Document ID: SEC-2023-0838-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2023-08-07T04:00Z

[Federal Register Volume 88, Number 150 (Monday, August 7, 2023)]
[Rules and Regulations]
[Pages 52224-52229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16712]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98033; File No. SR-NYSEARCA-2023-48]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend a 
Representation Regarding the VanEck Merk Gold Trust

August 1, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on July 19, 2023, NYSE Arca, Inc. (``NYSE Arca'' or ``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 self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend a representation regarding the 
VanEck Merk Gold Trust. The proposed rule change is available on the 
Exchange's website 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 Commission has previously approved a proposed rule change 
relating to listing and trading on the Exchange of shares of the Trust 
(the ``Shares'') under NYSE Arca Rule 8.201-E (Commodity-Based Trust 
Shares).\4\ The Commission subsequently noticed for immediate 
effectiveness a proposed rule change to replace references to the 
``London Gold Fix'' in the Prior Order with the ``LBMA Gold Price.'' 
\5\ Pursuant to the Prior Notice, the Trust currently uses the LBMA 
Gold Price as the benchmark price for purposes of calculating the net 
asset value (``NAV'') of the Shares of the Trust.
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    \4\ See Securities Exchange Act Release No. 71378 (January 23, 
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137) (Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1 
Thereto, To List and Trade Shares of the Merk Gold Trust Pursuant to 
NYSE Arca Equities Rule 8.201) (the ``Prior Order'').
    \5\ See Securities Exchange Act Release No. 74544 (March 19, 
2015), 80 FR 15840 (March 25, 2015) (SR-NYSEArca-2015-19) (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) (the ``Prior 
Notice'').
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    The Exchange now proposes to amend the representation in the Prior 
Notice to replace references to the ``LBMA Gold Price'' with the 
``Solactive Gold Spot Index'' (the ``Index''). Pursuant to this 
proposed rule change, the Trust would use the Solactive Gold Spot Index 
as the benchmark price for purposes of calculating the NAV of Shares of 
the Trust.
    According to the Trust's current registration statement on Form S-
3,\6\ Solactive AG (``Solactive'' or the ``Index Calculator'') owns, 
calculates, and disseminates the Index. The Index is a U.S. Dollar 
denominated index that aims to provide a price fixing for the gold spot 
price for London delivery gold bullion quoted as U.S. Dollars per Troy 
Ounce (``XAU'') and determined as of the time trading closes on the New 
York Stock Exchange (``NYSE'').\7\ The Index calculates gold bullion 
fixing prices by taking Time Weighted Average Prices (``TWAP'') \8\ of 
XAU trading prices provided via ICE Data Services (``IDS'') data 
feed.\9\
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    \6\ On May 12, 2023, the Trust filed Post-Effective Amendment 
No. 1 to its registration statement on Form S-3 (the ``Registration 
Statement'') (File No. 333-238022).
    \7\ Solactive calculates the Index pursuant to the Index 
Guideline publicly available at https://www.solactive.com/wp-content/uploads/2023/02/Solactive_Gold_Spot_Index_Methodology_Guideline_20230206.pdf. Index 
data are publicly available at https://www.solactive.com/indices/?index=DE000SL0FW35.
    \8\ TWAP is a widely used measure in the financial industry to 
calculate the average price of a security or traded asset over a 
specific time period. TWAP is calculated by dividing the total trade 
value by the total trading time, thereby providing an average price 
that reflects market conditions over a defined timeframe. The TWAP 
methodology helps mitigate the impact of large trades on market 
prices by providing an average price based on numerous current 
market transactions and mitigates the effects of erroneous or 
spurious pricing data points, which effects can significantly lower 
the level of confidence in single transaction data points at a 
specific time. Different weightings can be selected for the TWAP 
methodology to provide a check on average prices derived before a 
local market closing, for instance, by overweighting prices 
immediately after the local market close.
    \9\ Solactive receives real-time data via IDS's ``Spot Gold 
(Also Loco London Gold)'' data feed. The spot gold prices utilized 
by the Index are those for gold bullion deliverable in London. The 
Trust's gold is also valued on a loco London basis.
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    Specifically, according to the Registration Statement, the Index 
uses a TWAP calculation to determine an average price that is time-
weighted, using prices of actual transactions (``Trade Ticks'') for two 
specified time periods around the scheduled close of trading on the 
NYSE (generally, 4:00 p.m. Eastern Time) on each day that the NYSE is 
open for trading.\10\ The TWAP is derived for (1) the period ahead of 
the fixing (``Time Period 1''), which consists of the five minutes 
before the close of trading, and (2) the period directly after the 
fixing (``Time Period 2''), which consists of the six seconds after the 
close of trading. The TWAPs for Time Period 1 and Time Period 2 are 
each multiplied by their respective weightings, with 90% weighting 
given to Time Period 1 and 10% weighting given to Time Period 2. When 
added together, the two TWAPs result in a

[[Page 52225]]

single price sum that is the Index price.\11\
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    \10\ The NYSE's trading hours and holidays observed are 
available at: https://www.nyse.com/markets/hours-calendars.
    \11\ The Sponsor believes that it is unlikely that, on any given 
trading day for the Shares, there would be no Trade Ticks recorded 
for XAU in either Time Period 1 or Time Period 2, such that the 
Index calculation could not be performed on such day. Trade Ticks 
representing XAU are the closing prices for London delivery gold 
bullion transactions posted in a 24-hour, global, over-the-counter 
gold bullion market, which is not subject to trading suspensions, 
trading halts, or market closures. Trade Ticks in Time Periods 1 and 
2 thus reflect a comprehensive view of the gold spot market for 
London delivery gold that includes more market participants than the 
LBMA Gold Price. In the unlikely event that IDS is unable to publish 
pricing information for XAU, for whatever reason, during either Time 
Period 1 or Time Period 2 on a given trading day, the last available 
Index calculation will be used in accordance with Solactive's 
published and publicly available disruption policy.
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    For any calculation day t, the Index (Indext), is 
determined as described above following the below mathematical formula:
[GRAPHIC] [TIFF OMITTED] TN07AU23.714

    The sponsor of the Trust, Merk Investments LLC (the ``Sponsor''), 
believes that the Index will provide an improved benchmark price for 
purposes of determining the NAV of Shares of the Trust. Specifically, 
the Sponsor believes that replacing the LBMA Gold Price with the Index 
for calculating the NAV of the Shares may reduce the impact of timing 
differences between the basis for NAV calculation and market price for 
the Shares, as well as promote market liquidity, and would promote 
consistency between the NAV calculation and market price of the Shares 
by shifting the gold spot price determination to the end of the NYSE 
trading day (including because a significant amount of gold bullion 
trading (loco London) occurs after the close of London bullion 
trading). In addition, the Sponsor does not expect that the adoption of 
the Index will result in any unexpected, abrupt, or radical change in 
the value of the Trust's gold because both the LBMA Gold Price and the 
Index report the price in U.S. Dollars of a Troy Ounce of gold bullion 
deliverable in London, just at different times.
    According to the Registration Statement, the LBMA Gold Price is 
calculated by the ICE Benchmark Administration (the ``IBA''), which 
determines a gold price fixing for the London bullion market. Whereas 
the LBMA Gold Price is calculated twice daily (at 10:30 a.m. London 
Time and 3:00 p.m. London Time), the Index is calculated once daily no 
later than 30 minutes after the close of trading at the NYSE, which 
timing is more closely aligned with the close of trading in the Shares 
on a given trading day.\12\ Whereas the LBMA Gold Price is determined 
through an auction process involving a varying daily group of 
participants (currently, representing a subset of 16 direct 
participants) and is conducted by the IBA,\13\ the Index is calculated 
by Solactive based on thousands of transaction prices for gold bullion 
spot during Time Periods 1 and 2, as captured by IDS from identifiable 
and IDS-accepted data contributors.\14\ As noted above, while both the 
LBMA Gold Price and the Index price represent actual transactions in 
London gold bullion spot, they mainly differ in the timing of the 
fixing window.
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    \12\ The Trust currently utilizes the 3:00 p.m. London Time LBMA 
Gold Price and only resorts to the 10:30 a.m. London Time LBMA Gold 
Price if the afternoon price is not available.
    \13\ IBA operates the technology platform that facilitates the 
electronic auction process to determine the LBMA Gold Price.
    \14\ Contributors to the data feed include national central 
banks, large international banks that are recognized gold bullion 
trading or custody banks, and international bullion trading firms.
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    The LBMA Gold Price and the Index are based on the same London 
delivery gold spot, but at different times from a larger 24-hour market 
trading period. Both the LBMA Gold Price and the Index establish gold 
bullion spot prices loco London taken from the same continuous stream 
of data for such prices and differ only in that they reflect different 
snapshots at different times.\15\ On the same day, the LBMA Gold Price 
and the Index price may differ because of changes in the conditions of 
the gold spot market between the two different fixing times. However, 
when such price moves occur, use of the Index as a benchmark would 
facilitate the calculation of an NAV for Shares of the Trust that is 
aligned with and accounts for activity around the close of trading in 
such Shares. The Sponsor thus believes that using the Index rather than 
the LBMA Gold Price as the benchmark to calculate the NAV of the Shares 
could provide a timelier value of the NAV calculation and promote 
consistency between the NAV and market price of the Shares.\16\
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    \15\ LBMA Gold Prices are reflected in the XAU data feed 
utilized by the Index (although they are reported outside of the 
Index's Time Periods 1 and 2).
    \16\ Shares of the Trust are only created and redeemed in kind.
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    The Sponsor believes that using the Index, which is calculated 
based on timing that better mirrors the trading hours of the Shares, to 
calculate the NAV of the Shares would be beneficial for market makers 
and liquidity providers for the Shares by allowing them to manage their 
overnight risk exposure more effectively. The Sponsor has analyzed the 
daily trading volume of the Shares between November 16, 2022 and May 
30, 2023, as measured in five minute increments. This analysis revealed 
that, over the 133 trading days

[[Page 52226]]

during this period, Share trading volume was on average 17.2% higher in 
the five minutes before the close of trading on the NYSE than during 
the rest of the trading day. As expected, the analysis revealed that 
Share trading volume is also generally higher when London and New York 
trading overlap, but that there was a consistent and significant 
increase in Share trading volume immediately before the close of 
trading on the NYSE. Increased trading before market close generally 
reflects hedging in the Shares by market makers and other major market 
participants to mitigate overnight market risk arising from their 
exposure to the Shares. The relative staleness of the LBMA Gold Price 
at the time the Trust calculates its NAV contributes to the uncertainty 
that major market participants contend with in managing their overnight 
market risk, which could result in lower liquidity for the Shares.
    Market risk uncertainty is further heightened on days when the 
London gold bullion market is closed altogether, but the Shares 
continue to trade on the NYSE. Further, whereas the IBA observes a U.K. 
banking holiday schedule, the Shares of the Trust are traded on the 
Exchange, which observes a U.S. market calendar. As a result, there are 
days on which the IBA does not hold an auction because the U.K. markets 
are closed, but the Shares continue to trade on the Exchange. On such 
days and on days when there is significant movement in the market 
between the calculation of the LBMA Gold Price and the close of trading 
in the Shares, the NAV of the Shares of the Trust is not updated, while 
the market pricing of Shares of the Trust will generally continue to 
reflect activity in the gold spot market represented by XAU. In 
addition, in some cases, an NAV based on a stale LBMA Gold Price may 
give the perception of tracking error when none exists.
    Aligning the calculation of the NAV of the Shares with the close of 
trading in the Shares would also promote a NAV calculation that takes 
into account important liquidity events because the close of NYSE 
trading is generally the most liquid time of the trading day for Shares 
of the Trust. Closing the timing gap between the Trust's benchmark 
price determination and the close of trading in the Shares and 
subsequent NAV calculation could improve liquidity in the Shares by 
enabling market makers and liquidity providers to better manage risk 
and help reduce investor confusion stemming from any erroneous 
perceived tracking error. Moreover, market participants, including 
market makers, are unlikely to be confused or otherwise negatively 
impacted by the Trust's use of the Index instead of the LBMA Gold 
Price. Instead, because market participants already primarily rely on 
the gold spot price represented by XAU to inform their trading of 
Shares, the proposed change to the Index would align with current 
market participant expectations on how to value the Trust's gold.
    The Sponsor believes that the Index is a suitable replacement for 
the LBMA Gold Price because it would provide a reliable benchmark for 
purposes of calculating the NAV of the Shares and a better pricing 
mechanism in times of market volatility. Specifically, the Sponsor 
believes that the Index's methodology is reasonably designed to be 
resistant to potential price manipulation because the Index is based on 
an average spot price that is time-weighted around the close of trading 
on the NYSE. As described above, the Index's methodology aims to 
reflect a closing price for XAU that would be observed at the 
conclusion of a trading day in Shares of the Trust. By using TWAPs that 
account for the five minutes leading up to and six seconds immediately 
following the market close rather than using a single Trade Tick at the 
exact close, the Index's methodology is intended to minimize the impact 
of any attempts to manipulate the fixing price by submitting single 
time orders or any erroneous orders that could result in a NAV that 
does not fairly reflect the value of the Trust's gold.
    In addition, the Index Provider is registered as a benchmark 
administrator under European Benchmarks Regulation (``BMR'') with the 
German Federal Financial Supervisory Authority and adheres to the IOSCO 
Principles for Financial Benchmarks (``IOSCO Principles'').\17\ The BMR 
requires the Index Provider to have in place a control framework that 
ensures its benchmarks within scope of the BMR are provided or 
published and made available in accordance with the BMR. The control 
framework provides a description of the control activities and further 
information on how the business and the processes relate to the 
requirements of the BMR. The Index Provider has an Oversight Committee 
that is responsible for the integrity of the administration process and 
oversees its control framework for the process of determining and 
distributing the indices and benchmarks. The Index Provider is thus 
subject to a similar level of regulatory scrutiny as the IBA is with 
respect to the LBMA Gold Price,\18\ and, while the Index itself is not 
a BMR-compliant benchmark, the Index Provider applies the same 
processes and procedures in calculating the Index as it does to its 
BMR-compliant benchmarks, including ensuring that the price discovery 
process for the Index is subject to surveillance by the Index Provider 
and is auditable and transparent in accordance with the IOSCO 
Principles (as further discussed below).
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    \17\ See https://www.iosco.org/library/pubdocs/pdf/IOSCOPD415.pdf. The 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 areas of (1) governance: to protect the 
integrity of the benchmark determination process and to address 
conflicts of interest; (2) quality of the benchmark: to promote the 
quality and integrity of benchmark determinations through the 
application of design factors; (3) quality of the methodology: to 
promote the quality and integrity of methodologies by setting out 
minimum information that should be addressed within a methodology; 
and (4) 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. The IOSCO Principles also call for credible 
transition policies in case a benchmark may cease to exist due to 
market structure change.
    \18\ IBA is compliant with the UK benchmark regulation (MAR 
8.3), regulated by the FCA, and has been formally assessed against 
the IOSCO Principles.
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    Further, the Index is derived from data recorded during Time 
Periods 1 and 2--a total period of five minutes and six seconds. Thus, 
the Index calculation reflects several thousand Trade Ticks of actual 
transactions from hundreds of identifiable and IDS-accepted data 
contributors for a given calculation day. The Sponsor believes that the 
broad base of data underlying the Index calculation reduces the 
potential for price manipulation affecting NAV calculation.
    The Sponsor also believes that the Index would provide enhanced 
transparency to the calculation of the NAV of the Shares. The Index 
will be calculated and published by the Index Calculator no later than 
30 minutes following the close of trading on the NYSE on each business 
day, disseminated to major financial data providers, and made publicly 
available via the Trust's website. Solactive has published publicly 
available guidelines that outline the methodology for the Index 
calculation, including the formula by which the Index is calculated, 
such that the calculation could be replicated by anyone with access to 
the underlying XAU market data. Underlying XAU market data is commonly 
and broadly

[[Page 52227]]

available to a wide group of market participants, including analysts, 
advisers, traders, and investors at broker-dealers, banks, trading 
platforms, investment advisers and other financial institutions and 
investors that trade in gold bullion, as well as to the market makers 
and authorized participants for the Shares. The Sponsor believes that 
the Index provides a benchmark that is comprehensible and easily 
accessible to a wide range of market participants, thus promoting 
transparency into the valuation process for Shares of the Trust.\19\
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    \19\ By contrast, the LBMA Gold Price auction process lacks an 
equivalent degree of transparency because no direct participant in 
the daily electronic auction or any other bullion market participant 
can independently recreate how the auction resulted in a particular 
price.
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    Finally, the Sponsor believes that the Index would provide a 
comprehensive benchmark for purposes of determining the NAV of the 
Shares of the Trust. The Index calculation is based on XAU market data 
from IDS, which is a major provider of financial market data to 
institutions including banks and other asset managers for the pricing 
of portfolio assets and the execution of asset transactions. Various 
spot data, including XAU, is available through IDS's data streaming 
service, which covers 2,700 spot rates, with an average of over 130 
million updates per day for all spots provided by IDS. IDS compiles 
data from over 100 sources, including market makers, execution venues, 
banks and brokers from across the globe, and every updating Trade Tick 
of spot streaming data is available via IDS's Integrated Data Viewer 
service in a file-based format.
    The Sponsor believes that data aggregated by IDS provides a 
reliable basis for the calculation of the Index given the robust 
quality control and filtering process IDS applies to XAU Trade Ticks to 
exclude outliers and erroneous pricing. IDS publishes a ``Consolidated 
Feed Wires Protocol'' applicable to XAU and other IDS data feeds (the 
``Protocol''). The Protocol specifies the data series that are 
associated with XAU.\20\ Data in these series include millisecond time-
stamped trade prices of XAU submitted by identifiable and IDS-accepted 
contributors, and Solactive extracts Trade Ticks from this data set to 
calculate the Index. IDS's automated processes evaluate XAU trade price 
contributions to determine the authenticity of the contributor and the 
validity of the trade price contribution as representative of actual 
transaction pricing based on contemporary and historical XAU data 
fields. IDS data evaluation and data integrity processes are designed 
to filter out any invalid Trade Ticks.
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    \20\ The data series set for XAU reports, among other data: 
trade price; ask price; bid price; current price; millisecond Unix 
time stamps of last trade/quote update, last trade and last quote; 
contributor code; city code; region code; high; low; open; and 
change from yesterday. Solactive uses the trade price data series to 
calculate the Index. IDS uses the other data received to perform 
automated quality control checks of each trade price submitted by a 
contributor.
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    In addition, the Index Provider verifies input data used in the 
calculation of the Index to ensure the continuous quality of such data, 
including through automated assessments at the individual data value 
level as well as plausibility checks at the aggregated index level. The 
Index Provider also takes supplementary quality control measures by 
performing in-depth analyses of selected data samples in longer 
intervals to facilitate additional scrutiny of the data and detection 
of conduct indicating potential data manipulation. Finally, the Index 
Provider maintains long-term records of the input data used for each 
Index determination in order to be able to verify a determination 
retrospectively.
    The Exchange believes the Index will serve as an appropriate 
replacement to the LBMA Gold Price for purposes of determining the NAV 
of Shares of the Trust. The Index will be operated by a regulated 
benchmark administrator and its methodology is transparent, replicable, 
and auditable. The Index would provide a sound and reasonable basis for 
the calculation of an NAV that reflects the same gold bullion spot 
price loco London as the LBMA Gold Price (and thus would generally be 
very similar to the LBMA Gold Price), but that is more closely aligned 
with the timing of trading in the Shares. Accordingly, the Index is 
likely to facilitate a fairer NAV calculation for Shares of the Trust, 
particularly when market conditions include significant price moves in 
gold between when the LBMA Gold Price is calculated versus the New York 
trading close. The Exchange also believes that the Index is an 
appropriate replacement for the LBMA Gold Price given the anticipated 
benefits of aligning the timing of the Index calculation with the daily 
close of trading in the Shares of the Trust, including promoting 
liquidity by permitting market makers and other liquidity providers to 
more efficiently manage their risk and promoting consistency with 
market participants expectations' on how to value the Trust's gold.
    In connection with this proposed rule change, the Sponsor will:

    (1) issue a press release informing the public of the date on 
which the Trust will first use the Index to calculate its NAV;
    (2) file the applicable press release with the Commission by 
means of Form 8-K, which will be available on the Trust's website; 
and
    (3) file an amendment to its registration statement relating to 
the proposed change.\21\
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    \21\ The Sponsor further represents that it will manage the 
Trust as described in the Prior Order and Prior Notice and will not 
implement the changes described herein until the amendment to its 
registration statement and this proposed rule change are effective 
and operative.

    Except for the change noted above, all other representations made 
in the Prior Order and Prior Notice remain unchanged, and the Trust 
will continue to comply with all initial and continued listing 
requirements.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \22\ 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.
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    \22\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Index will be calculated via a robust and transparent methodology, 
based on high-quality transaction data from a major financial data 
provider. The Exchange believes the Index will serve as an appropriate 
replacement to the LBMA Gold Price for purposes of determining the NAV 
of the Shares and will provide a sound and reasonable basis for 
calculation of NAV that is more closely aligned with U.S. trading 
hours, which would protect investors and the public interest by 
promoting liquidity and price stability of Shares of the Trust and 
reduce investor confusion arising from any perceived tracking error 
based on the timing of the LBMA Gold Price fixing vis a vis the 
calculation of the Shares' NAV. Specifically, although the LBMA Gold 
Price and Index price are typically very similar and both reflect gold 
bullion spot prices loco London, the Index is likely to facilitate a 
fairer NAV calculation for Shares of the Trust in general and, 
particularly, on days where there have been significant price moves in 
gold between when the LBMA Gold Price is calculated versus the New York 
trading close and would allow the calculation of an NAV on every day 
that Shares of the Trust trade on the

[[Page 52228]]

Exchange. In addition, the Index, which is calculated in alignment with 
the close of trading in the Shares on each trading day, provides a 
pricing mechanism better equipped to respond to market volatility and 
that includes liquidity at the close of trading in the Shares in an 
assessment of their NAV. Moreover, because the Index would reflect the 
gold spot price as represented by XAU, market participants--who already 
primarily refer to such price to inform their trading in Shares of the 
Trust--would not be impacted negatively by the proposed change. 
Instead, because market participants already primarily rely on the gold 
spot price represented by XAU to inform their trading of Shares, the 
proposed change to the Index could remove impediments to, and perfect 
the mechanism of, a free and open market by promoting consistency with 
current market participant expectations on how to value the Trust's 
gold.
    The proposed rule change is also designed to perfect the mechanism 
of a free and open market price discovery process and, in general, to 
protect investors and the public interest because the Index will be 
administered and disseminated by Solactive, which is unaffiliated with 
the Sponsor and the Trust, and the Index will be transparent, 
auditable, and operated by a regulated benchmark administrator that 
adheres to IOSCO Principles. The guidelines that outline the 
methodology for the Index calculation are publicly available, including 
the formula by which the Index is calculated, such that the calculation 
could be reproduced by anyone with access to the underlying XAU market 
data, which is itself widely available to market participants. XAU data 
underlying the Index are submitted by identifiable and IDS-accepted 
contributors, and IDS evaluates XAU trade price contributions to 
determine the authenticity of the contributor and the validity of the 
trade price contribution as representative of actual transaction 
pricing based on contemporary and historical XAU data fields, as well 
as to identify and filter out any invalid Trade Ticks. In addition, 
although the Index is not a BMR-compliant benchmark, the Index Provider 
applies the same processes and procedures to the Index as it does to 
its BMR-compliant benchmarks; accordingly, the Index is subject to 
surveillance and other quality control measures performed by the Index 
Provider, including data analysis to aid in the identification of 
conduct indicating potential data manipulation and maintenance of 
records allowing the Index Provider to verify historical Index 
determinations. The Trust will continue to be listed and traded on the 
Exchange pursuant to the initial and continued listing criteria set 
forth in NYSE Arca Rule 8.201-E. Except for the changes noted above, 
all other facts presented and representations made in Prior Order and 
Prior Notice remain unchanged.\23\
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    \23\ See notes 4 & 5, supra.
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    As noted above, prior to implementing the proposed change, the 
Sponsor will (1) issue a press release informing the public of the date 
the Trust will first use the Index to calculate the NAV of the Shares; 
(2) file the applicable press release with the Commission by means of 
Form 8-K, which will be available on the Trust's website; and (3) file 
an amendment to the Trust's registration statement relating to the 
proposed change. The Exchange believes that such press release and 
registration statement amendment will protect investors and the public 
interest by providing notification to investors of the new gold price 
benchmark prior to the use of the Index by the Trust. The Exchange also 
believes that the proposed change is designed to protect investors and 
the public interest because, except for the change noted above with 
respect to the Index as the new benchmark for the calculation of the 
NAV for the Shares of the Trust, all other representations made in the 
Prior Order and Prior Notice remain unchanged, and the Trust will 
continue to comply with all initial and continued listing requirements.

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 is not 
designed to address any competitive issue, but rather would permit the 
Trust to update the benchmark it uses for purposes of calculating the 
NAV of Shares from the LBMA Gold Price to the Index. The Exchange does 
not believe this change will impact intramarket or intermarket 
competition.

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 foregoing 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, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \24\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\25\
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    \24\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and 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. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \26\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
believes that waiver of the operative delay would be consistent with 
the protection of investors and the public interest because the 
proposed rule change would amend a representation to replace references 
to the LBMA Gold Price as the benchmark for NAV calculation with 
references to the Index, which, for reasons discussed above, the 
Exchange believes is a suitable replacement. Other than amending that 
representation as specifically discussed herein, all statements in the 
Prior Order and Prior Notice remain unchanged, and the Trust will 
continue to comply with all initial and continued listing requirements. 
For these reasons, and because the proposal raises no novel legal or 
regulatory issues, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\27\
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    \26\ 17 CFR 240.19b-4(f)(6)(iii).
    \27\ For 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).

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[[Page 52229]]

    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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSEARCA-2023-48 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-2023-48. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSEARCA-2023-48 and should 
be submitted on or before August 28, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16712 Filed 8-4-23; 8:45 am]
BILLING CODE 8011-01-P