Document ID: SEC-2010-0002-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change for the Listing and Trading of Sprott Physical Gold Trust
Posted Date: 2010-01-04T05:00Z

[Federal Register Volume 75, Number 1 (Monday, January 4, 2010)]
[Notices]
[Pages 170-175]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-31162]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61236; File No. SR-NYSEArca-2009-113]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change for the Listing and Trading of Sprott Physical 
Gold Trust

December 23, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 15, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') 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 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

    NYSE Arca, Inc. (``Exchange''), through its wholly-owned subsidiary 
NYSE Arca Equities, Inc. (``NYSE Arca Equities''), proposes to list and 
trade units \4\ of the Sprott Physical Gold 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.nyse.com, at the Exchange's principal office and at the 
Commission's Public Reference Room.
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    \4\ Each unit represents an equal, fractional, undivided 
ownership interest in the net assets of the Trust attributable to 
the particular class of units.
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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
    The Exchange proposes to list and trade units (``Units'') of the 
Trust 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.'' 
\5\ The Commission has previously approved listing on the Exchange 
under NYSE Arca Equities Rule 5.2(j)(6) and 8.201, respectively, shares 
of the streetTRACKS Gold Trust and iShares COMEX Gold Trust.\6\ Prior 
to their listing on the Exchange, the Commission approved listing of 
the streetTRACKS Gold Trust on the New York Stock Exchange (``NYSE'') 
and listing of iShares COMEX Gold Trust on the American Stock Exchange 
LLC.\7\ In addition, the Commission has approved trading of the 
streetTRACKS Gold Trust and iShares Silver Trust and [sic] on the 
Exchange pursuant to UTP.\8\ The Commission also has approved listing 
of the iShares Silver Trust on the Exchange \9\ and, previously, 
listing of the iShares Silver Trust on the American Stock Exchange LLC 
(now known as ``NYSE Amex LLC'').\10\ Further, the Commission has also 
approved listing on the Exchange under NYSE Arca Equities Rule 8.201 
shares of ETFS Silver Trust \11\ and ETFS Gold Trust.\12\
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    \5\ Commodity-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.
    \6\ See Securities Exchange Act Release No. 56224 (August 8, 
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76) 
(approving listing on the Exchange of the streetTRACKS Gold Trust); 
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR 
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing 
on the Exchange of iShares COMEX Gold Trust).
    \7\ See Securities Exchange Act Release No. 50603 (October 28, 
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order 
approving listing of streetTRACKS Gold Trust on NYSE); Securities 
Exchange Act Release No. 51058 (January 19, 2005), 70 FR 3749 
(January 26, 2005) (SR-Amex-2004-38) (order approving listing of 
iShares COMEX Gold Trust on the American Stock Exchange LLC).
    \8\ See Securities Exchange Act Release No. 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); Securities Exchange Act Release No. 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).
    \9\ See Securities Exchange Act Release No. 58956 (November 14, 
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124) 
(approving listing on the Exchange of the iShares Silver Trust).
    \10\ See Securities Exchange Act Release No. 53521 (March 20, 
2006), 71 FR 14967 (March 24, 2006) (SR-Amex-2005-72) (approving 
listing on the American Stock Exchange LLC of the iShares Silver 
Trust).
    \11\ See Securities Exchange Act Release No. 59781 (April 17, 
2009), 74 FR 18771 (April 24, 2009) (SR-NYSEArca-2009-28) (approving 
listing on the Exchange of the ETFS Silver Trust).
    \12\ See Securities Exchange Act Release No. 59895 (May 8, 
2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (approving 
listing on the Exchange of the ETFS Gold Trust).
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    Sprott Asset Management LP is the sponsor or manager of the Trust 
(the ``Sponsor'' or the ``Manager'',\13\ as the case may be), RBC Dexia 
Investor Services Trust is the trustee of the Trust

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(the ``Trustee''),\14\ the Royal Canadian Mint is the custodian for the 
physical gold bullion owned by the Trust (the ``Gold Custodian''),\15\ 
and RBC Dexia serves as the custodian of the Trust's assets other than 
physical gold bullion (the ``Non-Gold Custodian'').\16\
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    \13\ The Manager is a limited partnership existing under the 
laws of Ontario, Canada, and acts as manager of the Trust pursuant 
to the Trust's trust agreement and the management agreement. The 
Manager provides management and advisory services to the Trust. 
Additional details regarding the Manager are set forth in the 
Registration Statement on Form F-1 for the Sprott Physical Gold 
Trust, filed with the Commission on December 9, 2009 (No. 333-
163601) (the ``Registration Statement'').
    \14\ The Trustee holds title to the Trust's assets on behalf of 
the Unitholders and has, together with the Manager, exclusive 
authority over the assets and affairs of the Trust. The Trustee has 
a fiduciary responsibility to act in the best interest of the 
Unitholders. Additional details regarding the Trustee are set forth 
in the Registration Statement.
    \15\ The Gold Custodian will be responsible for and will bear 
all risk of the loss of, and damage to, the Trust's physical gold 
bullion that is in its custody, subject to certain limitations based 
on events beyond the Gold Custodian's control. The Manager, with the 
consent of the Trustee, may determine to change the custodial 
arrangements of the Trust. Additional details regarding the Gold 
Custodian are set forth in the Registration Statement.
    \16\ The Non-Gold Custodian will be responsible for and will 
bear all risk of the loss of, and damage to, the Trust's assets 
(other than physical gold bullion) that are in its custody, subject 
to certain limitations based on events beyond the Non-Gold 
Custodian's control. The Manager, with the consent of the Trustee, 
may determine to change the custodial arrangements of the Trust. 
Additional details regarding the Non-Gold Custodian are set forth in 
the Registration Statement.
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Listing Rules
    Definition. Rule 8.201(c)(1) defines Commodity-Based Trust Shares 
as a security (a) that is issued by a trust that holds a specified 
commodity deposited with the trust; (b) that is issued by such trust in 
a specified aggregate minimum number in return for a deposit of a 
quantity of the underlying commodity; and (c) that, when aggregated in 
the same specified minimum number, may be redeemed at a holder's 
request by such trust which will deliver to the redeeming holder the 
quantity of the underlying commodity.
    The Trust will issue Units, each of which represents an equal, 
fractional undivided ownership interest in the net assets of the Trust 
attributable to the particular class of Units. Except with respect to 
cash held by the Trust to pay expenses and anticipated redemptions, the 
Trust expects to own only London Good Delivery physical gold bullion. 
The investment objective of the Trust is for the Units to reflect the 
performance of the price of gold bullion, less the expenses of the 
Trust's operations.\17\ The Trust is not actively managed and does not 
engage in any activities designed to obtain a profit from, or to 
ameliorate losses caused by, changes in the price of gold bullion. The 
Trust is neither an investment company registered under the Investment 
Company Act of 1940 nor a commodity pool for purposes of the Commodity 
Exchange Act.\18\ The Units will be issued in an initial public 
offering. The Trust may issue additional Units (i) in future offerings 
if the gross proceeds received by the Trust per Unit is not less than 
100% of the most recently calculated NAV or (ii) by way of a 
distribution in Units in connection with an income distribution. The 
Trust will not issue Units on an on-going or daily basis. At the start 
of trading the Trust will issue a minimum of 1,000,000 Units to at 
least 400 holders (``Unitholders''), as further described below.
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    \17\ The descriptions of the Trust, the Units and the gold 
market contained herein are based on the Registration Statement.
    \18\ The Trust does not trade in gold futures contracts. The 
Trust takes delivery of physical gold that complies with certain 
gold delivery rules. Because the Trust does not trade in gold 
futures contracts on any futures exchange, the Trust is not 
regulated as a commodity pool, and is not operated by a commodity 
pool operator.
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    The Units will be redeemable monthly at the option of the holder. 
The redemption process is further described below.
    The Exchange represents that the Units satisfy the remaining 
requirements of NYSE Arca Equities Rule 8.201 and thereby qualify for 
listing on the Exchange.\19\
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    \19\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Securities Exchange [sic] of 1934 (``Act'') (15 U.S.C. 
78a), the Trust relies on the exemption contained in Rule 10A-
3(c)(7).
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Operation of the Gold Market
    A detailed description of the gold market is set forth in the 
Registration Statement.
Secondary Market Trading and Liquidity
    While the Trust's investment objective is for the Units to reflect 
the performance of physical gold bullion, less the expenses of the 
Trust, the Units may trade in the secondary market on the NYSE Arca at 
prices that are lower or higher relative to their net asset value per 
Unit (``NAV''). The NAV is expected to fluctuate with changes in the 
market value of the Trust's assets. The trading price of the Units will 
fluctuate in accordance with changes in the NAV as well as market 
supply and demand. The amount of the discount or premium in the trading 
price relative to the NAV may be influenced by non-concurrent trading 
hours between the NYSE Arca and the COMEX and other major world gold 
markets. While the Units will trade on the NYSE Arca until 4 p.m., New 
York time, liquidity in the global gold market will be reduced after 
the close of the major world gold markets, including London and of the 
COMEX division of the New York Mercantile Exchange at 1:30 p.m., New 
York time. As a result, during this time, trading spreads, and the 
resulting premium or discount to the NAV may widen.
Trust Expenses
    The fees and expenses of the Trust are set forth in detail in the 
Registration Statement.
Initial Public Offering and Redemption of Units
    The Trust will offer at a minimum, 1,000,000 Units in its initial 
public offering to a minimum of 400 Unitholders. Each Unit will 
represent an equal, fractional, undivided ownership interest in the net 
assets of the Trust attributable to the particular class of Units. It 
is not currently intended that the Trust will create additional Units.
    Unitholders may redeem their Units on a monthly basis.
Redemption for Physical Gold
    Subject to the terms of the trust agreement and the Manager's right 
to suspend redemptions under certain circumstances described in the 
registration statement, Units may be redeemed at the option of a 
Unitholder for physical gold bullion in any calendar month. Units 
redeemed for physical gold will be entitled to a redemption price equal 
to 100% of the NAV of the redeemed Units on the last Business Day, as 
defined herein, of the calendar month in which the redemption request 
is processed, less redemption and delivery expenses. Redemption 
requests for gold must be for amounts that are at least equivalent in 
value to one London Good Delivery bar or an integral multiple thereof, 
plus applicable expenses. A ``London Good Delivery bar'' contains 
between 350 and 430 troy ounces of gold. Any fractional amount of 
redemption proceeds in excess of one London Good Delivery bar or an 
integral multiple thereof will be paid in cash at a rate equal to 100% 
of the NAV of such excess amount. The ability of a Unitholder to redeem 
Units for physical gold bullion may be limited by the sizes of London 
Good Delivery bars held by the Trust at the time of the redemption. A 
Unitholder redeeming Units for gold will be responsible for expenses 
incurred by the Trust in connection with such redemption and applicable 
delivery expenses, including the handling of the notice of redemption, 
the delivery of the physical bullion for units that are being redeemed 
and the applicable gold storage in-and-out fees.
    A redemption notice to redeem Units for physical gold bullion must 
be received by the Trust's transfer agent no later than 4 p.m. Toronto 
time, on the

[[Page 172]]

15th day of the calendar month in which the redemption notice will be 
processed or, if such day is not a day on which banks located in New 
York, New York, are open for the transaction of banking business (a 
``Business Day''), then on the immediately following day that is a 
Business Day. Any redemption notice received after such time will be 
processed in the next month.
    Physical gold bullion received by a Unitholder as a result of a 
redemption of Units will be delivered by armored transportation service 
carrier pursuant to delivery instructions provided by the Unitholder. 
The armored transportation service carrier will be engaged by or on 
behalf of the redeeming Unitholder. Such physical gold bullion can be 
delivered (i) To an account established by the Unitholder at an 
institution located in North America authorized to accept and hold 
London Good Delivery bars; (ii) in the United States, to any physical 
address (subject to approval by the armored transportation service 
carrier); (iii) in Canada, to any business address (subject to approval 
by the armored transportation service carrier); and (iv) outside of the 
United States and Canada, to any address approved by the armored 
transportation service carrier. Physical gold bullion delivered to an 
institution located in North America authorized to accept and hold 
London Good Delivery bars will likely retain its London Good Delivery 
status while in the custody of such institution; physical gold bullion 
delivered pursuant to a Unitholder's delivery instruction to a 
destination other than an institution located in North America 
authorized to accept and hold London Good Delivery bars will no longer 
be deemed London Good Delivery once received by the Unitholder. The 
armored transportation service carrier will receive gold bullion in 
connection with a redemption of Units approximately 10 Business Days 
after the end of the month in which the redemption notice is processed. 
Any cash to be received by a redeeming Unitholder in connection with a 
redemption of Units for physical gold bullion will be delivered to the 
Unitholder's brokerage account within 10 Business Days after the 
calendar month in which the redemption is processed.
Redemption for Cash
    Subject to the terms of the trust agreement and the Manager's right 
to suspend redemptions under certain circumstances described in the 
registration statement, Units may be redeemed at the option of a 
Unitholder for cash on a monthly basis. Units redeemed for cash will be 
entitled to a redemption price equal to 95% of the lesser of (i) the 
volume-weighted average trading price of the Units traded on the NYSE 
Arca or, if trading has been suspended on NYSE Arca, the trading price 
of the units traded on the Toronto Stock Exchange, for the last five 
Business Days of the month in which the redemption request is processed 
and (ii) the NAV of the redeemed Units as of 4 p.m., Toronto time, on 
the last Business Day of such month. Cash redemption proceeds will be 
transferred to a redeeming Unitholder approximately three Business Days 
after the end of the month in which the redemption notice is processed. 
See ``Redemption of Units'' for detailed terms and conditions relating 
to the redemption of Units for cash.
    A redemption notice to redeem Units for cash must be received by 
the Trust's transfer agent no later than 4 p.m.. Toronto time, on the 
15th day of the calendar month in which the redemption notice will be 
processed or, if such day is not a Business Day, then on the 
immediately following day that is a Business Day. Any redemption notice 
to redeem Units for cash received after such time will be processed in 
the next month.
Termination Events
    The Trust will be terminated in the event there are no Units 
outstanding, the Trustee resigns or is removed and no successor trustee 
is appointed by the Manager by the time the resignation or removal 
becomes effective, the Manager resigns and no successor manager is 
appointed by the Manager and approved by Unitholders by the time the 
resignation becomes effective, the Manager is, in the opinion of the 
Trustee, in material default of its obligations under the trust 
agreement and does not cure such default within a certain time period, 
the Manager experiences certain insolvency events or the assets of the 
Manager have become subject to seizure or confiscation by any public or 
governmental authority. In addition, the Manager may, in its 
discretion, terminate the Trust, without Unitholder approval, if, in 
the opinion of the Manager, after consulting with the independent 
review committee, the value of net assets of the Trust has been reduced 
such that it is no longer economically feasible to continue the Trust 
and it would be in the best interests of the Unitholders to terminate 
the Trust, by giving the Trustee and each holder of Units at the time 
at least 90 days' notice. To the extent such termination in the 
discretion of the Manager may involve a matter that would be a 
``conflict of interest matter'' as set forth in applicable Canadian 
regulations, the matter will be referred by the Manager to the 
independent review committee established by the Manager for its 
recommendation. In connection with the termination of the Trust, the 
Trust shall, to the extent possible, convert its assets to cash and, 
after paying or making adequate provision for all of the Trust's 
liabilities, distribute the net assets of the Trust to Unitholders, on 
a pro rata basis, as soon as practicable after the termination date.
    Additional information regarding the Units and the operation of the 
Trust, including termination events, risks, and redemption procedures, 
is described in the Registration Statement.
Valuation of Gold and Definition of Net Asset Value
    The value of the net assets of the Trust and the NAV will be 
determined daily at 4:00 p.m. (Toronto time) on each day that is a 
Business Day, by the Trust's valuator, which is RBC Dexia Investor 
Services Trust. The value of the net assets of the Trust as of the 
valuation time on any such day shall be equal to the aggregate fair 
market value of the assets of the Trust as of such date, less an amount 
equal to the total liabilities of the Trust (excluding all liabilities 
represented by outstanding Units and deferred taxes) as of such date. 
The valuator shall calculate the NAV by dividing the value of the net 
assets of the Trust on that day by the total number of Units then 
outstanding on such day.
    The Units will be book-entry only and individual certificates will 
not be issued for the Units (except in connection with a redemption of 
Units, during the process of which redeeming Units will be certificated 
and presented for cancellation as part of the redemption process).
Availability of Information Regarding Gold Prices
    Currently, the Consolidated Tape Plan does not provide for 
dissemination of the spot price of a commodity, such as gold, over the 
Consolidated Tape. However, there will be disseminated over the 
Consolidated Tape the last sale price for the Units, as is the case for 
all equity securities traded on the Exchange (including exchange-traded 
funds). In addition, there is a considerable amount of gold price and 
gold market information available on public Web sites and through 
professional and subscription services.
    Investors may obtain on a 24-hour basis gold pricing information 
based on the spot price for an ounce of gold from various financial 
information service

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providers, such as Reuters and Bloomberg. Reuters and Bloomberg provide 
at no charge on their Web sites delayed information regarding the spot 
price of gold and last sale prices of gold futures, as well as 
information about news and developments in the gold market. Reuters and 
Bloomberg also offer a professional service to subscribers for a fee 
that provides information on gold prices directly from market 
participants. An organization named EBS provides an electronic trading 
platform to institutions such as bullion banks and dealers for the 
trading of spot gold, as well as a feed of live streaming prices to 
Reuters and Moneyline Telerate subscribers. Complete real-time data for 
gold futures and options prices traded on the COMEX are available by 
subscription from Reuters and Bloomberg. The NYMEX also provides 
delayed futures and options information on current and past trading 
sessions and market news free of charge on its Web site. There are a 
variety of other public Web sites providing information on gold, 
ranging from those specializing in precious metals to sites maintained 
by major newspapers, such as The Wall Street Journal. In addition, the 
London AM Fix and London PM Fix are publicly available at no charge at 
or [sic] http://www.thebulliondesk.com.
    The Trust Web site will provide an intraday indicative value 
(``IIV'') per share for the Units, as calculated by a third party 
financial data provider during the Exchange's Core Trading Session 
(9:30 a.m. to 4 p.m., New York time). The IIV will be calculated based 
on a price of gold derived from updated bids and offers indicative of 
the spot price of gold.\20\ In addition, the Web site for the Trust 
will contain the following information, on a per Unit basis, for the 
Trust: (a) The mid-point of the bid-ask price \21\ at the close of 
trading in relation to the NAV as of the time the NAV is calculated 
(``Bid/Ask Price''), and a calculation of the premium or discount of 
such price against such NAV; and (b) data in chart format displaying 
the frequency distribution of discounts and premiums of the Bid/Ask 
Price against the NAV, within appropriate ranges, for each of the four 
previous calendar quarters. The Web site for the Trust will also 
provide the Trust's prospectus, as well as the two most recent reports 
to stockholders. Finally, the Trust Web site will provide the last sale 
price of the Units as traded in the US market. In addition, the 
Exchange will make available over the Consolidated Tape quotation 
information, trading volume, closing prices and NAV for the Units from 
the previous day.
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    \20\ The IIV on a per Unit basis disseminated during the Core 
Trading Session should not be viewed as a real-time update of the 
NAV, which is calculated once a day.
    \21\ The bid-ask price of the Trust is determined using the 
highest bid and lowest offer on the Consolidated Tape as of the time 
of calculation of the closing day NAV.
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Criteria for Initial and Continued Listing
    The Trust will be subject to the criteria in NYSE Arca Equities 
Rule 8.201(e) for initial and continued listing of the Units.
    A minimum of 1,000,000 \22\ Units will be required to be 
outstanding at the start of trading.\23\ The minimum number of Units 
required to be outstanding exceeds the requirements that have been 
applied to previously listed shares of the streetTRACKS Gold Trust, the 
iShares COMEX Gold Trust, the iShares Silver Trust and exchange-traded 
funds. A minimum of 400 \24\ Unitholders at the start of trading.\25\ 
Additionally, it is anticipated that the initial price of a Unit will 
be approximately $10.00. The Exchange believes that the anticipated 
minimum number of Units outstanding at the start of trading is 
sufficient to provide adequate market liquidity. The Trust represented 
to the Exchange that, prior to listing, the NAV would be calculated 
daily and made available to all market participants at the same time. 
The Trust has also represented to the Exchange that, prior to listing, 
the IIV will be calculated at least every fifteen seconds and made 
available to all market participants at the same time.
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    \22\ The minimum number of Units issued is comparable to the 
minimum threshold established for the issuance of equity linked 
notes under NYSE Arca Rule 5.2(j)(2).
    \23\ See e-mail, dated December 23, 2009, from Tim Malinowski, 
NYSE Arca, to David Liu, Assistant Director, Division of Trading and 
Markets, Commission.
    \24\ The minimum number of holders is comparable to the minimum 
threshold established for the issuance of equity linked notes under 
NYSE Arca Rule 5.2(j)(2).
    \25\ See supra note 23.
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Trading Rules
    The Exchange deems the Units to be equity securities and subject to 
the Exchange's existing rules governing the trading of equity 
securities. Trading in the Units 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 Units during all 
trading sessions.
    Further, NYSE Arca Equities Rule 8.201 sets forth certain 
restrictions on ETP Holders acting as registered Market Makers in the 
Units to facilitate surveillance. Pursuant to NYSE Arca Equities Rule 
8.201(h), an ETP Holder acting as a registered Market Maker in the 
Units is required to provide the Exchange with information relating to 
its trading in the underlying gold, 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 Units 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 gold, 
related futures or options on futures or any other related derivative 
(including the Units).
    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 Units. Trading on the Exchange in the Units may be 
halted because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Units inadvisable. These may include: 
(1) The extent to which conditions in the underlying gold 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 Units will be 
subject to trading halts caused by extraordinary market volatility 
pursuant to the Exchange's ``circuit breaker'' rule.\26\
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    \26\ See NYSE Arca Equities Rule 7.12.
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Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (including Commodity-Based 
Trust Shares) to monitor trading in the Units. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Units in all trading sessions and to deter and

[[Page 174]]

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 Units and the underlying gold, gold futures 
contracts, options on gold futures, or any other gold 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'') from other 
exchanges who are members of the ISG.\27\
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    \27\ A list of ISG members is available at http://www.ISGPortal.org. The Exchange notes that the New York Mercantile 
Exchange, of which the COMEX is a division, is an ISG member, 
however, the TOCOM is not an ISG member and the Exchange does not 
have in place a comprehensive surveillance sharing agreement with 
such market.
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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 Units. Specifically, the 
Information Bulletin will discuss the following: (1) The procedures for 
purchases and redemptions of Units; (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 Units; 
(3) how information regarding the IIV is disseminated; (4) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Units prior to or concurrently with the 
confirmation of a transaction; (5) the possibility that trading spreads 
and the resulting premium or discount on the Units may widen as a 
result of reduced liquidity of gold trading during the Core and Late 
Trading Sessions after the close of the major world gold 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. ETP Holders 
purchasing Units 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 gold, that the Commission has no jurisdiction over the trading 
of gold as a physical commodity, and that the CFTC has regulatory 
jurisdiction over the trading of gold futures contracts and options on 
gold 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 Exchange believes that the proposed rule change is consistent 
with Section 6(b) \28\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5),\29\ in particular, because it is 
designed 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 and perfect the 
mechanisms of a free and open market and to protect investors and the 
public interest. The Exchange believes that the proposed rule change 
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.
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    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(5).
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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. 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 the 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 rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2009-113 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-NYSEArca-2009-113. 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 the filing also will be available for 
inspection and copying at NYSE Arca's principal office and on its 
Internet Web site at http://www.nyse.com. All comments received will be 
posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions

[[Page 175]]

should refer to File Number SR-NYSEArca-2009-113 and should be 
submitted on or before January 25, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-31162 Filed 12-31-09; 8:45 am]
BILLING CODE 8011-01-P