82 FR 26534 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 2 Thereto, To List and Trade Shares of the Euro Gold Trust, Pound Gold Trust, and the Yen Gold Trust Under NYSE Arca Equities Rule 8.201

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 108 (June 7, 2017)

Page Range		26534-26536
FR Document		2017-11750

Federal Register, Volume 82 Issue 108 (Wednesday, June 7, 2017)

[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26534-26536]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-11750]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80840; File No. SR-NYSEArca-2017-33]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 2 Thereto, To List
and Trade Shares of the Euro Gold Trust, Pound Gold Trust, and the Yen
Gold Trust Under NYSE Arca Equities Rule 8.201

June 1, 2017.

I. Introduction

On March 31, 2017, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade shares (``Shares'') of the Euro Gold Trust, Pound Gold
Trust, and the Yen Gold Trust (each a ``Fund'' and, collectively, the
``Funds'') under NYSE Arca Equities Rule 8.201. On April 12, 2017, the
Exchange filed Amendment No. 1 to the proposal, which amended and
replaced the proposed rule change in its entirety. The proposed rule
change, as modified by Amendment No. 1, was published for comment in
the Federal Register on April 19, 2017.\3\ On May 23, 2017, the
Exchange filed Amendment No. 2 to the proposed rule change,\4\ which
amended and replaced the proposed rule change as modified by Amendment
No. 1. The Commission has not received any comments on the proposed
rule change. This order approves the proposed rule change, as modified
by Amendment No. 2.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 80457 (April 13,
2017), 82 FR 18492.
\4\ In Amendment No. 2, the Exchange: (1) Described further the
methodology for each underlying index; (2) provided additional
information regarding Solactive AG, the ``Index Provider;'' (3)
further supported its position that market makers in the Shares will
be able to trade the Shares at prices that are not at a material
discount or premium to net asset value (``NAV'') per Share; and (4)
made additional statements regarding the continued listing
requirements applicable to the Shares. The amendments to the
proposed rule change are available at: https://www.sec.gov/comments/sr-nysearca-2017-33/nysearca201733.htm. Amendment No. 2 is not
subject to notice and comment because it is a technical amendment
that does not materially alter the substance of the proposed rule
change or raise any novel regulatory issues.
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II. The Description of the Proposed Rule Change, as Modified by
Amendment No. 2 \5\
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\5\ A more detailed description of the Funds, the Shares, the
Indexes and the Gold Delivery Agreement (as defined in the Notice),
as well as investment risks, creation and redemption procedures, NAV
calculation, availability of values and other information regarding
the Funds, and fees, among other things, is included in the
Registration Statement, infra note 6, and Amendment No. 2, supra
note 4.
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The Exchange proposes to list and trade the Shares, which are a
series of the World Currency Gold Trust (``Trust''), under NYSE Arca
Equities Rule 8.201.\6\ Under NYSE Arca Equities Rule 8.201, the
Exchange may list and trade, or trade pursuant to unlisted trading
privileges, Commodity-Based Trust Shares.\7\
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\6\ On March 30, 2017, the Trust filed with the Commission its
initial registration statement on Form S-1 under the Securities Act
of 1933 relating to the Funds (File No. 333-217041) (``Registration
Statement'').
\7\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
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The Sponsor of the Funds and the Trust will be WGC USA Asset
Management Company, LLC (``Sponsor'').\8\ BNY Mellon Asset Servicing, a
division of The Bank of New York Mellon (``BNYM''), will be the Funds'
administrator (``Administrator'') and transfer agent and will not be
affiliated with the Trust, the Funds, or the Sponsor. BNYM will also
serve as the custodian of the Funds' cash, if any. HSBC Bank plc will
be the custodian of the Funds' gold.
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\8\ The Trust will be a Delaware statutory trust consisting of
multiple series, each of which will issue common units of beneficial
interest, which represent units of fractional undivided beneficial
interest in and ownership of such series. The term of the Trust and
each series will be perpetual (unless terminated earlier in certain
circumstances). The sole trustee of the Trust will be Delaware Trust
Company.
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The Euro Gold Trust will be designed to track the performance of
the Solactive GLD[supreg] EUR Gold Index, less the expenses of the
Fund's operations. The Solactive GLD[supreg] EUR Gold Index seeks to
track the daily performance of a long position in physical gold (as
represented by the Gold Price, which generally is the London Bullion
Markets Association (``LBMA'') Gold Price AM \9\) and a short position
in the Euro (i.e., a long U.S. dollar (``USD'') exposure versus the
Euro).
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\9\ The ``LBMA Gold Price'' means the price per troy ounce of
gold stated in USDs as set via an electronic auction process run
twice daily at 10:30 a.m. and 3:00 p.m. London time each Business
Day as calculated and administered by the ICE Benchmark
Administration Limited and published by the LBMA on its Web site.
The ``LBMA Gold Price AM'' is the 10:30 a.m. LBMA Gold Price. See
Amendment No. 2, supra note 4, at 8-9.
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The Pound Gold Trust will be designed to track the performance of
the Solactive GLD[supreg] GBP Gold Index, less the expenses of the
Fund's operations. The Solactive GLD[supreg] GBP Gold Index seeks to
track the daily performance of a long position in physical gold (as
represented by the Gold Price) and a short position in the British
Pound Sterling (i.e., a long USD exposure versus the British Pound
Sterling). The Yen Gold Trust will be designed to track the performance
of the Solactive GLD[supreg] JPY Gold Index, less the expenses of the
Fund's operations. The Solactive GLD[supreg] JPY Gold Index seeks to
track the daily performance of a long position in physical gold (as
represented by the Gold Price) and a short position in the Japanese Yen
(i.e., a long USD exposure versus the Japanese Yen). The Japanese Yen,
the Euro and the British Pound Sterling are referred to collectively as
the ``Reference Currencies.'' Each of the Solactive GLD[supreg] EUR
Gold Index, Solactive GLD[supreg] GBP Gold Index, and Solactive
GLD[supreg] JPY Gold Index are each referred to as an ``Index,'' and
are referred to collectively as the ``Indexes.''
Generally, each Fund's holdings will consist entirely of Gold
Bullion.\10\ Substantially all of each Fund's Gold Bullion holdings
will delivered by Authorized Participants \11\ in exchange for Fund
Shares. The Funds' Gold Bullion holdings will not be managed and the
Funds will not have any investment discretion. The Funds will not hold
their respective Reference Currencies. The Funds generally will not
hold USDs (except from time to time in very limited amounts to pay Fund
expenses).
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\10\ Gold Bullion means (a) gold meeting the requirements of
``London Good Delivery Standards'' or (b) credit to an ``Unallocated
Account'' representing the right to receive Gold Bullion meeting the
requirements of London Good Delivery Standards. London Good Delivery
Standards are the specifications for weight dimensions, fineness (or
purity), identifying marks and appearance set forth in ``The Good
Delivery Rules for Gold and Silver Bars'' published by the LBMA. See
id. at 6, n.19.
\11\ According to the Exchange, Authorized Participants are the
only persons that may place orders to create and redeem Creation
Units and such persons must enter into a Participant Agreement. See
id. at 18.

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[[Page 26535]]

III. Discussion and Commission Findings

After careful review, the Commission finds that the Exchange's
proposed rule change to list and trade the Shares is consistent with
the Act and the rules and regulations thereunder applicable to a
national securities exchange.\12\ In particular, the Commission finds
that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the
Act,\13\ which sets forth Congress' finding that it is in the public
interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities. Quotation, last-sale,
trading volume, and closing price information for the Shares will be
available over the Consolidated Tape.
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\12\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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Additionally, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Exchange Act,\14\ which
requires, among other things, that the Exchange's rules be designed to
prevent fraudulent and manipulative acts and practices, promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest. The
Commission believes that the proposed rule change is reasonably
designed to promote fair disclosure of information that may be
necessary to price the Shares appropriately. The Funds' Web site will
provide an indicative intraday value (``IIV'') per Share, updated every
15 seconds during the Exchange's Core Trading Session. The IIV will be
calculated based on the amount of gold held by the Fund, a price of
gold derived from updated bids and offers indicative of the spot price
of gold, and an intra-day exchange rate for each Reference Currency
against the U.S. dollar.\15\ The Exchange states that the IIV will be
widely disseminated by one or more major market data vendors at least
every 15 seconds during the Core Trading Session.\16\ Additionally, the
Funds' Web site will publish the Creation Basket Deposit and the
NAV.\17\ Each Index value generally will be calculated daily, using the
daily LBMA Gold Price AM and the Spot Rate \18\ as of 9:00 a.m., London
time, and it will be available from one or more major market data
vendors and will be available during the Exchange's Core Trading
Session.
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\14\ 15 U.S.C. 78f(b)(5).
\15\ See Amendment No. 2, supra note 4, at 23, text accompanying
n.30.
\16\ See id. at 28.
\17\ See id. at 23. The Funds also will publish the following
information on their Web site: (1) The mid-point of the bid-ask
price as of the close of trading (``Bid/Ask Price''), and a
calculation of the premium or discount of such price against such
NAV; (2) data in chart format displaying the frequency distribution
of discounts and premiums of the Bid/Ask Price against the NAV,
within appropriate ranges, for each of the four previous calendar
quarters; (3) the Fund's prospectus, as well as the two most recent
reports to stockholders; and (4) the last-sale price of the Shares
as traded in the U.S. market. See id. at 23.
\18\ A ``Spot Rate'' is the rate at which a Reference Currency
can be exchanged for USDs on an immediate basis, subject to the
applicable settlement cycle. See id. at 10.
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The Exchange represents that market participants will recalculate
approximate intraday Index values using reliable intraday prices of
gold and Reference Currencies to identify arbitrage opportunities that
present themselves during the Exchange's Core Trading Session.\19\ In
particular, the Exchange states that market makers in the Shares will
be able to hedge their positions in the Shares by entering into spot
gold and spot currency transactions in the Reference Currencies. Those
spot transactions would take place during the Exchange's Core Trading
session, when the currency and gold markets are highly liquid according
to the Exchange.\20\ The Exchange expects that those hedging
transactions will facilitate a market maker's ability to trade Shares
at a price that is not at a material discount or premium to the
NAV.\21\
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\19\ See id. at 22.
\20\ See id. The Exchange states that there is a considerable
amount of information about gold and currency prices available on
public Web sites and through professional and subscription services.
For example, according to the Exchange, investors may obtain on a
24-hour basis gold pricing information, as well as pricing
information for the Reference Currencies from various financial
information service providers. See id.
\21\ See id.
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As mentioned above,\22\ the Index Values, which impact the NAVs of
the Funds, are calculated using the Spot Rates. Each Spot Rate is
calculated by WM/Reuters (``WMR'') using observable data from arms-
length transactions between buyers and sellers in the applicable
currency market.\23\ The Exchange represents that WMR utilizes the same
methodology to calculate the Spot Rate as it does to calculate the NAV
for certain issues of Currency Trust Shares, the listing and trading of
which the Commission approved.\24\ The Commission believes that the
markets for the Reference Currencies (i.e., the Japanese Yen, Euro and
British Pound Sterling) and gold are deep and liquid. For these
reasons, and in light of the Exchange's representations that the Index
methodologies are transparent,\25\ the Commission presently has no
reason to believe that the Indexes are susceptible to manipulation.
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\22\ See supra note 18 and accompanying text.
\23\ See Amendment No. 2, supra note 4, at 11, n.25.
\24\ See id. at 11, n.24.
\25\ See id. at 8.
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The Commission also believes that the proposal is reasonably
designed to prevent trading when a reasonable degree of transparency
cannot be assured. With respect to trading halts, the Exchange may
consider all relevant factors in exercising its discretion to halt or
suspend trading in the Shares. The Exchange may halt trading in the
Shares because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. The Exchange will
halt trading in the Shares if the NAV is not calculated or disseminated
daily.\26\ The Exchange may halt trading during the day in which an
interruption occurs to the dissemination of the IIV or the Index value;
if the interruption to the dissemination of the IIV or the Index value
persists past the trading day in which it occurs, the Exchange will
halt trading no later than the beginning of the trading day following
the interruption.\27\ In addition, trading in Shares will be subject to
trading halts caused by extraordinary market volatility pursuant to the
Exchange's ``circuit breaker'' rule.
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\26\ See id. at 25.
\27\ See id.
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Additionally, the Commission notes that market makers in the Shares
would be subject to the requirements of NYSE Arca Equities Rule
8.201(g), which allow the Exchange to ensure that they do not use their
positions to violate the requirements of Exchange rules or applicable
federal securities laws.\28\
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\28\ The Commission notes that Commentary .04 of NYSE Arca
Equities Rule 6.3 requires that an ETP Holder acting as a registered
market maker in the Shares, and its affiliates, establish, maintain
and enforce written policies and procedures reasonably designed to
prevent the misuse of any material nonpublic information with
respect to such products, any components of the related products,
any physical asset or commodity underlying the product, applicable
currencies, underlying indexes, related futures or options on
futures, and any related derivative instruments.
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In support of this proposal, the Exchange has made the following
additional representations:
(1) The Shares will be listed and traded on the Exchange pursuant
to the initial and continued listing criteria in NYSE Arca Equities
Rule 8.201.
(2) The Exchange deems the Shares to be equity securities, thus
rendering the

[[Page 26536]]

trading of the Shares subject to the Exchange's existing rules
governing the trading of equity securities.
(3) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.\29\
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\29\ See id. at 24.
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(4) The Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.\30\
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\30\ See id. at 26.
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(5) The Index Provider, which is not affiliated with a broker-
dealer, has adopted policies and procedures designed to prevent the
spread of material non-public information about the Indexes.\31\
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\31\ See id. at 8.
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(6) Trading in the Shares will be subject to the existing trading
surveillances administered by the Exchange, as well as cross-market
surveillances administered by FINRA on behalf of the Exchange, which
are designed to detect violations of Exchange rules and applicable
federal securities laws, and that these procedures are adequate to
properly monitor Exchange trading of the Shares in all trading sessions
and to deter and detect violations of Exchange rules and federal
securities laws applicable to trading on the Exchange.\32\
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\32\ See id. at 25-26. FINRA conducts cross-market surveillances
on behalf of the Exchange pursuant to a regulatory services
agreement. The Exchange is responsible for FINRA's performance under
this regulatory services agreement. See id. at 25, n.33.
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(7) The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the Intermarket
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of
the Exchange, or both, may obtain trading information regarding trading
in the Shares from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\33\
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\33\ For a list of the current members of ISG, see
www.isgportal.org.
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(8) Prior to the commencement of trading, the Exchange will inform
its ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Shares.
Specifically, the Information Bulletin will discuss the following: (1)
The procedures for purchases and redemptions of Shares in Baskets
(including noting that Shares are not individually redeemable); (2)
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence
on its ETP Holders to learn the essential facts relating to every
customer prior to trading the Shares; (3) ETP Holders deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; (4) the
possibility that trading spreads and the resulting premium or discount
on the Shares may widen as a result of reduced liquidity of gold
trading during the Core and Late Trading Sessions after the close of
the major world gold markets; and (5) trading information.
(9) All statements and representations made in this filing
regarding (a) the description of the applicable Indexes, portfolios or
reference assets, (b) limitations on Index or portfolio holdings or
reference assets, or (c) the applicability of Exchange listing rules
specified in this rule filing constitute continued listing requirements
for listing the Shares on the Exchange.\34\
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\34\ See Amendment No. 2, supra note 4, at 26.
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(10) The issuer has represented to the Exchange that it will advise
the Exchange of any failure by the Funds to comply with the continued
listing requirements and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under the NYSE Arca Equities Rule 5.5(m).
This approval order is based on all of the Exchange's
representations, including those set forth above and in Amendment No.
2, and the Exchange's description of the Funds.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 2, is consistent with Section
6(b)(5) of the Act \35\ and the rules and regulations thereunder
applicable to a national securities exchange.
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\35\ 15 U.S.C. 78f(b)(5).
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VI. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\36\ that the proposed rule change (SR- NYSEArca-2017-33),
as modified by Amendment No. 2 be, and it hereby is, approved.
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\36\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11750 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P

Document Created: 2017-06-07 02:00:54
Document Modified: 2017-06-07 02:00:54

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 26534