Document ID: SEC-2010-1894-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-12-14T05:00Z

[Federal Register Volume 75, Number 239 (Tuesday, December 14, 2010)]
[Notices]
[Pages 77926-77928]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31288]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63464; File No. SR-NYSEArca-2010-95]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Accelerated Approval of a Proposed Rule Change To List and Trade Shares 
of the ETFS Asian Gold Trust

December 8, 2010.
    On September 22, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a 
proposed rule change to list and trade shares (``Shares'') of the ETFS 
Asian Gold Trust (``Trust''). The proposed rule change was published in 
the Federal Register on November 12, 2010.\4\ The Commission received 
no comments on the proposal. This order approves the proposed rule 
change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 63267 (November 8, 
2010), 75 FR 69494 (``Notice'').
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I. Description of the Proposal

    The Exchange proposes to list and trade Shares pursuant to NYSE 
Arca Equities Rule 8.201, which governs the listing and trading of 
Commodity-Based Trust Shares. The Exchange represents that the Shares 
satisfy the requirements of NYSE Arca Equities Rule 8.201 and thereby 
qualify for listing on the Exchange.
    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 
performance of the price of gold bullion, less the expenses of the 
Trust's operations.\5\
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    \5\ See the Registration Statement for the Trust on Form S-1, 
filed with the Commission on July 22, 2010 (No. 333-168277) 
(``Registration Statement''). The descriptions of the Trust, the 
Shares and the gold market contained in the Notice are based on the 
Registration Statement.
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    The Exchange deems the Shares to be equity securities, which 
subjects the Shares to the Exchange's existing rules

[[Page 77927]]

governing the trading of equity securities, and has represented that 
trading of the Shares on the Exchange, will occur in accordance with 
NYSE Arca Equities Rule 7.34(a). The Exchange also has represented that 
it has appropriate rules to facilitate transactions in the Shares 
during all trading sessions.
    Additional details regarding the Shares and Trust including, among 
other things, creations and redemptions of the Shares, the organization 
and structure of the Trust, custody of the Trust's holdings, Trust 
expenses, Trust termination events, the Singapore and London gold 
markets, the gold futures markets, and the gold markets generally, the 
dissemination and availability of information about the underlying 
assets, trading halts, applicable trading rules, surveillance, and the 
Information Bulletin can be found in the Notice and/or the Registration 
Statement.\6\
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    \6\ See supra notes 4 and 5.
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II. Discussion and Commission Findings

    After careful consideration, the Commission finds that the proposed 
rule change to list and trade the Shares is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\7\ In particular, the 
Commission finds that the proposed rule change is consistent with the 
requirements of Section 6(b)(5) of the Act,\8\ which requires, among 
other things, that the Exchange's rules be designed to prevent 
fraudulent and manipulative acts and practices, promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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.
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    \7\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission finds that the proposal to list and 
trade the Shares on the Exchange is consistent with Section 
11A(a)(1)(C)(iii) of the Act,\9\ which sets forth Congress' finding 
that it is in the public interest and appropriate for the protection of 
investors and the maintenance of fair and orderly markets to assure the 
availability to brokers, dealers and investors of information with 
respect to quotations for and transactions in securities. The Exchange 
states that there is a considerable amount of gold price and gold 
market information available on public Web sites and through 
professional and subscription services as discussed below. For example, 
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, such as Reuters and Bloomberg. Reuters 
and Bloomberg provide at no charge on their Web sites delayed 
information regarding the spot price of gold and last sale prices of 
gold futures, as well as information about news and developments in the 
gold market. Reuters and Bloomberg also offer a professional service to 
subscribers for a fee that provides information on gold prices directly 
from market participants. An organization named EBS provides an 
electronic trading platform to institutions such as bullion banks and 
dealers for the trading of spot gold, as well as a feed of live 
streaming prices to Reuters and Moneyline Telerate subscribers. 
Complete real-time data for gold futures and options prices traded on 
the COMEX are available by subscription from Reuters and Bloomberg.
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    \9\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    In addition, the Trust's Web site will provide the following 
information: (1) An 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, during the 
Exchange's Core Trading Session (9:30 a.m. to 4 p.m., Eastern Standard 
Time); and (2) the Creation Basket Deposit and net asset value 
(``NAV'') of the Trust as calculated each business day by the Sponsor. 
In addition, the Web site for the Trust will contain the following 
information, on a per Share basis, for the Trust: (1) The mid-point of 
the bid-ask price \10\ at the close of trading in relation to the NAV 
as of the time the NAV is calculated (``Bid/Ask Price''), and a 
calculation of the premium or discount of such price against such NAV; 
and (2) data in chart format displaying the frequency distribution of 
discounts and premiums of the Bid/Ask Price against the NAV, within 
appropriate ranges, for each of the four previous calendar quarters. 
The Web site for the Trust will also provide the Trust's prospectus, as 
well as the two most recent reports to stockholders. Finally, the Trust 
Web site will provide the last sale price of the Shares as traded in 
the US market.
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    \10\ The bid-ask price of the Trust is determined using the 
highest bid and lowest offer on the Consolidated Tape as of the time 
of calculation of the closing day NAV.
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    The Exchange will provide on its Web site http://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. The NYMEX 
also provides delayed futures and options information on current and 
past trading sessions and market news free of charge on its Web site. 
There are a variety of other public Web sites providing information on 
gold, ranging from those specializing in precious metals to sites 
maintained by major newspapers, such as The Wall Street Journal. In 
addition, the London AM Fix and London PM Fix are publicly available at 
no charge at or http://www.thebulliondesk.com.
    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Exchange states that it will obtain a representation from 
the Trust that the NAV will be calculated daily and made available to 
all market participants at the same time.\11\
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    \11\ See e-mail from Timothy J. Malinowski, Senior Director, 
NYSE Euronext, to Christopher W. Chow, Special Counsel, and Steve 
Varholik, Special Counsel, Commission, dated December 1, 2010.
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    Following the initial 12-month period following commencement of 
trading, the Exchange will consider the suspension of trading in Shares 
or removing Shares from listing if, among other things: (1) The value 
of the underlying commodity is no longer calculated or available on at 
least a 15-second delayed basis from a source unaffiliated with the 
sponsor, Trust, custodian or the Exchange; (2) the Exchange stops 
providing a hyperlink on its Web site to any such unaffiliated 
commodity value; or (3) the IIV is no longer made available on at least 
a 15-second delayed basis.\12\ Under NYSE Arca Equities Rule 
7.34(a)(5), if the Exchange becomes aware that the NAV is not being 
disseminated to all market participants at the same time, it must halt 
trading on the NYSE Marketplace until such time as the NAV is available 
to all market participants. With respect to trading halts, the Exchange 
may consider all relevant factors in exercising its discretion to halt 
or suspend trading in the Shares. These may include: (1) The extent to 
which conditions in the underlying gold

[[Page 77928]]

markets 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.\13\
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    \12\ See NYSE Arca Equities Rule 8.201(e)(2).
    \13\ See NYSE Arca Equities Rule 7.12.
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    Further, 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 applicable underlying commodity, related commodity 
futures or options on commodity futures, or any other related commodity 
derivatives. Commentary .04 of NYSE Arca Equities Rule 6.3 requires an 
ETP Holder acting as a registered Market Maker in Commodity-Based Trust 
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.
    In support of this proposal, the Exchange has made representations, 
including the following:
    (1) The Shares will be subject to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.201(e).
    (2) The Exchange's surveillance 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 applicable federal 
securities laws. In addition, the Exchange may obtain trading 
information via the Intermarket Surveillance Group (``ISG'') from other 
exchanges who are members of the ISG.
    (3) 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 Baskets 
(including noting that Shares are not individually redeemable); (b) 
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; (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; (d) 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 (e) trading information. In addition, 
the Information Bulletin will reference that the Trust is subject to 
various fees and expenses described in the Registration Statement. The 
Information Bulletin will also reference the fact that there is no 
regulated source of last sale information regarding physical gold, that 
the Commission has no jurisdiction over the trading of gold as a 
physical commodity, and that the CFTC has regulatory jurisdiction over 
the trading of gold futures contracts and options on gold futures 
contracts.
    This approval order is based on the Exchange's representations.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\14\ for approving the proposed rule change prior to the 45th 
day after publication of notice in the Federal Register. The Commission 
does not believe that the Exchange's proposal to list and trade the 
Shares presents any novel regulatory issues. The Commission has 
previously approved proposals by the Exchange to list and trade shares 
of similar trusts that hold gold bullion pursuant to NYSE Arca Equities 
Rule 8.201.\15\ Additionally, the Commission has previously approved 
proposals to list and trade shares of trusts that hold other 
commodities such as platinum, palladium, and silver pursuant to NYSE 
Arca Equities Rule 8.201.\16\
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    \14\ 15 U.S.C. 78s(b)(2).
    \15\ See, e.g., Securities Exchange Act Release No. 59895 (May 
8, 2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
    \16\ See Notice, supra note 4, 75 FR at 69495, nn. 5-11.
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III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NYSEArca-2010-95) be, and it 
hereby is, approved on an accelerated basis.
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    \17\ 15 U.S.C.78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31288 Filed 12-13-10; 8:45 am]
BILLING CODE 8011-01-P