[Federal Register Volume 79, Number 220 (Friday, November 14, 2014)]
[Notices]
[Pages 68329-68330]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26948]



[[Page 68329]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73561; File No. SR-NYSEArca-2014-102]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Proposing 
To List and Trade Shares of the Greenhaven Coal Fund Under NYSE Arca 
Equities Rule 8.200, Commentary .02

November 7, 2014.

I. Introduction

    On September 5, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to list and trade shares 
(``Shares'') of the Greenhaven Coal Fund (the ``Fund''), pursuant to 
NYSE Arca Equities Rule 8.200, Commentary .02. On September 18, 2014, 
the Exchange filed Amendment No. 1 to the proposed rule change, which 
superseded and replaced the proposed rule change as originally filed. 
The proposed rule change, as modified by Amendment No. 1, was published 
for comment in the Federal Register on September 25, 2014.\3\ The 
Commission received no comments on the proposal. This order approves 
the proposed rule change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 73149 (September 19, 
2014), 79 FR 57640 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares pursuant to NYSE 
Arca Equities Rule 8.200, Commentary .02, which permits the listing of 
Trust Issued Receipts (``TIRs'').\4\ The Exchange has represented that 
the Fund will meet the initial and continued listing requirements 
applicable to TIRs in NYSE Arca Equities Rule 8.200 and Commentary .02 
thereto.\5\ The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities.\6\
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    \4\ On September 5, 2014, the Fund filed with the Commission a 
pre-effective amendment to its registration statement on Form S-1 
under the Securities Act of 1933 (15 U.S.C. 77a) relating to the 
Fund. (File No. 333-182301) (``Registration Statement'').
    \5\ See Notice, supra note 3, 79 FR at 57645.
    \6\ See id. at 57646.
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    The Fund is a commodity pool that is organized as a Delaware 
statutory trust. The Fund's trustee is Christiana Trust, a division of 
Wilmington Savings Fund Society, FSB, and the Fund's sponsor is 
GreenHaven Coal Services, LLC (``Sponsor'').\7\ ALPS Distributors, Inc. 
will be the Fund's marketing agent and distributor. Bank of New York 
Mellon will be the Fund's administrator and transfer agent and will 
calculate the net asset value (``NAV'') on a daily basis.
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    \7\ The Sponsor is registered with the Commodity Futures Trading 
Commission as a commodity pool operator, and is approved as a member 
of the National Futures Association. The Sponsor is a wholly-owned 
subsidiary of GreenHaven Group, LLC and is affiliated with 
GreenHaven Commodity Services, LLC, a commodities trading firm.
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    The Exchange states that the investment objective of the Fund is to 
provide investors with exposure to the daily change in the price of 
coal futures, before expenses and liabilities of the Fund. The Fund 
intends to achieve this objective by investing substantially all of its 
assets in a three-month strip \8\ of the nearest calendar quarter of 
Rotterdam coal futures contracts (``Coal Futures'') traded on the CME's 
Globex CME ClearPort clearing services trading platforms. All of the 
Fund's positions in Coal Futures will be cleared by CME clearing member 
firms. The Sponsor will seek to invest the Fund's cash collateral in 
13-week U.S. Treasury Bills.
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    \8\ With regard to a ``three-month strip,'' ``strip'' is a term 
used in futures markets to describe a series of delivery months for 
an individual futures contract. A calendar strip is a three-month 
strip of one of the four calendar quarters. For example, a three-
month calendar strip for the third quarter 2014 includes July 2014, 
August 2014, and September 2014 coal futures contracts.
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    Additional information regarding the Fund, including the NAV 
calculation, operation of the Fund, portfolio composition, 
restrictions, risks, fees, expenses, and Share creations and redemption 
can be found in the Notice and the Registration Statement.\9\
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    \9\ See supra notes 3 and 4, respectively.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade Shares of the Fund is consistent with the 
Exchange Act and the rules and regulations thereunder applicable to a 
national securities exchange.\10\ In particular, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Exchange Act,\11\ which requires, among other things, that the 
Exchange's rules be designed to prevent fraudulent and manipulative 
acts and practices, promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest. The Commission also finds that the 
proposal is consistent with Section 11A(a)(1)(C)(iii) of the Exchange 
Act,\12\ which sets forth Congress' finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities.
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    \10\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. See 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Quotation and last-sale for the Shares will be available via the 
facilities of the Consolidated Tape Association.\13\ The Exchange's Web 
site will provide daily trading volume, closing prices, and NAV for the 
Shares.\14\ NYSE Euronext Global Index Feed and online information 
services will provide the intraday Indicative Fund Value (``IFV'') on a 
per-Share basis, which will be calculated by one or more major market 
vendors every 15 seconds during the Exchange's Core Trading 
Session.\15\ The Fund's Web site will post the daily NAV, as well as a 
breakdown of the holdings of the Fund.\16\ The Web sites for the Fund 
or the Exchange will also provide the following information: (1) The 
current NAV per Share daily and the prior business day's NAV and the 
reported closing price; (2) the midpoint of the bid-ask price in 
relation to the NAV as of the time the NAV is calculated (``Bid-Ask 
Price''); (3) calculation of the premium or discount of such price 
against such NAV; (4) the bid-ask price of Shares determined using the 
highest bid and lowest offer as of the time of calculation of the NAV; 
(5) data in chart form displaying the frequency distribution of 
discounts and premiums of the Bid-Ask Price against the NAV, within 
appropriate ranges for each of the four previous calendar quarters; (6) 
the prospectus; and (7) other applicable quantitative information.\17\
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    \13\ See Notice, supra note 3, 79 FR at 57645.
    \14\ See id.
    \15\ See id.
    \16\ See id.
    \17\ See id.

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[[Page 68330]]

    Quotation and last-sale information for the Coal Futures will be 
widely disseminated through a variety of major market data vendors 
worldwide.\18\ The spot price of coal is also available on a 24-hour 
basis from major market vendors. The Exchange further represents that 
complete real-time price (and volume) data for such contracts is 
available by subscription from certain market data vendors.\19\ For 
Coal Futures, the CME also provides delayed futures price (and volume) 
information on current and past trading sessions and market news free 
of charge on its Web site.\20\ The closing price and settlement prices 
of Coal Futures are also readily available from the CME.\21\
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    \18\ See id.
    \19\ See id.
    \20\ See id.
    \21\ See id.
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    The Commission believes that the proposal to list and trade Shares 
is reasonably designed to promote fair disclosure of information that 
may be necessary to price Shares appropriately and to prevent trading 
when a reasonable degree of transparency cannot be assured. If the 
Exchange becomes aware that the NAV with respect to the Shares is not 
disseminated to all market participants at the same time, it will halt 
trading in the Shares until such time as the NAV is available to all 
market participants.\22\ If the IFV or value of Coal Futures is not 
being disseminated as required, the Exchange may halt trading during 
the day in which the disruption occurs; if the interruption persists 
past the trading day in which it occurred, the Exchange will halt 
trading no later than the beginning of the trading day following the 
interruption.\23\ The Exchange will also consider halting trading for 
the following reasons: (1) The extent to which trading is not occurring 
in the Coal Futures; (2) if the creation or redemption of Shares is 
suspended for a period that, in the judgment of the Exchange, may 
detrimentally impact Exchange trading of the Shares; or (3) whether 
other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present.\24\
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    \22\ See id. at 57646.
    \23\ The Exchange also notes that the Exchange may halt trading 
during the day in which an interruption of the dissemination of the 
IFV or the value of the applicable futures contracts occurs. See id.
    \24\ See id. Additionally, trading in Shares will be subject to 
trading halts caused by extraordinary market volatility pursuant to 
the Exchange's ``circuit breaker'' rule. See NYSE Arca Equities Rule 
7.12.
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    Moreover, the trading of the Shares will be subject to NYSE Arca 
Equities Rule 8.200, Commentary .02(e), which sets forth certain 
restrictions on Equity Trading Permit (``ETP'') Holders acting as 
registered market makers in TIRs to facilitate surveillance. The 
Commission notes that the Financial Industry Regulatory Authority 
(``FINRA''), on behalf of the Exchange, will communicate as needed 
regarding trading in the Shares and the Coal Futures with other markets 
and other entities that are members of the Intermarket Surveillance 
Group (``ISG''), and FINRA may obtain trading information regarding 
trading in the Shares and the Coal Futures from such markets and other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.\25\
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    \25\ See Notice, supra note 3, 79 FR at 57646.
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    In support of this proposal, the Exchange has made representations, 
including that:
    (1) A minimum of 100,000 Shares for the Fund will be outstanding as 
of the start of trading on the Exchange.\26\
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    \26\ See id. at 57645.
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    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.\27\
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    \27\ See id. at 57646.
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    (3) Its trading surveillance procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws.\28\
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    \28\ See id.
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    (4) CME is a member of the ISG.\29\
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    \29\ See id.
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    (5) Prior to commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Bulletin will discuss the following: (1) The risks involved 
in trading the Shares during the Opening and Late Trading Sessions, or 
a portion of the Core Trading Session, when an updated IFV will not be 
calculated or publicly disseminated; (2) the procedures for purchases 
and redemptions of Shares in Basket size (and that Shares are not 
individually redeemable); (3) NYSE Arca Equities Rule 9.2(a), which 
imposes a duty of due diligence on its ETP Holders to learn the 
essential facts relating to every customer prior to trading the Shares; 
(4) how information regarding the IFV is disseminated; (5) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Shares prior to or concurrently with the 
confirmation of a transaction; and (6) trading information.\30\

    \30\ See id.
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    This order is based on the Exchange's representations.
    For the forgoing reasons, the Commission believes the Exchange's 
proposal to list and trade the Shares is consistent with the Exchange 
Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\31\ that the proposed rule change (SR-NYSEArca-2014-102), 
as modified by Amendment No. 1 thereto, be, and it hereby is, approved.
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    \31\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26948 Filed 11-13-14; 8:45 am]
BILLING CODE 8011-01-P