80 FR 15840 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the LBMA Gold Price as a Replacement for the London Gold Fix for Certain Gold Related Exchange Traded Products

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 57 (March 25, 2015)

[Federal Register Volume 80, Number 57 (Wednesday, March 25, 2015)]
[Notices]
[Pages 15840-15845]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06719]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74544; File No. SR-NYSEArca-2015-19]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
LBMA Gold Price as a Replacement for the London Gold Fix for Certain 
Gold Related Exchange Traded Products

March 19, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 17, 2015, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I 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.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to (1) to reflect a change to the value used 
by the SPDR[supreg] Gold Trust, which is currently listed on the 
Exchange under NYSE Arca Equities Rule 5.2(j)(5); iShares Gold Trust, 
ETFS Gold Trust, ETFS Precious Metals Basket Trust, ETFS Asian Gold 
Trust and Merk Gold Trust, each of which is currently listed on the 
Exchange under NYSE Arca Equities Rule 8.201, with respect to 
calculation of the net asset value of shares of each trust; and (2) to 
reflect a change to the underlying benchmark for ProShares Ultra Gold 
and ProShares UltraShort Gold, each of which is currently listed on the 
Exchange under NYSE Arca Equities Rule 8.200. The text of the proposed 
rule change is available on the Exchange's Web site at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Exchange listing rules 
applicable to nine exchange-traded products, all of which reference the 
``London Gold Fix'', as described further below. The exchange-traded 
products are listed and traded pursuant to NYSE Arca Equities Rule 
5.2(j)(5) for the Equity Gold Shares; NYSE Arca Equities Rules 8.201, 
for Commodity-Based Trust Shares, and NYSE Arca Equities Rule 8.200, 
for Trust Issued Receipts. The proposed change would replace references 
to the

[[Page 15841]]

``London Gold Fix'', as described below. The London Gold Fix is a gold-
price mechanism that has been in existence since 1919 and that will be 
discontinued T [sic] the close of business on March 19, 2015.\4\
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    \4\ As described in the registration statement under the 
Securities Act of 1933 (15 U.S.C. 77a) (``1933 Act'') for the 
SPDR[supreg] Gold Trust (formerly known as the streetTRACKS Gold 
Trust) (see infra, note 13), twice daily during London trading hours 
there is a fix (``London Gold Fix'') which provides reference gold 
prices for that day's trading. Many long-term contracts will be 
priced on the basis of either the morning (AM) or afternoon (PM) 
London Gold Fix, and market participants will usually refer to one 
or the other of these prices when looking for a basis for 
valuations. The London Gold Fix is the most widely used benchmark 
for daily gold prices and is quoted by various financial information 
sources. Membership in the London fix is traditionally limited to 
banks that are bullion dealers and members of the LBMA. The 
chairmanship rotates annually among the four member firms. The fix 
takes place by telephone and the four member firms no longer meet 
face-to-face as was previously the case. There is a morning session 
at 10:30 a.m. London time and an afternoon session at 3:00 p.m. 
London time. The current members of the gold fixing are Bank of Nova 
Scotia--ScotiaMocatta, Barclays Bank plc, HSBC Bank USA, N.A., and 
Soci[eacute]t[eacute] G[eacute]n[eacute]rale. Any other market 
participant wishing to participate in the trading on the fix is 
required to do so through one of the four gold fixing members. 
Orders are placed either with one of the four fixing members or with 
another bullion dealer who will then be in contact with a fixing 
member during the fixing. The fixing members net-off all orders when 
communicating their net interest at the fixing. The fix begins with 
the fixing chairman suggesting an opening price, reflecting the 
market price prevailing at the opening of the fix. This is relayed 
by the fixing members to their dealing rooms which have direct 
communication with all interested parties. Any market participant 
may enter the fixing process at any time, or adjust or withdraw his 
order. The gold price is adjusted up or down until all the buy and 
sell orders are matched, at which time the price is declared fixed. 
All fixing orders are transacted on the basis of this fixed price, 
which is instantly relayed to the market through various media.
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Revised Procedures for the Gold Price
    On November 8, 2014, the London Bullion Market Association 
(``LBMA'') announced that ICE Benchmark Administration (``IBA'') \5\ 
has been selected to be the third-party administrator for the ``LBMA 
Gold Price'', which will replace the current London Gold Fix. IBA, an 
independent specialist benchmark administrator, will provide the 
auction platform and methodology as well as the overall administration 
and governance for the LBMA Gold Price benchmark.
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    \5\ IBA is a London-based company that was created specifically 
to administer systemically important benchmarks. Formed in 2013, IBA 
is part of the Intercontinental Exchange (ICE).
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    On February 19, 2015, the Intercontinental Exchange (``ICE'') 
announced that the new LBMA Gold Price will be launched on March 20, 
2015. As the administrator for the LBMA Gold Price benchmark and the 
operator of the ``IBA Gold Auction'', IBA will transition from the 
current London Gold Fix procedures to a physically settled, electronic 
and tradeable auction, with the ability to settle trades in U.S. 
Dollars (``USD''), euros or British Pounds. Within the process, 
aggregated gold bids and offers will be updated in real-time with the 
imbalance calculated and the price updated at regular intervals 
(expected to be at least every 45 seconds). IBA will use ICE's front-
end system-- WebICE-- as the technology platform that will allow direct 
participants, as well as sponsored clients of direct participants, to 
manage their orders in the auction in real time via their desktops.\6\
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    \6\ The WebICE platform provides real-time order management as 
well as separation of direct participant and sponsored client 
orders, live credit limit controls, audit history, advanced Excel 
integration and automated deal notifications.
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    Participants in the auction will include direct participants and 
sponsored clients of direct participants. Direct participants may enter 
orders on their own behalf or on behalf of clients. Sponsored clients 
also may manage their own positions utilizing their own trading 
screens; however, a sponsored client's orders would be backed by the 
sponsoring direct participant. WebICE allows sponsored clients to 
participate in the auction process with the same information and order 
management capabilities as direct participants.
    At the opening of each auction, the auction chairman (``Chairman'') 
will announce an opening price (in USD) based on the current market 
conditions and begin auction rounds, with an expected duration of at 
least every 45 seconds each. During each auction round, participants 
may enter the volume they wish to buy or sell at that price, and such 
orders will be part of the price formation. All orders will be routed 
through direct participants but only direct participants will share the 
final imbalance. Aggregate bid and offer volume will be shown live on 
WebICE, providing a level playing field for all participants. At the 
end of each auction round, the total net volume will be calculated. If 
this `imbalance' is larger than the imbalance tolerance (currently set 
at 20,000 oz) then the Chairman will choose a new price \7\ (based on 
the current market conditions, and the direction and magnitude of the 
imbalance in the round) and begin a new auction round. If the imbalance 
is less than the tolerance, then the auction is complete with all 
volume tradeable at that price. The price will then be set in USD and 
also converted into in euros and British Pounds. Auctions will continue 
to be run at 10:30 and 15:00 (London time).
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    \7\ The Chairman will have significant experience in the gold 
markets and will be employed by IBA.
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    During the auction, the price at the start of each round, and the 
volumes at the end of each round will be available through major market 
data vendors. As soon as the auction finishes, the final prices and 
volumes will be available through major market data vendors. IBA will 
also publish transparency reports, detailing the prices, volumes and 
times for each round of the auction. These transparency reports will be 
available through major market data vendors and IBA when the auction 
finishes. The process can also be observed real-time through a WebICE 
screen. The auction mechanism will provide a complete audit trail.
    The number of direct participants initially expected to participate 
in the auction process is not yet confirmed, but is expected to equal 
or exceed the number of market participants currently determining the 
London Gold Fix.
Regulation of the LBMA Gold Price
    As of April 1, 2015, the LBMA Gold Price will be regulated by the 
Financial Conduct Authority (``FCA'') in the United Kingdom 
(``UK'').\8\ IBA is already authorized as a regulated benchmark 
administrator by the FCA. Under the UK benchmark regulation,\9\ the 
governance structure for a regulated benchmark must include an 
Oversight Committee, made up of market participants, industry bodies, 
direct participant representatives,

[[Page 15842]]

infrastructure providers and the administrator (i.e., IBA). \10\ 
Through the Oversight Committee, the LBMA will continue to have 
significant involvement in the oversight of the auction process, 
including, among other matters, changes to the methodology and 
accreditation of direct participants.\11\
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    \8\ The conduct of financial institutions is overseen by the 
FCA, which was formed from the former Financial Services Authority 
and is separate from the Bank of England. The LBMA Gold Price will 
be regulated under the FCA's Market Conduct (MAR) Sourcebook (MAR 
8.3).
    \9\ On June 12, 2014, the UK Chancellor of the Exchequer 
announced steps to raise standards of conduct in the financial 
system with a joint review by the UK Treasury, the Bank of England 
and the FCA into the way wholesale financial markets operate. 
According to this announcement, the ``Fair and Effective Markets 
Review'', led by Bank of England Deputy Governor for Markets and 
Banking, has been tasked with investigating those wholesale markets, 
both regulated and unregulated, where most of the recent concerns 
about misconduct have arisen: Fixed-income, currency and commodity 
markets, including associated derivatives and benchmarks. It will 
make recommendations on: principles to govern the operation of fair 
and effective markets, focusing on fixed income, currency and 
commodities; reforms to ensure standards of behavior are in 
accordance with those principles; tools to strengthen the oversight 
of market conduct; whether the regulatory perimeter for wholesale 
financial markets should be extended, and to what extent 
international action is required; and additional reforms in relation 
to benchmarks, in order to strengthen market infrastructure. See 
http://www.bankofengland.co.uk/markets/Documents/femraug2014.pdf. On 
September 25, 2014, the Fair and Effective Markets Review announced 
its proposal that the gold fixing process may become regulated under 
UK benchmark regulation, effective from April 2015.
    \10\ The Oversight Committee is a key decision making forum, 
with market representation that includes participants, users and 
infrastructure providers. The Oversight Committee's responsibilities 
include review of methodology and process relating to the LBMA Gold 
Price; implementation of a Code of Conduct applicable to 
participants; expansion of membership; and surveillance oversight, 
among other functions. The Oversight Committee's structure and 
responsibilities is described in the Oversight Committee Terms of 
Reference, available on the IBA Web site.
    \11\ The LBMA will continue to provide guidance with respect to 
the LBMA Gold Price through the Oversight Committee, which will 
facilitate communication among representatives of all market 
participants to ensure the process continues to fulfil the needs of 
the market. The Oversight Committee is responsible for decisions 
that affect the evolution of the process based on changes in the 
market and regulatory environments.
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    The price discovery process for the LBMA Gold Price will be subject 
to surveillance by IBA. IBA is compliant with the UK benchmark 
regulation (MAR 8.3), regulated by the FCA, and has been formally 
assessed against the IOSCO Principles for Financial Benchmarks (the 
``IOSCO Principles'').\12\ In order to meet the IOSCO Principles, the 
price discovery used for the LBMA Gold Price benchmark will be 
auditable and transparent.
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    \12\ The IOSCO Principles are designed to enhance the integrity, 
the reliability and the oversight of benchmarks by establishing 
guidelines for benchmark administrators and other relevant bodies in 
the following areas: Governance: To protect the integrity of the 
benchmark determination process and to address conflicts of 
interest; Benchmark quality: to promote the quality and integrity of 
benchmark determinations through the application of design factors; 
Quality of the methodology: to promote the quality and integrity of 
methodologies by setting out minimum information that should be 
addressed within a methodology. These principles also call for 
credible transition policies in case a benchmark may cease to exist 
due to market structure change. Accountability mechanisms: to 
establish complaints processes, documentation requirements and audit 
reviews. The IOSCO Principles provide a framework of standards that 
might be met in different ways, depending on the specificities of 
each benchmark. In addition to a set of high level principles, the 
framework offers a subset of more detailed principles for benchmarks 
having specific risks arising from their reliance on submissions 
and/or their ownership structure. For further information concerning 
the IOSCO Principles, see http://www.iosco.org/library/pubdocs/pdf/IOSCOPD415.pdf.
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Exchange-Listed Gold-Based Products
    The Exchange lists and trades shares of exchange traded products 
that reference the London Gold Fix benchmark for one or more purposes. 
The Exchange lists and trades shares of (1) the SPDR[supreg] Gold 
Trust,\13\ which is currently listed on the Exchange under NYSE Arca 
Equities Rule 5.2(j)(5); (2) iShares Gold Trust,\14\ ETFS Gold 
Trust,\15\ ETFS Precious Metals Basket Trust,\16\ ETFS Asian Gold 
Trust,\17\ and Merk Gold Trust,\18\ each of which is currently listed 
on the Exchange under NYSE Arca Equities Rule 8.201 (together with the 
SPDR Gold Trust, the ``Gold Trusts''). In addition, the Exchange lists 
and trades shares of the Ultra Gold ProShares and UltraShort Gold 
ProShares \19\ (together, the ``Gold Funds''), each of which is 
currently listed on the Exchange under NYSE Arca Equities Rule 8.200.
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    \13\ See Securities Exchange Act Release Nos. 50603 (October 28, 
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order 
approving listing of shares of the streetTRACKS Gold Trust (now 
known as the SPDR[supreg] Gold Trust) on the New York Stock 
Exchange); See Securities Exchange Act Release Nos. 51245 (February 
23, 2005), 70 FR 10731 (March 4, 2005) (SR-PCX-2004-117) (order 
approving trading on the Exchange of shares of the streetTRACKS Gold 
Trust pursuant to unlisted trading privileges); 56224 (August 8, 
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76) (order 
approving listing on the Exchange of shares of the streetTRACKS Gold 
Trust).
    \14\ See Securities Exchange Act Release No. 63398 (November 30, 
2010), 75 FR 76056 (December 7, 2010) (SR-NYSEArca-2010-105) (notice 
of filing and immediate effectiveness of proposed rule change 
relating to calculation of net asset value by the iShares Gold Trust 
(formerly the iShares COMEX Gold Trust)). See also Securities 
Exchange Act Release No. 56041 (July 11, 2007), 72 FR 39114 (July 
17, 2007) (SR-NYSEArca-2007-43) (order approving listing on the 
Exchange of iShares COMEX Gold Trust). 51058 (January 19, 2005), 70 
FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order approving 
listing of iShares COMEX Gold Trust on the American Stock Exchange 
LLC).
    \15\ See Securities Exchange Act Release No. 59895 (May 8, 
2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (notice of 
filing and order granting accelerated approval of proposed rule 
change relating to the listing and trading of shares of the ETFS 
Gold Trust).
    \16\ See Securities Exchange Act Release No. 62402 (June 29, 
2010), 75 FR 39292 (July 8, 2010) (SR-NYSEArca-2010-56) (notice of 
filing of proposed rule change to list and trade shares of the ETFS 
Precious Metals Basket Trust); 62692 (August 11, 2010), 75 FR 50789 
(August 17, 2010) (order approving proposed rule change to list and 
trade shares of the ETFS Precious Metals Basket Trust).
    \17\ See Securities Exchange Act Release No. 63267 (November 8, 
2010), 75 FR 69494 (November 12, 2010) (notice of filing of proposed 
rule change to list and trade shares of the ETFS Asian Gold Trust); 
63464 (December 8, 2010), 75 FR 77926 (December 14, 2010) (SR-
NYSEArca-2010-95) (order granting accelerated approval of a proposed 
rule change to list and trade shares of the ETFS Asian Gold Trust).
    \18\ See Securities Exchange Act Release No. 71038 (December 11, 
2013), 78 FR 76367 (December 17, 2013) (notice of filing of proposed 
rule change to list and trade shares of the Merk Gold Trust) 71378 
(January 23, 2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-
137) (order approving proposed rule change to list and trade shares 
of the Merk Gold Trust).
    \19\ See Securities Exchange Act Release Nos. 58457 (September 
3, 2008), (73 FR 52711 (September 10, 2008) (SR-NYSEArca-2008-91) 
(notice of filing and order granting accelerated approval of 
proposed rule change regarding listing and trading of shares of 14 
funds of the Commodities and Currency Trust, now ProShares Trust 
II); 58162 (July 15, 2008), 73 FR 42391 (July 21, 2008) (SR-
NYSEArca-2008-73) (notice of filing and immediate effectiveness of 
proposed rule change relating to trading of shares of 14 funds of 
the Commodities and Currency Trust pursuant to unlisted trading 
privileges). See also Securities Exchange Act Release Nos. 58161 
(July 15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39) 
(order approving listing and trading on the American Stock Exchange 
LLC of shares of 14 funds of the Commodities and Currency Trust); 
57932 (June 5, 2008), 73 FR 33467 (June 12, 2008) (notice of 
proposed rule change regarding listing and trading of shares of 14 
funds of the Commodities and Currency Trust).
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    With respect to the Gold Trusts, the net asset value of shares of 
the respective trusts is based on the London Gold Fix, as described in 
the applicable rule filings relating to listing and trading of shares 
of each of the Gold Trusts and in the registration statement under the 
1933 Act relating to each such trust.\20\ After March 19, 2015, the 
London Gold Fix will no longer exist and it is, therefore, necessary 
for the Gold Trusts to change the benchmark price that each such trust 
uses for purposes of calculating the net asset value of such trust's 
shares. The sponsors of the Gold Trusts have indicated that, as of 
March 20, 2015, they intend to use the LBMA Gold Price for purposes of 
determining the net asset value of shares of the Gold Trusts. 
Accordingly, the Exchange proposes to change the benchmark price used 
by the Gold Trusts for calculation of the net asset value of shares of 
each of such trust.
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    \20\ See supra, notes 13-19 [sic]. See also the registration 
statement on Form S-3 under the 1933 Act for the SPDR[supreg] Gold 
Trust dated April 26, 2012 (No. 333-180974); registration statement 
on Form S-3 under the 1933 Act for the iShares Gold Trust, dated May 
10, 2014 (No. 333-199257); Post-Effective Amendment No. 2 on Form S-
3 under the 1933 Act for the ETFS Precious Metals Basket Trust, 
filed with the Commission on November 25, 2014 (No. 333-195675); 
Registration Statement on Form S-3 ASR under the 1933 Act for the 
ETFS Gold Trust, filed with the Commission on April 11, 2014 (No. 
333-195204); Registration Statement on Form S-1 under the 1933 Act 
for the ETFS Asian Gold Trust, filed with the Commission on May 12, 
2014 (No. 333-195868); and Amendment No. 6 on Form S-1 under the 
1933 Act for the Merk Gold Trust, dated May 13, 2014 (No. 333-
180868).
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    With respect to the Gold Funds, the existing ``Underlying 
Benchmark'' for each such fund is the U.S. dollar price of gold bullion 
as measured by the London Gold Fix.\21\ The Gold Funds,

[[Page 15843]]

therefore, similarly need to change the Underlying Benchmark for each 
such fund. The sponsor of the Gold Funds represents that it intends to 
change the Underlying Benchmark for the Gold Funds to the LBMA Gold 
Price as of March 20, 2015. Accordingly, the Exchange proposes to 
reflect a change in the Underlying Benchmark applicable to the Gold 
Funds.
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    \21\ ProShares Ultra Gold seeks daily investment results, before 
fees and expenses, that correspond to twice (200%) the daily 
performance of the Underlying Benchmark. ProShares UltraShort Gold 
seeks daily investment results, before fees and expenses that 
correspond to twice the inverse (-200%) of the daily performance of 
the Underlying Benchmark. See Securities Exchange Act Release No. 
58161 (July 15, 2008), 73 FR 42380 (July 21, 2008) (SR-Amex-2008-39) 
(order approving listing and trading of shares of fourteen funds of 
the Commodities and Currency Trust); Securities Exchange Act Release 
No. 58457 (September 3, 2008) (73 FR 52711) (September 10, 2008) 
(SR-NYSEArca-2008-91) (notice of filing and order granting 
accelerated approval of proposed rule change regarding listing and 
trading of shares of 14 funds of ProShares Trust II). See also, 
registration statement for ProShares Trust II on Form S-3 under the 
1933 Act, filed with the Commission on October 28, 2014 (No. 333-
199641).
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    The LBMA Gold Price benchmark is widely expected to be viewed as a 
full and fair representation of all market interest at the conclusion 
of the auction. IBA's electronic auction methodology is similar to the 
non-electronic process previously used to establish the London Gold Fix 
where the London Gold Fix process adjusted the gold price up or down 
until all the buy and sell orders are matched (within the imbalance 
threshold), at which time the price was declared fixed. Nevertheless, 
the LBMA Gold Price has several advantages over the previous London 
Gold Fix. IBA's auction process will be fully transparent in real time 
to direct participants and sponsored clients and, at the close of each 
auction, to the general public. The auction process also will be fully 
auditable since an audit trail exists for every change made in the 
process. Moreover, the audit trail and active surveillance of the 
auction process by IBA, as well as FCA's oversight of IBA, will deter 
manipulative and abusive conduct in establishing each day's LBMA Gold 
Price.
    The Exchange believes the new LBMA Gold Price benchmark will serve 
as an appropriate replacement to the London Gold Fix for purposes of 
determining the net asset value of shares of the Gold Trusts or as the 
Underlying Benchmark applicable to the Gold Funds because of the 
transparency of the auction process, the anticipated participation of 
an increased number of market participants compared to the London Gold 
Fix, and the auditability of the gold pricing mechanism.
    In connection with this proposed rule change, (1) the sponsors of 
the Gold Trusts will each issue a press release informing the public of 
the date a trust will first use the LBMA Gold Price to value the gold 
held by a trust; (2) the sponsor of the Gold Funds will issue a press 
release informing the public of the date the Gold Funds will first use 
the LBMA Gold Price as the basis for their respective Underlying 
Benchmark; (3) the sponsors will each file the applicable press release 
with the Commission by means of Form 8-K, which will be available on 
the applicable Gold Trust's or Gold Fund's Web site; and (4) the 
sponsors will each file an amendment to the applicable registration 
statement relating to the proposed change.\22\
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    \22\ The sponsors for the Gold Trusts and the Gold Funds 
represent that they will manage the Gold Trusts and the Gold Funds 
in the manner described in the applicable proposed rule change (see 
supra, notes 13-19), and will not implement the changes described 
herein until the instant proposed rule change is operative.
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    The sponsors for the Gold Trusts and the Gold Funds represent that 
there is no change to the investment objective of the applicable Gold 
Trust or the Gold Funds from that described in the applicable proposed 
rule change.\23\ The Gold Trusts and the Gold Funds will comply with 
all initial and continued listing requirements with respect to NYSE 
Arca Equities Rule 5.2(j)(5), 8.201 or 8.200, respectively.
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    \23\ See supra, notes 13-19.
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    Except for the changes noted above, all other facts presented and 
representations made in the proposed rule changes referenced above 
remain unchanged.
    All terms referenced but not defined herein are defined in the 
applicable proposed rule change referenced above.\24\
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    \24\ See supra, notes 13-19.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \25\ 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.
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    \25\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the new 
LBMA Gold Price benchmark will be based on an auction that is 
electronic and auditable and is produced from tradeable volumes. The 
Exchange believes the new LBMA Gold Price benchmark will serve as an 
appropriate replacement to the London Gold Fix for purposes of 
determining the net asset value of shares of the Gold Trusts or as the 
Underlying Benchmark applicable to the Gold Funds because of the 
transparency and auditability of the auction process, and the 
prospective participation of an increased number of market participants 
compared to the London Gold Fix. In addition, the LBMA Gold Price and 
the transparency reports showing the prices, timings and total volumes 
for each round will be available electronically instantly after the 
conclusion of the auction, as described above.
    The proposed change will permit the Gold Trusts and Gold Funds to 
continue to function as gold-based exchange-traded products by 
utilizing a new gold benchmark to replace the London Gold Fix, which is 
not expected to be available after March 19, 2015, and that will 
provide a sound and reasonable basis for calculation of net asset value 
or will provide a suitable Underlying Benchmark, as applicable. Such 
price will be widely disseminated by one or more major market data 
vendors and/or exchanges. Prior to or following the effectiveness of 
this proposed rule change, (1) the sponsors of the Gold Trusts will 
each issue a press release informing the public of the date a trust 
will first use the LBMA Gold Price to value the gold held by a trust; 
(2) the sponsor of the Gold Funds will issue a press release informing 
the public of the date the Gold Funds will first use the LBMA Gold 
Price as the basis for their respective Underlying Benchmark; (3) the 
sponsors of the Gold Trusts and Gold Funds will each file the 
applicable press release with the Commission by means of Form 8-K, 
which will be available on the applicable Gold Trust's or Gold Fund's 
Web site; and (4) the sponsors of the Gold Trusts and Gold Funds will 
each file an amendment to the applicable registration statement under 
the 1933 Act relating to the proposed change. Such press releases and 
registration statement amendments will protect investors and the public 
interest by providing notification to investors of the new gold price 
benchmark prior to the use of the LBMA Gold Price by the Gold Trusts 
and Gold Funds. The sponsors for the Gold Trusts and Gold Funds 
represent that there is no change to the investment objective of the 
applicable trust or the Gold Funds from that described in the 
applicable proposed rule change. The Gold Trusts and Gold Funds will 
comply with all initial and continued listing requirements relating to 
NYSE Arca Equities Rules 5.2(j)(5), 8.201 or 8.200, respectively. 
Except for the changes noted above, all other facts presented and 
representations made in proposed

[[Page 15844]]

rule changes referenced above remain unchanged.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market price discovery process and, in general, to 
protect investors and the public interest in that the gold auction will 
be transparent, auditable, and operated by a regulated benchmark 
administrator (IBA). The audit trail records every change made in the 
process and IBA has regulatory obligations to run surveillance on the 
activity in the process to deter and identify manipulative and abusive 
conduct in establishing each day's LBMA Gold Price. The new LBMA Gold 
Price, as administered by IBA, is designed to be a benchmark that meets 
the needs of the market and regulators (including the IOSCO Principles 
\26\). The Gold Trusts and Gold Funds will continue to be listed and 
traded on the Exchange pursuant to the initial and continued listing 
criteria relating to NYSE Arca Equities Rules 5.2(j)(5), 8.201 and 
8.200, respectively. Except for the changes noted above, all other 
facts presented and representations made in proposed rule changes 
referenced above remain unchanged.\27\
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    \26\ See supra, note 12.
    \27\ See supra, notes 13-19.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change will 
permit the Gold Trusts and Gold Funds to continue to function as gold-
based exchange-traded products by utilizing a new gold price benchmark 
to replace the London Gold Fix, which will not be available after March 
19, 2015, and that will provide a sound and reasonable basis for 
calculation of net asset value or will provide a suitable Underlying 
Benchmark, as applicable.

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

    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 for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \28\ and Rule 19b-4(f)(6) 
thereunder.\29\
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    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 the proposed change will provide 
additional transparency to gold pricing compared to the previous London 
Gold Fix for several reasons. The Exchange represents that IBA's 
auction process will be fully transparent in real time to direct 
participants and sponsored clients and, at the close of each auction, 
to the general public. The Exchange represents that IBA's auction 
process will be fully auditable because an audit trail exists of every 
change that is made during the auction. Moreover, the Exchange states 
that there will be active surveillance of the activity in the auction 
process by IBA. The Exchange represents that the number of gold 
participants that initially are expected to participate in the auction 
process equals or exceeds the number of market participants currently 
determining the London Gold Fix, and will contribute to the integrity 
and reliability of the pricing process.
    The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
Waiver of the operative delay will allow the Gold Trusts and the Gold 
Funds, whose shares are actively traded, to use the LBMA Gold Price as 
the basis for calculating the NAV or as an Underlying Benchmark, as 
applicable, by March 20, 2015, thereby facilitating the transition to 
the new price mechanism without disruption in trading. Therefore, the 
Commission designates the proposed rule change to be operative upon 
filing.\30\
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    \30\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 shall institute proceedings under 
Section 19(b)(2)(B) \31\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \31\ 15 U.S.C. 78s(b)(2)(B).
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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 [email protected]. Please include 
File Number SR-NYSEArca-2015-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2015-19. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only

[[Page 15845]]

information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2015-19 and should be submitted 
on or before April 15, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06719 Filed 3-24-15; 8:45 am]
 BILLING CODE 8011-01-P