Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Notices 31823 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 57897 

(May 30, 2008), 73 FR 32061 (June 5, 2008) (order 

approving SR–CBOE–2005–11). 

4See Securities Exchange Act Release No. 59055 

(December 4, 2008), 73 FR 75148 (December 10, 

2008) (order approving SR–CBOE–2008–72). 

5See Securities Exchange Act Release No. 61483 

(February 3, 2010) (order approving SR–CBOE– 

2010–007). 

6See Securities Exchange Act Release No. 61892 

(April 13, 2010), 75 FR 20649 (April 20, 2010) 

(order approving SR–CBOE–2010–015). 7See Interpretation and Policy .06 to Rule 5.3. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: June 1, 2010. 

Elizabeth M. Murphy. 

Secretary. 

[FR Doc. 2010–13503 Filed 6–2–10; 11:15 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62193; File No. SR–CBOE– 

2010–043] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of 

Proposed Rule Change To Enable the 

Listing and Trading of Options on the 

Sprott Physical Gold Trust 

May 28, 2010. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on May 11, 

2010, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) filed with the Securities and 

Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CBOE proposes to amend certain rules 

to enable the listing and trading on the 

Exchange of options on the Sprott 

Physical Gold Trust. The text of the rule 

proposal is available on the Exchange’s 

Web site (http://www.cboe.org/legal), at 

the Exchange’s Office of the Secretary 

and at the Commission. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Recently the U.S. Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) authorized CBOE to list 

and trade options on the SPDR Gold 

Trust,3 the iShares COMEX Gold Trust, 

the iShares Silver Trust,4 the ETFS 

Silver Trust and the ETFS Gold Trust,5

the ETFS Palladium Trust and the ETFS 

Platinum Trust.6 Now, the Exchange 

proposes to list and trade options on the 

Sprott Physical Gold Trust (‘‘PHYS’’). 

Under current Rule 5.3, only Units 

(also referred to herein as exchange 

traded fund (‘‘ETFs’’)) representing (i) 

interests in registered investment 

companies (or series thereof) organized 

as open-end management investment 

companies, unit investment trusts or 

similar entities that hold portfolios of 

securities and/or financial instruments 

including, but not limited to, stock 

index futures contracts, options on 

futures, options on securities and 

indexes, equity caps, collars and floors, 

swap agreements, forward contracts, 

repurchase agreements and reverse 

purchase agreements (the ‘‘Financial 

Instruments’’), and money market 

instruments, including, but not limited 

to, U.S. government securities and 

repurchase agreements (the ‘‘Money 

Market Instruments’’) comprising or 

otherwise based on or representing 

investments in indexes or portfolios of 

securities and/or Financial Instruments 

and Money Market Instruments (or that 

hold securities in one or more other 

registered investment companies that 

themselves hold such portfolios of 

securities and/or Financial Instruments 

and Money Market Instruments); or (ii) 

interests in a trust or similar entity that 

holds a specified non-U.S. currency 

deposited with the trust or similar entity 

when aggregated in some specified 

minimum number may be surrendered 

to the trust by the beneficial owner to 

receive the specified non-U.S. currency 

and pays the beneficial owner interest 

and other distributions on deposited 

non-U.S. currency, if any, declared and 

paid by the trust; or (iii) commodity 

pool interests principally engaged, 

directly or indirectly, in holding and/or 

managing portfolios or baskets of 

securities, commodity futures contracts, 

options on commodity futures contracts, 

swaps, forward contracts and/or options 

on physical commodities and/or nonU.S. currency (‘‘Commodity Pool 

Units’’); or (iv) represent interests in the 

streetTRACKS Gold Trust or the iShares 

COMEX Gold Trust or the iShares Silver 

Trust or the ETFS Silver Trust or the 

ETFS Gold Trust or the ETFS Palladium 

Trust or the ETFS Platinum Trust; or (v) 

represents an interest in a registered 

investment company (‘‘Investment 

Company’’) organized as an open-end 

management investment company or 

similar entity, that invests in a portfolio 

of securities selected by the Investment 

Company’s investment adviser 

consistent with the Investment 

Company’s investment objectives and 

policies, which is issued in a specified 

aggregate minimum number in return 

for a deposit of a specified portfolio of 

securities and/or a cash amount with a 

value equal to the next determined net 

asset value (‘‘NAV’’), and when 

aggregated in the same specified 

minimum number, may be redeemed at 

a holder’s request, which holder will be 

paid a specified portfolio of securities 

and/or cash with a value equal to the 

next determined NAV (‘‘Managed Fund 

Share’’) are eligible as underlying 

securities for options traded on the 

Exchange.7 This rule change proposes to 

expand the types of ETFs that may be 

approved for options trading on the 

Exchange to include the Sprott Physical 

Gold Trust. 

Apart from allowing Sprott Physical 

Gold Trust to be an underlying for 

options traded on the Exchange as 

described above, the listing standards 

for ETFs will remain unchanged from 

those that apply under current Exchange 

rules. ETFs on which options may be 

listed and traded must still be listed and 

traded on a national securities exchange 

and must satisfy the other listing 

standards set forth in Interpretation and 

Policy .06 to Rule 5.3. 

Specifically, in addition to satisfying 

the aforementioned listing 

requirements, Units must meet either (1) 

the criteria and guidelines under Rule 

5.3 and Interpretation and Policy .01 to 

Rule 5.3, Criteria for Underlying 

Securities; or (2) they must be available 

for creation or redemption each 


srobinson on DSKHWCL6B1PROD with NOTICES
31824 Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Notices 

8See Rules 4.11, Position Limits, and 4.12, 

Exercise Limits. 

9See Rule 12.3, Margin Requirements. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

business day from or through the issuer 

in cash or in kind at a price related to 

net asset value, and the issuer must be 

obligated to issue Units in a specified 

aggregate number even if some or all of 

the investment assets required to be 

deposited have not been received by the 

issuer, subject to the condition that the 

person obligated to deposit the 

investments has undertaken to deliver 

the investment assets as soon as 

possible and such undertaking is 

secured by the delivery and 

maintenance of collateral consisting of 

cash or cash equivalents satisfactory to 

the issuer, as provided in the respective 

prospectus. 

The Exchange states that the current 

continued listing standards for options 

on ETFs will apply to options on the 

Sprott Physical Gold Trust. Specifically, 

under Interpretation and Policy .08 to 

Rule 5.4, options on Units may be 

subject to the suspension of opening 

transactions as follows: (1) Following 

the initial twelve-month period 

beginning upon the commencement of 

trading of the Units, there are fewer than 

50 record and/or beneficial holders of 

the Units for 30 or more consecutive 

trading days; (2) the value of the index 

or portfolio of securities, non-U.S. 

currency, or portfolio of commodities 

including commodity futures contracts, 

options on commodity futures contracts, 

swaps, forward contracts and/or options 

on physical commodities and/or 

Financial Instruments and Money 

Market Instruments on which Units are 

based is no longer calculated or 

available; or (3) such other event occurs 

or condition exists that in the opinion 

of the Exchange makes further dealing 

on the Exchange inadvisable. 

Additionally, the Sprott Physical Gold 

Trust shall not be deemed to meet the 

requirements for continued approval, 

and the Exchange shall not open for 

trading any additional series of option 

contracts of the class covering the Sprott 

Physical Gold Trust, if the Sprott 

Physical Gold Trust ceases to be an 

‘‘NMS stock’’ as provided for in 

paragraph (f) of Interpretation and 

Policy .01 of Rule 5.4 or the Sprott 

Physical Gold Trust is halted from 

trading on its primary market. 

The addition of the Sprott Physical 

Gold Trust to Interpretation and Policy 

.06 to Rule 5.3 will not have any effect 

on the rules pertaining to position and 

exercise limits 8 or margin.9

The Exchange represents that its 

surveillance procedures applicable to 

trading in options on the Sprott Physical 

Gold Trust will be similar to those 

applicable to all other options on other 

Units currently traded on the Exchange. 

The Exchange represents that its 

surveillance procedures applicable to 

trading in options on the Sprott Physical 

Gold Trust will be similar to those 

applicable to all other options on other 

ETFs currently traded on the Exchange. 

Also, the Exchange may obtain 

information from the New York 

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

member of the Intermarket Surveillance 

Group) related to any financial 

instrument that is based, in whole or in 

part, upon an interest in or performance 

of gold. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) 10 of the Act, in general, and 

furthers the objectives of Section 

6(b)(5) 11 in particular in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanisms of a free and 

open market in a manner consistent 

with the protection of investors and the 

public interest. In particular, the 

Exchange believes that amending its 

rules to accommodate the listing and 

trading of options on the Sprott Physical 

Gold Trust will benefit investors by 

providing them with valuable risk 

management tools. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will impose any 

burden on competition 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 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

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

Number SR–CBOE–2010–043 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2010–043. 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 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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. 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 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / Notices 31825 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The current FINRA rulebook consists of (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

4As defined in NASD Rule 2720(f)(5), a conflict 

of interest exists, if at the time of a member’s 

participation in an entity’s public offering, any of 

the following four conditions applies: (1) The 

securities are to be issued by the member; (2) the 

issuer controls, is controlled by or is under common 

control with the member or the member’s 

associated persons; (3) at least five percent of the 

net offering proceeds, not including underwriting 

compensation, are intended to be (i) used to reduce 

or retire the balance of a loan or credit facility 

extended by the member, its affiliates and its 

associated persons, in the aggregate; or (ii) 

otherwise directed to the member, its affiliates and 

associated persons, in the aggregate; or (4) if, as a 

result of the public offering and any transactions 

contemplated at the time of the public offering (i) 

the member will be an affiliate of the issuer; (ii) the 

member will become publicly owned; or (iii) the 

issuer will become a member or form a brokerdealer subsidiary. NASD Rule 2720 defines several 

terms for purposes of the rule, including ‘‘entity,’’ 

‘‘control,’’ and ‘‘common control.’’ 

5The rule requires prominent disclosure of the 

nature of the conflict, and in certain circumstances, 

the participation of a qualified independent 

underwriter. Members also must comply with 

certain net capital, discretionary accounts and filing 

requirements, as applicable. 

6See Securities Exchange Act Release No. 60113 

(June 15, 2009), 74 FR 29255 (June 19, 2009) (Order 

Approving Proposed Rule Change; File No. SR– 

FINRA–2007–009). 

7See Regulatory Notice 09–49 (SEC Approves 

Amendments to Modernize and Simplify NASD 

Rule 2720 Relating to Public Offerings in Which a 

Member Firm With a Conflict of Interest 

Participates) (August 2009). 

8 15 U.S.C. 78o–3(b)(6). 

available publicly. All submissions 

should refer to File Number SR–CBOE– 

2010–043 and should be submitted on 

or before June 25, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–13437 Filed 6–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62199; File No. SR–FINRA– 

2010–026] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt 

FINRA Rule 5121 (Public Offerings of 

Securities With Conflicts of Interest) in 

the Consolidated FINRA Rulebook 

June 1, 2010. 

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 May 20, 

2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

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

rule change as described in Items I, II, 

and III below, which Items have been 

substantially prepared by FINRA. 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 

FINRA is proposing to adopt NASD 

Rule 2720 (Public Offerings of Securities 

With Conflicts of Interest) as a FINRA 

rule in the consolidated FINRA 

rulebook without material change. The 

proposed rule change would renumber 

NASD Rule 2720 as FINRA Rule 5121 in 

the consolidated FINRA rulebook. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),3

FINRA is proposing to adopt NASD 

Rule 2720 (Public Offerings of Securities 

With Conflicts of Interest) without 

material change as FINRA Rule 5121 in 

the Consolidated FINRA Rulebook. 

NASD Rule 2720 governs public 

offerings of securities in which a 

member with a conflict of interest 

participates. The rule generally 

prohibits a member with a ‘‘conflict of 

interest,’’ as defined in the rule,4 from 

participating in a public offering, unless 

certain other requirements are met.5

There is no comparable Incorporated 

NYSE Rule. 

On June 15, 2009, the SEC approved 

a proposed rule change to modernize 

NASD Rule 2720 (the ‘‘2009 Rule 

Change’’).6 The 2009 Rule Change 

became effective on September 14, 

2009.7

The proposed rule change would 

adopt NASD Rule 2720 without material 

change as FINRA Rule 5121 in the 

Consolidated FINRA Rulebook. The rule 

would make minor changes to reflect 

the new terminology conventions of the 

Consolidated FINRA Rulebook. 

FINRA will announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. The 

implementation date will be no later 

than 180 days from Commission 

approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,8 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change will continue to 

serve to protect investors in offerings 

where the member has a conflict of 

interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in 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 

Written comments were neither 

solicited nor received. 


srobinson on DSKHWCL6B1PROD with NOTICES