
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26534-26536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11750]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80840; File No. SR-NYSEArca-2017-33]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 2 Thereto, To List 
and Trade Shares of the Euro Gold Trust, Pound Gold Trust, and the Yen 
Gold Trust Under NYSE Arca Equities Rule 8.201

June 1, 2017.

I. Introduction

    On March 31, 2017, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
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 (``Shares'') of the Euro Gold Trust, Pound Gold 
Trust, and the Yen Gold Trust (each a ``Fund'' and, collectively, the 
``Funds'') under NYSE Arca Equities Rule 8.201. On April 12, 2017, the 
Exchange filed Amendment No. 1 to the proposal, which amended and 
replaced the proposed rule change in its entirety. The proposed rule 
change, as modified by Amendment No. 1, was published for comment in 
the Federal Register on April 19, 2017.\3\ On May 23, 2017, the 
Exchange filed Amendment No. 2 to the proposed rule change,\4\ which 
amended and replaced the proposed rule change as modified by Amendment 
No. 1. The Commission has not received any comments on the proposed 
rule change. This order approves the proposed rule change, as modified 
by Amendment No. 2.
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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. 80457 (April 13, 
2017), 82 FR 18492.
    \4\ In Amendment No. 2, the Exchange: (1) Described further the 
methodology for each underlying index; (2) provided additional 
information regarding Solactive AG, the ``Index Provider;'' (3) 
further supported its position that market makers in the Shares will 
be able to trade the Shares at prices that are not at a material 
discount or premium to net asset value (``NAV'') per Share; and (4) 
made additional statements regarding the continued listing 
requirements applicable to the Shares. The amendments to the 
proposed rule change are available at: https://www.sec.gov/comments/sr-nysearca-2017-33/nysearca201733.htm. Amendment No. 2 is not 
subject to notice and comment because it is a technical amendment 
that does not materially alter the substance of the proposed rule 
change or raise any novel regulatory issues.
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II. The Description of the Proposed Rule Change, as Modified by 
Amendment No. 2 \5\
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    \5\ A more detailed description of the Funds, the Shares, the 
Indexes and the Gold Delivery Agreement (as defined in the Notice), 
as well as investment risks, creation and redemption procedures, NAV 
calculation, availability of values and other information regarding 
the Funds, and fees, among other things, is included in the 
Registration Statement, infra note 6, and Amendment No. 2, supra 
note 4.
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    The Exchange proposes to list and trade the Shares, which are a 
series of the World Currency Gold Trust (``Trust''), under NYSE Arca 
Equities Rule 8.201.\6\ Under NYSE Arca Equities Rule 8.201, the 
Exchange may list and trade, or trade pursuant to unlisted trading 
privileges, Commodity-Based Trust Shares.\7\
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    \6\ On March 30, 2017, the Trust filed with the Commission its 
initial registration statement on Form S-1 under the Securities Act 
of 1933 relating to the Funds (File No. 333-217041) (``Registration 
Statement'').
    \7\ 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.
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    The Sponsor of the Funds and the Trust will be WGC USA Asset 
Management Company, LLC (``Sponsor'').\8\ BNY Mellon Asset Servicing, a 
division of The Bank of New York Mellon (``BNYM''), will be the Funds' 
administrator (``Administrator'') and transfer agent and will not be 
affiliated with the Trust, the Funds, or the Sponsor. BNYM will also 
serve as the custodian of the Funds' cash, if any. HSBC Bank plc will 
be the custodian of the Funds' gold.
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    \8\ The Trust will be a Delaware statutory trust consisting of 
multiple series, each of which will issue common units of beneficial 
interest, which represent units of fractional undivided beneficial 
interest in and ownership of such series. The term of the Trust and 
each series will be perpetual (unless terminated earlier in certain 
circumstances). The sole trustee of the Trust will be Delaware Trust 
Company.
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    The Euro Gold Trust will be designed to track the performance of 
the Solactive GLD[supreg] EUR Gold Index, less the expenses of the 
Fund's operations. The Solactive GLD[supreg] EUR Gold Index seeks to 
track the daily performance of a long position in physical gold (as 
represented by the Gold Price, which generally is the London Bullion 
Markets Association (``LBMA'') Gold Price AM \9\) and a short position 
in the Euro (i.e., a long U.S. dollar (``USD'') exposure versus the 
Euro).
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    \9\ The ``LBMA Gold Price'' means the price per troy ounce of 
gold stated in USDs as set via an electronic auction process run 
twice daily at 10:30 a.m. and 3:00 p.m. London time each Business 
Day as calculated and administered by the ICE Benchmark 
Administration Limited and published by the LBMA on its Web site. 
The ``LBMA Gold Price AM'' is the 10:30 a.m. LBMA Gold Price. See 
Amendment No. 2, supra note 4, at 8-9.
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    The Pound Gold Trust will be designed to track the performance of 
the Solactive GLD[supreg] GBP Gold Index, less the expenses of the 
Fund's operations. The Solactive GLD[supreg] GBP Gold Index seeks to 
track the daily performance of a long position in physical gold (as 
represented by the Gold Price) and a short position in the British 
Pound Sterling (i.e., a long USD exposure versus the British Pound 
Sterling). The Yen Gold Trust will be designed to track the performance 
of the Solactive GLD[supreg] JPY Gold Index, less the expenses of the 
Fund's operations. The Solactive GLD[supreg] JPY Gold Index seeks to 
track the daily performance of a long position in physical gold (as 
represented by the Gold Price) and a short position in the Japanese Yen 
(i.e., a long USD exposure versus the Japanese Yen). The Japanese Yen, 
the Euro and the British Pound Sterling are referred to collectively as 
the ``Reference Currencies.'' Each of the Solactive GLD[supreg] EUR 
Gold Index, Solactive GLD[supreg] GBP Gold Index, and Solactive 
GLD[supreg] JPY Gold Index are each referred to as an ``Index,'' and 
are referred to collectively as the ``Indexes.''
    Generally, each Fund's holdings will consist entirely of Gold 
Bullion.\10\ Substantially all of each Fund's Gold Bullion holdings 
will delivered by Authorized Participants \11\ in exchange for Fund 
Shares. The Funds' Gold Bullion holdings will not be managed and the 
Funds will not have any investment discretion. The Funds will not hold 
their respective Reference Currencies. The Funds generally will not 
hold USDs (except from time to time in very limited amounts to pay Fund 
expenses).
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    \10\ Gold Bullion means (a) gold meeting the requirements of 
``London Good Delivery Standards'' or (b) credit to an ``Unallocated 
Account'' representing the right to receive Gold Bullion meeting the 
requirements of London Good Delivery Standards. London Good Delivery 
Standards are the specifications for weight dimensions, fineness (or 
purity), identifying marks and appearance set forth in ``The Good 
Delivery Rules for Gold and Silver Bars'' published by the LBMA. See 
id. at 6, n.19.
    \11\ According to the Exchange, Authorized Participants are the 
only persons that may place orders to create and redeem Creation 
Units and such persons must enter into a Participant Agreement. See 
id. at 18.

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[[Page 26535]]

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposed rule change to list and trade the Shares is consistent with 
the Act and the rules and regulations thereunder applicable to a 
national securities exchange.\12\ In particular, the Commission finds 
that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the 
Act,\13\ which sets forth Congress' 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, last-sale, 
trading volume, and closing price information for the Shares will be 
available over the Consolidated Tape.
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    \12\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Additionally, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Exchange Act,\14\ which 
requires, among other things, that the Exchange's rules be designed to 
prevent fraudulent and manipulative acts and practices, promote just 
and equitable principles of trade, 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 believes that the proposed rule change is reasonably 
designed to promote fair disclosure of information that may be 
necessary to price the Shares appropriately. The Funds' Web site will 
provide an indicative intraday value (``IIV'') per Share, updated every 
15 seconds during the Exchange's Core Trading Session. The IIV will be 
calculated based on the amount of gold held by the Fund, a price of 
gold derived from updated bids and offers indicative of the spot price 
of gold, and an intra-day exchange rate for each Reference Currency 
against the U.S. dollar.\15\ The Exchange states that the IIV will be 
widely disseminated by one or more major market data vendors at least 
every 15 seconds during the Core Trading Session.\16\ Additionally, the 
Funds' Web site will publish the Creation Basket Deposit and the 
NAV.\17\ Each Index value generally will be calculated daily, using the 
daily LBMA Gold Price AM and the Spot Rate \18\ as of 9:00 a.m., London 
time, and it will be available from one or more major market data 
vendors and will be available during the Exchange's Core Trading 
Session.
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    \14\ 15 U.S.C. 78f(b)(5).
    \15\ See Amendment No. 2, supra note 4, at 23, text accompanying 
n.30.
    \16\ See id. at 28.
    \17\ See id. at 23. The Funds also will publish the following 
information on their Web site: (1) The mid-point of the bid-ask 
price as of the close of trading (``Bid/Ask Price''), and a 
calculation of the premium or discount of such price against such 
NAV; (2) 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; (3) the Fund's prospectus, as well as the two most recent 
reports to stockholders; and (4) the last-sale price of the Shares 
as traded in the U.S. market. See id. at 23.
    \18\ A ``Spot Rate'' is the rate at which a Reference Currency 
can be exchanged for USDs on an immediate basis, subject to the 
applicable settlement cycle. See id. at 10.
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    The Exchange represents that market participants will recalculate 
approximate intraday Index values using reliable intraday prices of 
gold and Reference Currencies to identify arbitrage opportunities that 
present themselves during the Exchange's Core Trading Session.\19\ In 
particular, the Exchange states that market makers in the Shares will 
be able to hedge their positions in the Shares by entering into spot 
gold and spot currency transactions in the Reference Currencies. Those 
spot transactions would take place during the Exchange's Core Trading 
session, when the currency and gold markets are highly liquid according 
to the Exchange.\20\ The Exchange expects that those hedging 
transactions will facilitate a market maker's ability to trade Shares 
at a price that is not at a material discount or premium to the 
NAV.\21\
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    \19\ See id. at 22.
    \20\ See id. The Exchange states that there is a considerable 
amount of information about gold and currency prices available on 
public Web sites and through professional and subscription services. 
For example, according to the Exchange, investors may obtain on a 
24-hour basis gold pricing information, as well as pricing 
information for the Reference Currencies from various financial 
information service providers. See id.
    \21\ See id.
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    As mentioned above,\22\ the Index Values, which impact the NAVs of 
the Funds, are calculated using the Spot Rates. Each Spot Rate is 
calculated by WM/Reuters (``WMR'') using observable data from arms-
length transactions between buyers and sellers in the applicable 
currency market.\23\ The Exchange represents that WMR utilizes the same 
methodology to calculate the Spot Rate as it does to calculate the NAV 
for certain issues of Currency Trust Shares, the listing and trading of 
which the Commission approved.\24\ The Commission believes that the 
markets for the Reference Currencies (i.e., the Japanese Yen, Euro and 
British Pound Sterling) and gold are deep and liquid. For these 
reasons, and in light of the Exchange's representations that the Index 
methodologies are transparent,\25\ the Commission presently has no 
reason to believe that the Indexes are susceptible to manipulation.
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    \22\ See supra note 18 and accompanying text.
    \23\ See Amendment No. 2, supra note 4, at 11, n.25.
    \24\ See id. at 11, n.24.
    \25\ See id. at 8.
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    The Commission also believes that the proposal is reasonably 
designed to prevent trading when a reasonable degree of transparency 
cannot be assured. With respect to trading halts, the Exchange may 
consider all relevant factors in exercising its discretion to halt or 
suspend trading in the Shares. The Exchange may halt trading in the 
Shares because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Shares inadvisable. The Exchange will 
halt trading in the Shares if the NAV is not calculated or disseminated 
daily.\26\ The Exchange may halt trading during the day in which an 
interruption occurs to the dissemination of the IIV or the Index value; 
if the interruption to the dissemination of the IIV or the Index value 
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.\27\ In addition, trading in Shares will be subject to 
trading halts caused by extraordinary market volatility pursuant to the 
Exchange's ``circuit breaker'' rule.
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    \26\ See id. at 25.
    \27\ See id.
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    Additionally, the Commission notes that market makers in the Shares 
would be subject to the requirements of NYSE Arca Equities Rule 
8.201(g), which allow the Exchange to ensure that they do not use their 
positions to violate the requirements of Exchange rules or applicable 
federal securities laws.\28\
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    \28\ The Commission notes that Commentary .04 of NYSE Arca 
Equities Rule 6.3 requires that an ETP Holder acting as a registered 
market maker in the Shares, and its affiliates, 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.
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    In support of this proposal, the Exchange has made the following 
additional representations:
    (1) The Shares will be listed and traded on the Exchange pursuant 
to the initial and continued listing criteria in NYSE Arca Equities 
Rule 8.201.
    (2) The Exchange deems the Shares to be equity securities, thus 
rendering the

[[Page 26536]]

trading of the Shares subject to the Exchange's existing rules 
governing the trading of equity securities.
    (3) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.\29\
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    \29\ See id. at 24.
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    (4) The Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.\30\
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    \30\ See id. at 26.
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    (5) The Index Provider, which is not affiliated with a broker-
dealer, has adopted policies and procedures designed to prevent the 
spread of material non-public information about the Indexes.\31\
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    \31\ See id. at 8.
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    (6) Trading in the Shares will be subject to the existing trading 
surveillances administered by the Exchange, as well as cross-market 
surveillances administered by FINRA on behalf of the Exchange, which 
are designed to detect violations of Exchange rules and applicable 
federal securities laws, and that these procedures are adequate to 
properly monitor Exchange trading of the Shares in all trading sessions 
and to deter and detect violations of Exchange rules and federal 
securities laws applicable to trading on the Exchange.\32\
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    \32\ See id. at 25-26. FINRA conducts cross-market surveillances 
on behalf of the Exchange pursuant to a regulatory services 
agreement. The Exchange is responsible for FINRA's performance under 
this regulatory services agreement. See id. at 25, n.33.
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    (7) The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets and other entities that are members of the Intermarket 
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of 
the Exchange, or both, may obtain trading information regarding trading 
in the Shares from such markets and other entities. In addition, the 
Exchange may obtain information regarding trading in the Shares from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.\33\
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    \33\ For a list of the current members of ISG, see 
www.isgportal.org.
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    (8) 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 Shares. 
Specifically, the Information Bulletin will discuss the following: (1) 
The procedures for purchases and redemptions of Shares in Baskets 
(including noting that Shares are not individually redeemable); (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 Shares; (3) ETP Holders deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; (4) the 
possibility that trading spreads and the resulting premium or discount 
on the Shares may widen as a result of reduced liquidity of gold 
trading during the Core and Late Trading Sessions after the close of 
the major world gold markets; and (5) trading information.
    (9) All statements and representations made in this filing 
regarding (a) the description of the applicable Indexes, portfolios or 
reference assets, (b) limitations on Index or portfolio holdings or 
reference assets, or (c) the applicability of Exchange listing rules 
specified in this rule filing constitute continued listing requirements 
for listing the Shares on the Exchange.\34\
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    \34\ See Amendment No. 2, supra note 4, at 26.
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    (10) The issuer has represented to the Exchange that it will advise 
the Exchange of any failure by the Funds to comply with the continued 
listing requirements and, pursuant to its obligations under Section 
19(g)(1) of the Act, the Exchange will monitor for compliance with the 
continued listing requirements. If the Fund is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under the NYSE Arca Equities Rule 5.5(m).
    This approval order is based on all of the Exchange's 
representations, including those set forth above and in Amendment No. 
2, and the Exchange's description of the Funds.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 2, is consistent with Section 
6(b)(5) of the Act \35\ and the rules and regulations thereunder 
applicable to a national securities exchange.
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    \35\ 15 U.S.C. 78f(b)(5).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\36\ that the proposed rule change (SR- NYSEArca-2017-33), 
as modified by Amendment No. 2 be, and it hereby is, approved.
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    \36\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11750 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P


