71446 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 

minimis exemption was implemented, a day after 

the exemption was implemented before Island, an 

ECN, stopped displaying its orders to anyone, even 

its subscribers (going ‘‘dark’’), and a day after the 

exemption was implemented when Island was 

‘‘dark.’’ The analysis showed that the percent of 

trades executed outside the national best bid and 

offer (‘‘NBBO’’) did not increase, and that less than 

1% of total trades were executed more than three 

cents away from the NBBO, after the de minimis

exemption was implemented. A copy of the 

analysis is available in File No. S7–10–04.

11On February 24, 2004, the Commission 

proposed Regulation NMS for public comment. 

Securities Exchange Act Release No. 49325 

(February 26, 2004), 69 FR 11126 (March 9, 2004). 

On May 20, 2004, the Commission published a 

supplemental request for comment and extended 

the period for comment on proposed Regulation 

NMS. Securities Exchange Act Release No. 49749 

(May 20, 2004), 69 FR 30142 (May 26, 2004). In 

part, proposed Rule 611 of Regulation NMS would 

require certain identified market centers to 

establish, maintain, and enforce policies and 

procedures reasonably designed to prevent tradethroughs. Extension of the de minimis pilot in no 

way prejudges or determines what actions the 

Commission may take with respect to any rule 

proposal.

12 17 CFR 240.11Aa3–2(f).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Amendment No. 2, dated November 10, 

2004 (‘‘Amendment No. 2’’). In Amendment No. 2, 

the Exchange revised the proposed rule text and 

corresponding description. Amendment No. 2 

replaced Amex’s original filing in its entirety.

4See Amendment No. 3, dated November 16, 

2004 (‘‘Amendment No. 3’’). In Amendment No. 3, 

the Exchange proposed clarifying changes to certain 

aspects of Amendment No. 2 and modified the 

proposed rule text.

5See Amendment No. 4, dated December 1, 2004 

(‘‘Amendment No. 4’’). In Amendment No. 4, the 

Exchange provided additional description of the 

creation and redemption process for the Gold Trust 

shares and made clarifying changes to the proposed 

rule text. Amendment No. 4 replaced Amex’s 

amended proposal in its entirety.

In March 2004 and in May 2003, the 

Commission extended the three cent de 

minimis exemption for additional ninemonth periods, in order to assess 

trading data associated with the de 

minimis exemption and to consider 

whether to adopt the de minimis

exemption on a permanent basis, to 

adopt some other alternative solution, or 

to allow the exemption to expire. As a 

result of its review of trading data 

associated with the de minimis

exemption, the Commission has 

proposed, as part of its market structure 

initiatives, Regulation NMS under the 

Act, which would include a new rule 

relating to trade-throughs.11 Because the 

Commission has not yet taken action 

with respect to proposed Regulation 

NMS, the Commission believes it is 

appropriate to extend the de minimis

exemption.

This extension of the de minimis

exemption, however, applies only to the 

DIA and the SPY, and not the QQQ. On 

December 1, 2004, trading of the QQQ 

transferred from the American Stock 

Exchange to Nasdaq, and trades in the 

QQQ ceased to be subject to the tradethrough provisions of the ITS Plan. 

Accordingly, an exemption for the QQQ 

is no longer necessary. 

The Commission believes that an 

extension of the de minimis exemption 

for an additional nine-month period is 

consistent with the public interest, the 

protection of investors, the maintenance 

of fair and orderly markets and the 

removal of impediments to, and 

perfection of the mechanisms of, a 

national market system. Depending on 

the action the Commission takes on 

proposed Regulation NMS prior to 

September 4, 2005, the Commission 

may determine to modify, withdraw, or 

extend the de minimis exemption. The 

Commission emphasizes, as it did in the 

March 2004 Order, the May 2003 Order 

and the August 2002 Order, that the de 

minimis exemption does not relieve 

brokers and dealers of their best 

execution obligations under the federal 

securities laws and SRO rules. 

Accordingly, it is ordered, pursuant to 

Section 11A of the Act and Rule 11Aa3–

2(f) thereunder,12 that participants of 

the ITS Plan and their members are 

hereby exempt from Section 8(d) of the 

ITS Plan during the period covered by 

this Order with respect to transactions 

in DIAs and SPYs that are executed at 

a price that is no more than three cents 

lower than the highest bid displayed in 

CQS and no more than three cents 

higher than the lowest offer displayed in 

CQS. This Order extends the de minimis

exemption from December 4, 2004 

through September 4, 2005.

By the Commission. 

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. E4–3569 Filed 12–8–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50792; File No. SR–Amex–

2004–38] 

Self-Regulatory Organizations; Notice 

of Filing of a Proposed Rule Change 

and Amendment Nos. 2, 3 and 4 

Thereto by the American Stock 

Exchange LLC Relating to the Listing 

and Trading of the iShares() COMEX 

Gold Trust 

December 3, 2004. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934, as 

amended (‘‘Act’’)1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on May 24, 2004, the American Stock 

Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II and III below, which Items 

have been prepared by the Exchange. 

On November 9, 2004, Amex amended 

its proposal; however, the Exchange 

withdrew this amendment on November 

17, 2004. On November 10, 2004 the 

Exchange submitted a second 

amendment.3 On November 16, 2004, 

the Exchange submitted a third 

amendment.4 On December 1, 2004, the 

Exchange submitted a fourth 

amendment.5 The Commission is 

publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade under new Amex Rules 1200A et 

seq. iShares() COMEX Gold Trust 

Shares (‘‘Gold Shares’’). The text of the 

proposed rule change, as amended, is 

set forth below. Proposed new language 

is in italics; proposed deletions are in 

brackets.

* * * * *

Exchange Rules 

Commodity-Based Trust Shares 

Rule 1200A. (a) Applicability. The 

Rules in this Section are applicable only 

to Commodity-Based Trust Shares. In 

addition, except to the extent specific 

Rules in this Section govern or unless 

the context otherwise requires, the 

provisions of the Trust Issued Receipt 

rules and the Constitution and all other 

rules and policies of the Board of 

Governors shall be applicable to the 

trading on the Exchange of such 

securities. Pursuant to the provisions of 

Article I, Section 3(i) of the Constitution, 

Commodity-Based Trust Shares are 

included within the definition of 

‘‘security’’ or ‘‘securities’’ as such terms 

are used in the Constitution and Rules 

of the Exchange.

(b) Definitions. The following terms as 

used in the Rules shall, unless the 

context otherwise requires, have the 

meanings herein specified:

(1) Commodity-Based Trust Shares. 

The term ‘‘Commodity-Based Trust 

Shares’’ means a security (a) that is 

issued by a trust (the ‘‘Trust’’) that holds 

a specified commodity deposited with 

the Trust; (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 (c) that, when aggregated in the 

same specified minimum number, may 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 71447

be redeemed at a holder’s request by 

such Trust which will deliver to the 

redeeming holder the quantity of the 

underlying commodity.

(2) Commodity. The term 

‘‘commodity’’ is defined in Section 

1(a)(4) of the Commodity Exchange Act.

Commentary 

.01 A Commodity-Based Trust Share 

is a Trust Issued Receipt that holds a 

specified commodity deposited with the 

Trust.

.02 The Exchange requires that 

members and member organizations 

provide to all purchasers of newly 

issued Commodity-Based Trust Shares a 

prospectus for the series of Commoditybased Trust Shares.

.03 Transactions in Commodity-Based 

Trust Shares will occur between 9:30 

a.m. and either 4 p.m. or 4:15 p.m. for 

each series, as specified by the 

Exchange.

.04 (a) Limit Orders—Members and 

member organizations shall not enter 

orders into the Exchange’s order routing 

system, as principal or agent, limit 

orders in the same Commodity-Based 

Trust, for the account or accounts of the 

same or related beneficial owner, in 

such a manner that the member or 

beneficial owner(s) effectively is 

operating as a market maker by holding 

itself out as willing to buy and sell such 

Commodity-Based Trust Shares on a 

regular or continuous basis. In 

determining whether a member or 

beneficial owner effectively is operating 

as a market maker, the Exchange will 

consider, among other things, the 

simultaneous or near-simultaneous 

entry of limit orders to buy and sell the 

same Commodity-Based Trust Shares; 

the multiple acquisition and liquidation 

of positions in the same CommodityBased Trust Shares during the same 

day; and the entry of multiple limit 

orders at different prices in the same 

Commodity-Based Trust Shares.

(b) Members and member 

organizations may not enter, nor permit 

the entry of, orders into the Exchange’s 

order routing system if those orders are 

(i) created and communicated 

electronically without manual input 

(i.e., order entry by public customers or 

associated persons of members must 

involve manual input such as entering 

the terms of an order into an order-entry 

screen or manually selecting a 

displayed order against which an offsetting order should be sent) and (ii) 

eligible for execution through the 

Exchange’s automatic execution system 

for Commodity-Based Trust Shares. 

Nothing in this paragraph, however, 

prohibits members from electronically 

communicating to the Exchange orders 

manually entered by customers into 

front-end communication systems (e.g., 

Internet gateways, on-line networks, 

etc.).

Designation of an Underlying 

Commodity 

Rule 1201A. The Exchange may list 

and trade Commodity-Based Trust 

Shares based on an underlying 

commodity. Each issue of a CommodityBased Trust Share shall be designated 

as a separate series and shall be 

identified by a unique symbol.

Initial and Continued Listing 

Rule 1202A. Commodity-Based Trust 

Shares will be listed and traded on the 

Exchange subject to application of the 

following criteria:

(a) Initial Listing—The Exchange will 

establish a minimum number of 

Commodity-Based Trust Shares required 

to be outstanding at the time of 

commencement of trading on the 

Exchange.

(b) Continued Listing—The Exchange 

will remove from listing CommodityBased Trust Shares under any of the 

following circumstances:

(i) if following the initial twelve month 

period following the commencement of 

trading of the shares, (A) the Trust has 

more than 60 days remaining until 

termination and there are fewer than 50 

record and/or beneficial holders of 

Commodity-Based Trust Shares for 30 

or more consecutive trading days; (B) if 

the Trust has fewer than 50,000 receipts 

issued and outstanding; or (C) if the 

market value of all receipts issued and 

outstanding is less than $1,000,000;

(ii) if the value of the underlying 

commodity is no longer calculated or 

available on at least a 15-second 

delayed basis from a source unaffiliated 

with the sponsor, Trust, custodian or the 

Exchange or the Exchange stops 

providing a hyperlink on its Web site to 

any such unaffiliated commodity value;

(iii) if the Indicative Trust Value is no 

longer made available on at least a 15-

second delayed basis; or

(iv) if such other event shall occur or 

condition exists which in the opinion of 

the Exchange makes further dealings on 

the Exchange inadvisable.

Upon termination of a Trust, the 

Exchange requires that CommodityBased Trust Shares issued in connection 

with such Trust be removed from 

Exchange listing. A Trust may terminate 

in accordance with the provisions of the 

Trust prospectus, which may provide for 

termination if the value of the Trust falls 

below a specified amount.

(c) Term—The stated term of the 

Trust shall be as stated in the Trust 

prospectus. However, a trust may be 

terminated under such earlier 

circumstances as may be specified in 

the Trust prospectus.

(d) Trustee—The following 

requirements apply:

1. The trustee of a Trust must be a 

trust company or banking institution 

having substantial capital and surplus 

and the experience and facilities for 

handling corporate trust business. In 

cases where, for any reason, an 

individual has been appointed as 

trustee, a qualified trust company or 

banking institution must be appointed 

co-trustee.

2. No change is to be made in the 

trustee of a listed issue without prior 

notice to and approval of the Exchange.

(e) Voting—Voting rights shall be as 

set forth in the applicable Trust 

prospectus.

Commentary 

.01 The Exchange will file separate 

proposals under Section 19(b) of the 

Securities Exchange Act of 1934 before 

listing and trading Commodity-Based 

Trust Shares designated on different 

underlying commodities.

Specialist Prohibitions 

Rule 1203A. Rule 175(c) shall be 

deemed to prohibit an equity specialist, 

his member organization, or any other 

member, limited partner, officer, or 

approved person thereof from acting as 

a market maker or functioning in any 

capacity involving market-making 

responsibilities in an underlying 

commodity, related commodity futures 

or options on commodity futures, or any 

other related commodity derivatives. 

However, an approved person of an 

equity specialist that has established 

and obtained Exchange approval of 

procedures restricting the flow of 

material, non-public market information 

between itself and the specialist member 

organization pursuant to Rule 193, and 

any member, officer, or employee 

associated therewith, may act in a 

market making capacity, other than as 

a specialist in the Commodity-Based 

Trust Shares on another market center, 

in the underlying commodity, related 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives.

Commentary 

.01 In connection with CommodityBased Trust Shares, Commentaries .01, 

.02 and .07 of Rule 170 shall not apply 

to the trading of Trust Shares for the 

purpose of bringing the price of the 

Trust Shares into parity with the value 

of the underlying commodity on which 

the Trust Shares are based, with the net 

asset value of the Trust comprising the 

71448 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 

Shares or with a futures contract on the 

underlying commodity on which the 

Trust Shares are based. Such 

transactions must be effected in a 

manner that is consistent with the 

maintenance of a fair and orderly 

market and with the other requirements 

of this rule and the supplementary 

material herein.

Securities Accounts and Orders of 

Specialists 

Rule 1204A. (a) The member 

organization acting as specialist in 

Commodity-Based Trust Shares is 

obligated to conduct all trading in the 

Shares in its specialist account, subject 

only to the ability to have one or more 

investment accounts, all of which must 

be reported to the Exchange (See Rule 

170). In addition, the member 

organization acting as specialist in 

Commodity-Based Trust 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 physical 

commodity, related commodity futures 

or options on commodity futures, or any 

other related commodity derivatives, 

which the member organization acting 

as specialist may have or over which it 

may exercise investment discretion. No 

member organization acting as 

specialist in Commodity-Based Trust 

Shares shall trade in the underlying 

physical commodity, related commodity 

futures or options on commodity 

futures, or any other related commodity 

derivatives, in an account in which a 

member organization acting as 

specialist, 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 this Rule.

(b) In addition to the existing 

obligations under Exchange rules 

regarding the production of books and 

records (See, e.g. Rule 31), the member 

organization acting as a specialist in 

Commodity-Based Trust Shares shall 

make available to the Exchange such 

books, records or other information 

pertaining to transactions by such entity 

or any member, member organization, 

limited partner, officer or approved 

person thereof, registered or nonregistered employee affiliated with such 

entity for its or their own accounts in the 

underlying physical commodity, related 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives, as may be 

requested by the Exchange.

(c) In connection with trading the 

underlying physical commodity, related 

commodity futures or options on 

commodity futures or any other related 

commodity derivative (including 

Commodity-Based Trust Shares), the 

specialist registered as such in 

Commodity-Based Trust Shares shall 

not use any material nonpublic 

information received from any person 

associated with a member, member 

organization or employee of such person 

regarding trading by such person or 

employee in the physical commodity, 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives.

Limitation of Exchange Liability 

Rule 1205A. Neither the Exchange nor 

any agent of the Exchange shall have 

any liability for damages, claims, losses 

or expenses caused by any errors, 

omissions, or delays in calculating or 

disseminating any underlying 

commodity value, the current value of 

the underlying commodity required to 

be deposited to the Trust in connection 

with issuance of Commodity-Based 

Trust Shares; net asset value; or other 

information relating to the purchase, 

redemption or trading of CommodityBased Trust Shares, resulting from any 

negligent act or omission by the 

Exchange or any agent of the Exchange, 

or any act, condition or cause beyond 

the reasonable control of the Exchange 

or its agent, including, but not limited 

to, an act of God; fire; flood; 

extraordinary weather conditions; war; 

insurrection; riot; strike; accident; 

action of government; communications 

or power failure; equipment or software 

malfunction; or any error, omission or 

delay in the reports of transactions in an 

underlying commodity.

* * * * *

Amex Company Guide 

Section 140. Original Listing Fees 

Stock Issues—No Change.

Issues Listed Under Section 106 

(Currency and Index Warrants) and 

Section 107 (other Securities)—No 

Change 

Warrants—No Change. 

Bonds—No Change. 

Index Fund Shares, Trust Issued 

Receipts, Commodity-Based Trust 

Shares and Closed-End Funds—The 

original listing fee for Index Fund 

Shares listed under Rule 1000A, Trust 

Issued Receipts listed under Rule 1200, 

Commodity-Based Trust Shares listed 

under Rule 1200A and Closed-End 

Funds listed under Section 101 of the 

Company Guide is $5,000 for each series 

or Fund, with no application processing 

fee. 

Special Shareholder Rights Plans—No 

Change. 

Section 141. Annual Fees 

Stock Issues; Issues Listed Under 

Sections 106 and 107; [and] Rules 1200 

(Trust Issued Receipts) and 1200A 

(Commodity-Based Trust Shares); and 

Closed-End Funds

Shares outstanding Fees 

5,000,000 shares or less ......................................................................................................................................................... $15,000 (minimum) 

5,000,001 to 10,000,000 shares .............................................................................................................................................. 17,500 

10,000,001 to 25,000,000 shares ............................................................................................................................................ 20,000 

25,000,001 to 50,000,000 shares ............................................................................................................................................ 22,500 

In excess of 50,000,000 shares .............................................................................................................................................. 30,000 (maximum) 

The Board of Governors or its 

designee may, in its discretion, defer, 

waive or rebate all or any part of the 

applicable annual listing fee specified 

above excluding the fees applicable to 

issues listed under Sections 106 and 107 

and rule 1200 (Trust Issued Receipts); 

and Closed-End Funds. 

Issues Listed Under Rule 1000A (Index 

Fund Shares)

Shares outstanding Fees 

1,000,000 shares or less ......................................................................................................................................................... $6,500 (minimum) 

1,000,001 to 2,000,000 shares ................................................................................................................................................ 7,000 

2,000,001 to 3,000,000 shares ................................................................................................................................................ 7,500 

3,000,001 to 4,000,000 shares ................................................................................................................................................ 8,000 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 71449

6A Trust Issued Receipt or ‘‘TIR’’ is defined in 

Exchange Rule 1200(b) as 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.

7COMEX is a division of the New York 

Mercantile Exchange, Inc. (‘‘NYMEX’’) where gold 

futures contracts are traded.

8The Exchange submits that Gold Shares may be 

used as a price discovery mechanism for gold from 

1:30 pm to 4:15 p.m. New York time. The open 

outcry trading hours of the COMEX gold futures 

contract is from 8:20 a.m. to 1:30 p.m. New York 

time Monday through Friday. NYMEX ACCESS, 

an electronic trading system, is open for price 

discovery on COMEX gold futures contracts from 2 

p.m. Monday afternoon until 8 a.m. Friday morning 

New York time; and from 7 p.m. Sunday night until 

Monday morning at 8 a.m. New York time. 9The Exchange defines a ‘‘security’’ or 

‘‘securities’’ to include stocks, bonds, options, and 

other interests or instruments commonly known as 

securities. See Article I, Section 3(j) of the Amex 

Constitution. 10See Securities Exchange Act Release No. 41892 

(September 21, 1999), 64 FR 52559 (September 29, 

1999) (‘‘TIR Approval Order’’). 11 17 CFR 240.19b–4(e). Rule 19b–4(e), adopted 

by the Commission on December 8, 1998, permits 

the Exchange to list and trade new derivative 

securities products without a rule change provided 

the Exchange has in place trading rules, procedures, 

a surveillance program and listing standards that 

pertain to the class of securities covering the new 

product. See Securities Exchange Act Release No. 

40761 (December 8, 1998), 63 FR 70952 (December 

22, 1998).

Shares outstanding Fees 

4,000,001 to 5,000,000 shares ................................................................................................................................................ 8,500 

5,000,001 to 6,000,000 shares ................................................................................................................................................ 9,000 

6,000,001 to 7,000,000 shares ................................................................................................................................................ 9,500 

7,000,001 to 8,000,000 shares ................................................................................................................................................ 10,000 

8,000,001 to 9,000,000 shares ................................................................................................................................................ 10,500 

9,000,001 to 10,000,000 shares .............................................................................................................................................. 11,000 

10,000,001 to 11,000,000 shares ............................................................................................................................................ 11,500 

11,000,001 to 12,000,000 shares ............................................................................................................................................ 12,000 

12,000,001 to 13,000,000 shares ............................................................................................................................................ 12,500 

13,000,001 to 14,000,000 shares ............................................................................................................................................ 13,000 

14,000,001 to 15,000,000 shares ............................................................................................................................................ 13,500 

15,000,001 to 16,000,000 shares ............................................................................................................................................ 14,000 

In excess of 16,000,000 shares .............................................................................................................................................. 14,500 (maximum) 

The annual fee is payable in January 

of each year and is based on the total 

number of all classes of shares 

(excluding treasury shares) and warrants 

according to information available on 

Exchange records as of December 31 of 

the preceding year. (The above fee 

schedule also applies to companies 

whose securities are admitted to 

unlisted trading privileges.) 

In the calendar year in which a 

company first lists, the annual fee will 

be prorated to reflect only that portion 

of the year during which the security 

has been admitted to dealings and will 

be payable within 30 days of the date 

the company receives the invoice, based 

on the total number of outstanding 

shares of all classes of stock at the time 

of original listing. 

The annual fee for issues listed under 

Rule 1000A (Index Fund Shares), [and] 

Rule 1200 (Trust Issued Receipts) and 

Rule 1200A (Commodity-Based Trust 

Shares) is based upon the number of 

shares of a series of Index Fund Shares, 

[or] Trust Issued Receipts or 

Commodity-Based Trust Shares

outstanding at the end of each calendar 

year. For multiple series of Index Fund 

Shares issued by an open-end 

management investment company, or 

for multiple series of Trust Issued 

Receipts and/or Commodity-Based 

Trust Shares, the annual listing fee is 

based on the aggregate number of shares 

in all series outstanding at the end of 

each calendar year.

The annual fee for a Closed-End Fund 

listed under Section 101 of the 

Company Guide is based upon the 

number of shares outstanding of such 

Fund at the end of each calendar year. 

For multiple Closed-End Funds of the 

same sponsor, the annual listing fee is 

based on the aggregate number of shares 

outstanding of all such Funds at the end 

of each calendar year. 

Bond Issues—No Change. 

Late Fee—No Change. 

Note: No Change.

* * * * *

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

Amex 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to add new 

Section 1200A et seq. for the purpose of 

permitting the listing and trading of 

Trust Issued Receipts (i.e., Trust 

Shares) 6 based on commodity interests. 

In particular, the Amex initially 

proposes to list iShares COMEX 7 Gold 

Trust (the ‘‘Gold Trust’’ or ‘‘Trust’’) 

Shares that represent beneficial 

ownership interests in the net assets of 

the Trust consisting primarily of gold. 

The trustee of the Trust will not actively 

manage the gold held by the Trust, and 

therefore, a holder of Gold Shares will 

not be hedged to protect against the 

price volatility of the underlying gold.8

Under Amex Rule 1201, the Exchange 

may approve for listing and trading TIRs 

based on one or more securities.9 The 

Amex proposes to list for trading Gold 

Shares under proposed Rule 1200A et 

seq.

Introduction 

In September 1999, the Exchange 

adopted rules for the listing and trading 

of TIRs.10 TIRs are negotiable receipts 

issued by trusts that represent investors’

discrete identifiable and undivided 

beneficial ownership interest in the 

securities deposited into the trust. Since 

that time the Exchange has listed 

seventeen (17) TIRs under the trade 

name of HOLDRS, representing a wide 

variety of industry sectors and the 

market as a whole.

To accommodate the listing of 

additional TIRs, the Exchange in 

September 2000 revised the existing 

listing criteria and trading rules to 

permit the listing and trading of TIRs 

pursuant to Rule 19b–4(e) under the Act 

(the ‘‘Generic Listing Standards’’).11

Because of the structure of the Gold 

Trust, representing an interest in 

underlying gold, the current Generic 

Listing Standards cannot be used by the

71450 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 

12 15 U.S.C. 78s(b).

13Proposed Rule 1202A for Commodity-Based 

Trust Shares tracks but is not identical to current 

Rule 1202 relating to TIRs. The initial listing 

standards set forth in Rule 1202(a) provide that the 

Exchange establish a minimum number of TIRs 

required to be outstanding at the time of the 

commencement of trading on the Exchange. As set 

forth in the section ‘‘Criteria for Initial and 

Continued Listing,’’ the Exchange expects the 

minimum number of Gold Shares required to be 

outstanding at the time of trading to be 150,000. 

This section, infra, specifically details the initial 

and continued listing standards for CommodityBased Trusts such as the Gold Trust.

14The trust is not an investment company as 

defined in Section 3(a) of the Investment Company 

Act of 1940 (the ‘‘1940 Act’’).

15See Securities Exchange Act Release Nos. 

39402 (December 4, 1997), 62 FR 65459 (December 

12, 1997) (approving the listing and trading of 

commodity index preferred or debt securities 

(ComPS) on various agricultural futures contracts 

and commodities indexes); 36885 (February 26, 

1996), 61 FR 8315 (March 4, 1996) (approving the 

listing and trading of ComPS linked to the value of 

single commodity); 35518 (March 21, 1995), 60 FR 

15804 (March 27, 1995) (approving the listing and 

trading of commodity indexed notes or COINS); and 

43427 (October 10, 2000), 65 FR 62783 (October 19, 

2000) (approving the listing and trading of inflation 

indexed securities). See also Central Fund of 

Canada (Registration No. 033–15180) (closed-end 

fund listed and traded on the Amex that invests in 

gold) and Salmon Phibro Oil Trust (Registration No. 

033–33823) (trust units listed and traded on the 

Amex that held the right to a forward contract for 

the delivery of crude oil).

16 Information regarding clearing volume 

estimates by the LBMA can be found at http://

www.lbma.org.uk/clearing_table.htm. The three 

measures published by the LBMA are: volume, the 

amount of metal transferred on average each day 

measured in millions of troy ounces; value, 

measured in U.S. dollars, using the monthly average 

London PM fixing price; and the number of 

transfers, which is the average number recorded 

each day. The statistics exclude allocated and 

unallocated balance transfers where the sole 

purpose is for overnight credit and physical 

movements arranged by clearing members in 

locations other than London.

17 Information regarding average daily volume 

estimates by the COMEX can be found at http://

www.nymex.com/jsp/

markets.md_annual_volume6.jsp#2. The statistics 

are based on gold futures contracts, each of which 

relates to 100 troy ounces of gold.

18There are other gold exchange markets, such as 

the Instanbul Gold Exchange, the Shanghai Gold 

Exchange and the Hong Kong Chinese Gold & Silver 

Exchange Society.

Exchange to list this product. However, 

the Exchange submits that the Gold 

Shares may be listed for trading 

pursuant to proposed Rule 1200A et 

seq., subject to Commission review and 

approval.

Under proposed Rule 1201A, the 

Exchange may list and trade trust shares 

based on an underlying commodity (the 

‘‘Commodity-Based Trust Shares’’). For 

each separate and discrete commodity 

interest that may underlie a trust, the 

Exchange will submit a filing pursuant 

to Section 19(b) of the Act 12 subject to 

Commission review and approval.

The Gold Shares will conform to the 

initial and continued listing criteria 

under proposed Rule 1202A.13 The Gold 

Trust will be formed under a depositary 

trust agreement, among Bank of New 

York (‘‘BNY’’), the Trustee, Barclays 

Global Investors, N.A. (‘‘Barclays’’), the 

Sponsor, all depositors, if any, and the 

holders of Gold Shares.14

The Exchange notes that the 

Commission has permitted the listing 

and trading of products linked to the 

performance of an underlying 

commodity or commodities.15

Description of the Gold Market 

In its filing with the Commission, the 

Exchange made the following 

representations regarding the worldwide 

gold market. The gold market is a global 

marketplace consisting of both over-thecounter (‘‘OTC’’) transactions and 

exchange-traded products. The OTC 

market generally consists of transactions 

in spot, forwards, options and other 

derivatives, while exchange-traded 

transactions consist of futures and 

options. A description of each of the 

OTC and exchange-traded markets for 

gold as well as the regulation is set forth 

below. 

(a) The OTC Market

The OTC market trades on a 24-hour 

continuous basis and accounts for the 

substantial portion of global gold 

trading. Liquidity in the OTC market 

can vary from time to time during the 

course of the 24-hour trading day. 

Fluctuations in liquidity are reflected in 

adjustments to dealing spreads—the 

differential between a dealer’s buy and 

sell prices. The period of greatest 

liquidity in the gold market is typically 

that time of day when trading in the 

European time zone overlaps with 

trading in the United States. This occurs 

when the OTC market trading in 

London, New York and other centers 

coincides with futures and options 

trading on the COMEX. This period lasts 

for approximately four (4) hours each 

New York business day morning. 

The OTC market has no formal 

structure and no open-outcry meeting 

place. The main centers of the OTC 

market are London, New York and 

Zurich. Bullion dealers have offices 

around the world, and most of the 

world’s major bullion dealers are either 

members or associate members of the 

London Bullion Market Association 

(‘‘LBMA’’), a trade association of 

participants in the London Bullion 

market. 

There are no authoritative published 

figures for overall worldwide volume in 

gold trading. There are published 

sources that do suggest the significant 

size of the overall market. The LBMA 

publishes statistics compiled from the 

five (5) members offering clearing 

services.16 The monthly average daily 

volume figures published by the LBMA 

for 2003 range from a high of 19 million 

to a low of 13.6 million troy ounces per 

day. Through September 2004, the 

monthly average daily volume has 

ranged from a high of 17 million to a 

low of 12.4 million. The COMEX also 

publishes price and volume statistics for 

transactions in contracts for the future 

delivery of gold. COMEX figures for 

2003 indicate that the average daily 

volume for gold futures and options 

contracts was 4.89 million (48,943 

contracts) and 1.7 million (17,241 

contracts) troy ounces per day, 

respectively. Through October 2004, the 

average daily volume for gold futures 

and options was 6.08 million (60,817 

contracts) and 2.01 million (20,173 

contracts), respectively.17

(b) Futures Exchanges

The most significant gold futures 

exchanges are the COMEX division of 

the NYMEX and the Tokyo Commodity 

Exchange (‘‘TOCOM’’).18 Trading on 

these exchanges is based on fixed 

delivery dates and transaction sizes for 

the futures and options contracts traded. 

Trading costs are negotiable. As a matter 

of practice, only a small percentage of 

the future market turnover ever comes 

to physical delivery of the gold 

represented by the contracts traded. 

Both exchanges permit trading on 

margin. COMEX operates through a 

central clearance system. TOCOM has a 

similar clearance system. In each case, 

the exchange acts as counterparty for 

each member for clearing purposes.

(c) Gold Market Regulation

There is no direct regulation of the 

global OTC market in gold. However, 

indirect regulation of some of the 

overseas participants does occur. In the 

United Kingdom, responsibility for the 

regulation of financial market 

participants, including the major 

participating members of the LBMA, 

falls under the authority of the Financial 

Services Authority (‘‘FSA’’) as provided 

by the Financial Services and Market 

Act of 2000 (‘‘FSM Act’’). Under the 

FSM Act, all UK-based banks, together 

with other investment firms, are subject 

to a range of requirements, including 

fitness and properness, capital 

adequacy, liquidity, and systems and 

controls. The FSA is responsible for 

regulating investment products, 

including derivatives, and those who 

deal in investment products. Regulation 

of spot, commercial forwards and 

deposits of gold and silver not covered 

by the FSM Act is provided for by The 

London Code of Conduct for NonVerDate jul<14>2003 19:06 Dec 08, 2004 Jkt 205001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 E:\FR\FM\09DEN1.SGM 09DEN1
Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 71451

19An ‘‘Authorized Participant’’ is a person, who 

at the time of submitting to the trustee an order to 

create or redeem one or more Baskets, (i) is a 

registered broker-dealer, (ii) is a Depository Trust 

Company (‘‘DTC’’) Participant or an Indirect 

Participant and (iii) has in effect a valid Authorized 

Participant Agreement.

20 If the total value of the Trust’s gold held by the 

custodian exceeds $2 billion, then the custodian 

will be under no obligation to accept additional 

gold deliveries. In such a case, the trustee will 

retain an additional custodian.

21 Gold Shares are separate and distinct from the 

underlying gold comprising the portfolio of the 

Gold Trust. The Exchange expects that the number 

of outstanding Gold Shares will increase and 

decrease as a result of in-kind deposits and 

withdrawals of the underlying gold.

Investment Products, which was 

established by market participants in 

conjunction with the Bank of England, 

and is a voluntary code of conduct 

among market participants. 

Participants in the U.S. OTC market 

for gold are generally regulated by their 

institutional supervisors, which regulate 

their activities in the other markets in 

which they operate. For example, 

participating banks are regulated by the 

banking authorities. In the U.S., the 

CFTC, an independent governmental 

agency with the mandate to regulate 

commodity futures and options markets 

in the U.S., regulates market 

participants and has established rules 

designed to prevent market 

manipulation, abusive trade practices 

and fraud. 

TOCOM has authority to perform 

financial and operational surveillance 

on its members’ trading activities, 

scrutinize positions held by members 

and large-scale customers, and monitor 

price movements of futures markets by 

comparing them with cash and other 

derivative markets’ prices. 

Product Description 

Issuances of Gold Shares will be made 

only in baskets of 50,000 shares or 

multiples thereof (the ‘‘Basket 

Aggregation’’ or ‘‘Basket’’). The Trust 

will issue and redeem the Gold Shares 

on a continuous basis, by or through 

participants that have entered into 

participant agreements (each, an 

‘‘Authorized Participant’’) 19 with the 

Sponsor, Barclays and the Trustee, BNY, 

at the net asset value (‘‘NAV’’) per share 

next determined after an order to 

purchase Gold Shares in a Basket 

Aggregation is received in proper form. 

Following issuance, Gold Shares will be 

traded on the Exchange similar to other 

equity securities.

Basket Aggregations will be issued in 

exchange for a corresponding amount of 

gold. The basket amount of gold, 

measured in fine ounces (the ‘‘Basket 

Gold Amount’’), will be determined on 

each business day by the Trustee, BNY. 

Authorized Participants that wish to 

purchase a Basket must transfer the 

Basket Gold Amount to the Trust in 

exchange for a Basket. Authorized 

Participants that wish to redeem a 

Basket will receive the Basket Gold 

Amount in exchange for each Basket 

surrendered. The Bank of Nova Scotia 

(‘‘BNS’’) will be the custodian for the 

Trust and responsible for safekeeping 

the gold.20 Gold deposited with BNS 

must either (a) meet the requirements to 

be delivered in settlement of a COMEX 

gold futures contract pursuant to the 

rules adopted by the COMEX or (b) meet 

the specifications for weight, 

dimensions, fineness (or purity), 

identifying marks and appearance of 

gold bars as set forth in ‘‘The Good 

Delivery Rules for Gold and Silver Bars’’

published by the LBMA. Initially, 

creation of a Basket will require delivery 

of 5,000 fine ounces of gold. This Basket 

Gold Amount will decrease over the life 

of the Trust due to the payment or 

accrual of fees and other expenses 

payable by the Trust.

On each business day, BNY will make 

available immediately prior to the 

opening of trading on the Amex, the 

Basket Gold Amount for the creation of 

a Basket. BNY will adjust the quantity 

of gold included in the Basket Gold 

Amount to reflect sales of gold to cover 

expenses and any loss of deposited gold 

that may occur. The Amex will 

disseminate every 15 seconds 

throughout the trading day, via the 

facilities of the Consolidated Tape 

Association (‘‘CTA’’), an amount 

representing on a per share basis, the 

current value of the Basket Gold 

Amount. It is anticipated that the 

deposit of gold in exchange for Gold 

Shares will be made primarily by 

institutional investors, arbitrageurs, and 

the Exchange specialist. Baskets are 

then separable upon issuance into 

identical shares that will be listed and 

traded on the Amex.21 Gold Shares are 

expected to be traded on the Exchange 

by professionals as well as institutional 

and retail investors. Gold Shares may be 

acquired in two (2) ways: (1) Through a 

deposit of the Basket Gold Amount with 

the BNY during normal business hours 

by Authorized Participants, or (2) 

through a purchase on the Exchange by 

investors.

Shortly after 4 p.m. each business 

day, the BNY will determine the NAV 

for the Trust, utilizing the 1:30 p.m. 

daily settlement value for the spot 

month COMEX gold futures contract. At 

or about 4 p.m. each business day, the 

BNY will determine the Basket Gold 

Amount for orders placed by 

Authorized Participants received before 

4 p.m. that day. The BNY will also at 

the same time determine an ‘‘Indicative 

Basket Gold Amount’’ that Authorized 

Participants can use as an indicative 

amount of gold to be deposited for 

issuance of the Gold Shares on the next 

business day. Thus, although 

Authorized Participants place orders to 

purchase Gold Shares throughout the 

trading day, the actual Basket Gold 

Amount is determined at 4 p.m. or 

shortly thereafter. 

Shortly after 4 p.m. each business 

day, the BNY, Amex and 

Barclays (Sponsor) will disseminate 

the NAV for the Gold Shares, the Basket 

Gold Amount (for orders placed during 

the day), and the Indicative Basket Gold 

Amount (the indicative amount of gold 

for use by Authorized Participants on 

the next business day). The Basket Gold 

Amount, the Indicative Basket Gold 

Amount, and the NAV are 

communicated by the BNY to all 

Authorized Participants via facsimile or 

electronic mail message and will be 

available on the Trust’s Web site at 

http://www.ishares.com. The Amex will 

also disclose the NAV and Basket Gold 

Amount on its Web site. 

The Basket Gold Amount necessary 

for the creation of a Basket will change 

from day to day. The initial Basket Gold 

Amount is 5,000 fine ounces of gold. On 

each day that the Amex is open for 

regular trading, the BNY will adjust the 

quantity of gold constituting the Basket 

Gold Amount as appropriate to reflect 

sales of gold, any loss of gold that may 

occur, and accrued expenses. The BNY 

will determine the Basket Gold Amount 

for a given business day by multiplying 

the NAV for each Gold Share by the 

number of Gold Shares in each Basket 

(50,000) and dividing the resulting 

product by that day’s COMEX 

settlement price for the spot month gold 

futures contract. The NAV is calculated 

by multiplying the fine ounces of gold 

held by the Trust (after gold has been 

sold for that day to pay that day’s fees 

and expenses) by the daily settlement 

value of the COMEX spot month gold 

futures contract.

The Trust’s expense ratio, in the 

absence of any extraordinary expenses 

and liabilities, is established at 0.40% of 

the net assets of the Trust. As a result, 

the amount of gold by which the Basket 

Gold Amount will decrease each day 

will be predictable (i.e. 1/365th of the 

net asset value of the Trust multiplied 

by 0.40%). As provided for above, the 

BNY will disclose and disseminate the 

Indicative Basket Gold Amount for the 

next business day. Authorized 

Participants may use the Indicative 

Basket Gold Amount as guidance 

regarding the amount of gold expected 

71452 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 

22However, the Amex will disseminate an 

‘‘Indicative Trust Value’’ at least every 15 seconds 

through the facilities of the CTA during the trading 

day that represents an indicative value for the Gold 

Shares based on the most last reported trade price 

in the most actively-traded COMEX gold futures 

contract.

23 If the amount of gold corresponding to the 

Basket Gold Amount results in an amount that is 

less than a full gold bar denomination, the 

Authorized Participant has the ability to take and/

or deliver fractional gold bar amounts. Telephone 

conversation between Jeffrey Burns, Associate 

General Counsel, Amex, and Florence Harmon, 

Senior Special Counsel, Division of Market 

Regulation, Commission, on December 3, 2004.

24The COMEX daily settlement price for each 

gold futures contract is established by a 

subcommittee of COMEX members shortly after the 

close of trading in New York. The daily settlement 

price for each contract (delivery month) is derived 

from the daily settlement price for the most active 

futures contract month that is not necessarily the 

spot month. This settlement price is the average of 

the highest and lowest priced trades reported 

during the last one (1) minute of trading during 

regular trading hours. For all other gold futures 

contract months (which may include the spot 

month), the settlement prices are determined by 

COMEX based upon differentials reflected in spread 

trades between adjacent months, such differentials 

being directly or indirectly related to the most 

active month. These differentials are the average of 

the highest and lowest spread trades (trades based 

upon the differential between the prices for two 

contract months) reported during the last fifteen 

(15) minutes of trading during regular trading 

hours. In the case that there were no such spread 

trades, the average of the bids and offers for spread 

transactions during that last fifteen (15) minute 

period are used. In the case where there are no bids 

and offers during that time, the contracts are settled 

at prices consistent with the differentials for other 

contract months that were settled by the first or 

second method. If the third method is used, the 

subcommittee of the COMEX members establishing 

those settlement prices provides a record of the 

differentials from other contract months that formed 

the basis for those settlements.

to deposit with the custodian, BNS, in 

connection with the issuance of Gold 

Shares on such next business day. 

As a result, the amount of gold 

required for the Basket Gold Amount is 

not disseminated during the trading day 

to correspond to changes in the value of 

gold as identified by the COMEX gold 

futures contract.22 All purchase orders 

received by the BNY prior to 4 p.m. will 

be settled by depositing with the 

custodian, BNS, the Basket Gold 

Amount disseminated by the BNY 

shortly after 4 p.m. Given the 

predictability of the daily decline in the 

Basket Gold Amount, BNY and Barclays 

will announce the Indicative Basket 

Gold Amount for the next business day, 

shortly after 4 p.m.

Thus, the BNY will disseminate 

shortly after 4 p.m. the amount of gold 

to be deposited for each Basket (50,000 

shares) order properly submitted by 

Authorized Participants prior to 4 p.m. 

that business day. Before 4 p.m., the 

Authorized Participants may use the 

Indicative Basket Gold Amount 

published by Barclays and BNY the day 

before as guidance in respect of the 

amount of gold that they may expect to 

be required to deposit. But if the 

Indicative Basket Gold Amount 

published by Barclays and BNY turns 

out to be incorrect (for example, because 

the Trust incurred an extraordinary 

expense such as legal fees in excess of 

the amount assumed by Barclays), the 

amount actually determined by BNY 

will control. 

The creation/redemption process in 

connection with the Gold Shares does 

not contemplate the existence of cash. 

Because the process is based entirely on 

the physical delivery of gold, the actual 

number of fine ounces required for the 

Basket Gold Amount will not change 

even though the value of the Basket 

Gold Amount may change based on the 

market price of gold. Therefore, because 

Authorized Participants will only know 

the amount of gold to be deposited after 

the close of trading of the COMEX gold 

futures contract, the intra-day price 

fluctuations on the COMEX will not 

result in the making of gold deposits 

that are more or less than the amount 

required for the Basket Gold Amount. 

The Exchange believes that Gold 

Shares will not trade at a material 

discount or premium to the underlying 

gold held by the Trust based on 

potential arbitrage opportunities. Due to 

the fact that Gold Shares can be created 

and redeemed only in Basket 

Aggregations at NAV, the Exchange 

submits that arbitrage opportunities 

should provide a mechanism to mitigate 

the effect of any premiums or discounts 

that may exist from time to time. 

Gold Shares will not be individually 

redeemable but will only be redeemable 

in Basket Aggregations. To redeem, an 

Authorized Participant will be required 

to accumulate enough Gold Shares to 

constitute a Basket Aggregation (i.e., 

50,000 shares). An Authorized 

Participant redeeming a Basket 

Aggregation will receive the physical 

gold amount of the Basket announced 

by the Trustee. Upon the surrender of 

the Gold Shares and payment of the 

applicable Trustee’s fee and any 

expenses, taxes or charges, the BNY will 

deliver to the redeeming Authorized 

Participant the amount of gold 

corresponding to the redeemed Baskets. 

Unless otherwise requested by the 

Authorized Participants, gold will then 

be delivered to the redeeming 

Authorized Participants in the form of 

physical bars only.23

When calculating NAV, the BNY will 

value the gold held by the Trust on the 

basis of the day’s announced COMEX 

settlement price for the spot month gold 

futures contract.24 At any point in time, 

the spot month contract is the futures 

contract then closest to maturity. If a 

COMEX settlement price for a spot 

month gold futures contract is not 

announced, the Trustee will use the 

most recently announced spot month 

COMEX settlement price, unless the 

Trustee (BNY), in consultation with the 

Sponsor (Barclays), determines that 

such price is inappropriate. Once the 

value of the gold is determined, the 

BNY will then subtract all accrued fees 

(other than the fees to be computed by 

reference to the value of the Trust or its 

assets), expenses and other liabilities of 

the Trust from the total value of gold 

and all other assets of the Trust. This 

adjusted NAV is then used to compute 

all fees (including the Trustee and 

Sponsor fees) that are calculated from 

the value of Trust assets. To determine 

the NAV, the BNY will subtract from the 

adjusted NAV the amount of accrued 

fees from the value of Trust assets. The 

BNY will calculate the NAV per share 

by dividing the NAV by the number of 

Gold Shares outstanding.

Gold Shares will be registered in book 

entry form through DTC. Trading in 

Gold Shares on the Exchange will be 

effected until 4:15 p.m. New York Time 

each business day. The minimum 

trading increment for such shares will 

be $.01. 

COMEX Gold Futures Contracts 

The price of gold is volatile with 

fluctuations expected to affect the value 

of the Gold Shares. The price movement 

of gold may be influenced by a variety 

of factors, including announcements 

from Central Banks regarding reserve 

gold holdings, agreements among 

Central Banks, political uncertainties, 

and economic concerns. The price of 

gold during the period January 1994 

through October 29, 2004 ranged from a 

high of $431.05 per ounce in April 2004 

to a low of $251.95 in August 1999. As 

of October 29, 2004, the spot price per 

ounce for gold as provided by that day’s 

spot COMEX gold futures contract was 

$428.50.

The NYMEX is the world’s largest 

physical commodity futures exchange 

and the dominant market for the trading 

of energy and precious metals. The 

COMEX Division of the NYMEX 

commenced the trading of gold futures 

contracts on December 31, 1974. The 

NYMEX and the COMEX Division are 

subject to the regulation and oversight 

of the Commodity Futures Trading 

Commission (‘‘CFTC’’). The Amex states 

that the CFTC administers the 

Commodity Exchange Act (‘‘CEA’’), 

which requires commodity futures 

exchanges, such as the NYMEX, to have 

rules and procedures to prevent market 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 71453

25As previously stated, the COMEX daily 

settlement price for each gold futures contract is 

established by a subcommittee of COMEX members 

shortly after the close of trading of regular trading 

on the COMEX. NYMEX Rule 3.43 sets forth the 

composition of the subcommittee requiring that it 

consist of three (3) members that represent the gold 

market. Specifically, the Rule calls for the 

subcommittee to include a floor broker, a floor 

trader and one who represents the trade. Rule 3.02 

provides restrictions on Committee members and 

others who possess material, non-public 

information. A Committee Member is prohibited 

from disclosing for any purpose other than the 

performance of official duties relating to the 

Committee, material, non-public information 

obtained as a result of such person’s participation 

on the Committee. In addition, no person may trade 

for his own account or for or on behalf of any other 

account, in any commodity interest on the basis of 

any material, non-public information that such 

person knows was obtained from such Committee 

member in violation of Rule 3.02. Telephone 

conversation between Jeffrey Burns, Associate 

General Counsel, Amex, and Florence Harmon, 

Senior Special Counsel, Division of Market 

Regulation, Commission, on December 3, 2004.

26The bid-ask price of Shares is determined using 

the highest bid and lowest offer as of the time of 

calculation of the NAV.

manipulation, abusive trade practices 

and fraud. The CFTC conducts regular 

review and inspection of the NYMEX’s 

enforcement programs. 

The trading unit of COMEX gold 

futures contracts is 100 troy ounces. 

Gold bars tendered for delivery can be 

cast in the form of either one bar or 

three one-kilogram bars. In either form, 

the gross weight of the bar or bars 

tendered for each contract must be 

within a five percent tolerance of the 

100 ounce contract, and the bars must 

assay at not less than 995 fineness, i.e., 

99.5% pure gold. 

Dissemination of COMEX Gold Futures 

Information 

The daily settlement price for COMEX 

gold futures contracts is publicly 

available on the NYMEX Web site at 

http://nymex.com.25 The Exchange on 

its Web site at http://www.amex.com

will include a hyperlink to the NYMEX 

Web site for the purpose of disclosing 

gold futures contract pricing. In 

addition, the Exchange represents that 

COMEX gold futures prices, options on 

futures quotes, and last sale information 

is widely disseminated through a 

variety of market data vendors 

worldwide, including Bloomberg and 

Reuters. In addition, the Exchange 

further represents that complete realtime data for COMEX gold futures and 

options is available by subscription 

from Reuters and Bloomberg. The 

NYMEX also provides delayed futures 

and options information on current and 

past trading sessions and market news 

free of charge on its Web site at

http://www.nymex.com. The contract 

specifications for COMEX gold futures 

contracts are also available from the 

NYMEX at its Web site at http://

nymex.com as well as other financial 

informational sources.

Availability of Information Regarding 

Gold Shares 

The Web site for the Trust, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

The prior business day’s NAV and the 

reported closing price; (b) the mid-point 

of the bid-ask price 26 in relation to the 

NAV as of the time the NAV is 

calculated (the ‘‘Bid-Ask Price’’); (c) 

calculation of the premium or discount 

of such price against such NAV; (e) data 

in chart form displaying the frequency 

distribution of discounts and premiums 

of the Bid-Ask Price against the NAV, 

within appropriate ranges for each of 

the four (4) previous calendar quarters; 

(f) the Prospectus; and (g) other 

applicable quantitative information.

As described above, the NAV for the 

Trust will be calculated and 

disseminated daily. The Amex also 

intends to disseminate for the Trust on 

a daily basis by means of CTA/CQ High 

Speed Lines information with respect to 

the Indicative Trust Value (as discussed 

below), recent NAV and shares 

outstanding. The Exchange will also 

make available on its Web site daily 

trading volume, closing prices, and the 

NAV. The closing price and settlement 

prices of the COMEX gold futures 

contracts are also readily available from 

the NYMEX at http://www.nymex.com,

automated quotation systems, published 

or other public sources, or on-line 

information services such as Bloomberg 

or Reuters. In addition, the Exchange 

will provide a hyperlink on its Web site 

at http://www.amex.com to the Trust’s 

Web site at http://www.ishares.com.

Dissemination of Indicative Trust Value 

As noted above, the BNY calculates 

the NAV of the Gold Trust once each 

trading day. In addition, the BNY causes 

to be made available on a daily basis the 

required amount of gold to be deposited 

in connection with the issuance of Gold 

Shares in Basket Aggregations. In 

addition, other investors can request 

such information directly from the BNY. 

In order to provide updated 

information relating to the Trust for use 

by investors, professionals and persons 

wishing to create or redeem Gold 

Shares, the Exchange will disseminate 

through the facilities of CTA an updated 

Indicative Trust Value (the ‘‘Indicative 

Trust Value’’). The Indicative Trust 

Value will be disseminated on a per 

Gold Share basis every 15 seconds 

during regular Amex trading hours of 

9:30 a.m. to 4:15 p.m. New York time 

through the facilities of the CTA. The 

Indicative Trust Value will be 

calculated based on the amount of gold 

required for creations and redemptions 

and a price of gold derived from the 

most recently reported trade price in the 

active gold futures contract. The prices 

reported for the active contract month 

will be adjusted based on the prior day’s 

spread differential between settlement 

values for that contract and the spot 

month contract. In the event that the 

spot month contract is also the active 

contract, the last sale price for the active 

contract will not be adjusted. 

The Indicative Trust Value will not 

reflect changes to the price of gold 

between the close of trading at the 

COMEX, typically 1:30 p.m. New York 

time, and the open of trading on the 

NYMEX ACCESS market at 2 p.m. New 

York time. While the market for the gold 

futures is open for trading, the 

Indicative Trust Value can be expected 

to closely approximate the value per 

share of the Basket Gold Amount. The 

Indicative Trust Value on a per Gold 

Share basis disseminated during Amex 

trading hours should not be viewed as 

a real time update of the NAV, which is 

calculated only once a day. 

The Exchange believes that 

dissemination of the Indicative Trust 

Value based on the amount of gold 

required for a Basket Aggregation 

provides additional information that is 

not otherwise available to the public 

and is useful to professionals and 

investors in connection with Gold 

Shares trading on the Exchange or the 

creation or redemption of Gold Shares. 

In addition, the Trust’s Web site at

http//www.ishares.com will also 

provide continuously updated bids and 

offers indicative of the spot price of gold 

in the OTC market for the purpose of 

disclosing to investors on a real-time 

basis the underlying or spot price of 

gold.

Termination Events 

The Trust will be terminated if any of 

the following circumstances occur: (1) 

The Gold Shares are delisted from the 

Amex and are not listed for trading on 

another national securities exchange 

within five business days from the date 

the Gold Shares are delisted; (2) holders 

of at least 75% of the outstanding Gold 

Shares notify the Trustee that they elect 

to terminate the Trust; (3) the Trustee 

resigns and no successor trustee is 

appointed within 60 days from the date 

the Trustee provides notice to Barclays 

of its intent to resign; (4) the SEC finds 

that the Trust should be registered as an 

investment company under the 1940 

71454 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 

27See 17 CFR 240.10A–3(c)(7).

Act, and the Trustee has actual 

knowledge of the SEC finding; (5) the 

aggregate market capitalization of the 

Trust, based upon the closing price for 

the Gold Trust, was less than $350 

million on each of five (5) consecutive 

trading days and the Trustee receives, 

within six (6) months from the last of 

those trading days, notice that the 

Sponsor has decided to terminate the 

Trust; (6) the CFTC determines that the 

Trust is a commodity pool under the 

Commodity Exchange Act and the 

Trustee has actual knowledge of that 

determination: or (7) the Trust fails to 

qualify for treatment, or ceases to be 

treated, as a grantor trust for U.S. federal 

income tax purposes and the Trustee 

receives notice that the Sponsor has 

determined that the termination of the 

Trust is advisable. 

If not terminated earlier by the 

Trustee, the Trust will terminate in 2044 

on a date to be determined once the 

Trust is established. Upon termination 

of the Trust, holders of the Gold Shares 

will surrender their shares and receive 

from the Trustee their portion of the 

underlying gold. 

Criteria for Initial and Continued Listing 

The Trust will be subject to the 

criteria in proposed Rules 1201A and 

1202A for initial and continued listing 

of Gold Shares. The proposed continued 

listing criteria provides for the delisting 

or removal from listing of the Gold 

Shares under any of the following 

circumstances: 

• Following the initial twelve month 

period from the date of commencement 

of trading of the Gold Shares: (i) If the 

Trust has more than 60 days remaining 

until termination and there are fewer 

than 50 record and/or beneficial holders 

of the Gold Shares for 30 or more 

consecutive trading days; (ii) if the Trust 

has fewer than 50,000 Gold Shares 

issued and outstanding; or (iii) if the 

market value of all Gold Shares is less 

than $1,000,000. 

• If the value of the underlying gold 

is no longer calculated or available on 

at least a 15-second delayed basis from 

a source unaffiliated with the sponsor, 

Trust, custodian or the Exchange or the 

Exchange stops providing a hyperlink 

on its website to any such unaffiliated 

gold value. 

• The Indicative Trust Value is no 

longer made available on at least a 15-

second delayed basis. 

• If such other event shall occur or 

condition exists which in the opinion of 

the Exchange makes further dealings on 

the Exchange inadvisable. 

It is anticipated that a minimum of 

150,000 Gold Shares will be required to 

be outstanding at the start of trading. 

The minimum number of shares 

required to be outstanding at the start of 

trading is comparable to requirements 

that have been applied to previously 

listed series of trust issues receipts, 

Portfolio Depository Receipts and Index 

Fund Shares. It is anticipated that the 

initial price of a Gold Share will be 

approximately $40 per share. The 

Exchange believes that the anticipated 

minimum number of Gold Shares 

outstanding at the start of trading is 

sufficient to provide adequate market 

liquidity and to further the Trust’s 

objective to seek to provide a simple 

and cost effective means of making an 

investment similar to an investment in 

gold. The Exchange represents that it 

prohibits the initial and/or continued 

listing of any security that is not in 

compliance with Rule 10A–3 under the 

Act.27

Original and Annual Listing Fees 

The Amex original listing fee 

applicable to the listing of the Gold 

Trust is $5,000. In addition, the annual 

listing fee applicable under Section 141 

of the Amex Company Guide will be 

based upon the year-end aggregate 

number of shares in all series of Gold 

Trusts outstanding at the end of each 

calendar year. 

Information Circular 

The Amex will distribute an 

information circular (‘‘Information 

Circular’’) to its members in connection 

with the trading of Gold Shares. The 

Information Circular will discuss the 

special characteristics and risks of 

trading this type of security. 

Specifically, the Information Circular, 

among other things, will discuss what 

the Gold Shares are, how a basket is 

created and redeemed, the requirement 

that members and member firms deliver 

a prospectus to investors purchasing the 

Gold Shares prior to or concurrently 

with the confirmation of a transaction, 

applicable Amex rules, dissemination 

information regarding the per share 

Indicative Trust Value, trading 

information and applicable suitability 

rules. The Information Circular will also 

explain that the Gold Trust is subject to 

various fees and expenses described in 

the Registration Statement, and that the 

number of ounces of gold required to 

create a basket or to be delivered upon 

a redemption of a basket will gradually 

decrease over time because the Gold 

Shares comprising a basket will 

represent a decreasing amount of gold 

due to the sale of the Gold Trust’s gold 

to pay Trust expenses. The Information 

Circular will also reference the fact that 

there is no regulated source of last sale 

information regarding physical gold, 

that the Commission has no jurisdiction 

over the trading of gold as a physical 

commodity, and that the Commodity 

Futures Trading Commission (‘‘CFTC’’) 

has regulatory jurisdiction over the 

trading of gold futures contracts and 

options on gold futures contracts. 

The Information Circular will also 

notify members and member 

organizations about the procedures for 

purchases and redemptions of Gold 

Shares in baskets, and that Gold Shares 

are not individually redeemable but are 

redeemable only in basket-size 

aggregations or multiples thereof. The 

Information Circular will advise 

members of their suitability obligations 

with respect to recommended 

transactions to customers in the Gold 

Shares. The Information Circular will 

also discuss any relief, if granted, by the 

Commission or the staff from any rules 

under the Act. 

The Information Circular will disclose 

that the net asset value (’’NAV’’) for 

Gold Shares will be disseminated 

shortly after 4:00 p.m. each trading day 

based on the COMEX daily settlement 

value, which is disseminated shortly 

after 1:30 p.m. New York time each 

trading day. 

Disclosure

The Information Circular provided to 

Exchange members and member 

organizations will inform members and 

member organizations, prior to 

commencement of trading, of the 

prospectus delivery requirements 

applicable to the Trust. The Exchange 

notes that investors purchasing Gold 

Shares directly from the Trust (by 

delivery of the Basket Gold Amount) 

will receive a prospectus. Amex 

members purchasing Gold Shares from 

the Trust for resale to investors will 

deliver a prospectus to such investors. 

Purchase and Redemptions in Basket 

Aggregations 

In the Information Circular referenced 

above, members and member 

organizations will be informed that 

procedures for purchases and 

redemptions of Gold Shares in Basket 

Aggregations are described in the 

Prospectus and that Gold Shares are not 

individually redeemable but are 

redeemable only in Basket Aggregations 

or multiples thereof. 

Trading Rules 

Gold Shares are equity securities 

subject to Amex Rules governing the 

trading of equity securities, including, 

among others, rules governing priority, 

parity and precedence of orders, 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 71455

28See Securities Exchange Act Release No. 29063 

(April 10, 1991), 56 FR 15652 (April 17, 1991) at 

note 9, regarding the Exchange’s designation of 

equity derivative securities as eligible for such 

treatment under Amex Rule 154, Commentary 

.04(c).

29See Commentary .05 to Amex Rule 190.

30The Gold Trust has requested relief in 

connection with the trading of Gold Shares from the 

operation of the short sale rule, Rule 10a–1 under 

the Act. See 17 CFR 240.10a–1. The requested relief 

is currently pending with the Commission staff in 

the Division of Market Regulation. If granted, Gold 

Shares would be exempt from Rule 10a–1 

permitting sales without regard to the ‘‘tick’’

requirements of Rule 10a–1. Rule 10a–1(a)(1)(i) 

provides that a short sale of an exchange-traded 

security may not be effected (i) below the last 

regular-way sale price (an ‘‘uptick’’) or (ii) at such 

price unless such price is above the next preceding 

different price at which a sale was reported (a 

‘‘zero-plus tick’’).

specialist responsibilities and account 

opening and customer suitability (Amex 

Rule 411). Initial equity margin 

requirements of 50% will apply to 

transactions in Gold Shares. Gold 

Shares will trade on the Amex until 4:15 

p.m. New York time each business day 

and will trade in a minimum price 

variation of $0.01 pursuant to Amex 

Rule 127. Trading rules pertaining to 

odd-lot trading in Amex equities (Amex 

Rule 205) will also apply. 

Amex Rule 154, Commentary .04(c) 

provides that stop and stop limit orders 

to buy or sell a security (other than an 

option, which is covered by Rule 950(f) 

and Commentary thereto) the price of 

which is derivatively priced based upon 

another security or index of securities, 

may with the prior approval of a Floor 

Official, be elected by a quotation, as set 

forth in Commentary .04(c) (i–v). The 

Exchange has designated Gold Shares as 

eligible for this treatment.28

Gold Shares will be deemed ‘‘Eligible 

Securities’’, as defined in Amex Rule 

230, for purposes of the Intermarket 

Trading System Plan and therefore will 

be subject to the trade through 

provisions of Amex Rule 236 which 

require that Amex members avoid 

initiating trade-throughs for ITS 

securities. 

Specialist transactions of Gold Shares 

made in connection with the creation 

and redemption of Gold Shares will not 

be subject to the prohibitions of Amex 

Rule 190.29 Unless exemptive or noaction relief is available, Gold Shares 

will be subject to the short sale rule, 

Rule 10a–1 under the Act.30 If 

exemptive or no-action relief is 

provided, the Exchange will issue a 

notice detailing the terms of the 

exemption or relief.

The Exchange represents that the 

Gold Shares will generally be subject to 

the Exchange’s stabilization rule, Amex 

Rule 170, except that specialists may 

buy on ‘‘plus ticks’’ and sell on ‘‘minus 

ticks,’’ in order to bring the Gold Shares 

into parity with the underlying gold 

and/or futures price. Proposed 

Commentary .01 to proposed Rule 

1203A sets forth this limited exception 

to Amex Rule 170. 

The Exchange’s surveillance 

procedures for Gold Shares will be 

similar to those used for other trust 

issued receipts and exchange-traded 

funds (‘‘ETFs’’) and will incorporate and 

rely upon existing Amex surveillance 

procedures governing options and 

equities. 

Amex states that the adoption of Rule 

1203A relating to certain specialist 

prohibitions will address potential 

conflicts of interest in connection with 

acting as a specialist in the Gold Shares. 

Specifically, Rule 1203A provides that 

the prohibitions in Rule 175(c) apply to 

a specialist in the Gold Shares so that 

the specialist or affiliated person may 

not act or function as a market maker in 

the underlying gold, related gold futures 

contract or option or any other related 

gold derivative. An affiliated person of 

the specialist consistent with Amex 

Rule 193 (Affiliated Persons of 

Specialists) may be afforded an 

exemption to act in a market making 

capacity, other than as a specialist in the 

Gold Shares on another market center, 

in the underlying gold, related gold 

futures or options or any other related 

gold derivative. In particular, proposed 

Rule 1203A provides that an approved 

person of an equity specialist that has 

established and obtained Exchange 

approval for procedures restricting the 

flow of material, non-public market 

information between itself and the 

specialist member organization, and any 

member, officer, or employee associated 

therewith, may act in a market making 

capacity, other than as a specialist in the 

Gold Shares on another market center, 

in the underlying commodity, related 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives.

Also, the Exchange states that 

adoption of Rule 1204A will ensure that 

specialists handling the Gold Shares 

provide the Exchange with all the 

necessary information relating to their 

trading in physical gold, related gold 

futures contracts and options thereon or 

any other gold derivative. As a general 

matter, the Exchange has regulatory 

jurisdiction over its members, member 

organizations, and approved persons of 

a member organization. The Exchange 

also has regulatory jurisdiction over any 

person or entity controlling a member 

organization as well as a subsidiary or 

affiliate of a member organization 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 Halts 

The Information Circular issued to 

Amex members will inform them of, 

among other things, Exchange policies 

regarding trading halts in Gold Shares. 

First, the Information Circular will 

advise that trading will be halted in the 

event the market volatility trading halt 

parameters set forth in Amex Rule 117 

have been reached. Second, the 

Information Circular will advise that, in 

addition to the parameters set forth in 

Rule 117, the Exchange will halt trading 

in Gold Shares if trading in the 

underlying COMEX gold futures 

contract is halted or suspended. Third, 

with respect to a halt in trading that is 

not specified above, the Exchange may 

also consider other relevant factors and 

the existence of unusual conditions or 

circumstances that may be detrimental 

to the maintenance of a fair and orderly 

market. 

Suitability 

The Information Circular referenced 

above will inform members and member 

organizations of the characteristics of 

the Gold Trust and of applicable 

Exchange rules, as well as of the 

requirements of Amex Rule 411 (Duty to 

Know and Approve Customers). 

The Exchange notes that pursuant to 

Rule 411, members and member 

organizations are required in connection 

with recommending transactions in the 

Gold Shares to have a reasonable basis 

to believe that a customer is suitable for 

the particular investment given 

reasonable inquiry concerning the 

customer’s investment objectives, 

financial situation, needs, and any other 

information known by such member. 

Surveillance 

Amex represents that its surveillance 

procedures applicable to trading in the 

proposed Gold Shares will be similar to 

those applicable to Trust Issued 

Receipts, Portfolio Depository Receipts 

and Index Fund Shares currently 

trading on the Exchange. The Exchange 

currently has in place an Information 

Sharing Agreement with the NYMEX for 

the purpose of providing information in 

connection with trading in or related to 

COMEX gold futures contracts. In 

addition, the Exchange is also in the 

process of negotiating an Information 

Sharing Agreement with the NYMEX for 

71456 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Notices 

31 15 U.S.C. 78f(b).

32 15 U.S.C. 78f(b)(5). 33 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 48267 

(July 31, 2003), 68 FR 47116.

4 17 CFR 200.30–3(a)(12).

the sharing of information related to any 

financial instrument based, in whole or 

in part, upon an interest in or 

performance of gold. 

1. Statutory Basis

The Exchange believes that the 

proposed rule change is consistent with 

Section 6 of the Act 31 in general and 

furthers the objectives of Section 

6(b)(5) 32 in particular in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system.

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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange did not receive any 

written comments on the proposed rule 

change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

A. By order approve 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, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Amex–2004–38 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

450 Fifth Street, NW., Washington, DC 

20549–0609. 

All submissions should refer to File 

Number SR–Amex–2004–38. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Section, 450 Fifth Street, NW., 

Washington, DC 20549. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of the Amex. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Amex–

2004–38 and should be submitted on or 

before December 30, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.33

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–27018 Filed 12–8–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50791; File No. SR–CBOE–

2003–18] 

Self-Regulatory Organizations; Notice 

of Withdrawal of Proposed Rule 

Change by the Chicago Board Options 

Exchange, Incorporated to Amend 

CBOE Rule 6.24 Relating to 

Systematizing Orders 

December 3, 2004. 

On May 5, 2003, the Chicago Board 

Options Exchange, Inc. (‘‘CBOE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) a proposed rule change 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2 to 

amend CBOE Rule 6.24 relating to the 

systematization of orders to comply 

with the requirement to implement a 

consolidated options audit trail system 

(‘‘COATS’’). On July 29, 2003, the 

Exchange submitted Amendment No. 1 

to the proposed rule change. The 

proposed rule change, as amended, was 

published for comment in the Federal 

Register on August 7, 2003.3 No 

comment letters were received. On 

November 24, 2004, the Exchange 

withdrew the proposed rule change.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.4

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. E4–3578 Filed 12–8–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50790; File No. SR–FICC–

2004–16] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Granting Approval of a Proposed Rule 

Change Relating to Establishment of a 

Cross-Margining Agreement With The 

Clearing Corporation 

December 3, 2004. 

I. Introduction 

On August 12, 2004, the Fixed Income 

Clearing Corporation (‘‘FICC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change File No. SR–FICC–2004–16