[Federal Register Volume 83, Number 8 (Thursday, January 11, 2018)]
[Notices]
[Pages 1428-1438]
[FR Doc No: 2018-00307]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82448; File No. SR-NYSEArca-2017-131]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 2 and Order Approving on an Accelerated Basis a
Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade
Shares of the Sprott Physical Gold and Silver Trust Under NYSE Arca
Rule 8.201-E

January 5, 2018.

I. Introduction
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    \76\ Market share is based on Q2 2017 data made publicly
available by Bats (exchange market statistics source), FINRA (ATS
market statistics source), and OTC Markets (ATS market statistics
source).
    \77\ Market share for OTC Link ATS is based on the Q2 2017 data
made publicly available by OTC Markets.
    \78\ The market share is based on Q2 data made publicly
available by Bats.
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    On November 9, 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'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade shares of the
Sprott Physical Gold and Silver Trust under NYSE Arca Rule 8.201-E. The
proposed rule change was published for comment in the Federal Register
on November 24, 2017.\3\ On December 21, 2017, the Exchange filed
Amendment No. 1 to the proposed rule change, which superseded the
proposed rule change as originally filed. On January 4, 2018, the
Exchange filed Amendment No. 2 to the proposed rule change, which
superseded the proposed rule change as modified by Amendment No. 1.\4\
The Commission has not received any comments on the proposed rule
change.

The Commission is publishing this notice to solicit comments on
Amendment No. 2 from interested persons, and is approving the proposed
rule change, as modified by Amendment No. 2, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See See Securities Exchange Act Release No. 82116 (Nov. 17,
2017), 82 FR 55898.
    \4\ In Amendment No. 2, the Exchange: (1) Corrected the
definition for Commodity-Based Trust Shares and supplemented its
representations relating to the continued listing requirements
applicable to the Units (as defined herein); (2) supplemented its
description of the assets other than physical gold and silver
bullion that may be held by the Trust; (3) provided specific
information about the ratio of the value of net assets in gold
bullion to the value of net assets in silver bullion to be held by
the Trust; (4) provided updated information pertaining to the
Arrangement (as defined herein); (5) supplemented its description of
how the Trust's net asset value (``NAV'') will be calculated; (6)
provided information about gold and silver certificates; (7)
supplemented its description of the U.S. futures exchanges and the
Commodities Futures Trading Commission; (8) added a representation
that the NAV will be calculated daily and made available to all
market participants at the same time, and that the IIV (as defined
herein) will be calculated at least every fifteen seconds and made
available to all market participants at the same time; (9) specified
that the Exchange may obtain information regarding trading in gold
and silver futures from markets trading such futures that are
members of ISG (as defined herein) or with which the Exchange has in
place a CSSA (as defined herein), including COMEX (as defined
herein); (10) specified and confirmed that the Units would trade in
all of the Exchange's trading sessions; (11) referenced additional
language to be included in the Information Bulletin relating to the
possibility that trading spreads and the resulting premium or
discount on the Units (as defined herein) may widen as a result of
reduced liquidity of gold or silver trading during the Core and Late
Trading Sessions after the close of the major world gold and silver
markets; and (12) made certain technical, Exchange rule reference,
and other conforming corrections. Amendment No. 2 is available at:
https://www.sec.gov/comments/sr-nysearca-2017-131/nysearca2017131-2873835-161766.pdf.
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II. Description of the Proposed Rule Change, as Modified by Amendment
No. 2

    In its filing with the Commission, the Exchange 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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Under NYSE Arca Rule 8.201-E(a), the Exchange may propose to list
and/or trade pursuant to unlisted trading privileges (``UTP''),
``Commodity-Based Trust Shares.'' \5\ The Exchange proposes to list and
trade shares of the Trust pursuant to NYSE Arca Rule 8.201-E, defined
herein and in the Proxy Circular (defined below) as ``Units.'' \6\ The
Units will be issued in connection with a plan of arrangement under the
Alberta Business Corporations Act (``Arrangement'') involving Sprott
Inc. (``Sprott''), the Trust, Central Fund of Canada Limited (``CFCL'')
and its shareholders, The Central Group Alberta Ltd. (``CGAL'') and its
shareholders and 2070140 Alberta Ltd. (``2070140'') as described in
``Description of the Arrangement'' below.
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    \5\ The term ``Commodity-Based Trust Shares'' means a security
(a) that is issued by a trust that holds a specified commodity
deposited with the trust; (b) that is issued by such Trust in a
specified aggregate minimum number in return for a deposit of a
quantity of the underlying commodity; and (c) that, when aggregated
in the same specified minimum number, may be redeemed at a holder's
request by such trust which will deliver to the redeeming holder the
quantity of the underlying commodity.
    \6\ This Amendment No. 2 to SR-NYSEArca-2017-131 replaces SR-
NYSEArca-2017-131 as originally filed and Amendment 1 thereto and
supersedes such filing in its entirety.
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    Sprott Asset Management LP will be the sponsor and manager of the
Trust (``Manager'').\7\ RBC Investor Services Trust (``RBC'') will be
the trustee and valuation agent of the Trust (``Trustee'' or
``Valuation Agent,'' as the case may be) \8\ and the custodian of the
Trust's assets other than physical gold and silver bullion, comprising
principally cash, cash equivalents,\9\ government debt obligations and
money market mutual funds (``Non-Gold and Silver Custodian'').\10\ The
Trust will appoint a custodian for the Trust's physical gold and silver
bullion (``Gold and Silver Custodian'').\11\ The TSX Trust Company will
be the transfer agent of the Trust (``Transfer Agent'').
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    \7\ The Manager is a limited partnership formed and organized
under the laws of the Province 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 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 Proxy Circular.
The Manager has adopted a policy pursuant to which any 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 is prohibited from investing in the
Trust, and no such decision-making person is permitted to invest in
the Trust for that decision-making person's benefit, directly or
indirectly.
    \8\ RBC is a trust company existing under the laws 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 website.
The Trustee will hold title to the Trust's assets on behalf of the
unitholders of the Trust (``Unitholders'') and will have 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 Proxy Circular.
    \9\ See, note 27, infra.
    \10\ According to the Proxy Circular, the Non-Gold and Silver
Custodian will be responsible for the safekeeping of all of the
assets of the Trust, other than physical gold and silver bullion,
delivered to it and will act as the custodian of such assets. The
Manager, in accordance with applicable law and with the consent of
the Trustee, will have the authority to change the custodial
arrangement including, but not limited to, the appointment of a
replacement custodian and/or additional custodians. Additional
details regarding the Non-Gold and Silver Custodian are set forth in
the Proxy Circular.
    \11\ According to the Proxy Circular, the Trust's physical gold
and silver bullion will be fully allocated and stored with the Gold
and Silver Custodian or a sub-custodian of the Gold and Silver
Custodian. The Gold and Silver Custodian will be responsible for and
will bear all risk of the loss of, and damage to, the Trust's
physical gold and silver bullion that is in its or its sub-
custodian's custody, subject to certain limitations based on events
beyond the Gold and Silver Custodian's control. The Manager, with
the consent of the Trustee, may determine to change the custodial
arrangements of the Trust. Additional details regarding the Gold and
Silver Custodian are set forth in the Proxy Circular.
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    The Commission has previously approved listing on the Exchange
under NYSE Arca Rules 5.2-E(j)(5) and 8.201-E of other precious metals
and gold-based commodity trusts, including: Merk Gold Trust; \12\ ETFS
Gold Trust; \13\ ETFS Platinum Trust; \14\ ETFS Palladium Trust; \15\
APMEX Physical-1 oz. Gold Redeemable Trust; \16\ Sprott Gold Trust;
\17\ iShares Silver Trust; \18\ iShares COMEX Gold Trust; \19\ and Long
Dollar Gold Trust.\20\ Prior to their listing on the Exchange, the
Commission approved listing of the streetTRACKS Gold Trust on the New
York Stock Exchange \21\ and listing of iShares COMEX Gold Trust and
iShares Silver Trust on the American Stock Exchange LLC.\22\ In
addition, the Commission has approved trading of the streetTRACKS Gold
Trust and iShares Silver Trust on the Exchange pursuant to UTP.\23\
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    \12\ See, Securities Exchange Act Release No. 71378 (January 23,
2014), 79 FR 4786 (January 29, 2014) (SR-NYSEArca-2013-137).
    \13\ See, Securities Exchange Act Release No. 59895 (May 8,
2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
    \14\ See, Securities Exchange Act Release No. 61219 (December
22, 2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
    \15\ See, Securities Exchange Act Release No. 61220 (December
22, 2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
    \16\ See, Securities Exchange Act Release No 66930 (May 7,
2012), 77 FR 27817 (May 11, 2012) (SR-NYSEArca-2012-18).
    \17\ See, Securities Exchange Act Release No. 61496 (February 4,
2010), 75 FR 6758 (February 10, 2010) (SR-NYSEArca-2009-113).
    \18\ See, Securities Exchange Act Release No. 58956 (November
14, 2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
    \19\ See, Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
    \20\ See, Securities Exchange Act Release No. 79518 (December 9,
2016), 81 FR 90876 (December 15, 2016) (SR-NYSEArca-2016-84) (order
approving listing and trading of shares of the Long Dollar Gold
Trust).
    \21\ See, Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE).
    \22\ See, Securities Exchange Act Release Nos. 51058 (January
19, 2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38) (order
approving listing of iShares COMEX Gold Trust on the American Stock
Exchange LLC); 53521 (March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR-Amex-2005-72) (approving listing on the American Stock Exchange
LLC of the iShares Silver Trust).
    \23\ See, Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
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    The Exchange represents that the Units satisfy the requirements of
NYSE

Arca Rule 8.201-E and thereby qualify for listing on the Exchange.\24\
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    \24\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Exchange Act, the Trust relies on the exemption
contained in Rule 10A-3(c)(7).
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Description of the Arrangement
    CFCL is a passive, non-operating, specialized investment holding
company organized under the laws of the Province of Alberta, which buys
and holds almost entirely pure refined gold and silver bullion,
primarily in international bar form. The issued and outstanding share
capital of CFCL consists of common shares (``CFCL Common Shares'') and
Class A non-voting shares (``CFCL Class A Shares''). The CFCL Class A
Shares are listed for trading on the Toronto Stock Exchange (``TSX'')
under the symbols ``CEF.A'' (Cdn.$) and ``CEF.U'' (U.S.$), and on the
NYSE American under the symbol ``CEF.'' CFCL is a ``foreign private
issuer,'' as defined in Rule 3b-4 under the Exchange Act.
    According to the Manager, under the Arrangement, the Trust will
acquire all the assets and assume all the liabilities of CFCL (other
than CFCL's administration agreement), in exchange for that number of
fully paid and non-assessable Units as is equal to the aggregate number
of CFCL Class A Shares and CFCL Common Shares issued and outstanding
immediately prior to the effective time of the Arrangement. The CFCL
Common Shares and the common shares of 2070140 will be acquired by
Sprott in exchange for, among other things, cash consideration of $105
million Canadian dollars and 6,997,379 common shares of Sprott. CFCL
will then promptly redeem and cancel the outstanding CFCL Class A
Shares and the CFCL Common Shares and distribute to the former holders
thereof one Unit for each such share held.
    Approval of holders of two-thirds of the issued and outstanding
CFCL Class A Shares and of the issued and outstanding CFCL Common
Shares each voting as a separate class, as well as a majority of
uninterested (in the transaction) holders of the issued and outstanding
CFCL Class A Shares and of the issued and outstanding CFCL Common
Shares, each voting as a separate class, is required to effect the
Arrangement.\25\ Requisite shareholder approvals were obtained at a
meeting of such shareholders held on November 30, 2017. In addition, on
December 5, 2017, at a hearing before the Court of Queen's Bench
Alberta (Calgary) (``Court'') at which any holder of CFCL Class A
Shares and CFCL Common Shares had the right to appear, the Court passed
upon the substantive and procedural fairness of the terms and
conditions of the Arrangement to holders of CFCL Class A Shares and
CFCL Common Shares and as such, the distribution of Units to the
holders of the CFCL Class A Shares will be exempt from registration
under the Securities Act of 1933, as amended (``Securities Act'')
pursuant to Section 3(a)(10) thereof, which exempts the issuance of any
securities issued in exchange for one or more bona fide outstanding
securities from the general requirement of registration where the terms
and conditions of the issuance and exchange of such securities have
been approved by a court of competent jurisdiction, after a hearing
upon the fairness of the terms and conditions of such issuance and
exchange at which all persons to whom it is proposed to issue the
securities have the right to appear and receive timely notice thereof.
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    \25\ In connection therewith, CFCL prepared and mailed a proxy
circular, dated October 26, 2017 (``Proxy Circular''), soliciting
such approval at the meeting of such holders to be held on November
30, 2017, unless adjourned or postponed. The Proxy Circular was
furnished by CFCL to the Commission (File No. 001-09038) on November
8, 2017, under cover of Form 6-K. The descriptions of the Trust and
the Units contained herein are based, in part, on the Proxy
Circular.
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    The CFCL Class A Shares are registered under Section 12(b) of the
Exchange Act, based upon a listing of the CFCL Class A Shares on the
NYSE American. Pursuant to Rule 12g-3(a) under the Exchange Act, the
Units will ``succeed'' to the Section 12(b) Exchange Act registration
of the CFCL Class A Shares upon completion of the Arrangement. In order
to change the Section 12(b) registration of the Units from one based
upon a listing on the NYSE American to one based upon a listing on the
NYSE Arca, the Trust will file a separate initial registration
statement on Form 8-A under the Exchange Act to register the Units
under the Exchange Act based upon a listing of the Units on the NYSE
Arca.
    After completion of the Arrangement, the Trust will furnish current
reports to the Commission on Form 6-K in accordance with Rules 13a-1
and/or 13a-3 under the Exchange Act. The Trust will also file with the
Commission annual reports on Form 40-F under the Canada/U.S.
Multijurisdictional Disclosure System. Information included in such
filings (and which will be made available to Unitholders) will include
(i) annual information form, (ii) annual financial statements, (iii)
annual management report on fund performance (``MRFP''), (iv) quarterly
financial statements, (v) quarterly MRFP and (vi) report of independent
review committee.
Operation of the Trust
    According to the Proxy Circular, the investment objective of the
Trust is to participate in the Arrangement and to subsequently invest
and hold substantially all of its assets in physical gold and silver
bullion.\26\ The Trust is authorized to issue an unlimited number of
Units in an unlimited number of classes and series of a class. Each
Unit of a class or series of a class represents an undivided ownership
interest in the net assets of the Trust attributable to that class or
series of a class of Units.
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    \26\ The Trust has obtained exemptive relief from the Canadian
securities regulatory authorities for relief from certain
requirements of National Instrument 81-102--Investment Funds,
legislation which governs mutual funds and non-redeemable investment
funds in each of the provinces and territories of Canada
(``Exemptive Relief''), to permit: (i) The Trust to invest up to
100% of its assets in physical gold or silver bullion; (ii) the
appointment of the Gold and Silver Custodian as custodian of the
Trust's physical gold or silver bullion assets, if required; (iii)
purchases of Units on the Exchange and the TSX and redemption
requests to be submitted directly to the registrar and Transfer
Agent of the Trust; (iv) the redemption of Units and payment upon
redemption of Units all as described under ``Redemption for Physical
Gold and Silver'' and ``Redemption of Units for Cash''; and (v) the
Trust to establish a record date for distributions in accordance
with the policies of the TSX and the Exchange.
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    The Trust seeks to provide a secure, convenient and exchange-traded
investment alternative for investors interested in holding physical
gold and silver bullion without the inconvenience that is typical of a
direct investment in physical gold and silver bullion. The Trust will
invest primarily in long-term holdings of unencumbered, fully
allocated, physical gold and silver bullion and will not speculate with
regard to short-term changes in gold and silver prices. Pursuant to the
trust agreement, the Manager has full authority and exclusive power to
manage and direct the business and affairs of the Trust, subject to the
Trust's investment and operating restrictions.\27\

According to the Manager, the Trust will not invest in gold or silver
certificates \28\ (other than legacy gold and silver certificates
previously held by CFCL which historically represent less than 1% of
CFCL's assets, and which will be sold for cash as soon as practicable
following the completion of the Arrangement) or other financial
instruments that represent gold or silver or that may be exchanged for
gold or silver and will not purchase, sell or hold derivatives. The
Trust does not anticipate making regular cash distributions to
Unitholders. According to the Manager, the value of gold bullion is
currently approximately \2/3\, and the value of silver bullion is
currently approximately \1/3\, of CFCL's net assets. It is the
intention of the Trust, subject to the discretion of the Manager, to
maintain a ratio of the value of net assets in gold bullion to the
value of net assets in silver bullion at approximately \2/3\ to \1/3\.
It does not expect that its investment in either gold bullion or silver
bullion would be less than 15% to 20% of its net assets on a long-term
basis. However, changes in the relative prices of gold and silver
bullion, redemptions or other events beyond the control of the Manager
could cause the relative investments in gold and silver bullion to vary
from these percentages.
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    \27\ 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 gold and silver bullion in
``London Good Delivery'' bar (as defined in ``Operation of the Gold
and Silver Markets'' below) form and hold no more than 10% of the
total net assets of the Trust, at the discretion of the Manager, in
(i) physical gold and silver bullion (in London Good Delivery bar
form or otherwise), (ii) gold or silver coins, (iii) debt
obligations of or guaranteed by the Government of Canada or a
province of Canada or by the Government of the United States or a
state thereof (each, a ``Government''), (iv) money market mutual
funds, (v) interest-bearing accounts, (vi) cash and (vii) the
following short-term instruments: 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
Dominion Bond Rating Service Limited or its successors or assigns or
F1 (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
short-term certificates of deposit issued or guaranteed by a
Canadian chartered bank or trust company, short-term government
debt, 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) (such short-term instruments,
``cash equivalents''), except during the 60-day period following the
closing of additional offerings or prior to the distribution of the
assets of the Trust. Pursuant to the Exemptive Relief, the Trust is
permitted to invest up to 100% of its net assets, taken at market
value of the time of purchase, in physical gold and silver bullion.
    \28\ Gold or silver certificates are financial instruments
representing a promissory claim for gold or silver bullion, which
may be exchanged for physical gold or silver bullion held by a
custodian.
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    According to the Proxy Circular, the Trust is neither an investment
company registered or required to be registered under the Investment
Company Act of 1940, as amended,\29\ nor a commodity pool for purposes
of the Commodity Exchange Act (``CEA''),\30\ and neither the Manager
nor the Trustee is subject to regulation as a commodity pool operator
or a commodity trading adviser in connection with the operation of the
Trust.
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    \29\ 15 U.S.C. 80a-1.
    \30\ 17 U.S.C. 1.
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Operation of the Gold and Silver Markets
    According to the Proxy Circular, the global trade in gold and
silver consists of over-the-counter (``OTC''), transactions in spot,
forwards and options and other derivatives, together with exchange-
traded futures and options. The participants in the world gold market
may be classified in the following sectors: The mining and producer
sector; the banking sector; the official sector; the investment sector;
and the manufacturing sector. The participants in the world silver
industry may be classified by the following sectors: The mining and
producer sector; the banking sector; the investment sector; the
fabrication and manufacturing sector; and the official sector.
    According to the Proxy Circular, the OTC gold market and OTC silver
market include spot, forward and option and other derivative
transactions conducted on a principal-to-principal basis. While the OTC
gold market and the OTC silver market are global, nearly 24-hour per
day markets, the main centers for both OTC markets are London, New York
and Zurich. Thirteen members of the London Bullion Market Association
(``LBMA''), the London-based trade association that acts as the
coordinator for activities conducted on behalf of its members and other
participants in the London bullion market, act as OTC market makers for
both the OTC gold market and the OTC silver market, and most OTC market
trades for both markets are cleared through London.\31\ The LBMA plays
an important role in setting OTC gold and OTC silver trading industry
standards. The LBMA's ``London Good Delivery Lists'' identify approved
refiners of gold and silver.
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    \31\ Following the enactment of the Financial Markets Act 2012,
the Prudential Regulation Authority of the Bank of England is
responsible for regulating most of the financial firms that are
active in the bullion market, and the Financial Conduct Authority is
responsible for consumer and competition issues.
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    According to the Proxy Circular, in the OTC gold market and the OTC
silver market, gold and silver that meet the specifications for weight,
dimensions, fineness (or purity), identifying marks (including the
assay stamp of an LBMA-acceptable refiner) and appearance set forth in
``The Good Delivery Rules for Gold and Silver Bars'' published by the
LBMA are ``London Good Delivery'' bars. A gold London Good Delivery bar
must contain between 350 and 430 fine troy ounces of gold with a
minimum fineness of 995 parts per 1,000. A silver London Good Delivery
bar must contain between 750 ounces and 1,100 ounces of silver with a
minimum fineness of 999 parts per 1,000.
    According to the Proxy Circular, the most significant gold and
silver futures exchanges are the COMEX, operated by Commodities
Exchange, Inc. (``COMEX''), a subsidiary of New York Mercantile
Exchange, Inc. (``NYMEX''), and a subsidiary of CME Group Inc. (``CME
Group''),\32\ and the Tokyo Commodity Exchange. U.S. futures exchanges
are registered with the Commodities Futures Trading Commission and seek
to provide a neutral, regulated marketplace for the trading of
derivatives contracts for commodities, such as futures, options and
certain swaps.
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    \32\ CME Group is a member of the Intermarket Surveillance Group
(``ISG''). See note 39, infra.
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Initial Distribution and Redemption of Units
    According to the Proxy Circular, 252,156,003 Units are expected to
be issued in connection with the Arrangement. Each outstanding Unit
represents an equal, fractional, undivided ownership interest in the
net assets of the Trust attributable to the Units. The Trust will not
issue additional Units of the class offered in the Arrangement
following the completion of the Arrangement except: (i) If the net
proceeds per Unit to be received by the Trust are not less than 100% of
the most recently calculated net asset value (``NAV'') per Unit
immediately prior to, or upon, the determination of the pricing of such
issuance; or (ii) by way of distribution of Units in connection with an
income distribution. According to the Manager, the Trust does not
intend to issue new Units, or redeem existing Units, on a day-to-day
basis.
    Units may be redeemed at the option of the Unitholder on a monthly
basis for physical gold and silver bullion or cash, as described below.
Redemption for Physical Gold and Silver
    According to the Manager, subject to the terms of the trust
agreement, a Unitholder may redeem Units for physical gold and silver
bullion, provided the redemption request is for the Minimum Bullion
Redemption Amount. ``Minimum Bullion Redemption Amount'' means 100,000
Units, provided that if 100,000 Units is not at least equivalent to the
aggregate

value of (i) one London Good Delivery bar of gold, (ii) the
Proportionate Silver Amount (as defined below) and (iii) applicable
expenses, the Minimum Bullion Redemption Amount shall be such number of
Units as are at least equivalent to the aggregate value of (a) one
London Good Delivery bar of gold, (b) the Proportionate Silver Amount
and (c) applicable expenses. ``Proportionate Silver Amount'' means such
number of London Good Delivery bars of silver with an aggregate value
(as at the valuation time on the applicable redemption date in the
month during which the redemption request is processed) that is
proportionate to the aggregate value of one London Good Delivery bar of
gold based on the proportionate value of physical gold and silver
bullion held by the Trust (as at the valuation time on the applicable
redemption date in the month during which the redemption request is
processed). Units redeemed for physical gold and silver 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)
(``Redemption Amount'').
    The amount of physical gold and silver bullion a redeeming
Unitholder is entitled to receive will be determined by the Manager,
who will allocate the Redemption Amount to physical gold and silver
bullion in direct proportion to the value of physical gold and silver
bullion held by the Trust at the time of redemption (``Bullion
Redemption Amount''). The quantity of each particular metal delivered
to a redeeming Unitholder will be dependent on the applicable Bullion
Redemption Amount and the number and individual weight of London Good
Delivery bars of that metal that are held by the Trust on the
redemption date. A redeeming Unitholder may not receive physical gold
and silver bullion in the proportions then held by the Trust and, if
the Trust does not have a London Good Delivery bar 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. The ability of a Unitholder to redeem Units for
physical gold and silver bullion may be limited by the number of London
Good Delivery bars held by the Trust at the time of redemption. Any
Bullion Redemption Amount in excess of the value of the London Good
Delivery bar or an integral multiple thereof 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
gold and silver bullion.
    A Unitholder that owns a sufficient number of Units who desires to
exercise redemption privileges for physical gold and silver bullion
must do so by instructing his, her or its broker, who must be a direct
or indirect participant of CDS Clearing and Depository Services Inc. or
The Depository Trust Company, to deliver to the Transfer Agent on
behalf of the Unitholder a written notice (``Bullion Redemption
Notice'') of the Unitholder's intention to redeem Units for physical
gold and silver bullion. Pursuant to the Exemptive Relief, the Transfer
Agent is permitted to directly accept redemption requests. A Bullion
Redemption Notice must be received by the Transfer Agent no later than
4:00 p.m., Eastern Time (``E.T.''), on the 15th day of the month in
which the Bullion 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.
    A Unitholder redeeming Units for physical gold and silver bullion
will receive the physical gold and silver bullion from the Gold and
Silver Custodian. Physical gold and silver bullion received by a
Unitholder as a result of a redemption of Units will be delivered by
armored transportation service carrier pursuant to delivery
instructions provided by the Unitholder to the Manager, provided that
the delivery instructions are acceptable to the armored transportation
service carrier. The armored transportation service carrier will be
engaged by or on behalf of, and the costs in connection therewith, will
be borne by the redeeming Unitholder. Such physical gold and silver
bullion can be delivered: (i) To an account established by the
Unitholder at an institution located in North America authorized to
accept and hold London Good Delivery bars; (ii) in the United States,
to any physical address (subject to approval by the armored
transportation service carrier); (iii) in Canada, to any business
address (subject to approval by the armored transportation service
carrier); and (iv) outside of the United States and Canada, to any
address approved by the armored transportation service carrier.
Physical gold and silver bullion delivered to an institution located in
North America authorized to accept and hold London Good Delivery bars
will likely retain its London Good Delivery status while in the custody
of such institution; physical gold and silver bullion delivered
pursuant to a Unitholder's delivery instruction to a destination other
than an institution located in North America authorized to accept and
hold London Good Delivery bars will no longer be deemed London Good
Delivery once received by the Unitholder. Costs associated with the
redemption of Units and the delivery of physical gold and silver
bullion will be borne by the redeeming Unitholder.
    The armored transportation service carrier will receive physical
gold and silver bullion in connection with a redemption of Units
approximately 10 business days after the end of the month in which the
Bullion Redemption Notice is processed. Once the physical gold and
silver bullion representing the redeemed Units has been placed with the
armored transportation service carrier, the Gold and Silver Custodian
will no longer bear the risk of loss of, and damage to, such physical
gold and silver bullion. In the event of a loss after the physical gold
and silver bullion has been placed with the armored transportation
service carrier, the Unitholder will not have recourse against the
Trust or the Gold and Silver Custodian.
Redemption of Units for Cash
    According to the Proxy Circular, 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 trading price of the shares traded
on the TSX,\33\ for the last five days on which the respective exchange
is open for trading for the month in which the redemption request is
processed; and (ii) the NAV of the redeemed Units as of 4:00 p.m., ET,
on the last day of such month on which the Exchange is open for
trading. Pursuant to the Exemptive Relief, the redemption price will be
permitted to be less than 100% of the NAV per Unit. 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.
---------------------------------------------------------------------------

    \33\ The Exchange can receive information regarding transactions
on TSX through the Investment Industry Regulatory Organization of
Canada, which is a member of the ISG. See note 39, infra.
---------------------------------------------------------------------------

    To redeem Units for cash, a Unitholder must instruct the

Unitholder's broker to deliver a notice to redeem Units for cash
(``Cash Redemption Notice'') to the Transfer Agent. The Transfer Agent
is permitted to directly accept redemption requests. A Cash Redemption
Notice must be received by the Transfer Agent no later than 4:00 p.m.,
ET, 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.
Net Asset Value
    According to the Proxy Circular, the Valuation Agent will calculate
the NAV for each class of Units as of 4:00 p.m., ET, 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.\34\ The NAV
per Unit will be determined by dividing the NAV of the Trust on a date
by the total number of Units then outstanding on such date. According
to the Manager, the fair market value of the assets of the Trust will
be determined as follows:
---------------------------------------------------------------------------

    \34\ According to the Manager, 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 investment 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.
---------------------------------------------------------------------------

    (i) The value of physical gold and silver bullion will be its
market value based on the price provided by a widely recognized pricing
service as directed by the Manager and, if such service is not
available, such physical gold and silver bullion will be valued at
prices provided by another pricing service as determined by the
Manager, in consultation with the Valuation Agent;
    (ii) the value of any cash on hand or on deposit (including
interest-bearing accounts), accounts receivable, prepaid expenses,
prepaid assets and interest accrued and not yet received, will be
deemed to be the full amount thereof unless the Manager determines that
any such deposit, account receivable, prepaid expense, prepaid asset or
interest is not worth the full amount thereof, in which event the value
thereof will be deemed to be such value as the Manager determines to be
the fair value thereof;
    (iii) the value of any cash equivalents will be at their cost plus
accrued interest;
    (iv) the value of any debt instruments (including obligations of or
guaranteed by a Government) for which active markets exist (other than
cash equivalents), and money market mutual funds, will be at the quoted
value thereof;
    (v) the value of any assets for which no price quotations are
available or, in the opinion of the Manager (which may delegate such
responsibility to the Valuation Agent under the valuation services
agreement), to which the above valuation principles cannot or should
not be applied, will be the fair value thereof determined from time to
time in such manner as the Manager (or the Valuation Agent, as the case
may be) will from time to time provide; and
    (vi) the value of all assets and liabilities of the Trust valued in
terms of a currency other than the currency used to calculate the NAV
will be converted to the currency used to calculate the NAV by applying
the rate of exchange obtained from the best available sources to the
Valuation Agent as agreed upon by the Manager including, but not
limited to, the Trustee or any of its affiliates.
Secondary Market Trading
    According to the Proxy Circular, Units may trade in the market at a
premium or discount to the NAV per Unit. The amount of the discount or
premium in the trading price relative to the NAV may be influenced by
non-concurrent trading hours between the COMEX and the Exchange and the
TSX. According to the Proxy Circular, while the Units will trade on the
Exchange during the Early, Core and Late Trading Sessions as specified
in NYSE Arca Rule 7.34-E(a), liquidity in the global gold and silver
markets will be reduced after the close of the COMEX at 1:30 p.m., ET.
As a result, during this time, trading spreads, and the resulting
premium or discount to the NAV, may widen.
Availability of Information Regarding Gold and Silver
    Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity, such as gold or silver,
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 gold and silver price and
gold and silver market information available on public websites and
through professional and subscription services.
    Investors may obtain on a 24-hour basis gold or silver pricing
information based on the spot price for an ounce of gold or silver from
various financial information service providers, such as Reuters and
Bloomberg. Reuters and Bloomberg provide at no charge on their websites
delayed information regarding the spot price of gold and silver and
last sale prices of gold and silver futures, as well as information
about news and developments in the gold and silver market. Reuters and
Bloomberg also offer a professional service to subscribers for a fee
that provides information on gold and silver prices directly from
market participants. ICAP plc provides an electronic trading platform
called EBS for the trading of spot gold and silver, 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 gold and silver futures and options
prices traded on the COMEX are available by subscription from Reuters
and Bloomberg. The NYMEX also provides delayed futures and options
information on current and past trading sessions and market news free
of charge on its website. There are a variety of other public websites
providing information on gold and silver, ranging from those
specializing in precious metals to sites maintained by major
newspapers. In addition, the LBMA Gold Price and the LBMA Silver Price
are publicly available at no charge at www.lbma.org.uk.
Availability of Information
    The intra-day indicative value (``IIV'') per Unit will be
disseminated by one or more major market data vendors. The IIV will be
calculated based on the amount of gold and silver held by the Trust and
a price of gold and silver derived from updated bids and offers
indicative of the spot prices of gold and silver.\35\
---------------------------------------------------------------------------

    \35\ The IIV on a per Unit basis disseminated during the NYSE
Arca Core Trading Session should not be viewed as a real-time update
of the NAV, which will be calculated once a day.
---------------------------------------------------------------------------

    The IIV will be widely disseminated on a per Unit basis every 15
seconds

during the NYSE Arca Core Trading Session by one or more major market
data vendors. In addition, the IIV will be available through on-line
information services.
    The website for the Trust, which will be publicly accessible at no
charge, will contain the following information: (a) The mid-point of
the bid/ask price \36\ 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 (or
for the life of the Trust, if shorter). The Trust website 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 website for the Trust will also provide the
information described in the penultimate paragraph of ``Description of
the Arrangement'' above.
---------------------------------------------------------------------------

    \36\ The bid/ask price of the Trust is determined using the
highest bid and lowest offer on the Consolidated Tape as of the time
of calculation of the closing day NAV.
---------------------------------------------------------------------------

    The Trust's daily (or as determined by the Manager in accordance
with the trust agreement) NAV will be posted on the Trust's website 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 will be subject to the criteria in NYSE Arca Rule 8.201-
E, including 8.201-E(e), for initial and continued listing of the
Units.
    A minimum of 100,000 Units will be required to be outstanding at
the start of trading. The Exchange believes that the anticipated
minimum number of Units outstanding at the start of trading is
sufficient to provide adequate market liquidity. The Trust represents
that the NAV will be calculated daily and made available to all market
participants at the same time. The Trust also represents that the IIV
will be calculated at least every fifteen seconds and made available to
all market participants at the same time.
Trading Rules
    The Exchange deems the Units to be equity securities, thus
rendering trading in the Units subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Units on the
Exchange will occur during the Early, Core and Late Trading Sessions as
specified in NYSE Arca Rule 7.34-E(a). The Exchange has appropriate
rules to facilitate transactions in the Units during all trading
sessions. As provided in NYSE Arca Rule 7.6-E, 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.
    Further, NYSE Arca Rule 8.201-E sets forth certain restrictions on
Equity Trading Permit Holders (``ETP Holders'') acting as registered
Market Makers in the Units to facilitate surveillance. Pursuant to NYSE
Arca Rule 8.201-E(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 gold and silver and related
futures or options on futures or any other related derivatives.
Commentary .04 of NYSE Arca Rule 11.3 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.
    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 gold or silver
market have caused disruptions and/or lack of trading; or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Units will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\37\
---------------------------------------------------------------------------

    \37\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    The Exchange will halt trading in the Units if the NAV of the Trust
is not calculated or disseminated daily. The Exchange may halt trading
during the day in which an interruption occurs to the dissemination of
the IIV. 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.
Surveillance
    The Exchange represents that trading in the Units will be subject
to the existing trading surveillances administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws.\38\ 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 federal securities laws applicable to trading on the
Exchange.
---------------------------------------------------------------------------

    \38\ 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.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. 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.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Units with other markets
and other entities that are members of the ISG, and the Exchange or
FINRA, on behalf of the Exchange, or both, may

obtain trading information regarding trading in the Units from such
markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Units from markets and other
entities that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement (``CSSA'').\39\
The Exchange may obtain information regarding trading in gold and
silver futures from markets trading such futures that are members of
ISG or with which the Exchange has in place a CSSA, including COMEX.
---------------------------------------------------------------------------

    \39\ For the list of current members of ISG, see https://www.isgportal.org/home.html.
---------------------------------------------------------------------------

    Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able
to obtain information regarding trading in the Units and the underlying
gold and silver and related futures or options on futures or any other
related derivatives 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.
    The Exchange also has a general policy prohibiting the distribution
of material, non-public information by its employees.
    All statements and representations made in this filing regarding
(a) the description of the portfolio holdings or reference assets, (b)
limitations on portfolio holdings or reference assets and (c) the
applicability of Exchange listing rules specified in this rule filing
shall constitute continued listing requirements for listing the Units
on the Exchange.
    The Manager has represented to the Exchange that it will advise the
Exchange of any failure by the Trust to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Exchange Act, the Exchange will monitor for compliance
with the continued listing requirements. If the Trust is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under NYSE Arca Rule 5.5-E(m).
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)
Redemptions of Units; (2) NYSE Arca Rule 9.2-E(a), which imposes a duty
of due diligence on its ETP Holders to learn the essential facts
relating to every customer prior to trading the Units; (3) how
information regarding the IIV is disseminated; (4) the possibility that
trading spreads and the resulting premium or discount on the Units may
widen as a result of reduced liquidity of gold or silver trading during
the Core and Late Trading Sessions after the close of the major world
gold and silver markets; and (5) trading information.
    In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses as described in the Proxy
Circular. The Information Bulletin will disclose that information about
the Units of the Trust is publicly available on the Trust's website.
    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) \40\ 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.
---------------------------------------------------------------------------

    \40\ 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 Rule 8.201-E. 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 or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Units with other markets
that are members of the ISG, and the Exchange or FINRA, on behalf of
the Exchange, or both, may obtain trading information regarding trading
in the Units from such markets. In addition, the Exchange may obtain
information regarding trading in the Units from markets that are
members of ISG or with which the Exchange has in place a CSSA. The
Exchange may obtain information regarding trading in gold and silver
futures from markets trading such futures that are members of ISG or
with which the Exchange has in place a CSSA, including COMEX. Also,
pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able to obtain
information regarding trading in the Units and the underlying gold and
silver 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.
    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 gold and silver price and gold and
silver market information available on public websites and through
professional and subscription services. Investors may obtain on a 24-
hour basis gold or silver pricing information based on the spot price
for an ounce of gold or silver from various financial information
service providers, such as Reuters and Bloomberg. Reuters and Bloomberg
provide at no charge on their websites delayed information regarding
the spot price of gold and silver and last sale prices of gold and
silver futures, as well as information about news and developments in
the gold and silver market. Reuters and Bloomberg also offer a
professional service to subscribers for a fee that provides information
on gold and silver prices directly from market participants. ICAP plc
provides an electronic trading platform called EBS for the trading of
spot gold and silver, 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 gold and silver futures and options
prices traded on the COMEX are available by subscription from Reuters
and Bloomberg. The NYMEX also provides delayed futures and options
information on current and past trading sessions and market news free
of charge on its website. There are a variety of other public websites
providing information on gold and silver, ranging from those
specializing in precious metals to sites maintained by major
newspapers. In addition, the LBMA Gold Price and LBMA Silver Price are
publicly available at no charge at www.lbma.org.uk.
    The Trust's daily (or as determined by the Manager in accordance
with the trust agreement) NAV will be posted on the Trust's website as
soon as practicable. The Trust's website will provide an IIV per Unit,
as calculated by a third party financial data provider

during the Exchange's Core Trading Session.
    Quotation and last-sale information regarding the Units will be
disseminated through the facilities of the Consolidated Tape
Association. The IIV will be widely disseminated on a per Unit basis
every 15 seconds during the NYSE Arca Core Trading Session by one or
more major market data vendors. In addition, the IIV will be available
through on-line information services. The Exchange represents that the
Exchange may halt trading during the day in which an interruption to
the dissemination of the IIV occurs. If the interruption to the
dissemination of the IIV persists past the trading day in which it
occurred, 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. The NAV per Unit will be calculated daily and made
available to all market participants at the same time. One or more
major market data vendors will disseminate for the Trust on a daily
basis information with respect to the recent NAV per Unit and Units
outstanding.
    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
an additional type of exchange-traded product 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 CSSA. The Exchange may obtain information
regarding trading in gold and silver futures from markets trading such
futures that are members of ISG or with which the Exchange has in place
a CSSA, including COMEX. In addition, as noted above, investors will
have ready access to information regarding gold and silver pricing and
gold and silver 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. The Exchange
believes the proposed rule change will enhance competition by
accommodating Exchange trading of an additional exchange-traded product
relating to physical gold and silver.

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. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's
proposed rule change, as modified by Amendment No. 2, to list and trade
the Units is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.\41\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\42\ 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.
---------------------------------------------------------------------------

    \41\ 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).
    \42\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that the Exchange has represented that gold
and silver futures trade on markets that are regulated by the
Commodities Futures Trading Commission and that the Exchange will be
able to share surveillance information with one of the ``most
significant'' markets for gold and silver futures.\43\ The Commission
has previously approved the listing and trading of other gold- and
silver-based commodity trusts, noting the existence of surveillance-
sharing agreements between the listing exchange and significant,
regulated markets for gold and silver futures,\44\ and the Commission
finds that the Exchange will be able to share surveillance information
with a significant, regulated market for trading futures on gold and
silver.
---------------------------------------------------------------------------

    \43\ Specifically, the Exchange represents that the most
significant gold and silver futures exchanges are the COMEX,
operated by Commodities Exchange, Inc., a subsidiary of NYMEX and a
subsidiary of CME Group, and that it may obtain information
regarding trading in gold and silver futures from markets that are
members of ISG or with which the Exchange has in place a CSSA,
including COMEX. See Amendment No. 2, supra note 4, at 11, 20. The
Exchange also represents that the U.S. futures exchanges are
registered with the Commodities Futures Trading Commission. See
Amendment No. 2, supra note 4, at 11.
    \44\ See, e.g., iShares COMEX Gold Trust, Exchange Act Release
No. 51058 (Jan. 19, 2005), 70 FR 3749, 3751, 3754 (Jan. 26, 2005)
(SR-Amex-2004-38) (approval order notes the American Stock
Exchange's representation that ``the most significant gold futures
exchanges are the COMEX division of the NYMEX and the Tokyo
Commodity Exchange'' and that the American Stock Exchange has ``in
place an Information Sharing Agreement with the NYMEX for the
purpose of providing information in connection with trading in or
related to COMEX gold futures contracts''); iShares Silver Trust,
Exchange Act Release No. 53521 (Mar. 20, 2006), 71 FR 14967, 14968,
14973 (Mar. 24, 2006) (SR-Amex-2005-72) (approval order notes the
American Stock Exchange's representation that ``the most significant
silver futures exchanges are the COMEX and the Tokyo Commodity
Exchange'' and that the American Stock Exchange has ``in place an
Information Sharing Agreement with the NYMEX for the purpose of
providing information in connection with trading in or related to
COMEX silver futures contracts'').
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    The Commission also finds that the proposal is consistent with
Section 11A(a)(1)(C)(iii) of the Act,\45\ 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 and last-sale price of the Units will be
disseminated over the Consolidated Tape.
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    \45\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission believes that the proposed rule change is reasonably
designed to promote fair disclosure of information that may be
necessary to price the Units appropriately. NYSE Arca Rule 8.201-
E(e)(2)(v) requires that an IIV (which is referred to in the rule as
the ``Indicative Trust Value'') be calculated and disseminated at least
every 15 seconds. The IIV per Unit will be calculated based on the
amount of gold and silver held by the Trust and a price of gold and
silver derived from updated bids and offers indicative of the spot
prices of gold and silver. The IIV will be widely disseminated on a per
Unit basis every 15 seconds during the NYSE Arca Core Trading Session
by one or more major market data vendors. In addition, the IIV will be
available through on-line information services.\46\
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    \46\ See Amendment No. 2, supra note 4, at 17.
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    Additionally, the Valuation Agent will calculate the NAV for each
class of Units as of 4:00 p.m., E.T., on each business day.\47\ The
website for the Trust will contain the following information: (a) The
mid-point of the Bid/Ask Price and a calculation of the premium or
discount of such price

against the 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. According to the Exchange, the Trust's website also 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. 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.\48\
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    \47\ See id. at 14.
    \48\ See id. at 17.
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    According to the Exchange, investors may obtain on a 24-hour basis
gold or silver pricing information based on the spot price for an ounce
of gold or silver from various financial information service providers,
such as Reuters and Bloomberg. Reuters and Bloomberg provide at no
charge on their websites delayed information regarding the spot price
of gold and silver and last sale prices of gold and silver futures, as
well as information about news and developments in the gold and silver
market. Reuters and Bloomberg also offer a professional service to
subscribers for a fee that provides information on gold and silver
prices directly from market participants. ICAP plc provides an
electronic trading platform called EBS for the trading of spot gold and
silver, 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.\49\
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    \49\ See id. at 16, 22.
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    In addition, the Exchange notes that complete real-time data for
gold and silver futures and options prices traded on the COMEX are
available by subscription from Reuters and Bloomberg. NYMEX also
provides delayed futures and options information on current and past
trading sessions and market news free of charge on its website. There
are a variety of other public websites providing information on gold
and silver, ranging from those specializing in precious metals to sites
maintained by major newspapers. In addition, the Exchange represents
that the LBMA Gold Price and the LBMA Silver Price are publicly
available at no charge at www.lbma.org.uk.\50\
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    \50\ See id. at 17, 22.
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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 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 gold or
silver market have caused disruptions or lack of trading, or (2)
whether other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Units will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\51\ The Exchange will halt trading in the Units if the
NAV of the Trust is not calculated or disseminated daily or if not made
available to all participants at the same time.\52\ 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.\53\ The Exchange may halt trading during the day
in which an interruption occurs to the dissemination of the IIV; 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.\54\
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    \51\ See id. at 19.
    \52\ See id.
    \53\ See id. at 19, 22.
    \54\ See id.
---------------------------------------------------------------------------

    Additionally, the Commission notes that market makers in the Units
would be subject to the requirements of NYSE Arca Rule 8.201-E(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.\55\
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    \55\ Commentary .04 of NYSE Arca Equities Rule 11.3 requires
that an ETP Holder acting as a registered market maker in the Units,
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 Trust will be subject to the criteria in NYSE Arca Rule
8.201-E, including 8.201-E(e), for initial and continued listing of
the Units.\56\
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    \56\ See Amendment No. 2, supra note 4, at 18.
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    (2) The Exchange has appropriate rules to facilitate
transactions in the Units during all trading sessions.\57\
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    \57\ Trading in the Units on the Exchange will occur during the
Early, Core, and Late Trading Sessions as specified in NYSE Arca
Rule 7.34-E(a). See id. at 16, 18.
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    (3) The Exchange deems the Units to be equity securities.\58\
---------------------------------------------------------------------------

    \58\ See id. The Commission notes that, as a result, trading of
the Units will be subject to the Exchange's existing rules governing
the trading of equity securities.
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    (4) The Exchange also has a general policy prohibiting the
distribution of material, non-public information by its
employees.\59\
---------------------------------------------------------------------------

    \59\ See id. at 20.
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    (5) Trading in the Units 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 Units in all trading
sessions and to deter and detect violations of Exchange rules and
federal securities laws applicable to trading on the Exchange.\60\
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    \60\ 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 19, n. 36.
---------------------------------------------------------------------------

    (6) The Exchange or FINRA, on behalf of the Exchange, or both,
will communicate as needed regarding trading in the Units with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Units from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Units from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\61\ The Exchange also
may obtain information regarding trading in gold and silver futures
from markets trading such futures that are members of ISG or with
which the Exchange has in place a CSSA, including COMEX.\62\
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    \61\ See id. at 20.
    \62\ See id. at 20, 21, 23.
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    (7) Prior to the commencement of trading, the Exchange will
inform its ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Units.
Specifically, the Information Bulletin will discuss the following:
(a) Redemptions of Units; (b) NYSE Arca Rule 9.2-E(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; (c) how
information regarding the IIV is disseminated; (e) the possibility
that trading spreads and the resulting premium or discount on the
Units may widen as a result of reduced liquidity of gold or silver
trading during the Core and Late Trading Sessions after the close of
the major world gold and silver markets; and (e) trading
information.\63\
---------------------------------------------------------------------------

    \63\ See id. at 20-21.

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    (8) The Trust's investment and operating restrictions provide
that the Trust will invest in and hold a minimum of 90% of its total
net assets in physical gold and silver bullion in ``London Good
Delivery'' bar form, and hold no more than 10% of the total net
assets of the Trust, at the discretion of the Manager, in: (i)
Physical gold and silver bullion (in London Good Delivery bar form
or otherwise); (ii) gold or silver coins; (iii) debt obligations of
or guaranteed by a Government; (iv) money market mutual funds; (v)
interest-bearing accounts; (vi) cash; and (vii) cash equivalents,
except during the 60-day period following the closing of additional
offerings or prior to the distribution of the assets of the
Trust.\64\
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    \64\ See id. at 9.
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    (9) According to the Manager, the value of gold bullion is
currently approximately \2/3\, and the value of silver bullion is
currently approximately \1/3\, of CFCL's net assets. It is the
intention of the Trust, subject to the discretion of the Manager, to
maintain a ratio of the value of net assets in gold bullion to the
value of net assets in silver bullion at approximately \2/3\ to \1/
3\. It does not expect that its investment in either gold bullion or
silver bullion would be less than 15% to 20% of its net assets on a
long-term basis. However, changes in the relative prices of gold and
silver bullion, redemptions or other events beyond the control of
the Manager could cause the relative investments in gold and silver
bullion to vary from these percentages.\65\
---------------------------------------------------------------------------

    \65\ See id. at 10.
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    (10) According to the Manager, the Trust will not invest in gold
or silver certificates (other than legacy gold and silver
certificates previously held by CFCL which historically represent
less than 1% of CFCL's assets, and which will be sold for cash as
soon as practicable following the completion of the Arrangement) or
other financial instruments that represent gold or silver or that
may be exchanged for gold or silver, and will not purchase, sell, or
hold derivatives.\66\
---------------------------------------------------------------------------

    \66\ See id. at 10.
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    (11) All statements and representations made in this filing
regarding (a) The description of the portfolio holdings or reference
assets, (b) limitations on portfolio holdings or reference assets,
and (c) the applicability of Exchange listing rules specified in
this rule filing shall constitute continued listing requirements for
listing the Units on the Exchange.\67\
---------------------------------------------------------------------------

    \67\ See id. at 20.
---------------------------------------------------------------------------

    (12) The Manager has represented to the Exchange that it will
advise the Exchange of any failure by the Trust 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 Trust is
not in compliance with the applicable listing requirements, the
Exchange will commence delisting procedures under NYSE Arca Rule
5.5-E(m).\68\
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    \68\ See id. The Commission notes that certain proposals for the
listing and trading of exchange-traded products include a
representation that the exchange will ``surveil'' for compliance
with the continued listing requirements. See, e.g., Securities
Exchange Act Release No. 77499 (Apr. 1, 2016), 81 FR 20428, 20432
(Apr. 7, 2016) (SR-BATS-2016-04). In the context of this
representation, it is the Commission's view that ``monitor'' and
``surveil'' both mean ongoing oversight of compliance with the
continued listing requirements. Therefore, the Commission does not
view ``monitor'' as a more or less stringent obligation than
``surveil'' with respect to the continued listing requirements.
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    (13) A minimum of 100,000 Units will be required to be
outstanding at the start of trading.

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 Trust.
    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 \69\ and the rules and regulations
thereunder applicable to a national securities exchange.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendment No. 2 to the Proposed Rule
Change

    Interested persons are invited to submit written data, views,
and arguments concerning Amendment No. 2 to the proposed rule
change. 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 [email protected]. Please include
File Number SR-NYSEArca-2017-131 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2017-131.
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 website (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 website 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 this filing will also be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2017-131 and
should be submitted on or before February 1, 2018

V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 2

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 2, prior to the 30th day after
the date of publication of notice of Amendment No. 2 in the Federal
Register. Amendment No. 2 supplements the proposal by providing
additional information regarding, among other things: (1) The
Trust's primary holdings in gold and silver bullion and the other
assets that would comprise the remaining holdings of the Trust; (2)
the ability of the Exchange to obtain information regarding trading
in gold and silver futures from markets trading such futures that
are members of ISG or with which the Exchange has in place a CSSA,
including COMEX; (3) the calculation and dissemination of NAV and
IIV for the Units; and (3) updates with respect to the Arrangement.
These changes assisted the Commission in evaluating the Units'
susceptibility to manipulation, and in determining that the listing
and trading of the Units is consistent with the protection of
investors and the public interest. Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2) of the Act,\70\ to approve
the proposed rule change, as modified by Amendment No. 2, on an
accelerated basis.
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    \70\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\71\ that the proposed rule change (SR-NYSEArca-2017-131), as
modified by Amendment No. 2, be, and it hereby is, approved on an
accelerated basis.
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    \71\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\72\
---------------------------------------------------------------------------

    \72\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00307 Filed 1-10-18; 8:45 am]
 BILLING CODE 8011-01-P