[Federal Register Volume 83, Number 167 (Tuesday, August 28, 2018)]
[Notices]
[Pages 43934-43942]
[FR Doc No: 2018-18572]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83904; File No. SR-NYSEArca-2017-139]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order
Disapproving a Proposed Rule Change To List and Trade the Shares of the
ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF

August 22, 2018.

I. Introduction

    On December 4, 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 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade the shares
(``Shares'') of the ProShares Bitcoin ETF and the ProShares Short
Bitcoin ETF (each a ``Fund'' and, collectively, the ``Funds'') issued
by the ProShares Trust II (``Trust'') under NYSE Arca Rule 8.200-E,
Commentary .02. The proposed rule change was published for comment in
the Federal Register on December 26, 2017.\3\ The comment period for
the Notice of Proposed Rule Change closed on January 16, 2018.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 82350 (Dec. 19,
2017), 82 FR 61100 (Dec. 26, 2017) (``Notice'').
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    On January 30, 2018, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to approve or disapprove
the proposed rule change.\5\ On March 23, 2018, the Commission
instituted proceedings under Section 19(b)(2)(B) of the Exchange Act
\6\ to determine whether to approve or disapprove the proposed rule
change.\7\ The comment period and rebuttal comment period for the Order
Instituting Proceedings closed on April 19, 2018, and May 3, 2018,
respectively. Finally, on June 15, 2018, the Commission extended the
period for consideration of the proposed rule change to August 23,
2018.\8\ As of

August 21, 2018, the Commission had received 13 comments on the
proposed rule change.\9\
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    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 82602 (Jan. 30,
2018), 83 FR 4941 (Feb. 2, 2018).
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ See Securities Exchange Act Release No. 82939 (Mar. 23,
2018), 83 FR 13537 (Mar. 29, 2018) (``Order Instituting
Proceedings'').
    \8\ See Securities Exchange Act Release No. 83452 (June 15,
2018), 83 FR 28894 (June 21, 2018).
    \9\ See Letters from Abe Kohen, AK Financial Engineering
Consultants, LLC (Dec. 27, 2017) (``Kohen Letter''); Anita Desai
(Apr. 6, 2018) (``Desai Letter''); Ed Kaleda (Apr. 6, 2018)
(``Kaleda Letter''); Scott Moberg (Apr. 6, 2018) (``Moberg
Letter''); Adam Malkin (Apr. 8, 2018) (``Malkin Letter''); Gisan
Mohammed (Apr. 11, 2018) (``Mohammed Letter''); Shravan Kumar (Apr.
11, 2018) (``Kumar Letter''); Louise Fitzgerald (Apr. 19, 2018)
(``Fitzgerald Letter''); Joshua Rousseau (Apr. 30, 2018) (``Rousseau
Letter''); Thomas W. Fink (May 3, 2018) (``Fink Letter''); Sharon
Brown-Hruska, Managing Director, and Trevor Wagener, Consultant,
NERA Economic Consulting (May 18, 2018) (``NERA Letter''); Sami
Santos (Aug. 9, 2018) (``Santos Letter''); and Sam M. Ahn (Aug. 16,
2018) (``Ahn Letter''). All comments on the proposed rule change are
available on the Commission's website at: https://www.sec.gov/comments/sr-nysearca-2017-139/nysearca2017139.htm.
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    This order disapproves the proposed rule change. Although the
Commission is disapproving this proposed rule change, the Commission
emphasizes that its disapproval does not rest on an evaluation of
whether bitcoin, or blockchain technology more generally, has utility
or value as an innovation or an investment. Rather, the Commission is
disapproving this proposed rule change because, as discussed below, the
Exchange has not met its burden under the Exchange Act and the
Commission's Rules of Practice to demonstrate that its proposal is
consistent with the requirements of the Exchange Act Section 6(b)(5),
in particular the requirement that a national securities exchange's
rules be designed to prevent fraudulent and manipulative acts and
practices.\10\ Among other things, the Exchange has offered no record
evidence to demonstrate that bitcoin futures markets are ``markets of
significant size.'' That failure is critical because, as explained
below, the Exchange has failed to establish that other means to prevent
fraudulent and manipulative acts and practices will be sufficient, and
therefore surveillance-sharing with a regulated market of significant
size related to bitcoin is necessary to satisfy the statutory
requirement that the Exchange's rules be designed to prevent fraudulent
and manipulative acts and practices.\11\
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    \10\ See 15 U.S.C. 78f(b)(5).
    \11\ See infra notes 29-31 and accompanying text.
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II. Description of the Proposal

    The Exchange proposes to list and trade the Shares under NYSE Arca
Rule 8.200-E, Commentary .02, which governs the listing and trading of
Trust Issued Receipts on the Exchange.\12\ Each Fund will be a series
of the Trust, and the Trust and the Funds will be managed and
controlled by ProShare Capital Management LLC (``Sponsor''). Brown
Brothers Harriman & Co. will be the custodian and administrator for the
Trust. SEI Investments Distribution Co. will serve as the distributor
of the Shares (``Distributor''). The Trust will offer Shares of the
Funds for sale through the Distributor in ``Creation Units.'' \13\
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    \12\ See NYSE Arca Rule 8.200-E, Commentary .02. NYSE Arca Rule
8.200-E permits the listing and trading of ``Trust Issued
Receipts,'' defined as a security (1) that is issued by a trust
which holds specific securities deposited with the trust; (2) that,
when aggregated in some specified minimum number, may be surrendered
to the trust by the beneficial owner to receive the securities; and
(3) that pay beneficial owners dividends and other distributions on
the deposited securities, if any are declared and paid to the
trustee by an issuer of the deposited securities. Commentary .02
applies to Trust Issued Receipts that invest in any combination of
investments, including cash; securities; options on securities and
indices; futures contracts; options on futures contracts; forward
contracts; equity caps, collars, and floors; and swap agreements.
    \13\ See Notice, supra note 3, 82 FR at 61101.
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    According to the Notice, the ProShares Bitcoin ETF's investment
objective will be to seek results (before fees and expenses) that, both
for a single day and over time, correspond to the performance of lead-
month bitcoin futures contracts \14\ listed and traded on either the
Cboe Futures Exchange (``CFE'') or the Chicago Mercantile Exchange
(``CME'') (``Benchmark Futures Contract''). This Fund generally intends
to invest substantially all of its assets in the Benchmark Futures
Contracts, but may invest in other U.S. exchange-listed bitcoin futures
contracts, if available (together with Benchmark Futures Contracts,
collectively, ``Bitcoin Futures Contracts'').\15\
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    \14\ According to the Exchange, lead-month futures contracts are
the monthly contracts with the earliest expiration date. See Notice,
supra note 3, 82 FR at 61101, n.6.
    \15\ See Notice, supra note 3, 82 FR at 61101.
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    According to the Notice, the ProShares Short Bitcoin ETF's
investment objective will be to seek results, for a single day, that
correspond (before fees and expenses) to the inverse of the daily
performance of the Benchmark Futures Contract. This Fund generally
intends to invest substantially all of its assets through short
positions in Benchmark Futures Contracts, but may invest through short
positions in Bitcoin Futures Contracts, if available.\16\
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    \16\ See id.
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    The Exchange represents that no more than 10% of the net assets of
a Fund in the aggregate invested in Bitcoin Futures Contracts shall
consist of Bitcoin Futures Contracts whose principal market is neither
a member of the Intermarket Surveillance Group nor a market with which
the Exchange does not have a comprehensive surveillance-sharing
agreement.\17\ Further, according to the Notice, in the event that
position, price, or accountability limits are reached with respect to
Bitcoin Futures Contracts, each Fund may invest in listed options on
Bitcoin Futures Contracts (should such listed options become available)
and OTC swap agreements referencing Bitcoin Futures Contracts
(collectively, ``Financial Instruments'').\18\ The Notice also states:
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    \17\ See id. at 61105.
    \18\ See id. at 61102.

    Bitcoin Futures Contracts are a new type of futures contract to
be traded on the CFE and CME or other U.S. exchanges (if available).
Unlike the established futures markets for traditional physical
commodities, the market for Bitcoin Futures Contracts is in the
development stage and has very limited trading and operational
history. As such, the liquidity of the market for Bitcoin Futures
Contracts will depend on, among other things, the supply and demand
for Bitcoin Futures Contracts, the adoption of bitcoin and the
commercial and speculative interest in the market for Bitcoin
Futures Contracts and the potential ability to hedge against the
price of bitcoin with exchange-traded Bitcoin Futures Contracts.\19\
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    \19\ Id. at 61103.

    The Exchange represents that trading in the Shares of each Fund
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.\20\ The Exchange asserts that these procedures are adequate to
properly monitor Exchange trading of the Shares in all trading sessions
and to deter and detect violations of Exchange rules and federal
securities laws applicable to trading on the Exchange.\21\
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    \20\ See id. at 61105.
    \21\ See id.
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III. Discussion

A. The Applicable Standard for Review

    The Commission must consider whether the Exchange's proposal is
consistent with Exchange Act Section 6(b)(5), which requires, in
relevant part, that the rules of a national securities exchange be
designed ``to prevent fraudulent and manipulative acts and practices''
and ``to protect investors and the public interest.'' \22\ Under the
Commission's Rules of Practice, the ``burden to demonstrate that a
proposed rule change is consistent with the Exchange Act and the rules
and regulations issued thereunder . . . is on

the self-regulatory organization [`SRO'] that proposed the rule
change.'' \23\
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    \22\ 15 U.S.C. 78f(b)(5).
    \23\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
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    The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\24\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Exchange Act and the applicable rules and
regulations.\25\ Moreover, ``unquestioning reliance'' on an SRO's
representations in a proposed rule change is not sufficient to justify
Commission approval of a proposed rule change.\26\
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    \24\ See id.
    \25\ See id.
    \26\ See Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 447 (D.C. Cir. 2017).
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B. Preventing Fraudulent and Manipulative Practices

1. Applicable Legal Standard
    To approve the Exchange's proposal to list the Shares, the
Commission must be able to find that the proposal is, consistent with
Exchange Act Section 6(b)(5), ``designed to prevent fraudulent and
manipulative acts and practices.'' \27\ As the Commission recently
explained in an order disapproving a listing proposal for the
Winklevoss Bitcoin Trust (``Winklevoss Order''), although surveillance-
sharing agreements are not the exclusive means by which an exchange-
traded product (``ETP'') listing exchange can meet its obligations
under Exchange Act Section 6(b)(5), such agreements are a widely used
means for exchanges that list ETPs to meet their obligations, and the
Commission has historically recognized their importance.\28\
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    \27\ 15 U.S.C. 78f(b)(5).
    \28\ Order Setting Aside Action by Delegated Authority and
Disapproving a Proposed Rule Change, as Modified by Amendments No. 1
and 2, To List and Trade Shares of the Winklevoss Bitcoin Trust,
Securities Exchange Act Release No. 83723 (July 26, 2018), 83 FR
37579, 37580 (Aug. 1, 2018) (SR-BatsBZX-2016-30).
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    The Commission has therefore determined that, if the listing
exchange for an ETP fails to establish that other means to prevent
fraudulent and manipulative acts and practices will be sufficient, the
listing exchange must enter into a surveillance-sharing agreement with
a regulated market of significant size because ``[s]uch agreements
provide a necessary deterrent to manipulation because they facilitate
the availability of information needed to fully investigate a
manipulation if it were to occur.'' \29\ Accordingly, a surveillance-
sharing agreement with a regulated market of significant size is
required to ensure that, in compliance with the Exchange Act, the
proposal is ``designed to prevent fraudulent and manipulative acts and
practices.'' \30\ In this context, the Commission has interpreted the
terms ``significant market'' and ``market of significant size'' to
include a market (or group of markets) as to which (a) there is a
reasonable likelihood that a person attempting to manipulate the ETP
would also have to trade on that market to successfully manipulate the
ETP, so that a surveillance-sharing agreement would assist the ETP
listing market in detecting and deterring misconduct, and (b) it is
unlikely that trading in the ETP would be the predominant influence on
prices in that market.\31\ Thus, a surveillance-sharing agreement must
be entered into with a ``significant market'' to assist in detecting
and deterring manipulation of the ETP, because someone attempting to
manipulate the ETP is reasonably likely to also engage in trading
activity on that ``significant market.''
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    \29\ Id. (citing Amendment to Rule Filing Requirements for Self-
Regulatory Organizations Regarding New Derivative Securities
Products, Securities Exchange Act Release No. 40761 (Dec. 8, 1998)
63 FR 70952, 70954, 70959 (Dec. 22, 1998) (File No. S7-13-98)).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ See Winklevoss Order, supra note 28, 83 FR at 37594. This
definition is illustrative and not exclusive. There could be other
types of ``significant markets'' and ``markets of significant
size,'' but this definition is an example that will provide guidance
to market participants. See id.
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    Although the Winklevoss Order applied these standards to a
commodity-trust ETP based on bitcoin, the Commission believes that
these standards are also appropriate for an ETP based on bitcoin
futures. When approving the first commodity-futures ETP, the Commission
specifically noted that ``[i]nformation sharing agreements with primary
markets trading index components underlying a derivative product are an
important part of a self-regulatory organization's ability to monitor
for trading abuses in derivative products.'' \32\ And the Commission's
approval orders for commodity-futures ETPs consistently note the
ability of an ETP listing exchange to share surveillance information
either through surveillance-sharing agreements or through membership by
the listing exchange and the relevant futures exchanges in the
Intermarket Surveillance Group.\33\ While the

Commission in those orders did not explicitly undertake an analysis of
whether the related futures markets were of ``significant size,'' the
exchanges proposing commodity-futures ETPs on a single reference asset
or benchmark generally made representations regarding the trading
volume of the underlying futures markets,\34\ and the Commission was in
each of those cases dealing with a large futures market that had been
trading for a number of years before an exchange proposed an ETP based
on those futures.\35\ And where the Commission has considered a
proposed ETP based on futures that had only recently begun trading,\36\
the Commission specifically addressed whether the futures on which the
ETP was based--which were futures on an index of well-established
commodity futures--were illiquid or susceptible to manipulation.\37\
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    \32\ Securities Exchange Act Release No. 53105 (Jan. 11, 2006),
71 FR 3129, 3136 (Jan. 19, 2006) (SR-Amex-2005-059). Additionally,
the Winklevoss Order discusses the broader history and importance of
surveillance-sharing agreements relating to derivative securities
products, quoting Commission statements dating from 1990 on. See
Winklevoss Order, supra note 28, 83 FR at 37592-94.
    \33\ See, e.g., Securities Exchange Act Release No. 53105 (Jan.
11, 2006), 71 FR 3129, 3136 (Jan. 19, 2006) (SR-Amex-2005-059)
(approval order noted that Amex's ``Information Sharing Agreement
with the NYMEX and the CBOT and [Amex's] Memorandum of Understanding
with the LME, along with the Exchange's participation in the ISG, in
which the CBOT participates . . . create the basis for the Amex to
monitor for fraudulent and manipulative practices in the trading of
the Shares''); Securities Exchange Act Release No. 53582 (Mar. 31,
2006), 71 FR 17510, 17518 (Apr. 6, 2006) (SR-Amex-2005-127)
(approval order noted that Amex's ``comprehensive surveillance
sharing agreements with the NYMEX and ICE Futures . . . create the
basis for the Amex to monitor for fraudulent and manipulative
practices in the trading of the Units'' and that ``[s]hould 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 [Exchange] Act, seeking
Commission approval of [Amex's] surveillance agreement with such
market''); Securities Exchange Act Release No. 54013 (June 16,
2006), 71 FR 36372, 36378-79 (June 26, 2006) (NYSE-2006-17)
(approval order noted that NYSE's ``comprehensive surveillance
sharing agreements with the NYMEX, the Kansas City Board of Trade,
ICE Futures, and the LME . . . create the basis for the NYSE to
monitor for fraudulent and manipulative trading practices'' and that
``all of the other trading venues on which current Index components
and CERFs are traded are members of the ISG''); Securities Exchange
Act Release No. 54450 (Sept. 14, 2006), 71 FR 55230, 55236 (Sept.
21, 2006) (SR-Amex-2006-44) (approval order noted that ``CME, where
the futures contract for each of the current Index components is
traded, is a member of the ISG'' and that in the event of new fund
investments in ``foreign currency futures contracts traded on
futures exchanges other than CME, [Amex] must have a CSSA with that
futures exchange or the futures exchange must be an ISG member'');
Securities Exchange Act Release No. 55029 (Dec. 29, 2006), 72 FR
806, 809-10 (Jan. 8, 2007) (SR-Amex-2006-76) (approval order noted
that Amex's ``Comprehensive Surveillance Sharing Agreement with the
ICE Futures, LME, and NYMEX, . . . and membership in the Intermarket
Surveillance Group (`ISG') creates the basis for the Amex to monitor
fraudulent and manipulative practices in the trading of the
Shares''); Securities Exchange Act Release No. 56880 (Dec. 3, 2007),
72 FR 69259, 69261 (Dec. 7, 2007) (SR-Amex-2006-96) (approval order
noted that Amex has ``information sharing agreements with the
InterContinental Exchange, the Chicago Mercantile Exchange, and the
New York Mercantile Exchange and may obtain market surveillance
information from other exchanges, including the Chicago Board of
Trade, London Metals Exchange, and the New York Board of Trade
through the Intermarket Surveillance Group''); Securities Exchange
Act Release No. 55632 (Apr. 13, 2007), 72 FR 19987, 19988 (Apr. 20,
2007) (SR-Amex-2006-112) (approval order noted that Amex ``currently
has in place an Information Sharing Agreement with the NYMEX and ICE
Futures'' and that if ``USNG invests in Natural Gas Interests traded
on other exchanges, the Amex represented that it will seek to enter
into Information Sharing arrangements with those particular
exchanges''); Securities Exchange Act Release No. 57456 (Mar. 7,
2008), 73 FR 13599, 13601 (Mar. 13, 2008) (NYSEArca-2007-91)
(approval order noted that NYSEArca ``can obtain

market surveillance information, including customer identity
information, with respect to transactions occurring on the NYM, the
Kansas City Board of Trade, ICE, and the LME, pursuant to its
comprehensive information sharing agreements with each of those
exchanges'' and that ``[a]ll of the other trading venues on which
current Index components are traded are members of the ISG'');
Securities Exchange Act Release No. 57838 (May 20, 2008), 73 FR
30649, 30652, (May 28, 2008) (SR-NYSEArca-2008-09) (approval order
noted that NYSEArca ``may obtain information via the ISG from other
exchanges who are members or affiliate members of the ISG,'' that
NYSEArca ``has an information sharing agreement in place with ICE
Futures,'' and that NYSEArca will file a proposed rule change ``if
the Fund invests in EUAs . . . that constitute more than 10% of the
weight of the Fund where the principal trading market for such
component is not a member or affiliate member of the ISG or where
the Exchange does not have a comprehensive surveillance sharing
agreement with such market''); Securities Exchange Act Release No.
63635 (Jan. 3, 2011), 76 FR 1489, 1491 (Jan. 10, 2011) (NYSEArca-
2010-103) (approval order noted that ``with respect to Fund
components traded on exchanges, not more than 10% of the weight of
such components in the aggregate will consist of components whose
principal trading market is not a member of the Intermarket
Surveillance Group or is a market with which [NYSEArca] does not
have a comprehensive surveillance sharing agreement''); Securities
Exchange Act Release No. 66553 (Mar. 9, 2012), 77 FR 15440, 15444
(Mar. 15, 2012) (SR-NYSEArca-2012-04) (approval order noted that
NYSEArca ``can obtain market surveillance information, including
customer identity information, from ICE [Futures] and CME, which are
members of the Intermarket Surveillance Group''); Securities
Exchange Act Release No. 67223 (June 20, 2012), 77 FR 38117, 38124
(June 26, 2012) (NYSEAmex-2012-24) (approval order noted that
NYSEAmex ``can obtain market surveillance information, including
customer identity information, with respect to transactions
occurring on exchanges that are members of ISG, including CME, CBOT,
COMEX, NYMEX . . . and ICE Futures US,'' that NYSEAmex ``currently
has in place a comprehensive surveillance sharing agreement with
each of CME, NYMEX, ICE Futures Europe, and KCBOT,'' and that
``while the Fund may invest in futures contracts or options on
futures contracts which trade on markets that are not members of ISG
or with which [NYSEAmex] does not have in place a comprehensive
surveillance sharing agreement, such instruments will never
represent more than 10% of the Fund's holdings''); Securities
Exchange Act Release No. 73561 (Nov. 7, 2014), 79 FR 68329, 68330
(Nov. 14, 2014) (NYSEArca-2014-102) (approval order noted that
``FINRA may obtain trading information regarding trading in the
Shares and Coal Futures from such markets and other entities that
are members of ISG or with which [NYSEArca] has in place a
comprehensive surveillance sharing agreement'' and that ``CME is a
member of the ISG''); Securities Exchange Act Release No. 82390
(Dec. 22, 2017), 82 FR 61625, 61631, 61634 (Dec. 28, 2017)
(NYSEArca-2017-107) (approval order noted that NYSEArca ``may obtain
information regarding trading in the Shares and Freight Futures from
markets and other entities that are members of ISG or with which
[NYSEArca] has in place a CSSA'' and that ``not more than 10% of the
net assets of the Fund in the aggregate invested in Freight Futures
or options on Freight Futures shall consist of derivatives whose
principal market is not a member of the ISG or is a market with
which [NYSEArca] does not have a CSSA'').
    \34\ See, e.g., Securities Exchange Act Release No. 62213 (June
3, 2010), 75 FR 32828 (June 9, 2010) (SR-NYSEArca-2010-22) (notice
of proposed rule change included NYSE Arca's representations that:
(i) Corn futures volume on Chicago Board of Trade (``CBOT'') for
2008 and 2009 (through November 30, 2009) was 59,934,739 contracts
and 47,754,866 contracts, respectively, and as of March 16, 2010,
CBOT open interest for corn futures was 1,118,103 contracts, and
open interest for near month futures was 447,554 contracts; (ii) the
corn futures contract price was $18,337.50 ($3.6675 per bushel and
5,000 bushels per contract), and the approximate value of all
outstanding contracts was $20.5 billion; (iii) as of March 16, 2010,
open interest in corn swaps cleared on CBOT was approximately 2,100
contracts, with an approximate value of $38.5 million; and (iv) the
position limits for all months is 22,000 corn contracts, and the
total value of contracts if position limits were reached would be
approximately $403.5 million (based on the $18,337.50 contract
price), Securities Exchange Act Release No. 61954 (Apr. 21, 2010),
75 FR 22663, 22664 n.10 (Apr. 29, 2010)); Securities Exchange Act
Release No. 63610 (Dec. 27, 2010), 76 FR 199 (Jan. 3, 2011) (SR-
NYSEArca-2010-101) (notice of proposed rule change included NYSE
Arca's representations that: (i) As of June 14, 2010, there was VIX
futures contracts open interest on CFE of 88,366 contracts, with a
contract price of $25.55 and value of open interest of
$2,257,751,300; (ii) total CFE trading volume in 2009 in VIX futures
contracts was 1,143,612 contracts, with average daily volume of
4,538 contracts; and (iii) total volume year-to-date (through May
31, 2010) was 1,399,709 contracts, with average daily volume of
13,458 contracts, Securities Exchange Act Release No. 63317 (Nov.
16, 2010), 75 FR 71158, 71159 n.9 (Nov. 22, 2010)); Securities
Exchange Act Release No. 63753 (Jan. 21, 2011), 76 FR 4963 (Jan. 27,
2011) (SR-NYSEArca-2010-110) (notice of proposed rule change
included NYSE Arca's representations that: (i) Natural gas futures
volume on New York Mercantile Exchange (``NYMEX'') for 2009 and 2010
(through October 29, 2010) was 47,864,639 contracts and 52,490,180
contracts, respectively; (ii) as of October 29, 2010, NYMEX open
interest for natural gas futures was 794,741 contracts, and open
interest for near month futures was 47,313 contracts; (iii) the
contract price was $40,380 ($4.038 per MMBtu and 10,000 MMBtu per
contract), and the approximate value of all outstanding contracts
was $32.1 billion; (iv) the position limits for all months is 12,000
natural gas contracts and the total value of contracts if position
limits were reached would be approximately $484.56 million (based on
the $40,380 contract price); and (v) as of October 29, 2010, open
interest in natural gas swaps cleared on NYMEX was approximately
2,618,092 contracts, with an approximate value of $26.4 billion
($4.038 per MMBtu and 2,500 MMBtu per contract), Securities Exchange
Act Release No. 63493 (Dec. 9, 2010), 75 FR 78290, 78291 n.11 (Dec.
15, 2010)); Securities Exchange Act Release No. 63869 (Feb. 8,
2011), 76 FR 8799 (Feb. 15, 2011) (SR-NYSEArca-2010-119) (notice of
proposed rule change included NYSE Arca's representations that: (i)
WTI crude oil futures volume on NYMEX for 2009 and 2010 (through
November 30, 2010) was 137,352,118 contracts and 156,155,620
contracts, respectively; (ii) as of November 30, 2010, NYMEX open
interest for WTI crude oil was 1,342,325 contracts, and open
interest for near month futures was 323,184 contracts; (iii) the
position limits for all months is 20,000 WTI crude oil contracts and
the total value of contracts if position limits were reached would
be approximately $1.68 billion (based on the $84.11 contract price);
and (iv) the contract price was $84,110 ($84.11 USD per barrel and
1,000 barrels per contract), and the approximate value of all
outstanding contracts was $112.9 billion, Securities Exchange Act
Release No. 63625 (Dec. 30, 2010), 76 FR 807, 808 n.11 (Jan. 6,
2011)); Securities Exchange Act Release No. 65134 (Aug. 15, 2011),
76 FR 52034 (Aug. 19, 2011) (SR-NYSEArca-2011-23) (notice of
proposed rule change included NYSE Arca's representations that: (i)
As of January 31, 2011, there was VIX futures contracts open
interest on CFE of 163,396 contracts with a value of open interest
of $3,461,984,900; (ii) total CFE trading volume in 2010 in VIX
futures contracts was 4,402,616 contracts, with average daily volume
of 17,741 contracts; and (iii) total volume year-to-date (through
January 31, 2011) was 779,493 contracts, with average daily volume
of 38,975 contracts, Securities Exchange Act Release No. 64470 (May
11, 2011), 76 FR 28493, 28494 n.12 (May 17, 2011)); Securities
Exchange Act Release No. 65136 (Aug. 15, 2011), 76 FR 52037 (Aug.
19, 2011) (SR-NYSEArca-2011-24) (notice of proposed rule change
included NYSE Arca's representations that: (i) Natural gas futures
volume on NYMEX for 2009 and 2010 (through December 31, 2010) was
47,864,639 contracts and 64,350,673 contracts, respectively; (ii) as
of December 31, 2010, NYMEX open interest for all natural gas
futures was 772,104 contracts, and the approximate value of all
outstanding contracts was $35,664,257,310 billion [sic]; (iii) open
interest as of December 31, 2010 for the near month contract was
166,757 contracts and the near month contract value was
$7,345,645,850 ($4.405 per MMBtu and 10,000 MMBtu per contract);
(iv) the position accountability limits for all months is 12,000
natural gas contracts and the total value of contracts if position
accountability limits were reached would be approximately
$528,600,000 million (based on the $4.405 contract price); and (v)
as of December 31, 2010, open interest in natural gas swaps cleared
on NYMEX was approximately 1,493,013 contracts, with an approximate
value of $16,463,384,003 ($4.411 per MMBtu and 2,500 MMBtu per
contract), Securities Exchange Act Release No. 64464 (May 11, 2011),
76 FR 28483, 28484 n.11 (May 17, 2011)); Securities Exchange Act
Release No. 65344 (Sept. 15, 2011), 76 FR 58549 (Sept. 21, 2011)
(SR-NYSEArca-2011-48) (notice of proposed rule change included NYSE
Arca's representations that: (i) Wheat futures volume on CBOT for
2010 and 2011 (through April 29, 2011) was 23,058,783 contracts and
8,860,135 contracts, respectively; (ii) as of April 29, 2011, open
interest for wheat futures was 456,851 contracts; (iii) the wheat
contract price was $40,062.50 (801.25 cents per bushel and 5,000
bushels per contract), and the approximate value of all outstanding
contracts was $18.3 billion; (iv) the position limits for all months
was 6,500 wheat contracts and the total value of contracts if
position limits were reached would be approximately $260.4 million
(based on the $40,062.50 contract price); (v) soybean futures volume
on CBOT for 2010 and 2011 (through April 29, 2011) was 36,962,868
contracts and 16,197,385 contracts, respectively; (vi) as of April
29, 2011, open interest for soybean futures was 572,959 contracts;
(vii) the soybean contract price was $69,700.00 (1394 cents per
bushel and 5,000 bushels per contract), and the approximate value of
all outstanding contracts was $39.9 billion; (viii) the position
limits for all months is 6,500 soybean contracts and the total value
of contracts if position limits were reached would be approximately
$453 million (based on the $69,700.00 contract price); (ix) sugar
futures volume on ICE Futures for 2010 and 2011 (through April 29,
2011) was 27,848,391 contracts and 9,045,069 contracts,
respectively; (x) as of April 29, 2011, open interest for sugar
futures was 570,948 contracts; (xi) the sugar contract price was
$24,920.00 (22.25 cents per pound and 112,000 pounds per contract),
and the approximate value of all outstanding contracts was $14.2
billion; and (xii) the position limits for all months is 15,000
sugar contracts and the total value of contracts if position limits
were reached would be approximately $373.8 million (based on the
$24,920.00 contract price), Securities Exchange Act Release No.
64967 (July 26, 2011), 76 FR 45885, 45886 n.10, 45888 n.20, 45890
n.24 (Aug. 1, 2011)); Securities Exchange Act Release No. 66553
(Mar. 9, 2012), 77 FR 15440 (Mar. 15, 2012) (SR-NYSEArca-2012-04)
(notice of proposed rule change included NYSE Arca's representations
that: (i) As of December 30, 2011, open interest in AUD/USD futures
contracts traded on CME was $11.56 billion, and AUD/USD futures
contracts had an average daily trading volume in 2011 of 123,006
contracts; (ii) as of December 30, 2011, open interest in CAD/USD
futures contracts traded on CME was $11.66 billion, and CAD/USD
futures contracts had an average daily trading volume in 2011 of
89,667 contracts; (iii) as of December 30, 2011, open interest in
CHF/USD futures contracts traded on CME was $4.99 billion, and CHF/
USD futures contracts had an average daily trading volume in 2011 of
40,955 contracts; (iv) futures contracts based on the U.S. Dollar
Index (``USDX'') were listed on November 20, 1985, and options on
the USDX futures contracts began trading on September 3, 1986; (v)
as of December 30, 2011, open interest in USDX futures contracts
traded on ICE Futures was $5.44 billion, and USDX futures contracts
had an average daily trading volume in 2011 of 30,341 contracts;
(vi) as of December 30, 2011, open interest in EUR/USD futures
contracts traded on CME was $46.12 billion, and EUR/USD futures
contracts had an average daily trading volume in 2011 of 336,947
contracts; and (vii) as of December 30, 2011, open interest in JPY/
USD futures contracts traded on CME was $25.75 billion, and JPY/USD
futures contracts had an average daily trading volume in 2011 of
113,476 contracts, Securities Exchange Act Release No. 66180 (Jan.
18, 2012), 77 FR 3532, 3534-35 (Jan. 24, 2012)); Securities Exchange
Act Release No. 68165 (Nov. 6, 2012), 77 FR 67707 (Nov. 13, 2012)
(SR-NYSEArca-2012-102) (notice of proposed rule change included NYSE
Arca's representations that: (i) Gold and silver futures contracts
traded on Commodity Exchange, Inc. (``COMEX'') are the global
benchmark contracts and most liquid futures contracts in the world
for each respective commodity; (ii) as of March 15, 2012, open
interest in gold futures contracts and silver futures contracts
traded on CME was $23.7 billion and $8.5 billion, respectively;
(iii) gold futures contracts and silver futures contracts had an
average daily trading volume in 2011 of 138,964 contracts and 63,913
contracts, respectively; (iv) CME constitutes the largest regulated
foreign exchange marketplace in the world, with over $100 billion in
daily liquidity; (v) as of March 15, 2012, open interest in Euro
futures contracts and Yen futures contracts traded on CME and, for
Dollar futures contracts, on ICE Futures, were $42.7 billion, $20.8
billion, and $4.8 billion, respectively; and (vi) Euro futures
contracts, Yen futures contracts, and Dollar futures contracts had
an average daily trading volume in 2011 of 325,103, 106,824, and
27,258 contracts, respectively, Securities Exchange Act Release No.
67882 (Sept. 18, 2012), 77 FR 58881, 58883 n.10, 58883 n.14 (Sept.
24, 2012)); Securities Exchange Act Release No. 81686 (Sept. 22,
2017), 82 FR 45643, 45646 (Sept. 29, 2017) (SR-NYSEArca-2017-05)
(order approving the listing and trading of the Direxion Daily Crude
Oil Bull 3x Shares and Direxion Daily Crude Oil Bear 3x Shares,
citing to NYSE Arca's representations that: (i) The oil contract
market was of significant size and liquidity, and had average daily
volume of 650,000 contracts and daily open interest of 450,000
contracts; (ii) the Sponsor is registered as a commodity pool
operator with the CFTC and is a member of the National Futures
Association, and (iii) the CFTC has regulatory jurisdiction over the
trading of futures contracts traded on U.S. markets); Securities
Exchange Act Release No. 82390 (Dec. 22, 2017), 82 FR 61625 (Dec.
28, 2017) (SR-NYSEArca-2017-107) (notice of proposed rule change
included NYSE Arca's representations that: (i) Freight futures
liquidity has remained relatively constant, in lot terms, over the
last five years with approximately 1.1 million lots trading
annually; (ii) open interest currently stood at approximately
290,000 lots across all asset classes representing an estimated
value of more than $3 billion, and, of such open interest, Capesize
contracts accounted for approximately 50%, Panamax for approximately
40%, and Handymax for approximately 10%, Securities Exchange Act
Release No. 81681 (Sept. 22, 2017), 82 FR 45342, 45345 (Sept. 28,
2017)). See also Securities Exchange Act Release No. 53582 (Mar. 31,
2006), 71 FR 17510 (Apr. 6, 2006) (SR-Amex-2005-127) (notice of
proposed rule change included Amex's representations that: (i) WTI
light, sweet crude oil contract, listed and traded at NYMEX, trades
in units of 42,000 gallons (1,000 barrels), and annual daily
contract volume on NYMEX from 2001 through October 2005 was 149,028,
182,718, 181,748, 212,382 and 242,262, respectively; (ii) annual
daily contract volume on ICE Futures for Brent crude contracts from
2001 through October 2005 was 74,011, 86,499, 96,767, 102,361 and
120,695 respectively; (iii) annual daily contract volume on NYMEX
for heating oil futures from 2001 through October 2005 was 41,710,
42,781, 46,327, 51,745 and 52,334, respectively; (iv) annual daily
contract volume on NYMEX for natural gas contracts from 2001 through
October 2005 was 47,457, 97,431, 76,148, 70,048 and 77,149,
respectively; and (v) annual daily contract volume on NYMEX for
gasoline contracts from 2001 through October 2005 was 38,033,
43,919, 44,688, 51,315 and 53,577, respectively, Securities Exchange
Act Release No. 53324 (Feb. 16, 2006), 71 FR 9614, 9618 (Feb. 24,
2006)); Securities Exchange Act Release No. 55632 (Apr. 13, 2007),
72 FR 19987 (Apr. 20, 2007) (SR-Amex-2006-112) (notice of proposed
rule change included Amex's representations that annual daily
contract volume on NYMEX for natural gas contracts from 2001 through
October 2006 was 47,457, 97,431, 76,148, 70,048, 76,265, and
102,097, respectively, Securities Exchange Act Release No. 55372
(Feb. 28, 2007), 72 FR 10267, 10268 (Mar. 7, 2007)).
    \35\ For example, corn futures began trading in 1877, see
https://www.cmegroup.com/media-room/historical-first-trade-dates.html, and the first ETP based on corn futures was approved for
listing and trading in 2010. See Securities Exchange Act Release No.
62213 (June 3, 2010), 75 FR 32828 (June 9, 2010) (SR-NYSEArca-2010-
22). VIX futures began trading in 2004, see http://cfe.cboe.com/cfe-products/vx-cboe-volatility-index-vix-futures/contract-specifications, and the first ETPs based on VIX futures were
approved for listing and trading in 2010. See Securities Exchange
Act Release No. 63610 (Dec. 27, 2010), 76 FR 199 (Jan. 3, 2011) (SR-
NYSEArca-2010-10). Natural gas futures began trading in 1990, see
https://www.cmegroup.com/media-room/historical-first-trade-dates.html, and the first ETP based on natural gas was approved for
listing and trading in 2007. See Securities Exchange Act Release No.
55632 (Apr. 13, 2007), 72 FR 19987 (Apr. 20, 2007) (SR-Amex-2006-
112). Crude oil futures began trading in 1983, see https://www.cmegroup.com/media-room/historical-first-trade-dates.html, and
the first ETP based on crude oil futures was approved for listing
and trading in 2006. See Securities Exchange Act Release No. 53582
(Mar. 31, 2006), 71 FR 17510 (Apr. 6, 2006) (SR-Amex-2005-127).
Wheat futures, sugar futures, and soybean futures began trading in
1877, 1914, and 1936, respectively, see https://www.cmegroup.com/media-room/historical-first-trade-dates.html and https://www.theice.com/publicdocs/ICE_Sugar_Brochure.pdf, and the first ETPs
based on each of these commodity futures were approved for listing
and trading in 2011. See Securities Exchange Act Release No. 65344
(Sept. 15, 2011), 76 FR 58549 (Sept. 21, 2011) (SR-NYSEArca-2011-
48). U.S. Dollar Index futures began trading in 1985, https://www.theice.com/publicdocs/futures_us/ICE_Dollar_Index_FAQ.pdf, and
the first ETPs based on U.S. Dollar Index futures was approved for
listing and trading in 2007. See Securities Exchange Act Release No.
55292 (Feb. 14, 2007), 72 FR 8406 (Feb. 26, 2007) (SR-Amex-2006-86).
Australian Dollar futures and Euro futures began trading in 1987 and
1999, respectively, and Canadian Dollar futures, Swiss Franc
futures, and Yen futures began trading in 2002, see https://www.cmegroup.com/media-room/historical-first-trade-dates.html, and
the first ETPs based on each of these individual currency futures
were approved for listing and trading in 2012. See Securities
Exchange Act Release No. 66553 (Mar. 9, 2012), 77 FR 15440 (Mar. 15,
2012) (SR-NYSEArca-2012-04). Silver futures and gold futures began
trading in 1933 and 1974, respectively, see https://www.cmegroup.com/media-room/historical-first-trade-dates.html, and
the first ETPs based on each of these commodity futures were
approved for listing and trading in 2006. See Securities Exchange
Act Release No. 55029 (Dec. 29, 2006), 72 FR 806 (Jan. 8, 2007) (SR-
Amex-2006-76). Freight futures have been cleared since 2005, and the
first ETP based on freight futures was approved for listing and
trading in 2017. See Securities Exchange Act Release No. 82390 (Dec.
22, 2017), 82 FR 61625, 61626 n.6 (Dec. 28, 2017) (SR-NYSEArca-2017-
107) (noting that ``Freight Futures have been cleared since 2005'').
    \36\ The Exchange filed its proposal before bitcoin futures
began trading on either CME or CFE.
    \37\ At issue were futures on an index comprising futures on
crude oil, Brent crude oil, natural gas, heating oil, gasoline, gas
oil, live cattle, wheat, aluminum, corn, copper, soybeans, lean
hogs, gold, sugar, cotton, red wheat, coffee, standard lead, feeder
cattle, zinc, primary nickel, cocoa, and silver. See Securities
Exchange Act Release No. 53659 (Apr. 17, 2006), 71 FR 21074, 21080
(Apr. 24, 2006) (SR-NYSE-2006-17) (notice of proposed rule change to
list shares of iShares GSCI Commodity-Indexed Trust). The Commission
concluded that requirements of Exchange Act Section 6(b)(5) had been
met because concerns about manipulation would be addressed by the
arbitrage relationship between the new index futures and the
existing component futures, as well as the ETP listing exchange's
comprehensive surveillance-sharing agreements not only with the
market for the index futures, but also with the markets for the
component futures. See Securities Exchange Act Release No. 54013
(June 16, 2006), 71 FR 36372, 36379 (June 26, 2006) (SR-NYSE-2006-
17) (order approving listing of shares of iShares GSCI Commodity-
Indexed Trust). Additionally, the approval order for the ETP noted
that, if the volume in any futures contract that was part of the
reference index fell below a specified multiple of production of the
underlying commodity, that contract's weight in the index would
decrease. See id. at 36374.
---------------------------------------------------------------------------

    Accordingly, the Commission examines below whether the

representations by the Exchange, and the comments received from the
public, support a finding that the Exchange has entered into a
surveillance-sharing agreement with a market of significant size
relating to bitcoin, the asset underlying the proposed ETPs, or that
alternative means of preventing fraud and manipulation would be
sufficient to satisfy the requirement of Exchange Act Section 6(b)(5)
that the proposed rule change be designed to prevent fraudulent and
manipulative acts and practices.
2. Comments Received
    One commenter states that commencing an ETP without allowing the
market to adjust to the cash-settled futures products would be akin to
``putting the cart before the horse'' and seems to be an attempt to
appease institutional investors.\38\
---------------------------------------------------------------------------

    \38\ See Desai Letter, supra note 9, at 1.
---------------------------------------------------------------------------

    One commenter states that the market for bitcoin derivatives other
than bitcoin exchange-traded futures appears to be developing and that
financial institutions are reportedly moving toward launching bitcoin-
related trading desks and other operations. This commenter believes
that the proposed offering of both long and short ETPs raises the
possibility that market makers in bitcoin-related derivatives could
make two-sided markets if interest in the long and short ETPs is
similar in magnitude. The commenter further believes that interest
outside of the bitcoin ETPs may be sufficient to motivate market makers
to maintain bitcoin derivatives desks.\39\ In addition, the commenter
suggests that questions about bitcoin derivatives markets can be
addressed through market depth analyses, discussions with potential
bitcoin derivatives liquidity providers, and analyses of order and
trade data across CME and CFE to determine the plausibility of
simultaneous liquidity collapses on both bitcoin future markets.\40\
---------------------------------------------------------------------------

    \39\ See NERA Letter, supra note 9, at 2.
    \40\ See id. at 2.
---------------------------------------------------------------------------

    Three commenters assert that there is manipulation in the bitcoin
market.\41\ One commenter states that it is common knowledge that the
bitcoin market is being manipulated and asserts that BitConnect, which
was recently shut down and had promised risk-free annual returns of up
to 120%, is an example of Ponzi and multi-level marketing schemes that
are too common. This commenter argues that the Commission should not
send the wrong signal to bitcoin manipulators--who, the commenter
asserts, currently operate with impunity--by approving a bitcoin
ETP.\42\ Another commenter believes that the volatility of bitcoin
trading does not appear to be the result of natural trading and in the
long run would prevent true price discovery.\43\
---------------------------------------------------------------------------

    \41\ See Desai Letter, supra note 9, at 1; Fitzgerald Letter,
supra note 9, at 1; Kumar Letter, supra note 9.
    \42\ See Kumar Letter, supra note 9.
    \43\ See Malkin Letter, supra note 9, at 1-2.
---------------------------------------------------------------------------

    One commenter asserts that, in an unregulated market, a small
minority can manipulate the price of bitcoin and other ``altcoins'' and
that bitcoin and other cryptocurrencies are freely manipulated by
players who hold a disproportionate amount of cryptocurrencies or
access to fiat currencies. This commenter cites data showing that 4.11%
of bitcoin addresses own 96.53% of all the bitcoin in circulation, that
the top four addresses control 3.13% of all bitcoin currently in
distribution (worth over $4 billion), and that 115 individuals control
bitcoin worth over $24 billion.\44\ In contrast, another commenter
states that, although a small number of wallets may own 90% of
available bitcoin, exchanges own some of these wallets and may hold
bitcoin on behalf of hundreds, thousands, or millions of people.\45\
---------------------------------------------------------------------------

    \44\ See Fitzgerald Letter, supra note 9, at 1-2.
    \45\ See Rousseau Letter, supra note 9.
---------------------------------------------------------------------------

    One commenter asserts that widespread pump-and-dump schemes
organized through the messaging platform ``Telegram'' are evidence of
manipulation.\46\ This commenter further cites an inquiry by then-New
York Attorney General Eric Schneiderman into cryptocurrency exchanges
and the use of trading ``bots'' on those exchanges to manipulate the
market, and asserts that such activity can drive prices above fair
market value by over 300%. The commenter notes the Kraken exchange's
refusal to cooperate with this inquiry and believes that this refusal
should pose serious questions for investors and the Commission about
the Kraken exchange's operations, particularly after the Kraken
exchange recently exited the Japanese market due to regulatory
requirements.\47\
---------------------------------------------------------------------------

    \46\ See Fitzgerald Letter, supra note 9, at 2.
    \47\ See id. at 2.
---------------------------------------------------------------------------

    One commenter states that a commonly cited factor mitigating
possible susceptibility to manipulation is the securities exchanges'
own surveillance procedures, in addition to the futures exchanges'
surveillance procedures and market surveillance and oversight by the
Commodity Futures Trading Commission (``CFTC''). This commenter cites
statements by the CFTC that it has the legal authority and means to
police certain spot markets for fraud and manipulation through
``heightened review'' collaboration with exchanges, that exchanges will
provide the CFTC surveillance team with trade settlement data upon
request, and that the exchanges will enter into information-sharing
agreements with spot market platforms and monitor trading activity on
the spot markets. The commenter also states that the Gemini exchange
has announced that it would use Nasdaq's market surveillance system to
monitor its marketplace.\48\
---------------------------------------------------------------------------

    \48\ See NERA Letter, supra note 9, at 4-5.
---------------------------------------------------------------------------

    This commenter further asserts that market surveillance is
generally a prerequisite to identifying potential market manipulation
and discourages market manipulation. The commenter believes that the
emergence of institutionalized market surveillance on both futures and
spot markets is a positive sign for the long-term future of bitcoin
markets.\49\ The commenter suggests that the Commission, in
coordination with the CFTC, self-regulatory organizations, bitcoin
futures exchanges, and bitcoin spot market platforms, could gather
market surveillance data to conduct an independent analysis of trade
and settlement patterns and determine whether potentially manipulative
trading practices occur on bitcoin spot and futures markets.\50\
---------------------------------------------------------------------------

    \49\ See id. at 5.
    \50\ See id.
---------------------------------------------------------------------------

3. Analysis
    Unlike previous proposals for bitcoin-based ETPs,\51\ the Exchange
does not assert here that bitcoin prices or markets are inherently
resistant to manipulation. A number of commenters, however, have noted
the potential for manipulation in bitcoin markets.\52\ Instead, the
Exchange asserts that its existing surveillance procedures (including
its ability to review activity by its members) and its ability to share
surveillance information with U.S. futures exchanges are sufficient to
meet the requirements of Exchange Act

Section 6(b)(5).\53\ One commenter also asserts that the exchange's own
surveillance procedures, along with market surveillance and oversight
by the CFTC, can mitigate manipulation.\54\
---------------------------------------------------------------------------

    \51\ See Winklevoss Order, supra note 28, 83 FR at 37582 (noting
exchange argument that ``intrinsic properties of bitcoin and bitcoin
markets make manipulation `difficult and prohibitively costly' '');
Order Disapproving Proposed Rule Change, as Modified by Amendment
No. 1, Relating to the Listing and Trading of Shares of the SolidX
Bitcoin Trust, Securities Exchange Act Release No. 80319 (Mar. 28,
2017), 82 FR 16247, 16251 (Apr. 3, 2017) (SR-NYSEArca-2016-101)
(noting that study commissioned by trust sponsor argues that ``the
underlying market for bitcoin is inherently resistant to
manipulation'').
    \52\ See supra notes 41-47 and accompanying text.
    \53\ See Notice, supra note 3, 82 FR at 61105.
    \54\ See supra notes 48-49 and accompanying text. This commenter
also suggests that the Commission--in coordination with the CFTC,
SROs, futures markets, and bitcoin spot platforms--could gather
market surveillance data to independently analyze whether
manipulative practices occur on bitcoin spot and futures platforms.
See supra note 50 and accompanying text. As noted above, however, it
is the Exchange that bears the burden to demonstrate that its
proposal is designed to ``prevent fraudulent and manipulative acts
and practices.'' See supra notes 23-26 and accompanying text.
---------------------------------------------------------------------------

    While the Exchange would, pursuant to its listing rules, be able to
obtain certain information regarding trading in the Shares and in the
underlying bitcoin or any bitcoin derivative through registered market
makers,\55\ this trade information would be limited to the activities
of market participants who trade on the Exchange. Furthermore, neither
the Exchange's ability to surveil trading in the Shares nor its ability
to share surveillance information with other securities exchanges
trading the Shares would give the Exchange insight into the activity
and identity of market participants who trade in bitcoin futures
contracts or other bitcoin derivatives or who trade in the underlying
bitcoin spot markets, where a substantial majority of trading, the
Commission concluded in the Winklevoss Order, ``occurs on unregulated
venues overseas that are relatively new and that, generally, appear to
trade only digital assets.'' \56\ Thus, consistent with its
determination in the Winklevoss Order,\57\ and with the Commission's
previous orders approving commodity-futures ETPs,\58\ the Commission
believes that the Exchange must demonstrate that it has in place a
surveillance-sharing agreement with a regulated market of significant
size related to bitcoin, because ``[s]uch agreements provide a
necessary deterrent to manipulation because they facilitate the
availability of information needed to fully investigate a manipulation
if it were to occur.'' \59\
---------------------------------------------------------------------------

    \55\ See Notice, supra note 3, at 82 FR 61105 (``The Exchange is
also able to obtain information regarding trading in the Shares, the
commodity underlying futures or options on futures through ETP
[Exchange Trading Permit] Holders, in connection with such ETP
Holders' proprietary or customer trades which they effect through
ETP Holders on any relevant market.'').
    \56\ Winklevoss Order, supra note 28, 83 FR at 37580.
    \57\ See id. at 37591 (finding that ``traditional means'' of
surveillance were not sufficient in the absence of a surveillance-
sharing agreement with a regulated market of significant size
related to the underlying asset).
    \58\ See supra note 33 and accompanying text (noting previous
commodity-futures ETPs where surveillance sharing in place between
ETP listing exchange and underlying futures exchanges).
    \59\ Winklevoss Order, supra note 28, 83 FR at 37580 (quoting
Amendment to Rule Filing Requirements for Self-Regulatory
Organizations Regarding New Derivative Securities Products,
Securities Exchange Act Release No. 40761 (Dec. 8, 1998), 63 FR
70952, 70954, 70959 (Dec. 22, 1998) (File No. S7-13-98)).
---------------------------------------------------------------------------

    The Exchange represents that it is able to share surveillance
information with CME and CFE, which are bitcoin futures markets
regulated by the CFTC, through membership in the Intermarket
Surveillance Group.\60\ Nonetheless, the Commission must disapprove the
proposal, because there is no evidence in the record demonstrating that
CME's and CFE's bitcoin futures markets are markets of significant
size.
---------------------------------------------------------------------------

    \60\ See https://www.isgportal.org/isgPortal/public/members.htm
(listing the current members and affiliate members of the
Intermarket Surveillance Group).
---------------------------------------------------------------------------

    The Order Instituting Proceedings sought comment on whether the CME
and CFE bitcoin futures markets are markets of significant size,\61\
but the Exchange has not responded to any of the questions in the Order
Instituting Proceedings, and the only analysis of the underlying
futures markets the Exchange has provided in its proposed rule change
are the generic statements that the market for bitcoin futures
contracts ``has very limited trading and operational history'' and that
the liquidity of these markets will depend on supply and demand, the
adoption of bitcoin, and interest in the market for these futures.\62\
Thus, there is no basis in the record on which the Commission can
conclude that the bitcoin futures markets are markets of significant
size. Publicly available data show that the median daily notional
trading volume, from inception through August 10, 2018, has been 14,185
bitcoins on CME and 5,184 bitcoins on CFE, and that the median daily
notional value of open interest on CME and CFE during the same period
has been 10,145 bitcoins and 5,601 bitcoins, respectively.\63\ But
while these futures contract figures are readily available, meaningful
analysis of the size of the CME or CFE markets relative to the
underlying bitcoin spot market is challenging, because reliable data
about the spot market, including its overall size, are unavailable.\64\
---------------------------------------------------------------------------

    \61\ See Order Instituting Proceedings, supra note 7, 83 FR at
13539.
    \62\ Notice, supra note 3, 82 FR at 61103; see also supra note
19 and accompanying text.
    \63\ These volume figures were calculated by Commission staff
using data published by CME and CFE on their websites.
    \64\ See Winklevoss Order, supra note 28, 83 FR at 37601.
---------------------------------------------------------------------------

    The Commission also notes that in recent testimony CFTC Chairman
Giancarlo characterized the volume of the bitcoin futures markets as
``quite small.'' \65\ Additionally, the President and COO of CFE,
recently acknowledged in a letter to the Commission staff that ``the
current bitcoin futures trading volumes on Cboe Futures Exchange and
CME may not currently be sufficient to support ETPs seeking 100% long
or short exposure to bitcoin.'' \66\ These statements reinforce the
Commission's conclusion that there is insufficient evidence to
determine that the CME and CFE bitcoin futures markets are markets of
significant size.
---------------------------------------------------------------------------

    \65\ CFTC Chairman Giancarlo testified: ``It is important to put
the new Bitcoin futures market in perspective. It is quite small
with open interest at the CME of 6,695 bitcoin and at Cboe Futures
Exchange (Cboe) of 5,569 bitcoin (as of Feb. 2, 2018). At a price of
approximately $7,700 per Bitcoin, this represents a notional amount
of about $94 million. In comparison, the notional amount of the open
interest in CME's WTI crude oil futures was more than one thousand
times greater, about $170 billion (2,600,000 contracts) as of Feb[.]
2, 2018 and the notional amount represented by the open interest of
Comex gold futures was about $74 billion (549,000 contracts).'' See
Written Testimony of J. Christopher Giancarlo, Chairman, Commodity
Futures Trading Commission, Before the Senate Banking Committee at
text accompanying nn. 14-15 (Feb. 6, 2018). See also Winklevoss
Order, supra note 28, 83 FR at 37601 (citing Giancarlo testimony).
    \66\ Letter from Chris Concannon, President and COO, Cboe Global
Markets, to Dalia Blass, Director, Division of Investment
Management, Commission, at 5 (Mar. 23, 2018), available at https://www.sec.gov/divisions/investment/cboe-global-markets-innovation-cryptocurrency.pdf.
---------------------------------------------------------------------------

    Furthermore, while the Exchange represents that no more than 10% of
the net assets of a Fund in the aggregate invested in bitcoin futures
contracts will be invested in contracts whose principal market is
neither a member of the Intermarket Surveillance Group nor a market
with whom the Exchange has a comprehensive surveillance-sharing
agreement,\67\ this does not function as a meaningful limitation where,
as here, there is no minimum amount of a Fund that must be invested in
such contracts. According to the Notice, in the event position, price,
or accountability limits are reached with respect to bitcoin futures
contracts, each Fund may invest in listed options on bitcoin futures
contracts (should such listed options become available) and OTC swap
agreements referencing bitcoin futures contracts.\68\ The Notice does
not establish any limit on the Funds' holdings of these other bitcoin-
related derivatives; it provides no analysis of the size and liquidity
of markets for those derivatives; and it does not discuss whether the
Exchange has the ability to share surveillance information

with the markets for these derivatives. Thus, as to what might be a
substantial proportion of the Funds' portfolios, the Commission is
unable to conclude that surveillance-sharing will be available, that
the related markets are regulated, or that the related markets are of
significant size.
---------------------------------------------------------------------------

    \67\ See supra note 17 and accompanying text.
    \68\ See Notice, supra note 3, 83 FR at 61102; see also supra
note 18 and accompanying text.
---------------------------------------------------------------------------

    While one commenter suggests that the market for bitcoin
derivatives other than exchange-traded futures appears to be
developing--and that the offering of long and short bitcoin ETPs
``raises the possibility that market makers in Bitcoin derivatives
could make two-sided markets if interest in both the long and short
ETFs is similar in magnitude'' \69\--these speculative statements do
not provide a basis for the Commission to conclude that the non-
exchange-traded bitcoin derivatives market is now, or may eventually
be, of significant size.
---------------------------------------------------------------------------

    \69\ See supra notes 39-40 and accompanying text.
---------------------------------------------------------------------------

    The Commission therefore concludes that Exchange has not
demonstrated that it has entered into a surveillance-sharing agreement
with a regulated market of significant size related to bitcoin, or
that, given the current absence of such an agreement, the exchange's
own surveillance procedures described above would, by themselves, be
sufficient to satisfy the requirement of Exchange Act Section 6(b)(5)
that an exchange's rules be designed to prevent fraudulent and
manipulative acts and practices.\70\ While CME and CFE are regulated
markets for bitcoin derivatives, there is no basis in the record for
the Commission to conclude that these markets are of significant size.
Additionally, because bitcoin futures have been trading on CME and CFE
only since December 2017, the Commission has no basis on which to
predict how these markets may grow or develop over time, or whether or
when they may reach significant size.
---------------------------------------------------------------------------

    \70\ See 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Although the Exchange has not demonstrated that a regulated bitcoin
futures market of significant size currently exists, the Commission is
not suggesting that the development of such a market would
automatically require approval of a proposed rule change seeking to
list and trade shares of an ETP holding bitcoins as an asset. The
Commission would need to analyze the facts and circumstances of any
particular proposal and examine whether any unique features of a
bitcoin futures market would warrant further analysis before approval.

C. Protecting Investors and the Public Interest

1. Comments Received
    One commenter states that approval of a bitcoin ETP on a U.S.-
regulated exchange would protect small traders and increase exposure to
a new asset class in a safe manner.\71\ Another commenter states that
if the Commission rejects bitcoin ETPs, it will push investors to
unregulated and possibly unsafe environments.\72\
---------------------------------------------------------------------------

    \71\ See Mohammed Letter, supra note 9.
    \72\ See Fink Letter, supra note 9.
---------------------------------------------------------------------------

    One commenter believes that, while the Commission should deny the
proposed ETPs, it should regulate this environment to stop individual
consumers from coming to financial harm.\73\
---------------------------------------------------------------------------

    \73\ See Fitzgerald Letter, supra note 9, at 2.
---------------------------------------------------------------------------

    One commenter suggests that the Commission could address some of
its concerns about the proposed ETPs by working with self-regulatory
organizations, and in particular FINRA, to create bitcoin and
cryptocurrency-related asset suitability requirements. In addition,
this commenter suggests that targeted disclosure requirements could
make investors aware of volatility, discourage retail investors from
investing more than a small portion of their portfolio in
cryptocurrency-related assets, and present historical scenarios to
retail investors to demonstrate how an instrument such as a particular
bitcoin ETP would have performed over time. This commenter believes
that suitability requirements are less prescriptive than an effective
ban on a class of product and that they could balance the Commission's
interest in protecting retail investors against its interest in
allowing cryptocurrency-related asset markets to continue to develop in
regulated markets where the Commission can observe their performance
closely.\74\
---------------------------------------------------------------------------

    \74\ See NERA Letter, supra note 9, at 5-6.
---------------------------------------------------------------------------

    Several commenters assert that the Commission should deny the
proposed ETPs to help protect the public from exposure to financial
risk from an unregulated market.\75\ One commenter asserts that, while
the risk posed by the cash-settled futures products is mostly
contained, a bitcoin ETP would expose the public to significant
financial risk due to a highly volatile, unregulated, and manipulated
market in bitcoin as well as cryptocurrencies in general.\76\ Several
commenters further believe that before the Commission approves a
bitcoin ETP, there should be a proper legal and regulatory framework
put in place by a suitable governmental body to prevent manipulation
and protect the public.\77\ Another commenter refers to the proposed
ETPs as a ``house of cards'' and expresses concern that the Funds'
attempt to replicate the bitcoin futures markets, which are related to
underlying cryptocurrencies that trade on unregulated exchanges, will
lead to losses for retail investors, and that the inclusion of an
inverse Fund will add to the risk.\78\
---------------------------------------------------------------------------

    \75\ See Desai Letter, supra note 9, at 1; Kohen Letter, supra
note 9; Kumar Letter, supra note 9; Malkin Letter, supra note 9, at
2.
    \76\ See Desai Letter, supra note 9, at 1.
    \77\ See Desai Letter, supra note 9, at 1, 2; Kumar Letter,
supra note 9; Malkin Letter, supra note 9, at 2.
    \78\ See Kohen Letter, supra note 9.
---------------------------------------------------------------------------

2. Analysis
    The Exchange asserts that approval of the proposal would enhance
competition among market participants, to the benefit of investors,\79\
and two commenters assert that approval would protect investors by
permitting them to seek exposure to bitcoin through a safer, regulated
market.\80\ Other commenters suggest that the Commission should either
seek to regulate the underlying bitcoin markets,\81\ or should seek to
protect investors through disclosure requirements or suitability
standards, rather than disapproving a bitcoin-ETP proposal.\82\ Several
other commenters, however, assert that approval of a bitcoin-based ETP
would expose investors to risks from unregulated bitcoin markets.\83\
---------------------------------------------------------------------------

    \79\ See Notice, supra note 3, 82 FR at 61106.
    \80\ See supra notes 71-72 and accompanying text.
    \81\ See supra note 73 and accompanying text.
    \82\ See supra note 74 and accompanying text.
    \83\ See supra notes 75-78 and accompanying text.
---------------------------------------------------------------------------

    The Commission acknowledges that, compared to trading in
unregulated bitcoin spot markets, trading a bitcoin-based ETP on a
national securities exchange may provide some additional protection to
investors, but the Commission must consider this potential benefit in
the broader context of whether the proposal meets each of the
applicable requirements of the Exchange Act. Pursuant to Section
19(b)(2) of the Exchange Act, the Commission must disapprove a proposed
rule change filed by a national securities exchange if it does not find
that the proposed rule change is consistent with the applicable
requirements of the Exchange Act--including the requirement under
Section 6(b)(5) that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices.
    Thus, even if a proposed rule change would provide certain benefits
to

investors and the markets, the proposed rule change may still fail to
meet other requirements under the Exchange Act. For the reasons
discussed above, the Exchange has not met its burden of demonstrating
an adequate basis in the record for the Commission to find that the
proposal is consistent with Exchange Act Section 6(b)(5), and,
accordingly, the Commission must disapprove the proposal.y

D. Other Comments

    Comment letters also addressed the intrinsic value of bitcoin; \84\
the desire of investors to gain access to bitcoin through an ETP; \85\
investor understanding about bitcoin; \86\ the volatility of bitcoin
prices,\87\ the regulation of bitcoin spot markets,\88\ the operation
and valuation of the proposed ETPs,\89\ the potential impact of
Commission approval of the proposed ETP on the price of bitcoin,\90\
and the legitimacy that Commission approval of the proposed ETP might
confer upon bitcoin as a digital asset.\91\ Ultimately, however,
additional discussion of these tangential topics is unnecessary, as
they do not bear on the basis for the Commission's decision to
disapprove the proposal.
---------------------------------------------------------------------------

    \84\ See Ahn Letter, supra note 9.
    \85\ See Fink Letter, supra note 9; Kaleda Letter, supra note 9;
Moberg Letter, supra note 9; Rousseau Letter, supra note 9; Santos
Letter, supra note 9.
    \86\ See Desai Letter, supra note 9, at 1; Kumar Letter, supra
note 9.
    \87\ See Desai Letter, supra note 9, at 1; Malkin Letter, supra
note 9, at 1.
    \88\ See Desai Letter, supra note 9, at 1; Fitzgerald Letter,
supra note 9, at 1; Kumar Letter, supra note 9; Malkin Letter, supra
note 9, at 1; Mohammed Letter, supra note 9.
    \89\ See Desai Letter, supra note 9, at 1; Malkin Letter, supra
note 9, at 1; Kumar Letter, supra note 9; NERA Letter, supra note 9,
at 1-2, 3, 5.
    \90\ See Santos Letter, supra note 9.
    \91\ See Desai Letter, supra note 9, at 1, 2; Kumar Letter,
supra note 9; Santos Letter, supra note 9.
---------------------------------------------------------------------------

E. Basis for Disapproval

    The record before the Commission does not provide a basis for the
Commission to conclude that the Exchange has met its burden under the
Exchange Act and the Commission's Rules of Practice to demonstrate that
its proposed rule change is consistent with Exchange Act Section
6(b)(5).\92\
---------------------------------------------------------------------------

    \92\ In disapproving the proposed rule change, the Commission
has considered its impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

IV. Conclusion

    For the reasons set forth above, the Commission does not find,
pursuant to Section 19(b)(2) of the Exchange Act, that the proposed
rule change is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder applicable to a national
securities exchange, and in particular, with Section 6(b)(5) of the
Exchange Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act, that proposed rule change SR-NYSEArca-2017-139 is
disapproved.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\93\
---------------------------------------------------------------------------

    \93\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18572 Filed 8-27-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 189 (Tuesday, September 30, 2014)]
[Notices]
[Pages 58860-58861]
[FR Doc No: 2014-23202]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2014-0082]

Petition for Waiver of Compliance

    In accordance with Part 211 of Title 49 Code of Federal Regulations
(CFR), this document provides the public notice that by a document
dated, August 11, 2014, Mr. Brian Wise, General Manager of the Mount
Rainier Scenic Railroad (MRSR), petitioned the Federal Railroad
Administration (FRA) for a waiver of compliance from certain provisions
of the Federal railroad safety regulations contained at 49 CFR Part
215, Railroad Freight Car Safety Standards. FRA assigned the petition
Docket Number FRA-2014-0082.
    Specifically, MRSR requests a waiver from the stenciling
requirements of 49 CFR 215.303, Stenciling of restricted cars, and the
reflectorization requirements of 49 CFR 224.3, Applicability, for three
skeleton log cars (Car Numbers CW 238, CW 187, and CW 208), and two
flatcars with log bunks (Car Numbers CW 251 and MRSR 449).
    MRSR states that it is a tourist railroad operation that operates
between Elbe, and Mineral, WA. The subject equipment is operated by
MRSR on a portion of the Tacoma Rail-leased track from Milepost (MP)
45.3M in Elbe to MP 51.9M in Mineral. This track is FRA Class 1. MRSR
is operated by paid employees and volunteer members of the Western
Forest Industries Museum (WFIM)--a non-profit organization under the
laws of the State of Washington--and is entirely for historical and
educational purposes. WFIM was incorporated in the State of Washington
in 1965, and has operated as a historic tourist railroad since 1981.
    MRSR does not interchange the equipment subject to this petition
with the general system of railroad, although it does have a connection
to facilitate the movement of rail equipment onto MRSR trackage for
preservation purposes.
    MRSR seeks relief for operation of this freight equipment for use
in tourist railroad operations and for ``photo freights,'' which are
freight trains of historical equipment operated for the purposes of
providing an opportunity for the public to view freight trains of a
bygone era. MRSR also operates passenger cars in conjunction with its
tourist operations. Photo freight trains provide an additional source
of income for MRSR to enable MRSR to maintain and preserve the museum
collection. As an operating railroad museum, MRSR maintains freight
equipment restored with original markings and reporting marks in an
effort to interpret the history of West Coast logging railroads in the
early 20th Century. Freight cars are maintained and operated
exclusively on the MRSR for interpretation and occasional photo freight
events. These cars are typically operated while empty in photo freight
service. Photo freight events are only held periodically on MRSR with
the cars typically operating in this service no more than two to four
times per year. The cars listed in this petition may also double as
maintenance-of-way cars (e.g., flatcar, when not in photo freight
service).
    MRSR has a good compliance history. The museum continues to
endeavor to maintain all equipment, operation and track to FRA
compliance standards. Throughout the operation of MRSR, FRA has not
found it necessary to issue any violations for failure to comply with
FRA mechanical safety regulations. MRSR has not experienced any
derailments or accidents with the equipment referenced in this petition
since the railroad began operations in 1981. MRSR also states that the
subject cars are operated at a maximum speed of 10 mph and typically
travel no more than 30 miles per day.
    MRSR believes granting of the waiver sought in the petition will
benefit MRSR by allowing continued use of historic freight equipment
for tourist, interpretive, and educational purposes. MRSR generates
revenue from its operations which help fund the ongoing preservation
activities of the museum. In addition, the local economy also benefited
as a result of MRSR tourist trains and museum activities.
    MRSR indicates that all equipment operated on MRSR is maintained by
the museum using knowledgeable employees, museum members, and outside
contractors as needed to perform freight car safety inspections. MRSR
will conduct a detailed inspection of each restricted freight car once
every 10 years, which will include raising each car off its trucks for
inspection of the car's center plate and truck center bowl. Each car
will be serviced and repaired prior to being returned to service.
Records of such inspection will be maintained by MRSR.
    Regarding the stenciling waiver, MRSR stated that it does not
interchange these restricted freight cars with any railroad and as
such, the cars

are in captive service. In addition, the stenciling requirements would
destroy the historical appearance of the freight cars that have been
preserved for historical, education, and interpretive purposes.
    Regarding reflectorization relief, MRSR states that these
requirements would destroy the historical appearance of the freight
cars which have been preserved for historical, educational, and
interpretive purposes. Application of the reflectorized tape or decals
on wood-bodied equipment is difficult. Further, there is no practical
safety purpose served by applying reflectorization because of the
captive service and the extreme care under which MRSR operates such
equipment, as well as the fact that the equipment is rarely operated in
times other than daylight hours. During the Christmas season, the last
train on each operating day operates during hours of darkness on the
return trip. On those occasions, crossings not equipped with automatic
crossing protection will be protected by flagmen equipped with lights
and fuses to warn approaching motorists and to illuminate the cars.
Current MRSR management is not aware of any train or vehicle accidents
at grade crossings involving MRSR trains.
    A copy of the petition, as well as any written communications
concerning the petition, is available for review online at
www.regulations.gov and in person at the U.S. Department of
Transportation's (DOT) Docket Operations Facility, 1200 New Jersey
Avenue SE., W12-140, Washington, DC 20590. The Docket Operations
Facility is open from 9 a.m. to 5 p.m., Monday through Friday, except
Federal Holidays.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested party
desires an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Web site: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
    Communications received by November 14, 2014 will be considered by
FRA before final action is taken. Comments received after that date
will be considered as far as practicable.
    Anyone is able to search the electronic form of any written
communications and comments received into any of our dockets by the
name of the individual submitting the comment (or signing the document,
if submitted on behalf of an association, business, labor union, etc.).
See http://www.regulations.gov/#!privacyNotice for the privacy notice
of regulations.gov or interested parties may review DOT's complete
Privacy Act Statement in the Federal Register published on April 11,
2000 (65 FR 19477).

    Issued in Washington, DC, on September 23, 2014.
Ron Hynes,
Director, Office of Safety Compliance and Assurance.
[FR Doc. 2014-23202 Filed 9-29-14; 8:45 am]
BILLING CODE 4910-06-P