

[Federal Register: December 16, 2005 (Volume 70, Number 241)]
[Notices]               
[Page 74850-74859]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16de05-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52940; File No. SR-Amex-2005-059]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of a Proposed Rule Change and Amendments No. 1 and 2 
Thereto Relating to the Listing and Trading of the DB Commodity Index 
Tracking Fund

 December 12, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on May 27, 2005, the American Stock Exchange LLC 
(``Amex'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Amex. On September 15, 2005, the Amex filed Amendment No. 1 to 
the proposed rule change.\3\ On November 15, 2005, the Amex filed 
Amendment No. 2 to the proposed rule change.\4\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Partial Amendment dated September 15, 2005 (``Amendment 
No. 1''). In Amendment No. 1, the Amex made clarifying changes to 
the purpose section.
    \4\ See Partial Amendment dated November 15, 2005 (``Amendment 
No. 2'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to add new Commentary .07 to Amex Rule 1202 
to permit the listing and trading of shares of trust issued receipts 
(``TIRs'') that invest in shares or securities (the ``Investment 
Shares'') of a trust, partnership, commodity pool or other similar 
entity that holds investments comprising, or otherwise based on, any 
combination of securities, futures contracts, swaps, forward contracts,

[[Page 74851]]

options on futures contracts, commodities or portfolios of investments. 
Also in this proposal, the Exchange, pursuant to proposed Commentary 
.07 to Amex Rule 1202, seeks to list and trade the DB Commodity Index 
Tracking Fund (the ``Trust'' or ``Fund'').
    Below is the text of the proposed rule change. Proposed new 
language is in italics.
* * * * *

Trading of Trust Issued Receipts

    Rules 1200-1201. No Change.
    Rule 1202(a) through (e). No Change.

Commentary

    .01 through .06 No Change
    .07 (a) The provisions of this Commentary apply only to Trust 
Issued Receipts where the trust holds ``Investment Shares'' as defined 
below. Rules that reference Trust Issued Receipts shall also apply to 
Trust Issued Receipts investing in Investment Shares.
    (b) Definitions. The following terms as used in this Commentary 
shall, unless the context otherwise requires, have the meanings herein 
specified:
    (1) Investment Shares. The term ``Investment Shares'' means a 
security (a) that is issued by a trust, partnership, commodity pool or 
other similar entity that invests in any combination of futures 
contracts, options on futures contracts, forward contracts, 
commodities, swaps or high credit quality short-term fixed income 
securities or other securities; and (b) issued and redeemed daily at 
net asset value in amounts correlating to the number of receipts 
created and redeemed in a specified aggregate minimum number.
    (2) Futures Contract. The term ``futures contract'' is commonly 
known as a ``contract of sale of a commodity for future delivery'' set 
forth in Section 2(a) of the Commodity Exchange Act.
    (3) Forward Contract. A forward contract is a contract between two 
parties to purchase and sell a specific quantity of a commodity at a 
specified price with delivery and settlement at a future date. Forwards 
are traded over-the-counter (``OTC'') and not listed on a futures 
exchange.
    (c) Designation. The Exchange may list and trade Trust Issued 
Receipts investing in Investment Shares. Each issue of a Trust Issued 
Receipt based on a particular Investment Share shall be designated as a 
separate series and shall be identified by a unique symbol.
    (d) Initial and Continued Listing. Trust Issued Receipts based on 
Investment Shares will be listed and traded on the Exchange subject to 
application of the following criteria:
    (1) Initial Listing--The Exchange will establish a minimum number 
of receipts required to be outstanding at the time of commencement of 
trading on the Exchange.
    (2) Continued Listing--The Exchange will remove from listing Trust 
Issued Receipts based on an Investment Share under any of the following 
circumstances:
    (i) if following the initial twelve month period following the 
commencement of trading of the shares, (A) the Issuer has more than 60 
days remaining until termination and there are fewer than 50 record 
and/or beneficial holders of Trust Issued Receipts for 30 or more 
consecutive trading days; (B) if the Issuer has fewer than 50,000 
securities or shares issued and outstanding; or (C) if the market value 
of all securities or shares issued and outstanding is less than 
$1,000,000;
    (ii) if the value of an underlying index or portfolio is no longer 
calculated or available on at least a 15-second delayed basis or the 
Exchange stops providing a hyperlink on its website to any such asset 
or investment value;
    (iii) if the Indicative Value is no longer made available on at 
least a 15-second delayed basis; or
    (iv) if such other event shall occur or condition exists which in 
the opinion of the Exchange makes further dealings on the Exchange 
inadvisable.
    Upon termination of the trust, the Exchange requires that Trust 
Issued Receipts issued in connection with such trust be removed from 
Exchange listing. A trust may terminate in accordance with the 
provisions of the trust prospectus, which may provide for termination 
if the value of the trust falls below a specified amount.
    (3) Term--The stated term of the trust shall be as stated in the 
prospectus. However, such entity may be terminated under such earlier 
circumstances as may be specified in the trust prospectus.
    (4) Trustee--The following requirements apply:
    (i) The trustee of a trust must be a trust company or banking 
institution having substantial capital and surplus and the experience 
and facilities for handling corporate trust business. In cases where, 
for any reason, an individual has been appointed as trustee, a 
qualified trust company or banking institution must be appointed co-
trustee.
    (ii) No change is to be made in the trustee of a listed issue 
without prior notice to and approval of the Exchange.
    (5) Voting--Voting rights shall be as set forth in the applicable 
trust prospectus.
    (e) Rule 175(c) shall be deemed to prohibit an equity specialist, 
his member organization, or any other member, limited partner, officer, 
or approved person thereof from acting as a market maker or functioning 
in any capacity involving market-making responsibilities in an 
underlying asset or commodity, related futures or options on futures, 
or any other related derivatives. However, an approved person of an 
equity specialist that has established and obtained Exchange approval 
of procedures restricting the flow of material, non-public market 
information between itself and the specialist member organization 
pursuant to Rule 193, and any member, officer, or employee associated 
therewith, may act in a market making capacity, other than as a 
specialist in the Trust Issued Receipts on another market center, in 
the underlying asset or commodity, related futures or options on 
futures, or any other related derivatives.
    (f) In connection with the Trust Issued Receipts listed under this 
Commentary, Commentaries .01, .02 and .07 of Rule 170 shall not apply 
to the trading of receipts for the purpose of bringing the price of the 
receipt into parity with the value of the underlying asset or commodity 
on which the receipts are based, with the net asset value of the 
receipts or with a futures contract on the underlying asset or 
commodity on which the receipts are based. Such transactions must be 
effected in a manner that is consistent with the maintenance of a fair 
and orderly market and with the other requirements of this rule and the 
supplementary material herein.
    (g)(1) The member organization acting as specialist in Trust Issued 
Receipts is obligated to conduct all trading in the receipts in its 
specialist account, subject only to the ability to have one or more 
investment accounts, all of which must be reported to the Exchange (See 
Rule 170). In addition, the member organization acting as specialist in 
the Trust Issued Receipts must file, with the Exchange, in a manner 
prescribed by the Exchange, and keep current a list identifying all 
accounts for trading the underlying physical asset or commodity, 
related futures or options on futures, or any other related 
derivatives, which the member organization acting as specialist may 
have or over which it may exercise investment discretion. No member 
organization acting as specialist in the Trust Issued Receipts shall 
trade in the underlying physical

[[Page 74852]]

asset or commodity, related futures or options on futures, or any other 
related derivatives, in an account in which a member organization 
acting as specialist, directly or indirectly, controls trading 
activities, or has a direct interest in the profits or losses thereof, 
which has not been reported to the Exchange as required by this Rule.
    (2) In addition to the existing obligations under Exchange rules 
regarding the production of books and records (See, e.g. Rule 31), the 
member organization acting as a specialist in Trust Issued Receipts 
shall make available to the Exchange such books, records or other 
information pertaining to transactions by such entity or any member, 
member organization, limited partner, officer or approved person 
thereof, registered or non-registered employee affiliated with such 
entity for its or their own accounts in the underlying physical asset 
or commodity, related futures or options on futures, or any other 
related derivatives, as may be requested by the Exchange.
    (3) In connection with trading the underlying physical asset or 
commodity, related futures or options on futures or any other related 
derivative (including Trust Issued Receipts), the specialist registered 
as such in Trust Issued Receipts shall not use any material nonpublic 
information received from any person associated with a member, member 
organization or employee of such person regarding trading by such 
person or employee in the physical asset or commodity, futures or 
options on futures, or any other related derivatives.
    (h) Neither the Exchange nor any agent of the Exchange shall have 
any liability for damages, claims, losses or expenses caused by any 
errors, omissions, or delays in calculating or disseminating any 
underlying asset or commodity value, the current value of the 
underlying asset or commodity if required to be deposited to the trust 
in connection with issuance of Trust Issued Receipts; net asset value; 
or other information relating to the purchase, redemption or trading of 
Trust Issued Receipts, resulting from any negligent act or omission by 
the Exchange or any agent of the Exchange, or any act, condition or 
cause beyond the reasonable control of the Exchange or its agent, 
including, but not limited to, an act of God; fire; flood; 
extraordinary weather conditions; war; insurrection; riot; strike; 
accident; action of government; communications or power failure; 
equipment or software malfunction; or any error, omission or delay in 
the reports of transactions in an underlying asset or commodity.
    (i) The Exchange will file separate proposals under Section 19(b) 
of the Securities Exchange Act of 1934 before listing and trading Trust 
Issued Receipts based on separate Investment Shares.
* * * * *

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 Amex included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below, and the most significant aspects of such statements are 
set forth in Sections A, B, and C below.

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

1. Purpose
    The Exchange proposes to add new Commentary .07 to Amex Rule 1202 
for the purpose of permitting the listing and trading of TIRs where the 
trust holds shares (``Investment Shares'') that are issued by a trust, 
partnership, commodity pool, or other similar entity that holds 
investments in any combination of securities, futures contracts, 
options on futures contracts, swaps, forward contracts, commodities or 
portfolios of investments. Additionally, in this proposal, the Amex 
initially proposes to list and trade the shares (the ``Shares'') of a 
specific trust that invests in the securities of a commodity pool (the 
``Fund''). The Fund will invest substantially all of its assets in the 
common units of beneficial interests of DB Commodity Index Tracking 
Master Fund (the ``Master Fund''). The Master Fund is a trust created 
under Delaware law that will consist primarily of futures contracts on 
the commodities comprising the Deutsche Bank Liquid Commodity 
IndexTM--Excess Return (the ``DBLCI'' or ``Index''). Both 
the Fund and the Master Fund are commodity pools operated by DB 
Commodity Services LLC (the ``Managing Owner''). The Managing Owner 
will be registered as a commodity pool operator (the ``CPO'') and 
commodity trading advisor (the ``CTA'') with the Commodity Futures 
Trading Commission (``CFTC'') \5\ and a member of the National Futures 
Association (``NFA'').
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    \5\ See Part 4 of CFTC Regulation, 17 CFR 4.1 et al.
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    The Managing Owner will serve as the CPO and CTA of the Fund and 
the Master Fund. In this particular case, the Managing Owner of the 
Master Fund will manage only the futures contracts in order to track 
the performance of the Index. The Master Fund may also include U.S. 
Treasury securities for margin purposes and other high credit quality 
short-term fixed income securities. However, the Exchange states that 
the Master Fund is not ``actively managed,'' which typically involves 
effecting changes in the composition of a portfolio on the basis of 
judgment relating to economic, financial and market considerations with 
a view to obtaining positive results under all market conditions, but 
instead, seeks to track the performance of the Index.
Introduction
    In September 1999, the Exchange adopted rules for the listing and 
trading of TIRs.\6\ TIRs are negotiable receipts issued by trusts that 
represent investors' discrete identifiable and undivided beneficial 
ownership interest in the securities deposited into the trust. Since 
that time the Exchange has listed seventeen (17) TIRs under the trade 
name of HOLDRS, representing a wide variety of industry sectors and the 
market as a whole.
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    \6\ See Securities Exchange Act Release No. 41892 (September 21, 
1999), 64 FR 52559 (September 29, 1999) (``TIR Approval Order'').
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    Under Amex Rule 1201, the Exchange may list and trade TIRs based on 
one or more securities. The securities that are included in a series of 
a TIR are required to be selected by the Exchange or its agent, a 
wholly owned subsidiary of the Exchange, or by such other person as 
shall have a proprietary interest in such TIRs. Pursuant to this Amex 
Rule 1201, the Exchange may designate the Shares for trading.
    In January 2005, the Exchange adopted rules (Amex Rule 1200A et 
seq.) for the listing and trading of Commodity-Based Trust Shares.\7\ 
Commodity-Based Trust Shares are TIRs based on an underlying commodity. 
The Exchange listed and traded the iShares[supreg] COMEX Gold Trust 
under new Amex Rule 1200A as the first Commodity Based Trust Share. 
Recently, the Exchange commenced the trading of shares of the 
streetTRACKS[supreg] Gold Trust (GLD) pursuant to Amex Rule 1000B on an 
unlisted trading privileges (``UTP'') basis.\8\ This proposal seeks to 
expand

[[Page 74853]]

the ability of the Exchange to list and trade securities based on a 
portfolio of underlying investments that may not be ``securities.''
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    \7\ See Securities Exchange Act Release No. 51058 (January 19, 
2005), 70 FR 3749 (January 26, 2005).
    \8\ See Securities Exchange Act Release No. 51446 (March 29, 
2005), 70 FR 17272 (April 5, 2005).
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    Under proposed Commentary .07(c) to Amex Rule 1202, the Exchange 
would list and trade TIRs where the trust holds ``Investment Shares.'' 
For each separate Investment Share, the Exchange would submit a filing 
pursuant to Section 19(b) of the Act.
    The Shares will conform to the initial and continued listing 
criteria under proposed Commentary .07(d) to Amex Rule 1202.\9\ The 
Fund will be formed as a Delaware statutory trust pursuant to a 
Certificate of Trust and a Declaration of Trust and Trust Agreement 
among Wilmington Trust Company, as trustee, the Managing Owner and the 
holders of the Shares.\10\
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    \9\ Proposed Commentary .07(d) to Rule 1202 for listing the 
Shares is substantially similar to current Rule 1202A relating to 
Commodity-Based Trust Shares.
    \10\ The Exchange states that the Trust is not a registered 
investment company under the Investment Company Act of 1940 (``1940 
Act'') and is not required to register under the 1940 Act.
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    The Exchange notes that the Commission has permitted the listing 
and trading of products linked to the performance of a commodity or 
commodities.\11\
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    \11\ See Securities Exchange Act Release Nos. 51058 (January 19, 
2005), 70 FR 3749 (January 26, 2005) (approving the listing and 
trading of the iShares[supreg] COMEX Gold Trust); 50603 (October 28, 
2004), 69 FR 64614 (November 5, 2004) (approving the listing and 
trading of streetTRACKS[supreg] Gold Shares); 39402 (December 4, 
1997), 62 FR 65459 (December 12, 1997) (approving the listing and 
trading of commodity index preferred or debt securities (ComPS) on 
various agricultural futures contracts and commodities indexes); 
36885 (February 26, 1996), 61 FR 8315 (March 4, 1996) (approving the 
listing and trading of ComPS linked to the value of single 
commodity); 35518 (March 21, 1995), 60 FR 15804 (March 27, 1995) 
(approving the listing and trading of commodity indexed notes or 
COINs); and 43427 (October 10, 2000), 65 FR 62783 (October 19, 2000) 
(approving the listing and trading of inflation indexed securities). 
See also Central Fund of Canada (Registration No. 033-15180) 
(closed-end fund listed and traded on the Amex that invests in gold) 
and Salmon Phibro Oil Trust (Registration No. 033-33823) (trust 
units listed and traded on the Amex that held the right to a forward 
contract for the delivery of crude oil).
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Index Description
    DBLCI is intended to reflect the performance of certain 
commodities. The Index tracks the performance of futures contracts on 
crude oil, heating oil, aluminum, gold, corn and wheat, and the 
notional amounts of each commodity included in the Index are 
approximately in proportion to historical levels of the world's 
production and supplies of such commodities. The sponsor of the Index 
is Deutsche Bank AG London (``DB London'').
    The Index value is calculated by DB London during the trading day 
on the basis of the most recently reported trade price for the relevant 
futures contract relating to each of the Index commodities. Therefore, 
the market value of each Index commodity during the trading day will be 
equal to the number of futures contracts of each commodity represented 
in the Index multiplied by the real-time futures contract price (i.e., 
the most recently reported trade price).\12\ The Index value will be 
calculated and disseminated every 15 seconds. The closing level of the 
Index is calculated by DB London on the basis of closing prices for the 
applicable futures contracts relating to each of the Index commodities, 
and applying such prices to the relevant notional amount. For each 
Index commodity, the market value will be equal to the number of 
futures contracts represented in the Index multiplied by the futures 
contract closing price. The Index includes provisions for the 
replacement of expiring futures contracts. This replacement takes place 
over a period of time in order to lessen the impact on the market for 
such Index commodity. Such replacements occur monthly (other than in 
November) during the first week of the month in the case of futures 
contracts relating to crude oil and heating oil and annually in 
November in the case of futures contracts relating to aluminum, gold, 
corn and wheat.
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    \12\ Quote information and last sale information is available 
from the applicable futures markets and from data vendors.
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    The Index is adjusted annually in November to rebalance its 
composition to ensure that each of the Index commodities are weighted 
in the same proportion that such commodities were weighted on December 
1, 1988 (the ``Base Date''). The Index has been calculated back to the 
Base Date. On the Base Date, the closing level was 100.
    The following table reflects the index base weights (``Index Base 
Weights'') of each Index commodity on the Base Date:

------------------------------------------------------------------------
                                                              Index base
                      Index commodity                         weight (%)
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Crude Oil..................................................        35.00
Heating Oil................................................        20.00
Aluminum...................................................        12.50
Gold.......................................................        10.00
Corn.......................................................        11.25
Wheat......................................................        11.25
                                                            ------------
  Closing Level on Base Date...............................       100.00
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    The composition of the Index may be adjusted in the event that the 
Index Sponsor is not able to calculate the daily and/or closing price 
for the Index commodities.
    The Managing Owner represents that it will seek to arrange to have 
the Index calculated and disseminated on a daily basis through a third 
party if DB London ceases to calculate and disseminate the Index. If, 
however, the Managing Owner is unable to arrange the calculation and 
dissemination of the Index (or a Successor Index), the Exchange will 
undertake to delist the Shares.\13\
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    \13\ If the Index is discontinued or suspended, Managing Owner, 
in its sole discretion, may substitute the Index with an index 
substantially similar to the discontinued or suspended Index (the 
``Successor Index''). The Successor Index may be calculated and/or 
published by any other third party. See also note 32 and 
accompanying text.
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Commodity Futures Contracts and Related Options
    Crude Oil. Crude oil is the world's most actively traded commodity. 
The Light Sweet Crude Oil futures contract traded on the New York 
Mercantile Exchange (``NYMEX'') is the world's most liquid forum for 
crude oil trading, as well as the world's most liquid futures contract 
on a physical commodity.\14\ Due to the excellent liquidity and price 
transparency of the futures contract, it is used as a principal 
international pricing benchmark.
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    \14\ In 2004, ADTV on NYMEX for futures contracts on light sweet 
crude oil were 212,382 (with each contract representing 1,000 
barrels); ADTV through August 2005 was 241,673. Annual contracts 
traded on NYMEX on light sweet crude oil in 2004 were 52.8 million; 
annual contracts traded through August 2005 were 40.6 million.
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    Heating Oil. The heating oil futures contract, listed and traded at 
the NYMEX, trades in units of 42,000 gallons (1,000 barrels) and is 
based on delivery in New York harbor, the principal cash market 
center.\15\ The heating oil futures contract is also used to hedge 
diesel fuel and jet fuel, both of which trade in the cash market at an 
often stable premium to the heating oil futures contract.
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    \15\ In 2004, ADTV on NYMEX for futures contracts on heating oil 
were 51,745 (with each contract representing 1,000 barrels); ADTV 
through August 2005 was 52,413. Annual contracts traded on NYMEX on 
heating oil in 2004 were 12.8 million; annual contracts traded 
through August 2005 were 8.8 million.
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    Gold. NYMEX is the world's largest physical commodity futures 
exchange and the dominant market for the trading of energy and precious 
metals.\16\
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    \16\ In 2004, ADTV on NYMEX for futures contracts on gold were 
60,079 (with each contract representing 100 troy ounces); ADTV 
through August 2005 was 61,085. Annual contracts traded on NYMEX on 
gold in 2004 were 14.9 million; annual contracts traded through 
August 2005 were 10.2 million.
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    Aluminum. Aluminum is the most heavily produced and consumed non-
ferrous metal in the world. Its low

[[Page 74854]]

density and malleability has been recognized and championed by the 
industrial world. In 2001, world primary refined production totaled 
over 24 million tonnes. The total turnover for the London Metal 
Exchange (``LME'') primary aluminum futures and options in 2001 was 
over 25 million lots or 625 million tonnes. The LME has the most liquid 
aluminum contracts in the world.\17\
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    \17\ In 2004, ADTV on LME for futures contracts on aluminum were 
116,004 (with each contract representing 25 tonnes); ADTV through 
August 2005 was 113,743. Annual contracts traded on LME on aluminum 
in 2004 were 29.2 million; annual contracts traded through August 
2005 were 18.9 million.
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    Corn. Corn futures are traded on the Chicago Board of Trade 
(``CBOT'') with a unit of trading of 5,000 bushels.\18\
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    \18\ In 2004, ADTV on CBOT for futures contracts on corn were 
95,390 (with each contract representing 5,000 bushels); ADTV through 
August 2005 was 120,237. Annual contracts traded on CBOT on corn in 
2004 were 24.038 million; annual contracts traded through August 
2005 were 20.19 million.
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    Wheat. Wheat futures are traded on the CBOT with a unit of trading 
of 5,000 bushels.\19\
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    \19\ In 2004, ADTV on CBOT for futures contracts on wheat were 
31,568 (with each contract representing 5,000 bushels); ADTV through 
August 2005 was 41,249. Annual contracts traded on CBOT on wheat in 
2004 were 7.95 million; annual contracts traded through August 2005 
were 6.92 million.
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Structure of the Fund
    Fund. The Fund is a statutory trust formed pursuant to the Delaware 
Statutory Trust Act and will issue units of beneficial interest or 
shares that represent units of fractional undivided beneficial interest 
in and ownership of the Fund. Unless terminated earlier, the Fund will 
expire on December 31, 2055. The investment objective of the Fund is to 
reflect the performance of the DBLCI less the expenses of the operation 
of the Fund and the Master Fund. The Fund will pursue its investment 
objective by investing substantially all of its assets in the Master 
Fund. The Fund will hold no investment assets other than Master Fund 
Units.\20\ Each Share will correlate with a Master Fund share issued by 
the Master Fund and held by the Fund.
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    \20\ See Pre-Effective Amendment No. 4 to the Fund's Form S-1, 
Registration No. 333-125325, dated October 26, 2005.
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    Master Fund. The Master Fund is a statutory trust formed pursuant 
to the Delaware Statutory Trust Act and will issue units of beneficial 
interest or shares that represent units of fractional undivided 
beneficial interest in and ownership of the Master Fund. Unless 
terminated earlier, the Master Fund will expire on December 31, 2055. 
The investment objective of the Master Fund is to reflect the 
performance of the DBLCI less the expenses of the operations of the 
Fund and the Master Fund. The Master Fund will pursue its investment 
objective by investing primarily in a portfolio of futures contracts on 
the commodities comprising the DBLCI. In addition, the Master Fund will 
also hold cash and U.S. Treasury securities for deposit with futures 
commission merchants (``FCMs'') as margin and other high credit quality 
short-term fixed income securities.
    Trustee. Wilmington Trust Company is the trustee of the Fund and 
the Master Fund. The trustee has delegated to the Managing Owner the 
power and authority to manage and operate the day-to-day affairs of the 
Fund and the Master Fund.
    Managing Owner. The Managing Owner is a Delaware limited liability 
company that will be registered with the CFTC as a CPO and CTA and is 
an affiliate of Deutsche Bank AG, the sponsor of the Fund and Master 
Fund. The Managing Owner will serve as the CPO and CTA of the Fund and 
the Master Fund and will manage and control all aspects of the business 
of the Funds. As a registered CPO and CTA, the Exchange states that the 
Managing Owner is required to comply with various regulatory 
requirements under the Commodity Exchange Act and the rules and 
regulations of the CFTC and the NFA, including investor protection 
requirements, anti-fraud prohibitions, disclosure requirements, 
reporting and recordkeeping requirements and is subject to periodic 
inspections and audits by the CFTC and NFA.
    Clearing Broker. Deutsche Bank Securities, Inc., the Clearing 
Broker, is an affiliate of the Managing Owner and is registered with 
the CFTC as an FCM. The Clearing Broker will execute and clear each of 
the Master Fund's futures contract transactions and will perform 
certain administrative services for the Master Fund.
    Administrator. The Bank of New York is the administrator for both 
the Fund and the Master Fund (the ``Administrator''). The Administrator 
will perform or supervise the performance of services necessary for the 
operation and administration of the Fund and the Master Fund. These 
services include, but are not limited to, investment accounting, 
financial reporting, broker and trader reconciliation, net asset value 
(``NAV'') calculation,\21\ risk transparency, and receiving and 
processing orders from Authorized Participants (as defined below), and 
coordinating the processing of orders with the Managing Owner and the 
Depository Trust Company (``DTC'').
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    \21\ NAV is the total assets of the Master Fund less total 
liabilities of the Master Fund, determined on the basis of generally 
accepted accounting principles. NAV per Master Fund share is the NAV 
of the Master Fund divided by the number of outstanding Master Fund 
shares. This will be the same for the Shares of the Fund because of 
a one-to-one correlation between the Shares and the shares of the 
Master Fund.
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Product Description
    Issuances of the Shares will be made only in baskets of 200,000 
Shares or multiples thereof (the ``Basket Aggregation'' or ``Basket''). 
The Fund will issue and redeem the Shares on a continuous basis, by or 
through participants that have entered into participant agreements 
(each, an ``Authorized Participant'') \22\ with the Fund and its 
Managing Owner at the NAV per Share determined shortly after 4 p.m. ET 
or the last to close futures exchanges on which the Index Commodities 
are traded, whichever is later, on the business day on which an order 
to purchase the Shares in one or more Baskets is received in proper 
form. Following issuance, the Shares will be traded on the Exchange 
similar to other equity securities.
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    \22\ An ``Authorized Participant'' is a person, who at the time 
of submitting to the trustee an order to create or redeem one or 
more Baskets, (i) is a registered broker-dealer, (ii) is a DTC 
Participant, and (iii) has in effect a valid Participant Agreement 
with the Fund issuer.
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    The procedures for creating a Basket are as follows. On any 
business day, an Authorized Participant may place an order with the 
Distributor, ALPS Distributors, Inc. (the ``Distributor''), to create 
one or more Baskets. Purchase orders must be placed by 10 a.m. ET and 
are irrevocable. By placing a purchase order, and prior to delivery of 
such Basket(s), an Authorized Participant's DTC account will be charged 
the non-refundable $500 transaction fee due for the purchase order, 
regardless of the number of Baskets to be created in connection with 
such order.
    The total payment required to create a Basket during the continuous 
offering period is the cash amount equal to the NAV per Share times 
200,000 Shares (the ``Basket Amount'') on the purchase order date. Thus 
the Basket Amount usually will be determined on each business day by 
the Administrator shortly after 4 p.m. ET. Baskets are issued as of 12 
noon ET, on the business day immediately following the purchase order 
date (T+1) at NAV per Share on the purchase order date if the required 
payment has been timely received.
    Authorized Participants that have placed a purchase order to create 
a

[[Page 74855]]

Basket must transfer the Basket Amount to the Administrator (the ``Cash 
Deposit Amount'') by 10 a.m. the next day. Authorized Participants that 
wish to redeem a Basket will receive cash in exchange for each Basket 
surrendered in an amount equal to the NAV per Basket (the ``Cash 
Redemption Amount'') through a similar procedure. The Clearing Broker 
will be the custodian for the Master Fund and responsible for 
safekeeping the Master Fund's assets.
    Because orders to purchase Baskets must be placed by 10 a.m. ET, 
but the total payment required to create a Basket will not be 
determined until shortly after 4 p.m. ET, on the date the purchase 
order is received, Authorized Participants will not know the total 
amount of the payment required to create a Basket at the time they 
submit an irrevocable purchase order. This is similar to exchange-
traded funds and mutual funds. The Fund's prospectus discloses that NAV 
and the total amount of the payment required to create a Basket could 
rise or fall substantially between the time an irrevocable purchase 
order is submitted and the time the amount of the purchase order is 
determined.
    On each business day, the Administrator will make available 
immediately prior to the opening of trading on the Amex, an estimate of 
the Cash Deposit Amount for the creation of a Basket. The Amex will 
disseminate every 15 seconds throughout the trading day, via the 
facilities of the Consolidated Tape Association, an amount 
representing, on a per Share basis, the current value (intra-day) of 
the Basket Amount (the ``Indicative Fund Value''). It is anticipated 
that the deposit of the Cash Deposit Amount in exchange for a Basket 
will be made primarily by institutional investors, arbitrageurs, and 
the Exchange specialist. Baskets are then separable upon issuance into 
identical Shares that will be listed and traded on the Amex.\23\ The 
Shares are expected to be traded on the Exchange by professionals, as 
well as institutional and retail investors. Shares may be acquired in 
two (2) ways: (1) Through a deposit of the Cash Deposit Amount with the 
Administrator during normal business hours by Authorized Participants, 
or (2) through a purchase on the Exchange by investors.
---------------------------------------------------------------------------

    \23\ The Shares are separate and distinct from the shares of the 
Master Fund. The Master Fund's assets will consist of long positions 
in the futures contracts on the commodities comprising the DBLCI. 
The Exchange expects that the number of outstanding Shares will 
increase and decrease from time to time as a result of creations and 
redemptions of Baskets.
---------------------------------------------------------------------------

    Shortly after 4 p.m. ET each business day, the Administrator will 
determine the NAV for the Fund and Master Fund, utilizing the current 
day's settlement value of the particular commodity futures contracts in 
the Master Fund's portfolio and the value of the Master Fund's cash and 
high-credit quality, short-term fixed income securities. However, if a 
futures contract on a trading day cannot be liquidated due to the 
operation of daily limits or other rules of an exchange upon which such 
futures contract is traded, the settlement price on the most recent 
trading day on which the futures contract could have been liquidated 
will be used in determining the Fund's and the Master Fund's NAV. 
Accordingly, for both U.S. and non-U.S. futures contracts, the 
Administrator will typically use that day's futures settlement price 
for determining NAV.
    The NAV for the Fund is total assets of the Master Fund less total 
liabilities of the Master Fund. The NAV is calculated by including any 
unrealized profit or loss on futures contracts and any other credit or 
debit accruing to the Master Fund but unpaid or not received by the 
Master Fund. This preliminary NAV is then used to compute all NAV-based 
fees (including the management and administrative fees, accrued through 
and including the date of publication) that are calculated from the 
value of Master Fund assets. The Administrator will calculate the NAV 
per Share by dividing the NAV by the number of Shares outstanding. Then 
once the final, published NAV is determined, shortly after 4 p.m. ET 
each business day, the Administrator also will determine the Basket 
Amount for orders placed by Authorized Participants received by 10 a.m. 
ET that day.
    Shortly after 4 p.m. ET each business day, the Administrator, Amex, 
and Managing Owner will disseminate the NAV for the Shares and the 
Basket Amount (for orders placed during the day). The NAV and the 
Basket Amount are available at the same time and will be disseminated 
accordingly. The Basket Amount and the NAV are communicated by the 
Administrator to all Authorized Participants via facsimile or 
electronic mail message and will be publicly available on the DB 
London's (Index Sponsor) Web site at https://gm-secure.db.com/CommoditiesIndices.
 The Amex will also publicly disclose via its Web 

site at http://www.amex.com the NAV and Basket Amount (for orders 

placed that day). The Exchange also will disseminate the Basket Amount 
by means of CTA/CQ High Speed Lines.
    The Basket Amount necessary for the creation of a Basket will 
change from day to day. On each day that the Amex is open for regular 
trading, the Administrator will adjust the Cash Deposit Amount as 
appropriate to reflect the prior day Fund NAV and newly accrued 
expenses.
    The Exchange believes that the Shares will not trade at a material 
discount or premium to NAV due to potential arbitrage opportunities in 
the event of any discrepancy between the two. Due to the fact that the 
Shares can be created and redeemed daily only in Basket Aggregations at 
NAV by Authorized Participants, the Exchange submits that arbitrage 
opportunities should provide a mechanism to diminish the effect of any 
premiums or discounts that may exist from time to time.
    The Shares will not be individually redeemable but will only be 
redeemable in Basket Aggregations. To redeem, an Authorized Participant 
will be required to accumulate enough Shares to constitute a Basket 
Aggregation (i.e., 200,000 Shares). An Authorized Participant redeeming 
a Basket Aggregation will receive the Cash Redemption Amount. Upon the 
surrender of the Shares and payment of applicable redemption 
transaction fee, taxes or charges, the Administrator will deliver to 
the redeeming Authorized Participant the Cash Redemption Amount.
    Shares will be registered in book entry form through DTC. Trading 
in the Shares on the Exchange will be effected from 9:30 a.m. until 
4:15 p.m. ET each business day. The minimum trading increment for such 
Shares will be $.01.
Dissemination of the Index and Underlying Futures Contracts Information
    DB London as the sponsor of the Index will publish the value of the 
Index at least every fifteen (15) seconds during Amex trading hours 
through Bloomberg, Reuters, and other market data vendors. In addition, 
the Index value will be available on the DB London Web site at http://www.dbcfund.db.com
 on a twenty (20) minute delayed basis. The closing 

level will similarly be provided by DB London. In addition, any 
adjustments or changes to the Index will also be provided by DB London 
and the Exchange on their respective Web sites.\24\
---------------------------------------------------------------------------

    \24\ The Index Sponsor has in place procedures to prevent the 
improper sharing of information between different affiliates and 
departments. Specifically, an information barrier exists between the 
personnel within DB London that calculate and reconstitute the Index 
and other personnel of the Index Sponsor, including but not limited 
to the Managing Owner, sales and trading, external or internal fund 
managers, and bank personnel who are involved in hedging the bank's 
exposure to instruments linked to the Index, in order to prevent the 
improper sharing of information relating to the recomposition of the 
Index.

---------------------------------------------------------------------------

[[Page 74856]]

    The closing prices and daily settlement prices for the futures 
contracts held by the Master Fund are publicly available on the Web 
sites of the futures exchanges trading the particular contracts. The 
particular futures exchange for each futures contract with Web site 
information is as follows: (i) aluminum--London Metal Exchange (LME) at 
http://www.lme.com; (ii) corn and wheat--Chicago Board of Trade (CBOT) at http://www.cbot.com; and (iii) crude oil, heating oil and gold--New 

York Mercantile Exchange (NYMEX) at http://www.nymex.com The Exchange on its Web site at http://www.amex.com. will include a hyperlink to the 

Index Sponsor's Web site at https://gm-secure.db.com/CommoditiesIndices
, which will contain hyperlinks to each of the 

futures exchanges Web sites for the purpose of disclosing futures 
contract pricing. In addition, various data vendors and news 
publications publish futures prices and data. The Exchange represents 
that futures quotes and last sale information for the commodities 
underlying the Index are widely disseminated through a variety of 
market data vendors worldwide, including Bloomberg and Reuters. In 
addition, the Exchange represents that complete real-time data for such 
futures is available by subscription from Reuters and Bloomberg. The 
CBOT, LME, and NYMEX also provide delayed futures information on 
current and past trading sessions and market news free of charge on 
their respective Web sites. The specific contract specifications for 
the futures contracts are also available from the futures exchanges on 
their Web sites as well as other financial informational sources.
Availability of Information Regarding the Shares
    The Web site for the Fund, which will be publicly accessible at no 
charge, will contain the following information: (a) The prior business 
day's NAV and the reported closing price; (b) the mid-point of the bid-
ask price \25\ in relation to the NAV as of the time the NAV is 
calculated (the ``Bid-Ask Price''); (c) calculation of the premium or 
discount of such price against such NAV; (d) 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 (4) previous calendar quarters; (e) the prospectus; and (f) 
other applicable quantitative information.
---------------------------------------------------------------------------

    \25\ The bid-ask price of Shares is determined using the highest 
bid and lowest offer as of the time of calculation of the NAV.
---------------------------------------------------------------------------

    As described above, the NAV for the Fund will be calculated and 
disseminated daily. The Amex also intends to disseminate, during Amex 
trading hours, for the Fund on a daily basis by means of Consolidated 
Tape Association/Consolidated Quotation High Speed Lines information 
with respect to the Indicative Fund Value (as discussed below), recent 
NAV, and Shares outstanding. The Exchange will also make available on 
its Web site daily trading volume, closing prices, and the NAV.
Dissemination of Indicative Fund Value
    As noted above, the Administrator calculates the NAV of the Fund 
once each trading day. In addition, the Administrator causes to be made 
available on a daily basis the Cash Deposit Amount to be deposited in 
connection with the issuance of the Shares in Basket Aggregations. In 
addition, other investors can request such information directly from 
the Administrator.
    In order to provide updated information relating to the Fund for 
use by investors, professionals and persons wishing to create or redeem 
the Shares, the Exchange will disseminate through the facilities of CTA 
an updated Indicative Fund Value. The Indicative Fund Value will be 
disseminated on a per Share basis every 15 seconds from 9:30 a.m. to 
4:15 p.m. ET.\26\ The Indicative Fund Value will be calculated based on 
the cash required for creations and redemptions (i.e., NAV x 200,000) 
adjusted to reflect the price changes of the Index commodities through 
investments held by the Master Fund, i.e., futures contracts.
---------------------------------------------------------------------------

    \26\ Telephone conversation between Jeffrey Burns, Associate 
General Counsel, Amex, and Kate Robbins, Attorney, Division of 
Market Regulation, Commission, on November 28, 2005.
---------------------------------------------------------------------------

    The Indicative Fund Value will not reflect price changes to the 
price of an underlying commodity between the close of trading of the 
futures contract at the relevant futures exchange and the close of 
trading on the Amex at 4:15 p.m. ET. The value of a Share may 
accordingly be influenced by non-concurrent trading hours between the 
Amex and the various futures exchanges on which the futures contracts 
based on the Index commodities are traded. While the Shares will trade 
on the Amex from 9:30 a.m. to 4:15 p.m. ET, the table below lists the 
trading hours for each of the Index commodities underlying the futures 
contracts.

----------------------------------------------------------------------------------------------------------------
            Index commodity                  Futures exchange                    Trading hours (ET)
----------------------------------------------------------------------------------------------------------------
Aluminum..............................  LME......................  6:55 a.m.-12:00 p.m.
Gold..................................  COMEX....................  8:20 a.m.-1:30 p.m.
Crude Oil.............................  NYMEX....................  10:00 a.m.-2:30 p.m.
Heating Oil...........................  NYMEX....................  10:05 a.m.-2:30 p.m.
Corn..................................  CBOT.....................  10:30 a.m.-2:15 p.m.
Wheat.................................  CBOT.....................  10:30 a.m.-2:15 p.m.
----------------------------------------------------------------------------------------------------------------

    While the market for futures trading for each of the Index 
commodities is open, the Indicative Fund Value can be expected to 
closely approximate the value per Share of the Basket Amount. However, 
during Amex trading hours when the futures contracts have ceased 
trading, spreads and resulting premiums or discounts may widen, and 
therefore, increase the difference between the price of the Shares and 
the NAV of the Shares. Indicative Fund Value on a per Share basis 
disseminated during Amex trading hours should not be viewed as a real 
time update of the NAV, which is calculated only once a day.
    The Exchange believes that dissemination of the Indicative Fund 
Value based on the cash amount required for a Basket Aggregation 
provides additional information that is not otherwise available to the 
public and is useful to professionals and investors in connection with 
the Shares trading on the Exchange or the creation or redemption of the 
Shares.

[[Page 74857]]

Termination Events
    The Fund will be terminated if any of the following circumstances 
occur: (1) The Shares are delisted from the Amex and are not listed for 
trading on another national securities exchange within five business 
days from the date the Shares are delisted; (2) holders of at least 50% 
of the outstanding Shares notify the Managing Owner that they elect to 
terminate the Trust; (3) the trustee resigns and no successor trustee 
is appointed within 60 days from the date the trustee provides notice 
to the Managing Owner of its intent to resign; (4) the SEC finds that 
the Fund should be registered as an investment company under the 
Investment Company Act of 1940, and the trustee has actual knowledge of 
the SEC finding; (5) the aggregate market capitalization of the Fund, 
based upon the closing price for the Shares, was less than $10 million 
on each of five (5) consecutive trading days and the trustee receives, 
within six (6) months from the last of those trading days, notice that 
the sponsor has decided to terminate the Fund; or (6) the Fund fails to 
qualify for treatment, or ceases to be treated, as a grantor trust for 
U.S. federal income tax purposes and the trustee receives notice that 
the sponsor has determined that the termination of the Fund is 
advisable.
    If not terminated earlier by the trustee, the Fund will terminate 
on December 31, 2055. Upon termination of the Fund, holders of the 
Shares will surrender their Shares and receive from the Administrator, 
in cash, their portion of the value of the Fund.
Criteria for Initial and Continued Listing
    The Fund will be subject to the criteria in proposed Commentary 
.07(d) of Amex Rule 1202 for initial and continued listing of the 
Shares. The proposed continued listing criteria provides for the 
delisting or removal from listing of the Shares under any of the 
following circumstances:
     Following the initial twelve month period from the date of 
commencement of trading of the Shares: (i) If the Fund has more than 60 
days remaining until termination and there are fewer than 50 record 
and/or beneficial holders of the Shares for 30 or more consecutive 
trading days; (ii) if the Fund has fewer than 50,000 Shares issued and 
outstanding; or (iii) if the market value of all Shares is less than 
$1,000,000.
     If the value of the underlying index or portfolio is no 
longer calculated or available on at least a 15-second basis, or the 
Exchange stops providing a hyperlink on its Web site to any such asset 
or investment value.
     The Indicative Fund Value is no longer made available on 
at least a 15-second basis.
     If such other event shall occur or condition exists which 
in the opinion of the Exchange makes further dealings on the Exchange 
inadvisable.
    It is anticipated that a minimum of 2,000,000 Shares will be 
required to be outstanding at the start of trading. It is anticipated 
that the initial price of a Share will be approximately $25. The Fund 
expects to accept subscriptions for Shares in Basket Aggregations 
(i.e., $5 million) from Authorized Participants during an initial 
offering period with a finite term of approximately six (6) months, 
subject to earlier termination. After the initial offering period has 
closed and trading commences, the Fund will then issue Shares in the 
normal Basket Aggregations of 200,000 Shares to Authorized 
Participants. Once the initial offering period has closed and trading 
commences, the Master Fund will issue shares in Master Fund Baskets 
(200,000 shares) to the Fund continuously at NAV. The Master Fund will 
be owned by the Fund and the Managing Owner.\27\ Each Share issued by 
the Fund will correlate with a Master Fund share issued by the Master 
Fund and held by the Fund. The Exchange believes that the anticipated 
minimum number of Shares outstanding at the start of trading is 
sufficient to provide adequate market liquidity and to further the 
Fund's objective to seek to provide a simple and cost effective means 
of accessing the commodity futures markets.
---------------------------------------------------------------------------

    \27\ The Managing Owner will own 1% or less of the Master Fund 
and will share pro rata in the income and expenses of the Master 
Fund.
---------------------------------------------------------------------------

    The Exchange represents that it prohibits the initial and/or 
continued listing of any security that is not in compliance with Rule 
10A-3 under the Securities Act of 1934.\28\
---------------------------------------------------------------------------

    \28\ See Rule 10A-3(c)(7), 17 CFR 240.10A-3(c)(7) (stating that 
a listed issuer is not subject to the requirements of Rule 10A-3 if 
the issuer is organized as a trust that does not have a board of 
directors or other unincorporated association and the activities of 
the issuer are limited to passively owning or holding securities or 
other assets on behalf of or for the benefit of the holders of the 
listed securities).
---------------------------------------------------------------------------

Original and Annual Listing Fees
    The Amex original listing fee applicable to the listing of the Fund 
is $5,000. In addition, the annual listing fee applicable under Section 
141 of the Amex Company Guide will be based upon the year-end aggregate 
number of Shares in all series of the Fund outstanding at the end of 
each calendar year.
Purchase and Redemptions in Basket Aggregations
    In the Information Circular (described below), members and member 
organizations will be informed that procedures for purchases and 
redemptions of Shares in Basket Aggregations are described in the 
prospectus and that Shares are not individually redeemable but are 
redeemable only in Basket Aggregations or multiples thereof.
Trading Rules
    The Shares are equity securities subject to Amex Rules governing 
the trading of equity securities, including, among others, rules 
governing priority, parity and precedence of orders, specialist 
responsibilities and account opening and customer suitability (Amex 
Rule 411). Initial equity margin requirements of 50% will apply to 
transactions in the Shares. Shares will trade on the Amex until 4:15 
p.m. ET each business day and will trade in a minimum price variation 
of $0.01 pursuant to Amex Rule 127. Trading rules pertaining to odd-lot 
trading in Amex equities (Amex Rule 205) will also apply.
    Amex Rule 154, Commentary .04(c) provides that stop and stop limit 
orders to buy or sell a security (other than an option, which is 
covered by Amex Rule 950(f) and Commentary thereto) the price of which 
is derivatively based upon another security or index of securities, may 
with the prior approval of a Floor Official, be elected by a quotation, 
as set forth in Commentary .04(c)(i-v). The Exchange has designated the 
Shares as eligible for this treatment.\29\
---------------------------------------------------------------------------

    \29\ See Securities Exchange Act Release No. 29063 (April 10, 
1991), 56 FR 15652 (April 17, 1991) at note 9, regarding the 
Exchange's designation of equity derivative securities as eligible 
for such treatment under Amex Rule 154, Commentary .04(c).
---------------------------------------------------------------------------

    The Shares will be deemed ``Eligible Securities'', as defined in 
Amex Rule 230, for purposes of the Intermarket Trading System Plan and 
therefore will be subject to the trade through provisions of Amex Rule 
236 which require that Amex members avoid initiating trade-throughs for 
ITS securities.
    Specialist transactions of the Shares made in connection with the 
creation and redemption of Shares will not be subject to the 
prohibitions of Amex Rule 190.\30\ Unless exemptive or no-action relief 
is available, the Shares will be subject to the short sale rule, Rule 
10a-

[[Page 74858]]

1 under the Act.\31\ If exemptive or no-action relief is provided, the 
Exchange will issue a notice detailing the terms of the exemption or 
relief. The Shares will generally be subject to the Exchange's 
stabilization rule, Amex Rule 170, except that specialists may buy on 
``plus ticks'' and sell on ``minus ticks,'' in order to bring the 
Shares into parity with the underlying commodity or commodities and/or 
futures contract price. Proposed Commentary .07(f) to Amex Rule 1202 
sets forth this limited exception to Amex Rule 170.
---------------------------------------------------------------------------

    \30\ See Commentary .05 to Amex Rule 190.
    \31\ The Fund expects to seek relief, in the near future, from 
the Commission in connection with the trading of the Shares from the 
operation of certain Exchange Act rules.
---------------------------------------------------------------------------

    The adoption of Commentary .07(e) to Amex Rule 1202 relating to 
certain specialist prohibitions will address potential conflicts of 
interest in connection with acting as a specialist in the Shares. 
Specifically, Commentary .07(e) provides that the prohibitions in Amex 
Rule 175(c) apply to a specialist in the Shares so that the specialist 
or affiliated person may not act or function as a market maker in an 
underlying asset, related futures contract or option or any other 
related derivative. An affiliated person of the specialist consistent 
with Amex Rule 193 may be afforded an exemption to act in a market 
making capacity, other than as a specialist in the Shares on another 
market center, in the underlying asset, related futures or options or 
any other related derivative. In particular, proposed Commentary .07(e) 
provides that an approved person of an equity specialist that has 
established and obtained Exchange approval for procedures restricting 
the flow of material, non-public market information between itself and 
the specialist member organization, and any member, officer, or 
employee associated therewith, may act in a market making capacity, 
other than as a specialist in the Shares on another market center, in 
the underlying asset or commodity, related futures or options on 
futures, or any other related derivatives.
    Adoption of Commentary .07(g) to Amex Rule 1202 will also ensure 
that specialists handling the Shares provide the Exchange with all the 
necessary information relating to their trading in physical assets or 
commodities, related futures contracts and options thereon or any other 
derivative. As a general matter, the Exchange has regulatory 
jurisdiction over its members, member organizations and approved 
persons of a member organization. The Exchange also has regulatory 
jurisdiction over any person or entity controlling a member 
organization as well as a subsidiary or affiliate of a member 
organization that is in the securities business. A subsidiary or 
affiliate of a member organization that does business only in 
commodities or futures contracts would not be subject to Exchange 
jurisdiction, but the Exchange could obtain information regarding the 
activities of such subsidiary or affiliate through surveillance sharing 
agreements with regulatory organizations of which such subsidiary or 
affiliate is a member.
Trading Halts
    Prior to the commencement of trading, the Exchange will issue an 
Information Circular (described below) to members informing them of, 
among other things, Exchange policies regarding trading halts in the 
Shares. First, the circular will advise that trading will be halted in 
the event the market volatility trading halt parameters set forth in 
Amex Rule 117 have been reached. Second, the circular will advise that, 
in addition to the parameters set forth in Amex Rule 117, the Exchange 
will halt trading in the Shares if trading in the underlying related 
futures contract(s) is halted or suspended. Third, with respect to a 
halt in trading that is not specified above, the Exchange may also 
consider other relevant factors and the existence of unusual conditions 
or circumstances that may be detrimental to the maintenance of a fair 
and orderly market. Additionally, the Exchange represents that it will 
cease trading the Shares if the conditions in Amex Rule 1202(d)(2)(ii) 
or (iii) exist (i.e., if there is a halt or disruption in the 
dissemination of the Indicative Fund Value and/or underlying Index 
value).\32\
---------------------------------------------------------------------------

    \32\ In the event the Index value or Indicative Fund Value is no 
longer calculated or disseminated, the Exchange would immediately 
contact the Commission to discuss measures that may be appropriate 
under the circumstances. Telephone conversation between Jeffrey 
Burns, Associate General Counsel, Amex, and Florence Harmon, Senior 
Special Counsel, Division of Market Regulation, Commission, on 
November 22, 2005.
---------------------------------------------------------------------------

Suitability
    The Information Circular (described below) will inform members and 
member organizations of the characteristics of the Fund and of 
applicable Exchange rules, as well as of the requirements of Amex Rule 
411 (Duty to Know and Approve Customers).
    The Exchange notes that pursuant to Amex Rule 411, members and 
member organizations are required in connection with recommending 
transactions in the Shares to have a reasonable basis to believe that a 
customer is suitable for the particular investment given reasonable 
inquiry concerning the customer's investment objectives, financial 
situation, needs, and any other information known by such member.
Information Circular
    The Amex will distribute an Information Circular to its members in 
connection with the trading of the Shares. The Information Circular 
will inform members and member organizations, prior to commencement of 
trading, of the prospectus delivery requirements applicable to the 
Fund. The Exchange notes that investors purchasing Shares directly from 
the Fund (by delivery of the Cash Deposit Amount) will receive a 
prospectus. Amex members purchasing Shares from the Trust for resale to 
investors will deliver a prospectus to such investors.
    The Information Circular also will discuss the special 
characteristics and risks of trading this type of security. 
Specifically, the Information Circular, among other things, will 
discuss what the Shares are, how a Basket is created and redeemed, the 
requirement that members and member firms deliver a prospectus to 
investors purchasing the Shares prior to or concurrently with the 
confirmation of a transaction, applicable Amex rules, dissemination of 
information regarding the per Share Indicative Fund Value, trading 
information and applicable suitability rules. The Information Circular 
will also explain that the Fund is subject to various fees and expenses 
described in the registration statement.
    The Information Circular will also reference the fact that there is 
no regulated source of last sale information regarding physical 
commodities and that the SEC has no jurisdiction over the trading of 
physical commodities such as aluminum, gold, crude oil, heating oil, 
corn and wheat, or the futures contracts on which the value of the 
Shares is based.
    The Information Circular will also notify members and member 
organizations about the procedures for purchases and redemptions of 
Shares in Baskets, and that Shares are not individually redeemable but 
are redeemable only in Basket-size aggregations or multiples thereof. 
The Information Circular will also discuss any relief, if granted, by 
the Commission or the staff from any rules under the Act.
    The Information Circular will disclose that the NAV for Shares will 
be calculated shortly after 4 p.m. ET each trading day.

[[Page 74859]]

Surveillance
    The Exchange represents that its surveillance procedures are 
adequate to monitor Exchange trading of the Shares and to detect 
violations of applicable rules and regulations. Exchange surveillance 
procedures applicable to trading in the proposed Shares will be similar 
to those applicable to TIRs, Portfolio Depository Receipts and Index 
Fund Shares currently trading on the Exchange. The Exchange currently 
has in place an Information Sharing Agreement with the NYMEX and the 
CBOT for the purpose of providing information in connection with 
trading in or related to futures contracts traded on the NYMEX and 
CBOT, respectively. The Exchange also notes that the CBOT is a member 
of the Intermarket Surveillance Group (``ISG''). As a result, the 
Exchange asserts that market surveillance information is available from 
the CBOT, if necessary, due to regulatory concerns that may arise in 
connection with the CBOT futures. In addition, the Exchange has 
negotiated a Memorandum of Understanding with the LME for the purpose 
of providing information in connection with the trading in or related 
to futures contracts traded on the LME.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act \33\ in general and furthers the objectives 
of section 6(b)(5) \34\ 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, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

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

    The Exchange did not receive any written comments on the proposed 
rule change.

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

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

    The Commission is considering granting accelerated approval of the 
proposed rule change at the end of a 15-day comment period.\35\
---------------------------------------------------------------------------

    \35\ The Amex has requested accelerated approval of this 
proposed rule change prior to the 30th day after the date of 
publication of the notice of the filing thereof, following the 
conclusion of a 15-day comment period. Telephone conversation 
between Jeffrey Burns, Associate General Counsel, Amex, and Florence 
Harmon, Senior Special Counsel, Division of Market Regulation, 
Commission, on November 22, 2005.
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-Amex-2005-059 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-Amex-2005-059. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all 

written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of the filing 
also will be available for inspection and copying at the principal 
office of the Amex. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-Amex-2005-059 and should be submitted on or before January 3, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-30(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7419 Filed 12-15-05; 8:45 am]

BILLING CODE 8010-01-P
