Document ID: SEC-2022-0591-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2022-04-25T04:00Z

[Federal Register Volume 87, Number 79 (Monday, April 25, 2022)]
[Notices]
[Pages 24357-24366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08678]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94746; File No. SR-NYSEArca-2021-73]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Amendment No. 1 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade 
Shares of the Franklin Responsibly Sourced Gold ETF Under NYSE Arca 
Rule 8.201-E (Commodity-Based Trust Shares)

April 19, 2022.

I. Introduction

    On August 23, 2021, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade shares of the Franklin Responsibly Sourced Gold ETF 
under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares). The 
proposed rule change was published for comment in the Federal Register 
on September 8, 2021.\3\ On September 29, 2021, pursuant to Section 
19(b)(2) of the Act,\4\ the Commission designated a longer period 
within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
approve or disapprove the proposed rule change.\5\ On December 6, 2021, 
the Commission instituted proceedings pursuant to Section 19(b)(2)(B) 
of the Act \6\ to determine whether to approve or disapprove the 
proposed rule change.\7\ On February 23, 2022, pursuant to Section 
19(b)(2) of the Act,\8\ the Commission designated a longer period 
within which to issue an order approving or disapproving the proposed 
rule change.\9\ On March 25, 2022, the Exchange filed Amendment No. 1 
to the proposed rule change.\10\ This Amendment No. 1, set forth in 
Item II below, replaces SR-NYSE Arca-2021-73 as originally filed and 
supersedes such filing in its entirety. The Commission has received no 
comment letters on the proposal. The Commission is publishing this 
notice to solicit comments on the proposed rule change, as modified by 
Amendment No. 1, from interested persons, and is approving the proposed 
rule change, as modified by Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 92840 (September 1, 
2021), 86 FR 50385.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 93179, 86 FR 55033 
(October 5, 2021).
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ See Securities Exchange Act Release No. 93720, 86 FR 70555 
(December 10, 2021).
    \8\ 15 U.S.C. 78s(b)(2).
    \9\ See Securities Exchange Act Release No. 94302, 87 FR 11761 
(March 2, 2022). The Commission designated May 6, 2022, as the date 
by which the Commission shall either approve or disapprove the 
proposed rule change.
    \10\ Amendment No. 1 is available on the Commission's website at 
https://www.sec.gov/comments/sr-nysearca-2021-73/srnysearca202173.htm. Among other things, Amendment No. 1 to the 
proposed rule change provided greater detail with respect to the 
operation of the Trust (as defined herein) and the Fund (as defined 
herein), including the assets held by the Fund, the LBMA Responsible 
Sourcing Programme (as described herein), the Responsible Gold 
Guidance (as described herein), creations and redemptions of the 
Fund's Shares (as defined herein), determination of net asset value 
of the Fund's Shares, and availability of information for the Fund's 
Shares. Amendment No. 1 also made additional and revised 
representations, including that all gold held by the Fund will be 
London Good Delivery bars and the information related to the Shares 
that will be provided on the Fund's website. Finally, Amendment No. 
1 provided clarifications and technical edits to the proposed rule 
change.
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
Franklin Responsibly Sourced Gold ETF (the ``Fund''), under NYSE Arca 
Rule 8.201-E.\11\ The Fund is a series of the Franklin Templeton 
Holdings Trust, a Delaware statutory trust (the ``Trust''). Under NYSE 
Arca Rule 8.201-E, the Exchange may propose to list and/or trade 
Commodity-Based Trust Shares pursuant to unlisted trading privileges 
(``UTP'').\12\
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    \11\ On April 22, 2021, the Trust submitted to the Commission 
its confidential draft registration statement on Form S-1 (the 
``Registration Statement'') under the Securities Act of 1933 (15 
U.S.C. 77a) (the ``Securities Act''). The Registrant confidentially 
submitted amendments to the Registration Statement on September 7, 
2021, October 5, 2021, January 14, 2022 and February 22, 2022. The 
Jumpstart Our Business Startups Act, enacted on April 5, 2012, added 
Section 6(e) to the Securities Act. Section 6(e) of the Securities 
Act provides that an ``emerging growth company'' may confidentially 
submit to the Commission a draft registration statement for 
confidential, non-public review by the Commission staff prior to 
public filing, provided that the initial confidential submission and 
all amendments thereto shall be publicly filed not later than 21 
days before the date on which the issuer conducts a road show, as 
such term is defined in Securities Act Rule 433(h)(4), or 15 days 
prior to anticipated effectiveness in the case of an issuer who will 
not conduct a road show. An emerging growth company is defined in 
Section 2(a)(19) of the Securities Act as an issuer with less than 
$1,070,000,000 total annual gross revenues during its most recently 
completed fiscal year. The Fund meets the definition of an emerging 
growth company and consequently has submitted its Form S-1 
Registration Statement on a confidential basis with the Commission. 
The Registration Statement in [sic] not yet effective and the Shares 
will not trade on the Exchange until such time that the Registration 
Statement is effective.
    \12\ 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.
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    The Fund will not be registered as an investment company under the 
Investment Company Act of 1940, as amended,\13\ and is not required to 
register under such act. The Fund is not a commodity pool for purposes 
of the Commodity Exchange Act, as amended.\14\
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    \13\ 15 U.S.C. 80a-1.
    \14\ 17 U.S.C. 1.
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    The sponsor of the Fund is Franklin Holdings, LLC, a Delaware 
limited liability company (``Sponsor''). BNY Mellon Asset Servicing, a 
division of The Bank of New York Mellon (``BNYM''), serves as the 
Fund's administrator (the ``Administrator'') and transfer agent (the 
``Transfer Agent'').

[[Page 24358]]

Delaware Trust Company, a subsidiary of the Corporation Service 
Company, serves as trustee of the Trust (the ``Trustee''). The 
custodian of the Fund's gold bullion (``Custodian'') currently is the 
London branch of J.P. Morgan Chase Bank, N.A.\15\ BNYM will serve as 
the custodian of the Fund's cash, if any (the ``Cash Custodian'').
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    \15\ The Custodian is responsible for safekeeping the Fund's 
gold bullion. The Custodian will facilitate the transfer of gold in 
and out of the Fund through (i) the unallocated gold accounts it may 
maintain for each Authorized Participant (as defined below) or 
unallocated gold accounts that may be maintained for an Authorized 
Participant by another London Precious Metals Clearing Limited 
(``LPMCL'') clearing bank, and (ii) the unallocated and allocated 
gold accounts it will maintain for the Fund. As used herein, ``Fund 
Allocated Account'' means the allocated gold account of the Trust 
established with the Custodian on behalf of the Fund to be used to 
hold gold that is transferred from the Fund Unallocated Account to 
be held by the Fund in allocated form; the ``Fund Unallocated 
Account'' means the unallocated gold account of the Trust 
established with the Custodian on behalf of the Fund to be used to 
facilitate the transfer of gold in and out of the Fund Allocated 
Account. The Custodian is responsible for allocating specific bars 
of gold into and out of the Fund Allocated Account. The Custodian 
will provide the Fund with regular reports detailing the gold 
transfers into and out of the Fund Unallocated Account and the Fund 
Allocated Account and identifying the gold bars held in the Fund 
Allocated Account.
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    The Commission has previously approved listing on the Exchange 
under NYSE Arca Rules 5.2-E(j)(5) and 8.201-E of the shares of other 
precious metals and gold-based commodity trusts, including the 
GraniteShares Gold MiniBAR Trust; \16\ GraniteShares Gold Trust; \17\ 
Merk Gold Trust; \18\ ETFS Gold Trust; \19\ ETFS Platinum Trust \20\ 
and ETFS Palladium Trust (collectively, the ``ETFS Trusts''); \21\ 
APMEX Physical-1 oz. Gold Redeemable Trust; \22\ Sprott Gold Trust; 
\23\ SPDR Gold Trust (formerly the streetTRACKS Gold Trust); \24\ 
iShares Silver Trust; \25\ iShares COMEX Gold Trust; \26\ and Long 
Dollar Gold Trust.\27\ Prior to their listing on the Exchange, the 
Commission approved listing of shares of the streetTRACKS Gold Trust on 
the New York Stock Exchange (``NYSE'') \28\ and listing of shares of 
iShares COMEX Gold Trust and iShares Silver Trust on the American Stock 
Exchange LLC. \29\ In addition, the Commission has approved trading of 
shares of the streetTRACKS Gold Trust and iShares Silver Trust on the 
Exchange pursuant to UTP.\30\
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    \16\ Securities Exchange Act Release No. 84257 (September 21, 
2018), 83 FR 48877 (September 27, 2018) (SR-NYSEArca-2018-55).
    \17\ Securities Exchange Act Release No. 81077 (July 5, 2017), 
82 FR 32024 (July 11, 2017) (SR-NYSEArca-2017-55).
    \18\ Securities Exchange Act Release No. 71378 (January 23, 
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
    \19\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74 
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
    \20\ Securities Exchange Act Release No. 61219 (December 22, 
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
    \21\ Securities Exchange Act Release No. 61220 (December 22, 
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
    \22\ Securities Exchange Act Release No 66930 (May 7, 2012), 77 
FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
    \23\ Securities Exchange Act Release No. 61496 (February 4, 
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
    \24\ See Securities Exchange Act Release No. 56224 (August 8, 
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76).
    \25\ 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).
    \26\ 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).
    \27\ See Securities Exchange Act Release No. 79518 (December 9, 
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order 
approving listing and trading of shares of the Long Dollar Gold 
Trust).
    \28\ 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 the NYSE).
    \29\ See Securities Exchange Act Release Nos. 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); 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).
    \30\ See Securities Exchange Act Release Nos. 53520 (March 20, 
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving 
trading on the Exchange pursuant to UTP of the iShares Silver 
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS 
Gold Trust pursuant to UTP).
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    The Exchange represents that the Shares will satisfy the 
requirements of NYSE Arca Rule 8.201-E and thereby will qualify for 
listing on the Exchange.\31\
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    \31\ With respect to the application of Rule 10A-3 (17 CFR 
240.10A-3) under the Act, the Fund relies on the exemption contained 
in Rule 10A-3(c)(7).
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Operation of the Trust and Fund 32
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    \32\ The description of the operation of the Trust, the Fund, 
the Shares, and the gold market contained herein are based, in part, 
on the Registration Statement. See note 11, supra.
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    The investment objective of the Fund will be for the Shares to 
reflect the performance of the price of gold bullion, less the Fund's 
expenses. The Fund's only ordinary recurring expense is the Sponsor's 
annual fee. The assets of the Fund include only gold bullion and cash, 
if any. Shares of the Fund will represent units of fractional undivided 
beneficial interest in and ownership of the net assets of the Fund.
    The Fund seeks to hold only ``responsibly sourced gold'' in its 
Fund Allocated Account. The Fund defines responsibly sourced gold for 
this purpose as London Good Delivery gold bullion bars that were 
refined on or after January 1, 2012 (referred to herein as ``post-2012 
gold'').\33\ All post-2012 gold has been refined in accordance with 
London Bullion Market Association's (``LBMA'') Responsible Gold 
Guidance (the ``Gold Guidance'').\34\ To facilitate this, in 
transferring gold into and out of the Fund Allocated Account, the 
Custodian will, on a best efforts basis and subject to available 
liquidity, seek to allocate post-2012 gold. If, due to a lack of 
liquidity, the Custodian is

[[Page 24359]]

unable to allocate post-2012 gold, the Custodian will do so as soon as 
reasonably practicable. All gold held by the Fund will be London Good 
Delivery bars.
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    \33\ LBMA Good Delivery gold bullion bars refined prior to 
January 1, 2012 are referred to herein as ``pre-2012 gold.''
    \34\ LBMA Good Delivery gold bars are currently fungible in the 
London OTC gold market. The Fund is not aware of and does not 
anticipate bifurcated pricing to develop with respect to the trading 
of the post-2012 gold to be held by the Fund. In the London market, 
precious metals are traded directly between two parties, without the 
involvement of an exchange. This system depends on all the bars 
having exactly the same specification. As described further herein, 
the requirements for a Good Delivery listed bar (of approximately 
400 troy ounces for gold) cover: Fine ounce weight; purity; and 
physical appearance (including marking and surface quality). No 
other refined gold products produced by accredited refiners fall 
within the scope of the Good Delivery List as defined herein. Per 
World Gold Council estimates, the London OTC market comprises 
approximately 70% of global gold notional trading volume. As noted 
above, the market in London trades 400 ounce Good Delivery gold bars 
which are stored in the member vaults of the LPMCL and the Bank of 
England. Only gold bars that meet the LBMA's Good Delivery standards 
are acceptable in settlement of a loco London contract (i.e., where 
the bullion traded is physically held in London). Currently, there 
are no pricing distinctions in the London OTC gold market based on 
individual features or characteristics of particular gold bars that 
are accepted as LBMA Good Delivery gold bars in settlement of a loco 
London contract such as country of origin or the date on which the 
gold was refined. Specifically, both pre-2012 gold and post-2012 
gold are acceptable in settlement of OTC transactions in the London 
gold market, and there is no separate pricing or trading market for 
post-2012 gold. The Fund has no indication or basis to expect that 
separate markets will develop, particularly given that the Gold 
Guidance under the LBMA Responsible Sourcing Programme has been in 
existence for over nine years and to date there has been no 
deviation, even with the operation of similar gold-based exchange-
traded funds in the US and Europe. See, for example, VanEck 
Merk[supreg] Gold Trust (OUNZ) (https://www.vaneck.com/us/en/blogs/gold-investing/ounz-holds-responsibly-sourced-gold/) and Invesco 
Physical Gold ETC (https://www.invesco.com/uk/en/etf/insights/our-commitment-towards-responsible-gold.html), both of which state in 
fund website and marketing materials that they hold 100% LBMA gold 
refined/minted in 2012 or later. To the Fund's knowledge, these 
funds have not encountered any issues in holding only post-2012 
gold.
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    Under normal market conditions, the Fund therefore expects to hold 
only post-2012 gold in the Fund Allocated Account. The Fund, however, 
may temporarily deviate from this policy in unusual market conditions, 
such as in the event of a temporary supply constraint or lack of 
availability, in which case the Fund will seek to come back into 
conformity with the policy as soon as reasonably practical. For 
example, at the time of a creation transaction in the Fund's Shares, 
only pre-2012 gold may be readily available to the Custodian. In such 
circumstances, the Custodian would allocate such gold to the Fund 
Allocated Account on a temporary basis until such time as the Custodian 
is able to swap out the pre-2012 gold for post-2012 gold (including, 
but not limited to, in connection with redemption transactions).
The LBMA Responsible Sourcing Programme and Responsible Gold Guidance
    As described above, the Fund seeks to hold only post-2012 gold. The 
Gold Guidance is the specific document that underpins the LBMA's 
Responsible Sourcing Programme, a mandatory governance framework and 
audit program applicable to LBMA approved Good Delivery refiners 
designed to promote the ethical sourcing of the global supply chain for 
the wholesale gold markets. The Responsible Sourcing Programme is based 
on the five-step framework for risk-based due diligence codified in the 
OECD Due Diligence Guidance for Responsible Supply Chains of Minerals 
from Conflict-Affected and High-Risk Areas (2010) and the requirements 
detailed in the OECD Gold Supplement (2012). The Gold Guidance includes 
measures to address environmental and sustainability considerations 
(for example, management of harmful chemicals or pollutants associated 
with the gold mining process), avoid materials from conflict-afflicted 
areas, and combat money laundering, financing of terrorism, and human 
rights abuses, including child labor. Since January 1, 2012, each LBMA 
Good Delivery refinery has been required to undergo a comprehensive 
audit, at least annually, in order to confirm compliance with the 
LBMA's minimum requirements related to the responsible sourcing of gold 
as set forth in the Gold Guidance and to publicly report results 
(audits are made available on the LBMA website). The audits, among 
other aspects, focus on the refiner's management systems and controls, 
and whether they are robust and appropriate to address the refiner's 
risk profile with respect to priority focus areas as identified above. 
Additional information regarding the LBMA's efforts to promote ethical 
sourcing of gold and a copy of the current version of the Gold Guidance 
is available at https://www.lbma.org.uk/responsible-sourcing.
    The Fund will not trade in gold futures, options, or swap contracts 
on any futures exchange or over-the-counter (``OTC''). The Fund will 
not hold or trade in commodity futures contracts, ``commodity 
interests,'' or any other instruments regulated by the Commodity 
Exchange Act. As stated above, the Fund's Cash Custodian may hold cash 
proceeds from gold sales and other cash received by the Fund. The 
Fund's gold will be held in London.
    The Fund is not a proxy for investing in physical gold. Rather, the 
Shares are intended to provide a cost-effective means of obtaining 
investment exposure through the securities markets that is similar to 
an investment in gold. Specifically, the Shares are intended to 
constitute a simple and cost-efficient means of gaining investment 
benefits similar to those of holding gold bullion directly, by 
providing investors an opportunity to participate in the gold market 
through an investment in the Shares, instead of the traditional means 
of purchasing, storing and insuring gold.
Operation of the Gold Market
    The global gold trading market consists of OTC transactions in 
spot, forwards, and options and other derivatives, together with 
exchange-traded futures and options.
    The OTC gold market includes spot, forward, and option and other 
derivative transactions conducted on a principal-to-principal basis. 
While this is a global, nearly 24-hour per day market, its main centers 
are London, New York, and Zurich.
    According to the Registration Statement, most OTC market trades are 
cleared through London. The LBMA plays an important role in setting OTC 
gold trading industry standards. A London Good Delivery Bar (as 
described below), which is acceptable for delivery in settlement of any 
OTC transaction, will be acceptable for delivery to the Fund, as 
discussed below.
    The most significant gold futures exchange is COMEX, operated by 
Commodities Exchange, Inc., a subsidiary of New York Mercantile 
Exchange, Inc., and a subsidiary of the Chicago Mercantile Exchange 
Group (the ``CME Group''). Other commodity exchanges include the Tokyo 
Commodity Exchange (``TOCOM''), the Multi Commodity Exchange of India 
(``MCX''), the Shanghai Futures Exchange, the Shanghai Gold Exchange, 
ICE Futures US (the ``ICE''), and the Dubai Gold & Commodities 
Exchange. The CME Group and ICE are members of the Intermarket 
Surveillance Group (``ISG'').
The London Gold Bullion Market
    According to the Registration Statement, most trading in physical 
gold is conducted on the OTC market and is predominantly cleared 
through London. In addition to coordinating market activities, the LBMA 
acts as the principal point of contact between the market and its 
regulators. A primary function of the LBMA is its involvement in the 
promotion of refining standards by maintenance of the ``London Good 
Delivery Lists,'' which are the lists of LBMA accredited melters and 
assayers of gold (``Good Delivery List''). The LBMA also coordinates 
market clearing and vaulting, promotes good trading practices and 
develops standard documentation.
    The term ``loco London'' refers to gold bars physically held in 
London that meet the specifications for weight, dimensions, fineness 
(or purity), identifying marks (including the assay stamp of an LBMA 
acceptable refiner), and appearance set forth in the good delivery 
rules promulgated by the LBMA from time to time. Gold bars meeting 
these requirements are known as ``London Good Delivery Bars.''
    The unit of trade in London is the troy ounce, whose conversion 
between grams is: 1,000 grams = 32.1507465 troy ounces and 1 troy ounce 
= 31.1034768 grams. A London Good Delivery Bar is acceptable for 
delivery in settlement of a transaction on the OTC market. Typically 
referred to as 400-ounce bars, a London Good Delivery Bar must contain 
between 350 and 430 fine troy ounces of gold, with a minimum fineness 
(or purity) of 995 parts per 1,000 (99.5%), be of good appearance and 
be easy to handle and stack. The fine gold content of a gold bar is 
calculated by multiplying the gross weight of the bar (expressed in 
units of 0.025 troy ounces) by the fineness of the bar.
Creation and Redemption of Shares
    According to the Registration Statement, the Fund will create and 
redeem Shares on a continuous basis in one or more Creation Units. A 
Creation Unit equals a block of 50,000 Shares.

[[Page 24360]]

The Fund will issue Shares in Creation Units to certain authorized 
participants (``Authorized Participants'') on an ongoing basis. Each 
Authorized Participant must be a registered broker-dealer or other 
securities market participant such as a bank or other financial 
institution which is not required to register as a broker-dealer to 
engage in securities transactions, a participant in The Depository 
Trust Company (``DTC''), and have entered into an agreement with the 
Sponsor and the Administrator (the ``Participant Agreement''), and have 
established an unallocated gold account with the Custodian or another 
LPMCL clearing bank.
    Creation Units may be created or redeemed only by Authorized 
Participants. The creation and redemption of Creation Units is only 
made in exchange for the delivery to the Fund or the distribution by 
the Fund of the amount of gold represented by the Creation Units being 
created or redeemed. The amount of gold required to be delivered to the 
Fund in connection with any creation, or paid out upon redemption, is 
based on the combined net asset value of the number of Shares included 
in the Creation Units being created or redeemed as determined on the 
day the order to create or redeem Creation Units is properly received 
and accepted. Orders must be placed by 3:59:59 p.m. New York time. The 
day on which the Administrator receives a valid purchase or redemption 
order is the order date. Creation Units may only be issued or redeemed 
on a day that the Exchange is open for regular trading.
    According to the Registration Statement, the Fund only holds gold 
and cash, and transacts in-kind. Each outstanding Share represents a 
fractional, undivided interest in the gold bullion held by the Fund. 
The in-kind creation and redemption transactions in Creation Unit 
aggregations are based on a specified quantity/number of ounces of gold 
bullion, which proportionately reflects the amount of gold bullion 
represented by the Shares outstanding at the time of creation or 
redemption.\35\ The total deposit required to create each Creation 
Unit, or a ``Creation Unit Gold Delivery Amount,'' is an amount of gold 
and cash, if any, that is in the same proportion to the total assets of 
the Fund (net of estimated accrued expenses and other liabilities) on 
the date the order to purchase is properly received as the number of 
Shares to be created under the purchase order is in proportion to the 
total number of Shares outstanding on the date the order is received. 
An Authorized Participant who places a purchase order is responsible 
for transferring the Creation Unit Gold Delivery Amount to the Fund 
Unallocated Account.\36\ Upon receipt, the Administrator will direct 
DTC to credit the number of Creation Units ordered to the Authorized 
Participant's DTC account. The Custodian will transfer the Creation 
Unit Gold Delivery Amount from the Fund Unallocated Account to the Fund 
Allocated Account by allocating to the Fund Allocated Account specific 
bars of gold which the Custodian holds, or instructing a sub-custodian 
to allocate specific bars of gold held by or for the sub-custodian. As 
noted above, the Custodian will, on a best efforts basis and subject to 
available liquidity, seek to allocate post-2012 gold to the Fund 
Allocated Account.
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    \35\ The amount of gold represented by each Share of the Fund 
will decrease over the life of the Fund due to the sales of gold 
necessary to pay the Sponsor's fee and Fund expenses. The gradual 
decline in the amount of gold bullion represented by the Shares will 
occur regardless of whether the trading price of the Shares rises or 
falls in response to changes in the price of gold.
    \36\ Authorized Participants will not deliver specific physical 
gold bars to the Fund Unallocated Account in connection with 
creation transactions; rather, the Authorized Participant must 
maintain a designated unallocated account with the Custodian in 
order to transact in the Fund's Shares and with the Fund Unallocated 
Account which functions like a ledger, and the Custodian is then 
solely responsible for allocating specific gold bars with the 
requested features (i.e., post-2012 gold) from the Fund Unallocated 
Account (which, again, functions like a ledger) to the Fund 
Allocated Account. Gold is delivered to and distributed by the Fund 
through credits and debits between the Authorized Participant's 
unallocated account and the Fund Unallocated Account. When an 
Authorized Participant creates a Creation Unit aggregation of Fund 
Shares, gold will be transferred from the Authorized Participant to 
the Custodian via a debit to the Authorized Participant's 
unallocated account and a credit to the Fund Unallocated Account. 
Typically on the same business day, the Custodian then allocates the 
gold to the Fund Allocated Account and stores the gold for 
safekeeping. All gold represented by a credit to any unallocated 
account represents a right to receive a specified quantity of fine 
ounces of gold. Thus, there is no way for Authorized Participants to 
deposit specified pre- or post-2012 gold with the Fund in exchange 
for Creation Units, as Authorized Participants have no role in (or 
control over) the process of selecting or allocating specific gold 
bars for delivery to the Fund Allocated Account.
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    The redemption distribution from the Fund consists of a credit to 
the redeeming Authorized Participant's unallocated account in the 
amount of the Creation Unit Gold Delivery Amount. The Creation Unit 
Gold Delivery Amount for redemptions is the number of ounces of gold 
held by the Fund to be paid out upon redemption of a Creation Unit. The 
Custodian will transfer the redemption amount from the Fund Allocated 
Account to the Fund Unallocated Account and, thereafter, to the 
redeeming Authorized Participant's unallocated account.
Net Asset Value (``NAV'')
    To determine the Fund's NAV, the Administrator will value the gold 
held by the Fund on the basis of the LBMA Gold Price PM, as published 
by the ICE Benchmark Administration Limited (the ``IBA''). IBA operates 
electronic auctions for spot, unallocated loco London gold, providing a 
market-based platform for buyers and sellers to trade. The auctions are 
run at 10:30 a.m. and 3:00 p.m. London time for gold. The final auction 
prices are published to the market as the LBMA Gold Price AM and the 
LBMA Gold Price PM, respectively.\37\
---------------------------------------------------------------------------

    \37\ The LBMA Gold Price is the global benchmark price for 
unallocated gold delivered in London. According to the IBA, 
producers, the investment community, banks and central banks, 
fabricators, jewelers and other consumers as well as market 
participants from around the globe, transact during the IBA Gold 
Auctions and use the benchmarks as reference prices. The LBMA Gold 
Price facilitates spot, monthly averaging, cash-settlement, location 
swaps, fixed for floating swaps, options and other derivative 
transactions.
---------------------------------------------------------------------------

    The Administrator will calculate the NAV on each day the Exchange 
is open for regular trading, at the earlier LBMA Gold Price PM for the 
day or 12:00 p.m. New York time. If no LBMA Gold Price (AM or PM) is 
made on a particular evaluation day or if the LBMA Gold Price PM has 
not been announced by 12:00 p.m. New York time on a particular 
evaluation day, the next most recent LBMA Gold Price AM or PM will be 
used in the determination of the NAV, unless the Sponsor determines 
that such price is inappropriate to use as the basis for such 
determination.
    Once the value of the gold has been determined, the Administrator 
will subtract all estimated accrued expenses and other liabilities of 
the Fund from the total value of the gold and any cash of the Fund. The 
resulting figure is the NAV. The Administrator will determine the NAV 
per Share by dividing the NAV of the Fund by the number of Shares 
outstanding as of the close of trading on the Exchange.
    With respect to the theoretical possibility that a pricing premium 
or discount or official deviation in the LBMA gold spot price arises 
between post-2012 gold and pre-2012 gold, the Fund's valuation of its 
gold holdings would reflect the appropriate spot price or fair value of 
such holdings with a view to mitigating the risk of shareholder 
dilution. For example, the Fund generally values its gold holdings on 
the basis of the LBMA Gold Price PM, as described above. To the extent 
that it is determined that the LBMA

[[Page 24361]]

Gold Price PM no longer reflects an accurate measure of the value of 
the Fund's gold holdings, or to the extent that the LBMA begins 
providing two different prices--one for pre-2012 gold and one for post-
2012 gold--the Fund would adjust its valuation accordingly. Further, 
the Fund only holds gold and cash, and transacts in-kind. Each 
outstanding Share represents a fractional, undivided interest in the 
gold bullion held by the Fund. The in-kind creation and redemption 
transactions in creation unit aggregations are based on a specified 
quantity/number of ounces of gold bullion, which proportionately 
reflects the amount of gold bullion represented by the Shares 
outstanding at the time of creation/redemption.\38\ The Fund also has 
other levers in the event of theoretical pricing deviations or 
increased costs with respect to its post-2012 gold holdings, including 
imposing additional creation and redemption transaction fees on 
Authorized Participants transacting in the Fund's Shares as appropriate 
in the Sponsor's discretion. Accordingly, the Fund reserves the right 
to take appropriate steps to seek to ensure that the Fund and its 
shareholders are not adversely impacted in such a scenario.
---------------------------------------------------------------------------

    \38\ See supra note 35.
---------------------------------------------------------------------------

Availability of Information Regarding Gold
    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 Shares, as is the case 
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of 
information about gold and gold markets available on public websites 
and through professional and subscription services.
    Investors may obtain gold pricing information on a 24-hour basis 
based on the spot price for an ounce of gold from various financial 
information service providers, such as Reuters and Bloomberg.
    Reuters and Bloomberg, for example, provide at no charge on their 
websites 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. Complete real-time 
data for gold futures and options prices traded on the COMEX are 
available by subscription from Reuters and Bloomberg. There are a 
variety of other public websites providing information on gold, ranging 
from those specializing in precious metals to sites maintained by major 
newspapers. In addition, the LBMA Gold Price is publicly available at 
no charge at www.lbma.org.uk.
Availability of Information
    The intraday indicative value (``IIV'') per Share for the Shares 
will be disseminated by one or more major market data vendors on at 
least a 15 second delayed basis as required by NYSE Arca Rule 8.201-
E(e)(2)(v). The IIV will be calculated based on the amount of gold and 
cash (if any) held by the Fund and a price of gold derived from updated 
bids and offers indicative of the spot price of gold, adjusted to 
reflect estimated price changes based on real time proxy pricing 
updates.\39\
---------------------------------------------------------------------------

    \39\ The IIV on a per Share basis disseminated during the 
Exchange's Core Trading Session, as defined in NYSE Arca Rule 7.34-
E, should not be viewed as a real-time update of the NAV, which is 
calculated once a day.
---------------------------------------------------------------------------

    The Fund's website (https://www.franklintempleton.com/investments/options/exchange-traded-funds/products/31714/SINGLCLASS/franklin-responsibly-sourced-gold-etf/FGLD) will contain the following 
information, on a per Share basis: (a) The Official Closing Price \40\ 
and a calculation of the premium or discount of such Official Closing 
Price against the Fund's NAV, as of the prior business day, expressed 
as a percentage of such NAV; (b) a table showing the number of days the 
Shares of the Fund traded at a premium or discount during the most 
recently completed calendar year and the most recently completed 
calendar quarters since that year; (c) a line graph showing the Shares' 
premiums or discounts for the most recently completed calendar year and 
the most recently completed calendar quarters since that year; (d) data 
in chart format displaying the frequency distribution of discounts and 
premiums of the Official Closing Price against the NAV, within 
appropriate ranges, for each of the four previous calendar quarters; 
and (e) the daily holdings of the Fund, before 9:30 a.m. E.T. on each 
Exchange trading day. The website for the Fund will also provide its 
prospectus. The NAV of the Fund will be published on each day that the 
NYSE Arca is open for regular trading and will be posted on the Fund's 
website. Finally, the Fund's website will be updated once daily to 
provide the last sale price of the Shares as traded in the U.S. market 
at the end of regular trading. In addition, information regarding 
market price and trading volume of the Shares will be continually 
available on a real-time basis throughout the day on brokers' computer 
screens and other electronic services. Information regarding the 
previous day's closing price and trading volume information for the 
Shares will be published daily in the financial section of newspapers.
---------------------------------------------------------------------------

    \40\ The term ``Official Closing Price'' is defined in NYSE Arca 
Rule 1.1(ll) as the reference price to determine the closing price 
in a security for purposes of Rule 7-E Equities Trading, and the 
procedures for determining the Official Closing Price are set forth 
in that rule.
---------------------------------------------------------------------------

Criteria for Initial and Continued Listing
    The Fund will be subject to the criteria in NYSE Arca Rule 8.201-
E(e) for initial and continued listing of the Shares.
    A minimum of 100,000 Shares will be required to be outstanding at 
the start of trading, which is equivalent to 1,317 fine ounces of gold 
or approximately $2,500,000 as of February 18, 2022. The Exchange 
believes that the anticipated minimum number of Shares outstanding at 
the start of trading is sufficient to provide adequate market 
liquidity.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Trading in the Shares 
on the Exchange will occur in accordance with NYSE Arca Rule 7.34-E(a). 
The Exchange has appropriate rules to facilitate transactions in the 
Shares during all trading sessions. As provided in NYSE Arca Rule 7.6-E 
Commentary .03, 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.
    Further, NYSE Arca Rule 8.201-E sets forth certain restrictions on 
ETP Holders acting as registered Market Makers in the Shares to 
facilitate surveillance. Under NYSE Arca Rule 8.201-E(g), an ETP Holder 
acting as a registered Market Maker in the Shares is required to 
provide the Exchange with information relating to its trading in the 
underlying gold, any related futures or options on futures, or any 
other related derivatives. Commentary .04 of NYSE Arca Rule 11.3 
requires an ETP Holder acting as a registered Market Maker, and its 
affiliates, in the Shares to establish, maintain and enforce written 
policies and procedures reasonably designed to prevent the misuse of 
any material nonpublic information with respect to

[[Page 24362]]

such products, any components of the related products, any physical 
asset or commodity underlying the product, applicable currencies, 
underlying indexes, related futures or options on futures, and any 
related derivative instruments (including the Shares).
    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. To the extent the Exchange may be 
found to lack jurisdiction over a subsidiary or affiliate of an ETP 
Holder that does business only in commodities or futures contracts, the 
Exchange could obtain information regarding the activities of such 
subsidiary or affiliate through surveillance sharing agreements with 
regulatory organizations of which such subsidiary or affiliate is a 
member.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. Trading on the Exchange in the Shares may be 
halted because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Shares inadvisable. These may 
include: (1) The extent to which conditions in the underlying 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 Shares will be subject to trading halts caused by 
extraordinary market volatility pursuant to the Exchange's ``circuit 
breaker'' rule.\41\ The Exchange will halt trading in the Shares if the 
NAV of the Fund is not calculated or disseminated daily. The Exchange 
may halt trading during the day in which an interruption occurs to the 
dissemination of the IIV, as described above. If the interruption to 
the dissemination of the IIV persists past the trading day in which it 
occurs, the Exchange will halt trading no later than the beginning of 
the trading day following the interruption.
---------------------------------------------------------------------------

    \41\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

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 Inc. (``FINRA''), on behalf of the 
Exchange, which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\42\ The Exchange represents that 
these procedures are adequate to properly monitor Exchange trading of 
the Shares in all trading sessions and to deter and detect violations 
of Exchange rules and federal securities laws applicable to trading on 
the Exchange.
---------------------------------------------------------------------------

    \42\ 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 
communicate as needed regarding trading in the Shares 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 from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares from markets and other entities that 
are members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.\43\
---------------------------------------------------------------------------

    \43\ For a list of the current members of ISG, see 
www.isgportal.org.
---------------------------------------------------------------------------

    Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able 
to obtain information regarding trading in the Shares and the 
underlying gold, gold futures contracts, options on gold futures, or 
any other gold derivatives through ETP Holders acting as registered 
Market Makers, in connection with such ETP Holders' proprietary or 
customer trades through ETP Holders which they effect on any relevant 
market.
    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 portfolio or reference assets, (b) 
limitations on portfolio holdings or reference assets, or (c) the 
applicability of Exchange listing rules specified in this rule filing 
shall constitute continued listing requirements for listing the Shares 
of the Fund on the Exchange.
    The Trust has represented to the Exchange that it will advise the 
Exchange of any failure by the 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 the Fund is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under NYSE Arca Rule 5.5-E(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 procedures for 
purchases and redemptions of Shares in Creation Units (including noting 
that Shares are not individually redeemable); (2) NYSE Arca Rule 9.2-
E(a), which imposes a duty of due diligence on its ETP Holders to learn 
the essential facts relating to every customer prior to trading the 
Shares; (3) how information regarding the IIV is disseminated; (4) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Shares prior to or concurrently with the 
confirmation of a transaction; (5) the possibility that trading spreads 
and the premium or discount on the Shares 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 Fund. The Exchange notes that 
investors purchasing Shares directly from the Fund will receive a 
prospectus. ETP Holders purchasing Shares from the Fund for resale to 
investors will deliver a prospectus to such investors.
    In addition, the Information Bulletin will reference that the Fund 
is subject to various fees and expenses as will be 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.

[[Page 24363]]

    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 basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \44\ 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.
---------------------------------------------------------------------------

    \44\ 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 Rule 8.201-E. 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. The Exchange may obtain information via ISG from other 
exchanges that are members of ISG or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that there is a considerable amount of gold price and gold market 
information available on public websites 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 providers. Current spot prices 
also are generally available with bid/ask spreads from gold bullion 
dealers. In addition, the Fund's website will provide pricing 
information for gold spot prices and the Shares. Market prices for the 
Shares will be available from a variety of sources including brokerage 
firms, information websites and other information service providers. 
The NAV of the Fund will be published on each day that the NYSE Arca is 
open for regular trading and will be posted on the Fund's website. The 
IIV relating to the Shares will be widely disseminated by one or more 
major market data vendors at least every 15 seconds as required by NYSE 
Arca Rule 8.201-E(e)(2)(v). In addition, the LBMA Gold Price is 
publicly available at no charge at www.lbma.org.uk. The Fund's website 
will also provide its prospectus, as well as the two most recent 
reports to stockholders. In addition, information regarding market 
price and trading volume of the Shares will be continually available on 
a real-time basis throughout the day on brokers' computer screens and 
other electronic services. Information regarding the previous day's 
closing price and trading volume information for the Shares will be 
published daily in the financial section of newspapers.
    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 
an additional type of exchange-traded product 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 relating to trading in the Shares and may obtain information 
via ISG from other exchanges that are members of ISG or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement. In addition, as noted above, investors will have ready 
access to information regarding gold pricing.

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 Exchange believes the 
proposed rule change will enhance competition by accommodating Exchange 
trading of an additional exchange-traded product relating to physical 
gold.

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. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 1, is consistent with the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\45\ In particular, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with Section 6(b)(5) of the Act,\46\ which requires, among other 
things, that the Exchange's rules be 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 a national market system, and, in 
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \45\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \46\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change is reasonably 
designed to promote fair disclosure of information that may be 
necessary to price the Shares appropriately. The NAV of the Fund will 
be published on each day that the NYSE Arca is open for regular trading 
and will be posted on the Fund's website. The IIV relating to the 
Shares will be widely disseminated by one or more major market data 
vendors at least every 15 seconds as required by NYSE Arca Rule 8.201-
E(e)(2)(v). The IIV will be calculated based on the amount of gold and 
cash (if any) held by the Fund and a price of gold derived from updated 
bids and offers indicative of the spot price of gold, adjusted to 
reflect estimated price changes based on real time proxy pricing 
updates. Based on the information provided by the Exchange, the 
Commission believes that there is no separate market for post-2012 
gold. All gold held by the Fund will be London Good Delivery bars. The 
LBMA Gold Price is publicly available at no charge at www.lbma.org.uk.
    Additionally, the website for the Fund \47\ will contain the 
following information, on a per Share basis: (a) The Official Closing 
Price and a calculation of the premium or discount of such Official 
Closing Price against the Fund's NAV, as of the prior business day, 
expressed as a percentage of such NAV; (b) a table showing the number 
of days the Shares of the Fund traded at a premium or discount during 
the most recently completed calendar year and the most recently 
completed calendar quarters since that year; (c) a line graph showing 
the Shares' premiums or discounts for the most recently completed 
calendar year and the most recently completed calendar quarters since 
that year; (d) data in chart format displaying the frequency 
distribution of discounts and premiums of the Official Closing Price 
against the NAV, within appropriate ranges, for each of the four

[[Page 24364]]

previous calendar quarters; and (e) the daily holdings of the Fund, 
before 9:30 a.m. E.T. on each Exchange trading day. The website for the 
Fund will also provide the Fund's prospectus as well as the two most 
recent reports to shareholders.
---------------------------------------------------------------------------

    \47\ https://www.franklintempleton.com/investments/options/exchange-traded-funds/products/31714/SINGLCLASS/franklin-responsibly-sourced-gold-etf/FGLD.
---------------------------------------------------------------------------

    Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. The Fund's 
website will be updated once daily to provide the last sale price of 
the Shares as traded in the U.S. market at the end of regular trading. 
Information regarding the previous day's closing price and trading 
volume information for the Shares will be published daily in the 
financial section of newspapers. While the Consolidated Tape Plan does 
not provide for dissemination of the spot price of a commodity such as 
gold over the Consolidated Tape, the last sale price for the Shares 
will be disseminated over the Consolidated Tape. In addition, there is 
a considerable amount of information about gold and gold markets 
available on public websites and through professional and subscription 
services. Investors may obtain gold pricing information on a 24-hour 
basis based on the spot price for an ounce of gold from various 
financial information service providers.\48\
---------------------------------------------------------------------------

    \48\ As the Exchange states, Reuters and Bloomberg, for example, 
provide at no charge on their websites 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. Complete real-time data for gold 
futures and options prices traded on the COMEX are available by 
subscription from Reuters and Bloomberg. There are a variety of 
other public websites providing information on gold, ranging from 
those specializing in precious metals to sites maintained by major 
newspapers.
---------------------------------------------------------------------------

    The Commission also believes that the proposal is reasonably 
designed to prevent trading when a reasonable degree of transparency 
cannot be assured. The Exchange represents that it will halt trading in 
the Shares if the NAV of the Fund is not calculated or disseminated 
daily. If the IIV is not being disseminated as required, the Exchange 
may halt trading during the day in which the interruption to the 
dissemination of the IIV occurs. If the interruption to the 
dissemination of the IIV persists past the trading day in which it 
occurs, the Exchange will halt trading no later than the beginning of 
the trading day following the interruption. With respect to trading 
halts, the Exchange states that it may consider all relevant factors in 
exercising its discretion to halt or suspend trading in the Shares. 
Trading on the Exchange in the Shares may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. These may include: (1) The extent to 
which conditions in the underlying 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 Shares will be subject to 
trading halts caused by extraordinary market volatility pursuant to the 
Exchange's ``circuit breaker'' rule.
    Additionally, NYSE Arca Rule 8.201-E(g) sets forth certain 
restrictions on ETP Holders acting as registered Market Makers in the 
Shares to facilitate surveillance. Under NYSE Arca Rule 8.201-E(g), an 
ETP Holder acting as a registered Market Maker in the Shares is 
required to provide the Exchange with information relating to its 
trading in the underlying gold, related futures or options on futures, 
or any other related derivatives. Commentary .04 of NYSE Arca Rule 
11.3-E requires an ETP Holder acting as a registered Market Maker, and 
its affiliates, in the Shares to establish, maintain and enforce 
written policies and procedures reasonably designed to prevent the 
misuse of any material nonpublic information with respect to such 
products, any components of the related products, any physical asset or 
commodity underlying the product, applicable currencies, underlying 
indexes, related futures or options on futures, and any related 
derivative instruments (including the Shares).\49\
---------------------------------------------------------------------------

    \49\ The Exchange confirms that it has regulatory jurisdiction 
over its ETP Holders and their associated persons, which include any 
person or entity controlling an ETP Holder. 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.
---------------------------------------------------------------------------

    Moreover, the Commission concludes that the proposal is reasonably 
designed to mitigate the Shares' susceptibility to manipulation and 
misuse of nonpublic information in trading in the Shares, consistent 
with Section 6(b)(5) of the Act,\50\ because the Shares will be subject 
to the Exchange's and other rules below. Specifically:
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    (1) The Fund will be subject to the criteria in NYSE Arca Rule 
8.201-E(e) for initial and continued listing of the Shares.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions. Trading in the Shares on the 
Exchange will occur in accordance with NYSE Arca Rule 7.34-E(a).
    (3) The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Trust subject to the Exchange's existing rules 
governing the trading of equity securities.
    (4) Trading in the Shares will be subject to the existing trading 
surveillances administered by the Exchange, as well as cross-market 
surveillances administered by FINRA on behalf of the Exchange, which 
are designed to detect violations of Exchange rules and applicable 
federal securities laws.\51\ The Exchange represents that these 
procedures are adequate to properly monitor Exchange trading of the 
Shares in all trading sessions and to deter and detect violations of 
Exchange rules and federal securities laws applicable to trading on the 
Exchange. These surveillances 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.
---------------------------------------------------------------------------

    \51\ 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.
---------------------------------------------------------------------------

    (5) The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares 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 from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares from markets and other entities that 
are members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
    (6) Pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able to 
obtain information regarding trading in the Shares and the underlying 
gold, gold futures contracts, options on gold futures, or any other 
gold derivatives, through ETP Holders acting as registered Market 
Makers, in connection with such ETP Holders' proprietary or

[[Page 24365]]

customer trades through ETP Holders which they effect on any relevant 
market.
    (7) The Exchange has a general policy prohibiting the distribution 
of material, non-public information by its employees.
    (8) 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: (a) 
The procedures for purchases and redemptions of Shares in Creation 
Units (including noting that Shares are not individually redeemable); 
(b) NYSE Arca Rule 9.2-E(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; (c) how information regarding the IIV is 
disseminated; (d) the requirement that ETP Holders deliver a prospectus 
to investors purchasing newly issued Shares prior to or concurrently 
with the confirmation of a transaction; (e) the possibility that 
trading spreads and the resulting premium or discount on the Shares 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 (f) trading information. The Exchange states that 
investors purchasing Shares directly from the Fund will receive a 
prospectus. ETP Holders purchasing Shares from the Fund for resale to 
investors will deliver a prospectus to such investors. In addition, the 
Information Bulletin will reference that the Fund is subject to various 
fees and expenses as will be described in the Registration Statement, 
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.
    (9) A minimum of 100,000 Shares will be required to be outstanding 
at the start of trading.
    In addition, pursuant to Commentary .04 of NYSE Arca Rule 8.201-E, 
all statements and representations made in this filing regarding (a) 
the description of the portfolio or reference assets, (b) limitations 
on portfolio holdings or reference assets, or (c) the applicability of 
Exchange listing rules specified in this rule filing shall constitute 
continued listing requirements for listing the Shares of the Fund on 
the Exchange. The issuer must notify the Exchange of any failure by the 
Fund to comply with the continued listing requirements. Pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
monitor \52\ for compliance with the continued listing requirements. If 
the Trust is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under 
NYSE Arca Rule 5.5-E(m).
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    \52\ The Commission notes that certain proposals for the listing 
and trading of exchange-traded products include a representation 
that the exchange will ``surveil'' for compliance with the continued 
listing requirements. See, e.g., Securities Exchange Act Release No. 
77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR-BATS-
2016-04). In the context of this representation, it is the 
Commission's view that ``monitor'' and ``surveil'' both mean ongoing 
oversight of compliance with the continued listing requirements. 
Therefore, the Commission does not view ``monitor'' as a more or 
less stringent obligation than ``surveil'' with respect to the 
continued listing requirements.
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    Accordingly, for the foregoing reasons, the Commission finds that 
the proposed rule change, as modified by Amendment No. 1, is consistent 
with Section 6(b)(5) of the Act \53\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \53\ 15 U.S.C. 78f(b)(5).
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IV. Solicitation of Comments on the Proposed Rule Change, as Modified 
by Amendment No. 1

    Interested persons are invited to submit written views, data, and 
arguments concerning whether the proposed rule change, as modified by 
Amendment No. 1, 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 [email protected]. Please include 
File Number SR-NYSEArca-2021-73 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-2021-73. 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 (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 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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2021-73 and should be submitted 
on or before May 16, 2022.

V. Accelerated Approval of the Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 1, prior to the thirtieth day 
after the date of publication of notice of the filing of Amendment No. 
1 in the Federal Register. As stated above, among other things, 
Amendment No. 1 to the proposed rule change, among other things, went 
into greater detail with respect to the operation of the Trust and the 
Fund, including the assets held by the Fund, the LBMA Responsible 
Sourcing Programme, the Responsible Gold Guidance, creations and 
redemptions of the Fund's Shares, determination of net asset value of 
the Fund's Shares, and availability of information for the Fund's 
Shares. Amendment No. 1 also made additional and revised 
representations, including that all gold held by the Fund will be 
London Good Delivery bars and the information related to the Shares 
that will be provided on the Fund's website. Finally, Amendment No. 1 
provided clarifications and technical edits to the proposed rule 
change. These changes and additional information in Amendment No. 1 
assist the Commission in evaluating the Exchange's proposal and in 
determining that it is consistent with the Act. The

[[Page 24366]]

Commission believes that such changes and additional information do not 
raise unique or novel regulatory issues under the Act. Accordingly, the 
Commission finds good cause, pursuant to Section 19(b)(2) of the 
Act,\54\ to approve the proposed rule change, as modified by Amendment 
No. 1, on an accelerated basis.
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    \54\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\55\ that the proposed rule change (SR-NYSEArca-2021-73), as 
modified by Amendment No. 1, be, and it hereby is, approved on an 
accelerated basis.
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    \55\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\56\
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    \56\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08678 Filed 4-22-22; 8:45 am]
BILLING CODE 8011-01-P>