81600 Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 

50 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Trust was formed as a Delaware statutory 

trust on August 13, 2024. The Fund is operated as 

a partnership for U.S. federal tax purposes. The 

Trust and the Fund have no fixed termination date. 

4The Commission approved BZX Rule 14.11(e)(4) 

in Securities Exchange Act Release No. 65225 

(August 30, 2011), 76 FR 55148 (September 6, 2011) 

(SR–BATS–2011–018). 

5Any of the statements or representations 

regarding the index composition, the description of 

the portfolio or reference assets, limitations on 

portfolio holdings or reference assets, dissemination 

and availability of index, reference asset, and 

intraday indicative values, or the applicability of 

Exchange listing rules specified in this filing to list 

a series of Other Securities (collectively, 

‘‘Continued Listing Representations’’) shall 

constitute continued listing requirements for the 

Shares listed on the Exchange. 

6On August 16, 2024, the Trust filed with the 

Commission the Registration Statement on Form S– 

1, submitted to the Commission by the Sponsor on 

behalf of the Trust (333–281615). The descriptions 

of the Trust, the Shares, and the Index (as defined 

below) contained herein are based, in part, on 

information in the Registration Statement. The 

Registration Statement is not yet effective and the 

Shares will not trade on the Exchange until such 

time that the Registration Statement is effective. 

7See Exchange Rule 14.11(f). 

8Commodity-Based Trust Shares, as described in 

Exchange Rule 14.11(e)(4), are a type of Trust 

Issued Receipt. 

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– 

CBOE–2024–042 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–CBOE–2024–042. 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–CBOE–2024–042 and should be 

submitted on or before October 29, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.50

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–23064 Filed 10–7–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101233; File No. SR– 

CboeBZX–2024–091] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To List and 

Trade Shares of the Franklin Crypto 

Index ETF, a Series of the Franklin 

Crypto Trust, Under BZX Rule 

14.11(e)(4), Commodity-Based Trust 

Shares 

October 2, 2024. 

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 

September 19, 2024, Cboe BZX 

Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

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 

Cboe BZX Exchange, Inc. (‘‘BZX’’ or 

the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) a proposed 

rule change to list and trade shares of 

the Franklin Crypto Index ETF (the 

‘‘Fund’’), a series of the Franklin Crypto 

Trust (the ‘‘Trust’’),3 under BZX Rule 

14.11(e)(4), Commodity-Based Trust 

Shares. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

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 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade the Shares under BZX Rule 

14.11(e)(4),4 which governs the listing 

and trading of Commodity-Based Trust 

Shares on the Exchange.5 Franklin 

Holdings, LLC is the sponsor of the 

Fund (‘‘Sponsor’’). The Shares will be 

registered with the Commission by 

means of the Trust’s registration 

statement on Form S–1 (the 

‘‘Registration Statement’’).6

Section 6(b)(5) and the Applicable 

Standards 

The Commission has approved 

numerous series of Trust Issued 

Receipts,7 including Commodity-Based 

Trust Shares,8 to be listed on U.S. 

national securities exchanges. In order 

for any proposed rule change from an 

exchange to be approved, the 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 81601 

9See Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (August 1, 2018). This 

proposal was subsequently disapproved by the 

Commission. See Securities Exchange Act Release 

No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 

2018) (the ‘‘Winklevoss Order’’). Prior orders from 

the Commission have pointed out that in every 

prior approval order for Commodity-Based Trust 

Shares, there has been a derivatives market that 

represents the regulated market of significant size, 

generally a Commodity Futures Trading 

Commission (the ‘‘CFTC’’) regulated futures market. 

Further to this point, the Commission’s prior orders 

have noted that the spot commodities and currency 

markets for which it has previously approved spot 

ETPs are generally unregulated and that the 

Commission relied on the underlying futures 

market as the regulated market of significant size 

that formed the basis for approving the series of 

Currency and Commodity-Based Trust Shares, 

including gold, silver, platinum, palladium, copper, 

and other commodities and currencies. The 

Commission specifically noted in the Winklevoss 

Order that the approval order issued related to the 

first spot gold ETP ‘‘was based on an assumption 

that the currency market and the spot gold market 

were largely unregulated.’’ See Winklevoss Order at 

37592. As such, the regulated market of significant 

size test does not require that the spot bitcoin and 

ether markets be regulated in order for the 

Commission to approve this proposal, and 

precedent makes clear that an underlying market for 

a spot commodity or currency being a regulated 

market would actually be an exception to the norm. 

These largely unregulated currency and commodity 

markets do not provide the same protections as the 

markets that are subject to the Commission’s 

oversight, but the Commission has consistently 

looked to surveillance sharing agreements with the 

underlying futures market in order to determine 

whether such products were consistent with the 

Act. 

10See Winklevoss Order, 83 FR at 37580. 

11For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

12See Exchange Act Release No. 99306 (January 

10, 2024), 89 FR 3008 (January 17, 2024) (SelfRegulatory Organizations; NYSE Arca, Inc.; The 

Nasdaq Stock Market LLC; Cboe BZX Exchange, 

Inc.; Order Granting Accelerated Approval of 

Proposed Rule Changes, as Modified by 

Amendments Thereto, To List and Trade BitcoinBased Commodity-Based Trust Shares and Trust 

Units) (the ‘‘Spot Bitcoin ETP Approval Order’’). 

13See Exchange Act Release No. 100224 (May 23, 

2024), 89 FR 46937 (May 30, 2024) (Self-Regulatory 

Organizations; NYSE Arca, Inc.; The Nasdaq Stock 

Market LLC; Cboe BZX Exchange, Inc.; Order 

Granting Accelerated Approval of Proposed Rule 

Changes, as Modified by Amendments Thereto, To 

List and Trade Shares of Ether-Based ExchangeTraded Products) (the ‘‘Spot Ether ETP Approval 

Order’’). 

14See the Spot Bitcoin ETP Approval Order at 

3011–3012. 

15See Securities Exchange Act No. 82448 

(January 5, 2018) 83 FR 1428 (January 11, 2018) 

(SR–NYSEArca–2017–131) (NYSE Arca, Inc.; Notice 

of Filing of Amendment No. 2 and Order Approving 

on an Accelerated Basis a Proposed Rule Change, 

as Modified by Amendment No. 2, To List and 

Trade Shares of the Sprott Physical Gold and Silver 

Trust Under NYSE Arca Rule 8.201–E). 

16Cash equivalents are short-term instruments 

with maturities of less than 3 months. 

17The ‘‘Index’’ refers to the CF Institutional 

Digital Asset Index—US-Settlement Price. 

Commission must determine that, 

among other things, the proposal is 

consistent with the requirements of 

Section 6(b)(5) of the Act, specifically 

including: (i) the requirement that a 

national securities exchange’s rules are 

designed to prevent fraudulent and 

manipulative acts and practices; and (ii) 

the requirement that an exchange 

proposal be designed, in general, to 

protect investors and the public interest. 

The Commission has historically 

approved or disapproved exchange 

filings to list and trade series of Trust 

Issued Receipts, including spot-based 

Commodity-Based Trust Shares, on the 

basis of whether the listing exchange 

has in place a comprehensive 

surveillance sharing agreement with a 

regulated market of significant size 

related to the underlying commodity to 

be held.9 The Commission has also 

consistently recognized, however, that 

this is not the exclusive means by which 

an ETP listing exchange can meet this 

statutory obligation.10 A listing 

exchange could, alternatively, 

demonstrate that ‘‘other means to 

prevent fraudulent and manipulative 

acts and practices will be sufficient’’ to 

justify dispensing with a surveillancesharing agreement with a regulated 

market of significant size. 

Both the Exchange and Chicago 

Mercantile Exchange (‘‘CME’’) are 

members of the Intermarket 

Surveillance Group (‘‘ISG’’).11 With this 

in mind, the CME ether futures (‘‘Ether 

Futures’’) market and the CME bitcoin 

futures (‘‘Bitcoin Futures’’) market are 

the proper markets to consider in 

determining whether there is a related 

regulated market of significant size. 

Recently, the Commission issued orders 

granting approval for proposals to list 

bitcoin-based (‘‘Spot Bitcoin ETPs’’) 12

and ether-based (‘‘Spot Ether ETPs’’) 13

commodity trust and trust issued 

receipts (these funds are nearly identical 

to the Fund but hold either bitcoin or 

ether instead of bitcoin and ether). In 

the Spot Bitcoin ETP Approval Order, 

the Commission stated: 

[B]ased on the record before the 

Commission and the improved quality of the 

correlation analysis in the record . . . the 

Commission is able to conclude that fraud or 

manipulation that impacts prices in spot 

bitcoin markets would likely similarly 

impact CME bitcoin futures prices. And 

because the CME’s surveillance can assist in 

detecting those impacts on CME bitcoin 

futures prices, the Exchanges’ comprehensive 

surveillance-sharing agreement with the 

CME–a U.S. regulated market whose bitcoin 

futures market is consistently highly 

correlated to spot bitcoin, albeit not of 

‘‘significant size’’ related to spot bitcoin–can 

be reasonably expected to assist in 

surveilling for fraudulent and manipulative 

acts and practices in the specific context of 

the [p]roposals.14

In the Spot Ether ETP Approval Order 

the Commission also concluded that 

fraud or manipulation that impacts 

prices in spot ether markets would 

likely similarly impact CME Ether 

Futures prices. Further, for the same 

reasons that the CME’s surveillance can 

assist in detecting those impacts on 

CME Ether Futures prices, the 

Exchange’s comprehensive surveillancesharing agreement with the CME can be 

reasonably expected to assist in 

surveilling for fraudulent and 

manipulative acts and practices in the 

specific context of the proposals. 

In sum, in the Spot Bitcoin ETP 

Approval Order and Spot Ether ETP 

Approval Order the Commission 

established that the CME Bitcoin 

Futures market and CME Ether Futures 

market can reasonably be expected to 

assist for fraudulent and manipulative 

acts and practices. Further, the listing 

exchanges demonstrated ‘‘other means 

to prevent fraudulent and manipulative 

acts and practices will be sufficient’’ to 

justify dispensing with with the 

‘‘significant size’’ portion of the 

‘‘regulated market of significant size’’ 

test. 

The Exchange notes that the 

Commission has also previously 

approved the listing and trading of a 

series of Commodity-Based Trust Shares 

on another exchange that, like the Fund, 

holds two commodities.15 Given this 

and the above, the Exchange believes 

the Shares satisfy the requirements of 

Exchange Rule BZX Rule 14.11(e)(4) and 

thereby qualify for listing and trading on 

the Exchange. 

Franklin Crypto Index ETF 

CSC Delaware Trust Company, a 

subsidiary of the Corporation Service 

Company, is the trustee (‘‘Trustee’’). 

Bank of New York Mellon is the 

custodian for the Fund’s cash and cash 

equivalents 16 (the ‘‘Cash Custodian’’) 

and also serves as the Fund’s 

administrator and transfer agent (the 

‘‘Administrator’’ or ‘‘Transfer Agent’’). 

Coinbase Custody Trust Company, LLC 

(the ‘‘Digital Custodian’’) will be 

responsible for custody of the Fund’s 

bitcoin and ether. According to the 

Registration Statement, each Share will 

represent a fractional undivided 

beneficial interest in the Fund’s net 

assets. The Fund’s assets will only 

consist of bitcoin, ether, cash, and cash 

equivalents. In the event that any digital 

asset other than bitcoin and ether is 

included, or is eligible for inclusion, as 

a constituent in the Index,17 the Sponsor 

will transition the Fund from full 

replication to a representative sampling 

methodology, holding only bitcoin and 


ddrumheller on DSK120RN23PROD with NOTICES1
81602 Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 

18 15 U.S.C. 80a–1. 

19For redemptions, the process will occur in the 

reverse order. Upon receipt of an approved 

redemption order, the Sponsor, on behalf of the 

Fund, will submit an order to sell the amount of 

bitcoin and ether represented by a Creation Basket 

and the cash proceeds will be remitted to the 

authorized participant when the large block of 

Shares is received by the Transfer Agent. 

20Any alternative method will only be employed 

on an ad hoc basis. Any permanent change to the 

calculation of the NAV would require a proposed 

rule change under Rule 19b–4. 

ether in the same proportions 

determined by the Index, until such 

time that the Fund and the Exchange 

receive the necessary regulatory 

approval to permit the Fund to hold 

such other digital asset. 

According to the Registration 

Statement, the Trust is neither an 

investment company registered under 

the 1940 Act,18 nor a commodity pool 

for purposes of the Commodity 

Exchange Act (‘‘CEA’’), and neither the 

Trust, the Fund nor the Sponsor is 

subject to regulation as a commodity 

pool operator or a commodity trading 

adviser in connection with the Shares. 

Neither the Trust or the Fund, nor the 

Sponsor, nor the Custodian, nor any 

other person associated with the Trust 

or Fund will, directly or indirectly, 

engage in action where any portion of 

the Fund’s ether becomes subject to the 

Ethereum proof-of-stake validation or is 

used to earn additional ether or generate 

income or other earnings. The Fund will 

not acquire and will disclaim any 

incidental right (‘‘IR’’) or IR asset 

received, for example as a result of forks 

or airdrops, and such assets will not be 

taken into account for purposes of 

determining the Fund’s net asset value 

(‘‘NAV’’). 

When the Fund sells or redeems its 

Shares, it will do so in cash transactions 

in large blocks of 50,000 Shares (a 

‘‘Creation Basket’’) at the Fund’s NAV. 

For creations, authorized participants 

will deliver, or facilitate the delivery of, 

cash to the Fund’s account with the 

Cash Custodian in exchange for Shares. 

Upon receipt of an approved creation 

order, the Sponsor, on behalf of the 

Fund, will submit an order to buy the 

amount of bitcoin and ether represented 

by a Creation Basket. Based off bitcoin/ 

ether executions, the Cash Custodian 

will request the required cash from the 

authorized participant. Following 

receipt by the Cash Custodian of the 

cash from an authorized participant, the 

Sponsor, on behalf of the Fund, will 

approve an order with one or more 

previously onboarded trading partners 

to purchase the amount of bitcoin and 

ether represented by the Creation 

Basket.19 Authorized participants may 

then offer Shares to the public at prices 

that depend on various factors, 

including the supply and demand for 

Shares, the value of the Fund’s assets, 

and market conditions at the time of a 

transaction. Shareholders who buy or 

sell Shares during the day from their 

broker may do so at a premium or 

discount relative to the NAV of the 

Shares of the Fund. 

Investment Objective 

According to the Registration 

Statement and as further described 

below, the investment objective of the 

Fund is for changes in the Shares’ NAV 

to reflect the daily changes of the Index, 

less expenses and liabilities of the Fund. 

The Fund will seek to achieve its 

investment objective by investing in 

bitcoin and ether in approximately the 

same weights as they represent in the 

Index, which is a free float-adjusted 

market capitalization weighted index of 

liquid digital assets that are recognized 

as being in conformance with prevailing 

markets regulations of major financial 

jurisdictions as determined by CF 

Benchmarks Ltd. (the ‘‘Index Provider’’). 

In seeking to achieve its investment 

objective, the Fund will hold only 

bitcoin, ether, cash, and cash 

equivalents. The price of bitcoin and 

ether within the Index is based on the 

CME CF Bitcoin Reference Rate—New 

York Variant for the Bitcoin—U.S. 

Dollar trading pair (the ‘‘CF Bitcoin 

Reference Rate’’) and the CME CF EtherDollar Reference Rate—New York 

Variant for the ether-U.S. Dollar trading 

pair (the ‘‘CF Ether Reference Rate’’, and 

together with the CF Bitcoin Reference 

Rate, the ‘‘CF Reference Rates’’). 

If a CF Reference Rate is not available 

or the Sponsor determines, in its sole 

discretion, that a CF Reference Rate 

should not be used, the Fund’s holdings 

may be fair valued in accordance with 

the policy approved by the Sponsor.20

The Index 

As described in the Registration 

Statement, the Fund generally seeks to 

reflect the price of the digital assets 

included in the Index. Currently, the 

Index’s only constituent digital assets 

are bitcoin and ether. The Fund’s 

investment objective is for changes in 

the Shares’ NAV to reflect the daily 

changes of the Index, less expenses and 

liabilities of the Fund. The Fund will 

seek to achieve its investment objective 

by investing in bitcoin and ether in 

approximately the same weights as they 

represent in the Index. 

The Index is owned, administered 

and calculated by the Index Provider. 

The Index is derived from a rules-based 

methodology and related ground rules 

(together, the ‘‘Index Rules’’), which are 

overseen by the Index Provider. Eligible 

constituent digital assets are screened, 

including for their liquidity, asset 

turnover and ability to be stored in 

custody by third parties that have 

regulatory approval to provide services 

for the safe keeping of digital assets on 

behalf of investors. To be eligible for 

inclusion in the Index, the digital asset 

(1) must be listed on two or more 

eligible constituent exchanges as 

determined by the Index Provider and 

(2) must be supported by one or more 

eligible third-party custodians as 

determined by the Index Provider. 

Digital assets that are pegged to the 

value of any asset, including but not 

limited to stablecoins, are not eligible 

for inclusion in the Index. Only markets 

and trading pairs where a digital asset 

is listed as either the base asset or quote 

asset against the U.S. Dollar will be 

included in calculations for purposes of 

the liquidity screen. The Index Provider 

further reserves the right to exclude a 

digital asset based on one or more 

factors. The resultant digital assets are 

deemed to be the investible universe 

(‘‘Investible Universe’’) of digital assets 

that are eligible for inclusion in the 

Index. Digital assets within the 95th 

percentile of the free float-adjusted 

market capitalization of the Investible 

Universe that are determined by the 

Index Provider as being in conformance 

with prevailing capital markets 

regulations of major financial 

jurisdictions (including that the SEC has 

approved or permitted an exchangetraded product/fund registered under 

the Securities Act of 1933 holding such 

digital asset to list and launch) and that 

meet certain minimum liquidity, 

turnover, and full market capitalization 

ratios as determined by the Index 

Provider pursuant to the Index Rules are 

generally included as constituents in the 

Index. 

The free float supply of each digital 

asset is determined by the Index 

Provider in accordance with the Index 

Rules, with different calculations 

applying depending on whether the 

digital assets is determined to be ‘‘coincentric’’ (such as bitcoin) or ‘‘accountcentric’’ (such as ether). The Index is 

rebalanced and reconstituted quarterly. 

The Fund will be reconstituted and 

rebalanced in accordance with the 

Index. 

The price of bitcoin and ether within 

the Index is based on the respective CF 

Reference Rate (i.e., the CF Bitcoin 

Reference Rate and CF Ether Reference 

Rate). See the below section titled ‘‘Net 

Asset Value’’ for information on how 

the CF Reference Rates are calculated. 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 81603 

21As defined in Rule 11.23(a)(3), the term ‘‘BZX 

Official Closing Price’’ shall mean the price 

disseminated to the consolidated tape as the market 

center closing trade. 

22Regular Trading Hours is the time between 9:30 

a.m. and 4:00 p.m. Eastern Time. 

In addition, the Sponsor notes that an 

oversight function is implemented by 

the Index Provider in seeking to ensure 

that the CF Reference Rates are 

administered through codified policies 

for index integrity. CF Reference Rate 

data and the description of the CF 

Reference Rates are based on 

information made publicly available by 

the Index Provider on its website at 

https://www.cfbenchmarks.com. 

Net Asset Value 

NAV means the total assets of the 

Fund (which includes bitcoin, ether, 

cash and cash equivalents) less total 

liabilities of the Fund. The 

Administrator will determine the NAV 

of the Fund on each day that the 

Exchange is open for regular trading, as 

promptly as practical after 4:00 p.m. ET. 

The NAV of the Fund is the aggregate 

value of the Fund’s assets less its 

estimated accrued but unpaid liabilities 

(which include accrued expenses). In 

determining the Fund’s NAV, the 

Administrator values the bitcoin and 

ether held by the Fund based on the CF 

Reference Rates as of 4:00 p.m. ET. The 

Administrator also determines the NAV 

per Share. 

The NAV for the Fund will be 

calculated by the Administrator once a 

day and will be disseminated daily to 

all market participants at the same time. 

If one or both of the CF Reference 

Rates is not available or the Sponsor 

determines, in its sole discretion, that 

the CF Bitcoin Reference Rate or the CF 

Ether Reference Rate should not be 

used, the Fund’s holdings may be fair 

valued in accordance with the policy 

approved by the Sponsor. 

On each business day, as soon as 

practicable after 4:00 p.m. ET, the 

Administrator evaluates the bitcoin and 

ether held by the Fund as reflected by 

the CF Reference Rates and determines 

the NAV of the Fund. 

The CF Reference Rates serve as oncea-day benchmark rates of the U.S. dollar 

price of ether (USD/ETH) and bitcoin 

(USD/BTC), calculated as of 4:00 p.m. 

ET. The CF Reference Rates aggregate 

the trade flow of several ether and 

bitcoin trading platforms, during an 

observation window between 3:00 p.m. 

and 4:00 p.m. ET into the U.S. dollar 

price of one bitcoin and ether at 4:00 

p.m. ET. Specifically, the CF Reference 

Rates are calculated based on the 

‘‘Relevant Transactions’’ (as defined 

below) of all of its constituent bitcoin 

and ether trading platforms, which are 

currently Coinbase, Bitstamp, Kraken, 

itBit, LMAX Digital and Gemini (the 

‘‘Constituent Platforms’’), as follows: 

• All Relevant Transactions are added 

to a joint list, recording the time of 

execution, trade price and size for each 

transaction. 

• The list is partitioned by timestamp 

into 12 equally-sized time intervals of 5 

(five) minute length. 

• For each partition separately, the 

volume-weighted median trade price is 

calculated from the trade prices and 

sizes of all Relevant Transactions, i.e., 

across all Constituent Platforms. A 

volume-weighted median differs from a 

standard median in that a weighting 

factor, in this case trade size, is factored 

into the calculation. 

• The CF Reference Rate is then 

determined by the equally-weighted 

average of the volume medians of all 

partitions. 

The Constituent Platforms may 

change from time to time. The CF 

Reference Rates do not include any 

futures prices in its methodology. A 

‘‘Relevant Transaction’’ is any 

cryptocurrency versus U.S. dollar spot 

trade that occurs during the observation 

window between 3:00 p.m. and 4:00 

p.m. ET on a Constituent Platform in the 

XBT/USD and ETH/USD pairs that are 

reported and disseminated by a 

Constituent Platform through its 

publicly available Application 

Programming Interface (‘‘API’’) and 

observed by the Index Provider. 

The Sponsor believes that the use of 

the CF Reference Rates is reflective of a 

reasonable valuation of the average spot 

price of ether and bitcoin and that 

resistance to manipulation is a priority 

aim of its design methodology. The 

methodology: (i) takes an observation 

period and divides it into equal 

partitions of time; (ii) then calculates 

the volume-weighted median of all 

transactions within each partition; and 

(iii) the value is determined from the 

arithmetic mean of the volume-weighted 

medians, equally weighted. By 

employing the foregoing steps, the CF 

Reference Rates thereby seek to ensure 

that transactions in ether and bitcoin 

conducted at outlying prices do not 

have an undue effect on the value of the 

CF Reference Rates, large trades or 

clusters of trades transacted over a short 

period of time will not have an undue 

influence on the CF Reference Rates, 

and the effect of large trades at prices 

that deviate from the prevailing price 

are mitigated from having an undue 

influence on the CF Reference Rates. 

Availability of Information 

The website for the Fund, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

the current NAV per Share daily and the 

prior business day’s NAV per Share and 

the reported BZX Official Closing 

Price; 21 (b) the BZX Official Closing 

Price in relation to the NAV per Share 

as of the time the NAV is calculated and 

a calculation of the premium or 

discount of such price against such 

NAV per Share; (c) data in chart form 

displaying the frequency distribution of 

discounts and premiums of the BZX 

Official Closing Price against the NAV 

per Share, within appropriate ranges for 

each of the four previous calendar 

quarters (or for the life of the Fund, if 

shorter); (d) the prospectus; and (e) 

other applicable quantitative 

information. The aforementioned 

information will be published as of the 

close of business available on the 

Fund’s website at https://www.frankl

intempleton.com/investments/options/ 

exchange-traded-funds, or any 

successor thereto. The Fund will also 

disseminate its holdings on a daily basis 

on its website. 

The Intraday Indicative Value (‘‘IIV’’) 

will be calculated by using the prior 

day’s closing NAV per Share as a base 

and updating that value during Regular 

Trading Hours 22 to reflect changes in 

the value of the Fund’s bitcoin and ether 

holdings during the trading day, which 

are based on CME CF Ether-Dollar Real 

Time Index and CME CF Bitcoin Real 

Time Index. The IIV disseminated 

during Regular Trading Hours should 

not be viewed as an actual real-time 

update of the NAV, which will be 

calculated only once at the end of each 

trading day. The IIV will be widely 

disseminated on a per Share basis every 

15 seconds during the Exchange’s 

Regular Trading Hours through the 

facilities of the consolidated tape 

association (CTA) and Consolidated 

Quotation System (CQS) high speed 

lines. In addition, the IIV will be 

available through online information 

services, such as Bloomberg and 

Reuters. 

The price of bitcoin and ether will be 

made available by one or more major 

market data vendors, updated at least 

every 15 seconds during Regular 

Trading Hours. 

As noted above, each CF Reference 

Rate is calculated daily and aggregates 

the notional value of trading activity 

across major spot trading platforms. CF 

Reference Rate data, the CF Reference 

Rate value, and the description of the 

CF Reference Rate are based on 

information made publicly available by 

the Index Provider on its website at 

https://www.cfbenchmarks.com. 


ddrumheller on DSK120RN23PROD with NOTICES1
81604 Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 

23The term ‘‘cold storage’’ refers to a safeguarding 

method by which the private keys corresponding to 

ether stored on a digital wallet are removed from 

any computers actively connected to the internet. 

Cold storage of private keys may involve keeping 

such wallet on a non-networked computer or 

electronic device or storing the public key and 

private keys relating to the digital wallet on a 

storage device (for example, a USB thumb drive) or 

printed medium (for example, papyrus or paper) 

and deleting the digital wallet from all computers. 

24For purposes of Rule 14.11(e)(4), the term 

commodity takes on the definition of the term as 

provided in the Commodity Exchange Act. 

Quotation and last sale information 

for bitcoin and ether is widely 

disseminated through a variety of major 

market data vendors, including 

Bloomberg and Reuters. Information 

relating to trading, including price and 

volume information, in bitcoin and 

ether are available from major market 

data vendors and from the trading 

platforms on which ether and bitcoin 

are traded. Depth of book information is 

also available from ether and bitcoin 

trading platforms. The normal trading 

hours for ether and bitcoin trading 

platforms are 24 hours per day, 365 days 

per year. 

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. Information regarding the 

previous day’s BZX Official Closing 

Price and trading volume information 

for the Shares will be published daily in 

the financial section of newspapers. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the CTA. 

The Custodian 

The Custodian carefully considers the 

design of the physical, operational and 

cryptographic systems for secure storage 

of the Fund’s private keys in an effort 

to lower the risk of loss or theft. The 

Custodian utilizes a variety of security 

measures to ensure that private keys 

necessary to transfer digital assets 

remain uncompromised and that the 

Fund maintains exclusive ownership of 

its assets. The Custodian will keep the 

private keys associated with the Fund’s 

bitcoin and ether in ‘‘cold storage’’ 23

(the ‘‘Cold Vault Balance’’). The 

hardware, software, systems, and 

procedures of the ether Custodian may 

not be available or cost-effective for 

many investors to access directly. Only 

specific individuals are authorized to 

participate in the custody process, and 

no individual acting alone will be able 

to access or use any of the private keys. 

In addition, no combination of the 

executive officers of the Sponsor, acting 

alone or together, will be able to access 

or use any of the private keys that hold 

the Fund’s ether and bitcoin. 

Creation and Redemption of Shares 

When the Fund sells or redeems its 

Shares, it will do so in cash transactions 

in blocks of Shares (e.g., a Creation 

Basket) that are based on the quantity of 

bitcoin and ether attributable to each 

Share of the Fund at the NAV. 

According to the Registration Statement, 

on any business day, an authorized 

participant may place an order to create 

one or more Creation Baskets. Purchase 

orders for cash transaction Creation 

Baskets must be placed by 2:00 p.m. 

Eastern Time, or the close of regular 

trading on the Exchange, whichever is 

earlier. The day on which an order is 

received is considered the purchase 

order date. The total deposit of cash 

required is based on the combined NAV 

of the number of Shares included in the 

Creation Baskets being created 

determined as of 4:00 p.m. ET on the 

date the order to purchase is properly 

received. The Administrator determines 

the quantity of bitcoin and ether 

associated with a Creation Basket for a 

given day by dividing the number of 

bitcoin and ether held by the Fund as 

of the opening of business on that 

business day, adjusted for the amount of 

bitcoin and ether constituting estimated 

accrued but unpaid fees and expenses of 

the Fund as of the opening of business 

on that business day, by the quotient of 

the number of Shares outstanding at the 

opening of business divided by the 

number of Shares in a Creation Basket. 

The procedures by which an authorized 

participant can redeem one or more 

Creation Baskets mirror the procedures 

for the creation of Creation Baskets. 

The authorized participants will 

deliver only cash to create Shares and 

will receive only cash when redeeming 

Shares. Further, authorized participants 

will not directly or indirectly purchase, 

hold, deliver, or receive bitcoin or ether 

as part of the creation or redemption 

process or otherwise direct the Fund or 

a third-party with respect to purchasing, 

holding, delivering, or receiving bitcoin 

or ether as part of the creation or 

redemption process. 

The Fund will create Shares by 

receiving ether or bitcoin from a thirdparty that is not the authorized 

participant and the Fund—not the 

authorized participant—is responsible 

for selecting the third-party to deliver 

the ether and bitcoin. Further, the thirdparty will not be acting as an agent of 

the authorized participant with respect 

to the delivery of the ether and bitcoin 

to the Fund or acting at the direction of 

the authorized participant with respect 

to the delivery of the bitcoin and ether 

to the Fund. The Fund will redeem 

Shares by delivering bitcoin and ether to 

a third-party that is not the authorized 

participant and the Fund—not the 

authorized participant—is responsible 

for selecting the third-party to receive 

the ether and bitcoin. Further, the thirdparty will not be acting as an agent of 

the authorized participant with respect 

to the receipt of the ether and bitcoin 

from the Fund or acting at the direction 

of the authorized participant with 

respect to the receipt of the ether and 

bitcoin from the Fund. 

The Sponsor (including its delegates) 

will maintain ownership and control of 

the Fund’s ether and bitcoin in a 

manner consistent with good delivery 

requirements for spot commodity 

transactions. 

Rule 14.11(e)(4)—Commodity-Based 

Trust Shares 

The Shares will be subject to BZX 

Rule 14.11(e)(4), which sets forth the 

initial and continued listing criteria 

applicable to Commodity-Based Trust 

Shares. The Exchange represents that, 

for initial and continued listing, the 

Fund must be in compliance with Rule 

10A–3 under the Act. A minimum of 

100,000 Shares will be outstanding at 

the commencement of listing on the 

Exchange. The Exchange will obtain a 

representation that the NAV will be 

calculated daily and that the NAV and 

information about the assets of the Fund 

will be made available to all market 

participants at the same time. The 

Exchange notes that the Shares will 

meet the definition of Rule 

14.11(e)(4)(C)(i) except that the Fund 

will hold two commodities (i.e., bitcoin 

and ether) rather than a single 

commodity in addition to cash and cash 

equivalents. Specifically, the Shares 

will be: (a) issued by a trust that holds 

(1) two specified commodities 24

deposited with the trust, or (2) two 

specified commodities and, in addition 

to such specified commodities, cash; (b) 

issued by such trust in a specified 

aggregate minimum number in return 

for a deposit of a quantity of the 

underlying commodities and/or cash; 

and (c) when aggregated in the same 

specified minimum number, may be 

redeemed at a holder’s request by such 

trust which will deliver to the 

redeeming holder the quantity of the 

underlying commodities and/or cash. 

The Exchange notes that the 

Commission has previously approved 

the listing and trading of series of 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 81605 

25See Securities Exchange Act No. 82448 

(January 5, 2018) 83 FR 1428 (January 11, 2018) 

(SR-NYSEArca–2017–131) (NYSE Arca, Inc.; Notice 

of Filing of Amendment No. 2 and Order Approving 

on an Accelerated Basis a Proposed Rule Change, 

as Modified by Amendment No. 2, To List and 

Trade Shares of the Sprott Physical Gold and Silver 

Trust Under NYSE Arca Rule 8.201–E). 

Commodity-Based Trust Shares that 

hold more than one commodity.25

Upon termination of the Fund, the 

Shares will be removed from listing. 

The Trustee is a trust company having 

substantial capital and surplus and the 

experience and facilities for handling 

corporate trust business, as required 

under Rule 14.11(e)(4)(E)(iv)(a) and that 

no change will be made to the trustee 

without prior notice to and approval of 

the Exchange. The Exchange also notes 

that, pursuant to Rule 14.11(e)(4)(F), 

neither the Exchange nor any agent of 

the Exchange shall have any liability for 

damages, claims, losses or expenses 

caused by any errors, omissions or 

delays in calculating or disseminating 

any underlying commodity value, the 

current value of the underlying 

commodity required to be deposited to 

the Fund in connection with issuance of 

Commodity-Based Trust Shares; 

resulting from any negligent act or 

omission by the Exchange, or any agent 

of the Exchange, or any act, condition or 

cause beyond the reasonable control of 

the Exchange, its agent, including, but 

not limited to, an act of God; fire; flood; 

extraordinary weather conditions; war; 

insurrection; riot; strike; accident; 

action of government; communications 

or power failure; equipment or software 

malfunction; or any error, omission or 

delay in the reports of transactions in an 

underlying commodity. Finally, as 

required in Rule 14.11(e)(4)(G), the 

Exchange notes that any registered 

market maker (‘‘Market Maker’’) in the 

Shares must file with the Exchange in 

a manner prescribed by the Exchange 

and keep current a list identifying all 

accounts for trading in an underlying 

commodity, related commodity futures 

or options on commodity futures, or any 

other related commodity derivatives, 

which the registered Market Maker may 

have or over which it may exercise 

investment discretion. No registered 

Market Maker shall trade in an 

underlying commodity, related 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives, in an account in 

which 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 4.2), the 

registered Market Maker in CommodityBased Trust Shares 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 for trading the underlying 

physical commodity, related commodity 

futures or options on commodity 

futures, or any other related commodity 

derivatives, as may be requested by the 

Exchange. 

The Exchange is able to obtain 

information regarding trading in the 

Shares and the underlying ether and 

bitcoin, CME Ether Futures and CME 

Bitcoin Futures, options on CME Ether 

Futures and CME Bitcoin Futures, or 

any other bitcoin or ether derivative 

through members acting as registered 

Market Makers, in connection with their 

proprietary or customer trades. 

As a general matter, the Exchange has 

regulatory jurisdiction over its Members 

and their associated persons, which 

include any person or entity controlling 

a Member. To the extent the Exchange 

may be found to lack jurisdiction over 

a subsidiary or affiliate of a Member that 

does business only in commodities or 

futures contracts, the Exchange could 

obtain information regarding the 

activities of such subsidiary or affiliate 

through surveillance sharing agreements 

with regulatory organizations of which 

such subsidiary or affiliate is a member. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares. 

The Exchange will halt trading in the 

Shares under the conditions specified in 

BZX Rule 11.18. Trading may be halted 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. These may include: (1) the 

extent to which trading is not occurring 

in the bitcoin or ether underlying the 

Shares; or (2) whether other unusual 

conditions or circumstances detrimental 

to the maintenance of a fair and orderly 

market are present. Trading in the 

Shares also will be subject to Rule 

14.11(e)(4)(E)(ii), which sets forth 

circumstances under which trading in 

the Shares may be halted. 

If the IIV or the value of the Index is 

not being disseminated as required, the 

Exchange may halt trading during the 

day in which the interruption to the 

dissemination of the IIV or the value of 

the Index occurs. If the interruption to 

the dissemination of the IIV or the value 

of the Index 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. 

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. BZX will allow trading 

in the Shares during all trading sessions 

on the Exchange. The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. As provided in BZX 

Rule 11.11(a) the minimum price 

variation for quoting and entry of orders 

in securities traded on the Exchange is 

$0.01 where the price is greater than 

$1.00 per share or $0.0001 where the 

price is less than $1.00 per share. The 

Shares of the Fund will conform to the 

initial and continued listing criteria set 

forth in BZX Rule 14.11(e)(4). 

Surveillance 

The Exchange represents that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Shares on the Exchange during all 

trading sessions and to deter and detect 

violations of Exchange rules and the 

applicable federal securities laws. 

Trading of the Shares through the 

Exchange will be subject to the 

Exchange’s surveillance procedures for 

derivative products, including 

Commodity-Based Trust Shares. FINRA 

conducts certain 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. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares, CME Ether 

Futures and CME Bitcoin Futures, or 

any other bitcoin or ether derivative 

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, CME Ether Futures and CME 

Bitcoin Futures, or any other ether or 

bitcoin derivative from such markets 


ddrumheller on DSK120RN23PROD with NOTICES1
81606 Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 

26For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

27 15 U.S.C. 78f. 

28 15 U.S.C. 78f(b)(5). 

29See Exchange Rule 14.11(f). 

30Commodity-Based Trust Shares, as described in 

Exchange Rule 14.11(e)(4), are a type of Trust 

Issued Receipt. 

31See Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (August 1, 2018). This 

proposal was subsequently disapproved by the 

Commission. See Securities Exchange Act Release 

No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 

2018) (the ‘‘Winklevoss Order’’). Prior orders from 

the Commission have pointed out that in every 

prior approval order for Commodity-Based Trust 

Shares, there has been a derivatives market that 

represents the regulated market of significant size, 

generally a Commodity Futures Trading 

Commission (the ‘‘CFTC’’) regulated futures market. 

Further to this point, the Commission’s prior orders 

have noted that the spot commodities and currency 

markets for which it has previously approved spot 

ETPs are generally unregulated and that the 

Commission relied on the underlying futures 

market as the regulated market of significant size 

that formed the basis for approving the series of 

Currency and Commodity-Based Trust Shares, 

including gold, silver, platinum, palladium, copper, 

and other commodities and currencies. The 

Commission specifically noted in the Winklevoss 

Order that the approval order issued related to the 

first spot gold ETP ‘‘was based on an assumption 

that the currency market and the spot gold market 

were largely unregulated.’’ See Winklevoss Order at 

37592. As such, the regulated market of significant 

size test does not require that the spot bitcoin and 

ether markets be regulated in order for the 

Commission to approve this proposal, and 

precedent makes clear that an underlying market for 

a spot commodity or currency being a regulated 

market would actually be an exception to the norm. 

These largely unregulated currency and commodity 

markets do not provide the same protections as the 

markets that are subject to the Commission’s 

oversight, but the Commission has consistently 

looked to surveillance sharing agreements with the 

underlying futures market in order to determine 

whether such products were consistent with the 

Act. 

32See Winklevoss Order, 83 FR at 37580. 

33For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

and other entities.26 The Exchange may 

obtain information regarding trading in 

the Shares, CME Ether Futures and CME 

Bitcoin Futures, or any other ether or 

bitcoin derivative via ISG, from other 

exchanges who are members or affiliates 

of the ISG, or with which the Exchange 

has entered into a comprehensive 

surveillance sharing agreement. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

The Sponsor has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Fund or 

the Shares to comply with the 

continued listing requirements, and, 

pursuant to its obligations under 

Section 19(g)(1) of the Exchange Act, the 

Exchange will surveil for compliance 

with the continued listing requirements. 

If the Fund or the Shares are not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

Exchange Rule 14.12. 

Information Circular 

Prior to the commencement of 

trading, the Exchange will inform its 

members in an Information Circular of 

the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Circular 

will discuss the following: (i) the 

procedures for the creation and 

redemption of Creation Baskets (and 

that the Shares are not individually 

redeemable); (ii) BZX Rule 3.7, which 

imposes suitability obligations on 

Exchange members with respect to 

recommending transactions in the 

Shares to customers; (iii) how 

information regarding the IIV and the 

Fund’s NAV are disseminated; (iv) the 

risks involved in trading the Shares 

outside of Regular Trading Hours when 

an updated IIV will not be calculated or 

publicly disseminated; (v) the 

requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; and (vi) trading 

information. The Information Circular 

will also reference the fact that there is 

no regulated source of last sale 

information regarding ether or bitcoin, 

that the Commission has no jurisdiction 

over the trading of ether or bitcoin as a 

commodity, and that the CFTC has 

regulatory jurisdiction over the trading 

of CME Ether Futures contracts and 

CME Bitcoin Futures contracts and 

options on CME Ether Futures contracts 

and CME Bitcoin Futures contracts. 

In addition, the Information Circular 

will advise members, prior to the 

commencement of trading, of the 

prospectus delivery requirements 

applicable to the Shares. Members 

purchasing the Shares for resale to 

investors will deliver a prospectus to 

such investors. The Information Circular 

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

the Commission from any rules under 

the Act. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 6(b) 

of the Act 27 in general and Section 

6(b)(5) of the Act 28 in particular in that 

it is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 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 has approved 

numerous series of Trust Issued 

Receipts,29 including Commodity-Based 

Trust Shares,30 to be listed on U.S. 

national securities exchanges. In order 

for any proposed rule change from an 

exchange to be approved, the 

Commission must determine that, 

among other things, the proposal is 

consistent with the requirements of 

Section 6(b)(5) of the Act, specifically 

including: (i) the requirement that a 

national securities exchange’s rules are 

designed to prevent fraudulent and 

manipulative acts and practices; and (ii) 

the requirement that an exchange 

proposal be designed, in general, to 

protect investors and the public interest. 

The Exchange believes that this 

proposal is consistent with the 

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

Act. 

The Commission has historically 

approved or disapproved exchange 

filings to list and trade series of Trust 

Issued Receipts, including spot-based 

Commodity-Based Trust Shares, on the 

basis of whether the listing exchange 

has in place a comprehensive 

surveillance sharing agreement with a 

regulated market of significant size 

related to the underlying commodity to 

be held.31 The Commission has also 

consistently recognized, however, that 

this is not the exclusive means by which 

an ETP listing exchange can meet this 

statutory obligation.32 A listing 

exchange could, alternatively, 

demonstrate that ‘‘other means to 

prevent fraudulent and manipulative 

acts and practices will be sufficient’’ to 

justify dispensing with a surveillancesharing agreement with a regulated 

market of significant size. 

Both the Exchange and the CME are 

members of the ISG.33 With this in 

mind, the CME Ether Futures market 

and the CME Bitcoin Futures market are 

the proper markets to consider in 

determining whether there is a related 

regulated market of significant size. 

Recently, the Commission issued orders 

granting approval for proposals to list 

Spot Bitcoin ETPs and Spot Ether ETPs. 

In the Spot Bitcoin ETP Approval Order, 

the Commission stated: 

[B]ased on the record before the 

Commission and the improved quality of the 

correlation analysis in the record. . .the 

Commission is able to conclude that fraud or 

manipulation that impacts prices in spot 

bitcoin markets would likely similarly 

impact CME bitcoin futures prices. And 

because the CME’s surveillance can assist in 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 81607 

34See the Spot Bitcoin ETP Approval Order at 

3011–3012. 

35See Securities Exchange Act No. 82448 

(January 5, 2018) 83 FR 1428 (January 11, 2018) 

(SR–NYSEArca–2017–131) (NYSE Arca, Inc.; Notice 

of Filing of Amendment No. 2 and Order Approving 

on an Accelerated Basis a Proposed Rule Change, 

as Modified by Amendment No. 2, To List and 

Trade Shares of the Sprott Physical Gold and Silver 

Trust Under NYSE Arca Rule 8.201–E). 

36As defined in Rule 11.23(a)(3), the term ‘‘BZX 

Official Closing Price’’ shall mean the price 

disseminated to the consolidated tape as the market 

center closing trade. 

detecting those impacts on CME bitcoin 

futures prices, the Exchanges’ comprehensive 

surveillance-sharing agreement with the 

CME–a U.S. regulated market whose bitcoin 

futures market is consistently highly 

correlated to spot bitcoin, albeit not of 

‘‘significant size’’ related to spot bitcoin–can 

be reasonably expected to assist in 

surveilling for fraudulent and manipulative 

acts and practices in the specific context of 

the [p]roposals.34

In the Spot Ether ETP Approval Order 

the Commission also concluded that 

fraud or manipulation that impacts 

prices in spot ether markets would 

likely similarly impact CME Ether 

Futures prices. Further, for the same 

reasons that the CME’s surveillance can 

assist in detecting those impacts on 

CME Ether Futures prices, the 

Exchange’s comprehensive surveillancesharing agreement with the CME can be 

reasonably expected to assist in 

surveilling for fraudulent and 

manipulative acts and practices in the 

specific context of the proposals. 

In sum, in the Spot Bitcoin ETP 

Approval Order and Spot Ether ETP 

Approval Order the Commission 

established that the CME Bitcoin 

Futures market and CME Ether Futures 

market can reasonably be expected to 

assist for fraudulent and manipulative 

acts and practices. Further, the 

Commission determined that the listing 

exchanges demonstrated ‘‘other means 

to prevent fraudulent and manipulative 

acts and practices will be sufficient’’ to 

justify dispensing with a surveillancesharing agreement with a regulated 

market of significant size. 

The Exchange notes that the 

Commission has also previously 

approved the listing and trading of a 

series of Commodity-Based Trust Shares 

that, like the Fund, holds two 

commodities.35 Given this and the 

above, the Exchange believes the Shares 

satisfy the requirements of Exchange 

Rule BZX Rule 14.11(e)(4) and thereby 

qualify for listing and trading on the 

Exchange. 

Commodity-Based Trust Shares 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares will 

be listed on the Exchange pursuant to 

the initial and continued listing criteria 

in Exchange Rule 14.11(e)(4). The 

Exchange believes that its surveillance 

procedures are adequate to properly 

monitor the trading of the Shares on the 

Exchange during all trading sessions 

and to deter and detect violations of 

Exchange rules and the applicable 

federal securities laws. Trading of the 

Shares through the Exchange will be 

subject to the Exchange’s surveillance 

procedures for derivative products, 

including Commodity-Based Trust 

Shares. The issuer has represented to 

the Exchange that it will advise the 

Exchange of any failure by the Fund or 

the Shares to comply with the 

continued listing requirements, and, 

pursuant to its obligations under 

Section 19(g)(1) of the Exchange Act, the 

Exchange will surveil for compliance 

with the continued listing requirements. 

If the Fund or the Shares are not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

Exchange Rule 14.12. The Exchange 

may obtain information regarding 

trading in the Shares and listed ether or 

bitcoin derivatives via the ISG, from 

other exchanges who are members or 

affiliates of the ISG, or with which the 

Exchange has entered into a 

comprehensive surveillance sharing 

agreement. 

Availability of Information 

In addition to the price transparency 

of the Index, the Fund will provide 

information regarding the Fund’s 

bitcoin and ether holdings as well as 

additional data regarding the Fund. 

The website for the Fund, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

the current NAV per Share daily and the 

prior business day’s NAV per Share and 

the reported BZX Official Closing 

Price; 36 (b) the BZX Official Closing 

Price in relation to the NAV per Share 

as of the time the NAV is calculated and 

a calculation of the premium or 

discount of such price against such 

NAV per Share; (c) data in chart form 

displaying the frequency distribution of 

discounts and premiums of the BZX 

Official Closing Price against the NAV 

per Share, within appropriate ranges for 

each of the four previous calendar 

quarters (or for the life of the Fund, if 

shorter); (d) the prospectus; and (e) 

other applicable quantitative 

information. The aforementioned 

information will be published as of the 

close of business available on the 

Fund’s website at https://

www.franklintempleton.com/ 

investments/options/exchange-tradedfunds, or any successor thereto. The 

Fund will also disseminate its holdings 

on a daily basis on its website. 

The IIV will be calculated by using 

the prior day’s closing NAV per Share 

as a base and updating that value during 

Regular Trading Hours to reflect 

changes in the value of the Fund’s 

bitcoin and ether holdings during the 

trading day, which are based on CME 

CF Ether-Dollar Real Time Index and 

CME CF Bitcoin Real Time Index. The 

IIV disseminated during Regular 

Trading Hours should not be viewed as 

an actual real-time update of the NAV, 

which will be calculated only once at 

the end of each trading day. The IIV will 

be widely disseminated on a per Share 

basis every 15 seconds during the 

Exchange’s Regular Trading Hours 

through the facilities of the consolidated 

tape association (CTA) and 

Consolidated Quotation System (CQS) 

high speed lines. In addition, the IIV 

will be available through on-line 

information services such as Bloomberg 

and Reuters. 

The price of bitcoin and ether will be 

made available by one or more major 

market data vendors, updated at least 

every 15 seconds during Regular 

Trading Hours. 

As noted above, each CF Reference 

Rate is calculated daily and aggregates 

the notional value of trading activity 

across major spot trading platforms. CF 

Reference Rate data, the CF Reference 

Rate value, and the description of the 

CF Reference Rate are based on 

information made publicly available by 

the Index Provider on its website at 

https://www.cfbenchmarks.com. 

Quotation and last sale information 

for ether and bitcoin is widely 

disseminated through a variety of major 

market data vendors, including 

Bloomberg and Reuters. Information 

relating to trading, including price and 

volume information, in bitcoin and 

ether are available from major market 

data vendors and from the trading 

platforms on which ether and bitcoin 

are traded. Depth of book information is 

also available from ether and bitcoin 

trading platforms. The normal trading 

hours for ether and bitcoin trading 

platforms are 24 hours per day, 365 days 

per year. 

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. Information regarding the 

previous day’s BZX Official Closing 

Price and trading volume information 


ddrumheller on DSK120RN23PROD with NOTICES1
81608 Federal Register / Vol. 89, No. 195 / Tuesday, October 8, 2024 / Notices 

37For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

38 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

for the Shares will be published daily in 

the financial section of newspapers. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the CTA. 

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 an additional type of exchange-traded 

product 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 relating to 

trading in the Shares and may obtain 

information via ISG from other 

exchanges that are members of ISG or 

with which the Exchange has entered 

into a surveillance sharing agreement. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares, CME Ether 

Futures and CME Bitcoin Futures, or 

any other bitcoin or ether derivative 

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, CME Ether Futures and CME 

Bitcoin Futures, or any other ether or 

bitcoin derivative from such markets 

and other entities.37 The Exchange may 

obtain information regarding trading in 

the Shares, CME Ether Futures and CME 

Bitcoin Futures, or any other ether or 

bitcoin derivative via ISG, from other 

exchanges who are members or affiliates 

of the ISG, or with which the Exchange 

has entered into a comprehensive 

surveillance sharing agreement. 

For the above reasons, the Exchange 

believes that the proposed rule change 

is consistent with the requirements of 

Section 6(b)(5) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposed rule 

change, rather will facilitate the listing 

and trading of an additional exchangetraded product that will enhance 

competition among both market 

participants and listing venues, 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 

The Exchange neither solicited nor 

received comments on 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 Exchange consents, the Commission 

will: 

A. by order approve or disapprove 

such proposed rule change, or 

B. institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change 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– 

CboeBZX–2024–091 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–2024–091. 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–2024–091 and should be 

submitted on or before October 29, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–23167 Filed 10–7–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101231; File No. SR–IEX– 

2024–20] 

Self-Regulatory Organizations; 

Investors Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Rule 

11.330 To Adopt a New Market Data 

Product To Be Known as DEEP+ 

October 2, 2024. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on 

September 19, 2024, the Investors 

Exchange LLC (‘‘IEX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


ddrumheller on DSK120RN23PROD with NOTICES1