80_FR_10562 80 FR 10524 - Order Granting Limited Exemptions From Exchange Act Rule 10b-17 and Rules 101 and 102 of Regulation M to AccuShares S&P GSCI Spot Fund, AccuShares S&P GSCI Agriculture and Livestock Spot Fund, AccuShares S&P GSCI Industrial Metals Spot Fund, AccuShares S&P GSCI Crude Oil Spot Fund, AccuShares S&P GSCI Brent Oil Spot Fund, AccuShares S&P GSCI Natural Gas Spot Fund, and AccuShares Spot CBOE VIX Fund, Pursuant to Exchange Act Rule 10b-17(b)(2) and Rules 101(d) and 102(e) of Regulation M

80 FR 10524 - Order Granting Limited Exemptions From Exchange Act Rule 10b-17 and Rules 101 and 102 of Regulation M to AccuShares S&P GSCI Spot Fund, AccuShares S&P GSCI Agriculture and Livestock Spot Fund, AccuShares S&P GSCI Industrial Metals Spot Fund, AccuShares S&P GSCI Crude Oil Spot Fund, AccuShares S&P GSCI Brent Oil Spot Fund, AccuShares S&P GSCI Natural Gas Spot Fund, and AccuShares Spot CBOE VIX Fund, Pursuant to Exchange Act Rule 10b-17(b)(2) and Rules 101(d) and 102(e) of Regulation M

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 38 (February 26, 2015)

Page Range10524-10526
FR Document2015-03967

Federal Register, Volume 80 Issue 38 (Thursday, February 26, 2015)
[Federal Register Volume 80, Number 38 (Thursday, February 26, 2015)]
[Notices]
[Pages 10524-10526]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-03967]



[[Page 10524]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74348; File No. TP 14-02]


Order Granting Limited Exemptions From Exchange Act Rule 10b-17 
and Rules 101 and 102 of Regulation M to AccuShares S&P GSCI Spot Fund, 
AccuShares S&P GSCI Agriculture and Livestock Spot Fund, AccuShares S&P 
GSCI Industrial Metals Spot Fund, AccuShares S&P GSCI Crude Oil Spot 
Fund, AccuShares S&P GSCI Brent Oil Spot Fund, AccuShares S&P GSCI 
Natural Gas Spot Fund, and AccuShares Spot CBOE VIX Fund, Pursuant to 
Exchange Act Rule 10b-17(b)(2) and Rules 101(d) and 102(e) of 
Regulation M

February 20, 2015.
    On February 18, 2015, the Commission approved a proposed rule 
change by NASDAQ Stock Market LLC to adopt new listing standards for 
``Paired Class Shares'' as new NASDAQ Rule 5713, as well as to permit 
the listing and trading of ``Paired Class Shares'' issued by AccuShares 
Commodity Trust I (the ``Trust'').\1\ By letter dated February 20, 2015 
(the ``Letter''), as supplemented by conversations with the staff of 
the Division of Trading and Markets, counsel for AccuShares Investment 
Management LLC (the ``Sponsor''), the Trust, AccuShares S&P GSCI Spot 
Fund, AccuShares S&P GSCI Agriculture and Livestock Spot Fund, 
AccuShares S&P GSCI Industrial Metals Spot Fund, AccuShares S&P GSCI 
Crude Oil Spot Fund, AccuShares S&P GSCI Brent Oil Spot Fund, 
AccuShares S&P GSCI Natural Gas Spot Fund, and AccuShares Spot CBOE VIX 
Fund (the ``Funds''), the listing exchange, any national securities 
exchange on or through which shares issued by the Funds (``Shares'') 
may subsequently trade, and persons or entities engaging in 
transactions in Shares (collectively, the ``Requestors'') requested 
exemptions, or interpretive or no-action relief, from Rule 10b-17 under 
the Securities Exchange Act of 1934, as amended (``Exchange Act''), and 
Rules 101 and 102 of Regulation M, in connection with secondary market 
transactions in Shares and the creation or redemption of aggregations 
of Shares of at least 50,000 shares (``Creation Units'').\2\
---------------------------------------------------------------------------

    \1\ Exchange Act Release No. 74299 (Feb. 18, 2015) (SR-NASDAQ-
2014-065).
    \2\ Creation Units of shares are composed of 25,000 ``Up'' 
Shares and 25,000 ``Down'' Shares, as explained infra.
---------------------------------------------------------------------------

    As the Requestors explain in the Letter, the Trust is a Delaware 
statutory trust that is organized into separate Funds. Each Fund will 
have a distinctive objective to track the movements in a specified spot 
commodity, commodity futures contract, or measures of price volatility 
of a broad-based equity index as measured by such Fund's underlying 
index (``Underlying Index'') during each Fund's ``Measuring Period.'' 
\3\ Each Fund will engage in issuing, offering, and redeeming 
``paired'' ``Up'' and ``Down'' Shares, two types of Shares that reflect 
different views on the future direction of the Underlying Index. 
Entitlements of a Fund's Up Shares to distributions are related to any 
increases of such Fund's Underlying Index, and entitlements of a Fund's 
Down Shares to distributions from such Fund are related to any 
decreases of the same Underlying Index, during each Measuring Period. 
The Funds will not hold commodities, futures, or other assets that are 
referenced by the Underlying Index but will instead hold cash, certain 
U.S. Treasury securities, and certain overnight repurchase agreements. 
Creations and redemptions are permitted only in Creation Units.
---------------------------------------------------------------------------

    \3\ The Underlying Indexes for the Funds are (1) S&P GSCI Spot 
Index, (2) S&P GSCI Agricultural and Livestock Spot Index, (3) S&P 
GSCI Industrial Metals Spot Index, (4) S&P GSCI Crude Oil Spot 
Index, (5) S&P GSCI Brent Crude Oil Spot Index, (6) S&P GSCI Natural 
Gas Spot Index, and (7) CBOE Volatility Index (also known as the 
``VIX'').
---------------------------------------------------------------------------

    The Requestors also represent, among other things, the following:
     Shares of the Funds will be listed and traded on a 
national securities exchange that has obtained approval of a rule 
change from the Commission pursuant to Rule 19b-4;
     Neither the Trust nor any of its Funds will be an 
investment company registered under the Investment Company Act of 1940, 
as amended (``1940 Act''), and will not be required to register under 
the 1940 Act;
     Each Fund will continuously issue and redeem Shares in 
aggregations of at least 50,000 Shares (25,000 Up Shares and 25,000 
Down Shares) in exchange for specified amounts of cash, with the 
objective of tracking the performance of a specified commodity or 
volatility index;
     Throughout the trading day, the listing exchange will 
publicly disseminate intra-day prices of Fund Shares and their 
respective Underlying Indexes;
     The market value of Shares should be in close alignment 
with the increases and decreases in the value of each Fund's Underlying 
Index which tracks one or more physical commodities, a basket of 
particular commodities, commodity futures contracts, other commodity 
derivatives, or measures of price volatility of a broad-based equity 
index;
     Like other exchange-traded products, the secondary market 
price of Shares should not vary substantially from their respective 
Class Values (as defined in the Letter) per Share because the 
redeemability and the continuous offering features of the Funds provide 
opportunities for arbitrage activity that should eliminate any 
significant disparity between the market price of Shares and their 
respective Class Values per Share.
     Significant disparities between the market price of each 
Fund's Shares and the liquidation value of the Shares and between the 
market price of each Fund's Shares and the value of the Underlying 
Index should be eliminated by the arbitrage mechanism afforded by the 
open-ended character of the Funds and the redeemability of their 
Shares;
     The ``Corrective Distribution'' mechanism (as described in 
the Letter) is designed to supplement the aforementioned arbitrage 
mechanism in those rare situations where the arbitrage mechanism fails;
     The presence of each Fund's pre-established Corrective 
Distribution Thresholds (as defined in the Letter) is also intended to 
aid in driving the alignment of market prices with Class Value per 
Share;
     Special Distributions (as defined in the Letter) will be 
triggered only if a Fund's Underlying Index experiences an unexpected 
level of volatility and exceeds a fixed rate of change (for example, 
75% for the AccuShares S&P GSCI Spot and AccuShares S&P GSCI Natural 
Gas Spot Funds) since the beginning of the Measuring Period (as defined 
in the Letter);
     Special Distributions are not expected to occur regularly 
and will occur, if at all, only under the limited circumstances and 
according to the fixed formula stated in each Fund's prospectus;
     Each Fund will alert shareholders in a prominent manner on 
its Web site at the close of the business day during any Measuring 
Period when such Fund's Underlying Index first experiences a 50% 
increase or decrease in its level since the beginning of that Measuring 
Period and, if and when a Fund's Underlying Index exceeds its threshold 
for issuing a Special Distribution during such Measuring Period, at the 
close of business on such day the relevant Fund will immediately notify 
the listing exchange, and will thereafter issue a press release and 
post a notice of such event and its details on

[[Page 10525]]

its Web site, including notice of any other distributions to be made 
therewith; \4\
---------------------------------------------------------------------------

    \4\ Other distributions, specifically previously announced 
distributions of a Fund's net income or a Corrective Distribution, 
may occasionally simultaneously accompany a Special Distribution 
(``Accompanying Distributions''). In some cases, these Accompanying 
Distributions may be triggered without sufficient time to make the 
notice required by Rule 10b-17 in the time frame mandated in the 
rule. The exemption contained herein only extends to those 
Accompanying Distributions that cannot be disclosed ten days prior 
to the record date because the Accompanying Distribution was 
triggered within that ten-day time frame (``Exempted Accompanying 
Distributions'').
---------------------------------------------------------------------------

     The Funds will provide at least three business days' 
notice to the listing exchange in advance of the related record date 
for Special Distributions and any Exempted Accompanying Distribution;
     The listing exchange has confirmed that publication of a 
Special Distribution Notice (as defined in the Letter) three business 
days in advance of a Special Distribution Record Date (as defined in 
the Letter) can be made in the normal course, and will not require any 
system changes, technology alterations or other type of 
reconfigurations by the exchange and that it will be able to adequately 
disseminate the distribution information contained in the Special 
Distribution Notice to its members and the investing public within the 
three-day time period and, as a result, the Sponsor believes that the 
parties transacting in Fund Shares, as well as their broker-dealers, 
will be able to timely reflect Special Distributions and Exempted 
Accompanying Distributions in the price ultimately paid; and
     The Sponsor has agreed to compile the following data and 
provide it to the Commission staff on a quarterly basis for each Fund 
during the first year of operation:
    [cir] Daily Class Values and daily Class Values per Share;
    [cir] Daily end of day secondary market price per Class (as defined 
in the Letter) per Share;
    [cir] Per Share, the date, form (i.e., shares, dollars, etc.), and 
size of any distributions including any stock split; and
    [cir] Per Share, with respect to any stock split, whether it was a 
reverse or forward split.

Regulation M

    While redeemable securities issued by an open-end management 
investment company are excepted from the provisions of Rule 101 and 102 
of Regulation M, the Requestors may not rely upon that exception for 
the Shares as they are not issued by an open-end management investment 
company. However, we find that it is appropriate in the public interest 
and is consistent with the protection of investors to grant limited 
exemptions from Rules 101 and 102 to persons who may be deemed to be 
participating in a distribution of Shares of the Funds as well as the 
Funds, as described in more detail below.

Rules 101 and 102 of Regulation M

    Generally, Rule 101 of Regulation M is an anti-manipulation rule 
that, subject to certain exceptions, prohibits any ``distribution 
participant'' and its ``affiliated purchasers'' from bidding for, 
purchasing, or attempting to induce any person to bid for or purchase 
any security which is the subject of a distribution until after the 
applicable restricted period, except as specifically permitted in the 
rule. Rule 100 of Regulation M defines ``distribution'' to mean any 
offering of securities that is distinguished from ordinary trading 
transactions by the magnitude of the offering and the presence of 
special selling efforts and selling methods. The provisions of Rule 101 
of Regulation M apply to underwriters, prospective underwriters, 
brokers, dealers, or other persons who have agreed to participate or 
are participating in a distribution of securities. The Shares are in a 
continuous distribution and, as such, the restricted period in which 
distribution participants and their affiliated purchasers are 
prohibited from bidding for, purchasing, or attempting to induce others 
to bid for or purchase extends indefinitely.
    Similarly, Rule 102 of Regulation M prohibits issuers, selling 
security holders, and any affiliated purchaser of such person from 
bidding for, purchasing, or attempting to induce any person to bid for 
or purchase a covered security during the applicable restricted period 
in connection with a distribution of securities effected by or on 
behalf of an issuer or selling security holder.
    Based on the representations and facts presented in the Letter, 
particularly that the market value of Shares should be in close 
alignment with the increases and decreases in the value of each Fund's 
Underlying Index, that significant disparities between the market price 
of each Fund's Shares and the liquidation value of the Shares and 
between the market price of each Fund's Shares and the value of the 
Underlying Index should be eliminated by the arbitrage mechanism, and 
that the Corrective Distribution mechanism is designed to supplement 
the arbitrage mechanism in those rare situations where the arbitrage 
mechanism fails (which will be infrequent and, for most Funds, a 
Corrective Distribution may never occur), the concerns that the 
Commission raised in adopting Rules 101 and 102 of Regulation M should 
not be implicated because these mechanisms should reduce the potential 
that the purchases effected during the restricted period by these 
distribution participants and the Funds may artificially affect the 
secondary market price of the Shares.\5\ As a result, the Commission 
finds that it is appropriate in the public interest and consistent with 
the protection of investors to grant the Trust an exemption (1) under 
paragraph (d) of Rule 101 of Regulation M with respect to the Funds, 
thus permitting persons participating in a distribution of Shares of 
the Funds to bid for or purchase such Shares during the applicable 
restricted period and (2) under paragraph (e) of Rule 102 of Regulation 
M with respect to the Funds, thus permitting the Funds to redeem Shares 
of the Funds during the applicable restricted period.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 33924 (Apr. 19, 
1994); 59 FR 21681 (Apr. 26, 1994) (stating that the purpose of the 
prohibitions of Rules 101 and 102 are to ``prevent those persons 
participating in a distribution of securities . . . from 
artificially conditioning the market for the securities in order to 
facilitate the distribution'' as well as ``to protect the integrity 
of the securities trading market as an independent pricing 
mechanism.'').
---------------------------------------------------------------------------

Rule 10b-17

    Rule 10b-17, with certain exceptions, requires an issuer of a class 
of publicly traded securities to give notice of certain specified 
actions (for example, a dividend distribution) relating to such class 
of securities in accordance with Rule 10b-17(b). Based on the 
representations from the Fund, Sponsor, and listing exchange that 
timely notification of the existence and timing of such Special 
Distributions and Exempted Accompanying Distributions will be provided 
to market participants and that Special Distributions and Exempted 
Accompanying Distributions are not expected to occur frequently and 
only under the limited circumstances, if at all, according to a pre-
determined formula published in each Fund's prospectus, the concerns 
that the Commission raised in adopting Rule 10b-17 should not be 
implicated. As a result, the Commission finds that it is appropriate in 
the public interest and consistent with the protection of investors to 
grant the Trust a conditional exemption from Rule 10b-17 with respect 
to the Special Distributions and Exempted Accompanying Distributions.

[[Page 10526]]

Conclusion

    It is hereby ordered, pursuant to Rule 101(d) of Regulation M, that 
the Trust, based on the representations and facts presented in the 
Letter, is exempt from the requirements of Rule 101 with respect to the 
Funds, thus permitting persons who may be deemed to be participating in 
a distribution of Shares of the Funds to bid for or purchase such 
Shares during their participation in such distribution.
    It is further ordered, pursuant to Rule 102(e) of Regulation M, 
that the Trust, based on the representations and the facts presented in 
the Letter, is exempt from the requirements of Rule 102 with respect to 
the Funds, thus permitting the Funds to redeem Shares of the Funds 
during the continuous offering of such Shares.
    It is further ordered, pursuant to Rule 10b-17(b)(2), that the 
Trust, based on the representations and the facts presented in the 
Letter, subject to the conditions that the Funds will provide at least 
three business days' notice in advance of the related record date for 
Special Distributions and any Exempted Accompanying Distribution and 
that the Funds will otherwise comply with Rule 10b-17 with regard to 
any distributions except Special Distributions and Exempted 
Accompanying Distributions as described above and in the Letter, is 
exempt from the requirements of Rule 10b-17 with respect to Special 
Distributions and any Exempted Accompanying Distribution.
    This exemptive relief is subject to modification or revocation at 
any time the Commission determines that such action is necessary or 
appropriate in furtherance of the purposes of the Exchange Act. This 
exemption is based on the facts presented and the representations made 
in the Letter. Any different facts or representations may require a 
different response. In the event that any material change occurs in the 
facts or representations in the Letter, transactions in Shares of the 
Funds must be discontinued, pending presentation of the facts for our 
consideration. In addition, persons relying on this exemption are 
directed to the anti-fraud and anti-manipulation provisions of the 
Exchange Act, particularly Sections 9(a) and 10(b), and Rule 10b-5 
thereunder. Responsibility for compliance with these and any other 
applicable provisions of the federal securities laws must rest with the 
persons relying on this exemption. This order should not be considered 
a view with respect to any other question that the proposed 
transactions may raise, including, but not limited to the adequacy of 
the disclosure concerning, and the applicability of other federal or 
state laws to, the proposed transactions.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(6) and (9).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-03967 Filed 2-25-15; 8:45 am]
BILLING CODE 8011-01-P



                                               10524                       Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Notices

                                               SECURITIES AND EXCHANGE                                 trust that is organized into separate                 commodity futures contracts, other
                                               COMMISSION                                              Funds. Each Fund will have a                          commodity derivatives, or measures of
                                                                                                       distinctive objective to track the                    price volatility of a broad-based equity
                                               [Release No. 34–74348; File No. TP 14–02]
                                                                                                       movements in a specified spot                         index;
                                                                                                       commodity, commodity futures                             • Like other exchange-traded
                                               Order Granting Limited Exemptions
                                                                                                       contract, or measures of price volatility             products, the secondary market price of
                                               From Exchange Act Rule 10b–17 and
                                                                                                       of a broad-based equity index as                      Shares should not vary substantially
                                               Rules 101 and 102 of Regulation M to
                                                                                                       measured by such Fund’s underlying                    from their respective Class Values (as
                                               AccuShares S&P GSCI Spot Fund,
                                                                                                       index (‘‘Underlying Index’’) during each              defined in the Letter) per Share because
                                               AccuShares S&P GSCI Agriculture and
                                                                                                       Fund’s ‘‘Measuring Period.’’ 3 Each                   the redeemability and the continuous
                                               Livestock Spot Fund, AccuShares S&P
                                                                                                       Fund will engage in issuing, offering,                offering features of the Funds provide
                                               GSCI Industrial Metals Spot Fund,
                                                                                                       and redeeming ‘‘paired’’ ‘‘Up’’ and                   opportunities for arbitrage activity that
                                               AccuShares S&P GSCI Crude Oil Spot
                                                                                                       ‘‘Down’’ Shares, two types of Shares                  should eliminate any significant
                                               Fund, AccuShares S&P GSCI Brent Oil
                                                                                                       that reflect different views on the future            disparity between the market price of
                                               Spot Fund, AccuShares S&P GSCI                                                                                Shares and their respective Class Values
                                               Natural Gas Spot Fund, and                              direction of the Underlying Index.
                                                                                                       Entitlements of a Fund’s Up Shares to                 per Share.
                                               AccuShares Spot CBOE VIX Fund,                                                                                   • Significant disparities between the
                                               Pursuant to Exchange Act Rule 10b–                      distributions are related to any increases
                                                                                                       of such Fund’s Underlying Index, and                  market price of each Fund’s Shares and
                                               17(b)(2) and Rules 101(d) and 102(e) of                                                                       the liquidation value of the Shares and
                                               Regulation M                                            entitlements of a Fund’s Down Shares to
                                                                                                       distributions from such Fund are related              between the market price of each Fund’s
                                               February 20, 2015.                                      to any decreases of the same Underlying               Shares and the value of the Underlying
                                                  On February 18, 2015, the                            Index, during each Measuring Period.                  Index should be eliminated by the
                                               Commission approved a proposed rule                     The Funds will not hold commodities,                  arbitrage mechanism afforded by the
                                               change by NASDAQ Stock Market LLC                       futures, or other assets that are                     open-ended character of the Funds and
                                               to adopt new listing standards for                      referenced by the Underlying Index but                the redeemability of their Shares;
                                                                                                       will instead hold cash, certain U.S.                     • The ‘‘Corrective Distribution’’
                                               ‘‘Paired Class Shares’’ as new NASDAQ
                                                                                                       Treasury securities, and certain                      mechanism (as described in the Letter)
                                               Rule 5713, as well as to permit the
                                                                                                       overnight repurchase agreements.                      is designed to supplement the
                                               listing and trading of ‘‘Paired Class
                                                                                                       Creations and redemptions are                         aforementioned arbitrage mechanism in
                                               Shares’’ issued by AccuShares
                                                                                                       permitted only in Creation Units.                     those rare situations where the arbitrage
                                               Commodity Trust I (the ‘‘Trust’’).1 By
                                                                                                          The Requestors also represent, among               mechanism fails;
                                               letter dated February 20, 2015 (the                                                                              • The presence of each Fund’s pre-
                                               ‘‘Letter’’), as supplemented by                         other things, the following:
                                                                                                          • Shares of the Funds will be listed               established Corrective Distribution
                                               conversations with the staff of the                                                                           Thresholds (as defined in the Letter) is
                                               Division of Trading and Markets,                        and traded on a national securities
                                                                                                       exchange that has obtained approval of                also intended to aid in driving the
                                               counsel for AccuShares Investment                                                                             alignment of market prices with Class
                                               Management LLC (the ‘‘Sponsor’’), the                   a rule change from the Commission
                                                                                                       pursuant to Rule 19b–4;                               Value per Share;
                                               Trust, AccuShares S&P GSCI Spot Fund,                                                                            • Special Distributions (as defined in
                                               AccuShares S&P GSCI Agriculture and                        • Neither the Trust nor any of its
                                                                                                       Funds will be an investment company                   the Letter) will be triggered only if a
                                               Livestock Spot Fund, AccuShares S&P                                                                           Fund’s Underlying Index experiences an
                                               GSCI Industrial Metals Spot Fund,                       registered under the Investment
                                                                                                       Company Act of 1940, as amended                       unexpected level of volatility and
                                               AccuShares S&P GSCI Crude Oil Spot                                                                            exceeds a fixed rate of change (for
                                               Fund, AccuShares S&P GSCI Brent Oil                     (‘‘1940 Act’’), and will not be required
                                                                                                       to register under the 1940 Act;                       example, 75% for the AccuShares S&P
                                               Spot Fund, AccuShares S&P GSCI                                                                                GSCI Spot and AccuShares S&P GSCI
                                               Natural Gas Spot Fund, and AccuShares                      • Each Fund will continuously issue
                                                                                                       and redeem Shares in aggregations of at               Natural Gas Spot Funds) since the
                                               Spot CBOE VIX Fund (the ‘‘Funds’’), the                                                                       beginning of the Measuring Period (as
                                               listing exchange, any national securities               least 50,000 Shares (25,000 Up Shares
                                                                                                       and 25,000 Down Shares) in exchange                   defined in the Letter);
                                               exchange on or through which shares                                                                              • Special Distributions are not
                                               issued by the Funds (‘‘Shares’’) may                    for specified amounts of cash, with the
                                                                                                       objective of tracking the performance of              expected to occur regularly and will
                                               subsequently trade, and persons or                                                                            occur, if at all, only under the limited
                                               entities engaging in transactions in                    a specified commodity or volatility
                                                                                                       index;                                                circumstances and according to the
                                               Shares (collectively, the ‘‘Requestors’’)                                                                     fixed formula stated in each Fund’s
                                                                                                          • Throughout the trading day, the
                                               requested exemptions, or interpretive or                                                                      prospectus;
                                                                                                       listing exchange will publicly
                                               no-action relief, from Rule 10b–17
                                                                                                       disseminate intra-day prices of Fund                     • Each Fund will alert shareholders
                                               under the Securities Exchange Act of                                                                          in a prominent manner on its Web site
                                                                                                       Shares and their respective Underlying
                                               1934, as amended (‘‘Exchange Act’’),                                                                          at the close of the business day during
                                                                                                       Indexes;
                                               and Rules 101 and 102 of Regulation M,                                                                        any Measuring Period when such
                                                                                                          • The market value of Shares should
                                               in connection with secondary market                                                                           Fund’s Underlying Index first
                                                                                                       be in close alignment with the increases
                                               transactions in Shares and the creation                                                                       experiences a 50% increase or decrease
                                                                                                       and decreases in the value of each
                                               or redemption of aggregations of Shares                                                                       in its level since the beginning of that
                                                                                                       Fund’s Underlying Index which tracks
                                               of at least 50,000 shares (‘‘Creation                                                                         Measuring Period and, if and when a
                                                                                                       one or more physical commodities, a
                                               Units’’).2                                                                                                    Fund’s Underlying Index exceeds its
                                                                                                       basket of particular commodities,
rmajette on DSK2VPTVN1PROD with NOTICES




                                                  As the Requestors explain in the                                                                           threshold for issuing a Special
                                               Letter, the Trust is a Delaware statutory                 3 The Underlying Indexes for the Funds are (1)      Distribution during such Measuring
                                                                                                       S&P GSCI Spot Index, (2) S&P GSCI Agricultural        Period, at the close of business on such
                                                  1 Exchange Act Release No. 74299 (Feb. 18, 2015)
                                                                                                       and Livestock Spot Index, (3) S&P GSCI Industrial     day the relevant Fund will immediately
                                               (SR–NASDAQ–2014–065).                                   Metals Spot Index, (4) S&P GSCI Crude Oil Spot
                                                  2 Creation Units of shares are composed of 25,000    Index, (5) S&P GSCI Brent Crude Oil Spot Index,
                                                                                                                                                             notify the listing exchange, and will
                                               ‘‘Up’’ Shares and 25,000 ‘‘Down’’ Shares, as            (6) S&P GSCI Natural Gas Spot Index, and (7) CBOE     thereafter issue a press release and post
                                               explained infra.                                        Volatility Index (also known as the ‘‘VIX’’).         a notice of such event and its details on


                                          VerDate Sep<11>2014   15:27 Feb 25, 2015   Jkt 235001   PO 00000   Frm 00070   Fmt 4703   Sfmt 4703   E:\FR\FM\26FEN1.SGM   26FEN1


                                                                           Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Notices                                                     10525

                                               its Web site, including notice of any                   management investment company.                        infrequent and, for most Funds, a
                                               other distributions to be made                          However, we find that it is appropriate               Corrective Distribution may never
                                               therewith; 4                                            in the public interest and is consistent              occur), the concerns that the
                                                  • The Funds will provide at least                    with the protection of investors to grant             Commission raised in adopting Rules
                                               three business days’ notice to the listing              limited exemptions from Rules 101 and                 101 and 102 of Regulation M should not
                                               exchange in advance of the related                      102 to persons who may be deemed to                   be implicated because these
                                               record date for Special Distributions and               be participating in a distribution of                 mechanisms should reduce the potential
                                               any Exempted Accompanying                               Shares of the Funds as well as the                    that the purchases effected during the
                                               Distribution;                                           Funds, as described in more detail                    restricted period by these distribution
                                                  • The listing exchange has confirmed                 below.                                                participants and the Funds may
                                               that publication of a Special                           Rules 101 and 102 of Regulation M                     artificially affect the secondary market
                                               Distribution Notice (as defined in the                                                                        price of the Shares.5 As a result, the
                                               Letter) three business days in advance of                  Generally, Rule 101 of Regulation M                Commission finds that it is appropriate
                                               a Special Distribution Record Date (as                  is an anti-manipulation rule that,                    in the public interest and consistent
                                               defined in the Letter) can be made in the               subject to certain exceptions, prohibits
                                                                                                                                                             with the protection of investors to grant
                                               normal course, and will not require any                 any ‘‘distribution participant’’ and its
                                                                                                                                                             the Trust an exemption (1) under
                                               system changes, technology alterations                  ‘‘affiliated purchasers’’ from bidding for,
                                                                                                                                                             paragraph (d) of Rule 101 of Regulation
                                               or other type of reconfigurations by the                purchasing, or attempting to induce any
                                                                                                                                                             M with respect to the Funds, thus
                                               exchange and that it will be able to                    person to bid for or purchase any
                                                                                                                                                             permitting persons participating in a
                                               adequately disseminate the distribution                 security which is the subject of a
                                                                                                       distribution until after the applicable               distribution of Shares of the Funds to
                                               information contained in the Special                                                                          bid for or purchase such Shares during
                                               Distribution Notice to its members and                  restricted period, except as specifically
                                                                                                       permitted in the rule. Rule 100 of                    the applicable restricted period and (2)
                                               the investing public within the three-                                                                        under paragraph (e) of Rule 102 of
                                               day time period and, as a result, the                   Regulation M defines ‘‘distribution’’ to
                                                                                                       mean any offering of securities that is               Regulation M with respect to the Funds,
                                               Sponsor believes that the parties                                                                             thus permitting the Funds to redeem
                                               transacting in Fund Shares, as well as                  distinguished from ordinary trading
                                                                                                       transactions by the magnitude of the                  Shares of the Funds during the
                                               their broker-dealers, will be able to                                                                         applicable restricted period.
                                               timely reflect Special Distributions and                offering and the presence of special
                                                                                                       selling efforts and selling methods. The              Rule 10b–17
                                               Exempted Accompanying Distributions
                                                                                                       provisions of Rule 101 of Regulation M
                                               in the price ultimately paid; and
                                                                                                       apply to underwriters, prospective                       Rule 10b–17, with certain exceptions,
                                                  • The Sponsor has agreed to compile
                                                                                                       underwriters, brokers, dealers, or other              requires an issuer of a class of publicly
                                               the following data and provide it to the
                                                                                                       persons who have agreed to participate                traded securities to give notice of certain
                                               Commission staff on a quarterly basis
                                                                                                       or are participating in a distribution of             specified actions (for example, a
                                               for each Fund during the first year of
                                                                                                       securities. The Shares are in a                       dividend distribution) relating to such
                                               operation:
                                                                                                       continuous distribution and, as such,                 class of securities in accordance with
                                                  Æ Daily Class Values and daily Class
                                                                                                       the restricted period in which                        Rule 10b–17(b). Based on the
                                               Values per Share;
                                                                                                       distribution participants and their                   representations from the Fund, Sponsor,
                                                  Æ Daily end of day secondary market                  affiliated purchasers are prohibited from
                                               price per Class (as defined in the Letter)                                                                    and listing exchange that timely
                                                                                                       bidding for, purchasing, or attempting to             notification of the existence and timing
                                               per Share;                                              induce others to bid for or purchase
                                                  Æ Per Share, the date, form (i.e.,                                                                         of such Special Distributions and
                                                                                                       extends indefinitely.                                 Exempted Accompanying Distributions
                                               shares, dollars, etc.), and size of any                    Similarly, Rule 102 of Regulation M
                                               distributions including any stock split;                                                                      will be provided to market participants
                                                                                                       prohibits issuers, selling security                   and that Special Distributions and
                                               and                                                     holders, and any affiliated purchaser of
                                                  Æ Per Share, with respect to any stock                                                                     Exempted Accompanying Distributions
                                                                                                       such person from bidding for,                         are not expected to occur frequently and
                                               split, whether it was a reverse or                      purchasing, or attempting to induce any
                                               forward split.                                                                                                only under the limited circumstances, if
                                                                                                       person to bid for or purchase a covered               at all, according to a pre-determined
                                               Regulation M                                            security during the applicable restricted             formula published in each Fund’s
                                                                                                       period in connection with a distribution              prospectus, the concerns that the
                                                 While redeemable securities issued by                 of securities effected by or on behalf of
                                               an open-end management investment                                                                             Commission raised in adopting Rule
                                                                                                       an issuer or selling security holder.                 10b–17 should not be implicated. As a
                                               company are excepted from the                              Based on the representations and facts
                                               provisions of Rule 101 and 102 of                                                                             result, the Commission finds that it is
                                                                                                       presented in the Letter, particularly that
                                               Regulation M, the Requestors may not                                                                          appropriate in the public interest and
                                                                                                       the market value of Shares should be in
                                               rely upon that exception for the Shares                                                                       consistent with the protection of
                                                                                                       close alignment with the increases and
                                               as they are not issued by an open-end                                                                         investors to grant the Trust a
                                                                                                       decreases in the value of each Fund’s
                                                                                                                                                             conditional exemption from Rule 10b–
                                                                                                       Underlying Index, that significant
                                                  4 Other distributions, specifically previously                                                             17 with respect to the Special
                                                                                                       disparities between the market price of
                                               announced distributions of a Fund’s net income or                                                             Distributions and Exempted
                                               a Corrective Distribution, may occasionally             each Fund’s Shares and the liquidation
                                                                                                                                                             Accompanying Distributions.
                                               simultaneously accompany a Special Distribution         value of the Shares and between the
                                               (‘‘Accompanying Distributions’’). In some cases,        market price of each Fund’s Shares and
rmajette on DSK2VPTVN1PROD with NOTICES




                                               these Accompanying Distributions may be triggered                                                               5 See Securities Exchange Act Release No. 33924

                                               without sufficient time to make the notice required
                                                                                                       the value of the Underlying Index                     (Apr. 19, 1994); 59 FR 21681 (Apr. 26, 1994) (stating
                                               by Rule 10b–17 in the time frame mandated in the        should be eliminated by the arbitrage                 that the purpose of the prohibitions of Rules 101
                                               rule. The exemption contained herein only extends       mechanism, and that the Corrective                    and 102 are to ‘‘prevent those persons participating
                                               to those Accompanying Distributions that cannot be      Distribution mechanism is designed to                 in a distribution of securities . . . from artificially
                                               disclosed ten days prior to the record date because                                                           conditioning the market for the securities in order
                                               the Accompanying Distribution was triggered
                                                                                                       supplement the arbitrage mechanism in                 to facilitate the distribution’’ as well as ‘‘to protect
                                               within that ten-day time frame (‘‘Exempted              those rare situations where the arbitrage             the integrity of the securities trading market as an
                                               Accompanying Distributions’’).                          mechanism fails (which will be                        independent pricing mechanism.’’).



                                          VerDate Sep<11>2014   15:27 Feb 25, 2015   Jkt 235001   PO 00000   Frm 00071   Fmt 4703   Sfmt 4703   E:\FR\FM\26FEN1.SGM   26FEN1


                                               10526                       Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Notices

                                               Conclusion                                              adequacy of the disclosure concerning,                principal office of the Exchange, and at
                                                  It is hereby ordered, pursuant to Rule               and the applicability of other federal or             the Commission’s Public Reference
                                               101(d) of Regulation M, that the Trust,                 state laws to, the proposed transactions.             Room.] [sic]
                                               based on the representations and facts                     For the Commission, by the Division of             II. Self-Regulatory Organization’s
                                               presented in the Letter, is exempt from                 Trading and Markets, pursuant to delegated            Statement of the Purpose of, and
                                               the requirements of Rule 101 with                       authority.6                                           Statutory Basis for, the Proposed Rule
                                               respect to the Funds, thus permitting                   Jill M. Peterson,                                     Change
                                               persons who may be deemed to be                         Assistant Secretary.
                                                                                                                                                                In its filing with the Commission, the
                                               participating in a distribution of Shares               [FR Doc. 2015–03967 Filed 2–25–15; 8:45 am]           Exchange included statements
                                               of the Funds to bid for or purchase such                BILLING CODE 8011–01–P                                concerning the purpose of and basis for
                                               Shares during their participation in                                                                          the proposed rule change and discussed
                                               such distribution.                                                                                            any comments it received on the
                                                  It is further ordered, pursuant to Rule              SECURITIES AND EXCHANGE                               proposed rule change. The text of these
                                               102(e) of Regulation M, that the Trust,                 COMMISSION                                            statements may be examined at the
                                               based on the representations and the                                                                          places specified in Item IV below. The
                                                                                                       [Release No. 34–74334; File No. SR–BX–
                                               facts presented in the Letter, is exempt                                                                      Exchange has prepared summaries, set
                                                                                                       2015–012]
                                               from the requirements of Rule 102 with                                                                        forth in sections A, B, and C below, of
                                               respect to the Funds, thus permitting                   Self-Regulatory Organizations;                        the most significant aspects of such
                                               the Funds to redeem Shares of the                       NASDAQ OMX BX, Inc.; Notice of Filing                 statements.
                                               Funds during the continuous offering of                 and Immediate Effectiveness of
                                               such Shares.                                            Proposed Rule Change To Amend the                     A. Self-Regulatory Organization’s
                                                  It is further ordered, pursuant to Rule              BX Options Rules To Extend the Pilot                  Statement of the Purpose of, and
                                               10b–17(b)(2), that the Trust, based on                  Program Under Chapter V, Section                      Statutory Basis for, the Proposed Rule
                                               the representations and the facts                                                                             Change
                                                                                                       3(d)(iv)
                                               presented in the Letter, subject to the                                                                       1. Purpose
                                               conditions that the Funds will provide                  February 20, 2015.
                                               at least three business days’ notice in                    Pursuant to Section 19(b)(1) of the                   In April 2013,4 the Commission
                                               advance of the related record date for                  Securities Exchange Act of 1934                       approved a proposal, on a one year pilot
                                               Special Distributions and any Exempted                  (‘‘Act’’),1 and Rule 19b–4 thereunder,2               basis, to adopt Chapter V, Section
                                               Accompanying Distribution and that the                  notice is hereby given that on February               3(d)(iv) to provide for how the Exchange
                                               Funds will otherwise comply with Rule                   19, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’                 will treat obvious and catastrophic
                                               10b–17 with regard to any distributions                 or ‘‘Exchange’’) filed with the Securities            options errors in response to the Plan,
                                               except Special Distributions and                        and Exchange Commission (‘‘SEC’’ or                   which is applicable to all NMS stocks,
                                               Exempted Accompanying Distributions                     ‘‘Commission’’) the proposed rule                     as defined in Regulation NMS Rule
                                               as described above and in the Letter, is                change as described in Items I and II                 600(b)(47).5 The Plan is designed to
                                               exempt from the requirements of Rule                    below, which Items have been prepared                 prevent trades in individual NMS stocks
                                                                                                                                                             from occurring outside of specified
                                               10b–17 with respect to Special                          by the Exchange. The Commission is
                                                                                                                                                             Price Bands.6 The requirements of the
                                               Distributions and any Exempted                          publishing this notice to solicit
                                                                                                                                                             Plan are coupled with Trading Pauses to
                                               Accompanying Distribution.                              comments on the proposed rule change
                                                  This exemptive relief is subject to                                                                        accommodate more fundamental price
                                                                                                       from interested persons.
                                               modification or revocation at any time                                                                        moves (as opposed to erroneous trades
                                                                                                       I. Self-Regulatory Organization’s                     or momentary gaps in liquidity).
                                               the Commission determines that such
                                                                                                       Statement of the Terms of the Substance                  The Exchange extended the operation
                                               action is necessary or appropriate in
                                                                                                       of the Proposed Rule Change                           of Chapter V, Section 3(d)(iv), which
                                               furtherance of the purposes of the                                                                            provides that trades are not subject to an
                                               Exchange Act. This exemption is based                      The Exchange proposes to amend the
                                                                                                                                                             obvious error or catastrophic error
                                               on the facts presented and the                          BX Options Rules to extend the pilot
                                                                                                                                                             review pursuant to Chapter V, Sections
                                               representations made in the Letter. Any                 program under Chapter V, Section
                                                                                                                                                             6(b) or 6(f) during a Limit State or
                                               different facts or representations may                  3(d)(iv), which provides for how the
                                                                                                                                                             Straddle State in 2014.7 The Exchange
                                               require a different response. In the event              Exchange treats obvious and                           now proposes to extend the pilot
                                               that any material change occurs in the                  catastrophic options errors in response               program for an additional pilot period
                                               facts or representations in the Letter,                 to the Plan to Address Extraordinary                  ending October 23, 2015. The Exchange
                                               transactions in Shares of the Funds                     Market Volatility Pursuant to Rule 608                believes conducting an obvious error or
                                               must be discontinued, pending                           of Regulation NMS under the Act (the                  catastrophic error review is
                                               presentation of the facts for our                       ‘‘Limit Up-Limit Down Plan’’ or the                   impracticable given the lack of a reliable
                                               consideration. In addition, persons                     ‘‘Plan’’).3 The Exchange proposes to                  National Best Bid/Offer (‘‘NBBO’’) in the
                                               relying on this exemption are directed                  extend the pilot period until October 23,
                                               to the anti-fraud and anti-manipulation                 2015.                                                   4 Securities Exchange Act Release No. 69343
                                               provisions of the Exchange Act,                            The text of the proposed rule                      (April 8, 2013), 78 FR 21982 (April 12, 2013) (SR–
                                               particularly Sections 9(a) and 10(b), and               change is available on the Exchange’s                 BX–2013–026).
                                                                                                                                                               5 The Plan was extended until February 20, 2015.
                                               Rule 10b–5 thereunder. Responsibility                   Web site at http://
                                                                                                                                                             The Plan was initially approved for a one-year pilot
                                               for compliance with these and any other                 nasdaqomxbx.cchwallstreet.com/, at the
rmajette on DSK2VPTVN1PROD with NOTICES




                                                                                                                                                             period, which began on April 8, 2013. Securities
                                               applicable provisions of the federal                                                                          Exchange Act Release No. 71649 (March 5, 2014),
                                               securities laws must rest with the                        6 17 CFR 200.30–3(a)(6) and (9).                    79 FR 13696 (March 11, 2014).
                                                                                                         1 15 U.S.C. 78s(b)(1).
                                               persons relying on this exemption. This                                                                         6 Unless otherwise specified, capitalized terms
                                                                                                         2 17 CFR 240.19b–4.                                 used in this rule filing are based on the defined
                                               order should not be considered a view                     3 Securities Exchange Act Release Nos. 69140        terms of the Plan.
                                               with respect to any other question that                 (March 15, 2013), 78 FR 17255 (March 20, 2013);         7 Securities Exchange Act Release No. 71900
                                               the proposed transactions may raise,                    and 69343 (April 8, 2013), 78 FR 21982 (April 2,      (April 8, 2014), 79 FR 20951 (April 14, 2014) (SR–
                                               including, but not limited to the                       2013) (SR–BX–2013–026).                               BX–2014–017).



                                          VerDate Sep<11>2014   15:27 Feb 25, 2015   Jkt 235001   PO 00000   Frm 00072   Fmt 4703   Sfmt 4703   E:\FR\FM\26FEN1.SGM   26FEN1



Document Created: 2015-12-18 13:05:09
Document Modified: 2015-12-18 13:05:09
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 10524 

2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR