Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 19987 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55372 

(February 28, 2007), 72 FR 10267. 

4USNG is a commodity pool that will issue Units 

that may be purchased and sold on the Exchange. 

5The Benchmark Futures Contracts will be 

changed or ‘‘rolled’’ from the near month contract 

to expire over to the next month to expire over a 

four (4) day period. 

6USNG expects that the initial Authorized 

Purchaser will purchase the initial Basket of 

100,000 Units at the initial offering price per Unit 

of $50.00. On the date of the public offering and 

thereafter, USNG will continuously issue Units in 

Baskets of 100,000 Units to Authorized Purchasers 

at NAV. 7See 17 CFR 240.10A–3. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55632; File No. SR–Amex–

2006–112] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Order 

Granting Approval of a Proposed Rule 

Change, as Modified by Amendment 

No. 1, Relating to the Listing and 

Trading of Units of the United States 

Natural Gas Fund, LP 

April 13, 2007. 

I. Introduction 

On December 1, 2006, the American 

Stock Exchange LLC (‘‘Amex’’ or 

‘‘Exchange’’) 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 a proposal to list and trade 

units (a ‘‘Unit’’ or collectively, the 

‘‘Units’’) of the United States Natural 

Gas Fund, LP (‘‘USNG’’) pursuant to 

Amex Rules 1500 et seq. On February 

14, 2007, the Exchange submitted 

Amendment No. 1 to the proposed rule 

change. The proposed rule change, as 

modified by Amendment No. 1, was 

published for comment in the Federal 

Register on March 7, 2007 for a 15-day 

comment period.3 The Commission 

received no comments regarding the 

proposal. This order approves the 

proposed rule change, as modified by 

Amendment No. 1. 

II. Description of the Proposal 

The Exchange proposes to list and 

trade the Units issued by USNG 

pursuant to Amex Rules 1500 et seq. 

The Units represent ownership of a 

fractional undivided beneficial interest 

in the net assets of USNG.4 The net 

assets of USNG will consist of 

investments in futures contracts based 

on natural gas, crude oil, heating oil, 

gasoline, and other petroleum-based 

fuels traded on the New York 

Mercantile Exchange (‘‘NYMEX’’), 

Intercontinental Exchange (‘‘ICE 

Futures’’) or other U.S. and foreign 

exchanges (collectively, ‘‘Futures 

Contracts’’). USNG may also invest in 

other natural gas-related investments 

such as cash-settled options on Futures 

Contracts, forward contracts for natural 

gas, and over-the-counter transactions 

that are based on the price of natural 

gas, oil and other petroleum-based fuels, 

Futures Contracts and indices based on 

the foregoing (collectively, ‘‘Other 

Natural Gas Related Investments’’). 

Futures Contracts and Other Natural Gas 

Related Investments collectively are 

referred to as ‘‘Natural Gas Interests.’’

USNG will invest in Natural Gas 

Interests to the fullest extent possible 

without being leveraged or unable to 

satisfy its current or potential margin or 

collateral obligations. In pursuing this 

objective, the primary focus of USNG’s 

investment manager, Victoria Bay Asset 

Management, LLC (‘‘General Partner’’), 

will be the investment in Futures 

Contracts and the management of its 

investments in short-term obligations of 

the United States, cash equivalents, and 

cash for margining purposes and as 

collateral. 

The investment objective of USNG is 

for changes in percentage terms of a 

Unit’s net asset value (‘‘NAV’’) to reflect 

the changes in percentage terms of the 

price of natural gas delivered at the 

Henry Hub, Louisiana as measured by 

the natural gas futures contract traded 

on the NYMEX (the ‘‘Benchmark 

Futures Contract’’). The Benchmark 

Futures Contract employed is the near 

month expiration contract, except when 

the near month contract is within two 

(2) weeks of expiration, in which case 

the Benchmark Futures Contract is the 

next expiration month.5

The General Partner will attempt to 

place USNG’s trades in Natural Gas 

Interests and otherwise manage USNG’s 

investments so that ‘‘A’’ will be within 

plus/minus 10 percent of ‘‘B,’’ where: 

• A is the average daily change in 

USNG’s NAV for any period of 30 

successive valuation days, i.e., any day 

as of which USNG calculates its NAV; 

and 

• B is the average daily change in the 

price of the Benchmark Futures Contract 

over the same period. 

USNG will be subject to the criteria in 

Amex Rule 1502 for initial and 

continued listing of the Units. The 

Amex stated that it will require a 

minimum of 100,000 Units to be 

outstanding at the start of trading and 

expects that the initial price of a Unit 

will be $50.00.6 The Exchange 

represented that it prohibits the initial 

and/or continued listing of any security 

that is not in compliance with Rule 

10A–3 under the Act.7 Further, the 

Exchange stated that it will file a 

proposed rule change with the 

Commission pursuant to Rule 19b–4 

under the Act seeking approval to 

continue trading the Units and, unless 

approved, the Exchange will commence 

delisting the Units if more than a 

temporary disruption exists in 

connection with the pricing of the 

Benchmark Futures Contract or the 

calculation or dissemination of the NAV 

is more than temporarily disrupted, or 

the NAV is not disseminated to all 

market participants at the same time. 

Amex Rule 1503 relating to certain 

specialist prohibitions will address 

potential conflicts of interest in 

connection with acting as a specialist in 

the Units. Specifically, Rule 1503 

provides that the prohibitions in Amex 

Rule 175(c) apply to a specialist in the 

Units so that the specialist or affiliated 

person may not act or function as a 

market-maker in an underlying asset, 

related futures contract or option or any 

other related derivative. An affiliated 

person of the specialist consistent with 

Amex Rule 193 may be afforded an 

exemption to act in a market making 

capacity, other than as a specialist in the 

Units on another market center, in the 

underlying asset, related futures or 

options or any other related derivative. 

In particular, Amex Rule 1503 provides 

that an approved person of an equity 

specialist that has established and 

obtained Exchange approval for 

procedures restricting the flow of 

material, non-public market information 

between itself and the specialist 

member organization, and any member, 

officer, or employee associated 

therewith, may act in a market making 

capacity, other than as a specialist in the 

Units on another market center, in the 

underlying asset or commodity, related 

futures or options on futures, or any 

other related derivatives. 

Amex Rule 1504 will also ensure that 

specialists handling the Units provide 

the Exchange with all the necessary 

information relating to their trading in 

physical assets or commodities, related 

futures contracts and options thereon or 

any other derivative. As a general 

matter, the Exchange has regulatory 

jurisdiction over its members, member 

organizations and approved persons of a 

member organization. The Exchange 

also has regulatory jurisdiction over any 

person or entity controlling a member 

organization as well as a subsidiary or 

affiliate of a member organization that is 

in the securities business. A subsidiary 

or affiliate of a member organization 

that does business only in commodities 


sroberts on PROD1PC70 with NOTICES
19988 Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 

8 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78k–1(a)(1)(C)(iii). 

12See 17 CFR 240.10A–3. 

13 15 U.S.C. 78s(b)(2). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

5 17 CFR 240.19b–4(f)(6)(iii). 

or futures contracts would not be 

subject to Exchange jurisdiction, but the 

Exchange could obtain information 

regarding the activities of such 

subsidiary or affiliate through 

surveillance sharing agreements with 

regulatory organizations of which such 

subsidiary or affiliate is a member. 

III. Discussion and Commission 

Findings 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange 8 and, in 

particular, the requirements of Section 6 

of the Act.9 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,10 which requires, 

among other things, that the rules of a 

national securities exchange be 

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 a national market 

system, and, in general, to protect 

investors and the public interest. 

The Commission further believes that 

the proposal is consistent with Section 

11A(a)(1)(C)(iii) of the Act,11 which sets 

forth Congress’ finding that it is in the 

public interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers, and investors of information 

with respect to quotations for and 

transaction in securities. Amex 

represented that quotation for and lastsale information regarding the futures 

contracts held by USNG, including the 

future contracts underlying the 

Benchmark Index are widely 

disseminated through a variety of 

market data vendors worldwide, 

including Bloomberg and Reuters. In 

addition, the Exchange further 

represented that real-time futures data is 

available by subscription from Reuters 

and Bloomberg. The NAV of the Units 

is available at the Web site of the 

Exchange. The Commission believes 

that Amex’s proposal is reasonable 

designed to promote transparency in the 

pricing of the Units, and to prevent 

trading when a reasonable degree of 

transparency cannot be assured. The 

proposal also appears reasonably 

designed to prevent the misuse of 

information by specialists. 

In support of this proposal, the 

Exchange has made the following 

representations: 

(1) The Exchange represented that it 

currently has in place an Information 

Sharing Agreement with the NYMEX 

and ICE Futures for the purpose of 

providing information in connection 

with trading in or related to futures 

contracts traded on the NYMEX and ICE 

Futures, respectively. To the extent that 

USNG invests in Natural Gas Interests 

traded on other exchanges, the Amex 

represented that it will seek to enter into 

Information Sharing arrangements with 

those particular exchanges. 

(2) Amex would distribute an 

information circular to Exchange 

members and member organizations, 

prior to the commencement of trading 

providing guidance with regard to 

member firm compliance 

responsibilities (including suitability 

recommendations) when handling 

transaction in the Units. In addition, 

investors purchasing Units directly from 

USNG (by delivery of the Deposit 

Amount) would receive a prospectus 

from USNG. Amex members purchasing 

Units from USNG for resale to investors 

would deliver a prospectus to such 

investors. 

(3) Amex submits that its surveillance 

procedures are adequate to deter and 

detect violations of Exchange rules 

relating to the trading of the Units. The 

surveillance procedures for the Units 

will be similar to those used for units of 

the United States Oil Fund, LP as well 

as other commodity-based trusts, trust 

issued receipts and exchange-traded 

funds. In addition, the surveillance 

procedures will incorporate and rely 

upon existing Amex surveillance 

procedures governing options and 

equities. 

(4) Amex represents that it prohibits 

the initial and/or continued listing of 

any security that is not in compliance 

with Rule 10A–3 under the Act.12

This order is conditioned on Amex’s 

adherence to these representations. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,13 that the 

proposed rule change (SR–Amex–2006–

112), as modified by Amendment No. 1, 

be, and is hereby approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7486 Filed 4–19–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55636; File No. SR–Amex–

2007–32] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change To Shorten 

the Minimum Required Time Periods 

Required Between Tape Indications 

and Openings or Reopenings 

April 16, 2007. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on March 30, 

2007, the American Stock Exchange LLC 

(‘‘Amex’’ or ‘‘Exchange’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Amex. The Exchange has filed 

the proposal pursuant to Section 

19(b)(3)(A) of the Act,3 and Rule 19b–

4(f)(6) thereunder,4 which renders the 

proposal effective upon filing with the 

Commission. 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 amend the 

Amex Rules regarding openings and 

halts in trading to shorten the minimum 

time periods required between tape 

indications and openings or reopenings. 

The Exchange has designated this 

proposal as non-controversial and has 

requested that the Commission waive 

the 30-day pre-operative waiting period 

contained in Rule 19b–4(f)(6)(iii) under 

the Act.5

The text of the proposed rule change 

is available on the Amex’s Web site at 

http://www.amex.com, the Office of the 

Secretary, the Amex and at the 

Commission’s Public Reference Room. 


sroberts on PROD1PC70 with NOTICES