[Federal Register Volume 87, Number 23 (Thursday, February 3, 2022)]
[Notices]
[Pages 6206-6211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02182]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94094; File No. SR-CboeBZX-2022-005]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To List and
Trade Shares of the Goldman Sachs Physical Gold ETF Under BZX Rule
14.11(e)(4) (Commodity-Based Trust Shares)
January 28, 2022.
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 January 25, 2022, Cboe BZX Exchange, Inc. filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been substantially
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
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'' or the
``SEC'') a proposed rule change to list and trade shares of the Goldman
Sachs Physical Gold ETF (the ``Trust'') under BZX Rule 14.11(e)(4),
Commodity-Based Trust Shares.
The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, 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 Exchange 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. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
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 the Shares under BZX Rule
14.11(e)(4),\3\ which governs the listing and trading of Commodity-
Based Trust Shares on the Exchange.\4\ The Commission has previously
approved and noticed for immediate and effective proposals that are
substantively identical to this proposal that permit the listing and
trading of the Shares on NYSE Arca, Inc. (``Arca'').\5\ Further, the
Shares are currently listed and traded on Arca and as of December 14,
2021 and had net assets of $414.19 million.
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\3\ The Commission approved BZX Rule 14.11(e)(4) in Securities
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148
(September 6, 2011) (SR-BATS-2011-018).
\4\ All statements and representations made in this filing
regarding (a) the description of the portfolio, (b) limitations on
portfolio holdings, or (c) the applicability of Exchange rules and
surveillance procedures shall constitute continued listing
requirements for listing the Shares on the Exchange.
\5\ See Securities Exchange Act No. 82372 (December 21, 2017),
82 FR 61601 (December 28, 2017) (SR-NYSEArca-2017-140) (the
``Original Proposal''). See also Securities Exchange Act No. 82593
(January 26, 2018), 83 FR 4718 (February 1, 2018) (SR-NYSEArca-2017-
140) (Order Approving the Original Proposal). The order approving
the Original Proposal was later amended on November 20, 2020 to
reflect (i) a change in the sponsors and the custodian of the Perth
Mint Physical Gold ETF, which was renamed as the Goldman Sachs
Physical Gold ETF, (ii) the elimination of an investor's ability to
take delivery of Physical Gold, and (iii) in connection with the
change of custodian, the removal of the Government Guarantee, and to
amend certain other representations in the Proposal. See Securities
Exchange Act No. 90529 (November 30, 2020), 85 FR 78391 (December 4,
2020) (SR-NYSEArca-2020-100) (the ``Updated Proposal'').
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Goldman Sachs Asset Management, L.P. is the sponsor of the Trust
(the ``Sponsor''). The Bank of New York Mellon is the trustee of the
Trust (the ``Trustee''). JPMorgan Chase Bank, N.A., London branch
serves as the custodian of the Trust's gold bullion (the ``Custodian'')
and is responsible for the safekeeping of the gold owned by the Trust.
The Shares are registered with the Commission by means of the Trust's
registration statement on Form S-3 (the ``Registration Statement'').\6\
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\6\ On June 11, 2019 the Trust filed with the Commission a
registration statement on Form S-1 under the Securities Act of 1933
relating to the Trust (File No. 333-224389) (``S-1 Registration
Statement''). The S-1 Registration Statement was declared effective
by the SEC on June 20, 2019. On December 28, 2020, the Trust filed
with the Commission the Registration Statement on Form S-3 under the
Securities Act of 1933 relating to the Trust (File No. 333-251769).
The Registration Statement was declared effective by the SEC on
January 8, 2021.
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[[Page 6207]]
The Trust will not be registered as an investment company under the
Investment Company Act of 1940, as amended,\7\ and is not required to
register under such act. The Trust is not a commodity pool for purposes
of the Commodity Exchange Act, as amended.\8\
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\7\ 15 U.S.C. 80a-1.
\8\ 17 U.S.C. 1.
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Goldman Sachs Physical Gold ETF
The Trust's primary objective is for the Shares to reflect the
performance of the price of gold less the expenses of the Trust's
operations. Although the Shares are not the exact equivalent of an
investment in gold, they provide investors with an alternative that
allows a level of participation in the gold market through the
securities market.
Operation 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
trades on a continuous basis and accounts for most global gold trading.
Market makers and participants in the OTC market trade with each other
and their clients on a principal-to-principal basis. The main centers
of the OTC market are London, New York and Zurich. Most OTC market
trades are cleared through London. The London Bullion Market
Association (``LBMA'') plays an important role in setting OTC gold
trading industry standards.
Futures Exchanges
Although the Trust will not invest in gold futures, information
about the gold futures market is relevant as such markets contribute
to, and provide evidence of, the liquidity of the overall market for
gold. The most significant gold futures exchange in the U.S. is COMEX,
operated by Commodities Exchange, Inc., a subsidiary of New York
Mercantile Exchange, Inc., and a subsidiary of the Chicago Mercantile
Exchange Group (the ``CME Group''). Other commodity exchanges include
the Tokyo Commodity Exchange (``TOCOM''), the Multi Commodity Exchange
Of India (``MCX''), the Shanghai Futures Exchange, ICE Futures US (the
``ICE''), and the Dubai Gold & Commodities Exchange.\9\
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\9\ The CME Group and the ICE are members of the Intermarket
Surveillance Group (``ISG'').
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The London Bullion Market Association
The LBMA is a trade association that, among other duties, maintains
and publishes ``Good Delivery'' lists that establish a set of criteria
that a refiner and its gold must satisfy before being accepted for
trading. Although the market for Physical Gold \10\ is distributed
globally, most OTC market trades are cleared through London. The LBMA
coordinates the market for gold and 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 as well as the
specifications to which a bar/ingot must adhere. The LBMA also
coordinates market clearing and vaulting, and promotes good trading
practices. ``Good Delivery'' is a list of specifications a bar or ingot
must meet to trade on the London gold markets. The standards for gold
bars meeting the ``London Good Delivery Lists'' are published in LBMA's
``The Good Delivery Rules for Gold and Silver Bars''. Gold is usually
traded on the London market on a loco London basis. This means the gold
is physically held in vaults in London or is transferred into accounts
established in London. Payment upon settlement and delivery of a loco
London spot trade is usually in U.S. dollars, two business days after
the trade date. Delivery of the gold is either by physical delivery or
through the LBMA clearing system to an unallocated account.
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\10\ ``Physical Gold'' means gold bullion that meets the London
Good Delivery Standards.
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Creation and Redemption of Shares by Authorized Participants
According to the Registration Statement, authorized participants
may purchase (i.e., create) or redeem Shares only in blocks of 25,000
Shares (each such block, a ``Creation Unit'') in the Trust. Creation
Units are offered to authorized participants at the Trust's net asset
value (``NAV''). The size of a Creation Unit is subject to change. The
creation and redemption of Creation Units will only be made in exchange
for the delivery to the Trust or the distribution by the Trust of the
amount of gold represented by the Creation Units being created or
redeemed, the amount of which will be based on the combined Fine Ounces
\11\ represented by the number of Shares included in the Creation Units
being created or redeemed determined on the day the order to create or
redeem Creation Units is properly received.
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\11\ ``Fine Ounce'' means an ounce of 100% pure gold, Fine
Ounces being determined, as to Physical Gold, by multiplying the
gross weight in ounces by the fineness, expressed as a fraction of
the fine metal content in parts per 1,000 in accordance with London
Good Delivery Standards and, as to gold held on an unallocated
basis, by the number of Fine Ounces credited to the applicable
unallocated account from time to time (such account being
denominated in Fine Ounces).
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Orders to create and redeem Creation Units may be placed only by
authorized participants. An authorized participant must: (1) Be a
registered broker-dealer or other securities market participant, such
as a bank or other financial institution, which, but for an exclusion
from registration, would be required to register as a broker-dealer to
engage in securities transactions, (2) be a participant in the
Depository Trust Company (``DTC'') and (3) must have an agreement with
the Custodian establishing an account or have an existing account
meeting the standards described herein.
Gold is delivered to the Trust and distributed by the Trust through
credits and debits between authorized participants' accounts, the trust
unallocated metal account and the trust allocated metal account. When
the Trustee requests creation of a basket at an authorized
participant's request, the authorized participant will then transfer
gold to the trust unallocated metal account. Once that gold is received
in the trust unallocated metal account, the Custodian will then
allocate the gold to the trust allocated metal account where it will be
stored for safekeeping. All gold represented by a credit to any
authorized participant's unallocated account represents a right to
receive Fine Ounces of gold. London Bars must further conform to London
Good Delivery Standards.
Creation Procedures--Authorized Participants
On any business day, an authorized participant may place an order
with the Trustee to create one or more Creation Unit. For purposes of
processing both purchase and redemption orders, a ``business day''
means any day other than a day: (1) When the Exchange is closed for
regular trading; or (2) if the order or other transaction requires the
receipt or delivery, or the confirmation of receipt or delivery, of
gold in the United Kingdom, or in some other jurisdiction on a
particular day, (A) when banks are authorized to close in the United
Kingdom, or in such other jurisdiction or when the London gold market
is closed or (B) when banks in the United Kingdom, or in such other
jurisdiction are, or the London gold market is, not open for a full
business day and the order or other transaction requires the execution
or completion of procedures which cannot be executed or completed by
the close of the business day. Purchase orders must be placed
[[Page 6208]]
prior to the Order Cutoff Time \12\ on any business day.
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\12\ ``Order Cutoff Time'' is defined, with respect to any
business day, as (i) 3:59:59 p.m. New York City time on such
business day or (ii) another time agreed to by the Sponsors and the
Trustee as to which the Sponsor has notified registered owners of
Shares and all existing authorized participants.
\13\ ``Basket Gold Amount'' refers to the amount of gold that
must be deposited for issuance of one Creation Unit or that is
deliverable on surrender of one Creation Unit.
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Determination of Required Deposits
The Trustee shall determine the Basket Gold Amount \13\ for each
business day, and each such determination thereof and the Trustee's
resolution of questions concerning the composition of the Basket Gold
Amount shall be final and binding on all persons interested in the
Trust. At the creation of the Trust, the initial Basket Gold Amount was
500 Fine Ounces of gold. After the initial deposit of gold into the
Trust, the Creation Unit Gold Amount for each business day shall be an
amount of gold equal to:
[GRAPHIC] [TIFF OMITTED] TN03FE22.044
Where:
(a) = the total number of Fine Ounces of gold held in the Trust as
of the opening of business on such business day
(b) = the number of Fine Ounces of gold equal in value to the
Trust's unpaid expense accrual as of the opening of business on such
business day
(c) = the total number of Shares outstanding as of the opening of
business on such business day
(d) = 25,000 (or other number of Shares in a Creation Unit for such
business day). Fractions of a Fine Ounce of gold included in the
Basket Gold Amount smaller than 0.001 Fine Ounces shall be
disregarded. The Sponsor shall publish, or shall designate another
person to publish, for each business day, the Basket Gold Amount
Delivery of Required Deposits
An authorized participant who places a purchase order is
responsible for crediting the trust unallocated metal account with the
required gold deposit amount by 4:00 p.m. London time on the second
business day following the purchase order date. No Shares will be
issued unless and until the Custodian has informed the Trustee that it
has credited to the trust allocated metal account at the Custodian the
corresponding amount of gold. Upon transfer of the gold deposit amount
to the trust allocated metal account, the Trustee will direct DTC to
credit the number of Creation Units ordered to the authorized
participant's DTC account. The expense and risk of delivery, ownership
and safekeeping of gold, until such gold has been received by the
Custodian on behalf of the Trust, shall be borne solely by the
authorized participant.
Redemption Procedures--Authorized Participants
The procedures by which an authorized participant can redeem one or
more Creation Unit will mirror the procedures for the creation of
Creation Units. On any business day, an authorized participant may
place an order with the Trustee to redeem one or more Creation Units.
Redemption orders must be placed prior to the Order Cutoff Time on each
business day the Exchange is open for regular trading (normally 9:30
a.m. Eastern Time). A redemption order so received is effective on the
date it is received in satisfactory form by the Trustee. The redemption
procedures allow only authorized participants to redeem Creation Units.
An investor may not redeem Creation Units other than through an
authorized participant. By placing a redemption order, an authorized
participant agrees to deliver the Creation Unit to be redeemed through
DTC's book-entry system to the Trust no later than the second business
day following the effective date of the redemption order. Prior to the
delivery of the redemption distribution for a redemption order, the
authorized participant must also have wired to the Trustee the non-
refundable transaction fee due for the redemption order. The redemption
distribution from the Trust consists of a credit to the redeeming
authorized participant's account representing the amount of the gold
held by the Trust evidenced by the Shares being redeemed as of the date
of the redemption order. A redeeming authorized participant is
responsible for any applicable tax, fees or other governmental charge
that may be due, as well as any charges or fees in connection with the
transfer of gold and the issuance and delivery of the Shares, and any
expense associated with the delivery of gold other than by credit to an
authorized participant's unallocated account with the Custodian or
another LBMA-member clearing bank.
Delivery of Redemption Distribution
The redemption distribution due from the Trust is delivered to the
authorized participant on the second business day following the
redemption order date if, by 9:00 a.m. Eastern time on the second
business day following the redemption order date, the Trustee's DTC
account has been credited with the Creation Units to be redeemed. The
Custodian will arrange for the redemption amount in gold to be
transferred from the trust allocated metal account to the trust
unallocated metal account, and thereafter, as necessary, to the
redeeming authorized participant's account. With respect to a
redemption order provided in the ordinary course, the Custodian shall
deliver unallocated gold to the account indicated by the redeeming
authorized participant in its redemption order by 4:00 p.m. London Time
on the second business day following the order date.
Valuation of Gold and Computation of NAV
On each business day that the Exchange is open for regular trading,
as promptly as practicable after 4:00 p.m., Eastern time, the Trustee
will value the gold held by the Trust and will determine the NAV of the
Trust, as described below. The NAV of the Trust is the aggregate value
of gold and other assets, if any, of the Trust (other than any amounts
credited to the Trust's reserve account, if any) including cash, if
any, less liabilities of the Trust, which include estimated accrued but
unpaid fees, expenses and other liabilities. All gold is valued based
on its Fine Ounce content, calculated by multiplying the weight of gold
by its purity; the same methodology is applied independent of the type
of gold held by the Trust. The Trustee values the gold held by the
Trust based on the afternoon LBMA Gold Price, or the morning LBMA Gold
Price, if such day's afternoon LBMA Gold Price is not available. If no
LBMA Gold Price is available for the day, the Trustee will value the
Trust's gold based on the most recently announced afternoon LBMA Gold
Price or morning LBMA Gold Price. If the Sponsor determines that such
price is inappropriate to use, it shall identify an alternate basis for
evaluation to be employed by the Trustee. The Sponsor may instruct the
Trustee to use a different price which is reasonably available to the
Trustee at no cost to the Trustee that the Sponsor determines to fairly
represent the commercial value of the Trust's gold. Once the value of
gold has been determined, the Trustee will subtract all estimated
accrued but unpaid fees, expenses and other liabilities of the Trust
from the total value of gold and any other assets of the Trust (other
than any amounts credited to the Trust's reserve account), including
cash, if any. The resulting figure is the NAV of the Trust. The Trustee
will also determine the NAV per share by dividing the NAV of the Trust
by the number of the Shares outstanding
[[Page 6209]]
as of the close of trading on the Exchange (which includes the net
number of any Shares deemed created or redeemed on such evaluation
day).\14\
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\14\ The exchange of Shares to facilitate the delivery of
Physical Gold is subject to applicable product premiums and the
delivery fees associated with the transport of Physical Gold to
delivery applicants.
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Secondary Market Trading
The Shares may trade in the secondary market on the Exchange at
prices that are lower or higher relative to their NAV per share. 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 Exchange and the COMEX, London and Zurich. While the Shares will
trade on the Exchange during all trading sessions, liquidity in the
global gold market may be reduced after the close of the major world
gold markets, including London, Zurich and COMEX, usually at 1:30 p.m.
Eastern Time. As a result, during this time, trading spreads and the
resulting premium or discount on the Shares may widen.
Availability of Information Regarding Gold
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
information about gold and gold markets available on public websites
and through professional and subscription services. Investors may
obtain gold pricing information on a 24-hour basis based on the spot
price for an ounce of gold from various financial information service
providers, such as Reuters and Bloomberg. Reuters and Bloomberg, for
example, 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.
Complete real-time data for Gold futures and options prices traded
on the COMEX are available by subscription from Reuters and Bloomberg.
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. In addition, the LBMA Gold Price is
publicly available at no charge at www.lbma.org.uk.
Investors may obtain gold pricing information based on the spot
price for a Fine Ounce from various financial information service
providers. Current spot prices also are generally available with bid/
ask spreads from gold bullion dealers. In addition, the Trust's website
will provide pricing information for gold spot prices and the Shares.
Market prices for the Shares will be available from a variety of
sources including brokerage firms, information websites and other
information service providers. The NAV of the Trust will be published
by the Sponsor on each day that the Exchange is open for regular
trading and will be posted on the Trust's website.
Intraday Indicative Value (``IIV'')
The IIV is an indicator of the value of the Trust's net assets at
the time the IIV is disseminated. The IIV is calculated and
disseminated every 15 seconds during Regular Trading Hours.\15\ The IIV
is generally calculated using the prior day's closing net assets of the
Trust as a base and updating throughout the trading day changes in the
value of the gold and cash held by the Trust.
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\15\ Regular Trading Hours is the time between 9:30 a.m. and
4:00 p.m. Eastern Time.
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The IIV will be disseminated by the Exchange or a major market data
vendor. In addition, the IIV is available through on-line information
services such as Bloomberg Finance L.P. and Reuters.
Availability of Information
The Trust's website, Goldman Sachs Physical Gold ETF
(www.gsam.com), which is publicly accessible at no charge, contains the
following information: (a) The prior business day's NAV per Share, the
reported daily closing price and the reported daily trading volume; (b)
the Basket Gold Amount; (c) the midpoint of the bid-ask price as of the
time the NAV per Share is calculated (the ``Bid-Ask Price''); (d) the
calculation of the premium or discount of such price against such NAV
per Share; (e) data in chart form displaying the frequency distribution
of discounts or premiums of the bid-ask price against the NAV per
Share, within appropriate ranges for each of the four previous calendar
quarters; and (f) the current prospectus of the Trust.\16\ Finally, the
Trust's website will provide the last sale price of the Shares as
traded in the U.S. market. In addition, information regarding market
price and trading volume of the Shares will be continually available on
a real-time basis throughout the day on brokers' computer screens and
other electronic services. Information regarding the previous day's
closing price and trading volume information for the Shares will be
published daily in the financial section of newspapers.
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\16\ See https://www.gsam.com/content/gsam/us/en/individual/products/etf-fund-finder/goldman-sachs-physical-gold-etf.html#activeTab=performance.
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Criteria for Initial and Continued Listing
The Trust will be subject to the criteria in Rule 14.11(e)(4) for
initial and continued listing of the Shares. The Exchange will obtain a
representation that the Trust's NAV will be calculated daily and that
these values and information about the assets of the Trust will be made
available to all market participants at the same time. The Exchange
notes that, as defined in Rule 14.11(e)(4)(C)(i), the Shares will be:
(a) Issued by a trust that holds a specified commodity \17\ deposited
with the trust; (b) issued by such trust in a specified aggregate
minimum number in return for a deposit of a quantity of the underlying
commodity; and (c) when aggregated in the same specified minimum
number, may be redeemed at a holder's request by such trust which will
deliver to the redeeming holder the quantity of the underlying
commodity. Upon termination of the Trust, the Shares will be removed
from listing. The Trustee, Bank of New York Mellon, is a trust company
having substantial capital and surplus and the experience and
facilities for handling corporate trust business, as required under
Rule 14.11(e)(4)(E)(iv)(a) and that no change will be made to the
trustee without prior notice to and approval of the Exchange.
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\17\ For purposes of Rule 14.11(e)(4), the term commodity takes
on the definition of the term as provided in the Commodity Exchange
Act.
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Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. The Exchange will halt trading in the Shares
under the conditions specified in BZX Rule 11.18. Trading 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 underlying gold
market; or (2) whether other unusual conditions or circumstances
detrimental to the maintenance of a fair and orderly market are
present. Trading in the
[[Page 6210]]
Shares also will be subject to Rule 14.11(e)(4)(E)(ii), which sets
forth circumstances under which trading in the Shares may be halted.
Trading Rules
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. BZX will allow
trading in the Shares during all trading sessions on the Exchange. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in BZX Rule 11.11(a), the
minimum price variation for quoting and entry of orders in securities
traded on the Exchange is $0.01 where the price is greater than $1.00
per share or $0.0001 where the price is less than $1.00 per share.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of the Shares
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Commodity-Based Trust
Shares. The issuer has represented to the Exchange that it will advise
the Exchange of any failure by the Trust or the Shares to comply with
the continued listing requirements, and, pursuant to its obligations
under Section 19(g)(1) of the Act, the Exchange will surveil for
compliance with the continued listing requirements. If the Trust or the
Shares are not in compliance with the applicable listing requirements,
the Exchange will commence delisting procedures under Exchange Rule
14.12. The Exchange may obtain information regarding trading in the
Shares and Gold futures via ISG, from other exchanges who are members
or affiliates of the ISG, or with which the Exchange has entered into a
comprehensive surveillance sharing agreement.\18\
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\18\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
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Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (i) The procedures for the
creation and redemption of Baskets (and that the Shares are not
individually redeemable); (ii) BZX Rule 3.7, which imposes suitability
obligations on Exchange members with respect to recommending
transactions in the Shares to customers; (iii) how information
regarding the IIV and the Trust's NAV are disseminated; (iv) the risks
involved in trading the Shares outside of Regular Trading Hours when an
updated IIV will not be calculated or publicly disseminated; (v) the
requirement that members deliver a prospectus to investors purchasing
newly issued Shares prior to or concurrently with the confirmation of a
transaction; and (vi) trading information. In addition, the Information
Circular will advise members, prior to the commencement of trading, of
the prospectus delivery requirements applicable to the Shares. Members
purchasing the Shares for resale to investors will deliver a prospectus
to such investors. The Information Circular will also discuss any
exemptive, no-action and interpretive relief granted by the Commission
from any rules under the Act.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \19\ in general and Section 6(b)(5) of the Act \20\ 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 facilitating transactions in securities, 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.
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\19\ 15 U.S.C. 78f.
\20\ 15 U.S.C. 78f(b)(5).
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The Commission has approved numerous series of Trust Issued
Receipts, including Commodity-Based Trust Shares, to be listed on U.S.
national securities exchanges. In order for any proposed rule change
from an exchange to be approved, the Commission must determine that,
among other things, the proposal is consistent with the requirements of
Section 6(b)(5) of the Act, specifically including: (i) The requirement
that a national securities exchange's rules are designed to prevent
fraudulent and manipulative acts and practices; and (ii) the
requirement that an exchange proposal be designed, in general, to
protect investors and the public interest.
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Exchange Rule 14.11(e)(4).
The Exchange has in place surveillance procedures that are adequate to
properly monitor trading in the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws. The Exchange may obtain information via ISG from other
exchanges that are members of ISG or with which the Exchange has
entered into a comprehensive surveillance sharing agreement.
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 in that it will facilitate the listing and trading of
an additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement.
As noted above, the Commission has previously approved the Original
Proposal, which considered together with the Updated Proposal is
substantively identical to this proposal which permits the listing and
trading of the Shares.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
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. The Exchange believes that
the proposed amendment will facilitate the listing of an additional
exchange-traded product on the Exchange, which will enhance competition
among listing venues, to the benefit of issuers, investors, and the
marketplace more broadly.
[[Page 6211]]
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
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 \21\ and Rule 19b-
4(f)(6) \22\ thereunder.\23\
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6).
\23\ 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 satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ 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 so that the proposed
rule change may take effect upon filing and BZX may list the Shares as
soon as practicable. The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest because the proposed rule change does not raise any new
or novel issues. Accordingly, the Commission waives the 30-day
operative delay and designates the proposal operative upon filing.\26\
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\24\ 17 CFR 240.19b-4(f)(6).
\25\ 17 CFR 240.19b-4(f)(6)(iii).
\26\ For purposes only of waiving the 30-day operative delay,
the Commission has 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 shall 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-CboeBZX-2022-005 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-CboeBZX-2022-005. 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-CboeBZX-2022-005 and should be submitted
on or before February 24, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-02182 Filed 2-2-22; 8:45 am]
BILLING CODE 8011-01-P