[Federal Register: April 6, 2006 (Volume 71, Number 66)]
[Notices]
[Page 17510-17519]
[DOCID:fr06ap06-107]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53582; File No. SR-Amex-2005-127]

Self-Regulatory Organizations; American Stock Exchange LLC; Order
Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto
Relating to the Listing and Trading of Units of the United States Oil
Fund, LP

 March 31, 2006.

I. Introduction

    On December 6, 2005, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ On January 20, 2006, the Exchange filed Amendment No. 1
to the proposed rule change.\3\ On February 15, 2006, the Exchange
filed Amendment No. 2 to the proposed rule change.\4\ The proposed rule
change, as amended by Amendment Nos. 1 and 2, was published for comment
in the Federal Register on February 24, 2006.\5\ The Commission
received no comments on the proposal. This order approves the proposed
rule change, as amended by Amendment Nos. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Partial Amendment dated, January 20, 2006 (``Amendment
No. 1''). In Amendment No. 1, the Amex made clarifying changes to
the ``purpose'' section of the proposed rule change.
    \4\ See Partial Amendment dated, February 15, 2006 (``Amendment
No. 2''), which made technical and clarifying changes to the
``purpose'' section of the proposed rule change.
    \5\ See Securities Exchange Act Release No. 53324 (February 16,
2006), 71 FR 9614 (February 24, 2006)(``USOF Notice'').
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II. Description of the Proposal

    The Exchange proposes to add new Rules 1500 et seq. to permit the
listing and trading of units in a partnership that is a commodity pool
under the

Commodity Exchange Act (``CEA'') \6\ that are designed to track a
specified commodity or index of commodities by holding any combination
of investments (i) comprised of or based on futures contracts, options
on futures contracts, forward contracts, swaps, and over-the-counter
(``OTC'') contracts for commodities or based on price changes in
commodities, and (ii) in securities that may be required to satisfy
margin or collateral requirements associated with investments in the
financial instruments listed in item (i) above. Pursuant to these
proposed rules, the Amex proposes to list and trade units (the
``Units'') of the United States Oil Fund, LP (``USOF'' or the
``Partnership''). The Units represent ownership of a fractional
undivided beneficial interest in the net assets of USOF.
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    \6\ The offering of the Units of the Partnership is registered
with the Commission under the Securities Act of 1933.
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    USOF, a Delaware limited partnership, is a commodity pool.\7\ It is
operated by Victoria Bay Asset Management, LLC, a single member
Delaware limited liability company (the ``General Partner'' or
``Victoria Bay''), which is wholly owned by Wainwright Holdings, Inc.
The General Partner was formed for the specific purpose of managing and
controlling USOF and has registered as a Commodity Pool Operator
(``CPO'') with the Commodity Futures Trading Commission (``CFTC'') and
become a member of the National Futures Association (``NFA'').\8\
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    \7\ The Exchange states that USOF is not an investment company
as defined in Section 3(a) of the Investment Company Act of 1940.
    \8\ Telephone conversation between Jeffrey Burns, Senior
Associate General Counsel, Amex, Florence Harmon, Senior Special
Counsel, Division of Market Regulation (``Division''), Commission,
and Johnna B. Dumler, Attorney, Division, Commission, on February
15, 2006. Additional information about the management and structure
of USOF is found in the USOF Notice, supra note 5.
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    The investment objective of the USOF is for its net asset value
(``NAV'') \9\ to reflect the performance of the spot price of West
Texas Intermediate light, sweet crude oil delivered to Cushing,
Oklahoma (the ``WTI light, sweet crude oil''),\10\ as represented by
the performance of the price of the ``Benchmark Oil Futures Contract,''
\11\ less the expense of operation of USOF. The ``Benchmark Oil Futures
Contract'' is the near-month (i.e., spot month) future contract for
delivery of WTI light, sweet crude oil traded on the New York
Mercantile Exchange (``NYMEX'').\12\ The Exchange states that an
investment in the Units will allow both retail and institutional
investors to easily gain exposure to the crude oil market in a cost-
effective manner.
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    \9\ NAV is the total assets, less total liabilities of USOF,
determined on the basis of generally accepted accounting principles.
NAV per Unit is the NAV of USOF divided by the number of outstanding
Units.
    \10\ The types of crude oil are typically described by a
combination of their physical attributes and their place of origin.
A few of these types of crude oil are widely traded and their prices
serve as benchmarks in determining the spot and forward prices of
the other types of crude oil. The three most important types of
crude oil that are used as benchmarks are the light, sweet crude
from the United States known as ``West Texas Intermediate,'' a
light, sweet crude from Europe's North Sea known as ``Brent Crude,''
and a medium crude oil from the Middle East known as ``Dubai
Crude.'' These three types of crude oil are the ones used most
frequently in the trading of listed futures contracts, listed
options, and non-exchange listed derivative contracts based on crude
oil.
    \11\ Telephone conversation between Florence E. Harmon, Senior
Special Counsel, Division, Commission, and Cliff Weber, Senior Vice
President, Amex, on March 24, 2006.
    \12\ The Exchange will file a Form 19b-4 to obtain Commission
approval for the continued listing and trading of the Units should
the General Partner change the Benchmark Oil Futures Contract from
this NYMEX WTI light, sweet crude oil futures contract. Telephone
conversation between Jeffrey Burns, Senior Associate General
Counsel, Amex, Florence Harmon, Senior Special Counsel, Division,
Commission, and Johnna B. Dumler, Attorney, Division, Commission, on
February 13, 2006.
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    The assets of USOF will consist of futures contracts for light,
sweet crude oil and other petroleum based fuels that are traded on the
NYMEX or other U.S. and foreign exchanges \13\ (collectively, ``Oil
Futures Contracts''). USOF will also purchase other oil interests, such
as cash-settled options on Oil Futures Contracts, forward contracts for
oil, and OTC transactions that are based on the price of oil, other
petroleum-based fuels, and indices based on the foregoing
(collectively, ``Other Oil Interests'') (Oil Futures Contracts and
Other Oil Interests are collectively referred to as ``Oil Interests.'')
The Oil Interests for light, sweet crude oil and other petroleum based
fuels in which USOF will invest are based on domestic oil, (WTI light,
sweet crude), international oil (Brent Crude Oil), heating oil, natural
gas, and gasoline. A description of these commodities and the primary
trading market for futures contracts based on such commodities is set
out in the USOF Notice.\14\
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    \13\ USOF will primarily purchase WTI light, sweet crude Oil
Futures Contracts traded on the NYMEX, but may also purchase Oil
Futures Contracts on other exchanges, including the Intercontinental
Exchange, formerly known as the International Petroleum Exchange,
which operates its futures business through ICE Futures (``ICE
Futures''), and the Singapore Oil Exchange.
    \14\ See USOF Notice, supra note 5.
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    USOF will also invest in short term obligations of the United
States Government (``Treasuries'') to be used to satisfy its current or
future margin and collateral requirements and to otherwise satisfy its
obligations with respect to its investments in Oil Interests.
    Commodity-Based Trust Shares are trust issued receipts (``TIRs'')
based on the value of an underlying commodity or index of commodities
held by a trust.\15\ Because of USOF's structure as a partnership and
the nature of its investments, the current Commodity-Based Trust Shares
rules (Amex Rules 1200A et seq.) do not specifically permit the
Exchange to list this product. This proposal seeks to expand the
ability of the Exchange to list and/or trade securities based on a
portfolio of underlying investments that may not be ``securities'' in
circumstances where the issuer is a partnership, organized as a
commodities pool under the CEA.
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    \15\ See Securities Exchange Act Release No. 51446 (March 29,
2005), 70 FR 17272 (April 5, 2005). The Exchange listed and traded
the iShares[reg] COMEX Gold Trust under Amex Rule 1200A as the first
Commodity Based Trust Share. Recently, the Exchange commenced the
trading of shares of the streetTRACKS[reg] Gold Trust (GLD) pursuant
to Amex Rule 1000B on an unlisted trading privileges (``UTP'')
basis. See also Securities Exchange Act Release No. 53105 (January
11, 2006), 71 FR 3129 (January 19, 2006) (order approving listing
and trading of DB Commodity Index Tracking Fund).
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    Under proposed Amex Rule 1501, the Exchange would be able to list
and trade the Units issued by USOF. For units issued by other
commodity-based partnerships or other types of units issued by USOF, if
any, the Exchange will submit a filing pursuant to Section 19(b) of the
Act, subject to the review and approval of the Commission. The Exchange
submits that the Units will conform to the initial and continued
listing criteria under proposed Amex Rule 1502.\16\
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    \16\ Proposed Amex Rule 1502 for listing the Units is
substantially similar to current Amex Rule 1202A relating to
Commodity-Based Trust Shares. As set forth in the section ``Initial
and Continued Listing'' of proposed Amex Rule 1502, the minimum
number of Units required to be outstanding at the time of trading
will be 100,000. This section of the proposed rule specifically
details the initial and continued listing standards for the Units.
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    Information about the liquidity, depth, and pricing mechanisms of
the international oil market, operation of the USOF, and descriptions
of the Units of USOF follows below.\17\
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    \17\ Further information about the USOF is provided in the USOF
Notice, supra note 5.
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Description of the Oil Market

    The Exchange states that crude oil is the world's most actively
traded commodity. The investment objective of USOF is to track the spot
month futures contracts for WTI light, sweet crude traded on the NYMEX,
and thus USOF will primarily purchase WTI light, sweet crude Oil
Futures Contracts traded on the NYMEX. The Oil Futures Contracts for
light, sweet crude oil that

are traded on the NYMEX are the world's most liquid forum for crude oil
trading, as well as the most liquid futures contracts on a physical
commodity. Due to the liquidity and price transparency of Oil Futures
Contracts, they are used as a principal international pricing
benchmark. Oil Futures Contracts for WTI light, sweet crude oil trade
on the NYMEX in units of 1,000 U.S. barrels (42,000 gallons) and, if
not closed out before maturity, will result in delivery of the oil to
Cushing, Oklahoma, which is also accessible to the world market by two
major interstate petroleum pipeline systems.\18\
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    \18\ In practice, few Oil Futures Contracts result in delivery
of the underlying oil.
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Futures Regulation

    The CEA \19\ governs the regulation of commodity interest
transactions, markets, and intermediaries. The CFTC administers the
CEA. Among other things, the CEA provides that the trading of commodity
interest contracts generally must be upon exchanges designated as
contract markets or derivatives transaction execution facilities and
that all trading on those exchanges must be done by or through exchange
members. Commodity interest trading between sophisticated persons may
be traded on a trading facility not regulated by the CFTC. As a general
matter, the Exchange states that trading in spot contracts, forward
contracts, options on forward contracts or options on commodities, or
swap contracts between eligible contract participants is not within the
jurisdiction of the CFTC and may therefore be effectively unregulated.
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    \19\ 7 U.S.C. 1 et seq.
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    The Exchange states that non-U.S. futures exchanges differ in
certain respects from their U.S. counterparts. Importantly, non-U.S.
futures exchanges are not subject to regulation by the CFTC, but rather
are regulated by their home country regulator. In contrast to U.S.
designated contract markets, some non-U.S. exchanges are principals'
markets, where trades remain the liability of the traders involved, and
the exchange or an affiliated clearing organization, if any, does not
become substituted for any party. Due to the absence of a clearing
system, the Exchange states that such exchanges are significantly more
susceptible to disruptions. Further, participants in such markets must
often satisfy themselves as to the individual creditworthiness of each
entity with which they enter into a trade. Trading on non-U.S.
exchanges is often in the currency of the exchange's home jurisdiction.
Consequently, USOF may be subject to the additional risk of
fluctuations in the exchange rate between such currencies and U.S.
dollars and the possibility that exchange controls could be imposed in
the future.

Investment Strategy

    In connection with tracking the price of the Benchmark Oil Futures
Contract, the General Partner will endeavor to place USOF's trades in
Oil Futures Contracts and Other Oil Interests and otherwise manage
USOF's investments so that ``A'' will be within 10 percent
of ``B'', where:
     A is the average daily change in USOF's NAV for any period
of 30 successive valuation days, i.e., any day as of which USOF
calculates its NAV; and
     B is the average daily change in the price of the
Benchmark Oil Futures Contract over the same period.
    Therefore, USOF's investment objective is to manage its assets so
that the average daily change in the NAV for any period of 30
successive valuation days will be within 10% of the average daily
change in the price of the Benchmark Oil Futures Contract over the same
period.\20\
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    \20\ Telephone conversation between Jeffrey Burns, Senior
Associate General Counsel, Amex, Florence Harmon, Senior Special
Counsel, Division, Commission, and Johnna B. Dumler, Attorney,
Division, Commission, on February 13, 2006.
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    The Exchange believes that market arbitrage opportunities should
cause USOF's Unit price to closely track USOF's per Unit NAV, which is
targeted at the current Benchmark Oil Futures Contract. The price of
the Benchmark Oil Futures Contract has closely tracked the spot price
of WTI light, sweet crude oil over time.\21\ Accordingly, the General
Partner expects that the price of USOF's Units on the Exchange will
closely track the spot price of a barrel of WTI light, sweet crude oil,
less USOF's expenses.
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    \21\ See Exhibit A attached to the Form 19b-4 filed by the
Exchange, showing the tracking of the Benchmark Oil Futures Contract
and the WTI spot price.
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Investments

    USOF believes that it will be able to use a combination of Oil
Futures Contracts and Other Oil Interests to manage the portfolio to
achieve its investment objective of tracking the price of the Benchmark
Oil Futures Contract. USOF further anticipates that the exact mix of
Oil Futures Contracts and Other Oil Interests held by the portfolio
will vary over time depending on, among over things, the amount of
invested assets in the portfolio, price movements of oil, the rules and
regulations of the various futures and commodities exchanges and
trading platforms that deal in Oil Interests, and innovations in the
Oil Interests marketplace including both the creation of new Oil
Interest investment vehicles and the creation of new trading venues
that trade in Oil Interests.
    USOF's total portfolio composition will be disclosed each business
day that the Amex is open for trading on its Web site at http://www.unitedstatesoilfund.com and/or the Exchange's Web site at http://

http://www.amex.com. USOF states that Web site disclosure of portfolio

holdings will be made daily and will include, as applicable, the name
and value of each Oil Interest, the specific types of Other Oil
Interests and characteristics of such Other Oil Interests, Treasuries
and amount of cash held in the portfolio of USOF.\22\
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    \22\ See Amendment No. 1. The public Web site disclosure of the
portfolio composition of USOF will coincide with the disclosure by
the Administrator on each business day of the NAV for the Units and
the Basket Amount (for orders placed during the day). Therefore, the
same portfolio information will be provided on the public Web site,
as well as in the facsimile or electronic mail message to Authorized
Purchasers containing the NAV and Basket Amount (``Daily
Dissemination''). The format of the public Web site disclosure and
the Daily Dissemination will differ because the public Web site will
list all portfolio holdings, while the Daily Dissemination will
provide the portfolio holdings in a format appropriate for
Authorized Purchasers, i.e., the exact components of a Creation
Unit.
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Oil Futures Contracts
    The principal Oil Interests to be invested in by USOF are Oil
Futures Contracts. In particular, USOF expects to purchase futures on
the WTI light, sweet crude oil traded on the NYMEX. USOF may also
purchase futures on Brent crude oil traded on NYMEX.\23\ Brent crude
oil futures contracts are also listed on the ICE Futures. In addition
to the commodities and futures exchanges in New York and London,
several other established futures exchanges currently offer, or have
announced plans to offer, trading in futures contracts on light,
medium, or heavy crude oils, including exchanges in Singapore, Tokyo,
Shanghai and Dubai.\24\
    As noted above, the NYMEX futures contracts on WTI light, sweet
crude oil have historically closely tracked the investment objective of
USOF over both

the short-term, medium-term, and the long-term.\25\ For that reason,
USOF anticipates making significant investments in the current
Benchmark Oil Futures Contract. The General Partner submits that Other
Oil Futures Contracts, such as the Brent crude oil futures contract
traded on the NYMEX and ICE Futures, the Dubai crude oil futures
contract traded in Singapore and elsewhere, and other NYMEX petroleum-
based futures contracts such as heating oil and gasoline, have also
tended to track the investment objective of USOF, though not as closely
as the NYMEX light, sweet crude (WTI) oil futures contract.\26\
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    \23\ Brent crude oil is the price reference for two-thirds of
the world's traded oil.
    \24\ The Exchange has represented that the USOF will only
purchase Oil Futures Contracts on markets where the Exchange has
entered into the appropriate comprehensive surveillance sharing
arrangements. See infra, note 53.
    \25\ See supra note 21 and text accompanying note 12.
    \26\ See Exhibit B attached to the Form 19b-4 filed by the
Exchange, tracking the NYMEX futures contracts on light, sweet crude
oil, heating oil, natural gas and gasoline from November 17, 1995 to
November 11, 2005.
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Other Oil Interests
    In addition to Oil Futures Contracts, there are also a number of
listed options on Oil Futures Contracts on the principal commodities
and futures exchanges. These option contracts offer investors and
hedgers another vehicle for managing exposure to the crude oil market.
USOF may purchase oil-related listed options on these exchanges in
pursuing its investment objective.
    In addition to the Oil Futures Contracts and related listed
options, there also exists an active OTC market in derivatives linked
to crude oil. These OTC derivative transactions are privately-
negotiated agreements between two parties. Unlike most of the exchange-
traded Oil Futures Contracts or related options, each party to an OTC
contract bears the credit risk that the counterparty may not be able to
perform its obligations.
    Some oil-based derivatives transactions contain fairly generic
terms and conditions and are available from a wide range of
participants. Other oil-based derivatives have highly customized terms
and conditions and are not as widely available. Many of these OTC
contracts are cash-settled forwards for the future delivery of oil-or
petroleum-based fuels that have terms similar to the Oil Futures
Contracts. Others take the form of ``swaps'' in which the two parties
exchange cash flows based on pre-determined formulas tied to the price
of oil as determined by the spot, forward, or futures markets. USOF may
enter into OTC derivative contracts whose value will be tied to changes
in the difference between the WTI spot price, the price of Oil Futures
Contracts traded on NYMEX, and the prices of non-NYMEX Oil Futures
Contracts that may be invested in by USOF.
    To protect itself from the credit risk that arises in connection
with such contracts, USOF will enter into agreements with each
counterparty that provide for the netting of its overall exposure to
its counterparty and/or provide collateral or other credit support to
address USOF's exposure.\27\ The counterparties to an OTC contract will
generally be major broker-dealers and banks or their affiliates, though
certain institutions, such as large energy companies or other
institutions active in oil commodities markets, may also be
counterparties. The creditworthiness of each potential counterparty
will be assessed by the General Partner. The General Partner will
assess or review, as appropriate, the creditworthiness of each
potential or existing counterparty to an OTC contract pursuant to
guidelines approved by the General Partner's Board of Directors.
Furthermore, the General Partner on behalf of USOF will only enter into
OTC contracts with (a) members of the Federal Reserve System or foreign
banks with branches regulated by the Federal Reserve Board; (b) primary
dealers in U.S. government securities; (c) broker-dealers; (d)
commodities futures merchants; or (e) affiliates of the foregoing.
Existing counterparties will also be reviewed periodically by the
General Partner.
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    \27\ The agreements published by the International Swap and
Derivatives Association (``ISDA'') and used extensively in the OTC
derivatives market provides ``netting'' provisions. As discussed
above, USOF's total portfolio composition will be disclosed, each
business day that the Amex is open for trading, on its Web site at
http://www.unitedstatesoilfund.com and/or the Exchange's Web site at

http://www.amex.com, with a valuation assigned to these instruments.

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    USOF anticipates that the use of Other Oil Interests, together with
its investments in Oil Futures Contracts, will produce price and total
return results that closely track the investment objective of USOF.
Treasuries and Cash
    USOF will invest virtually all of its assets not invested in Oil
Interests in Treasuries, currently anticipated to be those securities
with a remaining maturity of two years or less. The Treasuries and any
cash will be available to be used to meet USOF's current or potential
margin and collateral requirements with respect to its investments in
Oil Interests. USOF will not use Treasuries as margin for new
investments unless it has a sufficient amount of Treasuries and cash to
meet the margin or collateral requirements that may arise due to
changes in the value of its currently held Oil Interests. Other than in
connection with a redemption of Units, USOF does not intend to
distribute cash or property to its Unit holders. Interest earned on
Treasuries and cash held by USOF will be retained by it to pay its
expenses, to make investments to satisfy its investment objectives, or
to satisfy its margin or collateral requirements.
Impact of Speculative Position Limits
    The CFTC and U.S. designated contract markets, such as the NYMEX,
have speculative position limits or position limits on the maximum net
long or net short speculative position that any person or group of
persons under common trading control (other than a hedger) may hold,
own, or control in commodity interests. Among the purposes of
speculative position limits is to prevent a corner or squeeze on a
market or undue influence on prices by any single trader or group of
traders.\28\
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    \28\ Most U.S. futures exchanges limit the amount of fluctuation
in some futures contracts or options on futures contract prices
during a single trading session. These regulations specify what are
referred to as daily price fluctuation limits (i.e., daily limits).
The daily limits establish the maximum amount that the price of a
futures contract or options on a futures contract may vary either up
or down from the previous day's settlement price. Once the daily
limit has been reached in a particular futures contract or options
on a futures contract, no trades may be made at a price beyond the
limit.
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    The foregoing speculative position limits will impact the mix of
investments in Oil Interests by USOF, with such mix varying depending
on the level of assets held by USOF. The following example illustrates
how the mix will vary as assets increase, assuming the spot price of
WTI light, sweet crude oil remains the same: Assuming the spot price
for WTI light, sweet crude oil and the Unit price were each $60, USOF
anticipates that it would invest the first $300 million of its daily
net assets only in Oil Futures Contracts. The majority of those
contracts will consist of the current Benchmark Oil Futures Contract.
At this level, USOF could purchase 5,000 of such contacts or 25% of the
NYMEX's speculative position limit for such contracts. When daily net
assets exceed $300 million, USOF anticipates that it will invest the
majority of its assets above that amount in the current Benchmark Oil
Futures Contract with the balance of its net assets being invested in a
mix of other Oil Futures Contracts, such as the Brent crude oil futures
contract traded on NYMEX or the ICE Futures, and Other Oil Interests.
At this level, USOF anticipates that it

would also invest in various OTC derivative contracts to hedge the
short-term price movements of Oil Futures Contracts against the current
Benchmark Oil Futures Contract.
    Once the daily net assets of the portfolio exceed approximately
$1.2 billion, USOF anticipates that a majority of all further
investments will be made in Oil Futures Contracts, other than the
current Benchmark Oil Futures Contract, and in Other Oil Interests.
    USOF anticipates that once the daily net assets of the portfolio
exceed approximately $2.4 billion, the ability of the portfolio to
invest in additional current Benchmark Oil Futures Contracts may be
sharply limited due to speculative position limit rules in effect on
the NYMEX. Assuming the current Benchmark Oil Futures Contract is at
the same price level and half of the USOF's assets were then fully
invested in such contracts ($1.2 billion), the current NYMEX position
limits for such contracts (20,000 contracts) would be met. Under that
scenario, all additional investments above the $2.4 billion level would
be required to be invested in other Oil Future Contracts and Other Oil
Interests. USOF anticipates that at or above the $2.4 billion daily net
asset level, the majority of the total portfolio holdings would be in
other Oil Futures Contracts or Other Oil Interests.

Issuance and Redemption of USOF Units

    There will be two markets for investors to purchase and sell Units.
New issuances of the Units will be made only in baskets of 100,000
Units or multiples thereof (a ``Basket''). USOF will issue and redeem
Baskets of the Units on a continuous basis by or through participants
who have entered into authorized purchaser agreements (``Authorized
Purchaser Agreement'' and each such participant, an ``Authorized
Purchaser'') \29\ with the General Partner, at the NAV per Unit next
determined after an order to purchase the Units in a Basket is received
in proper form. Baskets may be issued and redeemed on any Business day
(defined as any day other than a day on which the Amex, the NYMEX or
the New York Stock Exchange is closed for regular trading) through the
Marketing Agent in exchange for cash and/or Treasuries, which the
Custodian receives from Authorized Purchasers or transfers to
Authorized Purchasers, in each case on behalf of USOF. Baskets are then
separable upon issuance into identical Units that will be listed and
traded on the Exchange as equity securities.\30\
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    \29\ An ``Authorized Purchaser'' is a person, who at the time of
submitting to the General Partner an order to create or redeem one
or more Baskets: (i) Is a registered broker-dealer or other market
participants, such as banks and other financial institutions, that
are exempt from broker-dealer registration; (ii) is a DTC
Participant; and (iii) has in effect a valid Authorized Participant
Agreement. Telephone conversation between Jeffrey Burns, Senior
Associate General Counsel, Amex, Florence Harmon, Senior Special
Counsel, Division, Commission, and Johnna B. Dumler, Attorney,
Division, Commission, on February 13, 2006 (clarifying that the
reference to ``trustee'' in this sentence should be changed to
``General Partner'').
    \30\ The Exchange expects that the number of outstanding Units
will increase and decrease as a result of creations and redemptions
of Baskets.
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    Baskets will be issued in exchange for Treasuries and/or cash in an
amount equal to the NAV per Unit times 100,000 Units (the ``Basket
Amount''). Authorized Purchasers that wish to purchase a Basket must
transfer the Basket Amount to the Administrator (the ``Deposit
Amount''). Authorized Purchasers that wish to redeem a Basket will
receive an amount of Treasuries and cash in exchange for each Basket
surrendered in an amount equal to the NAV per Basket (the ``Redemption
Amount'').
    On each business day, the Administrator will make available prior
to the opening of trading on the Exchange, the estimated Basket Amount
for the creation of a Basket based on the prior day's NAV.\31\ The
Exchange will disseminate at least every 15 seconds throughout the
trading day, via the facilities of the Consolidated Tape Association
(``CTA''), an amount representing, on a per Unit basis, the current
indicative value of the Basket Amount (See ``Indicative Partnership
Value'' below). Shortly after 4 p.m. Eastern Time (``ET''), the
Administrator will determine the NAV for USOF as described below. At or
about 4 p.m. ET on each business day, the Administrator will determine
the Actual Basket Amount (``Actual Basket Amount'') for orders placed
by Authorized Purchasers received before 12 p.m. ET that day.\32\ Thus,
although Authorized Purchasers place orders to purchase Units during
the trading day until 12 p.m. ET, the Actual Basket Amount is
determined as of 4 p.m. ET.
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    \31\ Amex clarified that it intended for this sentence to
indicate that the Administrator will make available an ``estimated''
Basket Amount prior to the opening of trading on the Exchange,
rather than the Actual Basket Amount (as described below), which
will not be available until shortly after the close of trading on
each business day. Additionally, such information (NAV, Actual
Basket Amount, Estimated Basket Amount, daily disclosure of
portfolio holdings) will be available to all market participants at
the same time to avoid any informational advantage. Telephone
conversation between Jeffrey Burns, Senior Associate General
Counsel, Amex, Florence Harmon, Senior Special Counsel, Division,
Commission, and Johnna B. Dumler, Attorney, Division, Commission, on
February 8, 2006.
    \32\ See Amendment No. 2, supra note 4. See also ``Calculation
and Payment of Deposit Amount'' and ``Calculation and Payment of
Redemption Amount,'' infra.
---------------------------------------------------------------------------

    Shortly after 4 p.m. ET on each business day, the Administrator,
Amex, and the General Partner will disseminate the NAV for the Units
and the Actual Basket Amount (for orders placed during the day). The
Basket Amount and the NAV are communicated by the Administrator to all
Authorized Purchasers via facsimile or electronic mail message. The
Amex will also disclose the NAV and the Actual Basket Amount on its Web
site at http://www.amex.com.\33\ On each day that the Amex is open for

regular trading, the Administrator will adjust the Deposit Amount as
appropriate to reflect the prior day's Partnership NAV and accrued
expenses. The Administrator will then determine the Deposit Amount for
a given business day.
---------------------------------------------------------------------------

    \33\ See supra, note 32.
---------------------------------------------------------------------------

Calculation of USOF's NAV
    The Administrator will calculate NAV as follows: (1) Determine the
current value of USOF assets and (2) subtract the liabilities of USOF.
The NAV will be calculated at 4 p.m. ET using the settlement value \34\
of Oil Futures Contracts traded on the NYMEX as of the close of open-
outcry trading on the NYMEX at 2:30 p.m. ET,\35\ and for the value of
other Oil Futures Interests and Treasuries, the value of such
investments as of the earlier of 4 p.m. ET or the close of trading on
the New York Stock Exchange. The NAV is calculated by including any
unrealized profit or loss on Oil Futures Contracts and other Oil
Interests and any other credit or debit accruing to USOF but unpaid or
not received by USOF. The NAV is then used to compute all fees
(including the management and administrative fees) that are calculated
from the value of Partnership assets. The Administrator will calculate
the NAV per unit by dividing the NAV by the number of Units
outstanding.
---------------------------------------------------------------------------

    \34\ See Rule 6.52 of the NYMEX Rulebook.
    \35\ Telephone conversation between Jeffrey Burns, Senior
Associate General Counsel, Amex, Florence Harmon, Senior Special
Counsel, Division, Commission, and Johnna B. Dumler, Attorney,
Division, Commission, on February 8, 2006.
---------------------------------------------------------------------------

    When calculating NAV for USOF, the Administrator will value Oil
Futures Contracts based on the closing settlement prices quoted on the
relevant commodities and futures exchange and obtained from various
market data

vendors such as Bloomberg or Reuters.\36\ The value of the Other Oil
Interests for purposes of determining the NAV will be valued based upon
the determination of the Administrator as to their fair market value.
Certain types of Other Oil Interests, such as listed options on futures
contracts, have closing prices that are available from the exchange
upon which they are traded or from various market data vendors. If
available from an exchange, Other Oil Interests will be valued based on
the last sale price on the exchange or market where traded. If a
contract fails to trade, the value shall be the most recent bid
quotation from the third-party source.
---------------------------------------------------------------------------

    \36\ The Amex confirmed that the pricing for the NAV also will
be derived from the NYMEX futures contract nearest to settlement
(spot month) for WTI light, sweet crude.
---------------------------------------------------------------------------

    Other types of Other Oil Interests, such as crude oil forward
contracts do not trade on established exchanges, but typically have
prices that are widely available from third-party sources. The
Administrator may make use of such third-party sources in calculating a
fair market value of these Other Oil Interests.
    Certain types of Other Oil Interests, such as ``swaps,'' also do
not have established exchanges upon which they trade and may not have
readily available price quotes from third parties. Swaps and other
similar derivative or contractual-type instruments will be first valued
at a price provided by a single broker or dealer, typically the
counterparty. If no such price is available, the contract will be
valued at the price at which the counterparty to such contract would
repurchase the instrument or terminate the contract. In determining the
fair market value of such derivative contracts, the Administrator may
make use of quotes from other providers of similar derivatives. If
these are not available, the Administrator may calculate a fair market
value of the derivative contract based on the terms of the contract and
the movement of the underlying price factors of the contract.
Calculation and Payment of the Deposit Amount
    The Deposit Amount of Treasuries and cash will be in the same
proportion to the total net assets of USOF as the number of Units to be
created is in proportion to the total number of Units outstanding. The
General Partner will determine the requirements for the Treasuries that
may be included in the Deposit Amount and will disseminate these
requirements prior to the start of each business day. The amount of
cash that is required is the difference between the aggregate market
value of the Treasuries required to be included in the Deposit Amount
as of 4 p.m. ET on the date of purchase and the total required deposit.
    All purchase orders must be received by the Marketing Agent by 12
p.m. ET. Delivery of the Deposit Amount, i.e., Treasuries and cash, to
the Administrator must occur by the third Business day following the
purchase order date.\37\ Thus, the General Partner will disseminate
shortly after 4 p.m. ET the amount of Treasuries and cash to be
deposited with the Custodian for each Basket (100,000 Units) order
properly submitted by Authorized Purchasers by 12 p.m. ET that business
day, (e.g., the Actual Basket Amount).
---------------------------------------------------------------------------

    \37\ Authorized Purchasers are required to pay a transaction fee
of $1,000 for each order to create one or more Baskets.
---------------------------------------------------------------------------

Calculation and Payment of the Redemption Amount
    The Units will not be individually redeemable but will only be
redeemable in Baskets. To redeem, an Authorized Purchaser will be
required to accumulate enough Units to constitute a Basket (i.e.,
100,000 Units). An Authorized Purchaser redeeming a Basket will receive
the Redemption Amount.
    Upon the surrender of the Units and payment of applicable
redemption transaction fee,\38\ taxes or charges, the Custodian will
deliver to the redeeming Authorized Purchaser the Redemption Amount.
The Redemption Amount of Treasuries and cash will be in the same
proportion to the total net assets of USOF as the number of Units to be
redeemed is in proportion to the total number of Units outstanding. The
General Partner will determine the Treasuries to be included in the
Redemption Amount. The amount of cash that is required is the
difference between the aggregate market value of the Treasuries
required to be included in the Redemption Amount calculated as of 4:00
p.m. ET on the date of redemption and the total Redemption Amount. All
redemption orders must be received by the Marketing Agent by 12:00 p.m.
ET on the date redemption is requested. Delivery of the Basket to be
redeemed to the Custodian and payment of Redemption Amount will occur
by the third business day (T+3) following the redemption order date.
---------------------------------------------------------------------------

    \38\ Authorized Purchasers are required to pay a transaction fee
of $1,000 for each order to redeem one or more Baskets.
---------------------------------------------------------------------------

    The Exchange believes that the Units will not trade at a material
discount or premium to a Unit's NAV based on potential arbitrage
opportunities. Due to the fact that the Units can be created and
redeemed only in Baskets at the NAV, the Exchange submits that
arbitrage opportunities should provide a mechanism to mitigate the
effect of any premiums or discounts that may exist from time to time.

Dissemination and Availability of Information

Oil Futures Contracts
    The daily settlement prices for the NYMEX traded Oil Futures
Contracts held by USOF are publicly available on the NYMEX Web site at
http://www.nymex.com The Exchange's Web site at http://www.amex.com.
will also include a hyperlink to the NYMEX Web site for the purpose of
disclosing futures contract pricing. In addition, various market data
vendors and news publications publish futures prices and related data.
The Exchange represents that quote and last sale information for the
Oil Futures Contracts are widely disseminated through a variety of
market data vendors worldwide, including Bloomberg and Reuters. Thus,
last sale information for the Benchmark Oil Futures Contract will be
updated and disseminated at least every 15 seconds in accordance with
the continued listing standards by one or more major market data
vendors during the time the Units trade on Amex.\39\ From 2:30 p.m. ET
to the opening of NYMEX ACCESS at 3:15 p.m. ET, the pricing for the
Benchmark Oil Futures Contract will not be updated. The Exchange
further represents that real-time futures data is available by
subscription from Reuters and Bloomberg. The NYMEX also provides
delayed futures information on current and past trading sessions and
market news free of charge on its Web site. The specific contract
specifications for the Oil Futures Contracts are also available on the
NYMEX Web site and the ICE Futures Web site at https://www.the ice.com.

---------------------------------------------------------------------------

    \39\ Telephone conversation between Florence E. Harmon, Senior
Special Counsel, Division, Commission, and Cliff Weber, Senior Vice
President, Amex, on March 24, 2006.
---------------------------------------------------------------------------

USOF Units
    The Web site for USOF, which will be publicly accessible at no
charge, will include the following information: (1) The prior business
day's NAV and the reported closing price; (2) the mid-point of the bid-
ask price \40\ in relation to the NAV as of the time the NAV is
calculated (the ``Bid-Ask Price''); (3)

calculation of the premium or discount of such price against such NAV;
(4) data in chart form displaying the frequency distribution of
discounts and premiums of the Bid-Ask Price against the NAV, within
appropriate ranges for each of the four (4) previous calendar quarters;
(5) the prospectus and the most recent periodic reports filed with the
Commission or required by the CFTC; and (6) other applicable
quantitative information. In addition, information on USOF's daily
portfolio holdings will be available on its Web site at http://www.unitedstatesoilfund.com
 and will be equally accessible to investors

and Authorized Purchasers.\41\
---------------------------------------------------------------------------

    \40\ The Bid-Ask Price of Units is determined using the highest
bid and lowest offer as of the time of calculation of the NAV.
    \41\ See Amendment No. 1, supra note 3.
---------------------------------------------------------------------------

    As described above, the NAV for USOF will be calculated and
disseminated daily. The Amex also intends to disseminate for USOF on a
daily basis by means of CTA/CQ High Speed Lines information with
respect to the Indicative Partnership Value (as discussed below),
recent NAV, Units outstanding, the estimated Basket Amount and the
Deposit Amount (e.g., the Actual Basket Amount). The Exchange will also
make available on its Web site daily trading volume, closing prices and
the NAV. The closing price and settlement prices of the Oil Futures
Contracts held by USOF are also readily available from the NYMEX,
automated quotation systems, published or other public sources, or on-
line information services such as Bloomberg or Reuters. In addition,
the Exchange will provide a hyperlink on its Web site at http://www.amex.com
 to USOF's Web site.

Indicative Partnership Value
    The Exchange will disseminate through the facilities of the CTA an
updated Indicative Partnership Value (the ``Indicative Partnership
Value'') per Unit basis at least every 15 seconds during the regular
Amex trading hours of 9:30 a.m. to 4:15 p.m. ET. The Indicative
Partnership Value will be calculated based on the Treasuries and cash
required for creations and redemptions (i.e., NAV per limit x 100,000)
adjusted to reflect the price changes of the current Benchmark Oil
Futures Contract.
    The Indicative Partnership Value will not reflect price changes to
the price of the current Benchmark Oil Futures Contract between the
close of open-outcry trading of these oil futures contract on the NYMEX
at 2:30 p.m. ET and the open of trading on the NYMEX ACCESS market at
3:15 p.m. ET.\42\ The Indicative Partnership Value after 3:15 p.m. ET
will reflect changes to the current Benchmark Oil Futures Contract as
provided for through NYMEX ACCESS. The value of a Unit may accordingly
be influenced by the non-concurrent trading hours of the Amex and
NYMEX. While the Units will trade on the Amex from 9:30 a.m. to 4:15
p.m. ET, the current Benchmark Oil Futures Contract will trade, in
open-outcry, on the NYMEX from 10:00 a.m. ET to 2:30 p.m. ET and NYMEX
ACCESS from 3:15 p.m. ET through the following morning 9:30 a.m. ET.
---------------------------------------------------------------------------

    \42\ NYMEX ACCESS(r), an electronic trading system, is open for
price discovery on the NYMEX light, sweet crude oil futures contract
each Monday through Thursday at 3:15 p.m. ET through the following
morning at 9:30 a.m. ET, and from 7:00 p.m. Sunday night until
Monday morning 9:30 a.m. ET.
---------------------------------------------------------------------------

    The Exchange represents that while the NYMEX (open outcry) is open
for trading, the Indicative Partnership Value can be expected to
closely approximate the value per unit of the Basket Amount. However,
during Amex trading hours when the Oil Futures Contracts have ceased
trading, spreads and resulting premiums or discounts may widen, and
therefore, increase the difference between the price of the Units and
the NAV of the Units. The Exchange believes that dissemination of the
Indicative Partnership Value based on the cash amount required for a
Basket provides additional information that is not otherwise available
to the public and is useful to professionals and investors in
connection with the Units trading on the Exchange or the creation or
redemption of the Units.

Criteria for Initial and Continued Exchange Listing

    USOF will be subject to the criteria in proposed Amex Rule 1502 for
initial and continued listing of the Units. These continued listing
criteria provide for the delisting or removal from listing of the Units
under any of the following circumstances:
     Following the initial twelve month period from the date of
commencement of trading of the Units: (i) If USOF has more than 60 days
remaining until termination and there are fewer than 50 record and/or
beneficial holders of the Units for 30 or more consecutive trading
days; (ii) if USOF has fewer than 50,000 Units issued and outstanding;
or (iii) if the market value of all Units issued and outstanding is
less than $1,000,000.
     If the value of the underlying spot commodity or Oil
Futures Contract is no longer calculated or available on at least a 15-
second delayed basis or the Exchange stops providing a hyperlink on its
Web site to any such investment commodity or asset value.
     The Indicative Partnership Value is no longer made
available on at least a 15-second delayed basis.
     If such other event shall occur or condition exists which
in the opinion of the Exchange makes further dealings on the Exchange
inadvisable.
    A minimum of 100,000 Units will be required to be outstanding at
the start of trading.\43\ It is anticipated that the initial price of a
Unit will be approximately $67.00 based upon the WTI light, sweet crude
oil spot price on March 30, 2006.\44\ USOF expects that the initial
Authorized Purchaser will purchase the initial Basket of 100,000 Units
at the initial offering price per Unit equal to the closing price of
the expiration month light, sweet crude (WTI) oil futures contract
listed on the NYMEX on the first Business day prior to the launch date.
On the date of the public offering and thereafter, USOF will
continuously issue Units in Baskets of 100,000 Units to Authorized
Purchasers at NAV. The Exchange believes that the anticipated minimum
number of Units outstanding at the start of trading is sufficient to
provide adequate market liquidity and to further USOF's objective to
seek to provide a simple and cost effective means of accessing the
commodity futures markets.
---------------------------------------------------------------------------

    \43\ Telephone conversation between Florence E. Harmon, Senior
Special Counsel, Division, Commission, and Cliff Weber, Senior Vice
President, Amex, on March 29, 2006.
    \44\ Telephone conversation between Jeffrey Burns, Associate
General Counsel, Amex, and Florence E. Harmon, Senior Special
Counsel, Division, Commission, on March 31, 2006. As of March 30,
2006, the settlement spot price was $67.15 for a barrel of oil. The
exact price of a Unit will be determined on the date of launch. Id.
---------------------------------------------------------------------------

    The Exchange represents that it prohibits the initial and/or
continued listing of any security that is not in compliance with Rule
10A-3 under the Act.\45\
---------------------------------------------------------------------------

    \45\ The Exchange represents that the listed issuer of the USOF
Units qualifies for the exemption in Rule 10A-3(c)(7) of the Act.
---------------------------------------------------------------------------

Original and Annual Listing Fees

    The Amex original listing fee applicable to the listing of USOF is
$5,000. In addition, the annual listing fee applicable under Section
141 of the Amex Company Guide will be based on the year-end aggregate
number of Units in all series of USOF outstanding at the end of each
calendar year.

Trading Rules

    The Units are equity securities subject to Amex Rules governing the
trading of equity securities, including, among others, rules governing
priority, parity and precedence of orders, specialist responsibilities
and account opening

and customer suitability (Amex Rule 411). Initial equity margin
requirements of 50% will apply to transactions in the Units. Units will
trade on the Amex until 4:15 p.m. ET each business day and will trade
in a minimum price variation of $0.01 pursuant to Amex Rule 127.
Trading rules pertaining to odd-lot trading in Amex equities (Amex Rule
205) will also apply.
    Amex Rule 154, Commentary .04(c) provides that stop and stop limit
orders to buy or sell a security (other than an option, which is
covered by Amex Rule 950(f) and Commentary thereto) the price of which
is derivatively priced based upon another security or index of
securities, may with the prior approval of a Floor Official, be elected
by a quotation, as set forth in Commentary .04(c)(i-v). The Exchange
has designated the Units as eligible for this treatment.\46\
---------------------------------------------------------------------------

    \46\ See Securities Exchange Act Release No. 29063 (April 10,
1991), 56 FR 15652 (April 17, 1991) at note 8, regarding the
Exchange's designation of equity derivative securities as eligible
for such treatment under Amex Rule 154, Commentary .04(c).
---------------------------------------------------------------------------

    The Units will be deemed ``Eligible Securities'', as defined in
Amex Rule 230, for purposes of the Intermarket Trading System Plan and
therefore will be subject to the trade-through provisions of Amex Rule
236 which require that Amex members avoid initiating trade-throughs for
ITS securities.
    Specialist transactions of the Units made in connection with the
creation and redemption of Units will not be subject to the
prohibitions of Amex Rule 190, which generally prohibits business
transactions between a specialist (or its member organization) and a
company (or its officers, directors, or 10% stockholder) in which the
specialist is registered.\47\ Unless exemptive or no-action relief is
available, the Units will be subject to the short sale rule, Rule 10a-1
under the Act and Regulation SHO.\48\ If exemptive or no-action relief
is provided, the Exchange will issue a notice detailing the terms of
the exemption or relief. The Units will generally be subject to the
Exchange's stabilization rule, Amex Rule 170, except that specialists
may buy on ``plus ticks'' and sell on ``minus ticks,'' in order to
bring the Units into parity with the underlying commodity or
commodities and/or futures contract price. Commentary .01 to Amex Rule
1503 sets forth this limited exception to Amex Rule 170.
---------------------------------------------------------------------------

    \47\ See Commentary .05 to Amex Rule 190.
    \48\ USOF expects to seek relief, in the near future, from the
Commission in connection with the trading of the Units from the
operation of the short sale rule, Rule 10a-1 under the Act, no-
action relief from Regulation SHO, and other no-action or exemptive
relief from the Act.
---------------------------------------------------------------------------

    The Amex proposes Rule 1503 to address potential conflicts of
interest in connection with acting as a specialist in the Units.
Specifically, Amex Rule 1503 provides that the prohibitions in Amex
Rule 175(c) apply to a specialist in the Units so that the specialist
or affiliated person may not act or function as a market-maker in an
underlying asset, related futures contract or option or any other
related derivative. An affiliated person of the specialist, consistent
with Amex Rule 193, may be afforded an exemption to act in a market
making capacity, other than as a specialist in the Units on another
market center, in the underlying asset, related futures or options or
any other related derivative.
    Amex Rule 1504(a) provides that the member organization acting as
specialist in the Units is obligated to conduct all trading in the
Units in its specialist account, subject to only the ability to have
one or more investment accounts, all of which must be reported to the
Exchange (See Rule 170).
    Moreover, Amex Rule 1504(b) requires that the specialist in the
Units make available to the Exchange information relating to its
transactions or the transactions of any member, member organization,
limited partner, officer or approved person thereof, registered or non-
registered employee affiliated with such entity for its or their own
accounts in the underlying physical asset or commodity, related futures
or options on futures, or any other related derivatives.\49\ Finally,
Amex Rule 1504(c) prohibits the specialist registered as such in the
Units from using any material nonpublic information received from any
person associated with a member, member organization or employee of
such person regarding trading by such person or employee in the
physical asset or commodity, futures or options on futures, or any
other related derivatives.
---------------------------------------------------------------------------

    \49\ As a general matter, the Exchange has regulatory
jurisdiction over its members, member organizations and approved
persons of a member organization. The Exchange also has regulatory
jurisdiction over any person or entity controlling a member
organization, as well as a subsidiary or affiliate of a member
organization that is in the securities business. A subsidiary or
affiliate of a member organization 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.
---------------------------------------------------------------------------

Trading Halts

    Prior to the commencement of trading, the Exchange will issue an
Information Circular (described below) to members informing them of,
among other things, Exchange policies regarding trading halts in the
Units. First, the Information Circular will advise that trading will be
halted in the event the market volatility trading halt parameters set
forth in Amex Rule 117 have been reached. Second, the Information
Circular will advise that, in addition to the parameters set forth in
Amex Rule 117, the Exchange will halt trading in the Units if trading
in the current Benchmark Oil Futures Contract is halted or suspended.
Third, with respect to a halt in trading that is not specified above,
the Exchange may also consider other relevant factors and the existence
of unusual conditions or circumstances that may be detrimental to the
maintenance of a fair and orderly market. Additionally, the Exchange
represents that it will cease trading the Units if the conditions in
Amex Rule 1202(d)(2)(ii) or (iii) exist (i.e., if there is a halt or
disruption in the dissemination of the Indicative Partnership Value
and/or underlying Benchmark Futures Contract (spot commodity)
value).\50\
---------------------------------------------------------------------------

    \50\ In the event the Benchmark Oil Futures Contract value or
Indicative Partnership Value is no longer calculated or
disseminated, the Exchange would immediately contact the Commission
to discuss measures that may be appropriate under the circumstances.
Telephone conversation between Jeffrey Burns, Associate General
Counsel, Amex, Florence Harmon, Senior Special Counsel, Division,
Commission and Johnna B. Dumler, Attorney, Division, Commission on
February 8, 2006.
---------------------------------------------------------------------------

Information Circular

    The Amex will distribute an Information Circular to its members in
connection with the trading of the Units. The Information Circular,
will discuss the special characteristics of and risks of trading in the
Units. Specifically, the Information Circular, among other things, will
discuss what the Units are, how a basket is created and redeemed, the
requirement that members and member firms deliver a prospectus to
investors purchasing newly issued Units prior to or concurrently with
the confirmation of a transaction, applicable Amex rules, dissemination
information regarding the per unit Indicative Partnership Value,
trading information and applicable suitability rules. The Information
Circular will also explain that USOF is subject to various fees and
expenses described in the Registration Statement. The Information
Circular will also reference the fact that there is no regulated source
of last sale information regarding physical commodities, that the
Commission has no jurisdiction over the trading of WTI light, sweet
crude oil, Brent crude oil, heating oil, gasoline,

natural gas or other petroleum-based fuels, that the CFTC has
regulatory jurisdiction over the trading of oil-based futures contracts
and related options, and that trading in certain OTC commodity based
derivatives is not within the jurisdiction of the CFTC and may
therefore be effectively unregulated.\51\
---------------------------------------------------------------------------

    \51\ Telephone conversation between Jeffrey Burns, Senior
Associate General Counsel, Amex, and Florence Harmon, Senior Special
Counsel, Division, Commission, on March 31, 2006.
---------------------------------------------------------------------------

    The Information Circular will inform members and member
organizations, prior to commencement of trading, of the prospectus
delivery requirements applicable to USOF. The Exchange notes that
investors purchasing Units directly from USOF (by delivery of the
Deposit Amount) will receive a prospectus. Amex members purchasing
Units from USOF for resale to investors will deliver a prospectus to
such investors.
    The Information Circular will also notify members and member
organizations about the procedures for purchases and redemptions of
Units in Baskets, and that Units are not individually redeemable but
are redeemable only in Baskets or multiples thereof.
    The Information Circular will advise members of their suitability
obligations with respect to recommended transactions to customers in
the Units pursuant to Amex Rule 411. The Information Circular will also
discuss any exemptive or no-action relief, if granted, by the
Commission or the staff from any rules under the Act. The Information
Circular will disclose that the NAV for Units will be calculated
shortly after 4:00 p.m. ET each trading day.

Surveillance

    The Exchange submits that its surveillance procedures are adequate
to deter and detect violations of Exchange rules relating to the
trading of the units. The surveillance procedures for the Units will be
similar to those used for the iShares([reg]) COMEX Gold Trust and the
streetTRACKS([reg]) Gold Trust Shares, as well as other TIRs and
exchange-traded funds. In addition, the surveillance procedures will
incorporate and rely on existing Amex surveillance procedures governing
options and equities.\52\
---------------------------------------------------------------------------

    \52\ Proposed Rule 1504 will aid the Exchange in conducting
appropriate surveillance.
---------------------------------------------------------------------------

    The Exchange currently has in place a comprehensive surveillance
sharing agreement with the NYMEX for the purpose of providing
information in connection with trading in or related to futures
contracts traded on the NYMEX. In addition, the Exchange has entered
into a comprehensive surveillance sharing arrangement with ICE Futures
for the purpose of providing information in connection with the trading
in or related to futures contracts traded on the ICE Futures. To the
extent that USOF invests in Oil Interests traded on other exchanges,
the Amex will enter into comprehensive surveillance sharing
arrangements, acceptable to the Commission staff, with those particular
exchanges.\53\
---------------------------------------------------------------------------

    \53\ In such event, the Exchange will file a proposed rule
change pursuant to Rule 19b-4 of the Act, indicating such
surveillance arrangements. Telephone conversation between Jeffrey
Burns, Senior Associate General Counsel, Amex, and Florence Harmon,
Senior Special Counsel, Division, Commission, on March 29, 2006. See
also USOF Notice, supra note 5, at n.14.
---------------------------------------------------------------------------

III. Discussion and Commission's Findings

    After careful consideration, the Commission finds that the proposed
rule change, as amended, is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to a national
securities exchange.\54\ In particular, the Commission finds that the
proposed rule change, as amended, is consistent with the requirements
of Section 6(b)(5) of the Act,\55\ which requires, among other things,
that the Exchange's rules be designed to 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.
---------------------------------------------------------------------------

    \54\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \55\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

A. Surveillance

    Information sharing agreements with primary markets are an
important part of a self-regulatory organization's ability to monitor
for trading abuses in derivative products. The Commission believes that
the Exchange's comprehensive surveillance sharing agreements with the
NYMEX and ICE Futures for the purpose of providing information in
connection with trading in or related to futures contracts traded on
the NYMEX and the ICE Futures create the basis for the Amex to monitor
for fraudulent and manipulative practices in the trading of the Units.
Should the USOF invest in oil derivatives traded on markets such as the
Singapore Oil Market, the Exchange represents that it will file a
proposed rule change pursuant to Section 19(b) of the Act, seeking
Commission approval of the Exchange's surveillance arrangement with
such market.
    Moreover, Amex Rule 1504(b) requires that specialists handling the
Units provide the Exchange with necessary information relating to its
transactions and the trading activities of any member, member
organization, limited partner, officer or approved person thereof,
registered or non-registered employee affiliated with such entity in
the underlying physical assets or commodities, related futures
contracts and options thereon or any other derivative. Furthermore,
Amex Rule 1504(c) prohibits the specialist registered as such in the
Units from using any material nonpublic information received from any
person associated with a member, member organization or employee of
such person regarding trading by such person or employee in the
physical asset or commodity, futures or options on futures, or any
other related derivatives. The Commission believes that these rules
provide the Amex with the tools necessary to adequately surveil trading
in the Units.

B. Dissemination of Information

    The Commission believes that sufficient venues exist for obtaining
reliable information so that investors in the Units can monitor the
underlying Benchmark Oil Futures Contract market relative to the NAV of
their Units. There is a considerable amount of oil futures contract
price and information available through public Web sites and
professional subscription services, including Bloomberg and Reuters.
Other than from 2:30 p.m. to 3:15 p.m. ET, quote and last sale
information for the Benchmark Oil Futures Contract will be updated and
disseminated at least every 15 seconds, in accordance with the
continued listing standards, by one or more major market data vendors
during the time the Units trade on Amex. In addition, the daily
settlement prices for the NYMEX traded Oil Futures Contracts held by
USOF are publicly available on the NYMEX Web site at (http://www.nymex.com
) and various market data vendors, and news publications

publish futures prices and related data. The NYMEX also provides
delayed futures information on current and past trading sessions and
market news free of charge on its Web site.
    The Commission further notes that the Web site for USOF, which will
publicly accessible at no charge, will contain the following
information: (1) The prior business day's NAV and the reported closing
price; (2) the mid-point

of the bid-ask price \56\ in relation to the NAV as of the time the NAV
is calculated (the ``Bid-Ask Price''); (3) calculation of the premium
or discount of such price against such NAV; (4) data in chart form
displaying the frequency distribution of discounts and premiums of the
Bid-Ask Price against the NAV, within appropriate ranges for each of
the four (4) previous calendar quarters; (5) the prospectus and the
most recent periodic reports filed with the Commission or required by
the CFTC; and (6) other applicable quantitative information. In
addition, information on USOF's daily portfolio holdings will be
available on its Web site at (http://www.unitedstatesoilfund.com) and

will be equally accessible to investors and Authorized Purchasers.
---------------------------------------------------------------------------

    \56\ The Bid-Ask Price of Units is determined using the highest
bid and lowest offer as of the time of calculation of the NAV.
---------------------------------------------------------------------------

    In addition, the NAV for the USOF will be calculated and
disseminated on a daily basis. The Exchange represents that it intends
to disseminate for USOF on a daily basis by means of CTA/CQ High Speed
Lines information with respect to the Indicative Partnership Value,
recent NAV, Units outstanding, the estimated Basket Amount and the
Actual Basket Amount. The Exchange will also make available on its Web
site (http://www.amex.com) daily trading volume, closing prices and the

NAV. The Commission believes that the wide availability of information
about the Units the Oil Futures Contracts held by the USOF and NAV will
facilitate transparency with respect to the proposed Units and diminish
the risk of manipulation or unfair informational advantage.

C. Listing and Trading

    The Commission finds that the Exchange's proposed rules and
procedures for the listing and trading of the proposed Units are
consistent with the Act. The Units will trade as equity securities
subject to Amex rules including, among others, rules governing
priority, parity and precedence of orders, specialist responsibilities,
account opening and customer suitability requirements. The Commission
believes that the listing and delisting criteria for the Units should
help to maintain a minimum level of liquidity and therefore minimize
the potential for manipulation of the Units. Finally, the Commission
notes that the Information Circular the Exchange will distribute will
inform members and member organizations about the terms,
characteristics and risks in trading the Units, including their
prospectus delivery obligations.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-Amex-2005-127), as amended, be, and
it hereby is, approved.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\57\
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    \57\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-4971 Filed 4-5-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 84, Number 160 (Monday, August 19, 2019)]
[Rules and Regulations]
[Pages 42814-42815]
[FR Doc No: 2019-17706]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2019-0665]
RIN 1625-AA00

Safety Zone; Ohio River, Point Pleasant, WV

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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SUMMARY: The Coast Guard is establishing a temporary safety zone for
the navigable waters of the Ohio River, from mile marker (MM) 264.6 to
MM 265.6, near Point Pleasant on August 31, 2019 for a Labor Day
fireworks display. The safety zone is needed to protect personnel,
vessels, and the marine environment from potential hazards created by
the fireworks display. Entry of vessels or persons into this zone is
prohibited unless authorized by the Captain of the Port Sector Ohio
Valley or a designated representative.

DATES: This rule is effective from 9:30 through 10 p.m. on August 31,
2019.

ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to https://www.regulations.gov, type USCG-
2019-0665 in the ``SEARCH'' box and click ``SEARCH.'' Click on Open
Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule,
call or email MST3 Wesley Cornelius, MSU Huntington, U.S. Coast Guard;
telephone<PHONE_NUMBER>, email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR Code of Federal Regulations
COTP Captain of the Port Sector Ohio Valley
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
Sec.  Section
U.S.C. United States Code

II. Background Information and Regulatory History

    The Coast Guard is issuing this temporary rule without prior notice
and opportunity to comment pursuant to authority under section 4(a) of
the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This
provision authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good
cause exists for not publishing a notice of proposed rulemaking (NPRM)
with respect to this rule because it is impracticable. It is
impracticable to publish an NPRM because we must establish the safety
zone by August 31, 2019 and lack sufficient time to provide a
reasonable comment period and then consider those comments before
issuing this rule.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register. Delaying the effective date of
this rule would be contrary to the public interest because immediate
action is needed to provide for public safety and mitigation of
potential hazards associated with the fireworks display.

III. Legal Authority and Need for Rule

    The Coast Guard is issuing this rule under authority in 46 U.S.C.
70034 (previously 33 U.S.C. 1231). The Captain of the Port Sector Ohio
Valley (COTP) has determined that potential hazards associated with the
fireworks display on August 31, 2019 will be a safety concern for
anyone within the one-mile stretch of the Ohio River. The purpose of
this rule is to protect personnel, vessels, and the marine environment
in the navigable waters within the regulated area before, during, and
after the scheduled event.

IV. Discussion of the Rule

    This rule establishes a safety zone from 9:30 until 10 p.m. on
August 31, 2019. The safety zone will cover all navigable waters from
mile marker (MM) 264.6 to MM 265.6. No vessels or persons will be
permitted to enter the safety zone without obtaining permission from
the COTP or a designated representative.

V. Regulatory Analyses

    We developed this rule after considering numerous statutes and
Executive orders related to rulemaking. Below we summarize our analyses
based on a number of these statutes and Executive orders, and we
discuss First Amendment rights of protestors.

A. Regulatory Planning and Review

    Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits. Executive Order 13771 directs agencies to control
regulatory costs through a budgeting process. This rule has not been
designated a ``significant regulatory action,'' under Executive Order
12866. Accordingly, this rule has not been reviewed by the Office of
Management and Budget (OMB), and pursuant to OMB guidance it is exempt
from the requirements of Executive Order 13771.
    This regulatory action determination is based on the size,
location, and duration of the temporary safety zone. The safety zone
restricts transit on a one-mile stretch of the Ohio River for thirty
minutes on one day. The safety zone will be enforced later in the day
when vessel traffic is normally low. Moreover, the Coast Guard will
issue a Local Notice to Mariners and a Broadcast Notice to Mariners via
VHF-FM marine channel 16 about safety zone so that waterway users may
plan accordingly for this short restriction on transit, and the rule
would allow vessels to request permission to enter the zone.

B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule
will not have a significant economic impact on a substantial number of
small entities.
    While some owners or operators of vessels intending to transit the
safety zone may be small entities, for the reasons stated in section
V.A above, this rule will not have a significant economic impact on any
vessel owner or operator.
    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
call or email the

person listed in the FOR FURTHER INFORMATION CONTACT section.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

C. Collection of Information

    This rule will not call for a new collection of information under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under that Order and have
determined that it is consistent with the fundamental federalism
principles and preemption requirements described in Executive Order
13132.
    Also, this rule does not have tribal implications under Executive
Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it does not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes. If
you believe this rule has implications for federalism or Indian tribes,
please call or email the person listed in the FOR FURTHER INFORMATION
CONTACT section above.

E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such an expenditure, we do discuss the effects of this rule elsewhere
in this preamble.

F. Environment

    We have analyzed this rule under Department of Homeland Security
Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series),
which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have
determined that this action is one of a category of actions that do not
individually or cumulatively have a significant effect on the human
environment. This rule involves a safety zone lasting 30 minutes that
will prohibit access to the Ohio River from mile marker 264.6 to mile
marker 265.6. It is categorically excluded from further review under
paragraph L60(a) in Table 3-1 of U.S. Coast Guard Environmental
Planning Implementing Procedures. A Record of Environmental
Consideration supporting this determination is available in the docket
where indicated under ADDRESSES.

G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places or vessels.

List of Subjects in 33 CFR Part 165

    Harbors, Marine Safety, Navigation (water), Reporting and
Recordkeeping Requirements, Security Measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends
33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for part 165 continues to read as follows:

    Authority:  46 U.S.C. 70034, 70051; 33 CFR 1.05-1, 6.04-1, 6.04-
6, and 160.5; Department of Homeland Security Delegation No. 0170.1.

0
2. Add Sec.  165.T08-0665 to read as follows:

Sec.  165.T08-0665  Safety Zone; Ohio River, Point Pleasant, WV.

    (a) Location. The following area is a safety zone: all navigable
waters on the Ohio River from mile marker (MM) 264.6 to MM 265.6.
    (b) Regulations. Under the general safety zone regulations in
subpart C of this part, you may not enter the safety zone described in
paragraph (a) of this section unless authorized by the Captain of the
Port Sector Ohio Valley (COTP) or the COTP's designated representative.
    (c) Enforcement period. This section will be enforced from 9:30 to
10 p.m. on August 31, 2019.
    (d) Information broadcasts. The Coast Guard will issue Broadcast
Notices to Mariners, and Local Notices to Mariners about this safety
zone.

    Dated: August 12, 2019.
A.M. Beach,
Captain, U.S. Coast Guard, Captain of the Port Sector Ohio Valley.
[FR Doc. 2019-17706 Filed 8-16-19; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 79, Number 237 (Wednesday, December 10, 2014)]
[Notices]
[Page 73290]
[FR Doc No: 2014-28861]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #2

    Take notice that the Commission received the following electric
corporate filings:

    Docket Numbers: EC15-41-000.
    Applicants: PacifiCorp.
    Description: Application for Approval of Acquisition of
Jurisdictional Assets Under Section 203 of PacifiCorp.
    Filed Date: 11/28/14.
    Accession Number: 20141128-5077.
    Comments Due: 5 p.m. ET 12/19/14.
    Take notice that the Commission received the following electric
rate filings:
    Docket Numbers: ER15-514-000.
    Applicants: Jersey Central Power & Light Co.
    Description: Notice of Cancellation of Service Agreement of Jersey
Central Power & Light Company.
    Filed Date: 11/26/14.
    Accession Number: 20141126-5308.
    Comments Due: 5 p.m. ET 12/17/14.

    Docket Numbers: ER15-515-000.
    Applicants: Great Bay Energy VII, LLC.
    Description: Initial rate filing per 35.12 Baseline new to be
effective 12/1/2014.
    Filed Date: 11/28/14.
    Accession Number: 20141128-5069.
    Comments Due: 5 p.m. ET 12/19/14.

    Docket Numbers: ER15-516-000.
    Applicants: FirstEnergy Service Company.
    Description: Request for Waiver of FirstEnergy Service Company.
    Filed Date: 11/26/14.
    Accession Number: 20141126-5326.
    Comments Due: 5 p.m. ET 12/17/14.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: November 28, 2014.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-28861 Filed 12-9-14; 8:45 am]
BILLING CODE 6717-01-P