Federal Register / Vol. 88, No. 245 / Friday, December 22, 2023 / Notices 88687 

31 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98563 

(Sept. 27, 2023), 88 FR 68214 (‘‘Notice’’). The 

Commission has received no comments on the 

proposal. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 98948, 

88 FR 81156 (Nov. 21, 2023). The Commission 

designated January 1, 2024, as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Notice, supra note 3. 

8See Notice, 88 FR at 68215. The Fund is 

managed and controlled by Toroso Investments LLC 

(‘‘Sponsor’’). See id. at 68214. 

9See id. 

10According to the Exchange, the CME currently 

offers two ether futures contracts: one contract 

representing 50 ether (‘‘ETH Contracts’’) and 

another contract representing 0.10 ether (‘‘MET 

Contracts,’’ and collectively, ‘‘Ether Futures 

Contracts’’). See id. at 68214. 

11See id. at 68214. The Fund will hold a mix of 

Ether Futures Contracts, spot ether, and cash and 

cash equivalents, subject to certain investment 

restrictions. See id. at 68219. 

12See id. at 68219. According to the Exchange, 

EFP transactions are a type of private agreement 

between two parties to trade a futures position for 

the underlying asset. In an EFP transaction, two 

parties exchange equivalent but offsetting positions 

in an Ether Futures Contract and the underlying 

physical ether. In the context of the Fund, these 

transactions will be used to purchase and sell spot 

ether by delivering or receiving the equivalent 

futures position. See id. at 68229. 

13See id. at 68227–28. 

14See id. at 68231. The Fund’s NAV will include 

any unrealized profit or loss on open ether futures 

contacts and any other credit or debit accruing to 

the Fund but unpaid or not received by the Fund. 

See id. 

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– 

CboeBZX–2023–070 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–CboeBZX–2023–070. 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–CboeBZX–2023–070 and should be 

submitted on or before January 12, 2024. 

Rebuttal comments should be submitted 

by January 26, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–28193 Filed 12–21–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99200; File No. SR– 

NASDAQ–2023–035] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To List and 

Trade Shares of the Hashdex Nasdaq 

Ethereum ETF Under Nasdaq Rule 

5711(i) (Trust Units) 

December 18, 2023. 

On September 20, 2023, The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’ 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 proposed rule change to 

list and trade shares (‘‘Shares’’) of the 

Hashdex Nasdaq Ethereum ETF 

(‘‘Fund’’) under Nasdaq Rule 5711(i) 

(Trust Units). The proposed rule change 

was published for comment in the 

Federal Register on October 3, 2023.3

On November 15, 2023, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

I. Summary of the Proposal 

As described in more detail in the 

Notice,7 the Exchange proposes to list 

and trade the Shares of the Fund, a 

series of the Tidal Commodities Trust I 

(‘‘Trust’’), under Nasdaq Rule 5711(i), 

which governs the listing and trading of 

Trust Units on the Exchange. 

The investment objective of the Fund 

is to have the daily changes in the net 

asset value (‘‘NAV’’) of the Shares 

reflect the daily changes in the price of 

the Nasdaq Ether Reference Price 

(NQETH) (‘‘Benchmark’’), less expenses 

from the Fund’s operations.8 The 

Benchmark is designed to track the 

price performance of ether.9 Under 

normal market conditions, the Fund 

will invest in ether, ether futures 

contracts listed on the Chicago 

Mercantile Exchange, Inc. (‘‘CME’’),10

and in cash and cash equivalents.11 The 

Fund will use the CME’s Exchange for 

Physical (‘‘EFP’’) transactions to acquire 

and dispose of spot ether.12 The Fund 

will be subject to investment restrictions 

on spot ether which cap the Fund’s 

exposure to the ether spot market to a 

specified proportion of the Fund’s NAV 

and restrict the Fund’s notional 

exposure to ether to a set proportion.13

The sub-administrator of the Fund will 

calculate the NAV of the Fund once 

each trading day, as of the earlier of the 

close of the Nasdaq or 4:00 p.m. New 

York time.14 To determine the value of 

Ether Futures Contracts, the Fund’s subadministrator 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 may be used 

when Ether Futures Contracts close at 

their price fluctuation limit for the day. 

The value of spot ether held by the 

Fund would be determined by the 

Sponsor and by Hashdex Asset 

Management Ltd. (‘‘Digital Asset 

Adviser’’) in good faith based on a 

methodology that is entirely derived 

from the settlement prices of Ether 

Futures Contracts on the CME and that 

considers all available facts and all 

available information on the valuation 


ddrumheller on DSK120RN23PROD with NOTICES1
88688 Federal Register / Vol. 88, No. 245 / Friday, December 22, 2023 / Notices 

15See id. at 68222, 68231–32. According to the 

Exchange, this ‘‘futures-based spot price’’ 

methodology involves a calculation that is sensitive 

to both the length of time (‘‘tenor’’) until each Ether 

Futures Contract is due for settlement and the final 

settlement price for each contract. The calculation 

takes into account each contract’s tenor and the 

tenor squared. This approach is designed to give 

more importance to contracts that are due for 

settlement in the near term. The calculation 

produces a set of weighting factors, with each factor 

indicating the contribution of the corresponding 

Ether Futures Contract to the estimated current spot 

price of ether. The estimated spot price is the 

component of the result corresponding to a tenor of 

zero days. The Sponsor and Digital Asset Advisor 

do not use data from ether trading platforms or 

directly from spot ether trading activity in 

determining the value of spot ether held by the 

Fund. See id. at 68222–23. 

16See id. at 68232–33. 

17 15 U.S.C. 78s(b)(2)(B). 

18 Id. 

19 15 U.S.C. 78f(b)(5). 

20Nasdaq Rule 5711(i)(3)(B) defines the term 

‘‘Trust Units’’ as a security that is issued by a trust 

or other similar entity that is constituted as a 

commodity pool that holds investments comprising 

or otherwise based on any combination of futures 

contracts, options on futures contracts, forward 

contracts, swap contracts, commodities and/or 

securities. 

21See Notice, 88 FR at 68218, 68220–21, 68226– 

27. 

22See id. at 68219. 

23See id. at 68219–20. 

24See id. at 68220–21. 

25See id. at 68219. 

26See id. 

27See id. 

28See, e.g., id. at 68229–30. 

29See id. at 68230. 

30See id. at 68231. 

31See id. at 68222–25. 

32See id. at 68225. 

date.15 When the Fund sells or redeems 

its Shares, it will do so in cash 

transactions with authorized 

participants in blocks of 10,000 

Shares.16

II. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

NASDAQ–2023–035 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 17 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of proceedings is appropriate 

at this time in view of the legal and 

policy issues raised by the proposed 

rule change, as discussed below. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,18 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

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

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 19

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following questions 

and asks commenters to submit data 

where appropriate to support their 

views: 

1. Given the nature of the underlying 

assets held by the Fund, has the 

Exchange properly filed its proposal to 

list and trade the Shares under Nasdaq 

Rule 5711(i) (Trust Units)? 20

2. The Exchange raises similar 

arguments to support the listing and 

trading of the Shares as those made in 

proposals to list and trade spot bitcoin 

exchange-traded products (‘‘Bitcoin 

ETPs’’). Do commenters agree that 

arguments to support the listing of 

Bitcoin ETPs apply equally to the 

Shares? Are there particular features 

related to ether and its ecosystem, 

including its proof of stake consensus 

mechanism and concentration of control 

or influence by a few individuals or 

entities, that raise unique concerns 

about ether’s susceptibility to fraud and 

manipulation? 

3. What are commenters’ views on 

whether the proposed Fund and Shares 

would be susceptible to manipulation? 

What are commenters’ views generally 

on whether the Exchange’s proposal is 

designed to prevent fraudulent and 

manipulative acts and practices? What 

are commenters’ views generally with 

respect to the liquidity and transparency 

of the ether markets and the ether 

markets’ susceptibility to manipulation? 

4. Based on data and analysis 

provided by the Exchange,21 what are 

commenters views on whether the CME, 

on which CME ether futures trade and 

through which the Fund intends to 

engage in EFP transactions to purchase 

or sell spot ether, represents a regulated 

market of significant size related to spot 

ether? 22 What are commenters’ views 

on whether there is a reasonable 

likelihood that a person attempting to 

manipulate the Shares would also have 

to trade on the CME to manipulate the 

Shares? 23 Do commenters agree with 

the Exchange that trading in the Shares 

would not be the predominant influence 

on prices in the CME ether futures 

market? 24

5. The Exchange states that the Fund 

intends to adopt ‘‘an innovative 

approach to mitigate the risks of fraud 

and manipulation that are unique to the 

Fund’’ by ‘‘structur[ing] the operation of 

the Fund such that the regulated market 

of significant size in relation to the 

Fund is the [CME] because it is the same 

market on which the Fund trades its 

non-cash assets.’’ 25 The Exchange 

further states that the Fund has features 

that underscore its significant 

interrelationship with the CME, 

including that the Fund (i) utilizes 

futures-based pricing for spot ether such 

that the NAV calculation for the spot 

ether holdings of the Fund will be 

derived from the CME ether futures 

curve; (ii) is subject to investment 

restrictions on spot ether; (iii) will use 

CME EFP transactions to acquire and 

dispose of spot ether ‘‘instead of 

transactions on unregulated spot 

exchanges’’; and (iv) will utilize only 

cash creations and redemptions.26

Based on the structure and operation of 

the Fund and the Fund’s investments as 

described in the filing, what are 

commenters’ views on whether the CME 

represents a regulated market of 

significant size related to spot ether? 27

6. The Fund will only use CME EFP 

transactions to acquire and dispose of 

spot ether.28 The Exchange states that 

‘‘trading activity in EFP transactions is 

sporadic’’ but that, ‘‘[n]onetheless, the 

Sponsor believes that a large number of 

liquidity providers are ready to execute 

this type of transaction and can provide 

enough liquidity to support the [Fund’s] 

demand.’’ 29 Do commenters agree? Why 

or why not? 

7. The value of spot ether held by the 

Fund would be determined using a 

futures-based spot price methodology 

that is derived from the settlement 

prices of ether futures contracts on the 

CME.30 The Exchange presents data 31

that it states ‘‘strongly suggests that 

[futures-based spot pricing] is a suitable 

choice for the NAV calculation.’’ 32 The 

Exchange states that futures-based spot 

pricing ‘‘could create some level of 

uncertainty due to the potential 

divergences between the [futures-based 

spot price] and the spot prices observed 

in unregulated markets’’ but that 

authorized participants ‘‘will always be 

in a position to hedge their exposure 

using exclusively the [CME ether futures 

market], which will make them more 

likely to provide liquidity to the Fund 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 245 / Friday, December 22, 2023 / Notices 88689 

33See id. 

34See, e.g., Notice of Filing of a Proposed Rule 

Change to List and Trade Shares of the VanEck 

Ethereum ETF under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares, Securities 

Exchange Act Release No. 98457 (Sept. 20, 2023), 

88 FR 66076 (Sept. 26, 2023), 66081 (stating that 

‘‘The Sponsor’s research indicates daily correlation 

between the spot ETH and the CME ETH Futures 

is 0.998 from the period of 9/1/22 through 9/1/ 

23.’’). 

35See Notice, 88 FR at 68226–27. 

36Section 19(b)(2) of the Act, as amended by the 

Securities Acts Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Acts Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 

37 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

thus making its market price converge to 

its NAV.’’ 33 Do commenters agree with 

the Exchange? Why or why not? 

8. Some sponsors of proposed ether 

exchange-traded products have made 

statements regarding the correlation 

between ether spot markets and the 

CME ether futures market.34 What are 

commenters’ views on the correlation 

between the ether spot market and the 

CME ether futures market? What are 

commenters’ views on the extent to 

which a surveillance-sharing agreement 

with the CME would assist in detecting 

and deterring fraud and manipulation 

that impacts an exchange-traded 

product (‘‘ETP’’) that also holds spot 

ether, and on whether correlation 

analysis provides any evidence to this 

effect? What are commenters’ views on 

the Sponsor’s own statistical analysis of 

the relationship between prices in 

certain unregulated ether markets and 

prices of CME ether futures contracts? 35

What are commenters’ views generally 

on whether an ETP that holds only CME 

ether futures and an ETP that also holds 

spot ether are similar products? 

III. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.36

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change should be 

approved or disapproved by January 12, 

2024. Any person who wishes to file a 

rebuttal to any other person’s 

submission must file that rebuttal by 

January 26, 2024. 

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– 

NASDAQ–2023–035 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–NASDAQ–2023–035. 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–NASDAQ–2023–035 and should be 

submitted on or before January 12, 2024. 

Rebuttal comments should be submitted 

by January 26, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–28196 Filed 12–21–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99203; File No. SR– 

PEARL–2023–71] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 2615(d) To Eliminate the 

Contingent Open 

December 18, 2023. 

Pursuant to the provisions of 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 December 14, 2023, MIAX PEARL, 

LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Exchange Rule 2615(d) regarding the 

Contingent Open performed on the 

Exchange’s equity trading platform 

(referred to herein as ‘‘MIAX Pearl 

Equities’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-equities/pearl-equities/rule-filings, at 

MIAX Pearl’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 


ddrumheller on DSK120RN23PROD with NOTICES1