[Federal Register Volume 76, Number 4 (Thursday, January 6, 2011)]
[Notices]
[Pages 807-812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33363]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63625; File No. SR-NYSEArca-2010-119]


Self-Regulatory Organizations; NYSE Arca Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of the Teucrium WTI 
Crude Oil Fund Under NYSE Arca Equities Rule 8.200

December 30, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on December 20, 2010, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the Teucrium WTI 
Crude Oil Fund under NYSE Arca Equities Rule 8.200. The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and http://www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE Arca Equities Rule 8.200, Commentary .02 permits the trading 
of Trust Issued Receipts (``TIRs'') either by listing or pursuant to 
unlisted trading privileges (``UTP'').\3\ The Exchange proposes to list 
and trade shares (``Shares'') of the Teucrium WTI Crude Oil Fund (the 
``Fund'') pursuant to NYSE Arca Equities Rule 8.200.
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    \3\ Commentary .02 to NYSE Arca Equities Rule 8.200 applies to 
TIRs that invest in ``Financial Instruments.'' The term ``Financial 
Instruments,'' as defined in Commentary .02(b)(4) to NYSE Arca 
Equities Rule 8.200, means any combination of investments, including 
cash; securities; options on securities and indices; futures 
contracts; options on futures contracts; forward contracts; equity 
caps, collars and floors; and swap agreements.
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    The Exchange notes that the Commission has previously approved the 
listing and trading of other issues of Trust Issued Receipts on the 
American Stock Exchange LLC,\4\ trading on NYSE Arca pursuant to 
unlisted trading privileges (``UTP''),\5\ and listing on NYSE Arca.\6\ 
Among these is the Teucrium Corn Fund, a series of the Teucrium 
Commodity Trust (``Trust'').\7\ In addition, the Commission has 
approved other exchange-traded fund-like products linked to the 
performance of underlying commodities.\8\
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    \4\ See, e.g., Securities Exchange Act Release No. 58161 (July 
15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39).
    \5\ See, e.g., Securities Exchange Act Release No. 58163 (July 
15, 2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
    \6\ See, e.g., Securities Exchange Act Release No. 58457 
(September 3, 2008), 73 FR 52711 (September 10, 2008) (SR-NYSEArca-
2008-91).
    \7\ See Securities Exchange Act Release No. 62213 (June 3, 
2010), 75 FR 32828 (June 9, 2010) (SR-NYSEArca-2010-22) (order 
approving listing on the Exchange of Teucrium Corn Fund).
    \8\ See, e.g., Securities Exchange Act Release Nos. 57456 (March 
7, 2008), 73 FR 13599 (March 13, 2008) (SR-NYSEArca-2007-91) (order 
granting accelerated approval for NYSE Arca listing the iShares GS 
Commodity Trusts); 59781 (April 17, 2009), 74 FR 18771 (April 24, 
2009) (SR-NYSEArca-2009-28) (order granting accelerated approval for 
NYSE Arca listing the ETFS Silver Trust); 59895 (May 8, 2009), 74 FR 
22993 (May 15, 2009) (SR-NYSEArca-2009-40) (order granting 
accelerated approval for NYSE Arca listing the ETFS Gold Trust); 
61219 (December 22, 2009), 74 FR 68886 (December 29, 2009) (order 
approving listing on NYSE Arca of the ETFS Platinum Trust).
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    The Shares represent beneficial ownership interests in the Fund, as 
described in the Registration Statement for the Fund.\9\ The Fund is a 
commodity pool that is a series of the Trust, a Delaware statutory 
trust. The Fund is managed and controlled by Teucrium Trading, LLC 
(``Sponsor''). The Sponsor is a Delaware limited liability company that 
is registered as a commodity pool operator (``CPO'') with the Commodity 
Futures Trading Commission (``CFTC'') and is a member of the National 
Futures Association.
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    \9\ See registration statement on Amendment No. 1 to Form S-1 
for Teucrium Commodity Trust, dated September 7, 2010 (File No. 333-
167594) (``Registration Statement''). The discussion herein relating 
to the Trust and the Shares is based on the Registration Statement.
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Teucrium WTI Crude Oil Fund

    According to the Registration Statement, the investment objective 
of the Fund is to have the daily changes in percentage terms of the 
Shares' net asset value (``NAV'') reflect the daily changes in 
percentage terms of a weighted average of the closing settlement prices 
for futures contracts for Western Texas Intermediate (``WTI'') crude 
oil, also known as Texas Light Sweet crude oil (``Oil Futures 
Contracts'') traded on the New York Mercantile Exchange (``NYMEX''), 
specifically (1) the nearest to spot June or December Oil Futures 
Contract, weighted 35%; (2) the June or December Oil Futures Contract 
following the aforementioned (1), weighted 30%; and (3) the December 
Oil Futures Contract following the aforementioned (2),\10\ weighted 
35%; before taking Fund expenses and interest income into account. This 
weighted average of the three referenced

[[Page 808]]

Oil Futures Contracts is referred to herein as the ``Oil Benchmark,'' 
and the three Oil Futures Contracts that at any given time make up the 
Oil Benchmark are referred to herein as the ``Oil Benchmark Component 
Futures Contracts.'' \11\
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    \10\ See e-mail from Michael Cavalier, Chief Counsel, NYSE 
Euronext, to Christopher W. Chow, Special Counsel, Commission, dated 
December 22, 2010.
    \11\ Western Texas Intermediate crude oil futures volume on 
NYMEX for 2009 and 2010 (through November 30, 2010) was 137,352,118 
contracts and 156,155,620 contracts, respectively. As of November 
30, 2010, NYMEX open interest for Western Texas Intermediate crude 
oil was 1,342,325 contracts, and open interest for near month 
futures was 323,184 contracts. The contract price was $84,110 
($84.11 USD per barrel and 1,000 barrels per contract). The 
approximate value of all outstanding contracts was $112.9 billion. 
The position limits for all months is 20,000 contracts and the total 
value of contracts if position limits were reached would be 
approximately $1.68 billion (based on the $84.11 contract price). 
Western Texas Intermediate crude oil futures are also traded on ICE 
and the Singapore Mercantile Exchange.
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    The Fund seeks to achieve its investment objective by investing 
under normal market conditions in Oil Benchmark Component Futures 
Contracts or, in certain circumstances, in other Oil Futures Contracts 
traded on the NYMEX and to a lesser extent the IntercontinentalExchange 
(``ICE''). The Fund may also invest in other kinds of crude oil futures 
contracts traded on the NYMEX or ICE or on other domestic or foreign 
exchanges. In addition, and to a limited extent, the Fund will invest 
in crude oil-based swap agreements that are cleared through the NYMEX 
or ICE or their affiliated providers of clearing services (``Cleared 
Oil Swaps'') in furtherance of the Fund's investment objective, and to 
the extent permitted and appropriate in light of the liquidity in the 
Cleared Oil Swaps market. Once position limits and accountability 
levels in Oil Futures Contracts are applicable, the Fund's intention is 
to invest first in Cleared Oil Swaps to the extent permitted by the 
position limits and accountability levels applicable to Cleared Oil 
Swaps and appropriate in light of the liquidity in the Cleared Oil 
Swaps market,\12\ and then in contracts or instruments such as cash-
settled options on Oil Futures Contracts and forward contracts, swaps 
other than Cleared Oil Swaps, and other over-the-counter transactions 
that are based on the price of crude oil and Oil Futures Contracts 
(collectively, ``Other Oil Interests,'' and together with Oil Futures 
Contracts and Cleared Oil Swaps, ``Oil Interests'').\13\ The 
circumstances under which such investments in Other Oil Interests may 
be utilized (e.g., imposition of position limits or accountability 
levels) are discussed below.
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    \12\ See e-mail from Michael Cavalier, Chief Counsel, NYSE 
Euronext, to Christopher W. Chow, Special Counsel, Commission, dated 
December 27, 2010.
    \13\ The Commission has previously approved listing of similar 
funds which held forward contracts or swaps on the American Stock 
Exchange (``Amex'') and NYSE Arca. See, e.g., Securities Exchange 
Act Release Nos. 53582 (March 31, 2006), 71 FR 17510 (April 6, 2006) 
(SR-Amex-2005-127) (order approving Amex listing of United States 
Oil Fund, LP); 57188 (January 23, 2008), 73 FR 5607 (January 30, 
2008) (SR-Amex-2007-70) (order approving Amex listing of United 
States Heating Oil Fund, LP and United States Gasoline Fund, LP); 
61881 (April 9, 2010), 75 FR 20028 (April 16, 2010) (SR-NYSEArca-
2010-14) (order approving listing and trading of United States Brent 
Oil Fund, LP); and 62527 (July 19, 2010), 75 FR 43606 (July 26, 
2010) (order approving listing and trading of United States 
Commodity Index Fund).
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    Light Sweet Crude Oil Futures Contracts traded on the NYMEX are 
listed for the current year and the next 8 years. However, the nature 
of the Oil Benchmark is such that the Fund will not hold futures 
contracts beyond approximately the first 24 months of listed Oil 
Futures Contracts.\14\
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    \14\ See e-mail from Michael Cavalier, Chief Counsel, NYSE 
Euronext, to Christopher W. Chow, Special Counsel, Commission, dated 
December 22, 2010.
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    It is the intent of the Sponsor to never hold the next-to-expire an 
Oil Benchmark Component Futures Contract (commonly called the ``spot'' 
contract). For example, in terms of the Oil Benchmark, in April of a 
given year, the Oil Benchmark Component Futures Contracts will be the 
contracts expiring in June (the first-to-expire Oil Benchmark Component 
Futures Contract), December (the second-to-expire Oil Benchmark 
Component Futures Contract), and June of the following year (the third-
to-expire Oil Benchmark Component Futures Contract). Because the next-
to-expire Oil Benchmark Component Futures Contract (the June contract) 
will become spot on the third-to-last trading day prior to the 25th 
calendar day in April, the Sponsor will ``roll'' or change that 
contract prior to the third-to-last trading day prior to the 25th 
calendar day in April for a position in December of the following year, 
not intending to hold any futures contract to spot.
    According to the Registration Statement, the Fund seeks to achieve 
its investment objective primarily by investing in Oil Interests such 
that daily changes in the Fund's NAV will be expected to closely track 
the changes in the Oil Benchmark. The Fund's positions in Oil Interests 
will be changed or ``rolled'' on a regular basis in order to track the 
changing nature of the Oil Benchmark. For example, two times a year (in 
the month in which an Oil Benchmark Component Futures Contract is set 
to become the first-to-expire Oil Futures Contract listed on NYMEX), 
the first-to-expire Oil Benchmark Component Contract will become the 
next-to-expire (spot) Oil Futures Contract and will no longer be an Oil 
Benchmark Component Futures Contract, and the Fund's investments will 
have to be changed accordingly. In order that the Fund's trading does 
not cause unwanted market movements and to make it more difficult for 
third parties to profit by trading based on such expected market 
movements, the Fund's investments typically will not be rolled entirely 
on that day, but will typically be rolled over a period of several 
days.
    Consistent with achieving the Fund's investment objective of 
closely tracking the Oil Benchmark, the Sponsor may for certain reasons 
cause the Fund to enter into or hold Oil Futures Contracts other than 
Oil Benchmark Component Futures Contracts, Cleared Oil Swaps and/or 
Other Oil Interests. For example, certain Cleared Oil Swaps have 
standardized terms similar to, and are priced by reference to, a 
corresponding Oil Benchmark Component Futures Contract. Additionally, 
Other Oil Interests that do not have standardized terms and are not 
exchange-traded can generally be structured as the parties to the Oil 
Interest contract desire. Therefore, the Fund might enter into multiple 
Cleared Oil Swaps and/or over-the-counter Other Oil Interests intended 
to exactly replicate the performance of each of the three Oil Benchmark 
Component Futures Contracts, or a single over-the-counter Other Oil 
Interest designed to replicate the performance of the Oil Benchmark as 
a whole. According to the Registration Statement, assuming that there 
is no default by a counterparty to an over-the-counter Other Oil 
Interest, the performance of the Other Oil Interest will necessarily 
correlate exactly with the performance of the Oil Benchmark or the 
applicable Oil Benchmark Component Futures Contract.\15\ The Fund might 
also enter into or hold Other Oil Interests to facilitate effective 
trading, consistent with the discussion of the Fund's ``roll'' strategy 
in the preceding paragraph. In addition, the Fund might enter into or 
hold Oil Interests that would be expected to alleviate overall 
deviation between the Fund's performance and that of the Oil Benchmark 
that may result from certain

[[Page 809]]

market and trading inefficiencies or other reasons.
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    \15\ According to the Registration Statements [sic], the Fund 
faces the risk of non-performance by the counterparties to over-the-
counter contracts. Unlike in futures contracts, the counterparty to 
these contracts is generally a single bank or other financial 
institution, rather than a clearing organization backed by a group 
of financial institutions. As a result, there will be greater 
counterparty credit risk in these transactions.
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    The Fund invests in Oil Interests to the fullest extent possible 
without being leveraged or unable to satisfy its expected current or 
potential margin or collateral obligations with respect to its 
investments in Oil Interests.\16\ After fulfilling such margin and 
collateral requirements, the Fund will invest the remainder of its 
proceeds from the sale of baskets in obligations of the United States 
Government (``Treasury Securities'') or cash equivalents, and/or hold 
such assets in cash (generally in interest-bearing accounts). 
Therefore, the focus of the Sponsor in managing the Fund is investing 
in Oil Interests and in Treasury Securities, cash and/or cash 
equivalents. The Fund will earn interest income from the Treasury 
Securities and/or cash equivalents that it purchases and on the cash it 
holds through each Fund's custodian, the Bank of New York Mellon (the 
``Custodian'' and the ``Administrator'').
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    \16\ The Sponsor represents that the Fund will invest in Oil 
Interests in a manner consistent with the Fund's investment 
objective and not to achieve additional leverage.
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    The Sponsor endeavors to place the Fund's trades in Oil Interests 
and otherwise manage the Fund's investments so that the Fund's average 
daily tracking error against the Oil Benchmark will be less than 10 
percent over any period of 30 trading days. More specifically, the 
Sponsor will endeavor to manage the Fund so that A will be within plus/
minus 10 percent of B, where A is the average daily change in the 
Fund's NAV for any period of 30 successive valuation days, i.e., any 
trading day as of which the Fund calculates its NAV, and B is the 
average daily change in the Oil Benchmark over the same period.\17\
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    \17\ The Sponsor believes that market arbitrage opportunities 
will cause the Fund's Share price on the NYSE Arca to closely track 
the Fund's NAV per share. The Sponsor believes that the net effect 
of this expected relationship and the expected relationship 
described above between the Fund's NAV and the Benchmark will be 
that the changes in the price of the Fund's Shares on the NYSE Arca 
will closely track, in percentage terms, changes in such Benchmark, 
less expenses.
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    According to the Registration Statement, the Sponsor employs a 
``neutral'' investment strategy intended to track the changes in the 
Oil Benchmark regardless of whether the Oil Benchmark goes up or down. 
The Fund's ``neutral'' investment strategy is designed to permit 
investors generally to purchase and sell the Fund's Shares for the 
purpose of investing indirectly in crude oil in a cost-effective 
manner. Such investors may include participants in the crude oil market 
and other industries seeking to hedge the risk of losses in their crude 
oil-related transactions, as well as investors seeking exposure to the 
crude oil market. The Sponsor does not intend to operate the Fund in a 
fashion such that its per share NAV will equal, in dollar terms, the 
spot price of a barrel of WTI light, sweet crude oil or the price of 
any particular Oil Futures Contract.
    The CFTC and U.S. designated contract markets such as the NYMEX 
have established accountability levels and position limits on the 
maximum net long or net short futures contracts in commodity interests 
that any person or group of persons under common trading control (other 
than as a hedge) may hold, own or control. For example, the current 
accountability level for investments at any one time is 20,000 Oil 
Futures Contracts. While this is not a fixed ceiling, it is a threshold 
above which the NYMEX may exercise greater scrutiny and control over an 
investor, including limiting an investor to holding no more than 20,000 
Oil Future Contracts. With regard to position limits, the NYMEX limits 
an investor from holding more than 3,000 net futures in the last 3 days 
of trading in the near month contract to expire. The Fund, however, 
does not believe the current position limits imposed by the NYMEX will 
have any impact on the Fund.\18\
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    \18\ As stated in the Fund's Registration Statement, on July 21, 
2010, ``The Dodd-Frank Wall Street Reform and Consumer Protection 
Act'' (``Dodd-Frank Act'') was signed into law. This new law 
contains broad changes to the financial services industry including 
provisions changing the regulation of commodity interests. Such 
changes include the requirement that position limits on energy-based 
commodity futures contracts be established; new registration, 
recordkeeping, capital and margin requirements for ``swap dealers'' 
and ``major swap participants''; the forced use of clearinghouse 
mechanisms for most over-the-counter transactions; and the 
aggregation, for purposes of position limits, of all positions in 
energy futures held by a single entity and its affiliates, whether 
such positions exist on U.S. futures exchanges, non-U.S. futures 
exchanges, or in over-the-counter contracts; and the aggregation, 
for purposes of position limits, of all positions in energy futures 
held by a single entity and its affiliates, whether such positions 
exist on U.S. futures exchanges, non-U.S. futures exchanges, or in 
over-the-counter contracts. The CFTC has announced that in accord 
with the significant amendments introduced to the Commodity Exchange 
Act of 1936 (``CEA'') (7 U.S.C. 1) by the Dodd-Frank Act, the CFTC 
plans to issue a notice of rulemaking proposing position limits for 
regulated exempt commodity contracts, including energy commodity 
contracts, as directed by the CEA. See Federal Speculative Position 
Limits for Referenced Energy Contracts and Associated Regulations, 
75 FR 50950 (August 18, 2010).
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    In addition to accountability levels and position limits, the 
exchanges set price fluctuation limits on futures contracts. For Oil 
Futures Contracts, the price fluctuation limit establishes the maximum 
amount that the price of futures contracts may vary either up or down 
from the previous day's settlement price or from the price at which the 
limit was last imposed. When a price fluctuation limit has been reached 
for a particular futures contract, no trades may be made at a price 
beyond that limit.\19\
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    \19\ More specifically, the NYMEX imposes a $10.00 per barrel 
($10,000 per contract) price fluctuation limit for Oil Futures 
Contracts. This limit is initially based off of the previous trading 
day's settlement price. If any Oil Futures Contract is traded, bid 
or offered at the limit for five minutes, trading is halted for five 
minutes. When trading resumes it begins at the point where the limit 
was imposed and the limit is reset to be $10.00 per barrel in either 
direction of that point. If another halt were triggered, the market 
would continue to be expanded by $10.00 per barrel in either 
direction after each successive five-minute trading halt. There is 
no maximum price fluctuation limit during any one trading session.
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    The Fund does not intend to limit the size of the offering and will 
attempt to expose substantially all of its proceeds to the oil market 
utilizing Oil Interests. If the Fund encounters position limits, 
accountability levels, or price fluctuation limits for Oil Futures 
Contracts on the NYMEX or Cleared Oil Swaps on the NYMEX or ICE, it may 
then, if permitted under applicable regulatory requirements, purchase 
Other Oil Interests, including oil futures contracts listed on foreign 
exchanges. However, the oil futures contracts available on such foreign 
exchanges may have different underlying sizes, deliveries, and prices. 
The crude oil futures contracts available on such foreign exchanges may 
be subject to their own position limits and accountability levels. In 
any case, notwithstanding the potential availability of these 
instruments in certain circumstances, position limits and 
accountability levels could force the Fund to limit the number of 
Creation Baskets (as defined below) that it sells.

Creation and Redemption of Shares

    The Fund creates and redeems Shares only in blocks called Creation 
Baskets and Redemption Baskets, respectively, each consisting of 25,000 
Shares. Only Authorized Purchasers may purchase or redeem Creation 
Baskets or Redemption Baskets. An Authorized Purchaser is under no 
obligation to create or redeem baskets, and an Authorized Purchaser is 
under no obligation to offer to the public Shares of any baskets it 
does create. Baskets are generally created when there is a demand for 
Shares, including, but not limited to, when the market price per share 
is at (or perceived to be at) a premium to the NAV per share. 
Similarly, baskets are

[[Page 810]]

generally redeemed when the market price per share is at (or perceived 
to be at) a discount to the NAV per share. Retail investors seeking to 
purchase or sell Shares on any day are expected to effect such 
transactions in the secondary market, on the NYSE Arca, at the market 
price per share, rather than in connection with the creation or 
redemption of baskets.
    The total deposit required to create each basket (``Creation Basket 
Deposit'') is the amount of Treasury Securities and/or cash that is in 
the same proportion to the total assets of each Fund (net of estimated 
accrued but unpaid fees, expenses and other liabilities) on the 
purchase order date as the number of Shares to be created under the 
purchase order is in proportion to the total number of Shares 
outstanding on the purchase order date. The redemption distribution 
from each Fund will consist of a transfer to the redeeming Authorized 
Purchaser of an amount of Treasury Securities and/or cash that is in 
the same proportion to the total assets of the Fund (net of estimated 
accrued but unpaid fees, expenses and other liabilities) on the date 
the order to redeem is properly received as the number of Shares to be 
redeemed under the redemption order is in proportion to the total 
number of Shares outstanding on the date the order is received.
    Purchase or redemption orders for Creation and Redemption Baskets 
must be placed by 12 p.m. E.T. or the close of regular trading on the 
New York Stock Exchange, whichever is earlier.
    The Funds will meet the initial and continued listing requirements 
applicable to Trust Issued Receipts in NYSE Arca Equities Rule 8.200 
and Commentary .02 thereto. With respect to application of Rule 10A-3 
\20\ under the Act, the Trust relies on the exception contained in Rule 
10A-3(c)(7).\21\ A minimum of 100,000 Shares for the Fund will be 
outstanding as of the start of trading on the Exchange.
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    \20\ 17 CFR 240.10A-3.
    \21\ 17 CFR 240.10A-3(c)(7).
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    A more detailed description of Oil Interests as well as investment 
risks, are set forth in the Registration Statement. All terms relating 
to the Fund that are referred to, but not defined in, this proposed 
rule change are defined in the Registration Statement.

Net Asset Value

    The NAV for the Fund will be calculated by the Administrator once a 
day and will be disseminated daily to all market participants at the 
same time.\22\ With respect to the Teucrium WTI Crude Oil Fund, in 
determining the value of Oil Futures Contracts, the Administrator will 
use the NYMEX closing price (usually determined as of 2:30 p.m. E.T.). 
The value of over-the-counter Oil Interests will be determined based on 
the value of the commodity or futures contract underlying such Oil 
Interest, except that a fair value may be determined if the Sponsor 
believes that the Fund is subject to significant credit risk relating 
to the counterparty to such Oil Interest.
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    \22\ The NAV will be calculated by taking the current market 
value of the Fund's total assets and subtracting any liabilities. 
Under the Fund's current operational procedures, the Administrator 
will calculate the NAV of the Fund's Shares as of the earlier of 4 
p.m. Eastern Time (``E.T.'') or the close of the New York Stock 
Exchange (ordinarily, 4 p.m. E.T.) each day. NYSE Arca will 
calculate an approximate net asset value every 15 seconds throughout 
each day that the Fund's Shares are traded on the NYSE Arca for as 
long as NYMEX's main pricing mechanism is open.
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    Treasury Securities held by the Fund will be valued by the 
Administrator using values received from recognized third-party vendors 
and dealer quotes. NAV will include any unrealized profit or loss on 
open Oil Interests and any other credit or debit accruing to the Fund 
but unpaid or not received by the Fund.
    The Exchange also will disseminate on a daily basis via the 
Consolidated Tape Association (``CTA'') information with respect to 
recent NAV, and shares outstanding. The Exchange will also make 
available on its Web site daily trading volume of each of the Shares, 
closing prices of such Shares, and the corresponding NAV.

Availability of Information Regarding the Shares

    The Web site for the Fund (http://www.teucriumoilfund.com) and/or 
the Exchange, which are publicly accessible at no charge, will contain 
the following information: (a) The current NAV per share daily and the 
prior business day's NAV and the reported closing price; (b) the 
midpoint of the bid-ask price in relation to the NAV as of the time the 
NAV is calculated (the ``Bid-Ask Price''); (c) calculation of the 
premium or discount of such price against such NAV; (d) the bid-ask 
price of Shares determined using the highest bid and lowest offer as of 
the time of calculation of the NAV; (e) data in chart form displaying 
the frequency distribution of discounts and premiums of the Bid-Ask 
Price against the NAV, within appropriate ranges for each of the four 
(4) previous calendar quarters; (f) the prospectus; and (g) other 
applicable quantitative information. The Fund will also disseminate 
Fund's holdings on a daily basis on the Fund's Web site.
    The closing price and settlement prices of the Oil Futures 
Contracts are also readily available from the NYMEX (http://www.cmegroup.com) and ICE (http://www.theice.com), automated quotation 
systems, published or other public sources, or on-line information 
services such as Bloomberg or Reuters. The Oil Benchmarks [sic] will be 
disseminated by one or more major market data vendors every 15 seconds 
during the NYSE Arca Core Trading Session of 9:30 a.m. to 4 p.m. E.T. 
Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the CTA. In addition, the 
Exchange will provide a hyperlink on its Web site at http://www.nyse.com to each Fund's Web site, which will display all intraday 
and closing Oil Benchmark levels, the intraday Indicative Trust Value 
(see below), and NAV.
    In addition, various data vendors and news publications publish 
futures prices and data. The Exchange represents that quotation and 
last sale information for the Oil Futures Contracts are widely 
disseminated through a variety of major market data vendors worldwide, 
including Bloomberg and Reuters. In addition, the Exchange further 
represents that complete real-time data for the Oil Futures Contracts 
is available by subscription from Reuters and Bloomberg. The NYMEX and 
ICE also provide delayed futures information on current and past 
trading sessions and market news free of charge on their Web sites. The 
specific contract specifications for the futures contracts are also 
available at the NYMEX and ICE Web sites, as well as other financial 
informational sources. The spot price of WTI Crude Oil also is 
available on a 24-hour basis from major market data vendors. Price and 
volume information for cleared swaps is available from major market 
data vendors and on the NYMEX Web site.
    The Fund will provide Web site disclosure of portfolio holdings 
daily and will include, as applicable, the names, quantity, price and 
market value of Financial Instruments held by the Fund and the 
characteristics of such instruments and cash equivalents, and amount of 
cash held in the portfolio of the Fund. This Web site disclosure of the 
portfolio composition of the Fund will occur at the same time as the 
disclosure by the Sponsor of the portfolio composition to Authorized 
Purchasers so that all market participants are provided portfolio 
composition information at the same

[[Page 811]]

time. Therefore, the same portfolio information will be provided on the 
public Web site as well as in electronic files provided to Authorized 
Purchasers. Accordingly, each investor will have access to the current 
portfolio composition of the Fund through the Fund's Web site.

Dissemination of Indicative Trust Value

    In addition, in order to provide updated information relating to 
the Fund for use by investors and market professionals, an updated 
Indicative Trust Value (``ITV'') will be calculated. The ITV is 
calculated by using the prior day's closing NAV per share of the Fund 
as a base and updating that value throughout the trading day to reflect 
changes in the value of the applicable Oil Benchmark Component Futures 
Contracts. As stated in the respective Registration Statements [sic], 
changes in the value of over-the-counter Oil Interests, Treasury 
Securities and cash equivalents will not be included in the calculation 
of the ITV. The ITV disseminated during NYSE Arca trading hours should 
not be viewed as an actual real time update of the NAV, which is 
calculated only once a day.
    The ITV will be disseminated on a per Share basis by one or more 
major market data vendors every 15 seconds during the NYSE Arca Core 
Trading Session. The normal trading hours for Oil Futures Contracts on 
NYMEX are 9 a.m. to 2:30 p.m. E.T. The ITV will not be updated, and, 
therefore, a static ITV will be disseminated, between the close of 
trading on NYMEX of Oil Futures Contracts and the close of the NYSE 
Arca Core Trading Session. The value of a Share may be influenced by 
non-concurrent trading hours between NYSE Arca and the NYMEX and ICE 
when the Shares are traded on NYSE Arca after normal trading hours of 
Oil Futures Contracts.
    The Exchange believes that dissemination of the ITV provides 
additional information regarding the Fund that is not otherwise 
available to the public and is useful to professionals and investors in 
connection with the related Shares trading on the Exchange or the 
creation or redemption of such Shares.

Trading Rules

    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. The Exchange has 
appropriate rules to facilitate transactions in the Shares during all 
trading sessions. As provided in NYSE Arca Equities Rule 7.6, 
Commentary .03, the minimum price variation (``MPV'') for quoting and 
entry of orders in equity securities traded on the NYSE Arca 
Marketplace is $0.01, with the exception of securities that are priced 
less than $1.00 for which the MPV for order entry is $0.0001.
    The trading of the Shares will be subject to NYSE Arca Equities 
Rule 8.200, Commentary .02(e), which sets forth certain restrictions on 
ETP Holders acting as registered Market Makers in Trust Issued Receipts 
to facilitate surveillance. See ``Surveillance'' below for more 
information.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. Trading may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. These may include: (1) The extent to 
which trading is not occurring in the underlying futures contracts, or 
(2) whether other unusual conditions or circumstances detrimental to 
the maintenance of a fair and orderly market are present. In addition, 
trading in Shares will be subject to trading halts caused by 
extraordinary market volatility pursuant to the Exchange's ``circuit 
breaker'' rule \23\ or by the halt or suspension of trading of the 
underlying futures contracts.
---------------------------------------------------------------------------

    \23\ See NYSE Arca Equities Rule 7.12.
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    The Exchange represents that the Exchange may halt trading during 
the day in which the interruption to the dissemination of the ITV or 
the value of the underlying futures contracts occurs. If the 
interruption to the dissemination of the ITV or the value of the 
underlying futures contracts persists past the trading day in which it 
occurred, the Exchange will halt trading no later than the beginning of 
the trading day following the interruption. In addition, if the 
Exchange becomes aware that the NAV with respect to the Shares is not 
disseminated to all market participants at the same time, it will halt 
trading in the Shares until such time as the NAV is available to all 
market participants.

Surveillance

    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products, including Trust Issued 
Receipts, to monitor trading in the Shares. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws.
    The Exchange's current trading surveillances focus on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations. The Exchange is able to 
obtain information regarding trading in the Shares, the physical 
commodities included in, or options, futures or options on futures on, 
Shares through ETP Holders, in connection with such ETP Holders' 
proprietary or customer trades through ETP Holders which they effect on 
any relevant market. The Exchange can obtain market surveillance 
information, including customer identity information, with respect to 
transactions occurring on the NYMEX and ICE, which are members of the 
Intermarket Surveillance Group (``ISG''). A list of ISG members is 
available at http://www.isgportal.org.\24\
---------------------------------------------------------------------------

    \24\ The Exchange notes that not all Oil Interests may trade on 
markets that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    In addition, with respect to the Fund's futures contracts traded on 
exchanges, not more than 10% of the weight of such futures contracts in 
the aggregate shall consist of components whose principal trading 
market is not a member of ISG or is a market with which the Exchange 
does not have a comprehensive surveillance sharing agreement.
    The Exchange also has a general policy prohibiting the distribution 
of material, non-public information by its employees.

Information Bulletin

    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Bulletin will discuss the following: (1) The risks involved 
in trading the Shares during the Opening and Late Trading Sessions when 
an updated ITV will not be calculated or publicly disseminated; (2) the 
procedures for purchases and redemptions of Shares in Creation Baskets 
and Redemption Baskets (and that Shares are not individually 
redeemable); (3) NYSE Arca Equities Rule 9.2(a), which imposes a duty 
of due diligence on its ETP Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (4) how 
information regarding the ITV is

[[Page 812]]

disseminated; (5) the requirement that ETP Holders deliver a prospectus 
to investors purchasing newly issued Shares prior to or concurrently 
with the confirmation of a transaction; and (6) trading information.
    In addition, the Information Bulletin will advise ETP Holders, 
prior to the commencement of trading, of the prospectus delivery 
requirements applicable to the Fund. The Exchange notes that investors 
purchasing Shares directly from the Fund will receive a prospectus. ETP 
Holders purchasing Shares from the Fund for resale to investors will 
deliver a prospectus to such investors. The Information Bulletin will 
also discuss any exemptive, no-action and interpretive relief granted 
by the Commission from any rules under the Act.
    In addition, the Information Bulletin will reference that the Fund 
is subject to various fees and expenses described in the Registration 
Statement. The Information Bulletin will also reference that the CFTC 
has regulatory jurisdiction over the trading of Oil Futures Contracts 
traded on U.S. markets.
    The Information Bulletin will also disclose the trading hours of 
the Shares of the Fund and that the NAV for the Shares is calculated 
after 4 p.m. E.T. each trading day. The Bulletin will disclose that 
information about the Shares of the Fund is publicly available on the 
Fund's Web site.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\25\ in general, and furthers the objectives of Section 
6(b)(5),\26\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of exchange-traded product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. In addition, the listing and trading criteria set 
forth in NYSE Equities Rule 8.200 are intended to protect investors and 
the public interest.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 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 or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#aedcdbc2cb83cdc1c3c3cbc0daddeeddcbcd80c9c1d8"><span class="__cf_email__" data-cfemail="a1d3d4cdc48cc2ceccccc4cfd5d2e1d2c4c28fc6ced7">[email protected]</span></a>. Please include 
File Number SR-NYSEArca-2010-119 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca--2010-119. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2010-119 and should be submitted on or before January 27, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33363 Filed 1-5-11; 8:45 am]
BILLING CODE 8011-01-P


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