Document ID: SEC-2020-0833-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2020-05-27T04:00Z

[Federal Register Volume 85, Number 102 (Wednesday, May 27, 2020)]
[Notices]
[Pages 31826-31828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11286]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88912; File No. SR-NYSEArca-2020-42]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend 
Representations Relating to the Redemption Procedures Applicable to the 
Sprott Physical Gold Trust and the Sprott Physical Silver Trust

May 20, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on May 6, 2020, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend representations relating to the 
redemption procedures applicable to the Sprott Physical Gold Trust and 
the Sprott Physical Silver Trust (each a ``Trust''), as contained in 
the respective rule change filed with and approved by the Securities 
and Exchange Commission (``Commission'') relating to listing and 
trading of ``Units'' of each Trust on the Exchange. Units of the Trusts 
are currently listed and traded on the Exchange under NYSE Arca Rule 
8.201-E. The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Commission has approved proposed rule changes relating to 
listing and trading on the Exchange of Units of the Sprott Physical 
Gold Trust and the Sprott Physical Silver Trust under NYSE Arca Rule 
8.201-E (``Commodity-Based Trust Shares'').\4\ The Exchange proposes to 
amend a representation relating to the procedure for the redemption of 
Units of each Trust for gold or silver bullion, respectively, as 
contained in the Prior Releases. Units of the Sprott Physical Gold 
Trust and the Sprott Physical Silver Trust commenced trading on the 
Exchange on February 25, 2010 and October 27, 2010, respectively.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release Nos. 61236 (December 23, 
2009), 75 FR 170 (January 4, 2019) (SR-NYSEArca-2009-113) (Notice of 
Filing of Proposed Rule Change for the Listing and Trading of Sprott 
Physical Gold Trust) (``Sprott Gold Notice''); 61496 (February 10, 
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113) (Order 
Granting Approval of a Proposed Rule Change to List and Trade Sprott 
Physical Gold Trust) (``Sprott Gold Order''); 63043 (October 5, 
2010), 75 FR 62615 (October 12, 2010) (SR-NYSEArca-2010-84) (Notice 
of Filing and Order Approving Proposed Rule Change to List and Trade 
Shares of Sprott Physical Silver Trust) (``Sprott Silver Order'' 
and, together with the Sprott Gold Notice and Sprott Gold Order, the 
``Prior Releases'').
---------------------------------------------------------------------------

    The manager of each Trust is Sprott Asset Management LP 
(``Manager'').\5\ The Trust custodian for a Trust's physical gold and 
silver bullion, respectively, is the Royal Canadian Mint 
(``Custodian''). RBC Investor Services Trust (``RBC'') (formerly RBC 
Dexia Investor Services Trust) is the trustee and valuation agent of 
each Trust and the custodian of each Trust's assets other than physical 
gold and silver bullion.
---------------------------------------------------------------------------

    \5\ The Sprott Physical Gold Trust and the Sprott Physical 
Silver Trust filed with the Commission registration statements on 
Form F-10 under the Securities Act of 1933, as amended, relating to 
the Trusts on June 20, 2018 (as amended and supplemented) (File No. 
333-225771)) and June 20, 2018 (as amended and supplemented) (File 
No. 333-225772), respectively (together, the ``Registration 
Statements''). The description of the operation of the Trusts herein 
is based, in part, on the Registration Statements.
---------------------------------------------------------------------------

Change to Procedures for Redemption of Units for Gold or Silver
    The Sprott Gold Notice stated that ``[a] redemption notice to 
redeem Units for physical gold bullion must be received by the Trust's 
transfer agent no later than 4:00 p.m., Toronto time, on the 15th day 
of the calendar month in which the redemption notice will be processed 
or, if such day is not a day on which banks located in New York, New 
York, are open for the transaction of banking business (a ``Business 
Day''), then on the immediately following day that is a Business Day. 
Any redemption notice received after such time will be processed in the 
next month.'' The Sprott Gold Notice stated further that ``[p]hysical 
gold bullion received by a Unitholder as a result of a redemption of 
Units will be delivered by armored transportation service carrier 
pursuant to delivery instructions provided by the Unitholder'' and that 
``[t]he armored transportation service carrier will receive gold 
bullion in connection with a redemption of Units approximately 10 
Business Days after the end of the month in which the redemption notice 
is processed.''

[[Page 31827]]

    Similarly, the Sprott Silver Order stated that ``[a] redemption 
notice to redeem Units for physical silver bullion must be received by 
the Trust's transfer agent no later than 4:00 p.m. Toronto time, on the 
15th day of the calendar month in which the redemption notice will be 
processed or, if such day is not a day on which banks located in New 
York, New York, are open for the transaction of banking business (a 
``Business Day''), then on the immediately following day that is a 
Business Day. Any redemption notice received after such time will be 
processed in the next month. The Sprott Silver Order stated further 
that ``[p]hysical silver bullion received by a Unitholder as a result 
of a redemption of Units will be delivered by armored transportation 
service carrier pursuant to delivery instructions provided by the 
Unitholder'' and that ``[t]he armored transportation service carrier 
will receive silver bullion in connection with a redemption of Units 
approximately 10 Business Days after the end of the month in which the 
redemption notice is processed.''
    The Exchange proposes to delete the preceding statements relating 
to receipt of bullion by the armored transportation service carrier in 
connection with a redemption of Units approximately 10 Business Days 
after the end of the month in which the redemption notice is processed 
in accordance with a pending amendment to the ``Trust Agreement'' for 
each Trust (the ``Amendments'').\6\
---------------------------------------------------------------------------

    \6\ The Exchange notes that the proposed deletions are 
substantively identical to those included in a proposed rule change 
relating to redemption procedures of the Sprott Physical Gold and 
Silver Trust. See Securities Exchange Act Release No. 84282 
(September 25, 2018), 83 FR 49442 (October 1, 2018) (SR-NYSEArca-
2018-69) (Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Amend a Representation Relating to the Redemption 
Procedures Applicable to the Sprott Physical Gold and Silver Trust).
---------------------------------------------------------------------------

    The Manager represents that the actual timing of receipt of bullion 
by the armored transportation service carrier varies based on the 
number of redemption requests received in a given month, the redemption 
amount per request and the amount of gold and silver bullion redeemed, 
as applicable. The Manager represents that, in the event of large 
numbers or volumes of redemption requests, the Custodian and the 
armored transportation service carrier experience severe constraints in 
performing their required actions within the existing time period 
(i.e., approximately 10 Business Days).\7\ A high frequency of 
shipments in a short period of time places a significant strain on the 
operational and security resources necessary to prepare such shipments, 
resulting in additional expenses and risk to the Trust and the 
Custodian. The Manager and the Custodian expect that the Amendments 
will decrease operational expenses and risk caused by the 10 Business 
Day term currently provided by the applicable Trust Agreement. The 
Manager represents that by mitigating such expenses and risk, it is 
anticipated that the Amendments will allow the Custodian to continue to 
provide each Trust with low custody pricing. The Amendments thereby may 
result in narrowing of the spread between the trading price of Units, 
which price reflects the performance of the trading prices of gold and 
silver, respectively, less the expenses of a Trust's operations, and 
the trading prices of gold and silver in accordance with each Trust's 
objectives. Pursuant to the terms of the Trust Agreements and the 
applicable laws of the Province of Ontario, the Amendments are being 
effected on the ground that they provide added protection or benefit to 
``Unitholders.'' \8\
---------------------------------------------------------------------------

    \7\ The Commission has previously approved the listing and 
trading of other gold-based commodity trusts that include a physical 
redemption feature but do not specify any minimum deadline for 
physical delivery of the commodity to the redeeming investor 
following a redemption request. See, e.g., Securities Exchange Act 
Release Nos. 71378 (January 23, 2014), 79 FR 4786 (January 29, 2014) 
(SR-NYSEArca-2013-137) (Order Approving a Proposed Rule Change, as 
Modified by Amendment No. 1 Thereto, to List and Trade Shares of the 
Merk Gold Trust Pursuant to NYSE Arca Equities Rule 8.201); 82593 
(January 26, 2018), 83 FR 4718 (February 1, 2018) (SR-NYSEArca-2017-
140) (Order Approving a Proposed Rule Change to List and Trade 
Shares of the Perth Mint Physical Gold ETF Trust Pursuant to NYSE 
Arca Rule 8.201-E).
    \8\ Each Trust will file an amendment to its respective Trust 
Agreement or an amended and restated Trust Agreement, as 
appropriate, in Canada on SEDAR (System for Electronic Document 
Analysis and Retrieval), the electronic filing system for the 
disclosure documents of issuers across Canada. In addition, a brief 
description of the amendment will be included in a Trust's quarterly 
disclosures. Such filings or disclosures would be furnished to the 
Commission under cover of Form 6-K in accordance with Rules 13a-1 
and/or 13a-3 under the Exchange Act. Pursuant to the terms of the 
applicable Trust Agreement, a Unitholder vote is not required to 
effect the amendment.
---------------------------------------------------------------------------

    The Manager represents that the proposed change described above is 
consistent with each Trust's investment objective, and will further 
assist the Manager to achieve such investment objective. Except for the 
changes noted above, all other representations made in the Prior 
Releases remained unchanged.\9\
---------------------------------------------------------------------------

    \9\ See note 4, supra. All terms referenced but not defined 
herein are defined in the Prior Releases.
---------------------------------------------------------------------------

2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \10\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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. The Exchange believes that the Amendments may provide 
potential benefits to investors by decreasing operational expenses and 
risk caused by the 10 Business Day time frame currently provided by the 
applicable Trust Agreement. The Manager represents that by mitigating 
such expenses and risk, it is anticipated that the Amendments will 
allow the Custodian to continue to provide each Trust with low custody 
pricing and may result in the narrowing of the spread between the 
trading price of Units, which price reflects the performance of the 
trading prices of gold or silver, respectively less the expenses of a 
Trust's operations, and the trading prices of gold or silver in 
accordance with a Trust's objectives.
    The Manager represents that the proposed changes described above 
are consistent with each Trust's investment objective, and will further 
assist the Manager to achieve such investment objectives. The Manager 
also represents that all Unitholders will be subject to the Amendments; 
that the Manager has determined that the Amendments will provide added 
protection or benefit to Unitholders; and that the Amendments are being 
proposed to mitigate the practical constraints associated with the high 
volume of redemption requests.
    Except for the changes noted above, all other representations made 
in the Prior Releases remained unchanged.

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 Exchange Act. The Exchange 
believes the proposed rule change, by decreasing each Trust's 
operational expenses and risk relating to redemptions, will enhance 
competition among issues of Commodity-Based Trust Shares relating to 
physical gold and silver.

[[Page 31828]]

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\13\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest because the Commission has 
previously approved the listing and trading of gold-based commodity 
trusts that include a physical redemption feature but do not specify 
any minimum deadline for physical delivery of the commodity to the 
redeeming investor following a redemption request,\16\ and the proposed 
changes are substantively identical to those in another proposed rule 
change relating to redemption procedures.\17\ In addition, the Exchange 
believes the proposed rule change may benefit investors by decreasing 
operational expenses and risk caused by the 10 Business Day timeframe 
(as described above) currently provided by the Trust Agreements. 
Furthermore, the Exchange represents that, in the absence of large 
numbers or volumes of redemption requests or other factors causing 
delay, the armored transportation service carrier will typically 
receive physical gold and silver bullion in accordance with the 10 
Business Day time frame contained in the Prior Releases, and the 
Commission notes that Units of the Trusts have commenced trading on the 
Exchange. The Commission believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest for these reasons. Accordingly, the Commission hereby waives 
the 30-day operative delay and designates the proposed rule change 
operative upon filing.\18\
---------------------------------------------------------------------------

    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See note 7, supra.
    \17\ See note 6, supra (relating to redemption procedures of the 
Sprott Physical Gold and Silver Trust).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
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-2020-42 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-2020-42. 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-2020-42 and should be submitted 
on or before June 17, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11286 Filed 5-26-20; 8:45 am]
BILLING CODE 8011-01-P