Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 68171 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Commentary .02 to NYSE Arca Rule 8.200–E 

applies to Trust Issued Receipts that invest in 

‘‘Financial Instruments.’’ The term ‘‘Financial 

Instruments,’’ as defined in Commentary .02(b)(4) to 

NYSE Arca Rule 8.200–E, 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. 

5The daily settlements in MET are derived 

directly from the settlements in ETH for each 

contract listing. See https://www.cmegroup.com/ 

confluence/display/EPICSANDBOX/

Bitcoin#Bitcoin-NormalDailySettlementProcedure.

1. 

39 CFR part 3040, subpart B. Comment 

deadline(s) for each request appear in 

section II. 

II. Docketed Proceeding(s) 

1. Docket No(s).: CP2020–182; Filing 

Title: Notice of the United States Postal 

Service of Filing Modification Three to 

Global Reseller Expedited Package 2 

Negotiated Service Agreement; Filing 

Acceptance Date: September 27, 2023; 

Filing Authority: 39 CFR 3035.105; 

Public Representative: Katalin K. 

Clendenin; Comments Due: October 5, 

2023. 

2. Docket No(s).: CP2023–31; Filing 

Title: Notice of the United States Postal 

Service of Filing Modification One to 

Priority Mail Express International, 

Priority Mail International & First-Class 

Package International Service Contract 

10; Filing Acceptance Date: September 

27, 2023; Filing Authority: 39 CFR 

3035.105; Public Representative: Katalin 

K. Clendenin; Comments Due: October 

5, 2023. 

This Notice will be published in the 

Federal Register. 

Erica A. Barker, 

Secretary. 

[FR Doc. 2023–21835 Filed 10–2–23; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98567; File No. SR– 

NYSEARCA–2023–63] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of a 

Proposed Rule Change To List and 

Trade Shares of the Grayscale 

Ethereum Futures Trust (ETH) ETF 

Under NYSE Arca Rule 8.200–E, 

Commentary .02 (Trust Issued 

Receipts) 

September 27, 2023. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

September 19, 2023, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change 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 shares of the Grayscale Ethereum 

Futures Trust (ETH) ETF under NYSE 

Arca Rule 8.200–E, Commentary .02 

(‘‘Trust Issued Receipts’’). The proposed 

rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade shares (‘‘Shares’’) of the Grayscale 

Ethereum Futures Trust (ETH) ETF (the 

‘‘Trust’’) under NYSE Arca Rule 8.200– 

E, Commentary .02, which governs the 

listing and trading of Trust Issued 

Receipts.4

The Trust is managed by Grayscale 

Advisors, LLC (‘‘Sponsor’’). The 

Sponsor is in the process of becoming 

registered as a commodity pool operator 

with the Commodity Futures Trading 

Commission (‘‘CFTC’’) and is in the 

process of becoming a member of the 

National Futures Association. The 

Sponsor has engaged Videnct Advisory, 

LLC, as subadviser, to serve as the 

Trust’s commodity trading adviser 

(‘‘CTA’’). 

The Sponsor is not registered as a 

broker-dealer but is affiliated with a 

broker-dealer. The Sponsor has 

implemented and will maintain a ‘‘fire 

wall’’ with respect to such broker-dealer 

affiliate regarding access to information 

concerning the composition of and/or 

changes to the portfolio. In the event 

that (a) the Sponsor becomes registered 

as a broker-dealer or newly affiliated 

with a broker-dealer, or (b) any new 

sponsor or sub-adviser is registered as a 

broker-dealer or becomes affiliated with 

a broker-dealer, it will implement and 

maintain a fire wall with respect to its 

relevant personnel or personnel of the 

broker-dealer affiliate, as applicable, 

regarding access to information 

concerning the composition of and/or 

changes to the portfolio, and will be 

subject to procedures designed to 

prevent the use and dissemination of 

material non-public information 

regarding the portfolio. 

The Trust’s Investment Objective and 

Strategy 

According to the Sponsor, the CME 

currently offers two Ethereum futures 

contracts, one contract representing 50 

Ether (‘‘ETH Contracts’’) and another 

contract representing 0.10 Ether (‘‘MET 

Contracts’’). ETH Contracts began 

trading on the CME Globex trading 

platform on February 8, 2021 under the 

ticker symbol ‘‘ETH’’ and are cashsettled in U.S. dollars. MET Contracts 

began trading on the CME Globex 

trading platform on December 6, 2021 

under the ticker symbol ‘‘MET’’ and are 

also cash-settled in U.S. dollars.5

ETH Contracts and MET Contracts 

each trade six consecutive monthly 

contracts plus two additional December 

contract months (if the 6 consecutive 

months include December, only one 

additional December contract month is 

listed). Because ETH Contracts and MET 

Contracts are exchange-listed, they 

allow investors to gain exposure to 

Ether without having to hold the 

underlying cryptocurrency. Like a 

futures contract on a traditional 

commodity or stock index, ETH 

Contracts and MET Contracts allow 

investors to hedge investment positions 

or speculate on the future price of Ether. 

According to the Sponsor, the 

investment objective of the Trust is to 

have the daily changes in the net asset 

value (‘‘NAV’’) of the Trust’s Shares 

reflect the daily changes in the price of 

a specified benchmark (the 

‘‘Benchmark’’). The Benchmark is the 

average of the closing settlement prices 


ddrumheller on DSK120RN23PROD with NOTICES1
68172 Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 

6The term ‘‘normal market conditions’’ includes, 

but is not limited to, the absence of: trading halts 

in the applicable financial markets generally; 

operational issues (e.g., systems failure) causing 

dissemination of inaccurate market information; or 

force majeure type events such as a natural or 

manmade disaster, act of God, armed conflict, act 

of terrorism, riot or labor disruption or any similar 

intervening circumstance. See NYSE Arca Rule 

8.600–E(c)(5). 

7The term ‘‘cash equivalents’’ includes short term 

Treasury bills, money market funds, demand 

deposit accounts and commercial paper. 

8As discussed in more detail below, the CME 

determines the daily settlements for Bitcoin futures 

based on trading activity on CME Globex between 

14:59:00 and 15:00:00 Central Time (CT), which is 

the ‘‘settlement period.’’ 

9A ‘‘Digital Asset Market’’ is a ‘‘Brokered 

Market,’’ ‘‘Dealer Market,’’ ‘‘Principal-to-Principal 

Market’’ or ‘‘Exchange Market,’’ as each such term 

is defined in the Financial Accounting Standards 

Board Accounting Standards Codification Master 

Glossary. The ‘‘Digital Asset Exchange Market’’ is 

the global exchange market for the trading of ETH, 

which consists of transactions on electronic Digital 

Asset Exchanges. A ‘‘Digital Asset Exchange’’ is an 

electronic marketplace where exchange participants 

may trade, buy and sell ETH based on bid-ask 

trading. The largest Digital Asset Exchanges are 

online and typically trade on a 24-hour basis, 

publishing transaction price and volume data. 

for the first to expire and second to 

expire ETH Contracts listed on the 

Chicago Mercantile Exchange, Inc. 

(‘‘CME’’). The first to expire and second 

to expire ETH Contracts and MET 

Contracts are referred to as the Ether 

Futures Contracts. Under normal market 

conditions,6 the Trust will invest in 

Ether Futures Contracts and in cash and 

cash equivalents.7

According to the Sponsor, the Trust 

seeks to maintain its holdings in Ether 

Futures Contracts with a roughly 

constant expiration profile. Therefore, 

the Trust’s positions will be changed or 

‘‘rolled’’ on a regular basis in order to 

track the changing nature of the 

Benchmark by closing out first to expire 

contracts prior to settlement that are no 

longer part of the Benchmark, and then 

entering into second to expire contracts. 

Accordingly, the Trust will never carry 

futures positions all the way to cash 

settlement; the Trust will price only off 

of the daily settlement prices of the 

Ether Futures Contracts.8 To achieve 

this, the Trust will roll its futures 

holdings prior to cash settlement of the 

expiring contract. 

In seeking to achieve the Trust’s 

investment objective, the Sponsor will 

employ a ‘‘neutral’’ investment strategy 

that is intended to track the changes in 

the Benchmark regardless of whether 

the Benchmark goes up or goes down. 

The Trust will endeavor to trade in 

Ether Futures Contracts so that the 

Trust’s average daily tracking error 

against the Benchmark will be less than 

10 percent over any period of 30 trading 

days. The Trust’s ‘‘neutral’’ investment 

strategy is designed to permit investors 

generally to purchase and sell the 

Trust’s Shares for the purpose of 

investing in the Ether Futures Contracts 

(as discussed below). Such investors 

may include participants in the Ether 

market seeking to hedge the risk of 

losses in their Ether-related 

transactions, as well as investors 

seeking price exposure to the Ether 

market. 

According to the Sponsor, one factor 

determining the total return from 

investing in futures contracts is the 

price relationship between soon to 

expire contracts and later to expire 

contracts. If the futures market is in a 

state of backwardation (i.e., when the 

price of ETH Contracts and MET 

Contracts in the future is expected to be 

less than the current price), the Trust 

will buy later to expire contracts for a 

lower price than the sooner to expire 

contracts that it sells. Hypothetically, 

and assuming no changes to either 

prevailing ETH Contracts and MET 

Contracts’ prices or the price 

relationship between soon to expire 

contracts and later to expire contracts, 

the value of a contract will rise as it 

approaches expiration. Over time, if 

backwardation remained constant, the 

performance of a portfolio would 

continue to be affected. If the futures 

market is in contango, the Trust will 

buy later to expire contracts for a higher 

price than the sooner to expire contracts 

that it sells. Hypothetically, and 

assuming no other changes to either 

prevailing ETH Contracts and MET 

Contracts’ prices or the price 

relationship between the spot price, 

soon to expire contracts and later to 

expire contracts, the value of a contract 

will fall as it approaches expiration. 

Over time, if contango remained 

constant, the performance of a portfolio 

would continue to be affected. 

Frequently, whether contango or 

backwardation exists is a function, 

among other factors, of the prevailing 

market conditions of the underlying 

market and government policy. 

The Trust’s investments will be 

consistent with the Trust’s investment 

objective and will not be used to 

enhance leverage. That is, the Trust’s 

investments will not be used to seek 

performance that is the multiple or 

inverse multiple (e.g., 2Xs, 3Xs, –2Xs, 

and –3Xs) of the Trust’s Benchmark. 

Summary of the Application 

The CME is a regulated futures 

exchange with the requisite oversight, 

controls, and regulatory scrutiny 

necessary to maintain, promote, and 

effectuate fair and transparent trading of 

its listed products, including the ETH 

Contracts and MET Contracts. As 

proposed, under no circumstances will 

the Trust hold and/or invest in any 

assets other than ETH Contracts and 

MET Contracts, cash, and cash 

equivalents, and as such, would be an 

investment product similar to any other 

exchange-traded product (‘‘ETP’’) whose 

component holdings are futures 

contracts traded on a regulated 

exchange. Therefore, investors would be 

afforded all of the protections that 

exchanges provide, including bilateral 

surveillance agreements between the 

listing exchange of the ETP and the 

listing exchange of the ETP’s futuresbased components. 

The Ether Industry and Market 

Transactions 

According to the Sponsor and as 

discussed in further detail below, 

Ethereum, or ETH, is a digital asset that 

is created and transmitted through the 

operations of the peer-to-peer 

‘‘Ethereum Network,’’ a decentralized 

network of computers that operates on 

cryptographic protocols. No single 

entity owns or operates the Ethereum 

Network, the infrastructure of which is 

collectively maintained by a 

decentralized user base. The Ethereum 

Network allows people to exchange 

tokens of value, called Ether, which are 

recorded on a public transaction ledger 

known as a blockchain. ETH can be 

used to pay for goods and services, 

including computational power on the 

Ethereum network, or it can be 

converted to fiat currencies, such as the 

U.S. dollar, at rates determined on 

‘‘Digital Asset Exchanges’’ 9 that trade 

ETH or in individual end-user-to-enduser transactions under a barter system. 

Furthermore, the Ethereum Network 

also allows users to write and 

implement smart contracts—that is, 

general-purpose code that executes on 

every computer in the network and can 

instruct the transmission of information 

and value based on a sophisticated set 

of logical conditions. Using smart 

contracts, users can create markets, store 

registries of debts or promises, represent 

the ownership of property, move funds 

in accordance with conditional 

instructions and create digital assets 

other than ETH on the Ethereum 

Network. Smart contract operations are 

executed on the Ethereum Blockchain in 

exchange for payment of ETH. The 

Ethereum Network is one of a number 

of projects intended to expand 

blockchain use beyond just a peer-topeer money system. 

The Ethereum Network went live on 

July 30, 2015. Unlike other digital 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 68173 

10See Order Setting Aside Action by Delegated 

Authority and Disapproving a Proposed Rule 

Change, as Modified by Amendments No. 1 and 2, 

To List and Trade Shares of the Winklevoss Bitcoin 

Trust, Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (Aug. 1, 2018) (SR– 

BatsBZX–2016–30) (the ‘‘Winklevoss Order’’); 

Order Disapproving a Proposed Rule Change, as 

Modified by Amendment No. 1, Relating to the 

Listing and Trading of Shares of the Bitwise Bitcoin 

ETF Trust Under NYSE Arca Rule 8.201–E, 

Securities Exchange Act Release No. 87267 (Oct. 9, 

2019), 84 FR 55382 (Oct. 16, 2019) (SR–NYSEArca– 

2019–01) (the ‘‘Bitwise Order’’); Order 

Disapproving a Proposed Rule Change, as Modified 

by Amendment No. 1, to Amend NYSE Arca Rule 

8.201–E (Commodity-Based Trust Shares) and to 

List and Trade Shares of the United States Bitcoin 

and Treasury Investment Trust Under NYSE Arca 

Rule 8.201–E, Securities Exchange Act Release No. 

88284 (February 26, 2020), 85 FR 12595 (March 3, 

2020) (SR–NYSEArca–2019–39) (the ‘‘Wilshire 

Phoenix Order’’); Order Disapproving a Proposed 

Rule Change to List and Trade the Shares of the 

ProShares Bitcoin ETF and the ProShares Short 

Bitcoin ETF, Securities Exchange Act Release No. 

83904 (Aug. 22, 2018), 83 FR 43934 (Aug. 28, 2018) 

(SR–NYSEArca–2017–139) (the ‘‘ProShares Order’’); 

Order Disapproving a Proposed Rule Change 

Relating to Listing and Trading of the Direxion 

Daily Bitcoin Bear 1X Shares, Direxion Daily 

Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 

Continued 

assets, such as Bitcoin, which are solely 

created through a progressive mining 

process, 72.0 million ETH were created 

in connection with the launch of the 

Ethereum Network. At the time of the 

network launch, a non-profit called the 

Ethereum Foundation was the sole 

organization dedicated to protocol 

development. 

The Ethereum Network is 

decentralized in that it does not require 

governmental authorities or financial 

institution intermediaries to create, 

transmit, or determine the value of ETH. 

Rather, following the initial distribution 

of ETH, ETH is created, burned, and 

allocated by the Ethereum Network 

protocol through a process that is 

currently subject to an issuance and 

burn rate. The value of ETH is 

determined by the supply of and 

demand for ETH on the Digital Asset 

Exchanges or in private end-user-to-enduser transactions. 

New ETH are created and rewarded to 

the validators of a block in the Ethereum 

Blockchain for verifying transactions. 

The Ethereum Blockchain is effectively 

a decentralized database that includes 

all blocks that have been validated, and 

it is updated to include new blocks as 

they are validated. Each ETH 

transaction is broadcast to the Ethereum 

Network and, when included in a block, 

recorded in the Ethereum Blockchain. 

As each new block records outstanding 

ETH transactions, and outstanding 

transactions are settled and validated 

through such recording, the Ethereum 

Blockchain represents a complete, 

transparent and unbroken history of all 

transactions of the Ethereum Network. 

Among other things, ETH is used to 

pay for transaction fees and 

computational services (i.e., smart 

contracts) on the Ethereum Network; 

users of the Ethereum Network pay for 

the computational power of the 

machines executing the requested 

operations with ETH. Requiring 

payment in ETH on the Ethereum 

Network incentivizes developers to 

write quality applications and increases 

the efficiency of the Ethereum Network 

because wasteful code costs more, while 

also ensuring that the Ethereum 

Network remains economically viable 

by compensating for contributed 

computational resources. 

To date, several ETH-based exchangetraded funds (‘‘ETFs’’) that would be 

registered under the Investment 

Company Act of 1940 (the ‘‘ ’40 Act’’) 

have filed registration statements with 

the Commission. These ETFs would 

hold ETH futures contracts that trade on 

the CME and settle using the CME CF 

Ethereum Reference Rate (‘‘ERR’’). In 

other words, these ETFs offer identical 

exposure to that of the Trust. Therefore, 

the Sponsor believes that if the 

Commission allows these ETFs to begin 

trading, then it should also approve the 

Trust for trading. 

The Trust Will Not Transact in Ether 

and Will Not Be Required To Retain an 

Ether Custodian 

The Sponsor notes that individual 

users, institutional investors and 

investment funds that want to provide 

exposure to Ether by investing directly 

in Ether, and therefore must transact in 

Ether, must use the Ether Network to 

download specialized software referred 

to as a ‘‘Ether wallet.’’ This wallet may 

be used to send and receive Ether 

through users’ unique ‘‘Ether 

addresses.’’ The amount of Ether 

associated with each Ether address, as 

well as each Ether transaction to or from 

such address, is captured on the 

Blockchain. Ether transactions are 

secured by cryptography known as 

public-private key cryptography, 

represented by the Ether addresses and 

digital signature in a transaction’s data 

file. Each Ether Network address, or 

wallet, is associated with a unique 

‘‘public key’’ and ‘‘private key’’ pair, 

both of which are lengthy alphanumeric 

codes, derived together and possessing 

a unique relationship. The private key is 

a secret and must be kept in accordance 

with appropriate controls and 

procedures to ensure it is used only for 

legitimate and intended transactions. If 

an unauthorized third person learns of 

a user’s private key, that third person 

could forge the user’s digital signature 

and send the user’s Ether to any 

arbitrary Ether address, thereby stealing 

the user’s Ether. Similarly, if a user 

loses his private key and cannot restore 

such access (e.g., through a backup), the 

user may permanently lose access to the 

Ether contained in the associated 

address. 

According to the Sponsor, 

institutional purchasers of Ether, 

including other Ether funds that provide 

exposure to Ether by investing directly 

in Ether, generally maintain their Ether 

account with an Ether custodian. Ether 

custodians are financial institutions that 

have implemented a series of 

specialized security precautions, 

including holding Ether in ‘‘cold 

storage,’’ to try to ensure the safety of an 

account holder’s Ether. These Ether 

custodians must carefully consider the 

design of the physical, operational, and 

cryptographic systems for secure storage 

of private keys in an effort to lower the 

risk of loss or theft, and many use a 

multi-factor security system under 

which actions by multiple individuals 

working together are required to access 

the private keys necessary to transfer 

such digital assets and ensure exclusive 

ownership. 

The nature of the Ether Futures 

Contracts that the Trust will hold is 

such that the Trust will not be required 

to use an Ether custodian. According to 

the Sponsor, the Trust will deposit an 

initial margin amount to initiate an 

open position in futures contracts. A 

margin deposit is like a cash 

performance bond. It helps assure the 

trader’s performance of the futures 

contracts that he or she purchases or 

sells. Futures contracts are marked to 

market at the end of each trading day 

and the margin required with respect to 

such contracts is adjusted accordingly. 

The remainder of the Trust’s assets will 

be held in cash and cash equivalents at 

the Trust custodian or other financial 

institutions. The Trust will only hold 

Ether Futures Contracts described 

above. Accordingly, the Trust will not 

need an Ether custodian because it will 

never hold actual Ether. 

The Structure and Operation of the 

Trust Satisfies Commission 

Requirements for Ether-Based Exchange 

Traded Products 

In the context of prior spot digital 

asset ETP proposal disapproval orders 

for Bitcoin, the Commission expressed 

concerns about the underlying Digital 

Asset Market due to the potential for 

fraud and manipulation and outlined 

the reasons why such proposals have 

been unable to satisfy these concerns 

(the ‘‘Prior Spot Digital Asset ETP 

Disapproval Orders’’).10 In the Prior 


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68174 Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 

1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull 

Shares, and Direxion Daily Bitcoin 2X Bear Shares 

Under NYSE Arca Rule 8.200–E, Securities 

Exchange Act Release No. 83912 (Aug. 22, 2018), 

83 FR 43912 (Aug. 28, 2018) (SR–NYSEArca–2018– 

02) (the ‘‘Direxion Order’’); Order Disapproving a 

Proposed Rule Change to List and Trade the Shares 

of the GraniteShares Bitcoin ETF and the 

GraniteShares Short Bitcoin ETF, Securities 

Exchange Act Release No. 83913 (Aug. 22, 2018), 

83 FR 43923 (Aug. 28, 2018) (SR–CboeBZX–2018– 

01) (the ‘‘GraniteShares Order’’). 

11See Winklevoss I Order and Winklevoss II 

Order. The Sponsor notes that some of the concerns 

raised are that a significant portion of Bitcoin 

trading occurs on unregulated platforms and that 

there is a concentration of a significant number of 

Bitcoin in the hands of a small number of holders. 

However, the Sponsor believes that these facts are 

not unique to Bitcoin and are true of a number of 

commodity and other markets. For instance, some 

gold bullion trading takes place on unregulated 

OTC markets and a significant percentage of gold 

is held by a relative few. According to estimates of 

the World Gold Council, approximately 22% of 

total above ground gold stocks are held by private 

investors and 17% are held by foreign governments. 

See https://www.gold.org/goldhub/data/aboveground-stocks. By comparison, 13.61% of Bitcoin 

are held by the 86 largest Bitcoin addresses, some 

of which are known to be cold storage addresses of 

large centralized cryptocurrency trading platforms. 

See https://bitinfocharts.com/top-100-richestbitcoin-addresses.html. 

12For an extensive listing of such precedents, see 

Winklevoss I Order, 82 FR at 14083 n. 96. 

13The Exchange to date has not entered into 

surveillance sharing agreements with any 

cryptocurrency platform. However, the CME, which 

calculates the CME CF BRR, and which has offered 

contracts for Bitcoin futures products since 2017, is, 

as noted below, a member of the Intermarket 

Surveillance Group (‘‘ISG’’). In addition, each 

Constituent Platform has entered into a data sharing 

agreement with CME. See https://docscfbenchmarks.s3.amazonaws.com/

CME+CF+Constituent+Exchanges+Criteria.pdf. 

14See Winklevoss II Order, 83 FR at 37594. 

15The CME is regulated by the CFTC, which has 

broad reaching anti-fraud and anti-manipulation 

authority including with respect to the Bitcoin 

market since Bitcoin has been designated as a 

commodity by the CFTC. See A CFTC Primer on 

Virtual Currencies (October 17, 2017), available at: 

https://www.cftc.gov/sites/default/files/idc/groups/ 

public/documents/file/labcftc_

primercurrencies100417.pdf (the ‘‘CFTC Primer on 

Virtual Currencies’’) (‘‘The CFTC’s jurisdiction is 

implicated when a virtual currency is used in a 

derivatives contract or if there is fraud or 

manipulation involving a virtual currency traded in 

interstate commerce.’’). See also 7 U.S.C. 7(d)(3) 

(‘‘The board of trade shall list on the contract 

market only contracts that are not readily 

susceptible to manipulation.’’). 

16See https://isgportal.org/overview. 

17See, e.g., Winklevoss II Order, 83 FR at 37594. 

18See, e.g., id. at 37589–90. 

19 Id. at 37594; see also GraniteShares Order, 83 

FR at 43930 n. 85 and accompanying text. 

20Securities Exchange Act Release No. 94620 

(April 6, 2022), 87 FR 21676 (Apr. 12, 2022) (SR– 

NYSEArca–2021–53) (Order Granting Approval of a 

Proposed Rule Change, as Modified by Amendment 

No. 2, to List and Trade Shares of the Teucrium 

Bitcoin Futures Fund Under NYSE Arca Rule 

8.200–E, Commentary .02 (Trust Issued Receipts)). 

21See id. at 21678. 

Spot Digital Asset ETP Disapproval 

Orders, the Commission outlined that a 

proposal relating to a digital asset-based 

ETP could satisfy its concerns regarding 

potential for fraud and manipulation by 

demonstrating: 

(1) Inherent Resistance to Fraud and 

Manipulation: that the underlying 

commodity market is inherently 

resistant to fraud and manipulation; 

(2) Other Means to Prevent Fraud and 

Manipulation: that there are other 

means to prevent fraudulent and 

manipulative acts and practices that are 

sufficient; or 

(3) Surveillance Sharing: that the 

listing exchange has entered into a 

surveillance sharing agreement with a 

regulated market of significant size 

relating to the underlying or reference 

assets. 

As described below, the Sponsor 

believes the structure and operation of 

the Trust are designed to prevent 

fraudulent and manipulative acts and 

practices, to protect investors and the 

public interest, and to respond to the 

specific concerns that the Commission 

may have with respect to potential fraud 

and manipulation in the context of an 

ETH-based ETP. 

Surveillance Sharing Agreements With a 

Market of Significant Size 

In the Prior Spot Digital Asset ETP 

Disapproval Orders, the Commission 

noted its concerns that the Bitcoin 

market could be subject to 

manipulation.11 In these orders, the 

Commission cited numerous 

precedents 12 in which listing proposals 

were approved based on findings that 

the particular market was either 

inherently resistant to manipulation or 

that the listing exchange had entered 

into a surveillance sharing agreement 

with a market of significant size.13 The 

Commission noted that, for commoditytrust ETPs ‘‘there has been in every case 

at least one significant, regulated market 

for trading futures in the underlying 

commodity—whether gold, silver, 

platinum, palladium or copper—and the 

ETP listing exchange has entered into 

surveillance-sharing agreements with, or 

held Intermarket Surveillance Group 

(the ‘‘ISG’’) membership in common 

with, that market.’’ 14

Like the Exchange, the CME 15 is a 

member of the ISG, the purpose of 

which is ‘‘to provide a framework for 

the sharing of information and the 

coordination of regulatory efforts among 

exchanges trading securities and related 

products to address potential 

intermarket manipulations and trading 

abuses.’’ 16 Membership of a relevant 

futures exchange in ISG is sufficient to 

meet the surveillance-sharing 

requirement.17

The Commission has previously noted 

that the existence of a surveillancesharing agreement by itself is not 

sufficient for purposes of meeting the 

requirements of Section 6(b)(5); the 

surveillance-sharing agreement must be 

with a market of significant size.18 The 

Commission has also provided an 

example of how it interprets the terms 

‘‘significant market’’ and ‘‘market of 

significant size,’’ though that definition 

is meant to be illustrative and not 

exclusive: ‘‘the terms ‘significant 

market’ and ‘market of significant size’ 

. . . include a market (or group of 

markets) as to which (a) there is a 

reasonable likelihood that a person 

attempting to manipulate the ETP 

would also have to trade on that market 

to successfully manipulate the ETP so 

that a surveillance sharing agreement 

would assist the ETP listing market in 

detecting and deterring misconduct and 

it is unlikely that trading in the ETP 

would be the predominant influence on 

prices in that market.’’ 19

Further, as the Commission explained 

in the order approving the first Bitcoinbased ETP (the ‘‘Teucrium Order’’), ‘‘the 

CME is a ‘significant market’ related to 

CME bitcoin futures contracts, which 

would be the exclusive noncash 

holdings of the proposed ETP.’’ 20 In the 

Teucrium Order, the Commission 

further elaborated that: 

[w]ith respect to the proposed ETP, the 

underlying bitcoin assets are CME bitcoin 

futures contracts. The relevant analysis, 

therefore, is whether Arca has a 

comprehensive surveillance-sharing 

agreement with a regulated market of 

significant size related to CME bitcoin futures 

contracts . . . [T]aking into consideration the 

direct relationship between the regulated 

market with which Arca has a surveillancesharing agreement and the assets held by the 

proposed ETP, as well as developments with 

respect to the CME bitcoin futures market— 

including the launch of exchange-traded 

funds registered under the Investment 

Company Act of 1940 (‘‘1940 Act’’) that hold 

CME bitcoin futures (‘‘Bitcoin Futures 

ETFs’’)—the Commission concludes that the 

Exchange has the requisite surveillancesharing agreement.’’ 21

Key to the Commission’s approval 

was that the significant regulated market 

(i.e., the CME) with which the listing 

exchange had a surveillance-sharing 

agreement, was the same market on 

which the assets in the ETP trade. 

The Sponsor believes that the facts 

and circumstances of this proposal are 

the same as that of the Teucrium Order. 

CME Ether Futures Contracts are the 

exclusive holdings of the Trust. The 

relevant analysis, therefore, is whether 

the Exchange has a comprehensive 

surveillance-sharing agreement with a 

regulated market of significant size 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 68175 

22To further illustrate the size and liquidity of the 

Trust, as of September 6, 2023, compared with 

global commodity ETPs, the Trust would rank 24th 

in assets under management and 83rd in notional 

trading volume for the preceding 30 days. 

23While the Commission also considered the 

launch of exchange-traded funds registered under 

the ’40 Act as a reason for its approval in the 

Teucrium Order, the Sponsor does not believe this 

distinction is relevant given the otherwise 

satisfaction of the Significant Market Test. 

24 VWAP is calculated based first on Tier 1 (if 

there are trades during the settlement period); then 

Tier 2 (if there are no trades during the settlement 

period); and then Tier 3 (in the absence of any trade 

activity or bid/ask in a given contract month during 

the current trading day), as follows. For Tier 1, each 

contract month settles to its VWAP of all trades that 

occur between 14:59:00 and 15:00:00 CT, the 

settlement period, rounded to the nearest tradable 

tick. If the VWAP is exactly in the middle of two 

tradable ticks, then the settlement will be the 

tradable price that is closer to the contract’s prior 

day settlement price. For Tier 2, if no trades occur 

on CME Globex between 14:59:00 and 15:00:00 CT, 

the settlement period, then the last trade (or the 

contract’s settlement price from the previous day in 

the absence of a last trade price) is used to 

determine whether to settle to the bid or the ask 

during this period. If the last trade price is outside 

of the bid/ask spread, then the contract month 

settles to the nearest bid or ask price. If the last 

trade price is within the bid/ask spread, or if a bid/ 

ask spread is not available, then the contract month 

settles to the last trade price. For Tier 3, in the 

absence of any trade activity or bid/ask in a given 

contract month during the current trading day, the 

daily settlement price will be determined by 

applying the net change from the preceding contract 

month to the given contract month’s prior daily 

settlement price. 

25Several major market data vendors display and/ 

or make widely available ITVs taken from the 

Consolidated Tape Association (‘‘CTA’’) or other 

data feeds. 

related to CME Ether Futures Contracts, 

which it does by way of the ISG. 

The Sponsor also believes it is 

unlikely that the ETP would become the 

predominant influence on prices in the 

market. While future inflows to the 

proposed Trust cannot be predicted, to 

provide comparable data, the Sponsor 

examined the change in market 

capitalization of ETH with net inflows 

into Grayscale Ethereum Trust (ETH) 

(the ‘‘ETH Trust’’), an Ethereum fund 

that the Sponsor’s affiliate, Grayscale 

Investments, LLC, manages. The ETH 

Trust currently trades on OTC Markets 

and is largest and most liquid ETH 

investment product in the world.22

From November 1, 2019 to August 31, 

2023, the market capitalization of ETH 

grew from $20 billion to $198 billion, a 

$178 billion increase. Over the same 

period, the Trust experienced $1.2 

billion of inflows. The cumulative 

inflow into the Trust over the stated 

time period was only 0.6% of the 

aggregate growth of ETH’s market 

capitalization. 

Additionally, the Trust experienced 

approximately $70.2 billion of trading 

volume from November 1, 2019 to 

August 31, 2023, only 19% of the CME 

futures market and 10% of the Index 

over the same period. 

In summary, based on the 

Commission’s prior reasoning, the 

Sponsor believes that the Trust satisfies 

the Commission’s requirements under 

the Exchange Act because the CME is 

the same market on which the assets of 

the Trust trade, and the Trust would not 

otherwise become the predominant 

influence in prices in the market.23

Settlement of ETH Contracts and MET 

Contracts 

According to the Sponsor, each ETH 

Contract and MET Contract settles daily 

to the ETH Contract volume-weighted 

average price (‘‘VWAP’’) of all trades 

that occur between 2:59 p.m. and 3:00 

p.m. Central Time, the settlement 

period, rounded to the nearest tradable 

tick.24

ETH Contracts and MET Contracts 

each expire on the last Friday of the 

contract month and are settled with 

cash. The final settlement value is based 

on the CME CF ERR at 4:00 p.m. London 

time on the expiration day of the futures 

contract. 

As proposed, the Trust will rollover 

its soon to expire Ether Futures 

Contracts to extend the expiration or 

maturity of its position forward by 

closing the initial contract holdings and 

opening a new longer-term contract 

holding for the same underlying asset at 

the then-current market price. The Trust 

does not intend to hold any Ether 

futures positions into cash settlement. 

Net Asset Value 

According to the Sponsor, the Trust’s 

NAV per Share will be calculated by 

taking the current market value of its 

total assets, subtracting any liabilities, 

and dividing that total by the number of 

Shares. 

The Administrator of the Trust will 

calculate the NAV once each trading 

day, as of the earlier of the close of the 

New York Stock Exchange or 4:00 p.m. 

Eastern Standard Time (EST). 

According to the Sponsor, to 

determine the value of Ether Futures 

Contracts, the Trust’s Administrator will 

use the Ether Futures Contract 

settlement price on the exchange on 

which the contract is traded, except that 

the ‘‘fair value’’ of Ether Futures 

Contracts (as described in more detail 

below) may be used when Ether Futures 

Contracts close at their price fluctuation 

limit for the day. The Trust’s 

Administrator will determine the value 

of Trust investments as of the earlier of 

the close of the New York Stock 

Exchange or 4:00 p.m. EST. The Trust’s 

NAV will include any unrealized profit 

or loss on open Ether Futures Contacts 

and any other credit or debit accruing to 

the Trust but unpaid or not received by 

the Trust. 

According to the Sponsor, the fair 

value of the Trust’s holdings will be 

determined by the Trust’s Sponsor in 

good faith and in a manner that assesses 

the future Ether market value based on 

a consideration of all available facts and 

all available information on the 

valuation date. When an Ether Futures 

Contract has closed at its price 

fluctuation limit, the fair value 

determination will attempt to estimate 

the price at which such Ether Futures 

Contract would be trading in the 

absence of the price fluctuation limit 

(either above such limit when an 

upward limit has been reached or below 

such limit when a downward limit has 

been reached). Typically, this estimate 

will be made primarily by reference to 

exchange traded instruments at 4:00 

p.m. EST on settlement day. The fair 

value of ETH Contracts and MET 

Contracts may not reflect such security’s 

market value or the amount that the 

Trust might reasonably expect to receive 

for the ETH Contracts and MET 

Contracts upon its current sale. 

Indicative Trust Value 

According to the Sponsor, in order to 

provide updated information relating to 

the Trust for use by investors and 

market professionals, ICE Data Indices, 

LLC will calculate an updated 

Indicative Trust Value (‘‘ITV’’). The ITV 

will be calculated by using the prior 

day’s closing NAV per Share of the 

Trust as a base and will be updated 

throughout the Core Trading Session of 

9:30 a.m. E.T. to 4 p.m. E.T. to reflect 

changes in the value of the Trust’s 

holdings during the trading day. 

The ITV will be disseminated on a per 

Share basis every 15 seconds during the 

Exchange’s Core Trading Session and be 

widely disseminated by one or more 

major market data vendors during the 

Exchange’s Core Trading Session.25

Creation and Redemption of Shares 

According to the Sponsor, the Shares 

issued by the Trust may only be 

purchased by Authorized Purchasers 

and only in blocks of 10,000 Shares 

called ‘‘Creation Baskets.’’ The amount 

of the purchase payment for a Creation 

Basket is equal to the total NAV of 

Shares in the Creation Basket. Similarly, 

only Authorized Purchasers may 

redeem Shares and only in blocks of 

10,000 Shares called ‘‘Redemption 

Baskets.’’ The amount of the redemption 

proceeds for a Redemption Basket is 

equal to the total NAV of Shares in the 

Redemption Basket. The purchase price 


ddrumheller on DSK120RN23PROD with NOTICES1
68176 Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 

26See https://www.cmegroup.com/markets/ 

cryptocurrencies/ether/ether.html?gad=1&

gclid=CjwKCAjwjaWo

BhAmEiwAXz8DBd0hAnxJD205R-TSC-c44r2

Ir7YEssof0NkSOiL1zIwJcv7jsAibNhoCglQQAvD_

BwE&gclsrc=aw.ds. 

27See NYSE Arca Rule 7.12–E. 

for Creation Baskets and the redemption 

price for Redemption Baskets are the 

actual NAV calculated at the end of the 

business day when a request for a 

purchase or redemption is received by 

the Trust. 

‘‘Authorized Purchasers’’ will be the 

only persons that may place orders to 

create and redeem Creation Baskets. 

Authorized Purchasers must be (1) 

either registered broker-dealers or other 

securities market participants, such as 

banks and other financial institutions, 

that are not required to register as 

broker-dealers to engage in securities 

transactions, and (2) DTC Participants. 

An Authorized Purchaser is an entity 

that has entered into an Authorized 

Purchaser Agreement with the Sponsor. 

Creation Procedures 

According to the Sponsor, on any 

‘‘Business Day,’’ an Authorized 

Purchaser may place an order with the 

Transfer Agent to create one or more 

Creation Baskets. For purposes of 

processing both purchase and 

redemption orders, a ‘‘Business Day’’ 

means any day other than a day when 

the CME or the New York Stock 

Exchange is closed for regular trading. 

Purchase orders for Creation Baskets 

must be placed by 3:00 p.m. EST or one 

hour prior to the close of trading on the 

New York Stock Exchange, whichever is 

earlier. The day on which the 

Distributor receives a valid purchase 

order is referred to as the purchase order 

date. If the purchase order is received 

after the applicable cut-off time, the 

purchase order date will be the next 

Business Day. Purchase orders are 

irrevocable. 

By placing a purchase order, an 

Authorized Purchaser agrees to deposit 

cash with the Custodian. 

Redemption Procedures 

According to the Sponsor, the 

procedures by which an Authorized 

Purchaser can redeem one or more 

Creation Baskets will mirror the 

procedures for the creation of Creation 

Baskets. On any Business Day, an 

Authorized Purchaser may place an 

order with the Transfer Agent to redeem 

one or more Creation Baskets. 

The redemption procedures allow 

Authorized Purchasers to redeem 

Creation Baskets. Individual 

shareholders may not redeem directly 

from the Trust. By placing a redemption 

order, an Authorized Purchaser agrees 

to deliver the Creation Baskets to be 

redeemed through DTC’s book entry 

system to the Trust by the end of the 

next Business Day following the 

effective date of the redemption order or 

by the end of such later business day. 

Determination of Redemption 

Distribution 

According to the Sponsor, the 

redemption distribution from the Trust 

will consist of an amount of cash, cash 

equivalents, and/or exchange listed 

Ether futures that is in the same 

proportion to the total assets of the 

Trust on the date that 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. 

Delivery of Redemption Distribution 

According to the Sponsor, an 

Authorized Purchaser who places a 

purchase order will transfer to the 

Custodian the required amount of cash, 

cash equivalents, and/or Ether futures 

by the end of the next business day 

following the purchase order date or by 

the end of such later business day, not 

to exceed three business days after the 

purchase order date, as agreed to 

between the Authorized Purchaser and 

the Custodian when the purchase order 

is placed (the ‘‘Purchase Settlement 

Date’’). Upon receipt of the deposit 

amount, the Custodian will direct DTC 

to credit the number of Creation Baskets 

ordered to the Authorized Purchaser’s 

DTC account on the Purchase 

Settlement Date. 

Availability of Information 

The NAV for the Trust’s Shares will 

be disseminated daily to all market 

participants at the same time. The 

intraday, closing, and settlement prices 

of the Ether Futures Contracts will be 

readily available from the applicable 

futures exchange websites, automated 

quotation systems, published or other 

public sources, or major market data 

vendors. Information regarding the 

market price and trading volume of the 

Shares will be continually available on 

a real-time basis throughout the day on 

brokers’ computer screens and other 

electronic services. 

Complete real-time data for the Ether 

Futures Contracts will be available by 

subscription through on-line 

information services. ICE Futures U.S. 

and CME also provide delayed futures 

and options on futures information on 

current and past trading sessions and 

market news free of charge on their 

respective websites. The specific 

contract specifications for Ether Futures 

Contracts will also be available on such 

websites, as well as other financial 

informational sources. Quotation and 

last-sale information regarding the 

Shares will be disseminated through the 

facilities of the CTA. Quotation 

information for cash equivalents and 

commodity futures may be obtained 

from brokers and dealers who make 

markets in such instruments. Intra-day 

price and closing price level 

information for the Benchmark will be 

available from major market data 

vendors. The Benchmark value will be 

disseminated once every 15 seconds 

during the Core Trading Session. The 

Benchmark components and 

methodology will be made publicly 

available on the CME’s website 26 and 

the Trust’s website 

(www.grayscale.com). 

In addition, the Trust’s website will 

display the applicable end of day 

closing NAV. The daily holdings of the 

Trust will be available on the Trust’s 

website. The Trust’s website will also 

include a form of the prospectus for the 

Trust that may be downloaded. The 

website will include the Shares’ ticker 

and CUSIP information along with 

additional quantitative information 

updated on a daily basis, including: (1) 

the prior Business Day’s reported NAV 

and closing price and a calculation of 

the premium and discount of the closing 

price or mid-point of the bid/ask spread 

at the time of NAV calculation (the 

‘‘Bid/Ask Price’’) against the NAV; and 

(2) data in chart format displaying the 

frequency distribution of discounts and 

premiums of the daily closing price or 

Bid/Ask Price against the NAV, within 

appropriate ranges, for at least each of 

the four previous calendar quarters. The 

website disclosure of portfolio holdings 

will be made daily and will include, as 

applicable, (i) the name, quantity, price, 

and market value of the Trust’s 

holdings, (ii) the counterparty to and 

value of forward contracts and any other 

financial instruments tracking the 

Benchmark, and (iii) the total cash and 

cash equivalents held in the Trust’s 

portfolio, if applicable. 

The Trust’s website will be publicly 

available at the time of the public 

offering of the Shares and accessible at 

no charge. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

the Trust.27 Trading in Shares of the 

Trust will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached. Trading also may be 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 68177 

28 17 CFR 240.10A–3. 

29See Rule 10A–3(c)(7), 17 CFR 240.10A–3(c)(7) 

(stating that a listed issuer is not subject to the 

requirements of Rule 10A–3 if the issuer is 

organized as an unincorporated association that 

does not have a board of directors and the activities 

of the issuer are limited to passively owning or 

holding securities or other assets on behalf of or for 

the benefit of the holders of the listed securities). 

30FINRA conducts cross-market surveillances on 

behalf of the Exchange pursuant to a regulatory 

services agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 

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 ETH and/or MET Contracts and the 

securities and/or the financial 

instruments composing the daily 

disclosed portfolio of the Trust; or (2) 

whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. 

The Exchange may halt trading during 

the day in which an interruption to the 

dissemination of the ITV or the value of 

the Benchmark occurs. The Benchmark 

value will be disseminated once every 

15 seconds during the Core Trading 

Session. The Benchmark components 

and methodology will be made publicly 

available. If the interruption to the 

dissemination of the ITV, or to the value 

of the Benchmark 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. 

The Exchange will obtain a 

representation from the issuer of the 

Shares that the NAV per Share will be 

calculated and disseminated daily and 

will be made available to all market 

participants at the same time. 

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. in accordance with NYSE 

Arca Rule 7.34–E (Early, Core, and Late 

Trading Sessions). The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. As provided in NYSE 

Arca Rule 7.6–E, 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 Shares will conform to the initial 

and continued listing criteria under 

NYSE Arca Rule 8.200–E. The trading of 

the Shares will be subject to NYSE Arca 

Rule 8.200–E, Commentary .02(e), 

which sets forth certain restrictions on 

Equity Trading Permit Holders (‘‘ETP 

Holders’’) acting as registered Market 

Makers in Trust Issued Receipts to 

facilitate surveillance. For initial and 

continued listing, the Trust will be in 

compliance with Rule 10A–3 under the 

Act,28 and the Trust will rely on the 

exception contained in Rule 10A– 

3(c)(7).29 A minimum of 50,000 Shares 

of the Trust will be outstanding at the 

commencement of trading on the 

Exchange. 

Pursuant to NYSE Arca Rule 8.200–E, 

Commentary .02(e), the ETP Holder 

acting as a registered Market Maker in 

Trust Issued Receipts 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 asset or 

commodity, related futures or options 

on futures, or any other related 

derivatives, which the ETP Holder 

acting as registered Market Maker may 

have or over which it may exercise 

investment discretion. No ETP Holder 

acting as registered Market Maker in the 

Trust Issued Receipts shall trade in the 

underlying physical asset or 

commodity, related futures or options 

on futures, or any other related 

derivatives, in an account in which an 

ETP Holder acting as a registered Market 

Maker, directly or indirectly, controls 

trading activities, or has a direct interest 

in the profits or losses thereof, which 

has not been reported to the Exchange 

as required by this Rule. In addition to 

the existing obligations under Exchange 

rules regarding the production of books 

and records (see, e.g., Rule 4.4–E), the 

ETP Holder acting as a registered Market 

Maker in Trust Issued Receipts shall 

make available to the Exchange such 

books, records or other information 

pertaining to transactions by such entity 

or registered or non-registered employee 

affiliated with such entity for its or their 

own accounts in the underlying 

physical asset or commodity, related 

futures or options on futures, or any 

other related derivatives, as may be 

requested by the Exchange. 

Surveillance 

The Exchange represents that trading 

in the Shares of the Trust will be subject 

to the existing trading surveillances 

administered by the Exchange, as well 

as cross-market surveillances 

administered by the Financial Industry 

Regulatory Authority (‘‘FINRA’’) on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws.30 The Exchange 

represents that these procedures are 

adequate to properly monitor Exchange 

trading of the Shares in all trading 

sessions and to deter and detect 

violations of Exchange rules and federal 

securities laws applicable to trading on 

the Exchange. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and the Trust’s 

holdings with other markets and other 

entities that are members of the ISG, and 

the Exchange or FINRA, on behalf of the 

Exchange, or both, may obtain trading 

information regarding trading in the 

Shares and the Trust’s holdings from 

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and the Trust’s holdings from 

markets and other entities that are 

members of ISG or with which the 

Exchange has in place a CSSA. The 

Exchange is also able to obtain 

information regarding trading in the 

Shares and the Trust’s holdings through 

ETP Holders, in connection with such 

ETP Holders’ proprietary or customer 

trades which they effect through ETP 

Holders on any relevant market. The 

Exchange can obtain market 

surveillance information, including 

customer identity information, with 

respect to transactions (including 

transactions in futures contracts) 

occurring on US futures exchanges, 

which are members of the ISG. In 

addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

The Trust will only hold Ether 

Futures Contracts that are listed on an 

exchange that is a member of the ISG or 


ddrumheller on DSK120RN23PROD with NOTICES1
68178 Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 

31For a list of the current members of ISG, see 

www.isgportal.org. The Exchange notes that not all 

components of the Trust may trade on markets that 

are members of ISG or with which the Exchange has 

in place a CSSA. 32 15 U.S.C. 78f(b)(5). 

is a market with which the Exchange 

has a CSSA.31

All statements and representations 

made in this filing regarding (a) the 

description of the portfolios of the Trust 

or Benchmark, (b) limitations on 

portfolio holdings or the Benchmark, or 

(c) the applicability of Exchange listing 

rules specified in this rule filing shall 

constitute continued listing 

requirements for listing the Shares on 

the Exchange. 

The issuer has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Trust to 

comply with the continued listing 

requirements, and, pursuant to its 

obligations under Section 19(g)(1) of the 

Act, the Exchange will monitor for 

compliance with the continued listing 

requirements. If the Trust is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

NYSE Arca Rule 5.5–E(m). 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an information bulletin 

(‘‘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 Early 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 Rule 9.2–E(a), which imposes a 

duty of due diligence on its ETP Holders 

to learn the essential facts relating to 

every customer prior to trading the 

Shares; (4) how information regarding 

the ITV is disseminated; (5) how 

information regarding portfolio holdings 

is disseminated; (6) 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 (7) 

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 Trust. The Exchange 

notes that investors purchasing Shares 

directly from the Trust will receive a 

prospectus. ETP Holders purchasing 

Shares from the Trust for resale to 

investors will deliver a prospectus to 

such investors. The Information Bulletin 

will also discuss any exemptive, noaction, and interpretive relief granted by 

the Commission from any rules under 

the Act. In addition, the Information 

Bulletin will reference that the Trust is 

subject to various fees and expenses 

described in the Registration Statement. 

The Information Bulletin will also 

disclose the trading hours of the Shares 

and that the NAV for the Shares will be 

calculated after 4:00 p.m. E.T. each 

trading day. The Information Bulletin 

will disclose that information about the 

Shares will be publicly available on the 

Trust’s website. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 32 that an 

exchange have rules that are designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to, and perfect the 

mechanism of a free and open market 

and, in general, to protect investors and 

the public interest. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices and to protect 

investors and the public interest in that 

the Shares will be listed and traded on 

the Exchange pursuant to the initial and 

continued listing criteria in NYSE Arca 

Rule 8.200–E. The Exchange has in 

place surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange or FINRA, on behalf 

of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and the Trust’s 

holdings with other markets and other 

entities that are members of the ISG, and 

the Exchange or FINRA, on behalf of the 

Exchange, or both, may obtain trading 

information regarding trading in the 

Shares and the Trust’s holdings from 

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and the Trust’s holdings from 

markets and other entities that are 

members of ISG or with which the 

Exchange has in place a CSSA. The 

Exchange is also able to obtain 

information regarding trading in the 

Shares and the Trust’s holdings through 

ETP Holders, in connection with such 

ETP Holders’ proprietary or customer 

trades which they effect through ETP 

Holders on any relevant market. The 

Exchange can obtain market 

surveillance information, including 

customer identity information, with 

respect to transactions (including 

transactions in Ether Futures Contracts) 

occurring on US futures exchanges, 

which are members of the ISG. The 

intraday, closing prices, and settlement 

prices of the Ether Futures Contracts 

will be readily available from the 

applicable futures exchange websites, 

automated quotation systems, published 

or other public sources, or major market 

data vendors website or on-line 

information services. Information 

regarding market price and trading 

volume of the Shares will be continually 

available on a real-time basis throughout 

the day on brokers’ computer screens 

and other electronic services. 

Complete real-time data for the Ether 

Futures Contracts will be available by 

subscription from on-line information 

services. ICE Futures U.S. and CME also 

provide delayed futures information on 

current and past trading sessions and 

market news free of charge on the 

Trust’s website. The specific contract 

specifications for Ether Futures 

Contracts will also be available on such 

websites, as well as other financial 

informational sources. Information 

regarding options will be available from 

the applicable exchanges or major 

market data vendors. Quotation and 

last-sale information regarding the 

Shares will be disseminated through the 

facilities of the CTA. The ITV will be 

disseminated on a per Share basis every 

15 seconds during the Exchange’s Core 

Trading Session and be widely 

disseminated by one or more major 

market data vendors during the NYSE 

Arca Core Trading Session. The Trust’s 

website will also include a form of the 

prospectus for the Trust that may be 

downloaded. The website will include 

the Share’s ticker and CUSIP 

information along with additional 

quantitative information updated on a 

daily basis, including, for the Trust: (1) 

the prior business day’s reported NAV 

and closing price and a calculation of 

the premium and discount of the closing 

price or mid-point of the Bid/Ask Price 

against the NAV; and (2) data in chart 

format displaying the frequency 

distribution of discounts and premiums 

of the daily closing price or Bid/Ask 

Price against the NAV, within 

appropriate ranges, for at least each of 

the four previous calendar quarters. The 

website disclosure of portfolio holdings 

will be made daily and will include, as 

applicable, (i) the name, quantity, price, 

and market value of Ether Futures 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 190 / Tuesday, October 3, 2023 / Notices 68179 

33 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Terms not defined herein are defined in the GSD 

Rules and MBSD Rules, as applicable, available at 

www.dtcc.com/legal/rules-and-procedures. 

4See Securities Exchange Act Release No. 98163 

(Aug. 18, 2023), 88 FR 58004 (Aug. 24, 2023) (File 

No. SR–FICC–2023–012) (‘‘Notice of Filing’’). 

5Amendment No. 1 made clarifications and 

corrections to Exhibit 3b of the filing (Proposed 

Changes to the Depository Trust and Clearing 

Corporation (‘‘DTCC’’) Model Development 

Continued 

Contracts, (ii) the counterparty to and 

value of forward contracts, and (iii) 

other financial instruments, if any, and 

the characteristics of such instruments 

and cash equivalents, and amount of 

cash held in the Trust’s portfolio, if 

applicable. 

Trading in Shares of the Trust will be 

halted if the circuit breaker parameters 

in NYSE Arca Rule 7.12–E have been 

reached or because of market conditions 

or for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. These may include: (1) the 

extent to which trading is not occurring 

in ETH and/or MET Contracts and the 

securities and/or the financial 

instruments composing the daily 

disclosed portfolio of the Trust; or (2) 

whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest in that 

it will facilitate the listing and trading 

of Trust Issued Receipts based on Ether 

that will enhance competition among 

market participants, to the benefit of 

investors and the marketplace. As noted 

above, the Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. 

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 purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of Trust 

Issued Receipts based on Ether and that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

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 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSEARCA–2023–63 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–NYSEARCA–2023–63. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://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 website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NYSEARCA–2023–63 and should be 

submitted on or before October 24, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21792 Filed 10–2–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98558; File No. SR–FICC– 

2023–012] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of a 

Proposed Rule Change, as Modified by 

Amendment No. 1, Relating to the 

Margin Liquidity Adjustment Charge 

September 27, 2023. 

I. Introduction 

On August 3, 2023, Fixed Income 

Clearing Corporation (‘‘FICC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b-4 thereunder,2 proposed rule 

change SR–FICC–2023–012 to amend 

FICC’s Government Securities Division 

(‘‘GSD’’) Rulebook (‘‘GSD Rules’’) and 

Mortgage-Backed Securities Division 

(‘‘MBSD’’) Clearing Rules (‘‘MBSD 

Rules,’’ and collectively with the GSD 

Rules, the ‘‘Rules’’) 3 to enhance FICC’s 

margin methodology with respect to the 

Margin Liquidity Adjustment Charge 

(‘‘MLA Charge’’). The proposed rule 

change was published for public 

comment in the Federal Register on 

August 24, 2023.4 The Commission has 

received no comments on the proposed 

rule change. On August 22, 2023, FICC 

filed Amendment No. 1 to the proposed 

rule change, to make clarifications to the 

proposed rule change.5 The proposed 


ddrumheller on DSK120RN23PROD with NOTICES1