[Federal Register Volume 69, Number 116 (Thursday, June 17, 2004)]
[Notices]
[Pages 33984-33995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13694]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49849; File No. SR-NYSE-2004-22]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the New York Stock Exchange, Inc. Regarding Listing and 
Trading of Equity Gold Shares

June 10, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 7, 2004, the New York Stock Exchange, Inc. (``Exchange'' or 
``NYSE'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
items I, II, and III below, which items have been prepared by the NYSE.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

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

    The NYSE proposes to list and trade Equity Gold Shares 
(``Shares''), which represent units of fractional undivided beneficial 
interest in and ownership of the Equity Gold TrustSM 
(``Trust'').

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 NYSE 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 these statements may be examined at the places specified in 
Item IV below, and the Exchange has prepared summaries set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements. The text of the proposed rule change is set forth below. 
Proposed new language is in italics.
* * * * *
NYSE Constitution and Rules

Rule 1300

Equity Gold Shares

    (a) The provisions of this Rule 1300 series apply only to Equity 
Gold Shares, which represent units of fractional undivided beneficial 
interest in and ownership of the Equity Gold Trust.\SM\ While Equity 
Gold Shares are not technically Investment Company Units and thus are 
not covered by Rule 1100, all other rules that reference ``Investment 
Company Units,'' as defined and used in Para. 703.16 of the Listed 
Company Manual, including, but not limited to Rules 13, 36.30, 98, 104, 
460.10, 1002, and 1005 shall also apply to Equity Gold Shares.
    (b) As is the case with Investment Company Units, paragraph (m) of 
the Guidelines to Rule 105 shall also apply to Equity Gold Shares. 
Specifically, Rule 105(m) shall be deemed to prohibit an equity 
specialist, his member organization, other member, allied member or 
approved person in such member organization or officer or employee 
thereof from acting as a market maker or functioning in any capacity 
involving market-making responsibilities in physical gold, gold futures 
or options on gold futures, or any other gold derivatives. However, an 
approved person of an equity specialist entitled to an exemption from 
Rule 105(m) under Rule 98 may act in a market making capacity, other 
than as a specialist in the Equity Gold Shares on another market 
center, in physical gold, gold futures or options on gold futures, or 
any other gold derivatives.
    (c) Except to the extent that specific provisions in this Rule 
govern, or unless the context otherwise requires, the provisions of the 
Constitution, all other Exchange Rules and policies shall be applicable 
to the trading of Equity Gold Shares on the Exchange. Pursuant to 
Exchange Rule 3 (``Security''), Equity Gold Shares are included within 
the definition of ``security'' or ``securities'' as those terms are 
used in the Constitution and Rules of the Exchange.

Rule 1301

Equity Gold Shares: Securities Accounts and Orders of Specialists

    (a) The member organization acting as specialist in Equity Gold 
Shares is obligated to conduct all trading in the Shares in its 
specialist account, subject only to the ability to have one or more 
investment accounts, all of which must be reported to the Exchange. 
(See Rules 104.12 and 104.13.) In addition, the member organization 
acting as specialist in Equity Gold Shares must file with the Exchange 
in a manner prescribed by the Exchange and keep current a list 
identifying all accounts for trading physical gold, gold futures or 
options on gold futures, or any other gold derivatives, which the 
member organization acting as specialist may have or over which it may 
exercise investment discretion. No member organization acting as 
specialist in Equity Gold Shares shall trade in physical gold, gold 
futures or options on gold futures, or any other gold derivatives, in 
an account in which a member organization acting as specialist, 
directly or indirectly, controls trading activities, or has a direct 
interest in the profits or losses thereof, which has not been reported 
to the Exchange as required hereby.
    (b) In addition to the existing obligations under Exchange rules 
regarding the production of books and records (see, e.g., Rule 
476(a)(11)), the member organization acting as specialist in Equity 
Gold Shares shall make available to the Exchange such books, records or 
other information pertaining to transactions by such entity or any 
member, allied member, approved person, registered or non-registered 
employee affiliated with such entity for its or their own accounts in 
physical gold, gold futures or options on gold futures, or any other 
gold derivatives, as may be requested by the Exchange.
    (c) In connection with trading physical gold, gold futures or 
options on gold futures or any other gold derivative (including Equity 
Gold Shares), the specialist registered as such in Equity Gold Shares 
shall not use any material nonpublic information received from any 
person associated with a member or employee of such person regarding 
trading by such person or employee in physical gold, gold futures or 
options on

[[Page 33985]]

gold futures, or any other gold derivatives.
* * * * *

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

1. Purpose
    The Exchange proposes to list and trade Shares which represent 
units of fractional undivided beneficial interest in and ownership of 
the Trust.\3\ World Gold Trust Services, LLC, a wholly owned limited 
liability company of the World Gold Council,\4\ is the sponsor of the 
Trust (``Sponsor''). The Bank of New York is the trustee of the Trust 
(``Trustee''), and HSBC Bank USA, an indirect wholly owned subsidiary 
of HSBC Holdings plc, is the custodian of the Trust (``Custodian''). 
UBS Securities LLC is to be the initial purchaser of the Shares 
(``Initial Purchaser''), as described below. The Sponsor, Trustee, 
Custodian and Initial Purchaser are not affiliated with one another or 
with the Exchange.
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    \3\ Equity Gold Trust is a service mark of World Gold Trust 
Services, LLC.
    \4\ The World Gold Council is a not-for-profit association 
registered under Swiss law.
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Gold Supply and Demand \5\
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    \5\ The Sponsor, on behalf of the Trust, filed Amendment No. 2 
to Form S-1 (the ``Registration Statement'') on November 24, 2003. 
See Registration No. 333-105202. Except as otherwise specifically 
noted, the Exchange states that the information provided in this 
Rule 19b-4 filing relating to the Shares, gold, the gold market, 
movements in the price of gold and the like is based entirely on 
information included in the Registration Statement and the Trading 
Practices Letter (defined below).
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    The Exchange has provided the following description of the 
commodity underlying the Equity Gold Shares. According to the 
Registration Statement, gold is a physical asset that is accumulated, 
rather than consumed. As a result, virtually all of the gold that has 
ever been mined still exists today in one form or another. The 
Registration Statement notes that, at the end of 2002, there was an 
estimated 147,800 metric tonnes (approximately 4.8 billion ounces) of 
above-ground stocks of gold. Of this amount, approximately 47% is held 
as a store of value or monetary assets; much of the gold in this 
category exists in bullion form and in theory could be mobilized and 
made available to the market. Approximately 51% is held as a raw 
material or commodity and would need to be remelted and transformed 
into bullion bars before being mobilized into the market in an 
acceptable form. The remaining 2% is unaccounted.
    Sources of gold supply include both mine production and the 
recycling or mobilizing of existing above-ground stocks. The largest 
portion of gold supplied into the market annually is from gold mine 
production.\6\ The second largest source of annual gold supply is from 
old scrap, which is gold that has been recovered from jewelry and other 
fabricated products and converted back into marketable gold. 
Additionally, since 1989, official sector sales have outstripped 
purchases, creating an additional net supply of gold into the 
marketplace. Net producer hedging, which accelerates the timing of the 
sale of physical gold, can also impact (positively or negatively) 
supply in a given year, though such hedging transactions do not involve 
a net increase in the supply of gold to the market.
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    \6\ Mine production is derived from more than 900 separate 
operations on all continents of the world, except Antarctica. 
According to the Registration Statement, any disruption to 
production in one locality is unlikely to affect a significant 
number of these operations simultaneously. The Registration 
Statement asserts that such potential disruption is unlikely to have 
a material impact on the overall level of global mine production, 
and therefore equally unlikely to have a noticeable impact on the 
gold price. In the unlikely event of significant disruptions to 
production occurring simultaneously at a large number of individual 
mines, the Exchange notes that, according to the Registration 
Statement, any impact on the price of gold would likely be short-
lived.
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    According to the Registration Statement, published statistics 
indicate that the demand for gold amounted to less than 3.0% of total 
above ground stocks in 2002. Demand for gold is driven primarily by 
demand for jewelry and, in much of the developing world, also as an 
investment. Gold demand is widely dispersed throughout virtually all 
countries in the world. While there are seasonal fluctuations in the 
levels of demand for gold (especially jewelry) in many countries, the 
Exchange notes that, according to the Registration Statement, 
variations in the timing of such fluctuations in different countries 
mean that seasonal changes in demand do not have a significant impact 
on the global gold price.

Description of the Gold Market

    The Exchange has provided the following description of the gold 
market. The global trade in gold consists of over-the-counter (``OTC'') 
transactions in spot, forwards, and options and other derivatives, 
together with exchange-traded futures and options.

The OTC Market

    The OTC market trades on a 24-hour per day continuous basis and 
accounts for most global gold trading. Liquidity in the OTC market can 
vary from time to time during the course of the 24-hour trading day. 
Fluctuations in liquidity are reflected in adjustments to dealing 
spreads--the differential between a dealer's ``buy'' and ``sell'' 
prices. According to the Registration Statement, the period of greatest 
liquidity in the gold market is typically that time of the day when 
trading in the European time zones overlaps with trading in the United 
States, which is when OTC market trading in London, New York and other 
centers coincides with futures and options trading on the COMEX 
division of the New York Mercantile Exchange (``NYMEX''). This period 
lasts for approximately four hours each New York business day morning.
    Market makers, as well as others in the OTC market, trade with each 
other and with their clients on a principal-to-principal basis. All 
risks and issues of credit are between the parties directly involved in 
the transaction. Market makers include the market-making members of the 
London Bullion Market Association (``LBMA''), the trade association 
that acts as the coordinator for activities conducted on behalf of its 
members and other participants in the London bullion market.\7\ The 
current market-making members of the LBMA are: Barclays Bank Plc, 
Deutsche Bank AG, HSBC Bank USA (London branch), J. Aron and Company 
(UK) (a division of Goldman Sachs), JPMorganChase Bank, ScotiaMocatta, 
Soci[eacute]t[eacute] G[eacute]n[eacute]rale, and UBS AG. HSBC Bank USA 
(London branch) is an affiliate of the Custodian. UBS AG is an 
affiliate of the Initial Purchaser. The OTC market provides a 
relatively flexible market in terms of quotes, price, size, 
destinations for delivery, and other factors. Bullion dealers customize 
transactions to meet clients' requirements. The OTC market has no 
formal structure and no open-outcry meeting place.
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    \7\ Further information about the LBMA may be found at http://www.lbma.org.uk. The Exchange updated this information on June 9, 
2004. Telephone conference between James F. Duffy, Senior Vice 
President, Associate General Counsel, NYSE, and Florence Harmon, 
Senior Special Counsel, Division, Commission, on June 9, 2004 
(confirming to Commission staff that there are currently eight 
market-making members of the LBMA, five of which offer clearing 
services, and a further 52 full members).
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    The main centers of the OTC market are London, New York, and 
Zurich. Bullion dealers have offices around the world, and most of the 
world's major bullion dealers are either members or associate members 
of the LBMA. Of the eight market-making members of the LBMA, five offer 
clearing services. There are currently a further 52 full

[[Page 33986]]

members, plus a number of associate members around the world.
    According to the Registration Statement, in the OTC market, the 
standard size of gold trades between market makers ranges between 5,000 
and 10,000 troy \8\ ounces. Bid-offer spreads are typically U.S. $0.50 
per ounce. Dealers are willing to offer clients competitive prices for 
much larger volumes, potentially up to 100,000 troy ounces, although 
this will vary according to the dealer, the client and market 
conditions, as transaction costs in the OTC market are negotiable 
between the parties and therefore vary widely. Cost indicators can be 
obtained from various information service providers as well as dealers.
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    \8\ Telephone conference between James F. Duffy, Senior Vice 
President, Associate General Counsel, NYSE, and Florence Harmon, 
Senior Special Counsel, Division, Commission, on June 9, 2004 
(confirming to Commission staff that the standardized measurement 
used by markets around the world is troy ounces).
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    The Exchange states that there are no authoritative published 
figures for overall world-wide volume in gold trading. There are 
certain published sources that do suggest the significant size of the 
overall market. The LBMA publishes statistics compiled from the five 
members offering clearing services.\9\ The Exchange notes that the 
monthly average daily volume figures published by the LBMA for 2003 
range from a high of 19 million to a low of 13.6 million troy ounces 
per day. The Exchange also notes that the COMEX publishes price and 
volume statistics for transactions in contracts for the future delivery 
of gold. COMEX figures for 2003 indicate that the average daily volume 
for gold futures contracts was 4.9 million troy ounces per day.\10\
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    \9\ Information regarding clearing volume estimates by the LBMA 
can be found at http://www.lbma.org.uk/clearing_table.htm. The 
three measures published by LBMA are: Volume, the amount of metal 
transferred on average each day measured in million of troy ounces; 
value, measured in U.S. dollars, using the monthly average London PM 
fixing price; and the number of transfers, which is the average 
number recorded each day. The statistics exclude allocated and 
unallocated balance transfers where the sole purpose is for 
overnight credit and physical movements arranged by clearing members 
in locations other than London.
    \10\ Information regarding average daily volume estimates by the 
COMEX (a division of NYMEX) can be found at http://www.nymex.com/jsp/markets/md_annual_volume6.jsp#2. The statistics are based on 
gold futures contracts, each of which relates to 100 troy ounces of 
gold.
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The London Bullion Market and the London ``Fix'' Process

    Although the market for physical gold is distributed globally, the 
Exchange states that most OTC market trades are cleared through London. 
In addition to coordinating market activities, the Exchange notes that 
the LBMA acts as the principal point of contact between the market and 
its regulators. A primary function of the LBMA is its involvement in 
the promotion of refining standards by maintenance of the ``London Good 
Delivery Lists,'' which are the lists of LBMA accredited melters and 
assayers of gold. The LBMA also coordinates market clearing and 
vaulting, promotes good trading practices, and develops standard 
documentation. The LBMA also publishes ``The Good Delivery Rules for 
Gold and Silver Bars,'' the specifications for gold and silver bars 
acceptable for delivery in settlement of a transaction on the London 
market. Gold bars meeting these requirements are referred to herein as 
``London Good Delivery Bars.'' The gold spot price always refers to 
that of a London Good Delivery Bar, unless otherwise specified. The 
Exchange states that business is generally conducted over the phone and 
through a widely used electronic dealing system.
    Twice daily during London trading hours, there is a ``fix'' which 
provides reference gold prices for that day's trading.\11\ The Exchange 
notes that many long-term contracts will be priced on the basis of 
either the morning (AM) or afternoon (PM) London fix, and market 
participants will usually refer to one or the other of these prices 
when looking for a basis for valuations. According to the Registration 
Statement, the London fix is the most widely used benchmark for daily 
gold prices and is quoted by various financial information sources.
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    \11\ The Exchange states that formal participation in the London 
fix is traditionally limited to five LBMA members, each of which is 
a bullion dealer. N M Rothschild & Sons Limited withdrew in April 
2004 after acting as chairman since the inception of the fix more 
than 80 years ago. This prompted some changes in the process with 
effect from May 2004. The chairmanship will rotate annually among 
the five members. Under this new arrangement, Scotiabank, through 
its precious metals division ScotiaMocatta, assumed the chairmanship 
on May 5, 2004, for a period of 12 months. With effect from the same 
date, the fix has taken place by telephone, and the five members no 
longer meet face-to-face as was previously the case. As part of this 
change, it is intended that a web-based commentary of the fix will 
be introduced later this year. The morning session of the fix starts 
at 10:30 AM London time, and the afternoon session starts as 3 PM 
London time. The other members of the gold fixing are currently 
Deutsche Bank AG, HSBC Bank USA, Soci[eacute]t[eacute] 
G[eacute]n[eacute]rale, Barclays Capital. The last-named bought the 
Rothschild seat for an undisclosed sum. HSBC Bank USA acts as 
Custodian for the Trust. Any other market participant wishing to 
participate in trading on the fix is required to do so through one 
of these five dealers. Clients place orders either with one of the 
five 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 a 
``trying price,'' reflecting the market price prevailing at the 
opening of the fix. This is relayed by the fixing members to their 
dealing rooms that 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. According to the Registration Statement, the 
London fix is widely viewed as a full and fair representation of all 
market interest at the time of the fix.
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Futures Exchanges

    The Exchange states that the most significant gold futures 
exchanges are the COMEX division of the NYMEX and the Tokyo Commodity 
Exchange (``TOCOM'').\12\ Trading on these exchanges is based on fixed 
delivery dates and transaction sizes for the futures and options 
contracts traded. Trading costs are negotiable. According to the 
Registration Statement, as a matter of practice, only a small 
percentage of the futures market turnover ever comes to physical 
delivery of the gold represented by the contracts traded. Both 
exchanges permit trading on margin. COMEX operates through a central 
clearance system. TOCOM has a similar clearance system. In each case, 
the exchange acts as a counterparty for each member for clearing 
purposes.
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    \12\ The Exchange notes that there are other gold exchange 
markets, such as the Istanbul Gold Exchange, the Shanghai Gold 
Exchange, and the Hong Kong Chinese Gold & Silver Exchange Society.
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Gold Market Regulation

    The Exchange states that global gold market participants are 
overseen and regulated by both governmental and self-regulatory 
organizations. In addition, the Exchange states that certain trade 
associations have established rules and protocols for market practices 
and participants. In the United Kingdom, responsibility for the 
regulation of the financial market participants, including the major 
participating members of the LBMA, falls under the authority of the 
Financial Services Authority (``FSA'') as provided by the Financial 
Services and Markets Act 2000 (``FSM Act''). Under the FSM Act, all UK-
based banks, together with other investment firms, are subject to a 
range of requirements, including fitness and properness, capital 
adequacy, liquidity, and systems and controls. The Exchange states that 
the FSA is responsible for regulating investment products, including 
derivatives, and those who deal in investment products. Regulation of 
spot, commercial

[[Page 33987]]

forwards, and deposits of gold and silver not covered by the FSM Act is 
provided for by The London Code of Conduct for Non-Investment Products, 
which was established by market participants in conjunction with the 
Bank of England, and is a voluntary code of conduct among market 
participants.\13\
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    \13\ Telephone conference between James F. Duffy, Senior Vice 
President, Associate General Counsel, NYSE, and Florence Harmon, 
Senior Special Counsel, Division, Commission, on June 9, 2004 
(confirming to Commission staff that The London Code of Conduct for 
Non-Investment Products is a voluntary code of conduct among market 
participants.).
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    The Exchange states that participants in the United States OTC 
market for gold are generally regulated by the market regulators, which 
regulate their activities in the other markets in which they operate. 
For example, participating banks are regulated by the banking 
authorities. In the United States, the Commodity Futures Trading 
Commission, an independent government agency with the mandate to 
regulate commodity futures and option markets in the United States, 
regulates market participants and has established rules designed to 
prevent market manipulation, abusive trade practices, and fraud.
    The Exchange states that TOCOM has authority to perform financial 
and operational surveillance on its members' trading activities, 
scrutinize positions held by members and large-scale customers, and 
monitor the price movements of futures markets by comparing them with 
cash and other derivative markets' prices.

Investing in Gold

    Below, the Exchange discusses the reasons it believes investors 
would be attracted to investing in gold. According to the Registration 
Statement, gold's ability to serve as a portfolio diversifier is due to 
its historically low-to-negative correlation with stocks and bonds. The 
economic forces that determine the price of gold are different from the 
forces that determine the prices of most financial assets. For example, 
the price of a stock often depends on the earnings or growth potential 
of the issuing company or the confidence investors have in its 
management. The price of a bond depends primarily on its credit rating, 
its yield, and the yields of competing fixed income investments. The 
Exchange states that the price of gold, however, depends on different 
factors, including the supply and demand for gold, the strength or 
weakness of the United States dollar, the rate of inflation and 
interest rates, and the current political environment. The Exchange 
also notes that gold does not depend on a promise to pay on the part of 
any government or corporation, as is the case with investments in money 
market instruments as well as the corporate and government bond 
markets. Gold is not directly affected by the economic policies of any 
individual country and cannot be repudiated, as is the case with paper 
assets. Gold is not subject to the risk of default or bankruptcy. Gold 
cannot be created at will as can paper-backed assets. Some of gold's 
investment attributes are shared with traditional portfolio 
diversifiers, which include non-United States equities, emerging 
markets securities, real estate investment trusts, and domestic and 
foreign bonds. However, the Exchange notes that according to the 
Registration Statement, over the last ten years, gold is the only one 
of these diversifiers that has been negatively correlated with the 
Standard & Poor's 500 Index (``S&P''), which is widely regarded as the 
standard for measuring the stock market performance of large 
capitalized United States companies. In the search for effective 
diversification, investors have begun to turn to a variety of non-
traditional diversifiers, such as hedge and private equity funds, 
commodities, timber and forestry, fine art and collectibles. The 
Exchange notes, however, that according to the Registration Statement, 
gold has one or more of the following advantages over each of these 
non-traditional diversifiers: Greater liquidity, lower risk, and lower 
management and holding costs. According to the Registration Statement, 
gold is also often purchased as a hedge against inflation and currency 
fluctuations because, historically, it has tended to maintain its long-
term value in terms of purchasing power.
    As stated in the Registration Statement, the Exchange further notes 
that the Shares are intended to offer investors a new and different 
opportunity to participate in the gold market through the securities 
market. Most pension funds, mutual funds, and other investment vehicles 
do not or cannot hold physical commodities or their derivatives. In 
addition, the Exchange also contends that the logistics of buying, 
storing, and insuring gold have constituted a barrier to entry for 
institutional and retail investors alike. The logistics of storing and 
insuring gold are dealt with by the Custodian, and the related expenses 
are built into the price of the Shares. Therefore, the investor does 
not have any additional tasks or costs over and above those associated 
with dealing in any other publicly traded security.

Movements in the Price of Gold

    As noted in the Registration Statement, the value of the Shares 
relates directly to the value of the gold held by the Trust, and 
fluctuations in the price of gold are expected to directly affect the 
price of the Shares. Consequently, the Exchange discusses below recent 
movements in the price of gold.
    After reaching a 20-year low in July 1999 of approximately $250 per 
troy ounce, the gold price has staged a gradual increase, and currently 
trades in the $350-400 per troy ounce range. According to the 
Registration Statement, the initial reason for the market's turnaround 
during 1999 was the strong rise in physical demand, notably in price 
sensitive markets such as China, Egypt, India, and Japan. The price of 
gold rose sharply in September 1999, largely as a reflection of the 
institution of the Central Bank Gold Agreement,\14\ which removed an 
important element of uncertainty from the market and led not just to 
renewed professional interest in the market but also to short-covering 
purchases. According to the Registration Statement, the Central Bank 
Gold Agreement underpinned improved sentiment in the longer term (fears 
over official sector sales had been a key element to negative sentiment 
across the market in the latter part of the 1990s).
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    \14\ Over the past 10 years, the Exchange states that a number 
of central banks have sold portions of their gold, most of which is 
simply held in vaults and not bought, sold, leased or swapped or 
otherwise mobilized in the open market, creating an element of 
instability in the price of gold. Since 1999, such sales have been 
made in a coordinated manner under the terms of the Central Bank 
Gold Agreement, under which 15 of the world's major central banks 
(including the European Central Bank) agreed to limit the level of 
their gold sales and lending to the market for five years. The 
Registration Statement notes that although the Central Bank Gold 
Agreement is widely expected to be renewed, probably for a further 
five years, when it expires in September 2004, it is possible that 
this agreement will not be renewed. In the event that future 
economic, political or social conditions or pressures results in the 
liquidation of gold assets by central banks all at once or in an 
uncoordinated manner, the demand for gold might not be sufficient to 
accommodate the sudden increase in the supply of gold to the market. 
Consequently, the price of gold could decline significantly, which 
would adversely affect an investment in the Shares.
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    Despite the Central Bank Gold Agreement, the Exchange notes that 
the price of gold experienced a downward trend in 2000 for a number of 
reasons, including renewed strength in the dollar (gold is often 
perceived as a dollar hedge), strong global economic growth, low 
inflation and, for much of the year, buoyant stock markets in the 
United States and other key countries. This

[[Page 33988]]

downward price trend persisted into the early part of 2001. At this 
time the gold price once again appeared to be approaching $250 per troy 
ounce but, as before, strong physical demand from price sensitive 
markets such as India again countered the downward trend.
    The Exchange further notes that, according to the Registration 
Statement, the sentiment in the gold market started to change in early 
2001, and the gold price has shown an upward trend since March of that 
year. A rapid economic slowdown occurred in the world economy, while 
stock markets in the United States and other key countries were 
falling. There was an end to the significant disinvestment in gold in 
Europe and North America that had affected gold prices during 2000. In 
addition, the rapid sequence of interest rate cuts in the United States 
reduced the risk/reward ratio that had previously been enjoyed by 
speculators who had been trading in the gold market from the short side 
(i.e., selling forward or futures with a view to buying back at a lower 
price). Lower interest rates reduced the contango \15\ available and 
this, combined with steady prices, meant that such trades became 
increasingly unattractive. After the first quarter of 2001, some mining 
companies started to reduce their hedge books, reducing the amount of 
gold coming onto the market. Political uncertainties and the continuing 
economic downturn after the attacks of September 11, 2001 added to 
demand for gold investments.
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    \15\ The contango is the premium available on gold for future 
delivery.
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    According to the Registration Statement, the Exchange notes the 
continuation of the upward price trend during 2002 reflected concerns 
over the global economy, equity markets and whether stock prices were 
discounting over-optimistic earnings streams, along with concerns over 
banking crises (Argentina, Japan), currency volatility (notably 
affecting the United States dollar), corporate governance issues, and 
growing political tension. Political issues remained influential during 
the Fall of 2003. The markets have been attuned to the changing nuances 
in the political arena, notably with respect to the Middle East. North 
Korea's recent moves to reactivate its nuclear program have also been a 
topic of considerable concern, and tensions between Pakistan and India 
also fueled purchases. Buying activity in the gold market as a result 
of political tensions has come from a full range of market 
participants. These participants have ranged from the ``man in the 
street,'' particularly in Asia, through money managers looking to 
diversify risk, to speculators looking to trade trends. The 
Registration Statement states that speculative activity also 
contributed to the increases in the gold price over the period and to 
the retracement of such increases under bouts of profit taking when 
tensions appeared to be easing. According to the Registration 
Statement, however, the risk-averse investors have generally not left 
the market. Volatility in the price also deterred potential jewelry 
purchasers in price sensitive markets from entering the market, as many 
of these buyers prefer to wait for stable times. These purchasers have, 
however, returned to the market each time the price has stabilized and 
have, as they have in the past, been prepared to adapt to new price 
ranges as and when necessary.
    As explained in the Registration Statement, and noted by the 
Exchange, historically, any sudden and significant rise in the price of 
gold has been followed by a reduction in physical demand which lasts 
until the period of unusual volatility is past. Gold price increases 
also tend to lead to an increase in the levels of recycled scrap used 
for gold supply. Both of these factors have tended to limit the extent 
and duration of upward movements in the price of gold.

The Sponsor

    The Sponsor, World Gold Trust Services LLC, a wholly owned limited 
liability company of the World Gold Council, is responsible for the 
registration of the Shares. The Sponsor will oversee the Trust's 
administration but will not exercise day-to-day oversight over the 
Trustee or the Custodian. The Sponsor will regularly communicate with 
the Trustee to monitor the overall performance of the Trust. The 
Sponsor will exercise oversight over the Trust's legal, accounting and 
other professional service providers and, along with the Trustee, will 
liaise with these service providers as needed. The Sponsor, with 
assistance and support from the Trustee, will be responsible for 
preparing and filing certain periodic reports on behalf of the Trust 
with the Commission. The Sponsor will be responsible for and will 
oversee any marketing of the Shares. The Sponsor will maintain a public 
website (http://www.equitygoldshares.com) on behalf of the Trust, which 
will contain information about the Trust and the Shares, and will 
oversee certain Shareholder services, such as a call center and 
prospectus fulfillment. The Sponsor may direct the Trustee to sell the 
Trust's gold to pay expenses, to suspend a redemption order or postpone 
a redemption settlement date or, under certain circumstances, to 
terminate the Trust. The Sponsor may also remove the Trustee and 
appoint a successor Trustee in specific circumstances and may remove 
the Custodian and appoint a successor, as long as the appointment does 
not have a material adverse effect on the Trustee's ability to perform 
its duties.

The Trustee

    The Trustee, Bank of New York, is generally responsible for the 
day-to-day administration of the Trust, including keeping the Trust's 
operational records. The Trustee's principal responsibilities include 
(1) monitoring the Trust's on-going expenses and selling the Trust's 
gold as needed to pay the Trust's expenses (gold sales are expected to 
occur approximately monthly in the ordinary course), (2) calculating 
the net asset value (``NAV'') of the Trust and the NAV per Share, (3) 
receiving and processing orders from Authorized Participants to create 
and redeem Baskets (defined below) and coordinating the processing of 
such orders with the Custodian and Depository Trust Company (``DTC''), 
and (4) monitoring the Custodian. The Trustee will regularly 
communicate with the Sponsor to monitor the overall performance of the 
Trust. The Trustee, along with the Sponsor, will liaise with the 
Trust's legal, accounting, and other professional service providers as 
needed. The Trustee will prepare and file reports on Form 8-K 
identifying gold sales by the Trust and will assist and support the 
Sponsor with the preparation of all other periodic reports required to 
be filed with the SEC on behalf of the Trust. The Trustee and any of 
its affiliates may from time to time purchase or sell Shares for their 
own accounts, as agent for their customers, and for accounts over which 
they exercise investment discretion.

The Custodian

    The Custodian, an indirect wholly owned subsidiary of HSBC Holdings 
plc, is responsible for the safekeeping of the Trust's gold deposited 
with it by Authorized Participants in connection with the creation of 
Baskets. The Custodian is also responsible for selecting its direct 
subcustodians, if any. The Custodian facilitates the transfer of gold 
in and out of the Trust through the unallocated gold accounts it will 
maintain for each Authorized Participant and the unallocated and 
allocated gold accounts it will maintain for the Trust. The Custodian 
is responsible for allocating specific bars

[[Page 33989]]

of gold bullion to the Trust's allocated gold account. The Custodian 
will provide the Trustee with regular reports detailing the gold 
transfers in and out of the Trust's unallocated and allocated gold 
accounts and identifying the gold bars held in the Trust's allocated 
gold account. The Custodian is an authorized depository under the rules 
of the LBMA. The Custodian and any of its affiliates may from time to 
time purchase or sell Shares for their own account, as agent for their 
customers and for accounts over which they exercise investment 
discretion.

The Trust

General Description

    The purpose of the Trust is to hold gold bullion.\16\ The 
investment objective of the Trust is for the Shares to reflect the 
performance of the price of gold, less the Trust's expenses.
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    \16\ 16 The Exchange states that the Commission has permitted 
the listing of prior products for which the underlying was a 
commodity or otherwise was not a security trading on a regulated 
market. See, e.g., Securities Exchange Act Release Nos. 19133 
(October 14, 1982) (approving the listing of standardized options on 
foreign currencies); 36505 (November 22, 1995) (approving the 
listing of dollar-denominated delivery foreign currency options on 
the Japanese Yen); 36165 (August 29, 1995) (approving listing 
standards for, among other things, currency and currency index 
warrants). The Exchange also states that there are other securities 
trading on regulated markets that invest in commodities. See, e.g., 
Central Fund of Canada (Registration No. 033-15180) (symbol CEF), or 
in royalty interests based on commodities); Hugoton Royalty Trust 
(Registration No. 333-68441) (symbol HGT).
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    The Trust is an investment trust and is not managed like a 
corporation or an active investment vehicle. The Trust has no board of 
directors or officers or persons acting in a similar capacity. The 
Trust is not a registered investment company under the Investment 
Company Act of 1940 (``1940 Act'') and is not required to register 
under such Act. The Sponsor, on behalf of the Trust, has requested 
relief from certain periodic reporting and information requirements of 
the Act, application of the certification rules under Section 302 of 
the Sarbanes-Oxley Act of 2002, and relief from Rules 13a-15 and 15d-15 
under the Act. In addition, the Trust will not be subject to the 
Exchange's corporate governance requirements, including the Exchange's 
audit committee requirements.\17\
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    \17\ See Securities Exchange Act Release Nos. 48745 (November 4, 
2003) (specifically noting that the corporate governance standards 
will not apply to, among others, passive business organizations in 
the form of trusts); and 47654 (April 25, 2003) (noting in Section 
II(F)(3)(c) that ``SROs may exclude from Exchange Act Rule 10A-3's 
requirements issuers that are organized as trusts or other 
unincorporated associations that do not have a board of directors or 
persons acting in a similar capacity and whose activities are 
limited to passively owning or holding (as well as administering and 
distributing amounts in respect of) securities, rights, collateral 
or other assets on behalf of or for the benefit of the holders of 
the listed securities.'').
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Trust's Expenses

    Operating expenses of the Trust include (1) fees paid to the 
Sponsor, (2) fees paid to the Trustee, (3) fees paid to the Custodian, 
and (4) various Trust administration fees, including printing and 
mailing costs, call center costs, legal and audit fees, registration 
fees, and NYSE listing fees. The Trust's ordinary operating expenses 
are accrued daily and reflected in the NAV of the Trust. The Sponsor 
will pay the costs of the Trust's organization and the initial sale of 
the Shares, including the applicable SEC registration fees.
    Fees are paid to the Sponsor as compensation for services performed 
under the Trust Indenture and for services performed in connection with 
maintaining the Trust's website and marketing the Shares. The Sponsor's 
fee is payable monthly in arrears and is based on an annual amount 
equal to 0.05% of the daily adjusted NAV (ANAV) of the Trust. The 
Sponsor's fee, which may not exceed the actual costs to the Sponsor of 
providing its services to the Trust, does not commence until the 
Trust's ANAV first reaches $1 billion and only after the 30th day 
following the commencement of the trading of the Shares on the NYSE. 
The Sponsor will receive reimbursement from the Trust for all of its 
disbursements and expenses incurred in connection with the Trust 
exclusive of its ordinary disbursements and expenses incurred through 
the 30th day following the commencement of the trading of the Shares on 
the NYSE.
    Fees are paid to the Trustee as compensation for services performed 
under the Trust Indenture. The Trustee's fee is payable monthly in 
arrears and is based on an annual amount equal to 0.02% of the first 
$10 billion of the daily ANAV of the Trust, subject to a minimum fee of 
$500,000 per year and a maximum fee of $2 million per year.
    The Trustee will charge no fee and will pay the ordinary expenses 
of the Trust's operation for the 30-day period following the day the 
Shares commence trading on the NYSE. Starting the 31st day after the 
commencement of the trading of the Shares on the NYSE through the first 
anniversary of such commencement, the Trustee will reduce its fee and 
will assume the ordinary expenses of the Trust to the extent that the 
aggregate annual expenses of the Trust exceed 0.30% of the average 
daily value of the Trust's assets (determined without deduction of any 
Trust expenses). The Trustee and the Sponsor have a separate agreement 
concerning payment by the Sponsor of compensation to the Trustee for 
this period.
    Subject to the periods described above when the Trustee will bear 
all or part of the Trust's expenses, the Trustee will charge the Trust 
for its expenses and disbursements incurred in connection with the 
Trust (including the expenses of the Custodian paid by the Trustee), 
exclusive of fees of agents for services to be performed by the 
Trustee, and for any extraordinary services performed by the Trustee 
for the Trust.
    Fees are paid to the Custodian under the Allocated Bullion Account 
Agreement as compensation for its custody services. Under the Allocated 
Bullion Account Agreement, the Custodian is entitled to an annual fee 
equal to 0.10% of the average daily aggregate value of the gold held in 
the Trust's allocated gold account (``Trust Allocated Account'') \18\ 
and the Trust's unallocated gold account (``Trust Unallocated 
Account''),\19\ payable in quarterly installments in arrears. The 
Custodian does not receive a fee under the Unallocated Bullion Account 
Agreement.
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    \18\ The Registration Statement defines an allocated account as 
an account with a bullion dealer, which may also be a bank, to which 
individually identified gold bars owned by the account holder are 
credited. The gold bars in an allocated gold account are specific to 
that account and are identified by a list which shows, for each gold 
bar, the refiner, assay, serial number and gross and fine weight. 
The account holder has full ownership of the gold bars and the 
bullion dealer may not trade, lease, or lend the bars.
    \19\ The Registration Statement defines an unallocated account 
as an account with a bullion dealer, which may also be a bank, to 
which a fine weight amount of gold is credited. The account holder 
is entitled to direct the bullion dealer to deliver an amount of 
physical gold equal to the amount of gold standing to the credit of 
the account holder. The account holder has no ownership interest in 
any specific bars of gold that the bullion dealer holds or owns. 
When delivering gold, the bullion dealer will allocate physical gold 
from its general stock to the account holder with a corresponding 
debit being made to the amount of gold credited to the unallocated 
account. The account holder is an unsecured creditor of the bullion 
dealer and credits to an unallocated account are at risk of the 
bullion dealer's insolvency.
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    The Trustee will sell gold held by the Trustee on an as-needed 
basis to pay the Trust's expenses. As a result, the amount of the gold 
to be sold will vary from time to time depending on the level of the 
Trust's expenses and the market price of gold. Cash held by the Trustee 
pending payment of the Trust's expenses will not bear any interest.

[[Page 33990]]

Description of the Shares

General

    The Exchange states that the Shares do not represent a traditional 
investment in shares of a corporation operating a business enterprise 
with management and a board of directors and do not carry with them the 
statutory rights normally associated with the ownership of shares of a 
corporation. For example, the Exchange concludes that the Shareholders 
would not have the right to bring ``oppression'' or ``derivative'' 
actions.'' All Shares are of the same class with equal rights and 
privileges. Each Share is transferable and is fully paid and non-
assessable. Holders of Shares have no voting rights, except in certain 
limited instances.

Distributions and Share Splits

    The Exchange states that shareholders may receive distributions in 
only two circumstances. First, if the Trustee and the Sponsor determine 
that the Trust's cash account balance exceeds the anticipated expenses 
of the Trust for the next 12 months and the excess amount is more than 
$0.01 per Share outstanding, they shall direct the excess amount to be 
distributed to the Shareholders. Second, if the Trust is terminated and 
liquidated, the Trustee will distribute to the Shareholders any amounts 
remaining after the satisfaction of all outstanding liabilities of the 
Trust and the establishment of such reserves for applicable taxes, 
other governmental charges, and contingent or future liabilities as the 
Trustee shall determine.
    If the Sponsor believes that the per Share price in the secondary 
market for Shares has fallen outside a desirable trading price range, 
the Sponsor may direct the Trustee to declare a split or reverse split 
in the number of Shares outstanding and to make a corresponding change 
in the number of Shares constituting a Basket.

Liquidity

    The Exchange states that the amount of the discount or premium in 
the trading price relative to the NAV per Share may be influenced by 
non-concurrent trading hours between the major gold markets and the 
NYSE. While the Shares will trade on the NYSE until 4 PM New York time, 
liquidity in the OTC market for gold will be reduced after the close of 
the COMEX at 1:30 PM New York time. During this time, trading spreads 
and the resulting premium or discount on the Shares may widen as a 
result of reduced liquidity in the OTC gold market.\20\
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    \20\ As noted above in the section titled ``Description of the 
Gold Market,'' the period of greatest liquidity in the gold market 
is typically that time of the day when trading in the European time 
zones overlaps with trading in the United States, which is when OTC 
market trading in London, New York, and other centers coincides with 
futures and options trading on the COMEX division of the NYMEX. This 
period lasts for approximately four hours each New York business day 
morning.
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    Because of the potential for arbitrage inherent in the structure of 
the Trust, the Sponsor believes that the Shares will not trade at a 
material discount or premium to the underlying gold held by the Trust. 
The arbitrage process, which in general provides investors the 
opportunity to profit from differences in prices of assets, increases 
the efficiency of the markets, serves to prevent potentially 
manipulative efforts, and can be expected to operate efficiently in the 
case of the Shares and gold. If the price of the Shares deviates enough 
from the price of gold to create a material discount or premium, an 
arbitrage opportunity is created. If the Shares are inexpensive 
compared to the gold that underlies them, an arbitrageur may buy the 
Shares at a discount, immediately redeem them in exchange for gold, and 
sell the gold in the cash market at a profit. If the Shares are 
expensive compared to the gold that underlies them, an arbitrageur may 
sell the Shares short, buy enough gold to acquire the number of Shares 
sold short, acquire the Shares through the creation process, and 
deliver the Shares to close out the short position.\21\ In both 
instances, the arbitrageur serves efficiently to correct price 
discrepancies between the Shares and the underlying gold.\22\
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    \21\ 21 The Exchange states that the Trust, which will only hold 
gold, differs from index-based exchange-traded funds, which may 
involve a trust holding hundreds or even thousands of underlying 
component securities, necessarily involving in the arbitrage process 
movements in a large number of security positions. See, e.g., 
Securities Exchange Act Release No. 46306 (August 2, 2002) 
(approving the UTP trading of Vanguard Total Market VIPERs based on 
the Wilshire 5000 Total Market Index).
    \22\ See draft Letter from Mary Joan Hoene, Carter Ledyard & 
Milburn LLP, to Paula Dubberly, Chief Counsel, Division of 
Corporation Finance (``Corporation Finance''), and James 
Brigagliano, Assistant Director, Trading Practices, Division of 
Market Regulation (``Division''), Commission, (discussing the 
arbitrage potential of the Shares) (the ``Trading Practices 
Letter'').
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Book Entry Form

    DTC will act as securities depository for the Shares.\23\ 
Individual certificates will not be issued for the Shares. Instead, a 
global certificate will be deposited by the Trustee with DTC and 
registered in the name of Cede & Co., as nominee for DTC. The global 
certificate will evidence all of the Shares outstanding at any time. 
Shareholders are limited to (1) participants in DTC such as banks, 
brokers, dealers, and trust companies (``DTC Participants''), (2) those 
who maintain, either directly or indirectly, a custodial relationship 
with a DTC Participant (``Indirect Participants''), and (3) those 
banks, brokers, dealers, trust companies, and others who hold interests 
in the Shares through DTC Participants or Indirect Participants. Shares 
are only transferable through the book-entry system of DTC. 
Shareholders who are not DTC Participants may transfer their Shares 
through DTC by instructing the DTC Participant holding their Shares (or 
by instructing the Indirect Participant or other entity through which 
their Shares are held) to transfer the Shares. Transfers will be made 
in accordance with standard securities industry practice.
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    \23\ DTC may decide to discontinue providing its service with 
respect to Baskets and/or the Shares by giving notice to the Trustee 
and the Sponsor. Under such circumstances, the Trustee and the 
Sponsor will either find a replacement for DTC to perform its 
functions at a comparable cost or, if a replacement is unavailable, 
terminate the Trust.
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    Upon the settlement date of any creation, transfer, or redemption 
of Shares, DTC will credit or debit on its book-entry registration and 
transfer system, the amount of the Shares so created, transferred, or 
redeemed to the accounts of the appropriate DTC Participants. The 
Trustee and the DTC Participants will designate the accounts to be 
credited and charged in the case of creation or redemption of Shares. 
Beneficial ownership of the Shares will be limited to DTC Participants, 
Indirect Participants, and persons holding interests through DTC 
Participants and Indirect Participants. Owners of beneficial interests 
in the Shares will be shown on, and the transfer of ownership will be 
effected only through, records maintained by DTC (with respect to DTC 
Participants), the records of DTC Participants (with respect to 
Indirect Participants), and the records of Indirect Participants (with 
respect to beneficial owners that are not DTC Participants or Indirect 
Participants). Beneficial owners are expected to receive from or 
through the DTC Participant a written confirmation relating to their 
purchase of the Shares. Shareholders may transfer the Shares through 
DTC by instructing the DTC Participant or Indirect Participant through 
which the Shareholders hold their Shares to transfer the Shares.

Issuance of the Shares

    The Trust will create Shares on a continuous basis only in 
aggregations of 100,000 Shares (such aggregation

[[Page 33991]]

referred to as a ``Basket''), principally in exchange for gold (``Gold 
Deposit''), together with, if applicable, a specified cash payment 
(``Cash Deposit'', \24\ and together with the Gold Deposit, the 
``Creation Basket Deposit''). The Sponsor anticipates that in the 
ordinary course of the Trust's operations a cash deposit will not be 
required for the creation of Baskets. Similarly, the Trust will redeem 
Shares only in Baskets, principally in exchange for gold and, if 
applicable, a cash payment (``Cash Redemption Amount'' \25\ and 
together with the gold, the ``Redemption Distribution''). Authorized 
Participants \26\ are the only persons that may place orders to create 
and redeem Baskets. The Exchange states that certain Authorized 
Participants are expected to have the facility to participate directly 
in the gold bullion market and the gold futures market. The Sponsor 
believes that the size and operation of the gold bullion market make it 
unlikely that an Authorized Participant's direct activities in the gold 
or securities markets will impact the price of gold or the price of the 
Shares. The Exchange states that each Authorized Participant is (i) 
regulated as a broker-dealer regulated under the Act and registered 
with the National Association of Securities Dealers, Inc. (``NASD''), 
or (ii) is exempt from being, or otherwise is not required to be, 
regulated as a broker-dealer under the Act or registered with the NASD, 
and in either case is qualified to act as a broker or dealer in the 
states or other jurisdictions where the nature of its business so 
requires. Certain Authorized Participants will be regulated under 
federal and state banking laws and regulations. Each Authorized 
Participant will have its own set of rules and procedures, internal 
controls, and information barriers as it determines is appropriate in 
light of its own regulatory regime. Authorized Participants may act for 
their own accounts or as agents for broker-dealers, custodians, and 
other securities market participants that wish to create or redeem 
Baskets. An order for one or more Baskets may be placed by an 
Authorized Participant on behalf of multiple clients.
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    \24\ The amount of any required Cash Deposit will be determined 
as follows: (1) the fees, expenses and liabilities of the Trust will 
be subtracted from any cash held or receivable by the Trust as of 
the date an Authorized Participant (defined herein) places an order 
to purchase one or more Baskets (``Purchase Order''); (2) the 
remaining amount will be divided by the number of Baskets 
outstanding and then multiplied by the number of Baskets being 
created pursuant to the Purchase Order. If the resulting amount is 
positive, that amount will be the required Cash Deposit. If the 
resulting amount is negative, the amount of the required Gold 
Deposit will be reduced by a number of fine ounces of gold equal in 
value to that resulting amount, determined by reference to the price 
of gold used in calculating the NAV of the Trust on the Purchase 
Order date. Fractions of an ounce of gold of less than 0.001 of an 
ounce included in the Gold Deposit amount will be disregarded. All 
questions as to the amount and composition of a Creation Basket 
Deposit will be finally determined by the Trustee in consultation 
with the Custodian.
    \25\ The Cash Redemption Amount is equal to the excess (if any) 
of all assets of the Trust other than gold over all accrued fees, 
expenses, and other liabilities, divided by the number of Baskets 
outstanding and multiplied by the number of Baskets included in the 
Authorized Participant's order to redeem one or more Baskets 
(``Redemption Order''). The Trustee will distribute any positive 
Cash Redemption Amount through DTC to the account of the Authorized 
Participant at DTC. If the Cash Redemption Amount is negative, the 
credit to the Authorized Participant's unallocated account 
(``Authorized Participant Unallocated Account'') will be reduced by 
the number of fine ounces of gold equal in value to that resulting 
amount, determined by reference to the price of gold used in 
calculating the NAV of the Trust on the Redemption Order date. 
Fractions of a fine ounce of gold included in the Redemption 
Distribution of less than 0.001 of an ounce will be disregarded. 
Redemption Distributions will be subject to the deduction of any 
applicable tax or other governmental charges due. All questions 
regarding the amount and composition of a Redemption Distribution 
will be finally determined by the Trustee in consultation with the 
Custodian.
    \26\ Authorized Participants must be registered broker-dealers 
or other securities market participants, such as banks and other 
financial institutions that are not required to register as broker-
dealers to engage in securities transactions, who are participants 
in DTC. To become an Authorized Participant, a person must enter 
into a Participant Agreement with the Sponsor and the Trustee. The 
Participant Agreement provides the procedures for the creation and 
redemption of Baskets and for the delivery of the gold and any cash 
required for such creations and redemptions. Prior to initiating any 
creation or redemption order, an Authorized Participant must have 
entered into a Participant Unallocated Bullion Account Agreement 
with the Custodian to establish an Authorized Participant 
Unallocated Account in London. Authorized Participant Unallocated 
Accounts may only be used for transactions with the Trust. An 
Authorized Participant will bear all credit risk associated with its 
unallocated account.
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Creation and Redemption

    Authorized Participants may sell to other investors all or part of 
the Shares included in the Baskets they purchase from the Trust. The 
creation and redemption of Baskets require the delivery to or by the 
Trust of the amount of gold and any cash represented by the Baskets 
being created or redeemed. The total amount of gold and any cash 
required for the creation or redemption of each Basket will be in the 
same proportion to the total assets of the Trust (net of accrued and 
unpaid fees, expenses and other liabilities) on the date the Purchase 
Order is properly received as the number of Shares to be created in 
respect of the Creation Basket Deposit bears to the total number of 
Shares outstanding on the date the Purchase Order is received.\27\ 
Except when aggregated in Baskets, the Shares are not redeemable. The 
Trust will impose transaction fees in connection with creation and 
redemption transactions.
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    \27\ The initial amount of gold required for deposit to create 
Shares is 10,000 troy ounces per Basket. The number of ounces of 
gold required to create a Basket or to be delivered upon a 
redemption of a Basket will gradually decrease over time because the 
Shares comprising a Basket will represent a decreasing amount of 
gold due to the sale of the Trust's gold to pay the Trust's 
expenses.
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    The Trustee will determine the NAV \28\ and ANAV of the Trust on 
each business day at the earlier of the London PM Fix for such day or 
12 PM New York time.\29\ In determining the Trust's NAV, the Trustee 
will value the gold held by the Trust based on the London PM Fix price 
for a troy ounce of gold. The Trustee will also determine the NAV per 
Share by dividing the NAV of the Trust by the number of the Shares 
outstanding as of the close of trading on the NYSE.
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    \28\ The NAV of the Trust is the aggregate value of the Trust's 
assets less its liabilities (which include accrued expenses).
    \29\ For purposes of calculating the Trust's ANAV and NAV, a 
business day means any day when the NYSE is open for regular 
trading. If on a day when the Trust's NAV is being calculated the 
London PM Fix gold price is not available, the gold price from the 
next most recent London Fix (AM or PM) will be used, unless the 
Trustee determines that such price is inappropriate to use. The 
Trust's assets will consist of allocated gold bullion, gold credited 
to an unallocated gold account, and, from time to time, cash, which 
will be used to pay expenses. Except for the transfer of gold in or 
out of the Trust's unallocated account connected with the creation 
or redemption of a Basket or upon a sale of gold, it is anticipated 
that only a small amount of gold will be held in unallocated form by 
the Trust. Cash held by the Trust will not generate any income.
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    Once the value of the gold has been determined, the Trustee will 
determine the ANAV of the Trust by subtracting all accrued fees (other 
than the fees to be computed by reference to the value of the Trust's 
assets), expenses, and other liabilities of the Trust from the total 
value of the gold and all other assets of the Trust (other than any 
amounts credited to the Trust's reserve account, if established). The 
ANAV of the Trust is used to compute all fees (including the Trustee's 
and the Sponsor's fees), which are calculated from the value of the 
Trust's assets. To determine the Trust's NAV, the Trustee will subtract 
the amount of accrued fees, computed from the value of the Trust's 
assets using ANAV, from the ANAV amount.
    UBS Securities LLC, the Initial Purchaser, is expected to purchase 
100,000 Shares, which will comprise the seed Basket. The Initial 
Purchaser has, subject to conditions, also agreed to purchase 900,000 
Shares, which comprise the initial Baskets. The Trust

[[Page 33992]]

will receive all proceeds from the offering of the seed Basket and the 
initial Baskets in gold bullion. In connection with the offering and 
sale of the initial Baskets, the Initial Purchaser will be paid a fee 
by the Sponsor at the time of its purchase of the initial Baskets. In 
addition, the Initial Purchaser may receive commissions/fees from 
investors who purchase Shares from the initial Baskets through their 
commission/fee-based brokerage accounts.

Clearance and Settlement

    Set forth below is a description of the mechanisms for the 
settlement and redemption of the Shares.

Creation Orders

    An Authorized Participant who places a Purchase Order is 
responsible for crediting its Authorized Participant Unallocated 
Account with the required Gold Deposit amount by the end of the second 
business day in London following the Purchase Order date. Upon receipt 
of the Gold Deposit, the Custodian, after receiving appropriate 
instructions from the Authorized Participant and the Trustee, will 
transfer on the third business day following the Purchase Order date 
the Gold Deposit amount from the Authorized Participant Unallocated 
Account to the Trust Unallocated Account, and the Trustee will direct 
DTC to credit the Basket to the Authorized Participant's book-entry DTC 
account. The Trust will furnish a prospectus and a confirmation to 
those Authorized Participants placing Purchase Orders.
    Acting on standing instructions given by the Trustee, the Custodian 
will transfer the Gold Deposit amount from the Trust Unallocated 
Account to the Trust Allocated Account by transferring gold bars from 
its inventory to the Trust Allocated Account.
    Because gold is allocated only in multiples of whole bars, the 
amount of gold allocated from the Trust Unallocated Account to the 
Trust Allocated Account may be less than the total fine ounces of gold 
credited to the Trust Unallocated Account. Any balance will be held in 
the Trust Unallocated Account. The Custodian will follow practices 
designed to minimize the amount of gold held in the Trust Unallocated 
Account so that generally no more than 430 troy ounces of gold will be 
held in the Trust Unallocated Account at the close of any business day.

Redemption Orders

    The Redemption Distribution due from the Trust will be delivered to 
the Authorized Participant on the third business day following the date 
on which an Authorized Participant places a Redemption Order if, by 9 
a.m. New York time on such third business day, the Trustee's DTC 
account has been credited with the Baskets to be redeemed and, if the 
Trustee's DTC account has not been so credited by such time, the 
Redemption Distribution will be delivered to the extent of whole 
Baskets received. Any remainder of the Redemption Distribution will be 
delivered on the next business day to the extent of the remaining whole 
Baskets received if the Trustee receives the fee applicable to the 
extension of the Redemption Distribution date as the Trustee may, from 
time to time, determine and the remaining Baskets to be redeemed are 
credited to the Trustee's DTC account by 9 a.m. New York time on such 
next business day. Any further outstanding amount of the Redemption 
Order shall be cancelled. The Trustee is also authorized to deliver the 
Redemption Distribution notwithstanding that the Baskets to be redeemed 
are not credited to the Trustee's DTC account by 9 a.m. New York time 
on the third business day following the redemption order date if the 
Authorized Participant has collateralized its obligation to deliver the 
Baskets on such terms as the Sponsor and the Trustee may from time to 
time agree upon.
    The Custodian will transfer the gold Redemption Amount from the 
Trust Allocated Account to the Trust Unallocated Account and, 
thereafter, to the redeeming Authorized Participant Unallocated 
Account. Similar to the allocation of gold to the Trust Allocated 
Account which occurs upon a Purchase Order, if in transferring gold 
from the Trust Allocated Account to the Trust Unallocated Account in 
connection with a Redemption Order there is an excess amount of gold 
transferred to the Trust Unallocated Account, the excess over the gold 
Redemption Amount will be held in the Trust Unallocated Account.

Risk Factors to Investing in the Shares

    As set forth in the Registration Statement, an investment in the 
Shares carries certain risks. The Exchanges restates the following risk 
factors are taken from and discussed in more detail in the Registration 
Statement.
    The value of the Shares relates directly to the value of the gold 
held by the Trust and fluctuations in the price of gold could 
materially adversely affect an investment in the Shares.
     The sale of gold by the Trust to pay expenses will reduce 
the amount of gold represented by each Share on an ongoing basis 
irrespective of whether the trading price of the Shares rises or falls 
in response to changes in the price of gold.
     Expenses of the Trust may be higher than anticipated, thus 
reducing the NAV of the Trust more rapidly than anticipated and 
adversely affecting the value of the Shares.
     The sale of the Trust's gold to pay expenses at a time of 
low gold prices could adversely affect the value of the Shares.
     Purchasing activity in the gold market associated with the 
purchase of Baskets from the Trust may cause a temporary increase in 
the price of gold. This increase may adversely affect an investment in 
the Shares.
     As the Sponsor and its management have no history of 
operating an investment vehicle like the Trust, their experience may be 
inadequate or unsuitable to manage the Trust.
     The Shares are a new securities product, and their value 
could decrease if unanticipated operational or trading problems arise.
     The Trust may be required to terminate and liquidate at a 
time that is disadvantageous to Shareholders.
     The lack of a market for the Shares may limit the ability 
of Shareholders to sell the Shares.
     The operations of the Trust and the Sponsor depend on 
support from the World Gold Council. This support may not be available 
in the future and, if such support is not available, the operations of 
the Trust may be adversely affected.
     Shareholders will not have the rights enjoyed by investors 
in certain other vehicles.
     An investment in the Shares may be adversely affected by 
competition from other methods of investing in gold.
     Crises may motivate large-scale sales of gold that could 
decrease the price of gold and adversely affect an investment in the 
Shares.
     Substantial sales of gold by the official sector could 
adversely affect an investment in the Shares.
     Widening of interest rate differentials could negatively 
affect the price of gold that, in turn, could negatively affect the 
price of the Shares.
     The Trust's gold may be subject to loss, damage, theft, or 
restriction on access.
     The Trust may not have adequate sources of recovery if its 
gold is lost, damaged, stolen, or destroyed.
     Gold bullion allocated to the Trust in connection with the 
creation of a Basket may not meet the London Good Delivery Standards 
and, if a Basket is

[[Page 33993]]

issued against such gold, the Trust may suffer a loss.
     Because the Trustee and the Custodian do not oversee or 
monitor the activities of subcustodians who may hold the Trust's gold, 
and there can be no assurance that subcustodians will exercise due care 
in the safekeeping of the Trust's gold.
     The ability of the Trustee and the Custodian to take legal 
action against subcustodians may be limited which increases the 
possibility that the Trust may suffer a loss if a subcustodian does not 
use due care in the safekeeping of the Trust's gold.
     If the Custodian becomes insolvent, gold held in the Trust 
Unallocated Account or any Authorized Participant's unallocated gold 
account would represent an unsecured claim against the Custodian, and 
the Custodian's assets may not be adequate to satisfy a claim by the 
Trust or any Authorized Participant.
     In issuing Baskets, the Trustee will rely on certain 
information received from the Custodian that is subject to confirmation 
after the Trustee has relied on the information. If such information 
turns out to be incorrect, Baskets may be issued in exchange for an 
amount of gold that is more or less than the amount of gold that is 
required to be deposited with the Trust.
     The Trust's obligation to reimburse the Initial Purchaser 
for certain liabilities in the event the Sponsor fails to indemnify the 
Initial Purchaser could adversely affect an investment in the Shares.

Availability of Information Regarding Gold Prices

    Currently, the Consolidated Tape Plan does not provide for 
dissemination of the spot price of a commodity, such as gold, over the 
Consolidated Tape. However, there will be disseminated over the 
Consolidated Tape the last sale price for the Shares, as is the case 
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of gold 
price and gold market information available on public websites and 
through professional and subscription services. As is the case with 
equity securities generally and exchange-traded funds specifically, in 
most instances, real-time information is only available for a fee, and 
information available free of charge is subject to delay (typically, 20 
minutes).
    The Exchange states that investors may obtain on a 24-hour basis 
gold pricing information based on the spot price for a troy ounce of 
gold from various financial information service providers, such as 
Reuters and Bloomberg.\30\ Reuters and Bloomberg provide at no charge 
on their websites delayed information regarding the spot price of gold 
and last sale prices of gold futures, as well as information about news 
and developments in the gold market. Reuters and Bloomberg also offer a 
professional service to subscribers for a fee that provides information 
on gold prices directly from market participants. An organization named 
EBS provides an electronic trading platform to institutions such as 
bullion banks and dealers for the trading of spot gold, as well as a 
feed of live streaming prices to Reuters and Moneyline Telerate 
subscribers. The Exchange states that complete real-time data for gold 
futures and options prices traded on the COMEX (a division of the 
NYMEX) are available by subscription from Reuters and Bloomberg. The 
NYMEX also provides delayed futures and options information on current 
and past trading sessions and market news free of charge on its 
website. The Exchange also notes that there are a variety of other 
public websites providing information on gold, ranging from those 
specializing in precious metals to sites maintained by major 
newspapers, such as The Washington Post. Many of these sites offer 
price quotations drawn from other published sources, and as the 
information is supplied free of charge, it generally is subject to time 
delays.\31\ Like bond securities traded in the OTC market with respect 
to which pricing information is available directly from bond dealers, 
current gold spot prices are also generally available with bid/ask 
spreads from gold bullion dealers.\32\
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    \30\ Information about the pricing data provided by Reuters and 
Bloomberg has been provided to the Exchange by the Sponsor. Because 
the financial information service providers described are not 
affiliated with, or regulated by, the Exchange, and operate 
independently from the Exchange, the Exchange cannot ensure that the 
pricing information described above will remain available or be 
available in the same form or manner as described herein. These 
financial service providers are also not affiliated with the Trust, 
the Sponsor, or the Custodian.
    \31\ There may be incremental differences in the gold spot price 
among the various information service sources. While the Exchange 
believes the differences in the gold spot price may be relevant to 
those entities engaging in arbitrage or in the active daily trading 
of gold or gold-based products, the Exchange believes such 
differences are likely of less concern to individual investors 
intending to hold the Shares as part of a long-term investment 
strategy.
    \32\ See, e.g., Securities Exchange Act Release No. 46252 (July 
24, 2002) (noting that quote and trade information regarding debt 
securities is widely available to market participants from a variety 
of sources, including broker-dealers, information service providers, 
newspapers, and websites).
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    In addition, the NYSE, via a link to the Trust's website, will 
provide at no charge continuously updated bids and offers indicative of 
the spot price of gold on its own public website, http://www.nyse.com.\33\ The Trust website will also provide an intraday 
indicative value per share for the Shares calculated by multiplying the 
indicative spot price of gold by the quantity of gold backing each 
Share.\34\ Notwithstanding that they will be provided free of charge, 
the indicative spot price and intraday indicative value per Share will 
be provided on an essentially real-time basis.\35\ The Trust website 
will also provide the NAV of the Trust as calculated each business day 
by the Sponsor. Finally, the Trust website will also provide the last 
sale price of the Shares as traded in the United States market, subject 
to a 20-minute delay, as it is provided free of charge.\36\
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    \33\ The Trust website's gold spot price will be provided by The 
Bullion Desk (http://www.thebulliondesk.com). The NYSE will provide 
a link to the Trust website. The Bullion Desk is not affiliated with 
the Trust, Sponsor, Custodian, or the Exchange. The Exchange has 
been informed that the gold spot price is indicative only, 
constructed using a variety of sources to compile a spot price that 
is intended to represent a theoretical quote that might be obtained 
from a market maker from time to time. The Trust website will 
indicate, as noted above in the discussion titled ``Availability of 
Information Regarding Gold Prices,'' that there are other sources 
for obtaining the gold spot price. In the event that the Trust 
website should cease to provide this indicative spot price from an 
unaffiliated source and the intraday indicative value of the Shares, 
the NYSE will delist the shares. See discussion of continued listing 
standards, below.
    \34\ The intraday indicative value of the Shares is analogous to 
the intraday optimized portfolio value (sometimes referred to as the 
IOPV), indicative portfolio value and the intraday indicative value 
(sometimes referred to as the IIV) associated with the trading of 
exchange-traded funds. See, e.g., Securities Exchange Act Release 
No. 46686 (October 18, 2002) for a discussion of indicative 
portfolio value in the context of an exchange-traded fund.
    \35\ The Trust's website is expected to indicate that these 
values are subject to an average delay of 5 to 10 seconds.
    \36\ The last sale price of the Shares in the secondary market 
is available on a real-time basis for a fee from regular data 
vendors.
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Other Characteristics of the Shares

General Information

    It is anticipated that a minimum of three Baskets will be 
outstanding at the commencement of trading on the Exchange. The number 
of Shares per Basket is 100,000.
    Trading in Shares on the Exchange will be effected normally until 
4:15 p.m. each business day. The minimum trading increment for Shares 
on the Exchange will be $0.01.

Fees

    The Exchange original listing fee applicable to the listing of the 
Trust will

[[Page 33994]]

be $5,000. The annual continued listing fee for the Trust would be 
$2,000.

Continued Listing Criteria

    The Exchange applicable continued listing criteria are as follows: 
(1) Following the initial twelve-month period beginning upon the 
commencement of trading of the Shares, there are fewer than 50 record 
and/or beneficial holders of the Shares for 30 or more consecutive 
trading days; (2) the value of gold is no longer calculated or 
available from a source unaffiliated with the Sponsor, the Trust, the 
Custodian or the Exchange, or the Exchange stops providing the 
hyperlink on the Exchange's website to any such unaffiliated gold 
value; or (3) such other event shall occur or condition exist that, in 
the opinion of the Exchange, makes further dealings on the Exchange 
inadvisable. In addition, the Exchange will remove Shares from listing 
and trading upon termination of the Trust.

Exchange Trading Rules and Policies

    The Shares are considered ``securities'' pursuant to NYSE Rule 3 
and are subject to all applicable trading rules.
    The Exchange's surveillance procedures will be comparable to those 
used for investment company units currently trading on the Exchange and 
will incorporate and rely upon existing NYSE surveillance procedures 
governing equities.
    The Exchange will adopt new NYSE Rule 1300 (``Equity Gold Shares'') 
to deal with issues related to the trading of the Shares. Specifically, 
for purposes of NYSE Rule 13 (``Definitions of Orders''), NYSE Rule 
36.30 (``Communications Between Exchange and Members'' Offices''), NYSE 
Rule 98 (``Restrictions on Approved Person Associated with a 
Specialist's Member Organization), NYSE Rule 104 (``Dealings by 
Specialists''), NYSE Rule 105(m) (``Guidelines for Specialists'' 
Specialty Stock Option Transactions Pursuant to Rule 105''), and NYSE 
Rule 460.10 (``Specialists Participating in Contests''), 1002 
(Availability of Automatic Feature), and 1005 (Orders May Not Be Broken 
Into Smaller Accounts),\37\ the Shares will be treated the same as 
investment company units.\38\ The Exchange does not currently intend to 
exempt Equity Gold Shares from the Exchange's ``Market-on-Close/Limit-
on-Close/Pre-Opening Price Indications'' Policy, although the Exchange 
may do so in the future if, after having experience with the trading of 
the Shares, the Exchange believes such an exemption is appropriate.
---------------------------------------------------------------------------

    \37\ Telephone conference between James F. Duffy, Senior Vice 
President, Associate General Counsel, NYSE, and Florence Harmon, 
Senior Special Counsel, Division, Commission, on June 9, 2004 
(correcting typographical error to NYSE Rule 104 and inadvertent 
omission of NYSE Rules 1002 and 1005).
    \38\ In particular, Rule 1300 provides that Rule 105(m) is 
deemed to prohibit an equity specialist, his member organization, 
other member, allied member or approved person in such member 
organization or officer or employee thereof from acting as a market 
maker or functioning in any capacity involving market-making 
responsibilities in physical gold, gold futures or options on gold 
futures, or any other gold derivatives, except as otherwise provided 
therein.
---------------------------------------------------------------------------

    For intermarket surveillance purposes, the Exchange will enter into 
a Memorandum of Understanding with the NYMEX prior to the commencement 
of trading in the Shares. The Exchange will also adopt new NYSE Rule 
1301 (``Equity Gold Shares: Securities Accounts and Orders of 
Specialists'') to ensure that specialists handling Equity Gold Shares 
provide the Exchange with all necessary information relating to their 
trading in physical gold and in gold futures contracts and options 
thereon or any other gold derivative.\39\ As a general matter, the 
Exchange has regulatory jurisdiction over its member organizations and 
any person or entity controlling a member organization. The Exchange 
also has regulatory jurisdiction over a subsidiary or affiliate of a 
member organization that is in the securities business. A member 
organization subsidiary or affiliate that does business only in 
commodities would not be subject to NYSE jurisdiction, but the Exchange 
could obtain certain information regarding the activities of such 
subsidiary or affiliate through reciprocal agreements with regulatory 
organizations of which such subsidiary or affiliate is a member.
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    \39\ Rule 1301 also states that, in connection with trading 
physical gold, gold futures or options on gold futures or any other 
gold derivatives (including Equity Gold Shares), the specialist 
shall not use any material nonpublic information received from any 
person associated with a member or employee of such person regarding 
trading by such person or employee in physical gold, gold futures or 
options on gold futures, or any other gold derivatives. For the 
purpose of Rule 1301, ``person associated with a member'' shall have 
the same meaning ascribed to it in Section 3(a)(21) of the Exchange 
Act.
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    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. Trading on the Exchange in the Shares may be 
halted because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Shares inadvisable. These may include 
(1) the extent to which trading is not occurring in gold or (2) whether 
other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. In addition, 
trading in Shares is subject to trading halts caused by extraordinary 
market volatility pursuant to Exchange's ``circuit breaker'' rule.\40\
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    \40\ NYSE Rule 80B.
---------------------------------------------------------------------------

    Pursuant to NYSE Rule 405, before a member, member organization, 
allied member or employee of such member organization undertakes to 
recommend a transaction in Shares, such member or member organization 
should make a determination that such Shares are suitable for such 
customer. If any recommendation is made with respect to such Shares, 
the person making the recommendation should have a reasonable basis for 
believing at the time of making the recommendation, that the customer 
has such knowledge and experience in financial matters that he or she 
may reasonably be expected to be capable of evaluating the risks and 
any special characteristics of the recommended transaction, and is 
financially able to bear the risks of the recommended transaction.
    The Exchange will distribute an information circular to its members 
in connection with the trading in the Shares. The circular will discuss 
the special characteristics and risks of trading this type of security. 
Specifically, the circular, among other things, will discuss what the 
Shares are, how a Basket is created and redeemed, applicable Exchange 
rules, dissemination information, trading information, and the 
applicability of suitability rules.\41\ The information circular will 
also reference that the Trust is subject to various fees and expenses 
described in the Registration Statement, and that the number of ounces 
of gold required to create a Basket or to be delivered upon a 
redemption of a Basket will gradually decrease over time because the 
Shares comprising a Basket will represent a decreasing amount of gold 
due to the sale of the Trust's gold to pay the Trust's expenses. The 
information circular will also reference the fact that there is no 
regulated source of last sale information regarding physical gold, and 
that the Commission has no jurisdiction over the trading of gold as a 
physical commodity. Finally, the information circular will

[[Page 33995]]

also note to members language in the Registration Statement regarding 
prospectus delivery requirements for the Shares.
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    \41\ The information circular will also discuss exemptive 
relief, if granted, by the Commission from certain rules under the 
Act. The applicable rules are: Rule 10a-1; Section 11(d) and Rules 
11d1-1 and 11d1-2; and Rules 101 and 102 of Regulation M under the 
Act. Telephone conference between James F. Duffy, Senior Vice 
President, Associate General Counsel, NYSE, and Florence Harmon, 
Senior Special Counsel, Division, Commission, on June 9, 2004 
(clarifying status of exemptive relief sought).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\42\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\43\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transaction in securities, and, in general to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78f(b).
    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NYSE-2004-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NYSE-2004-22. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Amex. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2004-22 and should be submitted on or before July 8, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\44\
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    \44\ 17 CFR.200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-13694 Filed 6-16-04; 8:45 am]
BILLING CODE 8010-01-P