Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18771 

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

2 17 CFR 240.19b–4. 

3Commodity-Based Trust Shares are securities 

issued by a trust that represent investors’ discrete 

identifiable and undivided beneficial ownership 

interest in the commodities deposited into the 

Trust. 

4See Securities Exchange Act Release Nos. 58956 

(November 14, 2008), 73 FR 71074 (November 24, 

2008) (SR–NYSEArca–2008–124) (approving listing 

on the Exchange of the iShares Silver Trust); 56224 

(August 8, 2007) 72 FR 45850 (August 15, 2007) 

(SR–NYSEArca–2007–76) (approving listing on the 

Exchange of the streetTRACKS Gold Trust). 

5See Securities Exchange Act Release No. 53521 

(March 20, 2006), 71 FR 14967 (March 24, 2006) 

(SR–Amex–2005–72). 

6See Securities Exchange Act Release Nos. 53520 

(March 20, 2006), 71 FR 14977 (March 24, 2006) 

(SR–PCX–2005–117) (approving trading on the 

Exchange pursuant to UTP of the iShares Silver 

Trust); 51245 (February 23, 2005), 70 FR 10731 

(March 4, 2005) (SR–PCX–2004–117) (approving 

trading on the Exchange of the streetTRACKS Gold 

Trust pursuant to UTP). 

7See the Registration Statement for the ETFS 

Silver Trust on Form S–1, filed with the 

Commission on March 20, 2009 (No. 333–156307). 

The descriptions of the Trust, the Shares and the 

silver market contained herein are based on the 

Registration Statement. 

8See e-mail from Michael Cavalier, Chief 

Counsel, NYSE Euronext, to Christopher W. Chow, 

Special Counsel, Commission, dated April 14, 2009. 

9The Trustee is generally responsible for the dayto-day administration of the Trust. This includes (1) 

selling the Trust’s silver as needed to pay the 

Trust’s expenses (silver sales are expected to occur 

approximately monthly in the ordinary course), (2) 

calculating the net asset value (‘‘NAV’’) of the Trust 

and the NAV per Share, (3) receiving and 

processing orders from Authorized Participants to 

create and redeem Baskets and coordinating the 

processing of such orders with the Custodian and 

The Depository Trust Company (‘‘DTC’’) and (4) 

monitoring the Custodian. 

10The Custodian is responsible for the 

safekeeping of the Trust’s silver deposited with it 

by Authorized Participants in connection with the 

creation of Baskets. The Custodian also facilitates 

the transfer of silver in and out of the Trust through 

silver accounts it will maintain for Authorized 

Participants and the Trust. The Custodian is a 

market maker, clearer and approved weigher under 

the rules of the London Bullion Market Association 

(‘‘LBMA’’). 

11With respect to application of Rule 10A–3 (17 

CFR 240.10A–3) under the Act, the Trust relies on 

the exemption contained in Rule 10A–3(c)(7). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59781; File No. SR– 

NYSEArca–2009–28] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and Order 

Granting Accelerated Approval of 

Proposed Rule Change Relating to 

Listing and Trading of Shares of the 

ETFS Silver Trust 

April 17, 2009. 

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 April 6, 

2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade shares (‘‘Shares’’) of the ETFS 

Silver Trust (the ‘‘Trust’’) pursuant to 

NYSE Arca Equities Rule 8.201. The text 

of the proposed rule change is available 

on the Exchange’s Web site at http:// 

www.nyx.com, at the Exchange’s 

principal office and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 III 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade the Shares under NYSE Arca 

Equities Rule 8.201. Under NYSE Arca 

Equities Rule 8.201, the Exchange may 

propose to list and/or trade pursuant to 

unlisted trading privileges (‘‘UTP’’) 

‘‘Commodity-Based Trust Shares.’’ 3 The 

Commission has previously approved 

listing on the Exchange under Rule 

8.201 shares of the iShares Silver Trust 

and the streetTRACKS Gold Trust,4 and, 

prior to their listing on the Exchange, 

approved listing of the iShares Silver 

Trust on the American Stock Exchange 

LLC (now known as ‘‘NYSE Amex 

LLC’’).5 In addition, the Commission 

has approved trading of the iShares 

Silver Trust and the streetTRACKS Gold 

Trust on the Exchange pursuant to 

UTP.6

The Trust will issue ETFS Silver 

Shares (‘‘Shares’’) which represent units 

of fractional undivided beneficial 

interest in and ownership of the Trust. 

The investment objective of the Trust is 

for the Shares to reflect the performance 

of the price of silver bullion, less the 

Trust’s expenses.7

ETFS Services USA LLC is the 

sponsor of the Trust,8 Bank of New York 

Mellon is the trustee of the Trust 

(‘‘Trustee’’),9 and HSBC Bank U.S.A., 

N.A.is the custodian of the Trust 

(‘‘Custodian’’).10

The Exchange represents that the 

Shares satisfy the requirements of Rule 

8.201 and thereby qualify for listing on 

the Exchange.11

Global Over-The-Counter Market 

According to the Registration 

Statement, the global trade in silver 

consists of Over-the-Counter (‘‘OTC’’) 

transactions in spot, forwards, and 

options and other derivatives, together 

with exchange-traded futures and 

options. 

The OTC silver market includes spot, 

forward, and option and other 

derivative transactions conducted on a 

principal-to-principal basis. While this 

is a global, nearly 24-hour per day 

market, its main centers are London (the 

biggest venue), New York and Zurich. 

Market makers, as well as others in 

the OTC market, trade with each other 

and with their clients on a principal-toprincipal basis. All risks and issues of 

credit are between the parties directly 

involved in the transaction. Market 

makers include the market-making 

members of the LBMA, the trade 

association that acts as the coordinator 

for activities conducted on behalf of its 

members and other participants in the 

London bullion market. The eleven 

market-making members of the LBMA 

are: Barclays Bank plc, Deutsche Bank 

AG, HSBC Bank USA, N.A. (through its 

London branch), Goldman Sachs 

International, JPMorgan Chase Bank, 

ScotiaMocatta (a division of the Bank of 

Nova Scotia), Socie ́te ́ Ge ́ne ́rale, Mitsui & 

Co. Precious Metals Inc., Bear Stearns 

Forex Inc., Royal Bank of Canada, and 

UBS AG. The OTC market provides a 

relatively flexible market in terms of 

quotes, price, size, destinations for 

delivery and other factors. Bullion 

dealers customize transactions to meet 

clients’ requirements. The OTC market 

has no formal structure and no openoutcry meeting place. 

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18772 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

12Terms relating to the Trust and the Shares 

referred to, but not defined, herein are defined in 

the Registration Statement. 

The main centers of the OTC market 

are London, New York and Zurich. 

Mining companies, central banks, 

manufacturers of jewelry and industrial 

products, together with investors and 

speculators, tend to transact their 

business through one of these market 

centers. Centers such as Dubai and 

several cities in the Far East also 

transact substantial OTC market 

business, typically involving jewelry 

and small bars (1 kilogram or less). 

Bullion dealers have offices around the 

world and most of the world’s major 

bullion dealers are either members or 

associate members of the LBMA. Of the 

eleven market-making members of the 

LBMA, six offer clearing services. There 

are a further 59 full members, plus a 

number of associate members around 

the world. These numbers may change 

from time to time as new members are 

added and existing members drop out. 

The London Bullion Market 

Although the market for physical 

silver is distributed globally, most OTC 

market trades are cleared through 

London. In addition to coordinating 

market activities, the LBMA acts as the 

principal point of contact between the 

market and its regulators. A primary 

function of the LBMA is its involvement 

in the promotion of refining standards 

by maintenance of the ‘‘London Good 

Delivery Lists,’’ which are the lists of 

LBMA accredited melters and assayers 

of silver. The LBMA also coordinates 

market clearing and vaulting, promotes 

good trading practices and develops 

standard documentation.12

The term ‘‘loco London’’ silver refers 

to silver physically held in London that 

meets the specifications for weight, 

dimensions, fineness (or purity), 

identifying marks (including the assay 

stamp of a LBMA acceptable refiner) 

and appearance set forth in ‘‘The Good 

Delivery Rules for Gold and Silver Bars’’ 

published by the LBMA. Silver bars 

meeting these requirements are 

described in the Trust’s prospectus as 

‘‘London Good Delivery Bars.’’ The unit 

of trade in London is the troy ounce, 

whose conversion between grams is: 

1,000 grams = 32.1507465 troy ounces 

and 1 troy ounce = 31.1034768 grams. 

A London Good Delivery Bar is 

acceptable for delivery in settlement of 

a transaction on the OTC market. A 

London Good Delivery must contain 

between 750 ounces and 1100 ounces of 

silver with a minimum fineness (or 

purity) of 999.0 parts per 1000. A 

London Good Delivery Bar must also 

bear the stamp of one of the refiners 

who are on the LBMA-approved list. 

Unless otherwise specified, the silver 

spot price always refers to that of a 

London Good Delivery Bar. Business is 

generally conducted over the phone and 

through electronic dealing systems. 

Once daily during London trading 

hours there is a fix (‘‘London Fix’’) 

which provides reference silver prices 

for that day’s trading. According to the 

Registration Statement, many long-term 

contracts will be priced on the basis of 

the London Fix, and market participants 

will usually refer to this price when 

looking for a basis for valuations. The 

London Fix is the most widely used 

benchmark for daily silver prices and is 

quoted by various financial information 

sources. 

Three market making members of the 

LBMA conduct the Silver Fixing 

meeting under the chairmanship of The 

Bank of Nova Scotia-ScotiaMocatta by 

telephone at 12 noon London time each 

working day. The other two members of 

the Silver Fixing are Deutsche Bank AG 

and HSBC Bank USA, NA. 

Orders are placed either with one of 

the three 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 a 

‘‘trying 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 silver 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. 

According to the Registration Statement, 

the London Fix is widely viewed as a 

full and fair representation of all market 

interest at the time of the fix. 

Futures Exchanges 

According to the Registration 

Statement, the most significant silver 

futures exchanges are the COMEX, 

operated by Commodities Exchange, 

Inc., a subsidiary of New York 

Mercantile Exchange, Inc. (‘‘NYMEX’’), 

and the Tokyo Commodity Exchange 

(TOCOM). Trading on these exchanges 

is based on fixed delivery dates and 

transaction sizes for the futures and 

options traded. Trading costs on these 

exchanges is negotiable. The Exchange 

represents that, as a matter of practice, 

only a small percentage of the futures 

market turnover ever comes to physical 

delivery of the silver represented by the 

contracts traded. Both COMEX and 

TOCOM permit trading on margin. 

COMEX operates through a central 

clearance system. TOCOM has a similar 

clearance system. In each case, the 

exchange acts as a counterparty for each 

member for clearing purposes. 

Market Regulation 

The global silver markets are overseen 

and regulated by both governmental and 

self-regulatory organizations. In 

addition, certain trade associations have 

established rules and protocols for 

market practices and participants. In the 

United Kingdom, responsibility for the 

regulation of the financial market 

participants, including the major 

participating members of the LBMA, 

falls under the authority of the Financial 

Services Authority (‘‘FSA’’) as provided 

by the Financial Services and Markets 

Act 2000 (‘‘FSM Act’’). Under this act, 

all UK-based banks, together with other 

investment firms, are subject to a range 

of requirements, including fitness and 

properness, capital adequacy, liquidity, 

and systems and controls. 

The FSA is responsible for regulating 

investment products, including 

derivatives, and those who deal in 

investment products. Regulation of spot, 

commercial forwards, and deposits of 

gold and silver not covered by the FSM 

Act is provided for by The London Code 

of Conduct for Non-Investment 

Products, which was established by 

market participants in conjunction with 

the Bank of England. 

The TOCOM has authority to perform 

financial and operational surveillance 

on its members’ trading activities, 

scrutinize positions held by members 

and large-scale customers, and monitor 

the price movements of futures markets 

by comparing them with cash and other 

derivative markets’ prices. To act as a 

Futures Commission Merchant Broker, a 

broker must obtain a license from 

Japan’s Ministry of Economy, Trade and 

Industry (METI), the regulatory 

authority that oversees the operations of 

the TOCOM. 

According to the Registration 

Statement, the Trust will not trade in 

silver futures contracts on COMEX or on 

any other futures exchange. The Trust 

will take delivery of physical silver that 

complies with the LBMA silver delivery 

rules. Because the Trust will not trade 

in silver futures contracts on any futures 

exchange, the Trust will not be 

regulated by the Commodity Futures 

Trading Commission (‘‘CFTC’’) under 

the Commodity Exchange Act (‘‘CEA’’) 

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Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18773 

13 Initially, each Share represents one ounce of 

silver. 

14An ‘‘Authorized Participant’’ is a person who 

(1) is a registered broker-dealer or other securities 

market participant such as a bank or other financial 

institution which is not required to register as a 

broker-dealer to engage in securities transactions, 

(2) is a participant in DTC, (3) has entered into a 

Participant Agreement with the Trustee and the 

Sponsor, and (4) has established an Authorized 

Participant Unallocated Account with the 

Custodian. 

15The amount of any required cash deposit is 

determined as follows. The estimated unpaid fees, 

expenses and liabilities of the Trust accrued 

through the purchase order date are subtracted from 

any cash held or receivable by the Trust as of the 

purchase order date. The remaining amount is 

divided by the number of Shares outstanding 

immediately before the purchase order date and 

then multiplied by the number of Shares being 

created pursuant to the purchase order. If the 

resulting amount is positive, this amount is the 

required cash deposit. If the resulting amount is 

negative, the amount of the required silver deposit 

will be reduced by the number of fine ounces of 

silver equal in value to that resulting amount, 

determined at the price of silver used in calculating 

the NAV of the Trust on the purchase order date. 

as a ‘‘commodity pool,’’ and will not be 

operated by a CFTC-regulated 

commodity pool operator. Investors in 

the Trust will not receive the regulatory 

protections afforded to investors in 

regulated commodity pools, nor may 

COMEX or any futures exchange enforce 

its rules with respect to the Trust’s 

activities. In addition, investors in the 

Trust will not benefit from the 

protections afforded to investors in 

silver futures contracts on regulated 

futures exchanges. 

Product Description 

The activities of the Trust will be 

limited to (1) issuing Baskets (as defined 

below) of Shares in exchange for the 

silver deposited with the Custodian as 

consideration, (2) selling silver as 

necessary to cover the Sponsor’s Fee, 

Trust expenses not assumed by the 

Sponsor and other liabilities, and (3) 

delivering silver in exchange for Baskets 

of Shares surrendered for redemption. 

The Trust will not be actively managed. 

It will not engage in any activities 

designed to obtain a profit from, or to 

ameliorate losses caused by, changes in 

the price of silver. 

The investment objective of the Trust 

is for the Shares to reflect the 

performance of the price of silver 

bullion, less the Trust’s expenses. The 

Shares are intended to constitute a 

simple and cost-effective means of 

making an investment similar to an 

investment in silver. An investment in 

physical silver requires expensive and 

sometimes complicated arrangements in 

connection with the assay, 

transportation, warehousing and 

insurance of the metal. Although the 

Shares will not be the exact equivalent 

of an investment in silver, they provide 

investors with an alternative that allows 

a level of participation in the silver 

market through the securities market. 

According to the Registration 

Statement, the Trust is not registered as 

an investment company under the 

Investment Company Act of 1940 and is 

not required to register under such act. 

The Trust will not hold or trade in 

commodity futures contracts regulated 

by the CEA, as administered by the 

CFTC. According to the Registration 

Statement, the Trust is not a commodity 

pool for purposes of the CEA, and the 

Sponsor and Trustee are not subject to 

regulation as a commodity pool operator 

or a commodity trading adviser in 

connection with the Shares. 

Creation and Redemption Process 

Issuances of Shares will be made only 

in baskets of 100,000 shares or multiples 

thereof (‘‘Baskets’’).13 The Trust will 

issue and redeem Baskets daily, by or 

through registered broker-dealers that 

have entered into participant 

agreements (each, an ‘‘Authorized 

Participant’’) 14 with the Trustee. The 

creation and redemption of Baskets will 

only be made in exchange for the 

delivery to the Trust or the distribution 

by the Trust of the amount of silver and 

any cash represented by the Baskets 

being created or redeemed, the amount 

of which will be based on the combined 

net asset value (‘‘NAV’’) of the number 

of Shares included in the Baskets being 

created or redeemed determined on the 

day the order to create or redeem 

Baskets is properly received. 

The total deposit required to create 

each Basket (the ‘‘Creation Basket 

Deposit’’) will be an amount of silver 

and cash, if any, that is in the same 

proportion to the total assets of the 

Trust (net of estimated accrued but 

unpaid fees, expenses and other 

liabilities) on the date the order to 

purchase is properly received as the 

number of Shares to be created under 

the purchase order is in proportion to 

the total number of Shares outstanding 

on the date the order is received. The 

Sponsor anticipates that in the ordinary 

course of the Trust’s operations a cash 

deposit will not be required for the 

creation of Baskets.15

The amount of the required silver 

deposit is determined by dividing the 

number of ounces of silver held by the 

Trust by the number of Baskets 

outstanding, as adjusted for estimated 

accrued but unpaid fees and expenses, 

as described in the Registration 

Statement. 

The Shares will not be individually 

redeemable but will only be redeemable 

in Basket size. To redeem, an 

Authorized Participant will be required 

to accumulate enough Shares to 

constitute a Basket (i.e., 100,000 

Shares). Redeeming Authorized 

Participants will receive an allocation of 

silver to their accounts, in accordance 

with procedures set forth in the 

Registration Statement. Shares will be 

registered in book-entry form through 

DTC. 

The Exchange states that the Creation 

Basket Deposit necessary for the 

creation of a Basket will slightly 

diminish each day depending on the 

Trust’s daily expense accrual and the 

market price of silver. The initial 

Creation Basket Deposit will be a 

specified number of ounces of silver 

(with each Share initially representing 

one ounce of silver). On each day that 

the Exchange is open for regular trading, 

The Bank of New York Mellon will 

adjust the quantity of silver constituting 

the Creation Basket Deposit as 

appropriate to reflect sales of silver 

needed for payment of the Sponsor’s fee 

(which is similar to an expense ratio) 

and any extraordinary expenses or 

liabilities not assumed by the Sponsor. 

The Bank of New York Mellon will 

determine the Creation Basket Deposit 

for a given business day by subtracting 

the daily expense accrual from the 

previous day’s total ounces of silver in 

the Trust and then dividing the number 

of Baskets outstanding. Fractions of an 

ounce of silver smaller than .001 will be 

disregarded. 

The creation/redemption process in 

connection with the Shares is an in-kind 

exchange of silver for Shares, rather 

than an exchange of silver for cash. 

Except for the accrual of the Sponsor’s 

fee or extraordinary expenses or 

liabilities, the process is based entirely 

on the delivery of silver in exchange for 

Shares. Thus, throughout each business 

day, the Exchange states that the actual 

number of ounces required for the 

Creation Basket Deposit usually will not 

change even though the value of the 

Creation Basket Deposit may change 

based on the market price of silver. 

Valuation of Silver, Definition of Net 

Asset Value and Adjusted Net Asset 

Value (‘‘ANAV’’) 

According to the Registration 

Statement, as of the London Fix on each 

day that the Exchange is open for 

regular trading or, if there is no London 

Fix on such day or the London Fix has 

not been announced by 12 noon New 

York time on such day, as of 12 noon 

New York time on such day (the 

‘‘Evaluation Time’’), the Trustee will 

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18774 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

16The Exchange, pursuant to Rule 7.12, has 

discretion to halt trading in the Shares if the 

London Fix is not determined or available for an 

extended time period based on extraordinary 

circumstances or market conditions. 

17The period of greatest liquidity in the silver 

market is typically that time of the day when 

trading in the European time zones overlaps with 

trading in the United States, which is when OTC 

market trading in New York, London, Zurich and 

other centers coincides with futures and options 

trading on the COMEX division of the NYMEX. 

This period lasts for approximately four hours each 

New York business day morning. 

18 In addition, ICAP’s EBS platform also provides 

an electronic trading platform to institutions such 

as bullion banks and dealers for the trading of spot 

silver, as well as a feed of live streaming prices to 

market data subscribers. Approximately 1.5 million 

ounces in gold, 10 million ounces in silver and 

$190 billion a day in spot foreign exchange 

transactions is traded each day over the EBS trading 

platform. See http://www.icap.com. 

19The silver spot price is indicative only, 

constructed using a variety of sources to compile a 

spot price that is intended to represent a theoretical 

quote that might be obtained from a market maker 

from time to time. 

20The bid-ask price of Shares is determined using 

the highest bid and lowest offer as of the time of 

calculation of the NAV. 

evaluate the silver held by the Trust and 

determine both the ANAV and the NAV 

of the Trust. 

At the Evaluation Time, the Trustee 

will value the Trust’s silver on the basis 

of that day’s London Fix or, if no 

London Fix is made on such day or has 

not been announced by the Evaluation 

Time, the next most recent London Fix 

determined prior to the Evaluation Time 

will be used, unless the Trustee, in 

consultation with the Sponsor, 

determines that such price is 

inappropriate as a basis for evaluation. 

In the event the Trustee and the Sponsor 

determine that the London Fix or last 

prior London Fix is not an appropriate 

basis for evaluation of the Trust’s silver, 

they shall identify an alternative basis 

for such evaluation to be employed by 

the Trustee.16

Once the value of the silver has been 

determined, the Trustee will subtract all 

estimated accrued but unpaid fees, 

expenses and other liabilities of the 

Trust from the total value of the silver 

and all other assets of the Trust (other 

than any amounts credited to the Trust’s 

reserve account, if established). The 

resulting figure is the ANAV of the 

Trust. The ANAV of the Trust is used 

to compute the Sponsor’s Fee. 

To determine the Trust’s NAV, the 

Trustee will subtract the amount of 

estimated accrued but unpaid fees 

computed by reference to the ANAV of 

the Trust and to the value of the silver 

held by the Trust from the ANAV of the 

Trust. The resulting figure is the NAV 

of the Trust. The Trustee will also 

determine the NAV per Share by 

dividing the NAV of the Trust by the 

number of the Shares outstanding as of 

the close of trading on the Exchange 

(which includes the net number of any 

Shares created or redeemed on such 

evaluation day). 

Shortly after 4 p.m. E.T. each business 

day, the Trust will disseminate the NAV 

for the Shares and the Creation Basket 

Deposit (for orders properly placed by 4 

during the day). The Creation Basket 

Deposit and NAV will be publicly 

available simultaneously to all market 

participants and will be communicated 

to all Authorized Participants via 

facsimile or electronic mail message and 

on the Trust’s Web site. The Exchange 

also will disclose the NAV on its Web 

site. 

Liquidity 

The Exchange states that the amount 

of the discount or premium in the 

trading price relative to the NAV per 

Share may be influenced by the nonconcurrent trading hours between the 

major silver markets and the Exchange. 

While the Shares will trade on the 

Exchange from 4 a.m. to 8 p.m. E.T., 

liquidity in the OTC market for silver 

will be reduced after the close of the 

major world silver markets, including 

London, Zurich, and the COMEX. As a 

result, trading spreads and the resulting 

premium or discount on the Shares may 

widen as a result of reduced liquidity. 

Availability of Information Regarding 

Silver Prices 

Although the spot price of silver will 

not be disseminated over the facilities of 

CTA, the last sale price for the Shares, 

as is the case for all equity securities 

traded on the Exchange will be 

disseminated over the CTA’s Network B. 

In addition, there is a considerable 

amount of silver 17 price and market 

information available on public Web 

sites and through professional and 

subscription services. Investors may 

obtain on a 24-hour basis silver pricing 

information based on the spot price of 

an ounce of silver from various financial 

information service providers, such as 

Reuters and Bloomberg. In addition, the 

daily London silver fix is also 

disseminated by various market data 

vendors and is available from the 

LBMA’s Web site. Reuters and 

Bloomberg provide at no charge on their 

Web sites delayed information regarding 

the spot price of silver and last sale 

prices of silver futures contracts and 

related options, as well as information 

about news and developments in the 

silver market. Reuters and Bloomberg 

also offer a professional service to 

subscribers for a fee that provides 

information on silver prices directly 

from market participants.18 Complete 

real-time data for silver futures contracts 

and options prices traded on the 

COMEX is available by subscription 

from Reuters and Bloomberg and also on 

a delayed basis free of charge on the 

NYMEX Web site at http:// 

www.nymex.com. The Exchange also 

notes that there are a variety of other 

public Web sites providing information 

on silver, ranging from those 

specializing in precious metals to sites 

maintained by major newspapers, such 

as The Wall Street Journal. Current 

silver spot prices are also generally 

available with bid/ask spreads from 

silver bullion dealers.19

Availability of Information Regarding 

Shares 

The Web site for the Trust, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

The prior business day’s NAV and the 

reported closing price; (b) the mid-point 

of the bid-ask price in relation to the 

NAV as of the time the NAV is 

calculated (the ‘‘Bid-Asked Price’’); (c) 

calculation of the premium or discount 

of such price against such NAV; (d) data 

in chart form displaying the frequency 

distribution of discounts and premiums 

of the Bid-Ask Price against the NAV,20

within appropriate ranges for each of 

the four previous calendar quarters; (e) 

the Creation Basket Deposit; (f) the 

Prospectus; and (g) other applicable 

quantitative information. 

As described above, the NAV for the 

Trust will be calculated and 

disseminated daily. 

The Exchange also will disseminate 

for the Trust on a daily basis by means 

of CTA/CQ High Speed Lines 

information with respect to the 

Indicative Trust Value (as discussed 

below), recent NAV, and shares 

outstanding. The Exchange will also 

make available on its Web site daily 

trading volume, closing prices, NAV 

and the Creation Basket Deposit. The 

London silver fix price is readily 

available from the LBMA at http:// 

www.lbma.org.uk, automated quotation 

systems, published or other public 

sources, or online information services 

such as Bloomberg or Reuters. In 

addition, the Exchange will provide a 

hyperlink on its Web site at http:// 

www.nyx.com to the Trust’s Web site at 

http://www.etfsecurities.com. 

Dissemination of Indicative Trust Value 

The Trustee will calculate the NAV of 

the Trust once each trading day. In 

addition, the Trust will cause to be 

made available on a daily basis the 

required amount of silver to be 

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Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18775 

21See e-mail from Michael Cavalier, Chief 

Counsel, NYSE Arca, to Christoper W. Chow, 

Special Counsel, Commission, dated April 9, 2009. 22See NYSE Arca Equities Rule 7.12. 

deposited in connection with the 

issuance of Shares in Basket size. 

In order to provide updated 

information relating to the Trust for use 

by investors, professionals, and 

Authorized Persons wishing to create or 

redeem Shares, the Exchange will 

disseminate through the facilities of 

CTA an updated Indicative Trust Value 

(‘‘ITV’’). The Indicative Trust Value will 

be disseminated on a per Share basis at 

least every 15 seconds during the 

Exchange’s Core Trading Session (9:30 

a.m. to 4 p.m. ET). The Indicative Trust 

Value, as calculated by the Exchange or 

a third party financial data provider, 

will be calculated based on the amount 

of silver required for creations and 

redemptions and a price of silver 

derived from updated bids and offers 

indicative of the spot price of silver 

from silver dealer pricing.21 The ITV on 

a per Share basis disseminated during 

the Exchange’s Core Trading Session 

should not be viewed as a real time 

update of the NAV, which is calculated 

only once a day. 

The Exchange believes that 

dissemination of the Indicative Trust 

Value based on the amount of silver 

required for a Basket Aggregation 

provides additional information that is 

not otherwise available to the public 

and is useful to professionals and 

investors in connection with Shares 

trading on the Exchange or the creation 

or redemption of Shares. 

Termination Events 

The Trustee will terminate and 

liquidate the Trust if the aggregate 

market capitalization of the Trust, based 

on the closing price for the Shares, was 

less than $350 million (as adjusted for 

inflation) at any time after the first 

anniversary after the Trust’s formation 

and the Trustee receives, within six 

months after the last of those trading 

days, notice from the Sponsor of its 

decision to terminate the Trust. The 

Trustee will terminate the Trust if the 

CFTC determines that the Trust is a 

commodities pool under the CEA. The 

Trustee may also terminate the Trust 

upon the agreement of the owners of 

beneficial interests in the Shares 

(‘‘Shareholders’’) owning at least 75% of 

the outstanding Shares. Additional 

termination events are described in the 

Registration Statement. 

Criteria for Initial and Continued Listing 

The Trust will be subject to the 

criteria in Rule 8.201(d) for initial and 

continued listing of the Shares. 

It is anticipated that a minimum of 

100,000 Shares will be required to be 

outstanding at the start of trading. The 

minimum number of shares required to 

be outstanding is comparable to 

requirements that have been applied to 

previously listed shares of the iShares 

Silver Trust, the streetTRACKS Gold 

Trust, the iShares COMEX Gold Trust 

and exchange-traded funds. It is 

anticipated that the initial price of a 

Share will be approximately $10.00. The 

Exchange believes that the anticipated 

minimum number of Shares outstanding 

at the start of trading is sufficient to 

provide adequate market liquidity. 

Trading Rules 

The Exchange deems the Shares to be 

equity securities, thus rendering trading 

in the Fund subject to the Exchange’s 

existing rules governing the trading of 

equity securities. Trading in the Shares 

on the Exchange will occur in 

accordance with NYSE Arca Equities 

Rule 7.34(a). The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. The minimum trading 

increment for Shares on the Exchange 

will be $0.01. 

Further, NYSE Arca Equities Rule 

8.201 sets forth certain restrictions on 

ETP Holders acting as registered Market 

Makers in the Shares to facilitate 

surveillance. Pursuant to NYSE Arca 

Equities Rule 8.201(h), an ETP Holder 

acting as a registered Market Maker in 

the Shares is required to provide the 

Exchange with information relating to 

its trading in the underlying silver, 

related futures or options on futures, or 

any other related derivatives. NYSE 

Arca Equities Rule 8.201(i) prohibits an 

ETP Holder acting as a registered Market 

Maker in the Shares from using any 

material nonpublic information received 

from any person associated with an ETP 

Holder or employee of such person 

regarding trading by such person or 

employee in the underlying silver, 

related futures or options on futures or 

any other related derivative (including 

the Shares). In addition, NYSE Arca 

Equities Rule 8.201(g) prohibits an ETP 

Holder acting as a registered Market 

Maker in the Shares from being 

affiliated with a market maker in the 

underlying silver, related futures or 

options on futures or any other related 

derivative unless adequate information 

barriers are in place, as provided in 

NYSE Arca Equities Rule 7.26. 

As a general matter, the Exchange has 

regulatory jurisdiction over its ETP 

Holders and their associated persons, 

which include any person or entity 

controlling an ETP Holder, as well as a 

subsidiary or affiliate of an ETP Holder 

that is in the securities business. A 

subsidiary or affiliate of an ETP Holder 

that does business only in commodities 

or futures contracts would not be 

subject to Exchange jurisdiction, but the 

Exchange could obtain information 

regarding the activities of such 

subsidiary or affiliate through 

surveillance sharing agreements with 

regulatory organizations of which such 

subsidiary or affiliate is a member. 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares. 

Trading on the Exchange in the Shares 

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 

conditions in the underlying silver 

market have caused disruptions and/or 

lack of trading, or (2) whether other 

unusual conditions or circumstances 

detrimental to the maintenance of a fair 

and orderly market are present. In 

addition, trading in Shares will be 

subject to trading halts caused by 

extraordinary market volatility pursuant 

to the Exchange’s ‘‘circuit breaker’’ 

rule.22

Surveillance 

The Exchange intends to utilize its 

existing surveillance procedures 

applicable to derivative products 

(including Commodity-Based Trust 

Shares) to monitor trading in the Shares. 

The Exchange represents that these 

procedures are adequate to properly 

monitor Exchange trading of the Shares 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

applicable federal securities laws. 

The Exchange’s current trading 

surveillance focuses on detecting 

securities trading outside their normal 

patterns. When such situations are 

detected, surveillance analysis follows 

and investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. Also, pursuant to 

NYSE Arca Equities Rule 8.201(h), the 

Exchange is able to obtain information 

regarding trading in the Shares and the 

underlying silver, silver futures 

contracts, options on silver futures, or 

any other silver derivative, through ETP 

Holders acting as registered Market 

Makers, in connection with such ETP 

Holders’ proprietary or customer trades 

which they effect on any relevant 

market. In addition, the Exchange may 

obtain trading information via the 

Intermarket Surveillance Group (‘‘ISG’’) 

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18776 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

23A list of ISG members is available at http:// 

www.isgportal.org. The Exchange notes that 

TOCOM is not an ISG member and the Exchange 

does not have in place a comprehensive 

surveillance sharing agreement with such market. 

24 15 U.S.C. 78f(b). 

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

26 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

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

from other exchanges who are members 

of the ISG.23 Also, the Exchange has an 

Information Sharing Agreement with 

NYMEX for the purpose of sharing 

information in connection with trading 

in or related to COMEX silver futures 

contracts. 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Bulletin 

will discuss the following: (1) The 

procedures for purchases and 

redemptions of Shares in Baskets 

(including noting that Shares are not 

individually redeemable and that silver 

is a wasting asset); (2) NYSE Arca 

Equities Rule 9.2(a), which imposes a 

duty of due diligence on its ETP Holders 

to learn the essential facts relating to 

every customer prior to trading the 

Shares; (3) how information regarding 

the ITV is disseminated; (4) the 

requirement that ETP Holders deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; (5) the possibility that 

trading spreads and the resulting 

premium or discount on the Shares may 

widen as a result of reduced liquidity of 

silver trading during the Core and Late 

Trading Sessions after the close of the 

major world silver markets, and (6) 

trading information. For example, the 

Information Bulletin will advise ETP 

Holders, prior to the commencement of 

trading, of the prospectus delivery 

requirements applicable to the Trust. 

The Exchange notes that investors 

purchasing Shares directly from the 

Trust (by delivery of the Creation Basket 

Deposit) will receive a prospectus. ETP 

Holders purchasing Shares from the 

Trust for resale to investors will deliver 

a prospectus to such investors. 

In addition, the Information Bulletin 

will reference that the Trust is subject 

to various fees and expenses described 

in the Registration Statement. The 

Information Bulletin will also reference 

the fact that there is no regulated source 

of last sale information regarding 

physical silver, that the Commission has 

no jurisdiction over the trading of silver 

as a physical commodity, and that the 

CFTC has regulatory jurisdiction over 

the trading of silver futures contracts 

and options on silver futures contracts. 

The Information Bulletin will also 

discuss any relief, if granted, by the 

Commission or the staff from any rules 

under the Act. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 24 of the Act 

in general and furthers the objectives of 

Section 6(b)(5) 25 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 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transaction in securities, 

and, in general to protect investors and 

the public interest. The Exchange 

believes that the proposal will facilitate 

the listing and trading of an additional 

type of commodity-based product that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

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. 

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. 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2009–28 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2009–28. This 

file number should be included on the 

subject line if e-mail 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 inspection and copying 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 such 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 publicly available. All 

submissions should refer to File 

Number SR–NYSEArca–2009–28 and 

should be submitted on or before May 

15, 2009. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.26 In 

particular, the Commission believes that 

the proposal is consistent with Section 

6(b)(5) 27 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 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transaction in securities, 

and, in general to protect investors and 

the public interest. The listing and 

trading of an additional type of 

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Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18777 

28 15 U.S.C. 78k–1(a)(1)(C)(iii). 

29 15 U.S.C. 78s(b)(2). 

30See Securities Exchange Act Release No. 58956 

(November 14, 2008), 73 FR 71074 (November 24, 

2008) (SR–NYSEArca–2008–124) (approving listing 

and trading of shares of the iShares Silver Trust). 

See also Securities Exchange Act Release No. 53521 

(March 20, 2006); 71 FR 14967 (March 24, 2006) 

(SR–Amex-2005–072) (approving listing and trading 

of shares of the iShares Silver Trust on the 

American Stock Exchange LLC). 

31 15 U.S.C. 78s(b)(2). 

32 17 CFR 200.30–3(a)(12). 

commodity-based product should 

enhance competition among market 

participants and thereby benefit 

investors and the marketplace. 

The Commission believes that the 

proposal to list and trade the Shares on 

the Exchange is consistent with Section 

11A(a)(1)(C)(iii) of the Act,28 which sets 

forth Congress’s finding that it is in the 

public interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers, and investors of information 

with respect to quotations for and 

transactions in securities. The Exchange 

will make available, through the 

facilities of the CTA, the last sale price 

information for the Shares. In addition, 

the Exchange will disseminate each day 

through the facilities of the CTA the 

number of Shares outstanding and the 

ITV on a per-Share basis at least every 

15 seconds from 9:30 a.m. to 4 p.m. ET. 

The Web site for the Trust, which will 

be publicly accessible, contains 

information related to the NAV, 

including the Bid-Asked Price, the 

Creation Basket Deposit, calculation 

information and data related to the 

premium or discount of the Bid-Asked 

Price against the NAV, the Prospectus, 

and other applicable quantitative 

information, including trading volume 

data, NAV, and closing prices. Shortly 

after 4 p.m. ET each business day, the 

Trust will disseminate the NAV for the 

Shares, and the Creation Basket Deposit. 

Information on silver prices and markets 

is available on public Web sites and 

through professional and subscription 

services, and investors may obtain on a 

24-hour basis silver pricing information 

based on the spot price of an ounce of 

silver from various financial 

information service providers. Complete 

real-time data for silver futures contracts 

and options prices traded on the 

COMEX is available by subscription 

from information services such as 

Reuters or Bloomberg, and information 

on silver is available from published or 

other public sources. NYMEX also 

provides delayed futures and options 

information free of charge. 

Furthermore, the Commission 

believes that the proposal to list and 

trade the Shares is reasonably designed 

to promote fair disclosure of 

information that may be necessary to 

price the Shares appropriately. The 

Commission notes that the Exchange 

has represented that the Trustee will 

calculate, and the Trust will 

disseminate, the NAV per Share daily, 

and make the NAV available to all 

market participants at the same time. In 

addition, NYSE Arca Equities Rule 

8.201(i) provides that, in connection 

with trading in an underlying physical 

commodity, related commodity futures 

or options on commodity futures, or any 

other related commodity derivative, 

including Commodity-Based Trust 

Shares, an ETP Holder acting as a 

Market Maker (as defined in NYSE Arca 

Equities Rule 1.1(u)) in the Shares is 

restricted from using any material nonpublic information received from any 

person associated with such ETP Holder 

regarding by such person in the 

underlying physical commodity, related 

commodity futures or options on 

commodity futures, or other related 

commodity derivatives. 

The Commission also believes that the 

Exchange’s trading halt rules are 

reasonably designed to prevent trading 

in the Shares when transparency is 

impaired. NYSE Arca Equities Rule 

8.201(e)(2) provides that, when the 

Exchange is the listing market, if the 

value of the underlying commodity or 

ITV is no longer calculated or available 

on at least a 15-second delayed basis, 

the Exchange would consider 

suspending trading in the Shares. The 

Exchange has further represented that 

trading on the Exchange in the Shares 

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 

conditions in the underlying silver 

market have caused disruptions and/or 

lack of trading; or (2) whether other 

unusual conditions or circumstances 

detrimental to the maintenance of a fair 

and orderly market are present. In 

addition, trading in Shares will be 

subject to trading halts caused by 

extraordinary market volatility pursuant 

to the Exchange’s ‘‘circuit breaker’’ rule. 

NYSE Arca Equities Rule 8.201(e)(2) 

also provides that the Exchange may 

seek to delist the Shares in the event the 

value of the underlying silver or the ITV 

is no longer calculated or available as 

required. 

The Commission further believes that 

the trading rules and procedures to 

which the Shares will be subject 

pursuant to this proposal are consistent 

with the Act. The Exchange has 

represented that any securities listed 

pursuant to this proposal will be 

deemed equity securities, and subject to 

existing Exchange rules governing the 

trading of equity securities. 

In support of this proposal, the 

Exchange has made representations, 

including: 

(1) The Exchange’s surveillance 

procedures are adequate to deter and 

detect violations of Exchange rules and 

applicable federal securities laws. 

(2) The Exchange will distribute an 

Information Bulletin, the contents of 

which are more fully described above, 

to ETP Holders in connection with the 

trading of the Shares. 

This approval order is conditioned on 

the Exchange’s representations. 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,29 for approving the proposed rule 

change prior to the 30th day after the 

date of publication of notice in the 

Federal Register. The Exchange’s 

proposal to list and trade the Shares 

does not present any novel or significant 

regulatory issues. Previously, the 

Commission approved a proposal by the 

Exchange to list and trade shares of 

another trust that holds silver bullion 

pursuant to NYSE Arca Equities Rule 

8.201.30

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,31 that the 

proposed rule change (SR–NYSEArca– 

2009–28) be, and it hereby is, approved 

on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9385 Filed 4–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59788; File No. SR–FINRA– 

2007–024] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

Amendments Involving Best Execution 

and Interpositioning 

April 17, 2009. 

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

Securities Exchange Act of 1934 

mstockstill on PROD1PC66 with NOTICES