Document ID: SEC-2017-0049-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2017-01-11T05:00Z

[Federal Register Volume 82, Number 7 (Wednesday, January 11, 2017)]
[Notices]
[Pages 3366-3372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00366]

[[Page 3366]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79742; File No. SR-NYSEArca-2016-173]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to the Listing and Trading of the 
Shares of the United States 3x Oil Fund and United States -3x Short Oil 
Fund Under NYSE Arca Equities Rule 8.200

January 5, 2017.
    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 23, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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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 list and trade the shares of the following 
under NYSE Arca Equities Rule 8.200, Commentary .02 (``Trust Issued 
Receipts''): United States 3x Oil Fund and United States -3x Short Oil 
Fund. The proposed rule change is available on the Exchange's Web site 
at www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
following under NYSE Arca Equities Rule 8.200, Commentary .02, which 
governs the listing and trading of Trust Issued Receipts: United States 
3x Oil Fund and United States -3x Short Oil Fund (each a ``Fund'' and, 
collectively, the ``Funds'').\4\
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    \4\ Commentary .02 to NYSE Arca Equities Rule 8.200 applies to 
Trust Issued Receipts that invest in ``Financial Instruments.'' The 
term ``Financial Instruments,'' as defined in Commentary .02(b)(4) 
to NYSE Arca Equities Rule 8.200, means any combination of 
investments, including cash; securities; options on securities and 
indices; futures contracts; options on futures contracts; forward 
contracts; equity caps, collars, and floors; and swap agreements.
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    Each Fund is a series of the USCF Funds Trust (the ``Trust''), a 
Delaware statutory trust.\5\ The Trust and the Funds are managed and 
controlled by United States Commodity Funds LLC (``USCF''). USCF is 
registered as a commodity pool operator (``CPO'') with the Commodity 
Futures Trading Commission (``CFTC'') and is a member of the National 
Futures Association (``NFA'').\6\
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    \5\ The Trust is registered under the Securities Act of 1933. 
the Trust filed with the Commission a registration statement on Form 
S-1 under the Securities Act of 1933 (15 U.S.C. 77a) (``Securities 
Act'') relating to the United States 3x Oil Fund (File No. 333-
214825) and the United States 3x Short Oil Fund (File No. 333-
214881) (each a ``Registration Statement'' and, collectively, 
``Registration Statements'') on November 29, 2016 and December 2, 
2016, respectively. The description of the operation of the Trust 
and the Funds herein is based, in part, on the Registration 
Statements.
    \6\ The Commission has previously approved listing of Trust 
Issued Receipts based on oil on the American Stock Exchange (now 
known as NYSE MKT LLC) and NYSE Arca. See, e.g., Securities Exchange 
Act Release Nos. 53582 (March 31, 2006), 71 FR 17510 (April 6, 2006) 
(SR-Amex-2005-127) (order approving listing and trading of shares of 
United States Oil Fund, LP); 57188 (January 23, 2008), 73 FR 5607 
(January 30, 2008) (SR-Amex-2007-70) (order approving listing and 
trading of shares of United States Heating Oil Fund, LP and United 
States Gasoline Fund, LP); 61881 (April 9, 2010), 75 FR 20028 (April 
16, 2010) (SR-NYSEArca-2010-14) (order approving listing and trading 
of shares of United States Brent Oil Fund, LP); and 62527 (July 19, 
2010), 75 FR 43606 (July 26, 2010) (order approving listing and 
trading of shares of United States Commodity Index Fund).
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    In its capacity as the Custodian for the Funds, Brown Brothers 
Harriman & Co. (the ``Custodian'') may hold the Funds' Treasuries, cash 
and/or cash equivalents pursuant to a custodial agreement. Brown 
Brothers Harriman & Co. is also the registrar and transfer agent for 
the shares. In addition, in its capacity as Administrator for the 
Funds, Brown Brothers Harriman & Co. (the ``Administrator'') performs 
certain administrative and accounting services for the Funds and 
prepares certain Commission, NFA and CFTC reports on behalf of the 
Funds. ALPS Fund Services, Inc. is the ``Marketing Agent'' for the 
Funds.
United States 3x Oil Fund
    According to the Registration Statement, the investment objective 
of the Fund will be for the daily changes in percentage terms of its 
Shares' per Share net asset value (``NAV'') to reflect three times (3x) 
the daily change in percentage terms of the price of a specified short-
term futures contract on light, sweet crude oil (the ``Benchmark Oil 
Futures Contract'') less the Fund's expenses. To achieve this 
objective, USCF will endeavor to have the notional value of the Fund's 
aggregate exposure to the Benchmark Oil Futures Contract at the close 
of each trading day approximately equal to 300% of the Fund's NAV. The 
Fund will seek a return that is 300% of the return of the Benchmark Oil 
Futures Contract for a single day and does not seek to achieve its 
stated investment objective over a period of time greater than one 
day.\7\
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    \7\ According to the Registration Statement, the pursuit of 
daily leveraged investment goals means that the return of the Fund 
for a period longer than a full trading day may have no resemblance 
to 300% of the return of the Benchmark Oil Futures Contract for a 
period of longer than a full trading day because the aggregate 
return of the Fund is the product of the series of each trading 
day's daily returns.
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    The Benchmark Oil Futures Contract is the futures contract on 
light, sweet crude oil as traded on the New York Mercantile Exchange 
(the ``NYMEX'', which is part of the CME Group, Inc. (``CME'')) that is 
the near month contract to expire, except when the near month contract 
is within two weeks of expiration, in which case it will be measured by 
the futures contract that is the next month contract to expire.
    The Fund will seek to achieve its investment objective by primarily 
investing in futures contracts for light, sweet crude oil that are 
traded on the NYMEX, ICE Futures-U.S. or other U.S. and foreign 
exchanges (collectively, ``Oil Futures Contracts'').
    The Fund will, to a lesser extent and in view of regulatory 
requirements and/or market conditions:
    (i) Next invest in (a) cleared swap transactions based on the 
Benchmark Futures Contract, (b) non-exchange traded (``over-the-
counter'' or ``OTC''), negotiated swap contracts that are valued based 
on the Benchmark Futures Contract, and (c) forward contracts for oil;

[[Page 3367]]

    (ii) followed by investments in futures contracts for other types 
of crude oil, diesel-heating oil, gasoline, natural gas, and other 
petroleum-based fuels, each of which are traded on the NYMEX, ICE 
Futures U.S. or other U.S. and foreign exchanges as well as cleared 
swap transactions and OTC swap contracts valued based on the foregoing; 
and
    (iii) finally, invest in exchange-traded cash settled options on 
Oil Futures Contracts.
    All such other investments are referred to as ``Other Oil-Related 
Investments'' and, together with Oil Futures Contracts, are ``Oil 
Interests.''
    For the Fund to maintain a consistent 300% return versus the 
Benchmark Oil Futures Contract, the Fund's holdings must be rebalanced 
on a daily basis by buying additional Oil Interests or selling Oil 
Interests that it holds.
    The Fund anticipates that, to the extent it invests in Oil Futures 
Contracts other than the Benchmark Oil Futures Contract or Other Oil-
Related Investments, it will enter into various non-exchange-traded 
derivative contracts, including swaps and/or forward contracts, to 
hedge the short-term price movements of such Oil Futures Contracts (to 
the extent necessary) and Other Oil-Related Investments against the 
current Benchmark Oil Futures Contract. For example, if the Fund 
invested in diesel-heating oil futures contracts, it may also enter 
into a swap or forward contract that is valued based on the difference 
between the diesel-heating oil futures contract and the Benchmark Oil 
Futures Contract.
    USCF currently anticipates that regulatory requirements such as 
accountability levels or position limits, and market conditions 
including those allowing the Fund to obtain greater liquidity or to 
execute transactions with more favorable pricing, could cause the Fund 
to invest in Other Oil-Related Investments.
    The Fund will support its investments by holding the amounts of its 
margin, collateral and other requirements relating to these obligations 
in short-term obligations of the United States of two years or less 
(``Treasuries''), cash, and cash equivalents. The Fund may invest in 
money market funds, as well as Treasuries with a maturity date of two 
years or less, as an investment for assets not used for margin or 
collateral in the Oil Interests. The majority of the Fund's assets will 
be held in Treasuries, cash and/or cash equivalents with the Custodian.
    The Fund will seek to invest in a combination of Oil Interests such 
that the daily changes in its NAV, measured in percentage terms, less 
the Fund's expenses, will track three times (3x) the daily changes in 
the price of the Benchmark Oil Futures Contract, also measured in 
percentage terms. As a specific benchmark, USCF will endeavor to place 
the Fund's trades in Oil Interests and otherwise manage the Fund's 
investments so that the difference between ``A'' and ``B'' will be 
plus/minus 0.30 percent (0.30%) of ``B'', where:
     A is the average daily percentage change in the Fund's per 
Share NAV for any period of thirty (30) successive valuation days, 
i.e., any New York Stock Exchange (``NYSE'') trading day as of which 
the Fund calculates its per Share NAV, less the Fund's expenses; and
     B is three times the average daily percentage change in 
the price of the Benchmark Oil Futures Contract over the same period.
    According to the Registration Statement, the design of the Fund's 
Benchmark Oil Futures Contract is such that every month it begins by 
using the near month contract to expire until the near month contract 
is within two weeks of expiration, when, over a four day period, it 
transitions to the next month contract to expire as its benchmark 
contract and keeps that contract as its benchmark until it becomes the 
near month contract and close to expiration. In the event of a crude 
oil futures market where near month contracts trade at a higher price 
than next month to expire contracts (``backwardation''), then, absent 
the impact of the overall movement in crude oil prices, the value of 
the benchmark contract would tend to rise as it approaches expiration. 
Conversely, in the event of a crude oil futures market where near month 
contracts trade at a lower price than next month contracts 
(``contango''), then, absent the impact of the overall movement in 
crude oil prices, the value of the benchmark contract would tend to 
decline as it approaches expiration.
    According to the Registration Statement, USCF believes that market 
arbitrage opportunities will cause daily changes in the Fund's Share 
price on the Exchange on a percentage basis, to closely track the daily 
changes in the Fund's per Share NAV on a percentage basis.
    According to the Registration Statement, the Fund has not limited 
the size of its offering and is committed to utilizing substantially 
all of its proceeds to purchase Oil Futures Contracts and Other Oil-
Related Investments. If the Fund encounters accountability levels, 
position limits, or price fluctuation limits for Oil Futures Contracts 
on the NYMEX or ICE Futures U.S., it may then, if permitted under 
applicable regulatory requirements, purchase Oil Futures Contracts on 
other exchanges that trade listed crude oil futures or invest in Other 
Oil-Related Investments to meet its investment objective.
    The Fund will invest in Oil Interests to the fullest extent 
possible without being unable to satisfy its current or potential 
margin or collateral obligations with respect to its investments in Oil 
Interests. In pursuing this objective, the primary focus of USCF will 
be the investment in futures contracts and the management of the Fund's 
investments in Treasuries, cash and/or cash equivalents for margining 
purposes and as collateral.
    On each day during the four-day period, USCF anticipates it will 
``roll'' the Fund's positions in Oil Interests by closing, or selling, 
a percentage of the Fund's positions in Oil Interests and reinvesting 
the proceeds from closing those positions in new Oil Interests that 
reflect the change in the Benchmark Oil Futures Contract.
    Approximately 15% to 90% of the Fund's assets will be committed as 
margin for commodity futures contracts. However, from time to time, the 
percentage of assets committed as margin may be substantially more, or 
less, than such range. Ongoing margin and collateral payments will 
generally be required for both exchange-traded and OTC contracts based 
on changes in the value of the Oil Interests.
United States 3x Short Oil Fund
    According to the Fund's Registration Statement, the investment 
objective of the Fund will be for the daily changes in percentage terms 
of its shares' per share net asset value (``NAV'') to reflect three 
times the inverse (-3x) of the daily change in percentage terms of the 
price of the Benchmark Oil Futures Contract, less the Fund's expenses. 
To achieve this objective, USCF will endeavor to have the notional 
value of the Fund's aggregate short exposure to the Benchmark Oil 
Futures Contract at the close of each trading day approximately equal 
to the 300% of the Fund's NAV. The Fund will seek a return that is -
300% of the return of the Benchmark Oil Futures Contract for a single 
day and does not seek to achieve its stated investment objective over a 
period of time greater than one day.\8\
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    \8\ According to the Registration Statement, the pursuit of 
daily leveraged investment goals means that the return of the Fund 
for a period longer than a full trading day may have no resemblance 
to -300% of the return of the Benchmark Oil Futures Contract for a 
period of longer than a full trading day because the aggregate 
return of the Fund is the product of the series of each trading 
day's daily returns.

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[[Page 3368]]

    The Fund will seek to achieve its investment objective by primarily 
investing in futures contracts for light, sweet crude oil that are 
traded on the NYMEX, ICE Futures U.S. or other U.S. and foreign 
exchanges (collectively, ``Oil Futures Contracts'').
    The Fund will, to a lesser extent and in view of regulatory 
requirements and/or market conditions:
    (i) Next invest in (a) cleared swap transactions based on the 
Benchmark Futures Contract, (b) OTC negotiated swap contracts that are 
valued based on the Benchmark Futures Contract, and (c) forward 
contracts for oil;
    (ii) followed by investments in futures contracts for other types 
of crude oil, diesel-heating oil, gasoline, natural gas, and other 
petroleum-based fuels, each of which that are traded on the NYMEX, ICE 
Futures U.S. or other U.S. and foreign exchanges and as well cleared 
swap transactions and OTC swap contracts valued based on the foregoing; 
and
    (iii) finally, invest in exchange-traded cash settled options on 
Oil Futures Contracts.
    For the Fund to maintain a consistent -300% return versus the 
Benchmark Oil Futures Contract, the Fund's holdings must be rebalanced 
on a daily basis by buying additional Oil Interests or selling Oil 
Interests that it holds.
    The Fund anticipates that to the extent it invests in Oil Futures 
Contracts other than and the Benchmark Oil Futures Contract or Other 
Oil-Related Investments, it will enter into various non-exchange-traded 
derivative contracts, including swaps and/or forward contracts, to 
hedge the short-term price movements of such Oil Futures Contracts (to 
the extent necessary) and Other Oil-Related Investments against the 
current Benchmark Oil Futures Contract. For example, if the Fund 
invested in diesel-heating oil futures contracts, it may also enter 
into a swap or forward contract that is valued based on the difference 
between the diesel-heating oil futures contract and the Benchmark Oil 
Futures Contract.
    USCF currently anticipates that regulatory requirements such as 
accountability levels or position limits, and market conditions 
including those allowing the Fund to obtain greater liquidity or to 
execute transactions with more favorable pricing, could cause the Fund 
to invest in Other Oil-Related Investments.
    The Fund will support its investments by holding the amounts of its 
margin, collateral and other requirements relating to these obligations 
in Treasuries, cash, and cash equivalents. The Fund may invest in money 
market funds, as well as Treasuries with a maturity date of two years 
or less, as an investment for assets not used for margin or collateral 
in the Oil Interests. The majority of the Fund's assets will be held in 
Treasuries, cash and/or cash equivalents with the Custodian.
    The Fund will seek to invest in a combination of Oil Interests such 
that the daily changes in its NAV, measured in percentage terms, less 
the Fund's expenses, will track three times the inverse (-3x) of the 
daily changes in the price of the Benchmark Oil Futures Contract, also 
measured in percentage terms. As a specific benchmark, USCF will 
endeavor to place the Fund's trades in Oil Interests and otherwise 
manage the Fund's investments so that the difference between ``A'' and 
``B'' will be plus/minus 0.30 percent (0.30%) of ``B'', where:
     A is the average daily percentage change in the Fund's per 
Share NAV for any period of thirty (30) successive valuation days, 
i.e., any NYSE trading day as of which the Fund calculates its per 
Share NAV, less the Fund's expenses; and
     B is three times the inverse of the average daily 
percentage change in the price of the Benchmark Oil Futures Contract 
over the same period.
    The design of the Fund's Benchmark Oil Futures Contract is such 
that every month it begins by using the near month contract to expire 
until the near month contract is within two months of expiration, when, 
over a four-day period, it transitions to the next month contract to 
expire as its benchmark contract and keeps that contract as its 
benchmark until it becomes the near month contract and close to 
expiration. In the event of a crude oil futures market where the near 
month contracts trade at a higher price than next month to expire 
contracts (``backwardation''), then, absent the impact of the overall 
movement in crude oil prices, the value of the benchmark contract would 
tend to rise as it approaches expiration. Conversely, in the event of a 
crude oil futures market where near month contracts trade at a lower 
price than next month contracts (``contango''), then, absent the impact 
of the overall movement in crude oil prices, the value of the benchmark 
contract would tend to decline as it approaches expiration.
    USCF believes that market arbitrage opportunities will cause daily 
changes in the Fund's Share price on the Exchange on a percentage 
basis, to closely track the daily changes in the Fund's per Share NAV 
on a percentage basis.
    According to the Registration Statement, the Fund has not limited 
the size of its offering and is committed to utilizing substantially 
all of its proceeds to purchase Oil Futures Contracts and Other Oil-
Related Investments. If the Fund encounters accountability levels, 
position limits, or price fluctuation limits for Oil Futures Contracts 
on the NYMEX or ICE Futures, it may then, if permitted under applicable 
regulatory requirements, purchase Oil Futures Contracts on other 
exchanges that trade listed crude oil futures or invest in Other Oil-
Related Investments to meet its investment objective.
    The Fund will invest in Oil Interests to the fullest extent 
possible without being unable to satisfy its current or potential 
margin or collateral obligations with respect to its investments in Oil 
Interests. In pursuing this objective, the primary focus of USCF is the 
investment in futures contracts and the management of the Fund's 
investments in Treasuries, cash and/or cash equivalents for margining 
purposes and as collateral.
    On each day during the four-day period, USCF anticipates it will 
``roll'' the Fund's positions in Oil Interests by closing, or selling, 
a percentage of the Fund's positions in Oil Interests and reinvesting 
the proceeds from closing those positions in new Oil Interests that 
reflect the change in the Benchmark Oil Futures Contract.
    Approximately 15% to 90% of the Fund's assets will be committed as 
margin for commodity futures contracts. However, from time to time, the 
percentage of assets committed as margin may be substantially more, or 
less, than such range. Ongoing margin and collateral payments will 
generally be required for both exchange-traded and OTC contracts based 
on changes in the value of the Oil Interests.
Net Asset Value
    According to the Registration Statements, each Fund's per Share NAV 
will be calculated by taking the current market value of its total 
assets; subtracting any liabilities; and dividing that total by the 
total number of outstanding Shares.
    The Administrator intends to calculate the NAV of each Fund once 
each NYSE trading day. The NAV for a normal trading day will be 
released after 4:00 p.m. Eastern time. Trading during the Exchange's 
Core Trading Session typically closes at 4:00 p.m. Eastern time. The 
Administrator will use the

[[Page 3369]]

NYMEX closing price (determined at the earlier of the close of the 
NYMEX or 2:30 p.m. Eastern time) for the contracts traded on the NYMEX, 
but calculate or determine the value of all investments of each Fund 
using market quotations, if available, or other information customarily 
used to determine the fair value of such investments as of the earlier 
of the close of the NYSE Arca or 4:00 p.m. Eastern time. Other 
information customarily used in determining fair value includes 
information consisting of market data in the relevant market supplied 
by one or more third parties including, without limitation, relevant 
rates, prices, yields, yield curves, volatilities, spreads, 
correlations or other market data in the relevant market; or 
information of the types described above from internal sources if that 
information is of the same type used by a Fund in the regular course of 
business for the valuation of similar transactions. The information may 
include costs of funding, to the extent costs of funding are not and 
would not be a component of the other information being utilized. Third 
parties supplying quotations or market data may include, without 
limitation, dealers in the relevant markets, end-users of the relevant 
product, information vendors, brokers and other sources of market 
information. Money market funds will be valued at NAV.
Indicative Fund Value
    In addition, in order to provide updated information relating to a 
Fund for use by investors and market professionals, the Exchange will 
calculate and disseminate throughout the Exchange's Core Trading 
Session of 9:30 a.m. Eastern time to 4:00 p.m. Eastern time on each 
trading day an updated ``Indicative Fund Value'' (``IFV''). The IFV 
will be calculated by using the prior day's closing NAV per Share of a 
Fund as a base and updating that value throughout the trading day to 
reflect changes in the most recently reported trade price for the 
active light, sweet Oil Futures Contract on the NYMEX.
    The IFV will be disseminated on a per Share basis for each Fund 
every 15 seconds during the Exchange's Core Trading Session. The normal 
trading hours of the NYMEX are 9:00 a.m. Eastern time to 2:30 p.m. 
Eastern time. There will be a gap in time at the end of each day during 
which a Fund's Shares are traded on the NYSE Arca, but real-time NYMEX 
trading prices for oil futures contracts traded on the NYMEX are not 
available. During such gaps in time, the IFV will be calculated based 
on the end of day price of such Oil Futures Contracts from the NYMEX's 
immediately preceding trading session. In addition, other Oil Futures 
Contracts, Other Oil-Related Investments and Treasuries held by a Fund 
will be valued by the Administrator, using rates and points received 
from client-approved third party vendors and advisor quotes. These 
investments will not be included in the IFV.
Creation and Redemption of Shares
    According to the Registration Statements, each Fund intends to 
create and redeem Shares in one or more ``Creation Baskets'' or 
``Redemption Baskets'' of 50,000 Shares. The creation and redemption of 
baskets will be made only in exchange for delivery to a Fund or the 
distribution by a Fund of the amount of Treasuries and/or cash 
represented by the baskets being created or redeemed, the amount of 
which will be equal to the combined NAV of the number of Shares of a 
Fund included in the baskets being created or redeemed determined as of 
4:00 p.m. Eastern time on the day the order to create or redeem baskets 
is properly received.
    Authorized Participants will be the only persons that may place 
orders to create and redeem baskets. Authorized Participants must be 
(1) registered broker-dealers or other securities market participants, 
such as banks and other financial institutions, that are not required 
to register as broker-dealers to engage in securities transactions 
described below, and (2) Depository Trust Company (``DTC'') 
Participants.
Creation Procedures
    On any business day, an Authorized Participant may place an order 
with the Marketing Agent to create one or more baskets. For purposes of 
processing purchase and redemption orders, a ``business day'' means any 
day other than a day when NYSE or any futures exchange upon which a 
Benchmark Oil Futures Contract is traded is closed for regular trading. 
Purchase orders must be placed by 12:00 p.m. Eastern time or the close 
of regular trading on NYSE Arca, whichever is earlier. The day on which 
the Marketing Agent receives a valid purchase order is referred to as 
the purchase order date.
    By placing a purchase order, an Authorized Participant agrees to 
(1) deposit Treasuries, cash, or a combination of Treasuries and cash 
with the Custodian of a Fund, and (2) if required by USCF in its sole 
discretion, enter into or arrange for a block trade, an exchange for 
physical or exchange for swap, or any other OTC transaction (through 
itself or a designated acceptable broker) with a Fund for the purchase 
of a number and type of futures contracts at the closing settlement 
price for such contracts on the purchase order date. If an Authorized 
Participant fails to consummate (1) and (2), the order shall be 
cancelled.
Determination of Required Deposits
    The total deposit required to create each basket (``Creation Basket 
Deposit'') is the amount of Treasuries and/or cash that is in the same 
proportion to the total assets of a Fund (net of estimated accrued but 
unpaid fees, expenses and other liabilities) on the purchase order date 
as the number of Shares to be created under the purchase order is in 
proportion to the total number of Shares outstanding on the purchase 
order date. The Marketing Agent will publish an estimate of the 
Creation Basket Deposit requirements at the beginning of each business 
day.
Delivery of Required Deposits
    An Authorized Participant who places a purchase order will be 
responsible for transferring to a Fund's account with the Custodian the 
required amount of Treasuries and/or cash by noon Eastern time on the 
third business day following the purchase order date. Upon receipt of 
the deposit amount, the Administrator will direct DTC to credit the 
number of baskets ordered to the Authorized Participant's DTC account 
on the third business day following the purchase order date.
Redemption Procedures
    According to the Registration Statement, the procedures by which an 
Authorized Participant will be able to redeem one or more baskets will 
mirror the procedures for the creation of baskets. On any business day, 
an Authorized Participant may place an order with the Marketing Agent 
to redeem one or more baskets. Redemption orders must be placed by 
12:00 p.m. Eastern time or the close of regular trading on NYSE Arca, 
whichever is earlier. A redemption order so received will be effective 
on the date it is received in satisfactory form by the Marketing Agent 
(``Redemption Order Date''). An Authorized Participant may not withdraw 
a redemption order.
Determination of Redemption Distribution
    The redemption distribution from a Fund will consist of a transfer 
to the redeeming Authorized Participant of an amount of Treasuries and/
or cash that is in the same proportion to the total assets of a Fund 
(net of estimated accrued but unpaid fees, expenses and other

[[Page 3370]]

liabilities) on the date the order to redeem is properly received as 
the number of Shares to be redeemed under the redemption order is in 
proportion to the total number of Shares outstanding on the date the 
order is received. The Marketing Agent will publish an estimate of the 
redemption distribution per basket as of the beginning of each business 
day.
Suspension or Rejection of Redemption Orders
    USCF may, in its discretion, suspend the right of redemption, or 
postpone the redemption settlement date, (1) for any period during 
which NYSE Arca or any of the futures exchanges upon which a Benchmark 
Oil Futures Contract is traded is closed other than customary weekend 
or holiday closings, or trading on NYSE Arca or such futures exchanges 
is suspended or restricted, (2) for any period during which an 
emergency exists as a result of which delivery, disposal or evaluation 
of Treasuries is not reasonably practicable, or (3) for such other 
period as USCF determines to be necessary for the protection of the 
shareholders. For example, USCF may determine that it is necessary to 
suspend redemptions to allow for the orderly liquidation of a Fund's 
assets at an appropriate value to fund a redemption. If USCF has 
difficulty liquidating a Fund's positions, e.g., because of a market 
disruption event in the futures markets or an unanticipated delay in 
the liquidation of a position in an over the counter contract, it may 
be appropriate to suspend redemptions until such time as such 
circumstances are rectified.
Availability of Information
    The NAV for the Funds' Shares will be disseminated daily to all 
market participants at the same time. The Exchange will make available 
on its Web site daily trading volume of each of the Shares, closing 
prices of such Shares, and number of Shares outstanding. The intraday, 
closing prices, and settlement prices of the Oil Futures Contracts will 
be readily available from the applicable futures exchange Web sites, 
automated quotation systems, published or other public sources, or 
major market data vendors.
    Complete real-time data for the Oil Futures Contracts is available 
by subscription through on-line information services. ICE Futures U.S. 
and NYMEX also provide delayed futures information on current and past 
trading sessions and market news free of charge on their respective Web 
sites. Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the Consolidated Tape 
Association (``CTA''). The IFV will be available through on-line 
information services.
    In addition, the Funds' Web site, www.uscfinvestments.com, will 
display the applicable end of day closing NAV. The daily holdings of 
each Fund will be available on the Funds' Web site. Each Fund's total 
portfolio composition will be disclosed each business day that the NYSE 
Arca is open for trading, on the Funds' Web site. The Web site 
disclosure of portfolio holdings will be made daily and will include, 
as applicable, (i) the composite value of the total portfolio, (ii) the 
name, percentage weighting, and value of Oil Interests, (iii) the name 
and value of each Treasury security and cash equivalent, and (iv) the 
amount of cash held in each Fund's portfolio. The Funds' Web site will 
be publicly accessible at no charge.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of a Fund.\9\ Trading in Shares of a Fund will be 
halted if the circuit breaker parameters in NYSE Arca Equities Rule 
7.12 have been reached. Trading also may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares of a Fund inadvisable.
---------------------------------------------------------------------------

    \9\ See NYSE Arca Equities Rule 7.12.
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    The Exchange may halt trading during the day in which an 
interruption to the dissemination of the IFV or the value of the 
Benchmark Oil Futures Contract occurs. If the interruption to the 
dissemination of the IFV, or the value of the Benchmark Oil Futures 
Contract persists past the trading day in which it occurred, the 
Exchange will halt trading no later than the beginning of the trading 
day following the interruption. In addition, if the Exchange becomes 
aware that the NAV with respect to the Shares is not disseminated to 
all market participants at the same time, it will halt trading in the 
Shares until such time as the NAV is available to all market 
participants.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. in accordance with 
NYSE Arca Equities Rule 7.34 (Early, Core, and Late Trading Sessions). 
The Exchange has appropriate rules to facilitate transactions in the 
Shares during all trading sessions. As provided in NYSE Arca Equities 
Rule 7.6, the minimum price variation (``MPV'') for quoting and entry 
of orders in equity securities traded on the NYSE Arca Marketplace is 
$0.01, with the exception of securities that are priced less than $1.00 
for which the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.200. The trading of the Shares 
will be subject to NYSE Arca Equities Rule 8.200, Commentary .02(e), 
which sets forth certain restrictions on Equity Trading Permit 
(``ETP'') Holders acting as registered Market Makers in Trust Issued 
Receipts to facilitate surveillance. The Exchange represents that, for 
initial and/or continued listing, the Funds will be in compliance with 
Rule 10A-3 \10\ under the Act, as provided by NYSE Arca Equities Rule 
5.3. A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange.
---------------------------------------------------------------------------

    \10\ 17 CFR 240.10A-3.
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Surveillance
    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances administered by the Exchange, as 
well as cross-market surveillances administered by the Financial 
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, 
which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\11\ The Exchange represents that 
these procedures are adequate to properly monitor Exchange trading of 
the Shares of the Funds in all trading sessions and to deter and detect 
violations of Exchange rules and federal securities laws applicable to 
trading on the Exchange.
---------------------------------------------------------------------------

    \11\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. 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.
    The Exchange or FINRA, on behalf of the Exchange, or both, will

[[Page 3371]]

communicate as needed regarding trading in the Shares and certain Oil 
Futures Contracts with other markets and other entities that are 
members of the ISG, and the Exchange or FINRA, on behalf of the 
Exchange, or both, may obtain trading information regarding trading in 
the Shares and certain Oil Futures Contracts from such markets and 
other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares and certain Oil Futures Contracts from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement 
(``CSSA'').\12\
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    \12\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Funds may trade on markets that are members of ISG or with which the 
Exchange has in place a CSSA,
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    Not more than 10% of the net assets of a Fund in the aggregate 
invested in futures contracts shall consist of futures contracts whose 
principal market is not a member of the ISG or is a market with which 
the Exchange does not have a comprehensive surveillance sharing 
agreement.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding 
(a) the description of the portfolios, or (b) limitations on portfolio 
holdings or reference assets shall constitute continued listing 
requirements for listing the Shares on the Exchange.
    The issuer has represented to the Exchange that it will advise the 
Exchange of any failure by a Fund to comply with the continued listing 
requirements, and, pursuant to its obligations under Section 19(g)(1) 
of the Act, the Exchange will monitor for compliance with the continued 
listing requirements. If a Fund is not in compliance with the 
applicable listing requirements, the Exchange will commence delisting 
procedures under NYSE Arca Equities Rule 5.5(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Bulletin will discuss the following: (1) The risks involved 
in trading the Shares during the Opening and Late Trading Sessions when 
an updated IFV will not be calculated or publicly disseminated; (2) the 
procedures for purchases and redemptions of Shares in Creation Baskets 
and Redemption Baskets (and that Shares are not individually 
redeemable); (3) NYSE Arca Equities Rule 9.2(a), which imposes a duty 
of due diligence on its ETP Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (4) how 
information regarding the IFV is disseminated; (5) that a static IFV 
will be disseminated, between the close of trading on the CME and the 
close of the NYSE Arca Core Trading Session; (6) the requirement that 
ETP Holders deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (7) trading information.
    In addition, the Information Bulletin will advise ETP Holders, 
prior to the commencement of trading, of the prospectus delivery 
requirements applicable to a Fund. The Exchange notes that investors 
purchasing Shares directly from a Fund will receive a prospectus. ETP 
Holders purchasing Shares from a Fund for resale to investors will 
deliver a prospectus to such investors. The Information Bulletin will 
also discuss any exemptive, no-action, and interpretive relief granted 
by the Commission from any rules under the Act. In addition, the 
Information Bulletin will reference that a Fund is subject to various 
fees and expenses described in the Registration Statement. The 
Information Bulletin will also reference that the CFTC has regulatory 
jurisdiction over the trading of Oil Futures Contracts traded on U.S. 
markets.
    The Information Bulletin will also disclose the trading hours of 
the Shares and that the NAV for the Shares will be calculated after 
4:00 p.m. E.T. each trading day. The Information Bulletin will disclose 
that information about the Shares will be publicly available on the 
Funds' Web site.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \13\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.200. The Exchange has in place surveillance procedures that are 
adequate to properly monitor trading in the Shares of the Funds in all 
trading sessions and to deter and detect violations of Exchange rules 
and applicable federal securities laws. The Exchange or FINRA, on 
behalf of the Exchange, or both, will communicate as needed regarding 
trading in the Shares, and certain Oil Futures Contracts with other 
markets and other entities that are members of the ISG, and the 
Exchange or FINRA, on behalf of the Exchange, or both, may obtain 
trading information regarding trading in the Shares and certain Oil 
Futures Contracts from such markets and other entities. In addition, 
the Exchange may obtain information regarding trading in the Shares and 
certain Oil Futures Contracts from markets and other entities that are 
members of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement. Not more than 10% of the net assets of 
a Fund in the aggregate invested in futures contracts shall consist of 
futures contracts whose principal market is not a member of the ISG or 
is a market with which the Exchange does not have a comprehensive 
surveillance sharing agreement. The Exchange will make available on its 
Web site daily trading volume of each of the Shares, closing prices of 
such Shares, and number of Shares outstanding. The intraday, closing 
prices, and settlement prices of the Oil Futures Contracts will be 
readily available from the applicable exchange Web site, automated 
quotation systems, published or other public sources, or on-line 
information services.
    Complete real-time data for the Oil Futures Contracts is available 
by subscription from on-line information services. ICE Futures U.S. and 
NYMEX also provide delayed futures information on current and past 
trading sessions and market news free of charge on their Web sites. 
Information regarding exchange-traded cash-settled options and cleared 
swap contracts will be available from the applicable exchanges and 
major market data vendors. Quotation and last-sale information 
regarding the Shares will be disseminated through the facilities of the 
CTA. In addition, the Funds' Web site, will display the applicable end 
of day closing NAV. Each Fund's total portfolio composition will be 
disclosed each business day that the NYSE Arca is open for trading, on 
the Funds' Web site. The Web site disclosure of portfolio

[[Page 3372]]

holdings will be made daily and will include, as applicable, (i) the 
composite value of the total portfolio, (ii) the name, percentage 
weighting, and value of each Benchmark Oil Futures Contract, (iii) the 
name and value of each Treasury security and cash equivalent, and (iv) 
the amount of cash held in each Fund's portfolio.
    Moreover, prior to the commencement of trading, the Exchange will 
inform its Equity Trading Permit Holders in an Information Bulletin of 
the special characteristics and risks associated with trading the 
Shares. Trading in Shares of a Fund will be halted if the circuit 
breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
additional types of Trust Issued Receipts based on oil prices that will 
enhance competition among market participants, to the benefit of 
investors and the marketplace. As noted above, the Exchange has in 
place surveillance procedures that are adequate to properly monitor 
trading in the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws.

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 purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of 
additional types of Trust Issued Receipts based on oil prices and that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace.

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 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate 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 or disapprove 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2016-173 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-2016-173. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2016-173 and should 
be submitted on or before February 1, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-00366 Filed 1-10-17; 8:45 am]
 BILLING CODE 8011-01-P