
[Federal Register: October 26, 2011 (Volume 76, Number 207)]
[Notices]               
[Page 66339-66344]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26oc11-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65601; File No. SR-NYSEArca-2011-63]

 
 Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
a Proposed Rule Change To List and Trade Shares of the United States 
Metals Index Fund, the United States Agriculture Index Fund and the 
United States Copper Index Fund Under NYSE Arca Equities Rule 8.200

October 20, 2011.

I. Introduction

    On August 19, 2011, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade shares of the United States Metals Index Fund 
(``USMI''), the United States Agriculture Index Fund (``USAI'') and the 
United States Copper Index Fund (``USCUI'') (collectively, the 
``Funds'') under NYSE Arca Equities Rule 8.200. The proposed rule 
change was published for comment in the Federal Register on September 
9, 2011.\3\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 65249 (September 2, 
2011), 76 FR 55956 (``Notice'').

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[[Page 66340]]

II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade shares (``Units'') of the 
Funds \4\ pursuant to NYSE Arca Equities Rule 8.200, Commentary .02, 
which permits the trading of Trust Issued Receipts either by listing or 
pursuant to unlisted trading privileges.\5\ The Units represent 
beneficial ownership interests in the Funds, as described in the 
Registration Statement. The Funds are commodity pools that are series 
of the Trust, a Delaware statutory trust. The Funds are managed and 
controlled by United States Commodity Funds LLC (``Sponsor''). The 
Sponsor is a Delaware limited liability company that is registered as a 
commodity pool operator (``CPO'') with the Commodity Futures Trading 
Commission (``CFTC'') and is a member of the National Futures 
Association (``NFA'').
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    \4\ See the Funds' registration statement on Form S-1 for the 
United States Commodity Index Funds Trust, dated November 24, 2010 
(File No. 333-170844) relating to the Funds (``Registration 
Statement'').
    \5\ Commentary .02 to NYSE Arca Equities Rule 8.200 applies to 
Trust Issued Receipts that invest in ``Financial Instruments.'' The 
term ``Financial Instruments,'' as defined in Commentary .02(b)(4) 
to NYSE Arca Equities Rule 8.200, means any combination of 
investments, including cash; securities; options on securities and 
indices; futures contracts; options on futures contracts; forward 
contracts; equity caps, collars and floors; and swap agreements.
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A. USMI

    USMI's trading advisor is SummerHaven Investment Management, LLC 
(``SummerHaven''). The Sponsor expects to manage USMI's investments 
directly, using the trading advisory services of SummerHaven for 
guidance with respect to the Metals Index and the Sponsor's selection 
of investments on behalf of USMI. The Sponsor, SummerHaven Indexing and 
SummerHaven are not affiliated with a broker-dealer and are subject to 
procedures designed to prevent the use and dissemination of material 
nonpublic information regarding the Metals Index or USMI's 
portfolio.\6\
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    \6\ The Sponsor represents that, in the event the Sponsor, 
SummerHaven Indexing, or SummerHaven becomes affiliated with a 
broker-dealer, it will implement a fire wall with respect to such 
broker-dealer regarding access to information concerning the 
composition and/or changes to a portfolio.
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    The investment objective of USMI is for the daily changes in 
percentage terms of its Units' net asset value (``NAV'') to reflect the 
daily changes in percentage terms of the SummerHaven Dynamic Metals 
Index Total Return (the ``Metals Index''), less USMI's expenses.\7\ The 
Metals Index is a metal sector index designed to broadly represent 
industrial and precious metals while overweighting the components that 
are assessed to be in a low inventory state and underweighting the 
components assessed to be in a high inventory state. The Metals Index 
consists of six base metals--aluminum, copper, zinc, nickel, tin, and 
lead--and four precious metals: gold, silver, platinum, and palladium. 
Each metal is assigned a base weight in the Metals Index based on an 
assessment of market liquidity and the metal's overall economic 
importance.
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    \7\ The Metals Index is owned and maintained by SummerHaven 
Index Management, LLC (``SummerHaven Indexing'') and calculated and 
published by the Exchange.
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    Futures contracts for metals in the Metals Index that are traded on 
New York Mercantile Exchange (``NYMEX''), London Metal Exchange 
(``LME''), and Commodity Exchange, Inc. (``COMEX'') are collectively 
referred to herein as ``Eligible Metals Futures Contracts.'' The 10 
Eligible Metals Futures Contracts that at any given time have been 
designated as a component of the Metals Index are referred to as the 
``Benchmark Component Metals Futures Contracts.'' The relative 
weighting of the Benchmark Component Metals Futures Contracts will 
change on a monthly basis, based on quantitative formulas developed by 
SummerHaven Indexing relating to the prices of the Benchmark Component 
Metals Futures Contracts.\8\ USMI's investments also will be rebalanced 
on a monthly basis to track the changing nature of the Metals Index.
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    \8\ More information about the Metals Index is available in the 
Notice and also may be obtained from SummerHaven Indexing's Web site 
at http//www.summerhavenindex.com.
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    USMI will seek to achieve its investment objective by investing to 
the fullest extent possible in Benchmark Component Metals Futures 
Contracts. Then, if constrained by regulatory requirements (as 
described below) or in view of market conditions (as described below), 
USMI will invest next in other Eligible Metals Futures Contracts based 
on the same metal as the futures contracts subject to such regulatory 
constraints or market conditions, and finally, to a lesser extent, in 
other exchange-traded futures contracts that are economically identical 
or substantially similar to the Benchmark Component Metals Futures 
Contracts if one or more other Eligible Metals Futures Contracts is not 
available. When USMI has invested to the fullest extent possible in 
exchange-traded futures contracts, USMI may then invest in other 
contracts and instruments based on the Benchmark Component Metals 
Futures Contracts or the metals included in the Metals Index, such as 
cash-settled options, forward contracts, cleared swap contracts and 
swap contracts other than cleared swap contracts. Other exchange-traded 
futures contracts that are economically identical or substantially 
similar to the Benchmark Component Metals Futures Contracts and other 
contracts and instruments based on the Benchmark Component Metals 
Futures Contracts, as well as metals included in the Metals Index, are 
collectively referred to as ``Other Metals-Related Investments,'' and 
together with Benchmark Component Metals Futures Contracts and other 
Eligible Metals Futures Contracts, ``Metals Interests.''
    USMI also invests in short-term Treasury Securities or holds cash 
to meet its current or potential margin or collateral requirements with 
respect to its investments in Metals Interests and invests cash not 
required to be used as margin or collateral.
    Regulatory Requirements. As noted above, USMI may at times invest 
in other Eligible Metal Futures Contracts based on the same metal as 
the futures contracts subject to regulatory constraints (as described 
below), and then, to a lesser extent, in Other Metals-Related 
Investments in order to comply with regulatory requirements. An example 
of such regulatory requirements would be if USMI is required by law or 
regulation, or by one of its regulators, including a futures exchange, 
to reduce its position in one or more Benchmark Component Metals 
Futures Contracts to the applicable position limit or to a specified 
accountability level for such contracts, USMI's assets could be 
invested in one or more other Eligible Metal Futures Contracts. If one 
or more such Eligible Metal Futures Contracts were unavailable or 
economically impracticable, USMI could invest in Other Metals-Related 
Investments that are intended to replicate the return on the Metals 
Index or particular Benchmark Component Metals Futures Contracts. 
Another example would be if, because USMI's assets were reaching higher 
levels, it exceeded position limits, accountability levels or other 
regulatory limits and, to avoid triggering such limits or levels, it 
invested in one or more other Eligible Metal Futures Contracts to the 
extent practicable and then in Other Metals-Related Investments.
    When investing in Other Metals-Related Investments, USMI will first 
invest in other exchange traded futures contracts that are economically 
identical or substantially similar to the Benchmark Component Metals 
Futures Contracts and then in cash-settled

[[Page 66341]]

options, forward contracts, cleared swap contracts and swap contracts 
other than cleared swap contracts.
    Market Conditions. As also noted above, there may be market 
conditions that could cause USMI to invest in other Eligible Metal 
Futures Contracts that are based on the same metal as the futures 
contracts subject to such market conditions (as described below). One 
such type of market condition would be where demand for Benchmark 
Component Metals Futures Contracts exceeded supply and as a result USMI 
was able to obtain more favorable terms under other Eligible Metal 
Futures Contracts. An example of more favorable terms would be where 
the aggregate costs to USMI from investing in other Eligible Metal 
Futures Contracts (including actual or expected direct costs such as 
the costs to buy, hold, or sell such investments, as well as indirect 
costs such as opportunity costs) were less than the costs of investing 
in Benchmark Component Metal Futures Contracts. Only after USMI becomes 
subject to position limits in any Eligible Metal Futures Contracts will 
USMI invest in Other Metals-Related Investments to replicate exposure 
to the Eligible Metal Futures Contract that is position-limited. 
Generally, USMI will only invest in this manner in other Eligible Metal 
Futures Contracts or Other Metals-Related Investments if it results in 
materially more favorable terms, and if such investments result in a 
specific benefit for USMI or its shareholders, such as being able to 
more closely track its benchmark.

B. USAI

    USAI's trading advisor is SummerHaven. The Sponsor expects to 
manage USAI's investments directly, using the trading advisory services 
of SummerHaven for guidance with respect to the Agriculture Index and 
the Sponsor's selection of investments on behalf of USAI. The Sponsor, 
SummerHaven Indexing and SummerHaven are not affiliated with a broker-
dealer and are subject to procedures designed to prevent the use and 
dissemination of material nonpublic information regarding the 
Agriculture Index or USAI's portfolio.\9\
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    \9\ See supra note 6.
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    The investment objective of USAI is for the daily changes in 
percentage terms of its Units' NAV to reflect the daily changes in 
percentage terms of the SummerHaven Dynamic Agriculture Index Total 
Return (the ``Agriculture Index''),\10\ less USAI's expenses. The 
Agriculture Index consists of fourteen agricultural markets: soybeans, 
corn, soft red winter wheat, hard red winter wheat, soybean oil, 
soybean meal, canola, sugar, cocoa, coffee, cotton, live cattle, feeder 
cattle and lean hogs. Each agricultural commodity is assigned a base 
weight in the Agriculture Index based on an assessment of market 
liquidity and the commodity's overall economic importance.\11\
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    \10\ The Agriculture Index is owned and maintained by 
SummerHaven Indexing and calculated and published by the Exchange.
    \11\ More information about the Agriculture Index is available 
in the Notice and also may be obtained from SummerHaven Indexing's 
Web site at http://www.summerhavenindex.com.
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    Futures contracts for agricultural commodities in the Agriculture 
Index that are currently traded on the ICE Futures (``ICE Futures''), 
Chicago Board of Trade (``CBOT''), Chicago Mercantile Exchange 
(``CME''), Kansas City Board of Trade (``KCBT'') and ICE Futures Canada 
are collectively referred to herein as ``Eligible Agriculture Futures 
Contracts.'' The 14 Eligible Agriculture Futures Contracts that at any 
given time have been designated as a component of the Agriculture Index 
are referred to as the ``Benchmark Component Agriculture Futures 
Contracts.'' The relative weighting of the Benchmark Component 
Agriculture Futures Contracts will change on a monthly basis, based on 
quantitative formulas developed by SummerHaven Indexing relating to the 
prices of the Benchmark Component Agriculture Futures Contracts. USAI's 
investments also will be rebalanced on a monthly basis to track the 
changing nature of the Agriculture Index.
    USAI will seek to achieve its investment objective by investing to 
the fullest extent possible in Benchmark Component Agriculture Futures 
Contracts. Then, if constrained by regulatory requirements (described 
below) or in view of market conditions (described below), USAI will 
invest next in other Eligible Agriculture Futures Contracts based on 
the same agricultural commodity as the futures contracts subject to 
such regulatory constraints or market conditions, and finally, to a 
lesser extent, in other exchange traded futures contracts that are 
economically identical or substantially similar to the Benchmark 
Component Agriculture Futures Contracts, if one or more Eligible 
Agriculture Futures Contracts is not available. When USAI has invested 
to the fullest extent possible in exchange-traded futures contracts, 
USAI may then invest in other contracts and instruments based on the 
Benchmark Component Agriculture Futures Contracts or the agricultural 
commodities included in the Agriculture Index, such as cash-settled 
options, forward contracts, cleared swap contracts and swap contracts 
other than cleared swap contracts. Other exchange-traded futures 
contracts that are economically identical or substantially similar to 
the Benchmark Component Agriculture Futures Contracts and other 
contracts and instruments based on the Benchmark Component Agriculture 
Futures Contracts, as well as metals included in the Agriculture Index, 
are collectively referred to as ``Other Agriculture-Related 
Interests,'' and together with Benchmark Component Agriculture Futures 
Contracts and other Eligible Agriculture Futures Contracts, 
``Agriculture Interests.''
    USAI also invests in short-term Treasury Securities or holds cash 
to meet its current or potential margin or collateral requirements with 
respect to its investments in Agriculture Interests and invests cash 
not required to be used as margin or collateral.
    Regulatory Requirements. As noted above, USAI may at times invest 
in Eligible Agriculture Futures Contracts based on the same 
agricultural commodity as the futures contracts subject to regulatory 
constraints (as described below), and then to a lesser extent in Other 
Agriculture-Related Investments in order to comply with regulatory 
requirements. An example of such regulatory requirements would be if 
USAI is required by law or regulation, or by one of its regulators, 
including a futures exchange, to reduce its position in one or more 
Benchmark Component Agriculture Futures Contracts to the applicable 
position limit or to a specified accountability level for such 
contracts, USAI's assets could be invested in one or more other 
Eligible Agriculture Futures Contracts. If one or more such Eligible 
Agriculture Futures Contracts was unavailable or economically 
impracticable, USAI could invest in Other Agriculture-Related 
Investments that are intended to replicate the return on the 
Agriculture Index or particular Benchmark Component Agriculture Futures 
Contracts. Another example would be if because USAI's assets were 
reaching higher levels, it exceeded position limits, accountability 
levels or other regulatory limits and, to avoid triggering such limits 
or levels, it invested in one or more other Eligible Agriculture 
Futures Contracts to the extent practicable and then in Other 
Agriculture-Related Investments.
    When investing in Other Agriculture-Related Investments, USAI will 
first invest in other exchange traded futures

[[Page 66342]]

contracts that are economically identical or substantially similar to 
the Benchmark Component Agriculture Futures Contracts and then in cash 
settled options, forward contracts, cleared swap contracts and swap 
contracts other than cleared swap contracts.
    Market Conditions. As also noted above, there may be market 
conditions that could cause USAI to invest in other Eligible 
Agriculture Futures Contracts that are based on the same agricultural 
commodity as the futures contracts subject to such market conditions 
(as described below). One such type of market condition would be where 
demand for Benchmark Component Agriculture Futures Contracts exceeded 
supply and as a result USAI was able to obtain more favorable terms 
under other Eligible Agriculture Futures Contracts. An example of more 
favorable terms would be where the aggregate costs to USAI from 
investing in other Eligible Agriculture Futures Contracts or Other 
Agriculture-Related Investments (including actual or expected direct 
costs such as the costs to buy, hold, or sell such investments, as well 
as indirect costs such as opportunity costs) were less than the costs 
of investing in Benchmark Component Agriculture Futures Contracts. Only 
after USAI becomes subject to position limits in any Eligible 
Agriculture Futures Contract will USAI invest in Other Agriculture-
Related Investments to replicate exposure to the Eligible Agriculture 
Futures Contract that is position-limited. Generally, USAI will only 
invest in this manner in other Eligible Agriculture Futures Contracts 
or Other Agriculture-Related Investments if it results in materially 
more favorable terms, and if such investments result in a specific 
benefit for USAI or its shareholders, such as being able to more 
closely track its benchmark.

C. USCUI

    USCUI's trading advisor is SummerHaven. The Sponsor expects to 
manage USCUI's investments directly, using the trading advisory 
services of SummerHaven for guidance with respect to the Copper Index 
and the Sponsor's selection of investments on behalf of USCUI. The 
Sponsor, SummerHaven Indexing and SummerHaven are not affiliated with a 
broker-dealer and are subject to procedures designed to prevent the use 
and dissemination of material nonpublic information regarding the 
Copper Index or USCUI's portfolio.\12\
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    \12\ See supra note 6.
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    The investment objective of USCUI is for the daily changes in 
percentage terms of its Units' NAV to reflect the daily changes in 
percentage terms of the SummerHaven Copper Index Total Return (the 
``Copper Index''),\13\ less USCUI's expenses. The Copper Index is 
designed to reflect the performance of the investment returns from a 
portfolio of futures contracts for copper that are traded on the COMEX 
(such futures contracts, collectively, ``Eligible Copper Futures 
Contracts''). The Copper Index attempts to maximize backwardation and 
minimize contango while utilizing contracts in liquid portions of the 
futures curve.\14\ The Copper Index is comprised of either two or three 
Eligible Copper Futures Contracts that are selected on a monthly basis 
based on quantitative formulas relating to the prices of the Eligible 
Copper Futures Contracts developed by SummerHaven Indexing. USCUI's 
positions in Copper Interests will be rebalanced on a monthly basis in 
order to track the changing nature of the Copper Index.
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    \13\ The Copper Index is owned and maintained by SummerHaven 
Indexing and calculated and published by the Exchange.
    \14\ More information about the Copper Index is available in the 
Notice and also may be obtained from SummerHaven Indexing's Web site 
at http://www.summerhavenindex.com.
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    USCUI will seek to achieve its investment objective by investing to 
the fullest extent possible in the Benchmark Component Copper Futures 
Contracts, which are the Eligible Copper Futures Contracts that at any 
given time make up the Copper Index. Then if constrained by regulatory 
requirements (described below) or in view of market conditions 
(described below), USCUI will invest next in other Eligible Copper 
Futures Contracts, and finally to a lesser extent, in other exchange-
traded futures contracts that are economically identical or 
substantially similar to the Benchmark Component Copper Futures 
Contracts if one or more other Eligible Copper Futures Contracts is not 
available. When USCUI has invested to the fullest extent possible in 
exchange-traded futures contracts, USCUI may then invest in other 
contracts and instruments based on the Benchmark Component Copper 
Futures Contracts, other Eligible Copper Futures Contracts or copper, 
such as cash-settled options, forward contracts, cleared swap contracts 
and swap contracts other than cleared swap contracts. Other exchange-
traded futures contracts that are economically identical or 
substantially similar to the Benchmark Component Copper Futures 
Contracts and other contracts and instruments based on the Benchmark 
Component Copper Futures Contracts, are collectively referred to as 
``Other Copper-Related Investments,'' and together with Benchmark 
Component Copper Futures Contracts and other Eligible Copper Futures 
Contracts, ``Copper Interests.''
    After fulfilling the margin and collateral requirements with 
respect to USCUI's Copper Interests, the Sponsor will invest the 
remainder of USCUI's proceeds from the sale of baskets in Treasury 
Securities or cash equivalents, and/or hold such assets in cash 
(generally in interest-bearing accounts).
    Regulatory Requirements. As noted above, USCUI may at times invest 
in other Eligible Copper Futures Contracts based on the same metal as 
the futures contracts subject to regulatory constraints (as described 
below), and finally to a lesser extent, in other exchange traded 
futures contracts that are economically identical or substantially 
similar to the Benchmark Component Copper Futures Contracts if one or 
more other Eligible Copper Futures Contracts is not available in order 
to comply with regulatory requirements. An example of such regulatory 
requirements would be if USCUI is required by law or regulation, or by 
one of its regulators, including a futures exchange, to reduce its 
position in one or more Benchmark Component Copper Futures Contracts to 
the applicable position limit or to a specified accountability level 
for such contracts, USCUI's assets could be invested in one or more 
other Eligible Copper Futures Contracts. If one or more such Eligible 
Copper Futures Contracts were unavailable or economically 
impracticable, USCUI could invest in Other Copper-Related Investments 
that are intended to replicate the return on the Copper Index or 
particular Benchmark Component Copper Futures Contracts. Another 
example would be if, because USCUI's assets were reaching higher 
levels, it exceeded position limits, accountability levels or other 
regulatory limits and, to avoid triggering such limits or levels, it 
invested in one or more other Eligible Copper Futures Contracts to the 
extent practicable and then in Other Copper-Related Investments.
    When investing in Other Copper-Related Investments, USCUI will 
first invest in other exchange traded futures contracts that are 
economically identical or substantially similar to the Benchmark 
Component Copper Futures Contracts, other Eligible Copper Futures 
Contracts, and then in cash-settled options, forward contracts, cleared 
swap contracts and swap contracts other than cleared swap contracts.

[[Page 66343]]

    Market Conditions. As also noted above, there may be market 
conditions that could cause USCUI to invest in other Eligible Copper 
Futures Contracts that are based on the same metal as the futures 
contracts subject to such market conditions (as described below). One 
such type of market condition would be where demand for Benchmark 
Component Copper Futures Contracts exceeded supply and as a result 
USCUI was able to obtain more favorable terms under other Eligible 
Copper Futures Contracts. An example of more favorable terms would be 
where the aggregate costs to USCUI from investing in other Eligible 
Copper Futures Contracts (including actual or expected direct costs 
such as the costs to buy, hold, or sell such investments, as well as 
indirect costs such as opportunity costs) were less than the costs of 
investing in Benchmark Component Copper Futures Contracts. Only after 
USCUI becomes subject to position limits in any Eligible Copper Futures 
Contract will USCUI invest in Other Copper-Related Investments to 
replicate exposure to the Eligible Copper Futures Contract that is 
position-limited. Generally, USCUI will only invest in this manner in 
other Eligible Copper Futures Contracts or Other Copper-Related 
Investments if it results in materially more favorable terms, and if 
such investments result in a specific benefit for USCUI or its 
shareholders, such as being able to more closely track its benchmark.
    Additional details regarding the Trust, Units, trading policies of 
the Funds, creations and redemptions of the Units, investment risks, 
Benchmark performance, NAV calculation, the dissemination and 
availability of information about the underlying assets, trading halts, 
applicable trading rules, surveillance, and the Information Bulletin, 
among other things, can be found in the Notice and/or the Registration 
Statement, as applicable.\15\
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    \15\ See Notice and Registration Statement, supra notes 3 and 4, 
respectively.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change to list and trade the Units of the Funds is consistent with the 
requirements of Section 6 of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\16\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act,\17\ 
which requires, among other things, that the Exchange's rules be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The Commission notes that 
the Funds and the Units must comply with the requirements of NYSE Arca 
Equities Rule 8.200 and Commentary .02 thereto to be listed and traded 
on the Exchange.
    The Commission finds that the proposal to list and trade the Units 
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the 
Act,\18\ which sets forth Congress's finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets 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 high-speed line, and the underlying index levels will 
be disseminated by the Exchange and will be updated at least every 15 
seconds during NYSE Arca Core Trading Hours, from 9:30 a.m. E.T. to 4 
p.m. E.T., except for the period between the close of trading of all 
applicable futures contracts on futures exchanges and the close of the 
NYSE Arca Core Trading Session, at which point the underlying index 
values will be static.\19\ In addition, the Indicative Fund Value 
(``IFV'') for each Fund will be disseminated on a per-Unit basis by the 
Exchange at least every 15 seconds during the NYSE Arca Core Trading 
Session.\20\ The NAV for the Funds' Units will be calculated by the 
Administrator once a day and will be disseminated daily to all market 
participants after 4 p.m. E.T. The Funds will provide Web site 
disclosure of portfolio holdings daily and will include, as applicable, 
the names and value (in U.S. dollars) of financial instruments and 
characteristics of such instruments and cash equivalents, and amount of 
cash held in the portfolios of the Funds. The closing prices and 
settlement prices of the futures contracts also are readily available 
from the Web sites of the relevant futures exchanges, automated 
quotation systems, published or other public sources, or on-line 
information services such as Bloomberg or Reuters. Complete real-time 
data for the futures contracts is available by subscription from 
Reuters and Bloomberg. The relevant futures exchanges 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 on 
such Web sites, as well as other financial informational sources. 
Information regarding exchange-traded cash-settled options and cleared 
swap contracts will be available from the applicable exchanges and 
major market data vendors.
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    \16\ In approving this 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).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \19\ In addition, the closing prices and settlement prices of 
the futures contracts held by the Funds are readily available from 
the Web sites of the relevant futures exchanges, automated quotation 
systems, published or other public sources, or on-line information 
services such as Bloomberg or Reuters. The relevant futures 
exchanges also provide delayed futures information on current and 
past trading sessions and market news free of charge on their 
respective Web sites.
    \20\ The normal trading hours of the relevant futures exchanges 
vary, with some ending their trading hours before the close of the 
Core Trading Session on NYSE Arca (for example, the normal trading 
hours of the NYMEX are 10 a.m. E.T. to 2:30 p.m. E.T.). When a Fund 
holds applicable Benchmark Component Futures Contracts from futures 
exchanges with different trading hours than NYSE Arca, there will be 
a gap in time at the beginning and/or the end of each day during 
which Units will be traded on NYSE Arca, but real-time futures 
exchange trading prices for Applicable Benchmark Component Futures 
Contracts traded on such futures exchanges will not be available. As 
a result, during those gaps there will be no update to the IFV. A 
static IFV will be disseminated between the close of trading of all 
applicable Futures Contracts on futures exchanges and the close of 
the NYSE Arca Core Trading Session.
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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. If the Exchange becomes aware that the NAV with respect to the 
Units is not disseminated to all market participants at the same time, 
it will halt trading in the Units until such time as the NAV is 
available to all market participants. Further, the Exchange represents 
that it may halt trading during the day in which an interruption to the 
dissemination of the IFV or the value of the underlying futures 
contracts occurs. If the interruption to the dissemination of the IFV 
or the value of the underlying futures contracts persists past the 
trading day in which it occurred, the Exchange will halt trading no 
later than

[[Page 66344]]

the beginning of the trading day following the interruption. In 
addition, the Web site disclosure of the portfolio composition of each 
Fund will occur at the same time as the disclosure by the Sponsor of 
the portfolio composition to authorized participants so that all market 
participants are provided portfolio composition information at the same 
time. Therefore, the same portfolio information will be provided on the 
public Web site as well as in electronic files provided to authorized 
purchasers. Accordingly, each investor will have access to the current 
portfolio composition of the Funds through each Fund's Web site. The 
Exchange may halt trading in the Units if trading is not occurring in 
the underlying futures contracts or if other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\21\ In addition, the Exchange represents that the 
Sponsor, SummerHaven Indexing and SummerHaven are not affiliated with a 
broker-dealer and are subject to procedures designed to prevent the use 
and dissemination of material nonpublic information regarding the 
underlying index levels or the Funds' portfolios. Lastly, the trading 
of the Units will be subject to NYSE Arca Equities Rule 8.200, 
Commentary .02(e), which sets forth certain restrictions on ETP Holders 
\22\ acting as registered Market Makers \23\ in Trust Issued Receipts 
to facilitate surveillance.
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    \21\ With respect to trading halts, the Exchange may consider 
other relevant factors in exercising its discretion to halt or 
suspend trading in the Units of the Funds. Trading in the Units of 
the Funds will be subject to halts caused by extraordinary market 
volatility pursuant to the Exchange's circuit breaker rules in NYSE 
Arca Equities Rule 7.12. Trading also may be halted because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the Units inadvisable.
    \22\ See NYSE Arca Equities Rule 1.1(n) (defining ETP Holder).
    \23\ See NYSE Arca Equities Rule 1.1(u) (defining Market Maker).
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    The Exchange has represented that the Units are deemed to be equity 
securities, thus rendering trading in the Units subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has made representations, 
including:
    (1) The Funds will be subject to the criteria in NYSE Arca Equities 
Rule 8.200 and Commentary .02 thereto for initial and continued listing 
of the Units.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Units during all trading sessions.
    (3) 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.
    (4) With respect to the Funds' futures contracts traded on 
exchanges, not more than 10% of the weight of such futures contracts in 
the aggregate shall consist of components whose principal trading 
market is not a member of the Intermarket Surveillance Group or is a 
market with which the Exchange does not have a comprehensive 
surveillance sharing agreement.
    (5) 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: (a) 
The risks involved in trading the Units during the Opening and Late 
Trading Sessions when an updated IFV will not be calculated or publicly 
disseminated; (b) the procedures for purchases and redemptions of Units 
in creation baskets and redemption baskets (and that Units are not 
individually redeemable); (c) 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; 
(d) how information regarding the IFV is disseminated; (e) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Units prior to or concurrently with the 
confirmation of a transaction; and (f) trading information.
    (6) A minimum of 100,000 Units for each Fund will be outstanding as 
of the start of trading on the Exchange.
    (7) With respect to application of Rule 10A-3 \24\ under the Act, 
the Trust relies on the exception contained in Rule 10A-3(c)(7).\25\
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    \24\ 17 CFR 240.10A-3.
    \25\ 17 CFR 240.10A-3(c)(7).
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    This approval order is based on the Exchange's representations.\26\
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    \26\ The Commission notes that it does not regulate the market 
for futures in which the Fund plans to take positions, which is the 
responsibility of the Commodity Futures Trading Commission 
(``CFTC''). The CFTC has the authority to set limits on the 
positions that any person may take in futures. These limits may be 
directly set by the CFTC or by the markets on which the futures are 
traded. The Commission has no role in establishing position limits 
on futures, even though such limits could impact an exchange-traded 
product that is under the jurisdiction of the Commission.
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    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \27\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
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    \27\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\28\ that the proposed rule change (SR-NYSEArca-2011-63) be, and it 
hereby is, approved.
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    \28\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-27698 Filed 10-25-11; 8:45 am]
BILLING CODE 8011-01-P

