[Federal Register Volume 89, Number 195 (Tuesday, October 8, 2024)]
[Notices]
[Pages 81600-81608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23167]


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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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    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.
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    \3\ The 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.
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    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\
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    \4\ The 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).
    \5\ Any 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.
    \6\ On 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.
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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

[[Page 81601]]

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.
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    \7\ See Exchange Rule 14.11(f).
    \8\ Commodity-Based Trust Shares, as described in Exchange Rule 
14.11(e)(4), are a type of Trust Issued Receipt.
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    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 
surveillance-sharing agreement with a regulated market of significant 
size.
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    \9\ See 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.
    \10\ See Winklevoss Order, 83 FR at 37580.
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    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:
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    \11\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
    \12\ See Exchange Act Release No. 99306 (January 10, 2024), 89 
FR 3008 (January 17, 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 Bitcoin-Based 
Commodity-Based Trust Shares and Trust Units) (the ``Spot Bitcoin 
ETP Approval Order'').
    \13\ See 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 
Exchange-Traded Products) (the ``Spot Ether ETP Approval Order'').

    [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\
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    \14\ See the Spot Bitcoin ETP Approval Order at 3011-3012.

    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 
surveillance-sharing 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.
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    \15\ See 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).
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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

[[Page 81602]]

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.
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    \16\ Cash equivalents are short-term instruments with maturities 
of less than 3 months.
    \17\ The ``Index'' refers to the CF Institutional Digital Asset 
Index--US-Settlement Price.
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    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.
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    \18\ 15 U.S.C. 80a-1.
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    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.
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    \19\ For 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.
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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 Ether-Dollar 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\
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    \20\ Any 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.
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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 exchange-traded 
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 ``coin-centric'' (such as bitcoin) or ``account-
centric'' (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.

[[Page 81603]]

    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 once-a-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:
    <bullet> All Relevant Transactions are added to a joint list, 
recording the time of execution, trade price and size for each 
transaction.
    <bullet> The list is partitioned by timestamp into 12 equally-sized 
time intervals of 5 (five) minute length.
    <bullet> 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.
    <bullet> 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.franklintempleton.com/investments/options/exchange-traded-funds, or 
any successor thereto. The Fund will also disseminate its holdings on a 
daily basis on its website.
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    \21\ As 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.
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    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.
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    \22\ Regular Trading Hours is the time between 9:30 a.m. and 
4:00 p.m. Eastern Time.
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    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.

[[Page 81604]]

    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.
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    \23\ The 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.
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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 
third-party 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 third-party 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 third-party 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

[[Page 81605]]

Commodity-Based Trust Shares that hold more than one commodity.\25\
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    \24\ For purposes of Rule 14.11(e)(4), the term commodity takes 
on the definition of the term as provided in the Commodity Exchange 
Act.
    \25\ See 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).
---------------------------------------------------------------------------

    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 
Commodity-Based 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

[[Page 81606]]

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.
---------------------------------------------------------------------------

    \26\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
---------------------------------------------------------------------------

    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, no-action 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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f.
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \29\ See Exchange Rule 14.11(f).
    \30\ Commodity-Based Trust Shares, as described in Exchange Rule 
14.11(e)(4), are a type of Trust Issued Receipt.
---------------------------------------------------------------------------

    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 
surveillance-sharing agreement with a regulated market of significant 
size.
---------------------------------------------------------------------------

    \31\ See 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.
    \32\ See Winklevoss Order, 83 FR at 37580.
---------------------------------------------------------------------------

    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:
---------------------------------------------------------------------------

    \33\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.

    [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

[[Page 81607]]

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\
---------------------------------------------------------------------------

    \34\ See the Spot Bitcoin ETP Approval Order at 3011-3012.

    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 
surveillance-sharing 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 surveillance-sharing 
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.
---------------------------------------------------------------------------

    \35\ See 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
    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-traded-funds, or 
any successor thereto. The Fund will also disseminate its holdings on a 
daily basis on its website.
---------------------------------------------------------------------------

    \36\ As 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.
---------------------------------------------------------------------------

    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

[[Page 81608]]

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.
---------------------------------------------------------------------------

    \37\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
---------------------------------------------------------------------------

    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 exchange-traded 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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#156760797038767a7878707b6166556670763b727a63"><span class="__cf_email__" data-cfemail="93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5">[email protected]</span></a>. Please include 
file number SR-CboeBZX-2024-091 on the subject line.

Paper Comments

    <bullet> 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\
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-23167 Filed 10-7-24; 8:45 am]
BILLING CODE 8011-01-P


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