15840 Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 

21For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

22 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. 

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange stated that waiver 

of this requirement will enable the 

Exchange to, as soon as possible, have 

the ability to compete with option 

exchanges that have incorporated the 

proposed rule change to their short term 

option series programs. For this reason, 

the Commission believes that the 

proposed rule change presents no novel 

issues and that waiver of the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest. Therefore, the Commission 

designates the proposed rule change to 

be operative upon filing.21

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or 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 (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEARCA–2015–16 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEARCA–2015–16. 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 Web site (http://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 Web site 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEARCA–2015–16 and should be 

submitted on or before April 15, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–06718 Filed 3–24–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74544; File No. SR– 

NYSEArca–2015–19] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to the LBMA 

Gold Price as a Replacement for the 

London Gold Fix for Certain Gold 

Related Exchange Traded Products 

March 19, 2015. 

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 March 

17, 2015, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to (1) to 

reflect a change to the value used by the 

SPDR® Gold Trust, which is currently 

listed on the Exchange under NYSE 

Arca Equities Rule 5.2(j)(5); iShares 

Gold Trust, ETFS Gold Trust, ETFS 

Precious Metals Basket Trust, ETFS 

Asian Gold Trust and Merk Gold Trust, 

each of which is currently listed on the 

Exchange under NYSE Arca Equities 

Rule 8.201, with respect to calculation 

of the net asset value of shares of each 

trust; and (2) to reflect a change to the 

underlying benchmark for ProShares 

Ultra Gold and ProShares UltraShort 

Gold, each of which is currently listed 

on the Exchange under NYSE Arca 

Equities Rule 8.200. The text of the 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.com, 

at the principal office of the Exchange, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Exchange listing rules applicable to nine 

exchange-traded products, all of which 

reference the ‘‘London Gold Fix’’, as 

described further below. The exchangetraded products are listed and traded 

pursuant to NYSE Arca Equities Rule 

5.2(j)(5) for the Equity Gold Shares; 

NYSE Arca Equities Rules 8.201, for 

Commodity-Based Trust Shares, and 

NYSE Arca Equities Rule 8.200, for 

Trust Issued Receipts. The proposed 

change would replace references to the 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 15841 

4As described in the registration statement under 

the Securities Act of 1933 (15 U.S.C. 77a) (‘‘1933 

Act’’) for the SPDR® Gold Trust (formerly known 

as the streetTRACKS Gold Trust) (see infra, note 

13), twice daily during London trading hours there 

is a fix (‘‘London Gold Fix’’) which provides 

reference gold prices for that day’s trading. Many 

long-term contracts will be priced on the basis of 

either the morning (AM) or afternoon (PM) London 

Gold Fix, and market participants will usually refer 

to one or the other of these prices when looking for 

a basis for valuations. The London Gold Fix is the 

most widely used benchmark for daily gold prices 

and is quoted by various financial information 

sources. Membership in the London fix is 

traditionally limited to banks that are bullion 

dealers and members of the LBMA. The 

chairmanship rotates annually among the four 

member firms. The fix takes place by telephone and 

the four member firms no longer meet face-to-face 

as was previously the case. There is a morning 

session at 10:30 a.m. London time and an afternoon 

session at 3:00 p.m. London time. The current 

members of the gold fixing are Bank of Nova 

Scotia—ScotiaMocatta, Barclays Bank plc, HSBC 

Bank USA, N.A., and Socie ́te ́ Ge ́ne ́rale. Any other 

market participant wishing to participate in the 

trading on the fix is required to do so through one 

of the four gold fixing members. Orders are placed 

either with one of the four fixing members or with 

another bullion dealer who will then be in contact 

with a fixing member during the fixing. The fixing 

members net-off all orders when communicating 

their net interest at the fixing. The fix begins with 

the fixing chairman suggesting an opening price, 

reflecting the market price prevailing at the opening 

of the fix. This is relayed by the fixing members to 

their dealing rooms which have direct 

communication with all interested parties. Any 

market participant may enter the fixing process at 

any time, or adjust or withdraw his order. The gold 

price is adjusted up or down until all the buy and 

sell orders are matched, at which time the price is 

declared fixed. All fixing orders are transacted on 

the basis of this fixed price, which is instantly 

relayed to the market through various media. 5 IBA is a London-based company that was 

created specifically to administer systemically 

important benchmarks. Formed in 2013, IBA is part 

of the Intercontinental Exchange (ICE). 

6The WebICE platform provides real-time order 

management as well as separation of direct 

participant and sponsored client orders, live credit 

limit controls, audit history, advanced Excel 

integration and automated deal notifications. 

7The Chairman will have significant experience 

in the gold markets and will be employed by IBA. 

8The conduct of financial institutions is overseen 

by the FCA, which was formed from the former 

Financial Services Authority and is separate from 

the Bank of England. The LBMA Gold Price will be 

regulated under the FCA’s Market Conduct (MAR) 

Sourcebook (MAR 8.3). 

9On June 12, 2014, the UK Chancellor of the 

Exchequer announced steps to raise standards of 

conduct in the financial system with a joint review 

by the UK Treasury, the Bank of England and the 

FCA into the way wholesale financial markets 

operate. According to this announcement, the ‘‘Fair 

and Effective Markets Review’’, led by Bank of 

England Deputy Governor for Markets and Banking, 

has been tasked with investigating those wholesale 

markets, both regulated and unregulated, where 

most of the recent concerns about misconduct have 

arisen: Fixed-income, currency and commodity 

markets, including associated derivatives and 

benchmarks. It will make recommendations on: 

principles to govern the operation of fair and 

effective markets, focusing on fixed income, 

currency and commodities; reforms to ensure 

standards of behavior are in accordance with those 

principles; tools to strengthen the oversight of 

market conduct; whether the regulatory perimeter 

for wholesale financial markets should be extended, 

and to what extent international action is required; 

and additional reforms in relation to benchmarks, 

in order to strengthen market infrastructure. See 

http://www.bankofengland.co.uk/markets/

Documents/femraug2014.pdf. On September 25, 

2014, the Fair and Effective Markets Review 

announced its proposal that the gold fixing process 

may become regulated under UK benchmark 

regulation, effective from April 2015. 

‘‘London Gold Fix’’, as described below. 

The London Gold Fix is a gold-price 

mechanism that has been in existence 

since 1919 and that will be 

discontinued T [sic] the close of 

business on March 19, 2015.4

Revised Procedures for the Gold Price 

On November 8, 2014, the London 

Bullion Market Association (‘‘LBMA’’) 

announced that ICE Benchmark 

Administration (‘‘IBA’’) 5 has been 

selected to be the third-party 

administrator for the ‘‘LBMA Gold 

Price’’, which will replace the current 

London Gold Fix. IBA, an independent 

specialist benchmark administrator, will 

provide the auction platform and 

methodology as well as the overall 

administration and governance for the 

LBMA Gold Price benchmark. 

On February 19, 2015, the 

Intercontinental Exchange (‘‘ICE’’) 

announced that the new LBMA Gold 

Price will be launched on March 20, 

2015. As the administrator for the 

LBMA Gold Price benchmark and the 

operator of the ‘‘IBA Gold Auction’’, 

IBA will transition from the current 

London Gold Fix procedures to a 

physically settled, electronic and 

tradeable auction, with the ability to 

settle trades in U.S. Dollars (‘‘USD’’), 

euros or British Pounds. Within the 

process, aggregated gold bids and offers 

will be updated in real-time with the 

imbalance calculated and the price 

updated at regular intervals (expected to 

be at least every 45 seconds). IBA will 

use ICE’s front-end system— WebICE— 

as the technology platform that will 

allow direct participants, as well as 

sponsored clients of direct participants, 

to manage their orders in the auction in 

real time via their desktops.6

Participants in the auction will 

include direct participants and 

sponsored clients of direct participants. 

Direct participants may enter orders on 

their own behalf or on behalf of clients. 

Sponsored clients also may manage 

their own positions utilizing their own 

trading screens; however, a sponsored 

client’s orders would be backed by the 

sponsoring direct participant. WebICE 

allows sponsored clients to participate 

in the auction process with the same 

information and order management 

capabilities as direct participants. 

At the opening of each auction, the 

auction chairman (‘‘Chairman’’) will 

announce an opening price (in USD) 

based on the current market conditions 

and begin auction rounds, with an 

expected duration of at least every 45 

seconds each. During each auction 

round, participants may enter the 

volume they wish to buy or sell at that 

price, and such orders will be part of the 

price formation. All orders will be 

routed through direct participants but 

only direct participants will share the 

final imbalance. Aggregate bid and offer 

volume will be shown live on WebICE, 

providing a level playing field for all 

participants. At the end of each auction 

round, the total net volume will be 

calculated. If this ‘imbalance’ is larger 

than the imbalance tolerance (currently 

set at 20,000 oz) then the Chairman will 

choose a new price 7 (based on the 

current market conditions, and the 

direction and magnitude of the 

imbalance in the round) and begin a 

new auction round. If the imbalance is 

less than the tolerance, then the auction 

is complete with all volume tradeable at 

that price. The price will then be set in 

USD and also converted into in euros 

and British Pounds. Auctions will 

continue to be run at 10:30 and 15:00 

(London time). 

During the auction, the price at the 

start of each round, and the volumes at 

the end of each round will be available 

through major market data vendors. As 

soon as the auction finishes, the final 

prices and volumes will be available 

through major market data vendors. IBA 

will also publish transparency reports, 

detailing the prices, volumes and times 

for each round of the auction. These 

transparency reports will be available 

through major market data vendors and 

IBA when the auction finishes. The 

process can also be observed real-time 

through a WebICE screen. The auction 

mechanism will provide a complete 

audit trail. 

The number of direct participants 

initially expected to participate in the 

auction process is not yet confirmed, 

but is expected to equal or exceed the 

number of market participants currently 

determining the London Gold Fix. 

Regulation of the LBMA Gold Price 

As of April 1, 2015, the LBMA Gold 

Price will be regulated by the Financial 

Conduct Authority (‘‘FCA’’) in the 

United Kingdom (‘‘UK’’).8 IBA is 

already authorized as a regulated 

benchmark administrator by the FCA. 

Under the UK benchmark regulation,9

the governance structure for a regulated 

benchmark must include an Oversight 

Committee, made up of market 

participants, industry bodies, direct 

participant representatives, 


rljohnson on DSK3VPTVN1PROD with NOTICES
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10The Oversight Committee is a key decision 

making forum, with market representation that 

includes participants, users and infrastructure 

providers. The Oversight Committee’s 

responsibilities include review of methodology and 

process relating to the LBMA Gold Price; 

implementation of a Code of Conduct applicable to 

participants; expansion of membership; and 

surveillance oversight, among other functions. The 

Oversight Committee’s structure and 

responsibilities is described in the Oversight 

Committee Terms of Reference, available on the IBA 

Web site. 

11The LBMA will continue to provide guidance 

with respect to the LBMA Gold Price through the 

Oversight Committee, which will facilitate 

communication among representatives of all market 

participants to ensure the process continues to fulfil 

the needs of the market. The Oversight Committee 

is responsible for decisions that affect the evolution 

of the process based on changes in the market and 

regulatory environments. 

12The IOSCO Principles are designed to enhance 

the integrity, the reliability and the oversight of 

benchmarks by establishing guidelines for 

benchmark administrators and other relevant bodies 

in the following areas: Governance: To protect the 

integrity of the benchmark determination process 

and to address conflicts of interest; Benchmark 

quality: to promote the quality and integrity of 

benchmark determinations through the application 

of design factors; Quality of the methodology: to 

promote the quality and integrity of methodologies 

by setting out minimum information that should be 

addressed within a methodology. These principles 

also call for credible transition policies in case a 

benchmark may cease to exist due to market 

structure change. Accountability mechanisms: to 

establish complaints processes, documentation 

requirements and audit reviews. The IOSCO 

Principles provide a framework of standards that 

might be met in different ways, depending on the 

specificities of each benchmark. In addition to a set 

of high level principles, the framework offers a 

subset of more detailed principles for benchmarks 

having specific risks arising from their reliance on 

submissions and/or their ownership structure. For 

further information concerning the IOSCO 

Principles, see http://www.iosco.org/library/

pubdocs/pdf/IOSCOPD415.pdf. 

13See Securities Exchange Act Release Nos. 

50603 (October 28, 2004), 69 FR 64614 (November 

5, 2004) (SR–NYSE–2004–22) (order approving 

listing of shares of the streetTRACKS Gold Trust 

(now known as the SPDR® Gold Trust) on the New 

York Stock Exchange); See Securities Exchange Act 

Release Nos. 51245 (February 23, 2005), 70 FR 

10731 (March 4, 2005) (SR–PCX–2004–117) (order 

approving trading on the Exchange of shares of the 

streetTRACKS Gold Trust pursuant to unlisted 

trading privileges); 56224 (August 8, 2007), 72 FR 

45850 (August 15, 2007) (SR–NYSEArca–2007–76) 

(order approving listing on the Exchange of shares 

of the streetTRACKS Gold Trust). 

14See Securities Exchange Act Release No. 63398 

(November 30, 2010), 75 FR 76056 (December 7, 

2010) (SR–NYSEArca–2010–105) (notice of filing 

and immediate effectiveness of proposed rule 

change relating to calculation of net asset value by 

the iShares Gold Trust (formerly the iShares 

COMEX Gold Trust)). See also Securities Exchange 

Act Release No. 56041 (July 11, 2007), 72 FR 39114 

(July 17, 2007) (SR–NYSEArca-2007–43) (order 

approving listing on the Exchange of iShares 

COMEX Gold Trust). 51058 (January 19, 2005), 70 

FR 3749 (January 26, 2005) (SR–Amex–2004–38) 

(order approving listing of iShares COMEX Gold 

Trust on the American Stock Exchange LLC). 

15See Securities Exchange Act Release No. 59895 

(May 8, 2009), 74 FR 22993 (May 15, 2009) (SR– 

NYSEArca–2009–40) (notice of filing and order 

granting accelerated approval of proposed rule 

change relating to the listing and trading of shares 

of the ETFS Gold Trust). 

16See Securities Exchange Act Release No. 62402 

(June 29, 2010), 75 FR 39292 (July 8, 2010) (SR– 

NYSEArca–2010–56) (notice of filing of proposed 

rule change to list and trade shares of the ETFS 

Precious Metals Basket Trust); 62692 (August 11, 

2010), 75 FR 50789 (August 17, 2010) (order 

approving proposed rule change to list and trade 

shares of the ETFS Precious Metals Basket Trust). 

17See Securities Exchange Act Release No. 63267 

(November 8, 2010), 75 FR 69494 (November 12, 

2010) (notice of filing of proposed rule change to 

list and trade shares of the ETFS Asian Gold Trust); 

63464 (December 8, 2010), 75 FR 77926 (December 

14, 2010) (SR–NYSEArca–2010–95) (order granting 

accelerated approval of a proposed rule change to 

list and trade shares of the ETFS Asian Gold Trust). 

18See Securities Exchange Act Release No. 71038 

(December 11, 2013), 78 FR 76367 (December 17, 

2013) (notice of filing of proposed rule change to 

list and trade shares of the Merk Gold Trust) 71378 

(January 23, 2014), 79 FR 4786 (January 29, 2014) 

(SR–NYSEArca–2013–137) (order approving 

proposed rule change to list and trade shares of the 

Merk Gold Trust). 

19See Securities Exchange Act Release Nos. 

58457 (September 3, 2008), (73 FR 52711 

(September 10, 2008) (SR–NYSEArca–2008–91) 

(notice of filing and order granting accelerated 

approval of proposed rule change regarding listing 

and trading of shares of 14 funds of the 

Commodities and Currency Trust, now ProShares 

Trust II); 58162 (July 15, 2008), 73 FR 42391 (July 

21, 2008) (SR–NYSEArca–2008–73) (notice of filing 

and immediate effectiveness of proposed rule 

change relating to trading of shares of 14 funds of 

the Commodities and Currency Trust pursuant to 

unlisted trading privileges). See also Securities 

Exchange Act Release Nos. 58161 (July 15, 2008), 

73 FR 42380 (July 21, 2008) (SR–Amex–2008–39) 

(order approving listing and trading on the 

American Stock Exchange LLC of shares of 14 funds 

of the Commodities and Currency Trust); 57932 

(June 5, 2008), 73 FR 33467 (June 12, 2008) (notice 

of proposed rule change regarding listing and 

trading of shares of 14 funds of the Commodities 

and Currency Trust). 

20See supra, notes 13–19 [sic]. See also the 

registration statement on Form S–3 under the 1933 

Act for the SPDR® Gold Trust dated April 26, 2012 

(No. 333–180974); registration statement on Form 

S–3 under the 1933 Act for the iShares Gold Trust, 

dated May 10, 2014 (No. 333–199257); PostEffective Amendment No. 2 on Form S–3 under the 

1933 Act for the ETFS Precious Metals Basket Trust, 

filed with the Commission on November 25, 2014 

(No. 333–195675); Registration Statement on Form 

S–3 ASR under the 1933 Act for the ETFS Gold 

Trust, filed with the Commission on April 11, 2014 

(No. 333–195204); Registration Statement on Form 

S–1 under the 1933 Act for the ETFS Asian Gold 

Trust, filed with the Commission on May 12, 2014 

(No. 333–195868); and Amendment No. 6 on Form 

S–1 under the 1933 Act for the Merk Gold Trust, 

dated May 13, 2014 (No. 333–180868). 

21ProShares Ultra Gold seeks daily investment 

results, before fees and expenses, that correspond 

to twice (200%) the daily performance of the 

Underlying Benchmark. ProShares UltraShort Gold 

seeks daily investment results, before fees and 

expenses that correspond to twice the inverse (- 

200%) of the daily performance of the Underlying 

Benchmark. See Securities Exchange Act Release 

No. 58161 (July 15, 2008), 73 FR 42380 (July 21, 

2008) (SR-Amex-2008–39) (order approving listing 

infrastructure providers and the 

administrator (i.e., IBA). 10 Through the 

Oversight Committee, the LBMA will 

continue to have significant 

involvement in the oversight of the 

auction process, including, among other 

matters, changes to the methodology 

and accreditation of direct 

participants.11

The price discovery process for the 

LBMA Gold Price will be subject to 

surveillance by IBA. IBA is compliant 

with the UK benchmark regulation 

(MAR 8.3), regulated by the FCA, and 

has been formally assessed against the 

IOSCO Principles for Financial 

Benchmarks (the ‘‘IOSCO 

Principles’’).12 In order to meet the 

IOSCO Principles, the price discovery 

used for the LBMA Gold Price 

benchmark will be auditable and 

transparent. 

Exchange-Listed Gold-Based Products 

The Exchange lists and trades shares 

of exchange traded products that 

reference the London Gold Fix 

benchmark for one or more purposes. 

The Exchange lists and trades shares of 

(1) the SPDR® Gold Trust,13 which is 

currently listed on the Exchange under 

NYSE Arca Equities Rule 5.2(j)(5); (2) 

iShares Gold Trust,14 ETFS Gold 

Trust,15 ETFS Precious Metals Basket 

Trust,16 ETFS Asian Gold Trust,17 and 

Merk Gold Trust,18 each of which is 

currently listed on the Exchange under 

NYSE Arca Equities Rule 8.201 (together 

with the SPDR Gold Trust, the ‘‘Gold 

Trusts’’). In addition, the Exchange lists 

and trades shares of the Ultra Gold 

ProShares and UltraShort Gold 

ProShares 19 (together, the ‘‘Gold 

Funds’’), each of which is currently 

listed on the Exchange under NYSE 

Arca Equities Rule 8.200. 

With respect to the Gold Trusts, the 

net asset value of shares of the 

respective trusts is based on the London 

Gold Fix, as described in the applicable 

rule filings relating to listing and trading 

of shares of each of the Gold Trusts and 

in the registration statement under the 

1933 Act relating to each such trust.20

After March 19, 2015, the London Gold 

Fix will no longer exist and it is, 

therefore, necessary for the Gold Trusts 

to change the benchmark price that each 

such trust uses for purposes of 

calculating the net asset value of such 

trust’s shares. The sponsors of the Gold 

Trusts have indicated that, as of March 

20, 2015, they intend to use the LBMA 

Gold Price for purposes of determining 

the net asset value of shares of the Gold 

Trusts. Accordingly, the Exchange 

proposes to change the benchmark price 

used by the Gold Trusts for calculation 

of the net asset value of shares of each 

of such trust. 

With respect to the Gold Funds, the 

existing ‘‘Underlying Benchmark’’ for 

each such fund is the U.S. dollar price 

of gold bullion as measured by the 

London Gold Fix.21 The Gold Funds, 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 15843 

and trading of shares of fourteen funds of the 

Commodities and Currency Trust); Securities 

Exchange Act Release No. 58457 (September 3, 

2008) (73 FR 52711) (September 10, 2008) (SR– 

NYSEArca–2008–91) (notice of filing and order 

granting accelerated approval of proposed rule 

change regarding listing and trading of shares of 14 

funds of ProShares Trust II). See also, registration 

statement for ProShares Trust II on Form S–3 under 

the 1933 Act, filed with the Commission on October 

28, 2014 (No. 333–199641). 

22The sponsors for the Gold Trusts and the Gold 

Funds represent that they will manage the Gold 

Trusts and the Gold Funds in the manner described 

in the applicable proposed rule change (see supra, 

notes 13–19), and will not implement the changes 

described herein until the instant proposed rule 

change is operative. 

23See supra, notes 13–19. 

24See supra, notes 13–19. 

25 15 U.S.C. 78f(b)(5). 

therefore, similarly need to change the 

Underlying Benchmark for each such 

fund. The sponsor of the Gold Funds 

represents that it intends to change the 

Underlying Benchmark for the Gold 

Funds to the LBMA Gold Price as of 

March 20, 2015. Accordingly, the 

Exchange proposes to reflect a change in 

the Underlying Benchmark applicable to 

the Gold Funds. 

The LBMA Gold Price benchmark is 

widely expected to be viewed as a full 

and fair representation of all market 

interest at the conclusion of the auction. 

IBA’s electronic auction methodology is 

similar to the non-electronic process 

previously used to establish the London 

Gold Fix where the London Gold Fix 

process adjusted the gold price up or 

down until all the buy and sell orders 

are matched (within the imbalance 

threshold), at which time the price was 

declared fixed. Nevertheless, the LBMA 

Gold Price has several advantages over 

the previous London Gold Fix. IBA’s 

auction process will be fully transparent 

in real time to direct participants and 

sponsored clients and, at the close of 

each auction, to the general public. The 

auction process also will be fully 

auditable since an audit trail exists for 

every change made in the process. 

Moreover, the audit trail and active 

surveillance of the auction process by 

IBA, as well as FCA’s oversight of IBA, 

will deter manipulative and abusive 

conduct in establishing each day’s 

LBMA Gold Price. 

The Exchange believes the new LBMA 

Gold Price benchmark will serve as an 

appropriate replacement to the London 

Gold Fix for purposes of determining 

the net asset value of shares of the Gold 

Trusts or as the Underlying Benchmark 

applicable to the Gold Funds because of 

the transparency of the auction process, 

the anticipated participation of an 

increased number of market participants 

compared to the London Gold Fix, and 

the auditability of the gold pricing 

mechanism. 

In connection with this proposed rule 

change, (1) the sponsors of the Gold 

Trusts will each issue a press release 

informing the public of the date a trust 

will first use the LBMA Gold Price to 

value the gold held by a trust; (2) the 

sponsor of the Gold Funds will issue a 

press release informing the public of the 

date the Gold Funds will first use the 

LBMA Gold Price as the basis for their 

respective Underlying Benchmark; (3) 

the sponsors will each file the 

applicable press release with the 

Commission by means of Form 8–K, 

which will be available on the 

applicable Gold Trust’s or Gold Fund’s 

Web site; and (4) the sponsors will each 

file an amendment to the applicable 

registration statement relating to the 

proposed change.22

The sponsors for the Gold Trusts and 

the Gold Funds represent that there is 

no change to the investment objective of 

the applicable Gold Trust or the Gold 

Funds from that described in the 

applicable proposed rule change.23 The 

Gold Trusts and the Gold Funds will 

comply with all initial and continued 

listing requirements with respect to 

NYSE Arca Equities Rule 5.2(j)(5), 8.201 

or 8.200, respectively. 

Except for the changes noted above, 

all other facts presented and 

representations made in the proposed 

rule changes referenced above remain 

unchanged. 

All terms referenced but not defined 

herein are defined in the applicable 

proposed rule change referenced 

above.24

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 25 that an 

exchange have rules that are designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to, and perfect the 

mechanism of a free and open market 

and, in general, to protect investors and 

the public interest. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the new LBMA 

Gold Price benchmark will be based on 

an auction that is electronic and 

auditable and is produced from 

tradeable volumes. The Exchange 

believes the new LBMA Gold Price 

benchmark will serve as an appropriate 

replacement to the London Gold Fix for 

purposes of determining the net asset 

value of shares of the Gold Trusts or as 

the Underlying Benchmark applicable to 

the Gold Funds because of the 

transparency and auditability of the 

auction process, and the prospective 

participation of an increased number of 

market participants compared to the 

London Gold Fix. In addition, the 

LBMA Gold Price and the transparency 

reports showing the prices, timings and 

total volumes for each round will be 

available electronically instantly after 

the conclusion of the auction, as 

described above. 

The proposed change will permit the 

Gold Trusts and Gold Funds to continue 

to function as gold-based exchangetraded products by utilizing a new gold 

benchmark to replace the London Gold 

Fix, which is not expected to be 

available after March 19, 2015, and that 

will provide a sound and reasonable 

basis for calculation of net asset value 

or will provide a suitable Underlying 

Benchmark, as applicable. Such price 

will be widely disseminated by one or 

more major market data vendors and/or 

exchanges. Prior to or following the 

effectiveness of this proposed rule 

change, (1) the sponsors of the Gold 

Trusts will each issue a press release 

informing the public of the date a trust 

will first use the LBMA Gold Price to 

value the gold held by a trust; (2) the 

sponsor of the Gold Funds will issue a 

press release informing the public of the 

date the Gold Funds will first use the 

LBMA Gold Price as the basis for their 

respective Underlying Benchmark; (3) 

the sponsors of the Gold Trusts and 

Gold Funds will each file the applicable 

press release with the Commission by 

means of Form 8–K, which will be 

available on the applicable Gold Trust’s 

or Gold Fund’s Web site; and (4) the 

sponsors of the Gold Trusts and Gold 

Funds will each file an amendment to 

the applicable registration statement 

under the 1933 Act relating to the 

proposed change. Such press releases 

and registration statement amendments 

will protect investors and the public 

interest by providing notification to 

investors of the new gold price 

benchmark prior to the use of the LBMA 

Gold Price by the Gold Trusts and Gold 

Funds. The sponsors for the Gold Trusts 

and Gold Funds represent that there is 

no change to the investment objective of 

the applicable trust or the Gold Funds 

from that described in the applicable 

proposed rule change. The Gold Trusts 

and Gold Funds will comply with all 

initial and continued listing 

requirements relating to NYSE Arca 

Equities Rules 5.2(j)(5), 8.201 or 8.200, 

respectively. Except for the changes 

noted above, all other facts presented 

and representations made in proposed 


rljohnson on DSK3VPTVN1PROD with NOTICES
15844 Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 

26See supra, note 12. 

27See supra, notes 13–19. 

28 15 U.S.C. 78s(b)(3)(A). 

29 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

30For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 31 15 U.S.C. 78s(b)(2)(B). 

rule changes referenced above remain 

unchanged. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market price discovery process 

and, in general, to protect investors and 

the public interest in that the gold 

auction will be transparent, auditable, 

and operated by a regulated benchmark 

administrator (IBA). The audit trail 

records every change made in the 

process and IBA has regulatory 

obligations to run surveillance on the 

activity in the process to deter and 

identify manipulative and abusive 

conduct in establishing each day’s 

LBMA Gold Price. The new LBMA Gold 

Price, as administered by IBA, is 

designed to be a benchmark that meets 

the needs of the market and regulators 

(including the IOSCO Principles 26). The 

Gold Trusts and Gold Funds will 

continue to be listed and traded on the 

Exchange pursuant to the initial and 

continued listing criteria relating to 

NYSE Arca Equities Rules 5.2(j)(5), 

8.201 and 8.200, respectively. Except for 

the changes noted above, all other facts 

presented and representations made in 

proposed rule changes referenced above 

remain unchanged.27

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 

proposed change will permit the Gold 

Trusts and Gold Funds to continue to 

function as gold-based exchange-traded 

products by utilizing a new gold price 

benchmark to replace the London Gold 

Fix, which will not be available after 

March 19, 2015, and that will provide 

a sound and reasonable basis for 

calculation of net asset value or will 

provide a suitable Underlying 

Benchmark, as applicable. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not (i) significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 28 and Rule 19b–4(f)(6) 

thereunder.29

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange states that the 

proposed change will provide 

additional transparency to gold pricing 

compared to the previous London Gold 

Fix for several reasons. The Exchange 

represents that IBA’s auction process 

will be fully transparent in real time to 

direct participants and sponsored 

clients and, at the close of each auction, 

to the general public. The Exchange 

represents that IBA’s auction process 

will be fully auditable because an audit 

trail exists of every change that is made 

during the auction. Moreover, the 

Exchange states that there will be active 

surveillance of the activity in the 

auction process by IBA. The Exchange 

represents that the number of gold 

participants that initially are expected 

to participate in the auction process 

equals or exceeds the number of market 

participants currently determining the 

London Gold Fix, and will contribute to 

the integrity and reliability of the 

pricing process. 

The Commission believes that waiver 

of the operative delay is consistent with 

the protection of investors and the 

public interest. Waiver of the operative 

delay will allow the Gold Trusts and the 

Gold Funds, whose shares are actively 

traded, to use the LBMA Gold Price as 

the basis for calculating the NAV or as 

an Underlying Benchmark, as 

applicable, by March 20, 2015, thereby 

facilitating the transition to the new 

price mechanism without disruption in 

trading. Therefore, the Commission 

designates the proposed rule change to 

be operative upon filing.30

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 31 of the Act to 

determine whether the proposed rule 

change should be approved or 

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 (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2015–19 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2015–19. 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 Web site (http://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 Web site 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 

10:00 a.m. and 3:00 p.m. Copies of such 

filing will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 15845 

32 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 74212 

(February 5, 2015), 80 FR 7668 (February 11, 2015) 

(SR–OCC–2015–04). 

4For example, OCC Rule 1106(a) provides OCC 

with significant flexibility with respect actions it 

may take in order to close out a defaulting clearing 

member’s open long positions. 5OCC filed Amendment No. 1 in order to correct 

an inadvertent grammatical error. Specifically, a 

comma after the word ‘‘Executive Chairman’’ was 

removed because it caused the description of the 

proposed rule change to not be consistent with the 

text of the proposed rule change. 

6OCC’s proposal is similar to the summary 

suspension process employed by the National 

Securities Clearing Corporation (‘‘NSCC’’). See 

NSCC Rule 46, Section 3. 

7A description of OCC’s default management 

process is located at: http://www.theocc.com/riskmanagement/default-rules/> 

8OCC staff will notify the Board within two hours 

of the summary suspension. 

9 15 U.S.C. 78s(b)(2)(C). 

10 15 U.S.C. 78q–1(b)(3)(F). 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca-2015–19 and should be 

submitted on or before April 15, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–06719 Filed 3–24–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74537; File No. SR–OCC– 

2015–04] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Approving Proposed Rule Change, as 

Modified by Amendment 1 Thereto, To 

Expand the Officers Who May Declare 

That a Clearing Member Is Summarily 

Suspended 

March 19, 2015. 

On January 23, 2015, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–OCC–2015–04 

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

Securities Exchange Act of 1934 

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

The proposed rule change was 

published for comment in the Federal 

Register on February 11, 2015.3 The 

Commission did not receive any 

comments on the proposed rule change. 

This order approves the proposed rule 

change, as modified by Amendment 1. 

I. Description 

OCC is amending its Rules to permit 

OCC to expand the officers who may 

declare that a clearing member is 

summarily suspended from OCC. 

Currently, OCC Rule 1102 provides that 

only OCC’s Board of Directors (‘‘Board’’) 

and its Executive Chairman may 

summarily suspend a clearing member. 

OCC believes that, given the time 

sensitive nature of managing a clearing 

member default, it is prudent risk 

management to expand the number of 

officers with the authority to summarily 

suspend a clearing member so that OCC 

may begin its default management 

process and, in turn, take protective 

action as soon as possible. 

Pursuant to OCC Rule 1102, OCC’s 

Board and Executive Chairman have the 

authority to summarily suspend a 

clearing member. As set forth in 

Interpretation and Policy .01 of Rule 

1102, such action constitutes a 

‘‘default’’ with respect to the clearing 

member. OCC’s ability to timely and 

effectively begin its clearing member 

default management process serves a 

key role in protecting OCC, nondefaulting clearing members and the 

public from potential consequential 

damage(s) that may be caused by the 

default of a clearing member. In order to 

provide OCC with the necessary tools to 

manage a clearing member default, 

Chapter XI of OCC’s Rules provides 

OCC with the authority to take certain 

protective action(s) once a clearing 

member has been summarily suspended 

(and declared to be in default).4 While 

OCC believes that the authority 

provided to it in Chapter XI of its Rules 

is sufficiently robust to manage a 

clearing member default, OCC may not 

exercise such authority unless and until 

a clearing member has been summarily 

suspended by either the Board or the 

Executive Chairman. 

In order to provide greater assurance 

that OCC will be able to timely and 

effectively manage a clearing member 

default, pursuant to its proposal as 

approved, OCC is amending Rule 1102 

to expand the list of officers who may 

summarily suspend a clearing member 

to include OCC’s President or a designee 

of the Executive Chairman 5 or President 

of the rank of Senior Vice President or 

higher (each a ‘‘Designed Officer’’).6

OCC believes that the change will 

provide it with additional operational 

flexibility because more individuals will 

be able to timely summarily suspend a 

clearing member and thereby allow OCC 

to exercise its authority to manage a 

clearing member default. OCC’s clearing 

member default management process is 

designed to protect OCC, non-defaulting 

clearing members and the public from 

the defaulting clearing member without 

materially impacting financial markets.7

By providing additional officers with 

the authority to summarily suspend a 

clearing member, and thereby allow 

OCC to begin its default management 

processes, there will be greater 

assurance that OCC will timely take 

action(s) necessary to protect itself, nondefaulting clearing members, and the 

public from a defaulting clearing 

member. OCC also is amending Rule 

1102 to require notification to the Board 

as soon as practicable should a 

Designated Officer summarily suspend a 

clearing member.8 The addition of such 

a requirement will ensure that the Board 

is timely informed of such suspensions. 

Furthermore, pursuant to this rule 

change as approved, OCC is making 

conforming amendments consistent 

with the above to Article VI, Section 25 

of its By-Laws and OCC Rule 707, which 

concern the summary suspension of 

clearing members that participate in 

OCC’s cross-margining programs. 

Specifically, Article VI, Section of 

OCC’s By-Laws and OCC Rule 707 will 

explicitly state that the Board of 

Directors or a Designated Officer may 

summarily suspend a clearing member 

based on a cross-margining related 

default. 

Except for the changes described 

above, no other changes are proposed to 

OCC’s suspension or default 

management processes as set forth in 

the Rules, including a clearing 

member’s right to appeal a summary 

suspension in accordance with OCC 

Rule 1110. 

II. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act 9 directs 

the Commission to approve a proposed 

rule change of a self-regulatory 

organization if it finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

such organization. 

The Commission finds that the 

proposed rule change is consistent with 

Section 17A(b)(3)(F) of the Act, which 

requires, among other things, that the 

rules of a clearing agency are designed 

to assure the safeguarding of securities 

and funds which are in the custody or 

control of the clearing agency or for 

which it is responsible.10 By expanding 

the list of officers with the authority to 

summarily suspend a clearing member, 

OCC will be better able to ensure that 

has the ability to timely begin the 

clearing member default management 

processes. In turn, timely beginning the 


rljohnson on DSK3VPTVN1PROD with NOTICES