Document ID: SEC-2012-1003-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-06-27T04:00Z

[Federal Register Volume 77, Number 124 (Wednesday, June 27, 2012)]
[Notices]
[Pages 38351-38361]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15730]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67237; File No. SR-NYSEArca-2012-66]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of iShares Copper 
Trust Pursuant to NYSE Arca Equities Rule 8.201

June 22, 2012.
    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 June 19, 2012, 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, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of iShares Copper 
Trust (the ``Trust'') pursuant to NYSE Arca Equities Rule 8.201. The 
text of the proposed rule change is available on the Exchange's Web 
site at 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,

[[Page 38352]]

of the most significant parts of such statements.

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

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
Trust under NYSE Arca Equities Rule 8.201. Under NYSE Arca Equities 
Rule 8.201, the Exchange may propose to list and/or trade pursuant to 
unlisted trading privileges (``UTP'') ``Commodity-Based Trust Shares.'' 
\4\ The Commission has previously approved listing on the Exchange 
under NYSE Arca Equities Rule 8.201 of other issues of Commodity-Based 
Trust Shares. The Commission has approved listing on the Exchange of 
the streetTRACKS Gold Trust and iShares COMEX Gold Trust.\5\ Prior to 
their listing on the Exchange, the Commission approved listing of the 
streetTRACKS Gold Trust on the New York Stock Exchange (``NYSE'') and 
listing of iShares COMEX Gold Trust on the American Stock Exchange LLC 
(now known as ``NYSE MKT LLC'').\6\ In addition, the Commission has 
approved trading of the streetTRACKS Gold Trust and iShares Silver 
Trust on the Exchange pursuant to UTP.\7\ The Commission also has 
approved listing of the iShares Silver Trust on the Exchange \8\ and, 
previously, listing of the iShares Silver Trust on the American Stock 
Exchange LLC.\9\ In addition, the Commission has approved listing on 
the Exchange of the following issues of Commodity-Based Trust Shares: 
ETFS Silver Trust, the ETFS Gold Trust, the ETFS Platinum Trust, the 
ETFS Palladium Trust, the ETFS Precious Metals Basket Trust, and the 
ETFS White Metals Basket Trust.\10\
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    \4\ 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.
    \5\ See Securities Exchange Act Release No. 56224 (August 8, 
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76) 
(approving listing and trading 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 and trading on the Exchange of iShares COMEX Gold 
Trust).
    \6\ See Securities Exchange Act Release No. 50603 (October 28, 
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order 
approving listing and trading of streetTRACKS Gold Trust on NYSE); 
Securities Exchange Act Release No. 51058 (January 19, 2005), 70 FR 
3749 (January 26, 2005) (SR-Amex-2004-38) (order approving listing 
and trading of iShares COMEX Gold Trust on the American Stock 
Exchange LLC).
    \7\ 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).
    \8\ See Securities Exchange Act Release Nos. 58956 (November 14, 
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124) 
(approving listing and trading on the Exchange of the iShares Silver 
Trust)).
    \9\ See Securities Exchange Act Release No. 53521 (March 20, 
2006), 71 FR 14967 (March 24, 2006) (SR-Amex-2005-72) (approving 
listing and trading on the American Stock Exchange LLC of the 
iShares Silver Trust).
    \10\ See Securities Exchange Act Release Nos. 59781 (April 17, 
2009), 74 FR 18771 (April 24, 2009) (SR-NYSEArrca[sic]-2009-28) 
(order approving listing and trading on the Exchange of ETFS Silver 
Trust); 59895 (May 8, 2009), 74 FR 22993 (May 15, 2009) (SR-
NYSEArca-2009-40) (order approving listing and trading on the 
Exchange of ETFS Gold Trust); 61219 (December 22, 2009), 74 FR 68886 
(December 29, 2009) (SR-NYSEArca-2009-95) (order approving listing 
and trading on the Exchange of ETFS Platinum Trust); 61220 (December 
22, 2009), 74 FR 68895 (December 29, 2009) (order approving listing 
and trading on the Exchange of ETFS Palladium Trust); 62692 (August 
11, 2010), 75 FR 50789 (August 17, 2010) (order approving listing 
and trading on the Exchange of ETFS Precious Metals Basket Trust); 
62875 (September 9, 2010), 75 FR 56156 (September 15, 2010) (order 
approving listing and trading on the Exchange of ETFS White Metals 
Basket Trust).
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    The Trust will issue Shares which represent units of fractional 
undivided beneficial interest in and ownership of the Trust. The 
investment objective of the Trust is for the Shares to reflect the 
value of the assets owned by the Trust at that time less the Trust's 
expenses and liabilities.
    BlackRock Asset Management International Inc. is the sponsor of the 
Trust (``Sponsor''),\11\ The Bank of New York Mellon is the trustee of 
the Trust (``Trustee''),\12\ and Metro International Trade Services LLC 
is the custodian of the Trust (``Metro'' or the ``Custodian'').\13\
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    \11\ The Sponsor has agreed to assume the following 
administrative and marketing expenses incurred by the Trust: The 
Trustee's fee, the Custodian's fee, NYSE's listing fees, Commission 
registration fees, printing and mailing costs, audit fees and 
expenses and up to $100,000 per annum in legal fees and expenses. 
The Sponsor also has paid or will pay the costs of the Trust's 
organization and the initial sale of the Shares, including the 
applicable Commission registration fees.
    \12\ The Trustee is responsible for the day-to-day 
administration of the Trust. The responsibilities of the Trustee 
include (1) Processing orders for the creation and redemption of 
Baskets (as defined below); (2) coordinating with the Custodian the 
receipt or transfer of copper by the Trust in connection with each 
issuance and redemption of Baskets; (3) calculating the net asset 
value (``NAV'') and the adjusted NAV of the Trust on each business 
day; and (4) selling the Trust's copper as needed to cover the 
Trust's expenses. In addition, the Trustee will prepare the 
financial statements of the Trust.
    \13\ The Custodian will be responsible for safekeeping the 
copper deposited into the Trust in connection with the creation of 
Baskets.
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    The Exchange represents that the Shares satisfy the requirements of 
NYSE Arca Equities Rule 8.201 and thereby qualify for listing on the 
Exchange.\14\
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    \14\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Securities Exchange of 1934 (``Act'') (15 U.S.C. 78a), 
the Trust relies on the exemption contained in Rule 10A-3(c)(7).
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    According to the Registration Statement, the objective of the Trust 
is for the value of the Shares to reflect, at any given time, the value 
of copper owned by the Trust at that time, less the Trust's expenses 
and liabilities. The Trust will not be actively managed. It will not 
engage in any activities designed to obtain a profit from, or to 
ameliorate losses caused by, changes in the price of copper. The Trust 
will receive copper deposited with it in exchange for the creation of 
blocks of 2,500 Shares (``Baskets''), will sell copper as necessary to 
cover the Trust expenses and other liabilities and will transfer copper 
to Authorized Participants (as described below) in exchange for Baskets 
surrendered to it for redemption.
    Although the return, if any, of an investment in the Shares will be 
subject to the additional expense of the Sponsor's fee and other costs 
and expenses (as described in the Registration Statement) not assumed 
by the Sponsor which would not be incurred in the case of a direct 
investment in copper, the Shares are intended to constitute a simple 
and cost-effective means of making an investment similar to an 
investment in copper. While the Shares will not be the exact equivalent 
of an investment in copper, they will provide investors with an 
alternative that allows a level of participation in the copper market 
through the securities market.
    According to the Registration Statement, the Trust will not hold or 
trade in commodity interests regulated by the Commodity Exchange Act 
(``CEA''),\15\ as administered by the Commodity Futures Trading 
Commission (``CFTC''). Furthermore, the Trust is not a commodity pool 
for purposes of the CEA, and neither the Sponsor nor the Trustee is 
subject to regulation by the CFTC as a commodity pool operator, or a 
commodity trading advisor.
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    \15\ 7 U.S.C. 1 et seq.
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Copper Market Overview \16\
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    \16\ See Pre-Effective Amendment No. 4 to Form S-1 for iShares 
Copper Trust, filed with the Commission on September 2, 2011 (No. 
333-170131) (``Registration Statement''). The descriptions of the 
Trust, the Shares and the copper market contained herein are based, 
in part, on the Registration Statement.
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    Copper is a major base metal. The Registration Statement states 
that, according to the U.S. Geological Survey,

[[Page 38353]]

a scientific agency of the United States government, the copper market 
is the third largest metals market in terms of physical volume. Much of 
the copper traded in the world is traded across organized exchanges, 
with the major exchanges located in London, Shanghai, and New York. 
There also is an active dealer market that trades physical and forward 
copper off of the exchanges, as well as non-exchange traded options. 
The price of copper generally reflects copper supply and demand, 
underlying production costs, cumulative levels of copper inventories, 
and investor sentiment toward copper market prospects and broader 
economic trends, as well as actual economic conditions such as 
industrial production, real manufacturing output, inflation, and 
exchange rates.
    Copper mine supplies are concentrated on a regional basis, while 
demand is more geographically dispersed, as is typical in extractive 
industries. The copper supply chain--from raw copper concentrated ore 
from mines to upgraded copper products--is highly dependent on global 
trade. According to CPM Group, a commodities market research firm, the 
majority of copper mine production is in the Americas, accounting for 
roughly 55% of global output in 2011, while roughly 46% production is 
performed in Asia.
BILLING CODE 8011-01-P

[[Page 38354]]

[GRAPHIC] [TIFF OMITTED] TN27JN12.000

Copper Market Participants
    The copper market includes a diversified group of market 
participants. Both the physical and financial copper markets consist of 
primary and secondary producers, fabricators, manufacturers and end-use 
consumers, physical traders and merchants, the banking sector, and the 
investment community.
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    \17\ Table Notes (Source: CPM Group May 2011). See also 
Registration Statement.
    1. Includes consumption of refined copper scrap, not the direct 
consumption of copper scrap.
    2. Adjusted for estimated destocking and restocking in 
government strategic stockpiles. May not include all changes to 
government stockpiles.
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    Physical traders and merchants generally facilitate the domestic 
and international trade of copper supplies along the value chain and 
support the distribution of supplies to consumers. Banking institutions 
may provide market participants an assortment of services to assist 
copper market transactions. On the producer level, the banking sector 
may facilitate project financing, off-take agreements (agreements to 
purchase/sell all or a portion of a producer's output), over-the-
counter (``OTC'') transactions, hedging services, and price risk 
management. In addition to these and other services, consumers may seek 
guidance from the banking sector on commodity supply management.
    According to the Registration Statement, starting in the late 
1970s, changes in bank regulation in many industrialized nations 
allowed banks to assume many of the functions traditionally fulfilled 
by traders and commodities merchants. Non-banking merchants continue to 
operate side by side with banks that have either acquired or developed 
internal copper trading capacity.
    The investment community is composed of non-commercial market 
participants engaged in investment in copper or speculation about 
copper prices. This may range from large-scale institutional investors 
to hedge funds to small-scale retail investors. In addition, the 
investment community includes sovereign wealth funds as well as other 
governmental bodies that stockpile metal for strategic purposes.
Operation of the Copper Market
    The copper market is comprised of sales directly by producers and 
refiners to users, and by physical sales transacted by merchants, 
dealers, and trading banks. There are spot sales in the physical 
market, as well as forward contracts, options contracts, and other 
derivative transactions. A major portion of annual copper production 
and use is covered through physical transactions, many times through 
renewable annual supply contracts. Additional metal trades through 
commodities exchanges, and there is an interaction between the OTC 
market and exchange operations.

[[Page 38355]]

The Price of Copper
    Copper prices have historically been viewed by some economists as a 
key indicator of global industrial activity, given copper's prominence 
in major economic sectors such as construction, transportation, and 
electrical and electronic products. While copper prices are expected to 
reflect the fundamentals directly related to its market, prices may 
also reflect current and expected economic conditions less closely 
related to the copper market such as exchange rates, inflation, and 
global economic cycles. The price of copper is volatile and 
fluctuations are expected to have an impact on the value of the Shares. 
Historical trends in copper prices are not reliable indicators of 
future movements.
    Copper has been traded on the London Metal Exchange (``LME'') since 
its inception in 1877. New contracts have been added over the last 
century as the LME has responded to changes in supply and demand. The 
current specifications for grade A copper were introduced in April 
1986.
Over-the-Counter Market
    Physical traders, merchants, and banks participate in OTC spot, 
forward, option, and other derivative transactions for copper. OTC 
contracts are principal-to-principal agreements traded and negotiated 
privately between two principal parties, without going through an 
exchange or other intermediary. As such, both participants in OTC deals 
are subject to counter-party risk, including credit and contractual 
obligations to perform. The OTC derivative market remains largely 
unregulated with respect to public disclosure of information by the 
parties, thus providing confidentiality among principals.
    The terms of OTC contracts are not standardized and market 
participants have the flexibility to negotiate all terms of the 
transaction, including delivery specifications and settlement terms. 
The OTC market facilitates long-term transactions, such as life-of-mine 
off-take agreements \18\ which otherwise could be constrained by 
contract terms in a futures exchange.
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    \18\ A life-of-mine off-take agreement is an agreement between a 
producer and a buyer to purchase/sell portions of the producer's 
future production over the life of the operation. Off-take 
agreements are commonly negotiated prior to the construction of a 
project as they can assist in obtaining financing by showing future 
revenue streams.
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Futures Exchanges
    According to the Registration Statement, the LME is the longest 
standing exchange trading copper futures, and continues to be the 
platform with the greatest number of open copper futures and options 
contracts (open interest). The COMEX (a division of CME Group, Inc.), 
Shanghai Futures Exchange (``SHFE''), and the recently launched Multi 
Commodity Exchange of India (``MCX'') also trade copper futures. At the 
end of March 2012, the LME held roughly 64% of copper open interest 
across the four futures exchanges with copper contracts (adjusted for 
lot size).\19\
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    \19\ As of March 29, 2012, LME open interest for copper was 6.9 
million tonnes. Copper futures volume on the LME for 2011 was 862.6 
million tonnes. As of March, 29, 2012, COMEX open interest for 
copper was 1.7 million tonnes. Copper futures volume on the COMEX 
for 2011 was 141.7 million tonnes. As of March 29, 2012, SHFE open 
interest for copper was 2.2 million tonnes. Copper futures volume on 
the SHFE for 2011 was 483.4 million tonnes. As of March 29, 2012, 
MCX open interest for copper was 36,510 tonnes. Copper futures 
volume on MCX for 2011 was 33.0 million tonnes.
    According to the Registration Statement, the LME, the SHFE and 
the COMEX release regular, daily or weekly, publicly available 
reports on the weight of copper held in the area of the warehouse 
registered with the respective exchange. Each exchange also provides 
data on the amount of metal with warrants in the area of the 
warehouse registered with the exchange. The COMEX reports the 
quantity of warranted and non-warranted metal (metal without a 
warrant held in the area of the warehouse approved by the COMEX). 
The LME reports the quantity of metal ``on warrant'' and ``off 
warrant'' (metal where the warrant has been surrendered and is 
waiting to be delivered from the area of the warehouse approved by 
the LME). The SHFE reports the quantity of ``on warrant'' metal and 
deliverable metal. Deliverable metal, which includes ``on warrant'' 
metal, is the total metal held in the area of the warehouse approved 
by the SHFE. The warehouses are not owned or operated by the 
exchanges, but are registered with the exchanges as being suitable 
to hold exchange-registered metal. Metal stored in the area of the 
warehouse approved by the exchange but that is not registered with 
an exchange is not reported in exchange inventory data. Industry 
groups and trade associations publish proprietary estimates of 
copper inventories held by producers, consumers, and merchants using 
data collected from their constituent members with a one or more 
month lag. Currently, there are no comprehensive statistics or data 
on physical copper stockpiles held by all commercial and non-
commercial market participants.
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The London Metal Exchange
    In accordance with LME Trading Regulations, the LME official cash 
seller price commonly serves as the settlement prices for delivery of 
warranted Grade A Copper (copper held in a lot at LME approved 
warehouses that meets contract conditions specified by the LME for the 
warehouse to issue a copper warrant). Warrants, which are documents 
representing possession, are used as the means of delivering metal or 
plastics under LME contracts. The ownership of copper represented by 
warrants is transferred through LMEsword, an electronic transfer system 
for the purchase and sale of exchange issued warrants. Each warrant is 
invoiced at the contract weight, which is permitted to vary +/-2% from 
the specified 25 tonne lot of copper. Only registered LME copper brands 
are approved for delivery. Producers must follow exchange guidelines 
and meet specification requirements to maintain their brand 
registration. Currently, more than 75 brands of copper are listed with 
the LME. Failure to comply with LME requirements may result in the 
delisting of a brand. Purity levels specified for deliverable LME 
copper must be greater than 99.99% copper, which meets or exceeds 
purity levels specified by other copper futures exchanges. The brand is 
the main determinant for distinguishing whether or not copper 
deliverable on the LME is deliverable for other exchange contracts. 
Generally, the difference in minimum purities required by the LME, 
SHFE, COMEX, and MCX is minimal.
    The LME falls under the jurisdiction of the United Kingdom 
Financial Services Authority (``FSA''). The FSA is responsible for 
ensuring the financial stability of the exchange members businesses, 
whereas the LME is largely responsible for the oversight of day-to-day 
exchange activity, including conducting arbitration proceedings under 
the LME arbitration regulations.
    Through the establishment of the LMEsword system, the LME 
facilitates the orderly transfer of LME warrants and the reporting of 
inventories. In April 2010, the previous SWORD system operated for the 
LME by LCH Clearnet was replaced by the current LMEsword system in 
order to bring the management system under direct exchange control and 
regulation.
    According to the Registration Statement, the LME is one of the 
world's most important non-ferrous metals markets; it combines around-
the-clock inter-office telephone trading, electronic trading and open 
outcry trading that includes, for each metal traded on the exchange, 
four five-minute sessions taking place around the ring of the exchange 
(each such session, a ``ring''). In the case of copper, the first ring 
takes place between 12:00 and 12:05 p.m. (London time), and the second 
one between 12:30 and 12:35 p.m. (London time). At the close of the 
second ring, the LME Quotations Committee \20\

[[Page 38356]]

determines the last bid and offered prices for contracts that trade on 
the LME. If there is consensus among the members of the LME Quotations 
Committee as to the last prices, the prices so determined are displayed 
as provisional prices within five minutes from the end of the ring. If 
no objections are made to the provisional prices during the next five 
minutes, such prices become ``official'' at 12:45 p.m. (London time). 
If no consensus as to prices is reached within the five-minute period 
following the end of the second ring, no provisional price is announced 
and the LME Quotations Committee convenes at 1:15 p.m. (London time) to 
determine the relevant prices, which are then announced at 1:20 p.m. 
(London time).
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    \20\ The LME Quotations Committee is made up of five staff from 
the Executive's Market Operations department and is defined in the 
LME Rulebook as ``a committee authorized by the Directors to be 
responsible for determining Closing Prices and Settlement Prices''. 
Under rules currently in effect, the LME Quotations Committee 
determines the official cash seller and settlement price to be the 
last offer in the second ring of the morning session on the LME, if 
such prices were available. Otherwise, the LME Quotations Committee 
has the discretion to decide these prices. The cash price references 
the warehouse business day, which reflects copper that will be 
available for delivery two business days forward from the trading 
day.
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Shanghai Futures Exchange
    The SHFE is a self-regulatory body under the supervision and 
governance of the China Securities Regulatory Commission (``CSRC''). 
The SHFE is the day-to-day overseer of exchange activity, and is 
expected to carry out regulation as per the laws established by the 
CSRC. The CSRC meanwhile serves as the final authority on exchange 
regulation and policy development and ultimately determines the 
effectiveness of the SHFE as a regulatory entity. It has the right to 
overturn or revoke the SHFE's regulatory privileges at any time.
COMEX
    Commodity futures and options traded on the COMEX are subject to 
regulation by its parent, CME Group's Market Regulation Oversight 
Committee (``MROCC''), under CFTC rules.\21\ The MROCC is a self-
regulatory body created in 2004 to actively ensure competitive and 
financially sound trading activity on the CME and its subsidiary 
exchanges.
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    \21\ Copper is traded over two CME platforms: CME Globex and 
Open Outcry. CME Globex, which offers electronic trading, operates 
Sunday through Friday, 6:00 p.m., Eastern Time (``E.T.'') through 
5:15 p.m. E.T. with a 45-minute break each day beginning at 5:15 
p.m. E.T. The Open Outcry operates Monday through Friday 8:10 a.m. 
E.T. through 1:00 p.m. E.T.
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Multi Commodity Exchange of India
    Regulation of the MCX falls under the responsibility of the 
Governing Board of the MCX and the Forward Markets Commission of India 
pursuant to the Forward Contracts (Regulation) Act of 1952 and 
amendments made thereafter.
Trust Expenses
    According to the Registration Statement, the Trust's main recurring 
expenses are expected to be the Sponsor's fee and the Custodian's fee. 
The Sponsor's fee will be accrued daily and paid monthly in arrears at 
an annualized rate equal to a specified percentage of the adjusted NAV 
of the Trust. The Trustee will, when directed by the Sponsor, and, in 
the absence of such direction, may, in its discretion, sell copper in 
such quantity and at such times, as may be necessary to permit payment 
of the Sponsor's fee, the Custodian's fee and of Trust expenses or 
liabilities not assumed by the Sponsor.
    Cash held by the Trustee pending payment of the Trust's expenses 
will not bear any interest. Each sale of copper by the Trust will be a 
taxable event to Shareholders.
Deposit of Copper; Issuance of Baskets
    According to the Registration Statement, at the time of creation of 
the Trust, the Trust will issue to Goldman, Sachs & Co., as the 
``Initial Purchaser'', a specified number of Baskets of 2,500 Shares 
each (the ``Initial Shares''), in exchange for an in-kind per-Basket 
deposit with the Custodian of 25 tonnes of copper (equivalent to a per-
Share consideration of 10 kilograms of copper).\22\ The Trust then 
expects to create and redeem Shares on a continuous basis but only in 
blocks of five or more Baskets of 2,500 Shares each. Upon the deposit 
of the corresponding amount of copper with the Custodian and the 
payment of the Trustee's applicable fee and of any expenses, taxes or 
charges (such as sales, stamp taxes or stock transfer taxes or fees) 
and subject to the payment of any applicable fees to the Custodian, the 
Trustee will deliver the appropriate number of Baskets to the 
Depository Trust Company (``DTC'') account of the depositing Authorized 
Participant.\23\ Only Authorized Participants can deposit copper and 
receive Baskets in exchange. The Sponsor and the Trustee will maintain 
a current list of Authorized Participants.
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    \22\ According to the Registration Statement, the Initial 
Purchaser will be an underwriter with respect to the Initial Shares. 
The Initial Purchaser intends to make a public offering of the 
Initial Shares at a price per Share that will vary depending, among 
other factors, on the NAV and the trading price of the Shares on 
NYSE Arca at the time of the offer. Shares offered by the Initial 
Purchaser at different times may have different offering prices. The 
Initial Purchaser will not receive from the Trust, the Sponsor or 
any of their affiliates any fee or other compensation in connection 
with their sale of the Initial Shares to the public; however, the 
Sponsor may reimburse to the Initial Purchaser certain fees and 
expenses incurred in connection with the offering of the Initial 
Shares.
    \23\ The Custodian may keep the Trust's copper at locations 
within or outside the United States that are agreed from time to 
time by the Custodian and the Trustee. As of the date of the 
Registration Statement, the Custodian is authorized to hold copper 
owned by the Trust at warehouses located in East Chicago (Indiana), 
Hull and Liverpool (England), Mobile (Alabama), New Orleans 
(Louisiana), Saint Louis (Missouri), Rotterdam (the Netherlands), 
and Antwerp (Belgium). Unless otherwise instructed by the Trustee, 
no copper held by the Custodian on behalf of the Trust may be on 
Warrant. Unless otherwise agreed in writing by the Trustee, each of 
the warehouses where the Trust's copper will be stored must be LME-
approved at the time copper is delivered to the Custodian for 
storage in such warehouse.
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    Before making a deposit, the Authorized Participant must deliver to 
the Trustee a written purchase order indicating the number of Baskets 
it intends to acquire. In exchange for each Basket purchased, an 
Authorized Participant must deposit the Basket Copper Amount \24\ 
announced by the Trustee on the first business day on which the LME Bid 
Price \25\ is announced following the date of receipt of the purchase 
order. However, orders received by the Trustee after 3:59 p.m. E.T. on 
a business day will be treated as received on the next following 
business day.
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    \24\ The ``Basket Copper Amount'' is the amount of copper 
(measured in tonnes and fractions thereof), determined on each 
business day by the Trustee, which Authorized Participants must 
transfer to the Trust in exchange for a Basket, or are entitled to 
receive in exchange for each Basket surrendered for redemption.
    \25\ The ``LME Bid Price'' on any day, is the official price 
(cash, buyer) for copper announced by the LME on such day. Such 
price is disseminated at 1:20 p.m. London Time and represents the 
price that a buyer is willing to pay to receive a warrant in any 
warehouse within the LME system.
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    In connection with the creation of Baskets, only copper that meets 
the requirements to be delivered in settlement of copper futures 
contracts traded on the LME and are eligible to be placed on Warrant at 
the time of delivery to the Trust, may be delivered to the Trust in 
exchange for Shares. The Authorized Participant must specify and choose 
where the Basket Copper Amount will be deposited and must deliver such 
Basket Copper Amount to any of the Trust's accounts at the Custodian.
    Because copper usually trades in lots of 25 tonnes, with plus or 
minus 2% deviations being accepted in the industry, an Authorized 
Participant may not find readily available in the market the exact 
Basket Copper Amount needed in connection with the issuance of a new 
Basket. To facilitate the issuance of Baskets, the Sponsor has arranged 
for J. Aron & Company (``J. Aron''), an

[[Page 38357]]

international commodities dealer and subsidiary of The Goldman Sachs 
Group, Inc. (which owns the Custodian), to stand ready to (i) make 
available for sale for cash to an eligible Authorized Participant any 
fractional amounts of copper needed to meet the obligation to transfer 
to the Trust the exact Basket Copper Amount in exchange for each Basket 
purchased from the Trust; and (ii) purchase from an eligible Authorized 
Participant for cash any amount by which the lots of copper such 
Authorized Participant intends to use in connection with an issuance of 
a Basket exceed the corresponding Basket Copper Amount.\26\
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    \26\ The Goldman Sachs Group, Inc. and its affiliates (``GS 
Entities'') have represented to the Sponsor that they maintain 
policies that are reasonably designed to prevent misuse or improper 
dissemination of nonpublic information, including a ``need-to-know'' 
standard that states that confidential information may be shared 
only with persons who have a need to know the information to perform 
their duties and to carry out the purpose(s) for which the 
information was provided. In addition, GS Entities have represented 
to the Sponsor that they maintain specific policies and procedures 
that are reasonably designed to protect confidential and 
commercially sensitive information associated with Metro's business 
from being shared with GS Entity individuals engaged in commodity 
sales and trading activities.
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    The Basket Copper Amount necessary for the creation of a Basket 
changes from day to day. The initial Basket Copper Amount, in effect on 
the day of creation of the Trust, will be 25 tonnes of copper. On each 
day that NYSE Arca is open for regular trading, the Trustee will adjust 
the quantity of copper constituting the Basket Copper Amount as 
appropriate to reflect sales of copper, any loss of copper that may 
occur, and accrued expenses. The computation will be made by the 
Trustee as promptly as practicable after 4:00 p.m. E.T. The Basket 
Copper Amount so determined will be communicated via facsimile or 
electronic mail message to all Authorized Participants and will be 
available on the Sponsor's Web site for the Shares.
    No Shares will be issued unless and until the Custodian has 
informed the Trustee that it has received on behalf of the Trust the 
corresponding amount of copper. All taxes and fees incurred in 
connection with the delivery of copper to the Custodian in exchange for 
Baskets (including any applicable taxes and any fees incurred in 
connection with placing off Warrant) \27\ will be the sole 
responsibility of the Authorized Participant making such delivery.
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    \27\ Warrants that are registered with the LMEsword are 
surrendered to the warehouse holding the copper.
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Redemption of Baskets; Withdrawal of Copper
    Authorized Participants, acting on authority of a registered holder 
of Shares, may surrender five or more Baskets for redemption, each in 
exchange for the Basket Copper Amount announced by the Trustee on the 
first business day on which the LME Bid Price is announced following 
the date of receipt of the redemption order. However, orders received 
by the Trustee after 3:59 p.m. E.T. on a business day will be treated 
as received on the next following business day.
    Upon the surrender of the Shares comprising the number of Baskets 
to be redeemed and the payment by the Authorized Participant of the 
Trustee's applicable fee and of any expenses, taxes, or charges (such 
as fees owed to the Custodian in connection with the issuance of 
Warrants to be delivered to the redeeming Authorized Participant, and 
any sales, stamp or stock transfer taxes, or fees), the Custodian will 
transfer from the Trust's account to such Authorized Participant's 
account the aggregate Basket Copper Amount corresponding to the Baskets 
surrendered for redemption and will send written confirmation thereof 
to the Trustee which will then cancel all Shares so redeemed. The 
specific copper to be transferred to the redeeming Authorized 
Participant's account will be selected by the Custodian pursuant to an 
algorithm that gives priority to the delivery of copper that no longer 
meets LME requirements (e.g., is of a brand, or held at a location, 
that is no longer LME approved) or is on Warrant (in the rare instances 
where some of the Trust's copper may be on Warrant). While the Trust 
generally will not hold Warrants, but rather warrantable metal that may 
be placed on Warrant (``off Warrant''), the Sponsor expects that 
creation and redemption transactions with the Trust will be facilitated 
via Warrants. Copper represented by Warrants that are delivered by an 
Authorized Participant upon creation will, through the Trust's 
settlement process, be taken off Warrant prior to settlement with the 
Trust. Similarly, the placement of the metal on Warrant is completed 
following the settlement of the redemption. The costs associated with 
taking warrantable metal off Warrant will be borne by the Authorized 
Participant.\28\ Within each category, copper is selected for transfer 
to redeeming Authorized Participants on a last-in-first-out basis.\29\ 
The location of such transfer will be part of the Warrant details.
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    \28\ The cost for placing warrantable metal on Warrant is 
nominal. The Authorized Participant is expected to pay $10 per tonne 
to put the metal on Warrant. In addition, the LME Bid Price as of 
April 27th, 2012 published on the LME Web site is $8443.00 per tonne 
(http://www.lme.com/copper/asp).
    \29\ The Sponsor represents that only copper that satisfies all 
of the requirements to be put on Warrant in compliance with the LME 
Rulebook, as in effect at the time such copper is delivered to 
Custodian, can be used to facilitate creations. Authorized 
Participants desiring to create with Warranted copper will be 
required to take such Warrants off Warrant prior to delivery to the 
Custodian. In connection with redemptions, if the copper transferred 
to the redeeming Authorized Participant's account meets the 
requirements of the LME to be placed on Warrant, the Custodian will 
facilitate the issuance of one more Warrants in compliance with the 
LME Rulebook, subject to the Trust's procedures.
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    If the copper transferred to the redeeming Authorized Participant's 
account meets the requirements of the LME to be placed on Warrant and 
the Custodian is able to issue Warrants at such time, promptly after a 
redemption the Custodian will issue to the redeeming Authorized 
Participant one or more Warrants representing as much of the copper 
transferred to the Authorized Participant's account in connection with 
such redemption as may be placed on Warrant in compliance with the LME 
Rulebook, and without the Custodian having to break apart any specific 
parcel of copper so transferred pursuant to the algorithm referred to 
above. Because the LME Rulebook only allows Warrants for 25 tonnes 
(plus or minus 2% deviations), it is possible that the gross amount of 
copper transferred to an Authorized Participant's account in connection 
with a redemption may not be placed on Warrant in full. Any residual 
amount remaining in a redeeming eligible Authorized Participant's 
account after the Warrants have been issued, not in excess of 25.5 
tonnes (or, together with all other purchases effected by J. Aron from 
eligible Authorized Participants during a specified period, as 
disclosed in the Registration Statement, preceding the redemption, a 
specified number of Baskets) will be purchased for cash from such 
eligible Authorized Participant by J. Aron, pursuant to procedures 
described in the Registration Statement at the LME Bid Price that would 
apply to an LME-traded cash futures contract settling on the same date 
(or, if there is no such LME-traded contract, at the price agreed to 
between the redeeming eligible Authorized Participant and J. Aron). All 
fees due to J. Aron as consideration for its agreement to provide this 
service will be paid by the Sponsor.
    If it is not possible for the Custodian to issue Warrants in 
connection with a redemption of Shares as described

[[Page 38358]]

above (for example, because the copper to be delivered does not meet 
the LME specifications to be placed on Warrant, or because there is a 
failure in the electronic system used by the LME to process the 
issuance and transfer of Warrants), the Custodian will deliver to the 
redeeming Authorized Participant one or more negotiable warehouse 
receipts representing the copper transferred to the Authorized 
Participant's account in connection with such redemption. In the normal 
course of the Trust's operations, it is anticipated that Authorized 
Participants will receive Warrants (not warehouse receipts) following a 
redemption transaction. In the event that metal is no longer considered 
warrantable because, for example, the LME announces that a specific 
brand is no longer approved to be placed on Warrant the Trust will have 
operational procedures in place to put such metal on Warrant prior to 
such an event when possible.\30\ In the event that the metal is unable 
to be placed on Warrant, the Authorized Participant will receive a 
warehouse receipt instead of a Warrant following a redemption 
transaction.
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    \30\ In the example noted, the LME generally provides a grace 
period following an announcement that a brand is no longer eligible 
to be placed on Warrant.
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    Redemptions may be suspended only (i) during any period in which 
regular trading on NYSE Arca is suspended or restricted or the Exchange 
is closed (other than scheduled holiday or weekend closings), or (ii) 
if an emergency exists that makes it reasonably impracticable for the 
Custodian to deliver Warrants and warehouse receipts.
Termination Events
    The Trustee will terminate the Trust Agreement if (1) the Trustee 
is notified that the Shares are delisted from NYSE Arca and are not 
approved for listing on another national securities exchange within 
five business days of their delisting; (2) holders of at least 75% of 
the outstanding Shares notify the Trustee that they elect to terminate 
the Trust; (3) 60 days have elapsed since the Trustee notified the 
Sponsor of the Trustee's election to resign and a successor Trustee has 
not been appointed and accepted its appointment; (4) the Commission 
determines that the Trust is an investment company under the Investment 
Company Act of 1940, as amended,\31\ and the Trustee has actual 
knowledge of that determination; (5) the aggregate market 
capitalization of the Trust, based on the closing price for the Shares, 
was less than a specified dollar amount on each of five consecutive 
trading days and the Trustee receives, within six months from the last 
of those trading days, notice that the Sponsor has decided to terminate 
the Trust; (6) the CFTC determines that the Trust is a commodity pool 
under the Commodity Exchange Act and the Trustee has actual knowledge 
of that determination; (7) the Trust fails to qualify for treatment, or 
ceases to be treated, as a grantor trust for United States federal 
income tax purposes and the Trustee receives notice that the Sponsor 
has determined that the termination of the Trust is advisable; or (8) 
if the law governing the Trust limits its maximum duration, upon the 
expiration of 21 years after the death of the last survivor of all the 
descendants of Elizabeth II, Queen of England, living on the date of 
the Trust Agreement.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 80a-1.
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    Additional information regarding the Shares and the operation of 
the Trust, including termination events, risks, and creation and 
redemption procedures, are described in the Registration Statement.
Valuation of Copper; Computation of Net Asset Value
    According to the Registration Statement, on each business day, as 
soon as practicable after 4:00 p.m. E.T., the Trustee will value the 
copper held by the Trust and determine the NAV of the Trust. For 
purposes of making these calculations, a business day means any day 
other than a day when NYSE Arca is closed for regular trading.
    The Trustee will value the Trust's copper at that day's announced 
LME Bid Price. If there is no announced LME Bid Price on a business 
day, the Trustee will be authorized to use the most recently announced 
LME Bid Price unless the Sponsor determines that such price is 
inappropriate as a basis for valuation.\32\ In addition, if at any time 
the Sponsor believes the value of the Trust's Copper is not accurately 
represented by the LME Bid Price of a Warrant, the Sponsor will 
consider an alternative basis for valuation of the Trust's Copper. In 
such cases, the Sponsor will select and disclose to the shareholders an 
alternative basis for evaluation which could be, for example, the price 
announced on that date by any other internationally recognized exchange 
where copper contracts are traded (such as the COMEX).\33\ 
Alternatively, the Sponsor may arrange for the replacement of 
unwarrantable Copper for warrantable Copper at that time, but is under 
no obligation to do so.
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    \32\ The Exchange, pursuant to NYSE Arca Equities Rule 
8.201(e)(2)(iv), has discretion to halt trading in the Shares if the 
LME Bid Price is not determined or available for an extended time 
period based on extraordinary circumstances or market conditions.
    \33\ In the event the Sponsor uses an alternative basis for 
valuation on other than a temporary basis, the Exchange will file 
with the Commission a proposed rule change pursuant to Rule 19b-4 
under the Exchange Act, and such alternative basis will not be 
implemented until such proposed rule change is approved or 
operative.
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    Once the value of the copper has been determined, the Trustee will 
subtract all accrued fees (other than the fees to be computed by 
reference to the value of the Trust or its assets), expenses and other 
liabilities of the Trust from the total value of the copper and all 
other assets of the Trust. The resulting figure will be the adjusted 
NAV of the Trust, which will be used to compute all fees (including the 
Trustee's and the Sponsor's fees) which are calculated based on the 
value of the Trust's assets.
    To determine the NAV of the Trust, the Trustee will subtract from 
the adjusted NAV of the Trust the amount of accrued fees which are 
computed based on the value of the Trust's assets. The Trustee also 
will determine the NAV by dividing the NAV of the Trust by the number 
of the Shares outstanding at the time the computation is made. Once 
determined, the NAV will be disseminated via the Sponsor's Web site for 
the Shares.
Liquidity
    The Shares may trade at, above, or below their NAV. The NAV of 
Shares will fluctuate with changes in the market value of the Trust's 
assets. The trading prices of Shares will fluctuate in accordance with 
changes in their NAVs as well as market supply and demand. The amount 
of the discount or premium in the trading price relative to the NAV per 
Share may be influenced by non-concurrent trading hours between the 
major copper markets and the Exchange. While the Shares will trade on 
the Exchange until 8:00 p.m. E.T., liquidity in the market for copper 
may be reduced after the close of the major world copper markets, 
including the LME and the COMEX. As a result, during this time, trading 
spreads, and the resulting premium or discount, on Shares may widen.
Availability of Information Regarding Copper Prices
    Currently, the Consolidated Tape Plan does not provide for 
dissemination of the spot price of a commodity, such as copper, over 
the Consolidated Tape. However, there will be disseminated over the 
Consolidated Tape the quotation and last sale price for the Shares, as 
is the case for all equity securities traded on the Exchange

[[Page 38359]]

(including exchange-traded funds). In addition, there is a considerable 
amount of copper price and copper market information available on 
public Web sites and through professional and subscription services.
    Investors may obtain almost on a 24-hour basis copper pricing 
information based on the spot price of copper from various financial 
information service providers, such as Reuters and Bloomberg, as well 
as other sources. Reuters and Bloomberg provide at no charge on their 
Web sites delayed information regarding the spot price of copper and 
last sale prices of copper futures, as well as information about news 
and developments in the copper market.\34\ Reuters and Bloomberg also 
offer a professional service to subscribers for a fee that provides 
information on copper prices directly from market participants. 
Complete real-time data for copper futures and options prices traded on 
the LME and COMEX are available by subscription from Reuters and 
Bloomberg. In addition, LME publishes LME official price information on 
its Web site with a one day delay. The current day's LME official 
prices (such as the LME Bid Price used to calculate NAV) are available 
from major market data vendors for a fee. The COMEX also provides 
delayed futures and options information on current and past trading 
sessions and market news free of charge on its Web site. The LME 
official price information is also published on Basemetals.com and 
Metal-Page.com with a one day delay. There are a variety of other 
public Web sites providing information on copper, ranging from those 
specializing in precious metals to sites maintained by major 
newspapers, such as The Wall Street Journal.
---------------------------------------------------------------------------

    \34\ Copper futures trading occurs 24 hours a day each business 
day in the OTC electronic market.
---------------------------------------------------------------------------

    Market prices for the Shares will be available from a variety of 
sources including brokerage firms, information Web sites and other 
information service providers. The NAV will be published by the Sponsor 
on each business day after 4:00 p.m. E.T. and will be posted on the 
Trust's Web site. The Exchange will provide on its Web site 
(www.nyx.com) a link to the Trust's Web site. In addition, the Exchange 
will make available over the Consolidated Tape quotation information, 
trading volume, closing prices and NAV for the Shares from the previous 
day.
    Prior to commencement of trading in the Shares on the Exchange, the 
Exchange will obtain a representation from the issuer that the NAV per 
Share will be calculated daily and will be made available to all market 
participants at the same time.
    The intraday indicative value (``IIV'') per Share for the Shares, 
updated at least every 15 seconds, as calculated by the Exchange or a 
third party financial data provider, will be widely disseminated by one 
or more major market data vendors at least every 15 seconds during the 
Core Trading Session on the Exchange (9:30 a.m. to 4:00 p.m., 
E.T.).\35\ The three-month LME copper contract, which has live ticking 
prices, will serve as the IIV price of copper. The IIV will be 
calculated by multiplying the indicative spot price of copper by the 
quantity of copper backing each Share as of the last calculation date.
---------------------------------------------------------------------------

    \35\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available IIVs 
published via the Consolidated Tape Association (``CTA'') or other 
data feeds.
---------------------------------------------------------------------------

    In addition, the Web site for the Trust will contain the following 
information, on a per Share basis, for the Trust: (a) the NAV as of the 
close of the prior business day and the mid-point of the bid-ask price 
\36\ at the close of trading in relation to such NAV (``Bid/Ask 
Price''), and a calculation of the premium or discount of such price 
against such NAV; and (b) data in chart format displaying the frequency 
distribution of discounts and premiums of the Bid/Ask Price against the 
NAV, within appropriate ranges, for each of the four previous calendar 
quarters. The Trust's Web site will disclose the list of copper lot 
holdings, updated on a daily basis. The Web site for the Trust will 
also provide the following information: the Basket Copper Amount, the 
Trust's prospectus, and the two most recent reports to stockholders. 
Finally, the Trust's Web site will also provide the last sale price of 
the Shares as traded in the U.S. market.
---------------------------------------------------------------------------

    \36\ The bid-ask price of the Trust is determined using the mid-
point of highest bid and lowest offer on the Consolidated Tape as of 
the time of calculation of the closing day NAV.
---------------------------------------------------------------------------

Criteria for Initial and Continued Listing
    The Trust and the Shares, as applicable, will be subject to the 
criteria in Rule 8.201(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. The minimum number of shares required to be 
outstanding is comparable to requirements that have been applied to 
previously listed shares of the streetTRACKS Gold Trust, the iShares 
Gold Trust, the iShares Silver Trust and exchange-traded funds. 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 Shares of the Trust 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 
Equities Rule 7.34(a). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Equities Rule 7.6, 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.
    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 copper 
market have caused disruptions and/or lack of trading, (2) the extent 
to which the LME official price is no longer available or (3) 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.\37\
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    \37\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

    The Exchange represents that the Exchange may halt trading during 
the day in which an 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 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.
Surveillance
    The Exchange intends to utilize appropriate surveillance procedures 
applicable to derivative products

[[Page 38360]]

(including Commodity-Based Trust Shares) to monitor trading in the 
Shares. The Exchange represents that these procedures will be adequate 
to properly monitor Exchange trading of the Shares in all trading 
sessions and to deter and detect violations of Exchange rules and 
applicable federal securities laws. All trading in the Shares will be 
subject to applicable surveillance procedures.
    NYSE Arca Equities Rule 8.201 sets forth certain restrictions on 
ETP Holders acting as registered Market Makers in the Shares to 
facilitate surveillance. Pursuant to NYSE Arca Equities Rule 8.201(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 copper, related futures or options on 
futures, or any other related derivatives. Commentary .04 of NYSE Arca 
Equities Rule 6.3 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 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.\38\ 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.
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    \38\ See NYSE Arca Equities Rule 1.1(f) which defines associated 
person as a person who is a partner, officer, director, member of a 
limited liability company, trustee of a business trust, employee of 
an ETP Holder or any person directly or indirectly controlling, 
controlled by or under common control with an ETP Holder.
---------------------------------------------------------------------------

    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations. Also, pursuant to NYSE 
Arca Equities Rule 8.201(g), the Exchange is able to obtain information 
regarding trading in the Shares and the underlying copper, copper 
futures contracts, options on copper futures, or any other copper 
derivative, through ETP Holders acting as registered Market Makers, in 
connection with such ETP Holders' proprietary or customer trades which 
they effect on any relevant market. In addition, the Exchange may 
obtain trading information via the Intermarket Surveillance Group 
(``ISG'') from other exchanges who are members of the ISG.\39\ CME 
Group, Inc., which includes COMEX, is an ISG member. In addition, the 
Exchange has entered into a comprehensive surveillance sharing 
agreement with the LME that applies with respect to trading in copper 
and copper derivatives.
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    \39\ A list of ISG members is available at www.isgportal.org. 
The Exchange does not have access to information regarding copper-
related OTC transactions in spot, forwards, options or other 
derivatives. In addition, the Exchange does not have a comprehensive 
surveillance sharing agreement with SHFE and MCX.
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Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
Equity Trading Permit (``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 Baskets 
(including noting that Shares are not individually redeemable); (2) 
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence 
on its ETP Holders to learn the essential facts relating to every 
customer prior to trading the 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 resulting premium or discount 
on the Shares may widen as a result of reduced liquidity of physical 
copper trading during the Core and Late Trading Sessions after the 
close of the major world copper markets; and (6) trading information. 
For example, the Information Bulletin will advise ETP Holders, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Trust. The Exchange notes that investors purchasing 
Shares directly from the Trust (by delivery of the Creation Deposit) 
will receive a prospectus. ETP Holders purchasing Shares from the Trust 
for resale to investors will deliver a prospectus to such investors.
    In addition, the Information Bulletin will reference that the Trust 
is subject to various fees and expenses described in the Registration 
Statement. The Information Bulletin will also reference the fact that 
there is no regulated source of last sale information regarding 
physical copper, that the Commission has no jurisdiction over the 
trading of copper as a physical commodity, and that the CFTC has 
regulatory jurisdiction over the trading of copper futures contracts 
and options on copper futures contracts.
    The Information Bulletin will also discuss any relief, if granted, 
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \40\ 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.
---------------------------------------------------------------------------

    \40\ 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 
8.201. 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. Investors may obtain copper pricing information based on the 
spot price of copper from various financial information service 
providers. Complete real-time data for copper futures and options 
prices traded on the LME and COMEX are available by subscription from 
Reuters and Bloomberg, as well as other sources. In addition, LME 
publishes the LME official price information on its Web site with a one 
day delay. The COMEX also provides delayed futures and options 
information on current and past trading sessions and market news free 
of charge on its Web site. The LME official prices are also published 
on Basemetals.com and Metal-Page.com with a one day

[[Page 38361]]

delay. The Trust's Web site will provide ongoing pricing information 
for copper spot prices and the Shares. Market prices for the Shares 
will be available from a variety of sources including brokerage firms, 
information Web sites and other information service providers. The NAV 
will be published by the Sponsor on each business day after 4:00 p.m. 
E.T. and will be posted on the Trust's Web site. The IIV per Share for 
the Shares, updated at least every 15 seconds, as calculated by the 
Exchange or a third party financial data provider, will be widely 
disseminated by one or more major market data vendors at least every 15 
seconds during the Core Trading Session on the Exchange. In addition, 
the Exchange will make available over the Consolidated Tape last sale 
and quotation information, trading volume, closing prices and NAV for 
the Shares from the previous day.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that a large amount of information is publicly available regarding the 
Trust and the Shares, thereby promoting market transparency. Trading in 
Shares of the Trust 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. Moreover, 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.
    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 Commodity-Based Trust Shares 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2012-66 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2012-66. 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 also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2012-66, and should be submitted on or before July 18, 2012.
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    \41\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\41\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-15730 Filed 6-26-12; 8:45 am]
BILLING CODE 8011-01-P