
[Federal Register Volume 77, Number 210 (Tuesday, October 30, 2012)]
[Notices]
[Pages 65732-65740]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26589]



[[Page 65732]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68101; File No. SR-NYSEArca-2012-111]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change and Amendment No. 1 Thereto To List and Trade 
Units of the Sprott Physical Platinum and Palladium Trust Pursuant to 
NYSE Arca Equities Rule 8.201

October 24, 2012.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is 
hereby given that, on October 9, 2012, 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. On October 24, 2012, the Exchange 
submitted Amendment No. 1 to the proposed rule change.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as modified by Amendment No. 1, from interested 
persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ In Amendment No. 1, the Exchange amended the filing to 
provide that the Exchange may consider a trading halt if trading is 
halted on the Toronto Stock Exchange (``TSX'') and to provide that 
the intraday indicative value (``IIV'') will be widely disseminated 
by one or more major market data venders at least every 15 seconds 
during the NYSE Arca Core Trading Session.
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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 of Sprott Physical 
Platinum and Palladium Trust (the ``Trust'') pursuant to NYSE Arca 
Equities Rule 8.201. The text of the proposed rule change is available 
on the Exchange's Web site at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to list and trade units (``Units'') of the 
Trust under NYSE Arca Equities Rule 8.201.\5\ 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.'' 
\6\ The Commission has previously approved listing on the Exchange of 
units of Sprott Physical Gold Trust\7\ as well as Sprott Physical 
Silver Trust,\8\ ETFS Platinum Trust,\9\ and ETFS Palladium Trust.\10\
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    \5\ See Amendment No. 4 to the Registration Statement on Form F-
1, filed with the Commission on September 4, 2012 (No. 333-179017) 
(``Registration Statement''). The descriptions of the Trust, the 
Units and the platinum and palladium markets contained herein are 
based, in part, on the Registration Statement.
    \6\ 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.
    \7\ See Securities Exchange Act Release No. 61496 (February 4, 
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113) 
(approving listing on the Exchange of Sprott Physical Gold Trust).
    \8\ See Securities Exchange Act Release No. 63043 (October 5, 
2010), 75 FR 62615 (October 12, 2010) (SR-NYSEArca-2010-84) 
(approving listing on the Exchange of the Sprott Physical Silver 
Trust).
    \9\ See Securities Exchange Act Release No. 61219 (December 22, 
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95) 
(approving listing on the Exchange of the ETFS Platinum Trust).
    \10\ See Securities Exchange Act Release No. 61220 (December 22, 
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94) 
(approving listing on the Exchange of the ETFS Palladium Trust).
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    Sprott Asset Management LP is the sponsor and manager of the Trust 
(the ``Manager''),\11\ RBC Investor Services Trust (``RBC'') is the 
trustee and valuation agent of the Trust (the ``Trustee'' or 
``Valuation Agent,'' as the case may be) \12\ and the custodian of the 
Trust's assets other than physical platinum and palladium bullion (the 
``Non-Platinum and Palladium Custodian'').\13\ The Royal Canadian Mint 
is the custodian for the physical platinum and palladium bullion owned 
by the Trust (the ``Platinum and Palladium Custodian'').\14\
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    \11\ The Manager is a limited partnership existing under the 
laws of Ontario, Canada, and acts as manager of the Trust pursuant 
to the trust agreement and the management agreement. The Manager 
will be responsible for to the day-to-day activities and 
administration of the Trust. The Manager will manage and direct the 
business and affairs of the Trust. Additional details regarding the 
Manager are set forth in the Registration Statement. The Manager has 
adopted a policy pursuant to which no entity or account that is (a) 
managed or (b) for whom investment decisions are made, directly or 
indirectly, by a person that is involved in the decision-making 
process of, or has non-public information about, follow-on offerings 
of the Trust (a ``Decision Maker'') is permitted to invest in the 
Trust, and no Decision Maker is permitted to invest in the Trust for 
the Decision Maker's account or benefit, directly or indirectly.
    \12\ RBC is a trust company existing under the federal laws of 
Canada, and is equally owned by the Royal Bank of Canada. RBC is 
affiliated with a broker-dealer. RBC has represented to the Exchange 
that it has put in place and will maintain the appropriate 
information barriers and controls between itself and the broker-
dealer affiliate so that the broker-dealer affiliate will not have 
access to information concerning the composition and/or changes to 
the Trust's holdings that are not available on the Trust's Web site. 
The Trustee holds title to the Trust's assets on behalf of the 
Unitholders of the Trust (the ``Unitholders'') and has 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.
    \13\ The Non-Platinum and Palladium Custodian will be 
responsible for and will bear all risk of the loss of, and damage 
to, the Trust's assets (other than physical platinum and palladium 
bullion) that are in its custody, subject to certain limitations 
based on events beyond the Non-Platinum and Palladium 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-Platinum and Palladium Custodian are set 
forth in the Registration Statement.
    \14\ The Trust's physical platinum and palladium bullion will be 
fully allocated and stored with the Mint or a sub-custodian of the 
Mint. The current sub-custodian of the Mint is Via Mat International 
Ltd., through its subsidiary, Via Mat International (USA) Inc. 
(``Via Mat''). The Mint is a Canadian Crown corporation and its 
obligations generally constitute unconditional obligations of the 
Canadian Government. The Platinum and Palladium Custodian will be 
responsible for and will bear all risk of the loss of, and damage 
to, the Trusts' physical platinum and palladium bullion that is in 
its or its sub-custodian's custody, subject to certain limitations 
based on events beyond the Platinum and Palladium 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 Platinum and Palladium Custodian are set forth 
in the Registration Statement.
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    According to the Registration Statement, the investment objective 
of the Trust is to invest and hold substantially all of its assets in 
physical platinum and palladium bullion. The Trust seeks to provide a 
convenient and exchange-traded investment alternative for investors 
interested in holding physical platinum and palladium bullion without 
the inconvenience that is typical of a direct investment in physical 
platinum and palladium bullion. The Trust intends to achieve its 
objective by investing primarily in long-term holdings of unencumbered, 
fully allocated physical platinum and palladium bullion and will not

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speculate with regard to short-term changes in platinum or palladium 
prices. The Trust will not invest in platinum or palladium 
certificates, futures or other financial instruments that represent 
platinum or palladium or that may be exchanged for platinum or 
palladium. The Trust does not anticipate making regular cash 
distributions to unitholders. The Trust is neither an investment 
company registered under the Investment Company Act of 1940 \15\ nor a 
commodity pool for purposes of the Commodity Exchange Act.\16\
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    \15\ 15 U.S.C. 80a.
    \16\ 17 U.S.C. 1.
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    The Exchange represents that the Units satisfy the requirements of 
NYSE Arca Equities Rule 8.201 and thereby qualify for listing on the 
Exchange.\17\
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    \17\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Exchange 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 Platinum and Palladium Markets
    According to the Registration Statement, platinum and palladium are 
two of six precious metals comprising the ``Platinum Group Metals'' 
(``PGM''). Platinum and palladium are the PGMs produced in the greatest 
quantities and are generally viewed as the most significant PGMs in the 
global marketplace. The other four PGMs (rhodium, ruthenium, iridium 
and osmium) are produced as co-products of platinum and palladium. PGMs 
have unique physical attributes, including powerful catalytic 
properties, strong conductivity and ductility, high levels of 
resistance to corrosion, strength, durability and high melting points.
    PGMs are found primarily in South Africa and Russia. South Africa 
is the world's leading platinum producer and the second largest 
palladium producer.\18\ Together, South Africa and Russia accounted for 
88% of global platinum mine production and 80% of global palladium mine 
production in 2012.
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    \18\ In South Africa, PGMs occur chiefly in the Bushveld Igneous 
Complex, an irregular oval area approximately 15,000 square miles in 
size and centrally located in the Transvaal Basin. This complex 
hosts the world's largest reserve of platinum metals. Russia is the 
largest producer of palladium, with production concentrated in the 
Norilsk region.
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    Due to their rarity and relative inertness, platinum and palladium 
are considered precious metals. Total 2011 mine production of platinum 
and palladium was approximately 6.5 and 6.6 million ounces, 
respectively.
    Physical platinum and palladium can be bought and sold through 
various intermediaries such as precious metal traders and various 
precious metal exchanges. Additionally, physical platinum and palladium 
coins and bars can also be purchased through government mints.
    Futures on platinum and palladium are traded on two major 
exchanges: The New York Mercantile Exchange (``NYMEX''), and Tokyo 
Commodities Exchange (``TOCOM''). The NYMEX accounts for the majority 
of palladium futures trading volume and has seen increased levels of 
activity over the past five years. Smaller markets include Shanghai, 
Mumbai and Johannesburg. The platinum market traded 155 million ounces 
and the palladium market traded 105.5 million ounces in 2010.
    The London Platinum and Palladium Market (``LPPM'') is a London-
based trade association that acts as the coordinator for activities 
conducted on behalf of its members and other participants in the London 
platinum and palladium markets. The LPPM acts primarily in the function 
of establishing the Good Delivery Standards (``Good Delivery 
Standards'') for platinum and palladium in plate or ingot form and 
maintenance of the ``London/Zurich Good Delivery Lists'', as described 
below; acts as coordinator for activities conducted on behalf of its 
members and other participants in the London platinum and palladium 
markets; and acts as the principal point of contact between the market 
and its regulators. Members of the LPPM act as the over-the-counter 
(``OTC'') market-makers for platinum and palladium.\19\ Most OTC market 
trades are cleared through London. The LPPM plays an important role in 
setting OTC precious metals trading industry standards.
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    \19\ Members of the LPPM typically trade with each other and 
with their clients on a principal-to-principal basis. All risks, 
including those of credit, are between the two parties to a 
transaction. The OTC market allows flexibility unlike a futures 
exchange, where trading is based around standard contract units, 
settlement dates and delivery specifications. It also provides 
confidentiality, as transactions are conducted solely between the 
two principals involved.
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    In the OTC market, platinum and palladium that meet the 
specifications for weight, dimensions, fineness (or purity), 
identifying marks (including the assay stamp of an LPPM-acceptable 
refiner) and appearance set forth in the LPPM ``London/Zurich Good 
Delivery List'' are a standard ``Good Delivery plate or ingot.'' A Good 
Delivery plate or ingot must contain between 32.151 troy ounces and 
192.904 troy ounces of platinum or palladium with a minimum fineness 
(or purity) of 999.5 parts per 1,000. A Good Delivery plate or ingot 
must also bear the stamp of one of the refiners listed on the LPPM-
approved list.
Platinum Supply and Demand
    According to the Registration Statement, gross platinum demand rose 
by 2% in 2011 to 8.1 million ounces largely as a result of heavy 
purchasing by the glass industry. The price of platinum fell to a two-
year low of $1,364 by the end of 2011 but traded on average at $1,721 
for the year as a whole, 7% higher than in 2010. The price of platinum 
has risen by 3% in 2012 and was $1,445 as at June 3, 2012.
    Global mine production of platinum increased by 7% to 6.5 million 
ounces in 2011. From 2001 to 2011, the level of recycled platinum has 
increased by 1.5 million ounces, which equates to a compound annual 
growth rate of 14%. In 2011, 75% of global platinum mine production was 
from South Africa. The second largest producer in 2011 was Russia, at 
13%.
    The growth in platinum supply over the last four years has largely 
been due to a steady increase in the levels of recycled platinum and 
scrap platinum. In 2011, recycling of platinum rose by 12% to reach 2 
million ounces, with 60% of recycled platinum derived from automobile 
catalytic converters (``Autocatalysts'') and 40% from jewellery. The 
growth in platinum recycling was driven primarily by higher returns of 
end-of-life vehicle catalysts. Scrap and recycled platinum constituted 
24% of overall 2011 platinum supply.
    According to the Registration Statement, demand for platinum is 
driven primarily by several industries and activities, which may be 
categorized as (in order of relative importance) the automotive sector; 
jewellery; other (non-automotive) industrial manufacturing; and 
investment. For example:
     Platinum is a required component in the manufacturing of 
Autocatalysts. Platinum is used to form the surface catalyst upon which 
critical chemical reactions occur, converting exhaust emissions into 
neutral compounds. Diesel-powered vehicles require platinum-based 
Autocatalysts, whereas gasoline vehicle manufacturers have the option 
of using palladium-based Autocatalysts. At present, there are no widely 
used substitutes for platinum or palladium used in Autocatalysts. 
Platinum demand for use in Autocatalysts was 3.1 million ounces in 
2011, or 38% of global demand. The growth in global vehicle output in 
2010 moderated in 2011. Estimated total vehicle production worldwide 
rose by around 2 million units to approximately 80 million units in 
2011. This led to a

[[Page 65734]]

1% increase in platinum demand for the auto industry from 2010 to 2011.
     The second largest source of demand for platinum in 2011 
was jewellery manufacturing, which represented 31% of the global demand 
for platinum. Platinum is sought-after for its rarity, silvery-white 
lustre and resistance to wear and tarnish.
     Industrial manufacturing includes the chemical sector, the 
petroleum refining sector, the electrical sector, the glass 
manufacturing sector, the medical, biomedical and dental sectors, and 
other manufacturing sectors, such as turbines. Total non-automotive 
industrial demand for platinum jumped by 17% to 2.1 million ounces in 
2011. Demand for platinum in industrial applications reached 2.1 
million ounces. New capacity installations, together with pre-buying in 
anticipation of future growth, increased platinum demand in the glass 
sector by 44% to 555,000 ounces. Expansions in the petrochemical 
industry in developing markets and construction of new refining 
capacity in Europe and North America also drove up demand.
     The investment sector includes the investment and trading 
activities of both professional and private investors and speculators. 
These participants range from large hedge funds and mutual funds to 
day-traders on futures exchanges and retail-level coin collectors. 
Physically-backed investment demand, comprising coins, bars, 
investments held in allocated accounts, and exchange traded products, 
fell 30% to 460,000 ounces, representing approximately 6% of total 
reported demand in 2011. Inflows tended to coincide with periods of 
rising prices.
Palladium Supply and Demand
    According to the Registration Statement, the palladium market was 
in a 1.3 million ounce surplus in 2011. Gross demand fell 13% to 8.5 
million ounces due to sharply negative investment demand.
    During 2011, 775,000 ounces of palladium were sold from Russian 
state inventories, although shipments from this source were the lowest 
in five years. The fall in Russian state stock shipments largely offset 
growth in output from North America and Zimbabwe as operations ramped 
up to full production. In aggregate, 2011 mine production and stock 
sales of palladium were flat at 7.4 million ounces compared to 2010.
    During 2011, mine production of palladium was dominated by Russia 
and South Africa, which represented 41% and 39% of global production 
(excluding supply from Russia stock sales and recycled palladium), 
respectively. Mine production in 2011 was 6.6 million ounces, which 
compares to a 10-year average mine production of 6.8 million ounces.
    The supply of scrap and recycled palladium has grown at a compound 
annual growth rate of 24% since 2001 and represented 24% of overall 
palladium supply in 2011. Seventy-one percent of recycled palladium 
came from Autocatalysts in 2011 and 20% came from waste electrical 
equipment.
    According to the Registration Statement, demand for palladium is 
driven primarily by several industries and activities, which may be 
categorized as (in order of relative importance) the automotive sector; 
other (non-automotive) industrial manufacturing; and jewellery. For 
example:
     Palladium, like platinum, is a key component in the 
manufacturing of automobiles, primarily through its use in gasoline 
Autocatalysts. Like platinum, palladium can be used to form the surface 
catalyst upon which critical chemical reactions occur converting 
exhaust emissions into neutral compounds. In this regard, palladium is 
the only known substitute for platinum. For the past decade, the 
largest source of demand for palladium has consistently come from the 
auto industry (71% of 2011 demand). Given palladium's historically 
lower price compared to platinum, auto industry manufacturers have 
shifted from platinum to palladium where practical in Autocatalyst 
manufacturing. Demand for palladium in the automotive sector increased 
in 2011 by 8% over 2010 and, with the exception of the recession years 
of 2008 and 2009, has increased globally over the past nine years. 
Palladium demand in 2011 was driven by growth in vehicle output in all 
regions apart from Japan, and greater use of palladium in light duty 
diesel after-treatment systems.
     Industrial manufacturing includes demand primarily from 
the electronics, dental, and chemical industries. Electronics 
manufacturing includes palladium resistors and capacitors which are 
used in the manufacturing of circuit boards. Industrial demand for 
palladium strengthened overall in 2011, increasing by 15,000 ounces to 
2.5 million ounces. Rising levels of personal wealth in China and other 
emerging markets increased the demand for synthetic fibres and 
plastics, leading in turn to the expansion of bulk chemical production 
in 2011, which require palladium-containing catalysts in the 
manufacturing process and plastics. Recovering demand in export markets 
as well as government strategy in China to increase domestic 
consumption led to increased demand for process catalyst charges.
     In 2011, jewellery comprised 6.0% of the total demand for 
palladium. Purchasing of palladium by the jewellery industry globally 
declined by 90,000 ounces in 2011 to 505,000 ounces, as the metal 
suffered from a lack of positioning and effective marketing in China. 
Palladium is sought-after for use in jewellery since it does not 
tarnish or wear out.
    Elevated palladium prices for much of 2011 put many investors in 
exchange- traded funds in a position to sell at a profit, resulting in 
total disinvestment of 565,000 ounces in 2011.
Operation of the Trust
    According to the Registration Statement, the Trust will not hold or 
trade in commodity futures contracts regulated by the Commodity 
Exchange Act, as administered by the U.S. Commodity Futures Trading 
Commission (``CFTC''). According to the Registration Statement, the 
Trust is not a commodity pool for purposes of the Commodity Exchange 
Act,\20\ and none of the Manager, the Trustee or the underwriters is 
subject to regulation by the CFTC as a commodity pool operator or a 
commodity trading adviser in connection with the Units.
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    \20\ 7 U.S.C. 1 et seq.
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    According to the Registration Statement, the Trust was created to 
invest and hold substantially all of its assets in physical platinum 
and palladium bullion. The Trust intends to invest primarily in long-
term holdings of unencumbered, fully allocated, physical platinum and 
palladium bullion and will not speculate with regard to short-term 
changes in platinum and palladium prices.
    The Trust is authorized to issue an unlimited number of Units in 
one or more classes and series of Units.
    Except with respect to cash held by the Trust to pay expenses and 
anticipated cash redemptions, the Trust expects to own only physical 
platinum and palladium bullion that is certified as conforming to the 
Good Delivery Standard of the LPPM (``Good Delivery''). The Manager 
intends to invest and hold approximately 97% of the total net assets of 
the Trust in physical platinum and palladium bullion, which will be 
stored in Good Delivery plate and/or ingot form.\21\ The

[[Page 65735]]

Trust will purchase approximately equal dollar amounts of each of 
physical platinum and palladium bullion.
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    \21\ The Trust's Investment and Operating Restrictions provide 
that the Trust will invest in and hold a minimum of 90% of the total 
net assets of the Trust in physical platinum and palladium bullion 
in Good Delivery plate or ingot form and hold no more than 10% of 
the total net assets of the Trust, at the discretion of the Manager, 
in physical platinum and palladium bullion (in Good Delivery plate 
or ingot form or otherwise), debt obligations of or guaranteed by 
the Government of Canada or a province of Canada or by the 
Government of the United States of America or a state thereof, 
short-term commercial paper obligations of a corporation or other 
person whose short-term commercial paper is rated R-1 (or its 
equivalent, or higher) by DBRS Limited or its successors or assigns 
or F-1 (or its equivalent, or higher) by Fitch Ratings or its 
successors or assigns or A-1 (or its equivalent, or higher) by 
Standard & Poor's or its successors or assigns or P-1 (or its 
equivalent, or higher) by Moody's Investor Service or its successors 
or assigns, interest-bearing accounts and short-term certificates of 
deposit issued or guaranteed by a Canadian chartered bank or trust 
company, money market mutual funds, short-term government debt or 
short-term investment grade corporate debt, or other short-term debt 
obligations approved by the Manager from time to time (for the 
purpose of this paragraph, the term ``short-term'' means having a 
date of maturity or call for payment not more than 182 days from the 
date on which the investment is made), except during the 60-day 
period following the closing of the offering or additional offerings 
or prior to the distribution of the assets of the Trust.
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    The Trust will not invest in platinum or palladium certificates, 
futures or other financial instruments that represent platinum or 
palladium or that may be exchanged for platinum or palladium and will 
not purchase, sell or hold derivatives.
    According to the Registration Statement, to purchase physical 
platinum and palladium bullion, the Manager will create an order 
internally and send it for pre-trade compliance review. Once the order 
has been approved, the order will be placed by one of the Manager's 
traders. Orders generally will be placed by phone and through 
electronic dealing systems. Lists of the plates and ingots available to 
fill the buy order will be sent to the Manager by a bullion broker with 
whom the Manager has an established relationship. The trade will be 
required to be effected for Good Delivery plates or ingots, as the case 
may be, and executed in accordance with the LPPM compliance standards. 
Once executed, the order will be allocated and sent for post-trade 
compliance monitoring and approval. Upon approval, the Mint or its sub-
custodian, or both, will be notified and the trade will be settled 
between the Mint and the bullion broker. The bullion broker will 
arrange for the delivery of the Good Delivery plate or ingot, as the 
case may be, to the destination specified by the purchaser, which will 
be the Mint or its sub-custodian with respect to physical platinum and 
palladium bullion purchased by the Trust. Once the Mint takes delivery 
of physical platinum and palladium bullion (at the Mint or at the 
Mint's sub-custodian), it will be immediately fully allocated to the 
Trust's account and segregated from non-Trust assets held by the Mint 
or such sub-custodian of the Mint. The Manager expects to complete the 
purchase of physical platinum and palladium bullion within 20 days on 
which the Exchange or the TSX is open for trading (``Business Days'') 
after the completion of the offering. While the Manager will work with 
a bullion broker with whom the Manager has an established relationship, 
the Manager has represented that it will make all purchases of physical 
platinum and palladium bullion on an arms-length basis and will not 
make purchases from affiliated entities.
    The Manager intends to store physical platinum bullion acquired by 
the Trust at the Mint. The Manager intends to purchase with proceeds of 
the offering as much platinum bullion as is practicable in Canada or 
the United States. However, given the amount of physical platinum 
bullion generally available for purchase in Canada and the United 
States, the Manager expects that a significant portion of such physical 
platinum bullion will be purchased in the London markets. The Manager 
intends to store physical palladium bullion acquired by the Trust at 
Via Mat in London or Zurich, as certain taxes are payable in respect of 
palladium bullion delivered in Canada (other than for immediate 
export). The Manager intends to purchase with proceeds of the offering 
palladium bullion in the London and North American markets. While there 
is generally no difference between the purchase prices of platinum and 
palladium in the North American and London markets (platinum and 
palladium trade in both the North American and London markets in US 
dollars), transportation costs payable by the Trust may be 
substantially higher for platinum bullion purchased in the London 
market and stored in Canada and for palladium bullion purchased in 
North America and stored in London or Zurich. Based on current rates, 
the Manager expects that transportation costs from London to the Mint 
would be approximately $0.20 to $0.30 per ounce for platinum bullion 
(for air transportation), and transportation costs from North America 
to Via Mat in London or Zurich would be no more than $0.10 per ounce 
for palladium bullion, assuming current market prices.
    The physical platinum and palladium bullion will be subject to a 
physical count by a representative of the Manager periodically on a 
spot inspection basis and subject to audit procedures by the Trust's 
external auditors on at least an annual basis.
Secondary Market Trading
    According to the Registration Statement, the Units will generally 
trade at a premium or discount to the net asset value (``NAV'') per 
Unit, depending on relative supply and demand for the Units in the 
secondary market. The amount of the discount or premium in the trading 
price relative to the NAV per Unit may be influenced by non-concurrent 
trading hours between the LPPM, which is the main global exchange on 
which platinum and palladium for physical delivery is traded, and the 
Exchange and the TSX. Liquidity in the global platinum and palladium 
markets will be reduced after the close of regular trading hours on the 
LPPM at 4:00 p.m. Western European time (11:00 a.m. Eastern time 
(``E.T.'')). The Units will trade on the Exchange and the TSX until 
4:00 p.m. E.T. As a result of the reduced liquidity in the global 
platinum and palladium markets after the close of regular trading hours 
on the LPPM, trading spreads, and the resulting premium or discount to 
the NAV per Unit, may widen between the close of regular trading hours 
for the bullion on LPPM and 4:00 p.m. E.T.
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. The 
Trust may not issue additional units of the class offered in the 
offering following the completion of the offering except (i) if the net 
proceeds per unit to be received by the Trust are not less than 100% of 
the most recently calculated NAV per Unit 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. 
According to the Registration Statement, the Trust does not intend to 
issue new Units, or redeem existing Units, on a day-to-day basis.
    Unitholders may redeem their Units on a monthly basis, as described 
below.
Redemption for Physical Platinum and Palladium
    According to the Registration Statement, subject to the terms of 
the Trust Agreement, a Unitholder may redeem Units for physical 
platinum and palladium bullion, provided the

[[Page 65736]]

redemption request is for a minimum of 25,000 Units. Units redeemed for 
physical platinum and palladium bullion will have a redemption value 
equal to the aggregate value of the NAV per Unit of the redeemed Units 
on the last day of the month on which the Exchange is open for trading 
in the month during which the redemption request is processed (less 
applicable expenses described below) (the ``Redemption Amount'').
    The amount of physical platinum and palladium bullion a redeeming 
Unitholder is entitled to receive will be determined by the Manager, 
who will allocate the Redemption Amount to physical platinum and 
palladium bullion in direct proportion to the value of physical 
platinum and palladium bullion held by the Trust at the time of 
redemption (the ``Bullion Redemption Amount''). The Manager will 
determine the quantity of each particular metal to be delivered to a 
redeeming Unitholder based on the applicable Bullion Redemption Amount 
and the sizes of plates and ingots of that metal that are held by the 
Trust on the redemption date. A redeeming Unitholder may not receive 
physical platinum and palladium bullion in the proportions then held by 
the Trust and, if the Trust does not have a Good Delivery plate or 
ingot, as the case may be, of a particular metal in inventory of a 
value equal to or less than the applicable Bullion Redemption Amount, 
the redeeming Unitholder will not receive any of that metal.\22\ Any 
Bullion Redemption Amount in excess of the value of the Good Delivery 
plates or ingots, as the case may be, of the particular metal to be 
delivered to the redeeming Unitholder will be paid in cash, as such 
excess amount will not be combined with any excess amounts in respect 
of the other metal for the purpose of delivering additional physical 
platinum and palladium bullion.
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    \22\ According to the Manager, it views this language as a 
binding commitment to deliver, in the event a Unitholder is 
redeeming units for bullion, to such Unitholder an amount of 
platinum and palladium in accordance with the size of plates and 
ingots held by the Trust; in no event would the Manager determine to 
not deliver to such Unitholder bullion if there are plates and 
ingots available in a size that permits such redemption to be 
satisfied in bullion, subject to the applicable bullion redemption 
requirements.
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    A Unitholder redeeming Units for physical platinum and palladium 
bullion will be responsible for expenses incurred by the Trust in 
connection with such redemption. Unitholders will be informed of the 
exact amount of expenses to be incurred in connection with the 
redemption on the notice from the Trust's registrar and transfer agent 
to the redeeming Unitholder that informs the Unitholder that the 
redemption notice was received and determined to be complete.\23\ A 
Unitholder that owns a sufficient number of Units who desires to 
exercise redemption privileges for physical platinum and palladium 
bullion must do so by instructing his, her or its broker, who must be a 
direct or indirect participant of Clearing and Depository Services, 
Inc. (``CDS'') or The Depository Trust Company (``DTC''), to withdraw 
such position with CDS or DTC, as applicable, and to deliver to the 
Trust's transfer agent on behalf of the Unitholder a written notice of 
the Unitholder's intention to redeem Units for physical platinum and 
palladium bullion. A bullion redemption notice must be received by the 
Trust's transfer agent no later than 4:00 p.m., E.T., on the 15th day 
of the month in which such 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 bullion redemption notice received after 
such time will be processed in the next month.
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    \23\ Because the exact amount of expenses associated with a 
redemption cannot be determined until certain facts are known, e.g., 
the amount of bullion to be delivered and the delivery destination, 
it is not possible to provide the exact amount of redemption 
expenses to a redeeming Unitholder until the bullion redemption 
notice has been received and processed by the Trust's registrar and 
transfer agent. However, barring unforeseen circumstances, a 
redeeming Unitholder will receive the notice confirming the bullion 
redemption request, which will contain the approximate amount of 
bullion to be received, before the bullion is sent.
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    Physical platinum and palladium bullion received by a Unitholder as 
a result of a redemption of Units will be transported by armored 
transportation service carrier pursuant to instructions provided by the 
Unitholder to the Manager, provided that those instructions are 
acceptable to the armored transportation service carrier. The release 
of the physical platinum and palladium bullion by the Mint and/or its 
sub-custodian to the armored transportation service carrier will 
constitute delivery of such physical platinum and palladium bullion by 
the Trust to the Unitholder and the payment of the portion of the 
applicable Bullion Redemption Amount that is to be paid in physical 
platinum and palladium bullion.\24\ The armored transportation service 
carrier will receive physical platinum and palladium bullion in 
connection with a redemption of Units approximately 21 Business Days 
after the end of the month in which the redemption notice is processed. 
As directed by the Manager, any cash to be received by a redeeming 
Unitholder in connection with a redemption of Units for physical 
platinum and palladium bullion will be delivered or caused to be 
delivered by the Manager to the Unitholder's account within 21 Business 
Days after the month in which the redemption is processed.
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    \24\ Physical platinum and palladium bullion transported to an 
institution located in North America authorized to accept and hold 
Good Delivery plates and ingots will likely retain its Good Delivery 
status while in the custody of such institution. Physical platinum 
and palladium bullion transported pursuant to a Unitholder's 
delivery instruction to a destination other than an institution 
located in North America authorized to accept and hold Good Delivery 
plates and ingots will no longer be deemed Good Delivery once 
received by the Unitholder.
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Redemption of Units for Cash
    According to the Registration Statement, Unitholders whose Units 
are redeemed for cash will be entitled to receive a redemption price 
per Unit equal to 95% of the lesser of (i) the volume-weighted average 
trading price of the Units traded on the Exchange or, if trading has 
been suspended on the Exchange, the volume-weighted average trading 
price of the Units traded on the TSX, for the last five days on which 
the respective stock exchange is open for trading for the month in 
which the redemption request is processed and (ii) the NAV per Unit of 
the redeemed Units, on the last day of such month on which the Exchange 
is open for trading. Cash redemption proceeds will be transferred to a 
redeeming Unitholder approximately three Business Days after the end of 
the month in which such redemption request is processed by the Trust.
    A cash redemption notice must be received by the Trust's transfer 
agent no later than 4:00 p.m., E.T., on the 15th day of the month in 
which the cash 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 cash redemption notice received after such time will 
be processed in the next month.
Suspension of Redemptions
    According to the Registration Statement, the Manager, on behalf of 
the Trust, may suspend the right of Unitholders to request a redemption 
of their Units or postpone the date of delivery or payment of the 
redemption proceeds (whether in physical platinum and palladium bullion 
or cash, or both, as the case may be) with the prior approval of 
Canadian securities regulatory authorities having jurisdiction, where 
required, for any period during which the Manager

[[Page 65737]]

determines that conditions exist which render impractical the sale of 
assets of the Trust or which impair the ability of the Manager to 
determine the value of the assets of the Trust or the redemption amount 
for the Units.
    Pursuant to Sections 5.7(2) and 5.7(3) of National Instrument 81-
102,--Mutual Funds, the Trust must apply to the Ontario Securities 
Commission, the securities regulatory authority for the jurisdiction in 
which the head office of the Trustee is located, for approval to 
suspend redemptions and must concurrently file a copy of the 
application with the securities regulatory authority in each of the 
other Canadian jurisdictions in which the Units will be offered. The 
Trust may suspend redemptions only after the application is approved by 
the Ontario Securities Commission and has not been disallowed by any of 
the other relevant Canadian jurisdictions.\25\
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    \25\ Other Canadian securities regulatory authorities which must 
be notified are as follows: British Columbia Securities Commission, 
Alberta Securities Commission, Saskatchewan Securities Commission, 
The Manitoba Securities Commission, Autorite des marches financiers, 
New Brunswick Securities Commission, Nova Scotia Securities 
Commission, Service Newfoundland and Labrador, Prince Edward Island 
Securities Office, Office of the Attorney General, Superintendent of 
Securities, Northwest Territories, Superintendent of Securities, 
Yukon Territory, and Superintendent of Securities, Nunavut.
---------------------------------------------------------------------------

    In the event of any such suspension, the Manager will issue a press 
release announcing the suspension and will advise the Trustee, the 
Trust's Valuation Agent and any other agents appointed by the Manager, 
as applicable. The suspension may apply to all requests for redemption 
received prior to the suspension, but as for which payment has not been 
made, as well as to all requests received while the suspension is in 
effect. All Unitholders making such requests will be advised by the 
Manager of the suspension and that the redemption will be effected at a 
price determined on the first valuation date that the NAV per Unit is 
calculated following the termination of the suspension. All such 
Unitholders will have, and will be advised that during such suspension 
of redemptions they have, the right to withdraw their requests for 
redemption. The suspension will terminate in any event on the first 
Business Day on which the condition giving rise to the suspension has 
ceased to exist or when the Manager has determined that such condition 
no longer exists, provided that no other condition under which a 
suspension is authorized then exists, at which time the Manager will 
issue a press release announcing the termination of the suspension and 
will advise the Trustee, the Trust's Valuation Agent and any other 
agents appointed by the Manager, as applicable. Subject to applicable 
Canadian and U.S. securities laws, any declaration of suspension made 
by the Manager, on behalf of the Trust, will be conclusive.
Termination Events
    The Trust does not have a fixed termination date but will be 
terminated and dissolved in the event any of the following occurs:
    1. There are no outstanding Units;
    2. The Trustee resigns or is removed and no successor trustee is 
appointed by the Manager by the time the resignation or removal becomes 
effective;
    3. The Manager resigns and no successor manager is appointed by the 
Manager and approved by Unitholders by the time the resignation becomes 
effective;
    4. The Manager is, in the opinion of the Trustee, in material 
default of its obligations under the trust agreement and such default 
continues for 120 days from the date the Manager receives notice of 
such default from the Trustee and no successor manager has been 
appointed by the Unitholders;
    5. The Manager has been declared bankrupt or insolvent or has 
entered into a liquidation or winding-up, whether compulsory or 
voluntary (and not merely voluntary liquidation for the purposes of 
amalgamation or reconstruction);
    6. The Manager makes a general assignment for the benefit of its 
creditors or otherwise acknowledges its insolvency; or
    7. 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, at any time 
terminate and dissolve the Trust, without Unitholder approval, if, in 
the opinion of the Manager, after consulting with the independent 
review committee, the NAV 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. To the extent such termination of the Trust 
in the discretion of the Manager may involve a matter that would be a 
``conflict of interest matter'' as set forth under applicable Canadian 
securities legislation, the matter will be referred by the Manager to 
the Trust's independent review committee for its recommendation. In 
connection with the termination of the Trust, the Trust will, 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.
Valuation of Platinum and Palladium and Definition of NAV
    The Valuation Agent will calculate the NAV for each class of Units 
as of 4:00 p.m., E.T., on each Business Day. The NAV as of the 
valuation time on each Business Day will be the amount obtained by 
deducting from the aggregate fair market value of the assets of the 
Trust as of such date an amount equal to the fair value of the 
liabilities of the Trust (excluding all liabilities represented by 
outstanding Units, if any) as of such date.\26\ Registration or 
transfers of the Units may be made through CDS and/or DTC, each of 
which hold the Units on behalf of its participants (i.e., brokers), 
which in turn may hold the Units on behalf of their customers.
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    \26\ According to the Trust, the Trust is a mutual fund under 
applicable Canadian securities legislation and must calculate its 
NAV pursuant to Part 14 of National Instrument 81-106--Investment 
Fund Continuous Disclosure (``NI 81-106''), a rule applicable to 
Canadian mutual funds and administered by Canadian securities 
regulatory authorities. Pursuant to Subsection 14.2(1) of NI 81-106, 
the Trust must subtract the ``fair value'' of its liabilities from 
the fair value of its assets when calculating its NAV. Subsection 
14.2(1.2) of NI 81-106 defines fair value as (a) the market value 
based on reported prices and quotations in an active market; or (b) 
if the market value is not available, or the Manager believes that 
it is unreliable, a value that is fair and reasonable in all the 
relevant circumstances, and requires the Manager to establish and 
maintain appropriate written policies and procedures for determining 
fair value of the Trust's assets and liabilities and to consistently 
follow those policies and procedures.
---------------------------------------------------------------------------

    Prior to commencement of trading in the Units, the Exchange will 
obtain a representation from the Trust that the NAV per Unit will be 
calculated daily and will be made available to all market participants 
at the same time.
Intraday Indicative Value
    The Trust Web site will provide an IIV per unit for the Units, as 
calculated by a third party financial data provider during the 
Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m., E.T.). \27\ 
The IIV will be calculated by:
---------------------------------------------------------------------------

    \27\ 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.
---------------------------------------------------------------------------

    1. Multiplying the total number of ounces of physical platinum 
bullion held by the Trust as of the close of

[[Page 65738]]

business on the previous day with the mid-price of spot platinum per 
ounce (the ``Platinum IIV'');
    2. Multiplying the total number of ounces of physical palladium 
bullion held by the Trust as of the close of business on the previous 
day with the mid-price of spot palladium per ounce (the ``Palladium 
IIV'');
    3. Adding the Platinum IIV to the Palladium IIV and the fair market 
value of the assets of the Trust that are not physical platinum or 
palladium bullion as of the close of business on the previous day\28\ 
(such sum, the ``IIV Assets'');
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    \28\ The fair market value of the non-bullion assets of the 
Trust will not change significantly day over day and should be 
relatively small in relation to the value of the Trust's bullion 
assets. Therefore the previous' day closing value of the Trust's 
non-bullion assets will be used as approximation of the current 
day's value.
---------------------------------------------------------------------------

    4. Subtracting the fair market value of the Trust's total 
liabilities (excluding all liabilities represented by outstanding 
Units, if any) as of the close of business on the previous day \29\ 
from the IIV Assets; and
---------------------------------------------------------------------------

    \29\ The value of the total liabilities of the Trust will not 
change significantly day over day and should be relatively small in 
relation to the value of the Trust's bullion assets. Therefore the 
previous' day closing value of the Trust's total liabilities will be 
used as an approximation of the current day's value.
---------------------------------------------------------------------------

    5. Dividing the result by the number of Units of the Trust 
outstanding as of the close of business on the previous day.
Availability of Information
    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 \30\ 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 Unitholders. The Trust Web site will provide 
the last sale price of the Units as traded in the U.S. market, as well 
as a breakdown, provided on a daily basis, of the holdings of the Trust 
by metal type. The IIV will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the NYSE Arca Core 
Trading Session.
---------------------------------------------------------------------------

    \30\ The bid-ask price of the Trust is determined using the 
midpoint of the highest bid and lowest offer on the Consolidated 
Tape as of the time of calculation of the closing day NAV.
---------------------------------------------------------------------------

    Currently, the Consolidated Tape Plan does not provide for 
dissemination of the spot price of a commodity, such as platinum or 
palladium, over the Consolidated Tape. However, there will be 
disseminated over the Consolidated Tape the quotation and last sale 
price for the Units, as is the case for all equity securities traded on 
the Exchange. In addition, there is a considerable amount of platinum 
and palladium price and platinum and palladium market information 
available on public Web sites and through professional and subscription 
services.
    Investors may obtain on a 24-hour basis platinum or palladium 
pricing information based on the spot price for an ounce of platinum or 
palladium 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 
platinum and palladium and last sale prices of platinum and palladium 
futures, as well as information about news and developments in the 
platinum and palladium market. Reuters and Bloomberg also offer a 
professional service to subscribers for a fee that provides information 
on platinum and palladium prices directly from market participants. 
ICAP plc provides an electronic trading platform called EBS for the 
trading of spot platinum and palladium, as well as a feed of real-time 
streaming prices, delivered as record-based digital data from the EBS 
platform to its customer's market data platform via Bloomberg or 
Reuters.
    Complete real-time data for platinum and palladium 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 platinum and palladium, 
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 
www.thebulliondesk.com.
    The Trust's daily (or as determined by the Manager in accordance 
with the trust agreement) NAV will be posted on the Trust's Web site as 
soon as practicable. In addition, the Exchange will make available over 
the Consolidated Tape quotation information, trading volume, closing 
prices and NAV per Unit from the previous day.
Criteria for Initial and Continued Listing
    The Trust and the Units will be subject to the relevant criteria in 
NYSE Arca Equities Rule 8.201(e) for initial and continued listing of 
the Units.
    A minimum of 1,000,000 Units will be required to be outstanding at 
the start of trading. The minimum number of Units required to be 
outstanding is comparable to requirements that have been applied to 
previously-listed units of Sprott Physical Gold Trust.\31\ The Exchange 
believes that the anticipated minimum number of Units outstanding at 
the start of trading is sufficient to provide adequate market 
liquidity.\32\
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    \31\ See supra note 6.
    \32\ The Exchange notes that a minimum of 1,000,000 Units will 
be outstanding at the start of trading, while under NYSE Arca 
Equities Rule 8.201(e)(2)(ii) the Exchange will consider the 
suspension of trading in, or removal from listing of, units if, 
following the initial 12 month period following commencement of 
trading on the Exchange, a trust has fewer than 50,000 receipts 
issued and outstanding.
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Trading Rules
    The Exchange deems the Units to be equity securities, thus 
rendering trading in the Trust 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. As provided in NYSE Arca Equities 
Rule 7.6, Commentary .03, the minimum price variation (``MPV'') for 
quoting and entry of orders in equity securities traded on the NYSE 
Arca Marketplace is $0.01, with the exception of securities that are 
priced less than $1.00 for which the MPV for order entry is $0.0001.
    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 platinum or 
palladium 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 trading 
in the Units is halted on TSX. In addition, trading in Units will be 
subject to trading halts caused by extraordinary

[[Page 65739]]

market volatility pursuant to the Exchange's ``circuit breaker'' 
rule.\33\ The Exchange will halt trading of the Units on the Exchange 
in the event the Trust directs the Trust's Valuation Agent to suspend 
the calculation of the value of the net assets of the Trust and the 
NAV. The Exchange may halt trading during the day in which an 
interruption occurs to the dissemination of the IIV, as described 
above. If the interruption to the dissemination of the IIV persists 
past the trading day in which it occurs, the Exchange will halt trading 
no later than the beginning of the trading day following the 
interruption. In addition, 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.
---------------------------------------------------------------------------

    \33\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

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.
    Further, NYSE Arca Equities Rule 8.201 sets forth certain 
restrictions on exchange-traded product (``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 
platinum and palladium, 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, and its 
affiliates, in the Units to 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 
components of the related products, any physical asset or commodity 
underlying the product, applicable currencies, underlying indexes, 
related futures or options on futures, and any related derivative 
instruments (including the Units).
    As a general matter, the Exchange has regulatory jurisdiction over 
its ETP Holders and their associated persons, which include any person 
or entity controlling an ETP Holder. 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.
    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 platinum and 
palladium, platinum or palladium futures contracts, options on platinum 
or palladium futures, or any other platinum or palladium 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, including the COMEX.\34\
---------------------------------------------------------------------------

    \34\ A list of ISG members is available at http://www.isgportal.org. The Investment Industry Regulatory Organization 
of Canada and the New York Mercantile Exchange, of which the COMEX 
is a division, are ISG members. However, TOCOM is not an ISG member 
and the Exchange does not have in place a comprehensive surveillance 
sharing agreement with such market.
---------------------------------------------------------------------------

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 
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) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Units prior to or concurrently with the 
confirmation of a transaction; (4) the possibility that trading spreads 
and the resulting premium or discount on the Units may widen as a 
result of reduced liquidity of platinum and palladium trading during 
the Core and Late Trading Sessions after the close of the major world 
platinum and palladium markets; and (5) 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. The Exchange notes that investors 
purchasing Units directly from the Trust will receive a prospectus. 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 platinum and palladium, that the Commission has no 
jurisdiction over the trading of platinum and palladium as a physical 
commodity, and that the CFTC has regulatory jurisdiction over the 
trading of platinum and palladium futures contracts and options on 
platinum and palladium futures contracts.
    The Information Bulletin will also discuss any relief, if granted, 
by the Commission or the staff from any rules under the Exchange Act.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \35\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Units will be listed and traded on the Exchange pursuant to the initial 
and continued listing criteria in NYSE Arca Equities Rule 8.201. The 
Exchange has in place surveillance procedures that are adequate to 
properly monitor trading in the Units in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws. The Exchange may obtain information via ISG from other 
exchanges that are members of ISG or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement, including 
COMEX.

[[Page 65740]]

    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
There is a considerable amount of platinum and palladium price and 
platinum and palladium market information available on public Web sites 
and through professional and subscription services. Investors may 
obtain on a 24-hour basis platinum or palladium pricing information 
based on the spot price for an ounce of platinum or palladium from 
various financial information service providers. Complete real-time 
data for platinum and palladium futures and options prices traded on 
the COMEX are available by subscription from Reuters and Bloomberg. In 
addition, the London AM Fix and London PM Fix are publicly available at 
no charge at www.thebulliondesk.com. The Trust's daily (or as 
determined by the Manager in accordance with the trust agreement) NAV 
will be posted on the Trust's Web site as soon as practicable. The 
Trust's Web site will provide an IIV per Unit, as calculated by a third 
party financial data provider during the Exchange's Core Trading 
Session. The IIV will be widely disseminated by one or more major 
market data venders at least every 15 seconds during the NYSE Arca Core 
Trading Session. The Trust's Web site will also provide the Trust's 
prospectus, as well as the two most recent reports to Unitholders. In 
addition, the Exchange will make available over the Consolidated Tape 
quotation information, trading volume, closing prices and NAV per Unit 
from the previous day.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
additional types of Commodity-Based Trust Shares that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. As noted above, the Exchange has in place surveillance 
procedures relating to trading in the Units and may obtain information 
via ISG from other exchanges that are members of ISG or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement. In addition, as noted above, investors will have ready 
access to information regarding platinum and palladium pricing and 
platinum and palladium futures information.

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 Exchange 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 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment No. 1, is consistent with the Exchange 
Act. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2012-111 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-2012-111. This 
file number should be included on the subject line if email is used.

    To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. 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-
NYSEArca-2012-111, and should be submitted on or before November 20,  
2012.
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    \36\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-26589 Filed 10-29-12; 8:45 am]
BILLING CODE 8011-01-P


