underlying spot market. The Exchange and Sponsor believe that
such conditions are present. While there is currently no regulated
futures market for SUI, in approving the Spot Bitcoin ETPs, the
Commission found that ``sufficient `other means' of preventing fraud
and manipulation had been demonstrated that justified dispensing with a
surveillance sharing agreement with a regulated market of significant
size.\16\ The Exchange and Sponsor believe that this proposal provides
for sufficient other means of preventing fraud and manipulation to
justify dispensing with a surveillance sharing agreement with a
regulated market of significant size.
---------------------------------------------------------------------------
\16\ See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008 (January 17, 2024) (Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments
Thereto, To List and Trade Shares of Bitcoin-Based Commodity-Based
Trust Shares and Trust Units). The SEC made substantially similar
findings in the approval order for Spot ETH ETPs. See Securities
Exchange Act Release No. 100224 (May 23, 2024), 89 FR 46937 (May 30,
2024) (Order Granting Accelerated Approval of Proposed Rule Changes,
as Modified by Amendments Thereto, To List and Trade Shares of
Ether-Based Exchange-Traded Products).
---------------------------------------------------------------------------
Over the past two years, U.S. investor exposure to SUI, through
digital asset trading platforms, has grown to billions of dollars with
a market capitalization greater than $12 billion, as of the date of
this filing. The Exchange believes that approving this proposal (and
comparable proposals) provides the Commission with the opportunity to
allow U.S. investors with access to SUI in a regulated and transparent
exchange-traded vehicle that would act to limit risk to U.S. investors
by: (i) reducing premium and discount volatility; (ii) reducing
management fees through meaningful competition; and (iii) providing an
alternative to the custody of spot SUI.
The policy concerns that the Exchange Act is designed to address
are also otherwise mitigated by the fact that the size of the market
for the underlying reference asset (greater than $12 billion, as of the
date of this filing) and the nature of the SUI ecosystem reduces its
susceptibility to manipulation. The geographically diverse and
continuous nature of SUI trading, along with trading volume across
multiple venues, makes it difficult and prohibitively costly to
manipulate the price of SUI. There are a number of reasons this is the
case, including that manipulation of the price on any single venue
would require manipulation of the global SUI price in order to be
effective; SUI's character as a continuously traded digital asset
traded without interruption across the world provides constant
arbitrage opportunities across all trading venues; and it is unlikely
that any one actor could obtain a dominant market share.
Further, the Exchange believes that the fragmentation across SUI
trading platforms and adoption of SUI, as displayed through user
engagement and trading volumes, and the Sui Network make manipulation
of SUI prices through continuous trading activity more difficult.
Moreover, the linkage between the SUI markets and the presence of
arbitrageurs in those markets means that the manipulation of the price
of SUI on any single venue would require manipulation of the global SUI
price in order to be effective. Arbitrageurs must have funds
distributed across multiple SUI trading platforms in order to take
advantage of temporary price dislocations, thereby making it unlikely
that there will be strong concentration of funds on any particular SUI
trading platform. As a result, the potential for manipulation on a
particular SUI trading platform would require overcoming the liquidity
supply of such arbitrageurs who are effectively eliminating any cross-
market pricing differences. The Exchange therefore believes that the
above considerations can effectively address concerns around potential
fraud and manipulation.
The Exchange further believes that the proposed rule change is
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest in that the Shares will be
listed and traded on the Exchange pursuant to the initial and continued
listing criteria set forth in Nasdaq Rule 5711(d). 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. As
discussed above, the surveillance program includes real-time patterns
for price and volume movements and post-trade surveillance patterns
(e.g., spoofing, marking the close, pinging, phishing). Trading of
Shares on the Exchange will be subject to the Exchange's surveillance
program for derivative products, as well as cross-market surveillances
administered by FINRA, on behalf of the Exchange pursuant to a
regulatory services agreement, which are also designed to detect
violations of Exchange rules and applicable federal securities laws.
The Exchange is responsible for FINRA's performance under this
regulatory services agreement.
The Exchange will require the Trust to represent to the Exchange
that it will advise the Exchange of any failure by the Trust to comply
with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing requirements. If
the Trust is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under the
Nasdaq 5800 Series. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
The Exchange will communicate as needed regarding trading in the
Shares with other markets and other entities that are members of the
ISG, and the Exchange may obtain trading information regarding trading
in the Shares from such markets and other entities.
Trading in Shares of the Trust will be halted if the circuit
breaker parameters have been reached or because of market conditions or
for reasons that, in the view of the Exchange, make trading in the
Shares inadvisable. These may include unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market.
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
Shares that will enhance competition among market participants, to the
benefit of investors and the marketplace.
[[Page 24441]]
For all the above reasons, the Exchange believes that the proposed
rule change is consistent with the requirements of Section 6(b)(5) of
the Act.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange notes that the
proposed rule change will rather facilitate the listing and trading of
an additional ETP that will enhance competition among both market
participants and listing venues, to the benefit of investors and the
marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
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 Exchange 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c2b0b7aea7efa1adafafa7acb6b182b1a7a1eca5adb4"><span class="__cf_email__" data-cfemail="2c5e594049014f4341414942585f6c5f494f024b435a">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-042 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-NASDAQ-2025-042. 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 internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2025-042 and should
be submitted on or before July 1, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Stephanie Fouse,
Assistant Secretary.
[FR Doc. 2025-10441 Filed 6-9-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on June 10, 2025.
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