[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86635-86637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28889]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90791; File No. SR-NYSEArca-2020-113]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Reflect a Change 
to the Index Underlying the United States Copper Index

December 23, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 18, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect a change to the index underlying 
the United States Copper Index Fund, shares of which are currently 
listed and traded on the Exchange under NYSE Arca Rule 8.200-E. The 
proposed rule change is available on the Exchange's website at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Commission has approved a proposed rule change relating to 
listing and trading on the Exchange of ``Units'' of the United States 
Copper Index Fund for listing and trading on the Exchange under NYSE 
Arca Rule 8.200-E (``Trust Issued Receipts'').\3\ The Exchange proposes 
to reflect a change to the SummerHaven Copper Index Total Return (the 
``Index''), which is the index underlying the Units.\4\
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    \3\ See Securities Exchange Act Release Nos. 65249 (September 2, 
2011), 76 FR 55956 (September 9, 2011) (SR-NYSEArca-2011-63) (Notice 
of Filing of Proposed Rule Change To List and Trade Shares of the 
United States Metals Index Fund, the United States Agriculture Index 
Fund and the United States Copper Index Fund Under NYSE Arca 
Equities Rule 8.200) (``Prior Notice''); 65601 (October 20, 2011), 
76 FR 66339 (October 26, 2011) (SR-NYSEArca-2011-63) (Order 
Approving a Proposed Rule Change To List and Trade Shares of the 
United States Metals Index Fund, the United States Agriculture Index 
Fund and the United States Copper Index Fund Under NYSE Arca 
Equities Rule 8.200) (``Prior Order'' and, together with the Prior 
Notice, the ``Prior Releases'').
    \4\ On December 1, 2020 the Trust filed with the Commission an 
amended registration statement on Form S-1 under the Securities Act 
of 1933 relating to the Trust (File No. 333-237184) (``Registration 
Statement''). The description of the operation of the Trust herein 
is based, in part, on the Prior Releases. The procedures described 
in this proposed rule change will not be implemented until this 
proposed rule change is effective and operative.

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[[Page 86636]]

    As stated in the Prior Releases, the Index is designed to reflect 
the performance of the investment returns from a portfolio of futures 
contracts for copper that are traded on the COMEX (such futures 
contracts, collectively, ``Eligible Copper Futures Contracts''). The 
Index is comprised of either two or three Eligible Copper Futures 
Contracts that are selected on a monthly basis based on quantitative 
formulas relating to the prices of the Eligible Copper Futures 
Contracts developed by SummerHaven Indexing.\5\
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    \5\ Eligible Copper Futures Contracts that at any given time 
make up the Index are referred to in the Prior Releases as 
``Benchmark Component Copper Futures Contracts.''
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    The Exchange proposes to amend this representation to state that, 
beginning December 31, 2020, the Index will be revised such that, on 
the new Selection Date, as defined below, it will be comprised of 
either one or three Eligible Copper Futures Contracts that are selected 
on a monthly basis based on quantitative formulas relating to the 
prices of the Eligible Copper Futures Contracts developed by 
SummerHaven Indexing. The Trust announced this change in a Form 8-K 
filed with the Commission on December 1, 2020 and in the Registration 
Statement.\6\ The Form 8-K and the Registration Statement state that 
this revision to the composition of the Index is intended to ensure 
that the Index components at any given time represent copper futures 
contracts for which there is an active and liquid trading market.
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    \6\ See Form 8-K filed with the Commission by the Trust on 
December 1, 2020 (File No. 001-34833).
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    The Exchange also proposes to change the description in the Prior 
Notice regarding how Eligible Copper Futures Contracts are allocated in 
the Index. Specifically, the Prior Notice stated that, at the end of 
each month, (1) the copper futures curve is assessed to be in either 
backwardation or contango, and (2) the annualized percentage price 
difference between the closest-to-expiration Eligible Copper Futures 
Contract and each of the next four Eligible Copper Futures Contracts is 
calculated. If the copper futures curve is in backwardation at the end 
of a month, the Copper Index takes positions in the two Eligible Copper 
Futures Contracts with the highest annualized percentage price 
difference, each weighted at 50%. If the copper futures curve is in 
contango, then the Copper Index takes positions in three Eligible 
Copper Futures Contracts, as follows: First, the Copper Index takes 
positions in the two Eligible Copper Futures Contracts with the highest 
annualized percentage price difference, each weighted at 25%; then the 
Copper Index also takes a position in the nearest-to-maturity December 
Eligible Copper Futures Contract that has expiration more distant than 
the fourth nearest Eligible Copper Futures Contract, which position is 
weighted at 50%.
    The Exchange proposes to change this representation to state that, 
if the copper futures curve is in backwardation on the ``Selection 
Date'', the Index takes positions in the first Eligible Copper Futures 
Contract (which is the next nearest to maturity of the Eligible Futures 
Contracts), weighted at 100%. If the copper futures curve is in 
contango, then the Index takes positions in the first three Eligible 
Copper Futures Contracts, each position weighted at 33.33%.\7\ The 
``Selection Date'' is the 10th business day of each month. In addition, 
the rebalancing period for the Index will change from the first four 
business days of each month to the 11th-14th business days of each 
month, based on signals used for contract selection on the Selection 
Date, rather than the last business day of each month as is currently 
the case. As noted above, the Sponsor represents that these revisions 
to the composition of the Index are intended to ensure that the Index 
components at any given time represent copper futures contracts for 
which there is an active and liquid trading market.
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    \7\ For each month, the ``Eligible Copper Futures Contracts'' 
are as set forth in a chart appearing in the Registration Statement.
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    Regarding the proposed changes to the Selection Date and roll dates 
for the Index and the Fund, the Sponsor represents that moving the 
Selection Date would allow the Index and the Fund to include or hold 
Eligible Copper Futures Contracts in nearer months (meaning shorter 
duration) and with the greatest liquidity. This is particularly 
important when copper is in backwardation when it is advantageous for 
the Index and the Fund to include or hold Eligible Copper Futures 
Contracts in the closest month possible.
    The Exchange notes that the Prior Releases stated that the Fund 
will create Units only in blocks of 100,000 Units called ``Creation 
Baskets'' and redeem Units only in blocks of 100,000 Units called 
``Redemption Baskets''. The Registration Statement states that the Fund 
creates Units only in blocks of 50,000 Units and redeems Units only in 
blocks of 50,000 Units, which is the current size of Creation Baskets 
and Redemption Baskets. United States Commodity Funds LLC (the 
``Sponsor'') represents that a lower size of a Creation or Redemption 
Basket is beneficial to investors by facilitating additional creation 
and redemption activity in the Shares that may result in increased 
secondary market trading activity, tighter bid/ask spreads and narrower 
premiums or discounts to net asset value.\8\
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    \8\ The Trust's Basket size of 50,000 Shares is consistent with 
the August 8, 2018 letter from the Division of Trading and Markets 
granting no-action relief to certain commodity-based investment 
vehicles from Rules 101 and 102 of Regulation M under the Act. See 
footnote 2 to letter, dated August 8, 2018, from Josephine J. Tao, 
Assistant Director, Division of Trading and Markets, to Eric 
Simanek, Sullivan & Worcester LLP. The Commission has previously 
approved listing and trading of Trust Issued Receipts on the 
Exchange where the size of a ``Creation Unit'' for a series of Trust 
Issued Receipts was 50,000 shares. See, e.g., Securities Exchange 
Act Release Nos. 58161 (July 15, 2008), 73 FR 42380 (July 21, 2008) 
(SR-Amex-2008-39) (Order Granting Approval of Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, Relating to the Listing and 
Trading of Trust Issued Receipts that Directly Hold Investments in 
Certain Financial Instruments and to Permit the Listing and Trading 
of Shares of Fourteen Funds of the Commodities and Currency Trust); 
66553 (March 9, 2012), 77 FR 15440 (March 15, 2012) (SR-NYSEArca-
2012-04) (Order Granting Approval of Proposed Rule Change Relating 
to Listing and Trading of Shares of Twenty-Six Series of ProShares 
Trust II under NYSE Arca Equities Rule 8.200).
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    The Sponsor represents that the proposed changes described above 
will further assist the Trust to achieve its investment objective. 
Except for the changes noted above, all other representations made in 
the Prior Releases remain unchanged.\9\
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    \9\ See note 4, supra. All terms referenced but not defined 
herein are defined in the Prior Releases.
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \10\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest. The Sponsor represents that the proposed revisions to 
the composition of the Index are intended to ensure that the Index 
components at any given time represent copper futures contracts for 
which there is an active and liquid trading market, which may help 
prevent fraudulent and manipulative practices.

[[Page 86637]]

    Regarding the proposed changes to the Selection Date and roll dates 
for the Index and the Fund, the Sponsor represents that moving the 
Selection Date would allow the Index and the Fund to include or hold 
Eligible Copper Futures Contracts in nearer months (meaning shorter 
duration) and with the greatest liquidity. This is particularly 
important when copper is in backwardation when it is advantageous for 
the Index and the Fund to include or hold Eligible Copper Futures 
Contracts in the closest month possible.
    With respect to the lower size of a Creation or Redemption Basket 
(50,000 Shares rather than 100,000 Shares as stated in the Prior 
Releases), the Sponsor represents that such lower size is beneficial to 
investors by facilitating additional creation and redemption activity 
in the Shares that may result in increased secondary market trading 
activity, tighter bid/ask spreads and narrower premiums or discounts to 
net asset value.
    The Sponsor represents that the proposed changes described above 
will further assist the Trust to achieve its investment objective. 
Except for the changes noted above, all other representations made in 
the Prior Releases remain unchanged.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act and, by permitting the Index 
to include, and the Fund to hold, more liquid futures components at any 
given time, will enhance competition among issues of commodity-based 
Trust Issued Receipts.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative for 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay. The Exchange states 
the proposed rule change will accommodate the inclusion of more liquid 
and active copper futures contracts in the Index and, other than the 
changes to the index methodology and Creation and Redemption basket 
size described above, all other representations made in the Prior 
Releases remain unchanged. For this reason, the proposed rule change 
does not raise any novel regulatory issues, and the Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission waives the 30-day operative delay and designates the 
proposal operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
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 email to [email protected]. Please include 
File Number SR-NYSEArca-2020-113 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 Number SR-NYSEArca-2020-113. 
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 website (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 website 
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 the filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2020-113 and should 
be submitted on or before January 21, 2021.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28889 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P