[Federal Register Volume 80, Number 242 (Thursday, December 17, 2015)]
[Notices]
[Pages 78791-78793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31680]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76630; File No. SR-NYSEArca-2015-76]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting 
Proceedings To Determine Whether To Approve or Disapprove Proposed Rule 
Change, as Modified by Amendment No. 1, To List and Trade Shares of the 
Global Currency Gold Fund Under NYSE Arca Equities Rule 8.201

December 11, 2015.
    On August 28, 2015, NYSE Arca, Inc. (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to list and trade 
shares of the Global Currency Gold Fund under NYSE Arca Equities Rule 
8.201. The proposed rule change was published for comment in the 
Federal Register on September 16, 2015.\3\ On September 29, 2015, the 
Exchange submitted Amendment No. 1 on the proposed rule change.\4\ On 
October 28, 2015, pursuant to Section 19(b)(2) of the Act,\5\ the 
Commission designated a longer period within which to approve the 
proposed rule change, disapprove the proposed rule change, or institute 
proceedings to determine whether to disapprove the proposed rule 
change.\6\ The Commission has not received any comments on the 
proposal, as modified by Amendment No. 1. This order institutes 
proceedings under Section 19(b)(2)(B) of the Act \7\ to determine 
whether to approve or disapprove 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. 75900 (September 11, 
2015), 80 FR 55674 (``Notice'').
    \4\ In Amendment No. 1, the Exchange: (1) Identified weightings 
of each currency referenced in the Index; (2) supplemented its 
description of the method of calculation for the Spot Rate; (3) 
clarified when the Fund may suspend the right of redemption or 
postpone the redemption settlement date. Amendment No. 1 is 
available at: http://www.sec.gov/rules/sro/nysearca/2015/34-75900-amendment1.pdf.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 75945, 80 FR 57645 
(Sept. 24, 2015). The Commission designated a longer period within 
which to take action on the proposed rule change and designated 
December 15, 2015, as the date by which it should approve, 
disapprove, or institute proceedings to determine whether to 
disapprove the proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
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I. The Exchange's Description of Proposal \8\
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    \8\ A complete description of the proposal can be found in the 
Notice. See Notice, supra note 3 (available at: http://www.sec.gov/rules/sro/nysearca/2015/34-75900.pdf).
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    The Exchange proposes to list and trade (``Shares'') of the Global 
Currency Gold Fund (the ``Fund''),\9\ a series of the Global Gold 
Currency Trust (Trust''), under NYSE Arca Equities Rule 8.201, which 
governs the listing and trading of Commodity-Based Trust Shares.\10\
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    \9\ On August 28, 2015, the Trust filed with the Commission a 
registration statement on Form S-1 under the Securities Act of 1933 
(``1933 Act'') relating to the Fund (File No. 333-206640) 
(``Registration Statement''). The Fund will not be registered as an 
investment company under the Investment Company Act of 1940 and is 
not required to register under such act. 15 U.S.C. 80a-1.
    \10\ Commodity-Based Trust Shares are securities issued by a 
trust that represent investors' discrete identifiable and undivided 
beneficial ownership interest in the commodities deposited into the 
Trust.
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    The Sponsor of the Fund and the Trust will be WGC USA Asset 
Management Company, LLC (the ``Sponsor''). BNY Mellon Asset Servicing, 
a division of The Bank of New York Mellon, will be the Fund's 
administrator (``Administrator''), transfer agent (``Transfer Agent'') 
and custodian (``Custodian'') and will not be affiliated with the 
Trust, the Fund or the Sponsor.
    Although investors will purchase Shares with U.S. dollars, the Fund 
is designed to provide investors with the economic effect of holding 
gold in terms of a specific basket of major, non-U.S. currencies, such 
as the euro, Japanese yen and British pound (each, a ``Reference 
Currency''), rather than the U.S. dollar. Specifically, the Fund will 
seek to track the performance of the Global Gold Index (ex-USD), less 
Fund expenses. The Global Gold Index (ex-USD), or the ``Index'', 
represents the daily performance of a long position in physical gold 
and a short position in each of the Reference Currencies, and is 
designed to measure daily gold bullion returns as though an investor 
had invested in Gold \11\ in terms of the Reference Currencies 
reflected in the Index.
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    \11\ ``Gold'' means gold bullion meeting the requirements of 
London Good Delivery Standards.
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    The Fund is a passive investment vehicle and is designed to track 
the performance of the Index. The Fund's holdings generally will 
consist entirely of Gold, and substantially all of the Fund's Gold 
holdings will be delivered by authorized participants in exchange for 
Shares. The Fund will not hold any of the Reference Currencies, and 
generally will not hold U.S. dollars (except from time to time in very 
limited amounts to pay expenses).
    The Administrator will determine the net asset value (``NAV'') of 
the Shares each Business Day, unless there is a market disruption or 
extraordinary event.\12\ The NAV of the Shares represents the aggregate 
value of the Fund's assets (which include gold payable, but not yet 
delivered, to the Fund) less its liabilities (which include accrued but 
unpaid fees and expenses). The NAV of the Fund will be calculated based 
on the price of Gold per ounce applied against the number of ounces of 
Gold owned by the Fund. The number of ounces of Gold held by the Fund 
is adjusted up or down on a daily basis to reflect the U.S. dollar 
value of currency gains or losses based on changes in the value of the 
Reference Currencies against the U.S. dollar. The number of ounces of 
Gold held by the Fund also reflects the amount of Gold delivered into 
(or out of) the Fund on a daily basis by authorized participants 
creating and redeeming Shares. In determining the Fund's NAV, the 
Administrator generally will value the Gold held by the Fund based on 
the LBMA Gold Price PM \13\ for an ounce of Gold (though other sources 
may be used if the LBMA Gold Price PM is delayed or unavailable). 
Although the Fund will not hold the Reference Currencies, the Gold 
Delivery Provider \14\ generally will value the Reference Currencies 
based on the rates in effect as of the WMR FX Fixing Time.\15\ Unless 
there is a market

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disruption or extraordinary event, NAV generally will be calculated as 
of 4:00 p.m., London time.
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    \12\ See Notice, supra note 3 at 55678.
    \13\ The Index values Gold on a daily basis using the ``Gold 
Price.'' The Gold Price generally is the LBMA Gold Price PM (though 
other sources may be used if the LBMA Gold Price PM is delayed or 
unavailable). The ``LBMA Gold Price'' means the price per troy ounce 
of Gold stated in U.S. dollars as set via an electronic auction 
process run twice daily at 10:30 a.m. and 3:00 p.m., London time 
each Business Day as calculated and administered by ICE Benchmark 
Administration Limited (``IBA'') and published by LBMA on its Web 
site. The ``LBMA Gold Price PM'' is the 3:00 p.m. LBMA Gold Price. 
IBA, an independent specialist benchmark administrator, provides the 
price platform, methodology and the overall administration and 
governance for the LBMA Gold Price. Id.
    \14\ The Fund will deliver Gold to, or receive Gold from, the 
Gold Delivery Provider each Business Day. The amount of Gold 
transferred will be equivalent to the Fund's profit or loss as if 
the Fund had exchanged the Reference Currencies, in the proportion 
in which they are reflected in the Index, for U.S. dollars in an 
amount equal to the Fund's declared holdings of Gold on such day. 
The Fund does not intend to enter into any other Gold transactions 
other than with the Gold Delivery Provider (except that the Fund may 
sell Gold to cover Fund expenses), and the Fund does not intend to 
hold any Reference Currency or enter into any currency transactions. 
See Notice, supra note 3 at 55675.
    \15\ The ``WMR FX Fixing Time'' is the time the Reference 
Currency prices are published, which generally is at 4:00 p.m., 
London Time.
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    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Fund subject to the Exchange's existing rules 
governing the trading of equity securities.\16\ The Fund will be 
subject to the criteria in NYSE Arca Equities Rule 8.201(e) for initial 
and continued listing of the Shares. A minimum of 100,000 Shares will 
be required to be outstanding at the start of trading. The Exchange 
believes that the anticipated minimum number of Shares outstanding at 
the start of trading is sufficient to provide adequate market 
liquidity.\17\
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    \16\ See Notice, supra note 3 at 55681.
    \17\ Id.
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    Trading in the Shares will be subject to the existing trading 
surveillances, administered by the Financial Industry Regulatory 
Authority (``FINRA'') on behalf of the Exchange, which are designed to 
detect violations of Exchange rules and applicable federal securities 
laws.\18\ The Exchange represents that these procedures are adequate to 
properly monitor Exchange trading of the Shares in all trading sessions 
and to deter and detect violations of Exchange rules and federal 
securities laws applicable to trading on the Exchange.\19\
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    \18\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement. Id.
    \19\ Id.
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    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in the Shares with other markets and other entities 
that are members of the Intermarket Surveillance Group (``ISG''), and 
FINRA, on behalf of the Exchange, may obtain trading information 
regarding trading in the Shares from such markets and other entities. 
In addition, the Exchange may obtain information regarding trading in 
the Shares from markets and other entities that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.\20\
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    \20\ For a list of the current members of ISG, see 
www.isgportal.org.
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    Also, pursuant to NYSE Arca Equities Rule 8.201(g), the Exchange is 
able to obtain information regarding trading in the Shares and the 
underlying gold, gold futures contracts, options on gold futures, or 
any other gold derivative, through equity trading permit holders (``ETP 
Holders'') acting as registered market makers, in connection with such 
ETP Holders' proprietary or customer trades through ETP Holders which 
they effect on any relevant market.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.

II. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2015-76 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \21\ to determine whether the proposed rule 
change, as modified by Amendment No. 1, should be approved or 
disapproved. Institution of such proceedings is appropriate at this 
time in view of the legal and policy issues raised by the proposed rule 
change, as modified by Amendment No. 1. Institution of proceedings does 
not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide comments 
on the proposed rule change, as modified by Amendment No. 1.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\22\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission questions whether: (1) The Exchange has sufficiently 
demonstrated in its filing that the Index is not susceptible to 
manipulation; and (2) the existing provisions of the Exchange's listing 
rule are adequate to allow it to surveil for and investigate potential 
manipulation by ETP Holders registered as market makers. Therefore, the 
Commission is instituting proceedings to allow for the submission of 
additional analysis regarding the proposed rule change's consistency 
with Section 6(b)(5) of the Act, which requires, among other things, 
that the rules of a national securities exchange be ``designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade,'' and ``to protect investors and the 
public interest.'' \23\
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    \22\ Id.
    \23\ 15 U.S.C. 78f(b)(5).
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III. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) or any other provision of the Act, or 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\24\
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    \24\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by January 7, 2016. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
January 21, 2016. The Commission asks that commenters address the 
sufficiency of the Exchange's statements in support of the proposal, 
which are set forth in the Notice,\25\ in addition to any other 
comments they may wish to submit about the proposed rule change, as 
modified by Amendment No. 1. In particular, the Commission seeks 
comment on the following:
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    \25\ Supra note 3.
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    1. In general, do commenters believe that the proposal is 
consistent with the requirements of Section 6(b)(5) of the Act, which 
requires that the rules of a national securities exchange be designed, 
among other things, to 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?
    2. What are commenters' views regarding the susceptibility of the 
price of the Shares to manipulation?
    3. The Exchange states that Index values generally are calculated 
using the published WMR Spot Rate (``Spot Rate'') as of 4:00 p.m., 
London time associated with each Reference Currency, subject to certain 
adjustments, and notes that other rates may be used if the Spot Rate is 
delayed or unavailable. The Exchange does not state, however, how the 
Spot Rate and any replacement rate (``Currency Rates'') are calculated.

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    a. Are the Currency Rates calculated using arm's length 
transactions and, if so, are such transactions verified, and how? If 
quotes are used to calculate the Currency Rates, are those arm's length 
quotes firm?
    b. What concerns, if any, do commenters have regarding the Index's 
susceptibility to manipulation?
    4. Are the requirements of NYSE Arca Equities Rule 8.201(g) 
adequate to allow the Exchange to fulfill its regulatory obligations 
or, in light of the Shares' exposure to the Reference Currencies, 
should those requirements be expanded to also apply to market makers' 
trading accounts for all of the applicable non-U.S. currencies, 
options, futures or options on futures on such currencies, or any other 
derivatives based on such currencies?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2015-76 on the subject line.

Paper Comments

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

    All submissions should refer to File Numbers SR-NYSEArca-2015-76. 
This file number should be included on the subject line if email is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE., Washington, DC 20549, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of these filings also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2015-76 and should be submitted on or before January 7, 2016. 
Rebuttal comments should be submitted by January 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(57).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31680 Filed 12-16-15; 8:45 am]
BILLING CODE 8011-01-P