
[Federal Register: October 12, 2010 (Volume 75, Number 196)]
[Notices]               
[Page 62615-62621]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc10-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63043; File No. SR-NYSEArca-2010-84]

 
 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of a Proposed Rule Change To 
List and Trade Shares of the Sprott Physical Silver Trust

October 5, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 22, 2010, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons and is 
approving the proposed rule change on an accelerated basis.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade units \4\ of the Sprott 
Physical Silver Trust (the ``Trust'') under NYSE Arca Equities Rule 
8.201. The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, and http://
www.nyse.com.
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    \4\ Each unit represents an equal, fractional, undivided 
ownership interest in the net assets of the Trust attributable to 
the particular class of units.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    The Exchange proposes to list and trade units (``Units'') of the 
Trust under NYSE Arca Equities Rule 8.201. Under NYSE Arca Equities 
Rule 8.201, the Exchange may propose to list and/or trade pursuant to 
unlisted trading privileges (``UTP'') ``Commodity-Based Trust Shares.'' 
\5\ The Commission has approved listing of the iShares Silver Trust on 
the Exchange \6\ and, previously, listing of the iShares Silver Trust 
on the American Stock Exchange LLC (now known as ``NYSE Amex LLC'').\7\ 
Further, the Commission has also approved listing on the Exchange under 
NYSE Arca Equities Rule 8.201 shares of ETFS Silver Trust \8\ and ETFS 
Gold Trust.\9\ The Commission also has previously approved listing on 
the Exchange of shares of the Sprott Physical Gold Trust, streetTRACKS 
Gold Trust, and iShares COMEX Gold Trust.\10\ Prior to their listing on 
the Exchange, the Commission approved listing of the

[[Page 62616]]

streetTRACKS Gold Trust on the New York Stock Exchange (``NYSE'') and 
listing of iShares COMEX Gold Trust on the American Stock Exchange 
LLC.\11\ In addition, the Commission has approved trading of the 
streetTRACKS Gold Trust and iShares Silver Trust on the Exchange 
pursuant to UTP.\12\ Sprott Asset Management LP is the sponsor or 
manager of the Trust (the ``Sponsor'' or the ``Manager,'' \13\ as the 
case may be), RBC Dexia Investor Services Trust is the trustee of the 
Trust (the ``Trustee''),\14\ the Royal Canadian Mint is the custodian 
for the physical silver bullion owned by the Trust (the ``Silver 
Custodian''),\15\ and RBC Dexia serves as the custodian of the Trust's 
assets other than physical silver bullion (the ``Non-Silver 
Custodian'').\16\
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    \5\ Commodity-Based Trust Shares are securities issued by a 
trust that represent investors' discrete identifiable and undivided 
beneficial ownership interest in the commodities deposited into the 
Trust.
    \6\ See Securities Exchange Act Release No. 58956 (November 14, 
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124) 
(approving listing on the Exchange of the iShares Silver Trust).
    \7\ See Securities Exchange Act Release No. 53521 (March 20, 
2006), 71 FR 14967 (March 24, 2006) (SR-Amex-2005-72) (approving 
listing on the American Stock Exchange LLC of the iShares Silver 
Trust).
    \8\ See Securities Exchange Act Release No. 59781 (April 17, 
2009), 74 FR 18771 (April 24, 2009) (SR-NYSEArca-2009-28) (approving 
listing on the Exchange of the ETFS Silver Trust).
    \9\ See Securities Exchange Act Release No. 59895 (May 8, 2009), 
74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (approving listing 
on the Exchange of the ETFS Gold Trust).
    \10\ See Securities Exchange Act Release No. 61496 (February 4, 
2010) 75 FR 6758 (February 10, 2010) (NYSEArca-2009-113) (approving 
listing on the Exchange of Sprott Physical Gold Trust); Securities 
Exchange Act Release No. 56224 (August 8, 2007), 72 FR 45850 (August 
15, 2007) (SR-NYSEArca-2007-76) (approving listing on the Exchange 
of the streetTRACKS Gold Trust); Securities Exchange Act Release No. 
56041 (July 11, 2007), 72 FR 39114 (July 17, 2007) (SR-NYSEArca-
2007-43) (approving listing on the Exchange of iShares COMEX Gold 
Trust).
    \11\ See Securities Exchange Act Release No. 50603 (October 28, 
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (approving 
listing of streetTRACKS Gold Trust on NYSE); Securities Exchange Act 
Release No. 51058 (January 19, 2005), 70 FR 3749 (January 26, 2005) 
(SR-Amex-2004-38) (approving listing of iShares COMEX Gold Trust on 
the American Stock Exchange LLC).
    \12\ See Securities Exchange Act Release No. 53520 (March 20, 
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving 
trading on the Exchange pursuant to UTP of the iShares Silver 
Trust); Securities Exchange Act Release No. 51245 (February 23, 
2005), 70 FR 10731 (March 4, 2005) (SR-PCX-2004-117) (approving 
trading on the Exchange of the streetTRACKS Gold Trust pursuant to 
UTP).
    \13\ The Manager is a limited partnership existing under the 
laws of Ontario, Canada, and acts as manager of the Trust pursuant 
to the Trust's trust agreement and the management agreement. The 
Manager provides management and advisory services to the Trust. 
Additional details regarding the Manager are set forth in the 
Registration Statement on Form F-1 for the Sprott Physical Silver 
Trust, filed with the Commission on July 9, 2010 (No. 333-168051) 
(the ``Registration Statement'').
    \14\ The Trustee holds title to the Trust's assets on behalf of 
the Unitholders and has, together with the Manager, exclusive 
authority over the assets and affairs of the Trust. The Trustee has 
a fiduciary responsibility to act in the best interest of the 
Unitholders. Additional details regarding the Trustee are set forth 
in the Registration Statement.
    \15\ The Silver Custodian will be responsible for and will bear 
all risk of loss of, and damage to, the Trust's physical silver 
bullion that is in its custody, subject to certain limitations based 
on events beyond the Silver Custodian's control. The Manager, with 
the consent of the Trustee, may determine to change the custodial 
arrangements of the Trust. Additional details regarding the Silver 
Custodian are set forth in the Registration Statement.
    \16\ The Non-Silver Custodian will be responsible for and will 
bear all risk of the loss of, and damage to, the Trust's assets 
(other than physical silver bullion) that are in its custody, 
subject to certain limitations based on events beyond the Non-Silver 
Custodian's control. The Manager, with the consent of the Trustee, 
may determine to change the custodial arrangements of the Trust. 
Additional details regarding the Non-Silver Custodian are set forth 
in the Registration Statement.
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Listing Rules
    Definition. Rule 8.201(c)(1) defines Commodity-Based Trust Shares 
as a security (a) that is issued by a trust that holds a specified 
commodity deposited with the trust; (b) that is issued by such trust in 
a specified aggregate minimum number in return for a deposit of a 
quantity of the underlying commodity; and (c) that, 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.
    The Trust will issue Units, each of which represents an equal, 
fractional undivided ownership interest in the net assets of the Trust 
attributable to the particular class of Units. Except with respect to 
cash held by the Trust to pay expenses and anticipated redemptions, the 
Trust expects to own only London Good Delivery physical silver bullion. 
The investment objective of the Trust is for the Units to reflect the 
performance of the price of silver bullion, less the expenses of the 
Trust's operations.\17\ The Trust is not actively managed and does not 
engage in any activities designed to obtain a profit from, or to 
ameliorate losses caused by, changes in the price of silver bullion. 
The Trust is neither an investment company registered under the 
Investment Company Act of 1940 nor a commodity pool for purposes of the 
Commodity Exchange Act.\18\ The Units will be issued in an initial 
public offering. The Trust may not issue additional Units of the class 
offered in this offering following its completion except (i) if the net 
proceeds per Unit to be received by the Trust are not less than 100% of 
the most recently calculated net asset value (``NAV'') immediately 
prior to, or upon, the determination of the pricing of such issuance or 
(ii) by way of Unit distribution in connection with an income 
distribution. The Trust will not issue Units on an on-going or daily 
basis. At the start of trading the Trust will issue a minimum of 
1,000,000 Units to at least 400 holders (``Unitholders''), as further 
described below.
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    \17\ The descriptions of the Trust, the Units and the silver 
market contained herein are based on the Registration Statement.
    \18\ The Trust does not trade in silver futures contracts. The 
Trust takes delivery of physical silver that complies with certain 
silver delivery rules. Because the Trust does not trade in silver 
futures contracts on any futures exchange, the Trust is not 
regulated as a commodity pool, and is not operated by a commodity 
pool operator.
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    The Units will be redeemable monthly at the option of the holder. 
The redemption process is further described below.
    The Exchange represents that the Units satisfy the requirements of 
NYSE Arca Equities Rule 8.201 and thereby qualify for listing on the 
Exchange.\19\
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    \19\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Act (15 U.S.C. 78a), the Trust relies on the exemption 
contained in Rule 10A-3(c)(7).
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Operation of the Silver Market
    A detailed description of the silver market is set forth in the 
Registration Statement.
Secondary Market Trading and Liquidity
    While the Trust's investment objective is for the Units to reflect 
the performance of physical silver bullion, less the expenses of the 
Trust, the Units may trade in the secondary market on the NYSE Arca at 
prices that are lower or higher relative to their per Unit NAV. The NAV 
is expected to fluctuate with changes in the market value of the 
Trust's assets. The trading price of the Units will fluctuate in 
accordance with changes in the NAV as well as market supply and demand. 
The amount of the discount or premium in the trading price relative to 
the NAV may be influenced by non-concurrent trading hours between the 
NYSE Arca and the COMEX and other major world silver markets. While the 
Units will trade on the NYSE Arca until 8 p.m. New York time, liquidity 
in the global silver market will be reduced after the close of the 
major world silver markets, including London and of the COMEX division 
of the New York Mercantile Exchange at 1:25 p.m. New York time. As a 
result, during this time, trading spreads, and the resulting premium or 
discount to the NAV may widen.
Trust Expenses
    The fees and expenses of the Trust are set forth in detail in the 
Registration Statement.
Initial Public Offering and Redemption of Units
    The Trust will offer at a minimum, 1,000,000 Units in its initial 
public offering to a minimum of 400 Unitholders. Each Unit will 
represent an equal, fractional, undivided ownership interest in the net 
assets of the Trust attributable to the particular class of Units. It 
is not currently intended that the Trust will create additional Units, 
except as provided above.
    Unitholders may redeem their Units on a monthly basis.
Redemption for Physical Silver
    Subject to the terms of the trust agreement and the Manager's right 
to suspend redemptions under certain circumstances described in the

[[Page 62617]]

registration statement, Units may be redeemed at the option of a 
Unitholder for physical silver bullion in any calendar month. Units 
redeemed for physical silver will be entitled to a redemption price 
equal to 100% of the NAV of the redeemed Units on the last Business 
Day, as defined herein, of the calendar month in which the redemption 
request is processed, less redemption and delivery expenses. Redemption 
requests must be for amounts that are at least equivalent to the value 
of ten London Good Delivery bars or an integral multiple of one bar in 
excess thereof, plus applicable expenses. A ``London Good Delivery 
bar'' contains between 750 and 1100 troy ounces of silver. Any 
fractional amount of redemption proceeds in excess of ten London Good 
Delivery bars or an integral multiple of one bar in excess thereof will 
be paid in cash at a rate equal to 100% of the NAV of such excess 
amount. The ability of a Unitholder to redeem Units for physical silver 
bullion may be limited by the sizes of London Good Delivery bars held 
by the Trust at the time of the redemption. A Unitholder redeeming 
Units for silver will be responsible for expenses incurred by the Trust 
in connection with such redemption and applicable delivery expenses, 
including the handling of the notice of redemption, the delivery of the 
physical bullion for units that are being redeemed and the applicable 
silver storage in-and-out fees.
    A redemption notice to redeem Units for physical silver bullion 
must be received by the Trust's transfer agent no later than 4 pm, 
Eastern Standard Time, on the 15th day of the calendar month in which 
the redemption notice will be processed or, if such day is not a day on 
which banks located in New York, New York, are open for the transaction 
of banking business (a ``Business Day''), then on the immediately 
following day that is a Business Day. Any redemption notice received 
after such time will be processed in the next month.
    Physical silver bullion received by a Unitholder as a result of a 
redemption of Units will be delivered by armored transportation service 
carrier pursuant to delivery instructions provided by the Unitholder. 
The armored transportation service carrier will be engaged by or on 
behalf of the redeeming Unitholder. Such physical silver bullion can be 
delivered (i) to an account established by the Unitholder at an 
institution located in North America authorized to accept and hold 
London Good Delivery bars; (ii) in the United States, to any physical 
address (subject to approval by the armored transportation service 
carrier); (iii) in Canada, to any business address (subject to approval 
by the armored transportation service carrier); and (iv) outside of the 
United States and Canada, to any address approved by the armored 
transportation service carrier. Physical silver bullion delivered to an 
institution located in North America authorized to accept and hold 
London Good Delivery bars will likely retain its London Good Delivery 
status while in the custody of such institution; physical silver 
bullion delivered pursuant to a Unitholder's delivery instruction to a 
destination other than an institution located in North America 
authorized to accept and hold London Good Delivery bars will no longer 
be deemed London Good Delivery once received by the Unitholder. The 
armored transportation service carrier will receive silver bullion in 
connection with a redemption of Units approximately 10 Business Days 
after the end of the month in which the redemption notice is processed. 
Any cash to be received by a redeeming Unitholder in connection with a 
redemption of Units for physical silver bullion will be delivered to 
the Unitholder's brokerage account within 10 Business Days after the 
calendar month in which the redemption is processed.
Redemption for Cash
    Subject to the terms of the trust agreement and the Manager's right 
to suspend redemptions under certain circumstances described in the 
registration statement, Units may be redeemed at the option of a 
Unitholder for cash on a monthly basis. Units redeemed for cash will be 
entitled to a redemption price equal to 95% of the lesser of (i) the 
volume-weighted average trading price of the Units traded on the NYSE 
Arca or, if trading has been suspended on NYSE Arca, the trading price 
of the units traded on the Toronto Stock Exchange, for the last five 
Business Days of the month in which the redemption request is processed 
and (ii) the NAV of the redeemed Units as of 4:00 p.m., Eastern 
Standard Time, on the last Business Day of such month. Cash redemption 
proceeds will be transferred to a redeeming Unitholder approximately 
three Business Days after the end of the month in which the redemption 
notice is processed. See ``Redemption of Units'' for detailed terms and 
conditions relating to the redemption of Units for cash.
    A redemption notice to redeem Units for cash must be received by 
the Trust's transfer agent no later than 4 p.m. Eastern Standard Time, 
on the 15th day of the calendar month in which the redemption notice 
will be processed or, if such day is not a Business Day, then on the 
immediately following day that is a Business Day. Any redemption notice 
to redeem Units for cash received after such time will be processed in 
the next month.
Termination Events
    The Trust will be terminated in the event there are no Units 
outstanding, the Trustee resigns or is removed and no successor trustee 
is appointed by the Manager by the time the resignation or removal 
becomes effective, the Manager resigns and no successor manager is 
appointed by the Manager and approved by Unitholders by the time the 
resignation becomes effective, the Manager is, in the opinion of the 
Trustee, in material default of its obligations under the trust 
agreement and does not cure such default within a certain time period, 
the Manager experiences certain insolvency events or the assets of the 
Manager have become subject to seizure or confiscation by any public or 
governmental authority. In addition, the Manager may, in its 
discretion, terminate the Trust, without Unitholder approval, if, in 
the opinion of the Manager, after consulting with the independent 
review committee, the value of net assets of the Trust has been reduced 
such that it is no longer economically feasible to continue the Trust 
and it would be in the best interests of the Unitholders to terminate 
the Trust, by giving the Trustee and each holder of Units at the time 
not less than 60 days and not more than 90 days' written notice prior 
to the effective date of the termination of the Trust.\20\ To the 
extent such termination in the discretion of the Manager may involve a 
matter that would be a ``conflict of interest matter'' as set forth in 
applicable Canadian regulations, the matter will be referred by the 
Manager to the independent review committee established by the Manager 
for its recommendation. In connection with the termination of the 
Trust, the Trust shall, to the extent possible, convert its assets to 
cash and, after paying or making adequate provision for all of the 
Trust's liabilities, distribute the net assets of the Trust to 
Unitholders, on a pro rata basis, as soon as practicable after the 
termination date. Additional information regarding the Units and the 
operation of the Trust, including termination events, risks, and 
redemption procedures, are described in the Registration Statement.
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    \20\ See e-mail, dated October 5, 2010, from Tim Malinowski, 
Senior Director, NYSE Euronext, to Christopher Chow, Special 
Counsel, and Steve Varholik, Special Counsel, Commission.

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[[Page 62618]]

Valuation of Silver and Definition of Net Asset Value
    The value of the net assets of the Trust and the NAV will be 
determined daily at 4 p.m. (Eastern Standard Time) on each day that is 
a Business Day, by the Trust's valuator, which is RBC Dexia Investor 
Services Trust. The value of the net assets of the Trust as of the 
valuation time on any such day shall be equal to the aggregate fair 
market value of the assets of the Trust as of such date, less an amount 
equal to the total liabilities of the Trust (excluding all liabilities 
represented by outstanding Units) as of such date. The valuator shall 
calculate the NAV by dividing the value of the net assets of the Trust 
on that day by the total number of Units then outstanding on such day.
    The Units will be book-entry only and individual certificates will 
not be issued for the Units (except in connection with a redemption of 
Units, during the process of which redeeming Units will be certificated 
and presented for cancellation as part of the redemption process).
Availability of Information Regarding Silver Prices
    Currently, the Consolidated Tape Plan does not provide for 
dissemination of the spot price of a commodity, such as silver, over 
the Consolidated Tape. However, there will be disseminated over the 
Consolidated Tape the last sale price for the Units, as is the case for 
all equity securities traded on the Exchange (including exchange-traded 
funds). In addition, there is a considerable amount of silver price and 
silver market information available on public Web sites and through 
professional and subscription services.
    Investors may obtain on a 24-hour basis silver pricing information 
based on the spot price for an ounce of silver from various financial 
information service providers, such as Reuters and Bloomberg. Reuters 
and Bloomberg provide at no charge on their Web sites delayed 
information regarding the spot price of silver and last sale prices of 
silver futures, as well as information about news and developments in 
the silver market. Reuters and Bloomberg also offer a professional 
service to subscribers for a fee that provides information on silver 
prices directly from market participants. An organization named EBS 
provides an electronic trading platform to institutions such as bullion 
banks and dealers for the trading of spot silver, as well as a feed of 
live streaming prices to Reuters and Moneyline Telerate subscribers. 
Complete real-time data for silver futures and options prices traded on 
the COMEX are available by subscription from Reuters and Bloomberg. The 
NYMEX also provides delayed futures and options information on current 
and past trading sessions and market news free of charge on its Web 
site. There are a variety of other public Web sites providing 
information on silver, ranging from those specializing in precious 
metals to sites maintained by major newspapers, such as The Wall Street 
Journal. In addition, the daily London noon Fix is publicly available 
at no charge at or http://www.thebulliondesk.com.
    The Trust Web site will provide an intraday indicative value 
(``IIV'') per share for the Units, as calculated by a third party 
financial data provider during the Exchange's Core Trading Session 
(9:30 a.m. to 4 p.m., New York time). The IIV will be calculated based 
on a price of silver derived from updated bids and offers indicative of 
the spot price of silver.\21\ In addition, the Web site for the Trust 
will contain the following information, on a per Unit basis, for the 
Trust: (a) The mid-point of the bid-ask price \22\ at the close of 
trading in relation to the NAV as of the time the NAV is calculated 
(``Bid/Ask Price''), and a calculation of the premium or discount of 
such price against such NAV; and (b) data in chart format displaying 
the frequency distribution of discounts and premiums of the Bid/Ask 
Price against the NAV, within appropriate ranges, for each of the four 
previous calendar quarters. The Web site for the Trust will also 
provide the Trust's prospectus, as well as the two most recent reports 
to stockholders. Finally, the Trust Web site will provide the last sale 
price of the Units as traded in the US market. In addition, the 
Exchange will make available over the Consolidated Tape quotation 
information, trading volume, closing prices and NAV for the Units from 
the previous day.
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    \21\ The IIV on a per Unit basis disseminated during the Core 
Trading Session should not be viewed as a real-time update of the 
NAV, which is calculated once a day.
    \22\ The bid-ask price of the Trust is determined using the 
highest bid and lowest offer on the Consolidated Tape as of the time 
of calculation of the closing day NAV.
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Criteria for Initial and Continued Listing
    The Trust will be subject to the criteria in NYSE Arca Equities 
Rule 8.201(e) for initial and continued listing of the Units.
    It is anticipated that a minimum of 1,000,000 \23\ Units will be 
required to be outstanding at the start of trading. The minimum number 
of Units required to be outstanding exceeds the requirements that have 
been applied to previously listed shares of the streetTRACKS Gold 
Trust, the iShares COMEX Gold Trust, the iShares Silver Trust and 
exchange-traded funds. There will be a minimum of 400 \24\ Unitholders 
at the start of trading. Additionally, it is anticipated that the 
initial price of a Unit will be approximately $10.00. The Exchange 
believes that the anticipated minimum number of Units outstanding at 
the start of trading is sufficient to provide adequate market 
liquidity. Prior to listing, the Trust will represent to the Exchange 
that the NAV would be calculated daily and made available to all market 
participants at the same time. Prior to listing, the Trust will also 
represent to the Exchange that the IIV will be calculated at least 
every fifteen seconds and made available to all market participants at 
the same time.
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    \23\ The minimum number of Units issued is comparable to the 
minimum threshold established for the issuance of equity linked 
notes under NYSE Arca Rule 5.2(j)(2).
    \24\ The minimum number of holders is comparable to the minimum 
threshold established for the issuance of equity linked notes under 
NYSE Arca Rule 5.2(j)(2).
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Trading Rules
    The Exchange deems the Units to be equity securities and subject to 
the Exchange's existing rules governing the trading of equity 
securities. Trading in the Units on the Exchange will occur in 
accordance with NYSE Arca Equities Rule 7.34(a). The Exchange has 
appropriate rules to facilitate transactions in the Units during all 
trading sessions.
    Further, NYSE Arca Equities Rule 8.201 sets forth certain 
restrictions on ETP Holders acting as registered Market Makers in the 
Units to facilitate surveillance. Pursuant to NYSE Arca Equities Rule 
8.201(g), an ETP Holder acting as a registered Market Maker in the 
Units is required to provide the Exchange with information relating to 
its trading in the underlying silver, related futures or options on 
futures, or any other related derivatives. Commentary .04 of NYSE Arca 
Equities Rule 6.3 requires an ETP Holder acting as a registered Market 
Maker in the Units from using any material nonpublic information 
received from any person associated with an ETP Holder or employee of 
such person regarding trading by such person or employee in the 
underlying silver, related futures or options on futures or any other 
related derivative (including the Units).
    As a general matter, the Exchange has regulatory jurisdiction over 
its ETP

[[Page 62619]]

Holders and their associated persons, which include any person or 
entity controlling an ETP Holder, as well as a subsidiary or affiliate 
of an ETP Holder that is in the securities business. A subsidiary or 
affiliate of an ETP Holder 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.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Units. Trading on the Exchange in the Units may be 
halted because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Units inadvisable. These may include: 
(1) The extent to which conditions in the underlying silver market have 
caused disruptions and/or lack of trading, or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present, or (3) if the Toronto Stock Exchange 
halts trading in the Units. In addition, trading in Units will be 
subject to trading halts caused by extraordinary market volatility 
pursuant to the Exchange's ``circuit breaker'' rule.\25\
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    \25\ See NYSE Arca Equities Rule 7.12.
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Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (including Commodity-Based 
Trust Shares) to monitor trading in the Units. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Units in all trading sessions and to deter and detect violations 
of Exchange rules and applicable federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations. Also, pursuant to NYSE 
Arca Equities Rule 8.201(g), the Exchange is able to obtain information 
regarding trading in the Units and the underlying silver, silver 
futures contracts, options on silver futures, or any other silver 
derivative, through ETP Holders acting as registered Market Makers, in 
connection with such ETP Holders' proprietary or customer trades 
through ETP Holders which they effect on any relevant market. In 
addition, the Exchange may obtain trading information via the 
Intermarket Surveillance Group (``ISG'') from other exchanges who are 
members of the ISG.\26\
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    \26\ A list of ISG members is available at http://
www.isgportal.org/isgportal/public/members.htm. Trading information 
can be obtained from the Investment Industry Regulatory Organization 
of Canada, a member of ISG, who oversees Canadian broker dealers and 
trading activity on the Toronto Stock Exchange. The Exchange notes 
that the New York Mercantile Exchange, of which the COMEX is a 
division, is an ISG member, however, the Tokyo Commodity Exchange 
(``TOCOM'') is not an ISG member and the Exchange does not have in 
place a comprehensive surveillance sharing agreement with such 
market.
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Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Units. Specifically, the 
Information Bulletin will discuss the following: (1) The procedures for 
purchases and redemptions of Units; (2) NYSE Arca Equities Rule 9.2(a), 
which imposes a duty of due diligence on its ETP Holders to learn the 
essential facts relating to every customer prior to trading the Units; 
(3) how information regarding the IIV is disseminated; (4) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Units prior to or concurrently with the 
confirmation of a transaction; (5) the possibility that trading spreads 
and the resulting premium or discount on the Units may widen as a 
result of reduced liquidity of silver trading during the Core and Late 
Trading Sessions after the close of the major world silver markets; and 
(6) trading information. For example, the Information Bulletin will 
advise ETP Holders, prior to the commencement of trading, of the 
prospectus delivery requirements applicable to the Trust. ETP Holders 
purchasing Units from the Trust for resale to investors will deliver a 
prospectus to such investors.
    In addition, the Information Bulletin will reference that the Trust 
is subject to various fees and expenses described in the Registration 
Statement. The Information Bulletin will also reference the fact that 
there is no regulated source of last sale information regarding 
physical silver, that the Commission has no jurisdiction over the 
trading of silver as a physical commodity, and that the CFTC has 
regulatory jurisdiction over the trading of silver futures contracts 
and options on silver futures contracts.
    The Information Bulletin will also discuss any relief, if granted, 
by the Commission or the staff from any rules under the Act.

2. Statutory Basis

    The proposed rule change is consistent with Section 6(b) of the 
Act,\27\ in general, and furthers the objectives of Section 
6(b)(5),\28\ 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. The Exchange believes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of commodity-based product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace.
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    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
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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 purposes of the Act.

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

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

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

    Within 45 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 self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and

[[Page 62620]]

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-84 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2010-84. 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 Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the NYSE's principal office and 
on its Internet Web site at http://www.nyse.com. 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 publicly available. All submissions 
should refer to File Number SR-NYSEArca-2010-84 and should be submitted 
on or before November 2, 2010.

V. Commission's Findings and Order Granting Accelerated Approval of the 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\29\ In particular, the Commission finds that the proposed 
rule change is consistent with the requirements of Section 6(b)(5) of 
the Act,\30\ which requires, among other things, that the Exchange's 
rules be designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market, a national market 
system, and in general, to protect investors and the public interest.
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    \29\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \30\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission finds that the proposal to list and 
trade Units on the Exchange is consistent with Section 11(a)(1)(C)(iii) 
of the Act,\31\ which sets forth Congress' finding that it is in the 
public interest and appropriate for the protection of investors to 
assure the availability to brokers, dealers and investors of 
information with respect to quotations for and transactions in 
securities. Quotation and last-sale information for the Units will be 
available via the Consolidated Tape Association.\32\ The Trust's Web 
site will provide an IIV per share for the Units, as calculated by a 
third party financial data provider during the Exchange's Core Trading 
Session (9:30 a.m. to 4 p.m., New York time). The IIV will be 
calculated based on a price of silver derived from updated bids and 
offers indicative of the spot price of silver. In addition, the Web 
site for the Trust will contain the following information, on a per 
Unit basis, for the Trust: (a) The mid-point of the Bid/Ask Price and a 
calculation of the premium or discount of such price against such NAV; 
and (b) data in chart format displaying the frequency distribution of 
discounts and premiums of the Bid/Ask Price against the NAV, within 
appropriate ranges, for each of the four previous calendar quarters. 
The Web site for the Trust also will provide the Trust's prospectus, as 
well as the two most recent reports to stockholders. Further, the 
Exchange will make available over the Consolidated Tape quotation 
information, trading volume, closing prices and NAV for the Units from 
the previous day. Finally, information on silver prices and markets is 
widely available as discussed above.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \32\ The Trust Web site also will provide the last-sale price of 
the Units as traded in the US market.
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    The Commission further believes that the proposal to list and trade 
the Units is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Units appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. Under NYSE Arca Equities Rule 7.34(a)(5), if the Exchange 
becomes aware that the NAV is not being disseminated to all market 
participants at the same time, it must halt trading on the NYSE 
Marketplace until such time as the NAV is available to all market 
participants. The Commission notes that the Exchange will receive a 
representation from the Trust that, prior to listing, the NAV would be 
calculated daily and made available to all market participants at the 
same time. Additionally, if the IIV is not being disseminated as 
required, the Exchange may halt trading during the day in which the 
disruption occurs; if the interruption persists past the day in which 
it occurred, the Exchange will halt trading no later than the beginning 
of the trading day following the interruption.\33\ Additionally, under 
NYSE Arca Rules 8.201(e)(2)(iv) and (v), the Exchange will consider 
suspending or delisting the Units if, after the initial 12-month period 
following commencement of trading: (1) The value of silver is no longer 
calculated or available on at least a 15-second delayed basis from a 
source unaffiliated with the Sponsor, Trust, custodian or the Exchange 
stops providing a hyperlink on its Web site to any such unaffiliated 
commodity value; or (2) if the IIV is no longer made available on at 
least a 15-second delayed basis. With respect to trading halts, the 
Exchange may consider all relevant factors in exercising its discretion 
to halt or suspend trading in the Units. These may include: (1) The 
extent to which conditions in the underlying silver market have caused 
disruptions and/or lack of trading; (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present; or (3) if the Toronto Stock Exchange 
halts trading in the Units. In addition, trading in Units will be 
subject to trading halts caused by extraordinary market volatility 
pursuant to the Exchange's ``circuit breaker'' rule.\34\
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    \33\ See e-mail, dated September 29, 2010, from Tim Malinowski, 
Senior Director, NYSE Euronext, to Christopher Chow, Special 
Counsel, Commission.
    \34\ See NYSE Arca Equities Rule 7.12.

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[[Page 62621]]

    In addition, NYSE Arca Equities Rule 8.201 sets forth certain 
requirements for ETP Holders acting as Market Makers in the Units. 
Pursuant to NYSE Arca Equities Rule 8.201(g), the Exchange is able to 
obtain information regarding trading in the Units and the underlying 
silver, silver futures contracts, options on silver futures, or any 
other silver derivative, through ETP Holders acting as registered 
Market Makers, in connection with such ETP Holders' proprietary or 
customer trades through ETP Holders which they effect on any relevant 
market. In addition, the Exchange may obtain trading information via 
the Intermarket Surveillance Group (``ISG'') from other exchanges who 
are members of the ISG.\35\
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    \35\ See supra note 26 for additional information regarding ISG.
---------------------------------------------------------------------------

    Finally, the Commission notes that Commentary .04 to NYSE Arca 
Equities Rule 6.3 requires among other things that ETP Holders acting 
as a registered Market Maker in products listed under NYSE Arca 
Equities Rule 8.201 (and their affiliates) must establish, maintain and 
enforce written policies and procedures reasonably designed to prevent 
the misuse of any material nonpublic information with respect to such 
products, any physical asset or commodity underlying the product, 
related futures or options on futures, and any related derivative 
instruments.
    In support of this proposal, the Exchange has made representations 
including:
    (1) The Units will be subject to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.201.
    (2) The Exchange's surveillance procedures are adequate to properly 
monitor Exchange trading of the Units in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws. Pursuant to NYSE Arca Equities Rule 8.201(g), the 
Exchange is able to obtain information regarding trading in the Units 
and the underlying silver, silver futures contracts, options on silver 
futures, or any other silver derivative through ETP Holders acting as 
registered Market Makers, in connection with such ETP Holders' 
proprietary or customer trades which they effect on any relevant 
market. In addition, the Exchange may obtain trading information via 
ISG from other exchanges who are members of the ISG and from the 
Investment Industry Regulatory Organization of Canada.
    (3) Prior to the commencement of trading, the Exchange will inform 
its ETP Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Units. 
Specifically, the Information Bulletin will discuss the following: (1) 
The procedures for purchases and redemptions of Units; (2) NYSE Arca 
Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP 
Holders to learn the essential facts relating to every customer prior 
to trading the Units; (3) how information regarding the IIV is 
disseminated; (4) the requirement that ETP Holders deliver a prospectus 
to investors purchasing newly issued Units prior to or concurrently 
with the confirmation of a transaction; (5) the possibility that 
trading spreads and the resulting premium or discount on the Units may 
widen as a result of reduced liquidity of silver trading during the 
Core and Late Trading Sessions after the close of the major world 
silver markets; and (6) trading information.
    This approval order is based on the Exchange's representations.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\36\ for approving the proposed rule change prior to the 30th 
day after publication of notice in the Federal Register. The Exchange's 
proposal to list and trade the Units does not present any novel or 
significant regulatory issues. Previously, the Commission approved a 
proposal by the Exchange to list and trade shares of a substantially 
similar trust that holds gold bullion pursuant to NYSE Arca Equities 
Rule 8.201.\37\ Additionally, the Commission has previously approved 
proposals to list and trade shares of trusts that hold silver bullion 
pursuant to NYSE Arca Equities Rule 8.201.\38\
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    \36\ 15 U.S.C. 78s(b)(2).
    \37\ See Securities Exchange Act Release No. 61496, supra note 
10.
    \38\ See supra notes 6, 7, and 8. See also supra notes 9-12.
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\39\ that the proposed rule change (SR-NYSEArca-2010-84) be, and it 
hereby is, approved on an accelerated basis.
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    \39\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Trading and Markets, pursuant to 
delegated authority.\40\
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    \40\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25496 Filed 10-8-10; 8:45 am]
BILLING CODE 8011-01-P

