UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on June 1, 2006

   NOTICE OF ACTION TAKEN -- DOCKET OST-2004-17469

________________________________________________________________________
_________________________________

This serves as notice to the public of the action described below, taken
by the Department official indicated (no additional confirming order
will be issued in this matter).

Application of   AMERICAN EAGLE AIRLINES, INC. (American Eagle), filed
2/23/06 for:

XX  Renewal of Exemption for two years under 49 U.S.C. 40109 to provide
the following service:

Scheduled foreign air transportation of persons, property, and mail
between Dallas/Ft. Worth, Texas, and Torreon, Mexico.

Applicant rep: Carl B. Nelson, Jr.<PHONE_NUMBER>  DOT Analyst: Linda
Lundell<PHONE_NUMBER>

D I S P O S I T I O N

XX	Granted (subject to conditions, see below)

The above action was effective when taken: June 1, 2006,  through  June
1, 2008 .

Action taken by:   Paul L. Gretch, Director

		      Office of International Aviation

XX  The authority granted is consistent with the aviation agreement
between the United States and Mexico.

Except to the extent exempted or waived, this authority is subject to
the terms, conditions, and limitations indicated:

	XX  The holder’s certificates of public convenience and necessity

	XX  Standard exemption conditions (attached)

Conditions:  The U.S.-Mexico exemption authority granted is subject to
the dormancy notice requirements set forth in condition 7 of Appendix A
of Order 88-10-2.

________________________________________________________________________
______

On the basis of data officially noticeable under Rule 24(g) of the
Department's regulations, we found the applicant qualified to provide
the exemption services authorized.

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) our action was consistent with Department
policy; (2) grant of the authority was consistent with the public
interest; and (3) grant of the authority would not constitute a major
regulatory action under the Energy Policy and Conservation Act of 1975.
To the extent not granted, we denied all requests in the referenced
Docket.  We may amend, modify, or revoke the authority granted in this
Notice at any time without hearing at our discretion.

Persons entitled to petition the Department for review of the action set
forth in this Notice under the Department’s regulations, 14 CFR
§385.30, may file their petitions within seven (7) days after the date
of issuance of this Notice.  This action was effective when taken, and
the filing of a petition for review will not alter such effectiveness.

An electronic version of this document is available on the World Wide
Web at:

  HYPERLINK "http://dms.dot.gov//reports/reports_aviation.asp"
http://dms.dot.gov//reports/reports_aviation.asp

				APPENDIX

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier
applicant(s) shall:

(1)  Hold at all times effective operating authority from the government
of each country served;

(2)  Comply with applicable requirements concerning oversales contained
in 14 CFR 250 (for scheduled operations, if authorized);

(3)  Comply with the requirements for reporting data contained in 14 CFR
241;

(4)  Comply with requirements for minimum insurance coverage, and for
certifying that coverage to the Department, contained in 14 CFR 205;

(5)  Except as specifically exempted or otherwise provided for in a
Department Order, comply with the requirements of 14 CFR 203, concerning
waiver of Warsaw Convention liability limits and defenses;

(6)  Comply with all applicable requirements of the Federal Aviation
Administration and with all applicable U.S. Government requirements
concerning security, including, but not limited to, 49 CFR Part 1544.
To assure compliance with all applicable U.S. Government requirements
concerning security, the holder shall, before commencing any new service
(including charter flights) to or from a foreign airport, contact its
International Principal Security Inspector (IPSI) to advise the IPSI of
its plans and to find out whether the Transportation Security
Administration has determined that security is adequate to allow such
airport(s) to be served; and

(7)  Comply with such other reasonable terms, conditions, and
limitations required by the public interest as may be prescribed by the
Department of Transportation, with all applicable orders and regulations
of other U.S. agencies and courts, and with all applicable laws of the
United States.

The authority granted shall be effective only during the period when the
holder is in compliance with the conditions imposed above.

05/2004

   American Eagle has also requested certificate authority for this
route under the streamlined procedures in Docket OST-2005-22261.  We
will handle that request separately.


[Federal Register Volume 76, Number 22 (Wednesday, February 2, 2011)]
[Notices]
[Pages 5800-5802]
[FR Doc No: 2011-2271]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2007-0265; FRL-9261-2]

Agency Information Collection Activities: Proposed Collection;
Comment Request

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: In compliance with the Paperwork Reduction Act (PRA) (44
U.S.C. 3501 et seq.), this document announces that EPA is planning to
submit to the Office of Management and Budget (OMB) a request to renew
an existing approved Information Collection Request (ICR) 2258.02--
Implementation of the 1997 and the 2006 fine particle
(PM2.5) national ambient air quality standards (NAAQS). This
ICR is scheduled to expire on May 31, 2011. Before submitting the ICR
to OMB for review and approval, EPA is soliciting comments on specific
aspects of the proposed information collection as described below.

DATES: Comments must be submitted on or before April 4, 2011.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2007-0265, by one of the following methods:
     http://www.regulations.gov: Follow the on-line
instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>
     Mail: Attention Docket ID No. EPA-HQ-OAR-2007-0265, U.S.
Environmental Protection Agency, EPA West (Air Docket), 1200
Pennsylvania Avenue, Northwest, Mailcode: 6102T, Washington, DC 20460.
     Hand Delivery: U.S. Environmental Protection Agency, EPA
West (Air Docket), 1301 Constitution Avenue, Northwest, Room 3334,
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2007-0265.
Such deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2007-0265. The EPA's policy is that all comments received will be
included in the public docket without change and may be made available
online at http://www.regulations.gov, including any personal
information provided, unless the comment includes information claimed
to be Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. Do not submit information
that you consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses. For additional information about EPA's public
docket visit, the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.

FOR FURTHER INFORMATION CONTACT: Butch Stackhouse, Air Quality Policy
Division, Office of Air Quality Planning and Standards, Mail Code C539-
01, Research Triangle Park, North Carolina 27711, telephone number
(919) 541-5208, facsimile number<PHONE_NUMBER>, electronic mail e-mail
address<EMAIL_ADDRESS>Karl Pepple, Air Quality Policy
Division, Office of Air Quality Planning and Standards, Mail Code C539-
01, Research Triangle Park, North Carolina 27711, telephone number
(919) 541-2683, facsimile number<PHONE_NUMBER>, electronic mail e-mail
address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

How can I access the docket and/or submit comments?

    The EPA has established a public docket for this ICR under Docket
ID No. EPA-HQ-OAR-2007-0265, which is available for online viewing at
http://www.regulations.gov, or in person viewing at the Air Docket in
the EPA Docket Center (EPA/DC), EPA West, Room 3334, 1301 Constitution
Ave., NW., Washington, DC. The EPA/DC Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Reading Room is<PHONE_NUMBER>,
and the telephone number for the Air Docket is<PHONE_NUMBER>.
    Use http://www.regulations.gov to obtain a copy of the draft
collection of information, submit or view public comments, access the
index listing of the contents of the docket, and to access those
documents in the public docket that are available electronically. Once
in the system, select ``search,'' then key in the docket ID number
identified in this document.

What information is EPA particularly interested in?

    Pursuant to section 3506(c)(2)(A) of the PRA, EPA specifically
solicits

comments and information to enable it to:
    (i) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the Agency,
including whether the information will have practical utility;
    (ii) evaluate the accuracy of the Agency's estimate of the burden
of the proposed collection of information, including the validity of
the methodology and assumptions used;
    (iii) enhance the quality, utility, and clarity of the information
to be collected; and
    (iv) minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.

What should I consider when I prepare my comments for EPA?

    You may find the following suggestions helpful for preparing your
comments:
    1. Explain your views as clearly as possible and provide specific
examples.
    2. Describe any assumptions that you used.
    3. Provide copies of any technical information and/or data you used
that support your views.
    4. If you estimate potential burden or costs, explain how you
arrived at the estimate that you provide.
    5. Offer alternative ways to improve the collection activity.
    6. Make sure to submit your comments by the deadline identified
under DATES.
    7. To ensure proper receipt by EPA, be sure to identify the docket
ID number assigned to this action in the subject line on the first page
of your response. You may also provide the name, date, and Federal
Register citation.

What information collection activity or ICR does this apply to?

    Affected entities: Entities potentially affected by this action are
states and Regional Offices. There are other entities that may be
indirectly affected, as they may comment on the draft submissions
before they are forwarded to EPA's Regional Offices. These include
potentially regulated entities, representatives of special interest
groups, and individuals.
    Title: PM2.5 National Ambient Air Quality Standard
Implementation Rule.
    ICR number: EPA ICR No. 2258.02, OMB Control No. 2060-0611.
    ICR status: This ICR is currently scheduled to expire on May 31,
2011. An Agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information, unless it displays
a currently valid OMB control number. The OMB control numbers for EPA's
regulations in title 40 of the Code of Federal Register (CFR), after
appearing in the Federal Register when approved, are listed in 40 CFR
part 9, are displayed either by publication in the Federal Register or
by other appropriate means, such as on the related collection
instrument or form, if applicable. The display of OMB control numbers
in certain EPA regulations is consolidated in 40 CFR part 9.
    Abstract: The Paperwork Reduction Act requires the information
found in this ICR number 2258.02 to assess the burden (in hours and
dollars) of the 1997 and 2006 PM2.5 NAAQS Implementation
Rule as well as the periodic reporting and recordkeeping necessary to
maintain the rule. The rule was proposed November 1, 2005 (70 FR 65983)
and promulgated April 25, 2007 (71 FR 61145). The preamble to the
proposed and final regulation addressed the administrative burden in
general terms. The preamble to the final rule stated that an ICR would
be prepared. The rule includes requirements that involve collecting
information from states with areas that have been designated
nonattainment for the PM2.5 NAAQS.
    The time period covered in this ICR is a 3 year period from June 1,
2011 through May 31, 2014. The milestones for the State or local air
agency respondents will include the required State Implementation Plan
(SIP) elements prescribed in the Clean Air Act (CAA) sections 110 and
part D, subpart 1 of title I for implementation plans and the
requirements in the PM2.5 NAAQS Implementation Rule (40 CFR
51.1000-51.1012). The PM2.5 SIP will contain rules and other
requirements designed to achieve the NAAQS by the deadlines established
under the CAA, and it also contains a demonstration that the state's
requirements will in fact result in attainment. The SIP must meet the
requirements in subpart 1 to adopt Reasonable Available Control
Measures, Reasonable Available Control Technology, and provide for
Reasonable Further Progress toward attainment for the period prior to
the area's attainment date. However, not all of the milestones and
associated burden and administrative cost estimates apply to every
designated PM2.5 nonattainment area. Areas with cleaner air
quality have fewer requirements.
    Burden Statement: The annual public reporting and recordkeeping
burden for this collection of information is estimated to average 317
hours per response for states with nonattainment areas for the 1997
PM2.5 standard, and 4,243 hours per response for states with
nonattainment areas for the 2006 PM2.5 standard. Burden
means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a federal agency. This includes the time needed
to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements
which have subsequently changed; train personnel to be able to respond
to a collection of information; search data sources; complete and
review the collection of information; and transmit or otherwise
disclose the information.
    The ICR provides a detailed explanation of the Agency's estimate,
which is only briefly summarized here:
    Estimated total number of potential respondents: 1997
PM2.5
    Standard: 21; 2006 PM2.5 Standard: 18.
    Frequency of response: Annual.
    Estimated total average number of responses for each respondent:
1997 PM2.5 Standard: 2.7; 2006 PM2.5 Standard: 2.
    Estimated total annual burden hours: 1997 PM2.5
Standard: 18,400; 2006 PM2.5 Standard: 157,000 hours.
    Estimated total average annual costs per respondent: 1997
PM2.5 standard: $52,600; 2006 PM2.5 Standard:
$523,700. This includes an estimated burden cost of $0 for capital
investment or maintenance and operational costs.
    There is a decrease of 34,600 hours to 175,400 hours (from a sum of
210,000 hours in the 2007 ICR) in the total estimated respondent burden
compared with that identified in the ICR currently approved by OMB.
This decrease reflects EPA's information that the number of non-
attainment areas for the 1997 PM2.5 standard has decreased
as areas have come into compliance with the standards and that the
burden associated with the remaining non-attainment areas is less
because of the work they have done previously to comply with the
standards. At the same time, promulgation of the 2006 PM2.5
standard led to designations of new areas as non-attainment, leading to
an increased burden on those respondents.

Additional Background on Burden Estimation Method

    The methodology and draft estimates of incremental administrative
burden for this ICR are documented in a separate supporting statement
in the docket. The methodology and draft estimates in the
PM2.5 Implementation Rule ICR are based on the ICR developed
for the 8-hour ozone Implementation Rule ICR (EPA ICR No. 2236.02, OMB
Control No. 2060-0594). The 8-hour ozone Implementation Rule ICR
methodology and draft estimates were submitted to EPA's Ozone NAAQS
Implementation Workgroup for their review and comment. This workgroup
is comprised of representatives from EPA Regional Offices I through IX,
as well as EPA's Offices of General Counsel, Office of Policy, and Air
and Radiation (including the Offices of Transportation and Air Quality,
Air Quality Planning and Standards, and Policy Analysis and Review).
    The workgroup provided constructive criticism on earlier drafts
which resulted in clarifications to the methodology section, revisions
to the categorization of non-attainment areas by Regional Office, and
changes to the temporal allocation of Regional Office administrative
burden. The workgroup reviewed the June 2006 ICR supporting statement
which was forwarded to OMB's Office of Information and Regulatory
Affairs. The workgroup believed there would be differences between the
realized incremental administrative burden of the states and Regional
Offices versus what was in the supporting statement. However, the
estimates in the ICR supporting statement were judged to be
appropriate.

What is the next step in the process for this ICR?

    The EPA will consider the comments received and amend the ICR as
appropriate. The final ICR package will then be submitted to OMB for
review and approval pursuant to 5 CFR 1320.12. At that time, EPA will
issue another Federal Register notice pursuant to 5 CFR
1320.5(a)(1)(iv) to announce the submission of the ICR to OMB and the
opportunity to submit additional comments to OMB. If you have any
questions about this ICR or the approval process, please contact the
technical person listed under FOR FURTHER INFORMATION CONTACT.

    Dated: January 28, 2011.
Mary E. Henigin,
Acting Director, Office of Air Quality Planning and Standards, Office
of Air and Radiation.
[FR Doc. 2011-2271 Filed 2-1-11; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 88, Number 190 (Tuesday, October 3, 2023)]
[Notices]
[Pages 68171-68179]
[FR Doc No: 2023-21792]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98567; File No. SR-NYSEARCA-2023-63]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of a Proposed Rule Change To List and Trade Shares of the Grayscale
Ethereum Futures Trust (ETH) ETF Under NYSE Arca Rule 8.200-E,
Commentary .02 (Trust Issued Receipts)

September 27, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on September 19, 2023, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the Grayscale
Ethereum Futures Trust (ETH) ETF under NYSE Arca Rule 8.200-E,
Commentary .02 (``Trust Issued Receipts''). The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the
Grayscale Ethereum Futures Trust (ETH) ETF (the ``Trust'') under NYSE
Arca Rule 8.200-E, Commentary .02, which governs the listing and
trading of Trust Issued Receipts.\4\
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    \4\ Commentary .02 to NYSE Arca Rule 8.200-E applies to Trust
Issued Receipts that invest in ``Financial Instruments.'' The term
``Financial Instruments,'' as defined in Commentary .02(b)(4) to
NYSE Arca Rule 8.200-E, means 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.
---------------------------------------------------------------------------

    The Trust is managed by Grayscale Advisors, LLC (``Sponsor''). The
Sponsor is in the process of becoming registered as a commodity pool
operator with the Commodity Futures Trading Commission (``CFTC'') and
is in the process of becoming a member of the National Futures
Association. The Sponsor has engaged Videnct Advisory, LLC, as
subadviser, to serve as the Trust's commodity trading adviser
(``CTA'').
    The Sponsor is not registered as a broker-dealer but is affiliated
with a broker-dealer. The Sponsor has implemented and will maintain a
``fire wall'' with respect to such broker-dealer affiliate regarding
access to information concerning the composition of and/or changes to
the portfolio. In the event that (a) the Sponsor becomes registered as
a broker-dealer or newly affiliated with a broker-dealer, or (b) any
new sponsor or sub-adviser is registered as a broker-dealer or becomes
affiliated with a broker-dealer, it will implement and maintain a fire
wall with respect to its relevant personnel or personnel of the broker-
dealer affiliate, as applicable, regarding access to information
concerning the composition of and/or changes to the portfolio, and will
be subject to procedures designed to prevent the use and dissemination
of material non-public information regarding the portfolio.
The Trust's Investment Objective and Strategy
    According to the Sponsor, the CME currently offers two Ethereum
futures contracts, one contract representing 50 Ether (``ETH
Contracts'') and another contract representing 0.10 Ether (``MET
Contracts''). ETH Contracts began trading on the CME Globex trading
platform on February 8, 2021 under the ticker symbol ``ETH'' and are
cash-settled in U.S. dollars. MET Contracts began trading on the CME
Globex trading platform on December 6, 2021 under the ticker symbol
``MET'' and are also cash-settled in U.S. dollars.\5\
---------------------------------------------------------------------------

    \5\ The daily settlements in MET are derived directly from the
settlements in ETH for each contract listing. See https://www.cmegroup.com/confluence/display/EPICSANDBOX/Bitcoin#Bitcoin-NormalDailySettlementProcedure.1.
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    ETH Contracts and MET Contracts each trade six consecutive monthly
contracts plus two additional December contract months (if the 6
consecutive months include December, only one additional December
contract month is listed). Because ETH Contracts and MET Contracts are
exchange-listed, they allow investors to gain exposure to Ether without
having to hold the underlying cryptocurrency. Like a futures contract
on a traditional commodity or stock index, ETH Contracts and MET
Contracts allow investors to hedge investment positions or speculate on
the future price of Ether.
    According to the Sponsor, the investment objective of the Trust is
to have the daily changes in the net asset value (``NAV'') of the
Trust's Shares reflect the daily changes in the price of a specified
benchmark (the ``Benchmark''). The Benchmark is the average of the
closing settlement prices

for the first to expire and second to expire ETH Contracts listed on
the Chicago Mercantile Exchange, Inc. (``CME''). The first to expire
and second to expire ETH Contracts and MET Contracts are referred to as
the Ether Futures Contracts. Under normal market conditions,\6\ the
Trust will invest in Ether Futures Contracts and in cash and cash
equivalents.\7\
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    \6\ The term ``normal market conditions'' includes, but is not
limited to, the absence of: trading halts in the applicable
financial markets generally; operational issues (e.g., systems
failure) causing dissemination of inaccurate market information; or
force majeure type events such as a natural or manmade disaster, act
of God, armed conflict, act of terrorism, riot or labor disruption
or any similar intervening circumstance. See NYSE Arca Rule 8.600-
E(c)(5).
    \7\ The term ``cash equivalents'' includes short term Treasury
bills, money market funds, demand deposit accounts and commercial
paper.
---------------------------------------------------------------------------

    According to the Sponsor, the Trust seeks to maintain its holdings
in Ether Futures Contracts with a roughly constant expiration profile.
Therefore, the Trust's positions will be changed or ``rolled'' on a
regular basis in order to track the changing nature of the Benchmark by
closing out first to expire contracts prior to settlement that are no
longer part of the Benchmark, and then entering into second to expire
contracts. Accordingly, the Trust will never carry futures positions
all the way to cash settlement; the Trust will price only off of the
daily settlement prices of the Ether Futures Contracts.\8\ To achieve
this, the Trust will roll its futures holdings prior to cash settlement
of the expiring contract.
---------------------------------------------------------------------------

    \8\ As discussed in more detail below, the CME determines the
daily settlements for Bitcoin futures based on trading activity on
CME Globex between 14:59:00 and 15:00:00 Central Time (CT), which is
the ``settlement period.''
---------------------------------------------------------------------------

    In seeking to achieve the Trust's investment objective, the Sponsor
will employ a ``neutral'' investment strategy that is intended to track
the changes in the Benchmark regardless of whether the Benchmark goes
up or goes down. The Trust will endeavor to trade in Ether Futures
Contracts so that the Trust's average daily tracking error against the
Benchmark will be less than 10 percent over any period of 30 trading
days. The Trust's ``neutral'' investment strategy is designed to permit
investors generally to purchase and sell the Trust's Shares for the
purpose of investing in the Ether Futures Contracts (as discussed
below). Such investors may include participants in the Ether market
seeking to hedge the risk of losses in their Ether-related
transactions, as well as investors seeking price exposure to the Ether
market.
    According to the Sponsor, one factor determining the total return
from investing in futures contracts is the price relationship between
soon to expire contracts and later to expire contracts. If the futures
market is in a state of backwardation (i.e., when the price of ETH
Contracts and MET Contracts in the future is expected to be less than
the current price), the Trust will buy later to expire contracts for a
lower price than the sooner to expire contracts that it sells.
Hypothetically, and assuming no changes to either prevailing ETH
Contracts and MET Contracts' prices or the price relationship between
soon to expire contracts and later to expire contracts, the value of a
contract will rise as it approaches expiration. Over time, if
backwardation remained constant, the performance of a portfolio would
continue to be affected. If the futures market is in contango, the
Trust will buy later to expire contracts for a higher price than the
sooner to expire contracts that it sells. Hypothetically, and assuming
no other changes to either prevailing ETH Contracts and MET Contracts'
prices or the price relationship between the spot price, soon to expire
contracts and later to expire contracts, the value of a contract will
fall as it approaches expiration. Over time, if contango remained
constant, the performance of a portfolio would continue to be affected.
Frequently, whether contango or backwardation exists is a function,
among other factors, of the prevailing market conditions of the
underlying market and government policy.
    The Trust's investments will be consistent with the Trust's
investment objective and will not be used to enhance leverage. That is,
the Trust's investments will not be used to seek performance that is
the multiple or inverse multiple (e.g., 2Xs, 3Xs, -2Xs, and -3Xs) of
the Trust's Benchmark.
Summary of the Application
    The CME is a regulated futures exchange with the requisite
oversight, controls, and regulatory scrutiny necessary to maintain,
promote, and effectuate fair and transparent trading of its listed
products, including the ETH Contracts and MET Contracts. As proposed,
under no circumstances will the Trust hold and/or invest in any assets
other than ETH Contracts and MET Contracts, cash, and cash equivalents,
and as such, would be an investment product similar to any other
exchange-traded product (``ETP'') whose component holdings are futures
contracts traded on a regulated exchange. Therefore, investors would be
afforded all of the protections that exchanges provide, including
bilateral surveillance agreements between the listing exchange of the
ETP and the listing exchange of the ETP's futures-based components.
The Ether Industry and Market Transactions
    According to the Sponsor and as discussed in further detail below,
Ethereum, or ETH, is a digital asset that is created and transmitted
through the operations of the peer-to-peer ``Ethereum Network,'' a
decentralized network of computers that operates on cryptographic
protocols. No single entity owns or operates the Ethereum Network, the
infrastructure of which is collectively maintained by a decentralized
user base. The Ethereum Network allows people to exchange tokens of
value, called Ether, which are recorded on a public transaction ledger
known as a blockchain. ETH can be used to pay for goods and services,
including computational power on the Ethereum network, or it can be
converted to fiat currencies, such as the U.S. dollar, at rates
determined on ``Digital Asset Exchanges'' \9\ that trade ETH or in
individual end-user-to-end-user transactions under a barter system.
---------------------------------------------------------------------------

    \9\ A ``Digital Asset Market'' is a ``Brokered Market,''
``Dealer Market,'' ``Principal-to-Principal Market'' or ``Exchange
Market,'' as each such term is defined in the Financial Accounting
Standards Board Accounting Standards Codification Master Glossary.
The ``Digital Asset Exchange Market'' is the global exchange market
for the trading of ETH, which consists of transactions on electronic
Digital Asset Exchanges. A ``Digital Asset Exchange'' is an
electronic marketplace where exchange participants may trade, buy
and sell ETH based on bid-ask trading. The largest Digital Asset
Exchanges are online and typically trade on a 24-hour basis,
publishing transaction price and volume data.
---------------------------------------------------------------------------

    Furthermore, the Ethereum Network also allows users to write and
implement smart contracts--that is, general-purpose code that executes
on every computer in the network and can instruct the transmission of
information and value based on a sophisticated set of logical
conditions. Using smart contracts, users can create markets, store
registries of debts or promises, represent the ownership of property,
move funds in accordance with conditional instructions and create
digital assets other than ETH on the Ethereum Network. Smart contract
operations are executed on the Ethereum Blockchain in exchange for
payment of ETH. The Ethereum Network is one of a number of projects
intended to expand blockchain use beyond just a peer-to-peer money
system.
    The Ethereum Network went live on July 30, 2015. Unlike other
digital

assets, such as Bitcoin, which are solely created through a progressive
mining process, 72.0 million ETH were created in connection with the
launch of the Ethereum Network. At the time of the network launch, a
non-profit called the Ethereum Foundation was the sole organization
dedicated to protocol development.
    The Ethereum Network is decentralized in that it does not require
governmental authorities or financial institution intermediaries to
create, transmit, or determine the value of ETH. Rather, following the
initial distribution of ETH, ETH is created, burned, and allocated by
the Ethereum Network protocol through a process that is currently
subject to an issuance and burn rate. The value of ETH is determined by
the supply of and demand for ETH on the Digital Asset Exchanges or in
private end-user-to-end-user transactions.
    New ETH are created and rewarded to the validators of a block in
the Ethereum Blockchain for verifying transactions. The Ethereum
Blockchain is effectively a decentralized database that includes all
blocks that have been validated, and it is updated to include new
blocks as they are validated. Each ETH transaction is broadcast to the
Ethereum Network and, when included in a block, recorded in the
Ethereum Blockchain. As each new block records outstanding ETH
transactions, and outstanding transactions are settled and validated
through such recording, the Ethereum Blockchain represents a complete,
transparent and unbroken history of all transactions of the Ethereum
Network.
    Among other things, ETH is used to pay for transaction fees and
computational services (i.e., smart contracts) on the Ethereum Network;
users of the Ethereum Network pay for the computational power of the
machines executing the requested operations with ETH. Requiring payment
in ETH on the Ethereum Network incentivizes developers to write quality
applications and increases the efficiency of the Ethereum Network
because wasteful code costs more, while also ensuring that the Ethereum
Network remains economically viable by compensating for contributed
computational resources.
    To date, several ETH-based exchange-traded funds (``ETFs'') that
would be registered under the Investment Company Act of 1940 (the ``
'40 Act'') have filed registration statements with the Commission.
These ETFs would hold ETH futures contracts that trade on the CME and
settle using the CME CF Ethereum Reference Rate (``ERR''). In other
words, these ETFs offer identical exposure to that of the Trust.
Therefore, the Sponsor believes that if the Commission allows these
ETFs to begin trading, then it should also approve the Trust for
trading.
The Trust Will Not Transact in Ether and Will Not Be Required To Retain
an Ether Custodian
    The Sponsor notes that individual users, institutional investors
and investment funds that want to provide exposure to Ether by
investing directly in Ether, and therefore must transact in Ether, must
use the Ether Network to download specialized software referred to as a
``Ether wallet.'' This wallet may be used to send and receive Ether
through users' unique ``Ether addresses.'' The amount of Ether
associated with each Ether address, as well as each Ether transaction
to or from such address, is captured on the Blockchain. Ether
transactions are secured by cryptography known as public-private key
cryptography, represented by the Ether addresses and digital signature
in a transaction's data file. Each Ether Network address, or wallet, is
associated with a unique ``public key'' and ``private key'' pair, both
of which are lengthy alphanumeric codes, derived together and
possessing a unique relationship. The private key is a secret and must
be kept in accordance with appropriate controls and procedures to
ensure it is used only for legitimate and intended transactions. If an
unauthorized third person learns of a user's private key, that third
person could forge the user's digital signature and send the user's
Ether to any arbitrary Ether address, thereby stealing the user's
Ether. Similarly, if a user loses his private key and cannot restore
such access (e.g., through a backup), the user may permanently lose
access to the Ether contained in the associated address.
    According to the Sponsor, institutional purchasers of Ether,
including other Ether funds that provide exposure to Ether by investing
directly in Ether, generally maintain their Ether account with an Ether
custodian. Ether custodians are financial institutions that have
implemented a series of specialized security precautions, including
holding Ether in ``cold storage,'' to try to ensure the safety of an
account holder's Ether. These Ether custodians must carefully consider
the design of the physical, operational, and cryptographic systems for
secure storage of private keys in an effort to lower the risk of loss
or theft, and many use a multi-factor security system under which
actions by multiple individuals working together are required to access
the private keys necessary to transfer such digital assets and ensure
exclusive ownership.
    The nature of the Ether Futures Contracts that the Trust will hold
is such that the Trust will not be required to use an Ether custodian.
According to the Sponsor, the Trust will deposit an initial margin
amount to initiate an open position in futures contracts. A margin
deposit is like a cash performance bond. It helps assure the trader's
performance of the futures contracts that he or she purchases or sells.
Futures contracts are marked to market at the end of each trading day
and the margin required with respect to such contracts is adjusted
accordingly. The remainder of the Trust's assets will be held in cash
and cash equivalents at the Trust custodian or other financial
institutions. The Trust will only hold Ether Futures Contracts
described above. Accordingly, the Trust will not need an Ether
custodian because it will never hold actual Ether.
The Structure and Operation of the Trust Satisfies Commission
Requirements for Ether-Based Exchange Traded Products
    In the context of prior spot digital asset ETP proposal disapproval
orders for Bitcoin, the Commission expressed concerns about the
underlying Digital Asset Market due to the potential for fraud and
manipulation and outlined the reasons why such proposals have been
unable to satisfy these concerns (the ``Prior Spot Digital Asset ETP
Disapproval Orders'').\10\ In the Prior

Spot Digital Asset ETP Disapproval Orders, the Commission outlined that
a proposal relating to a digital asset-based ETP could satisfy its
concerns regarding potential for fraud and manipulation by
demonstrating:
---------------------------------------------------------------------------

    \10\ See 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 (Aug. 1, 2018) (SR-BatsBZX-2016-30) (the ``Winklevoss
Order''); Order Disapproving a Proposed Rule Change, as Modified by
Amendment No. 1, Relating to the Listing and Trading of Shares of
the Bitwise Bitcoin ETF Trust Under NYSE Arca Rule 8.201-E,
Securities Exchange Act Release No. 87267 (Oct. 9, 2019), 84 FR
55382 (Oct. 16, 2019) (SR-NYSEArca-2019-01) (the ``Bitwise Order'');
Order Disapproving a Proposed Rule Change, as Modified by Amendment
No. 1, to Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust
Shares) and to List and Trade Shares of the United States Bitcoin
and Treasury Investment Trust Under NYSE Arca Rule 8.201-E,
Securities Exchange Act Release No. 88284 (February 26, 2020), 85 FR
12595 (March 3, 2020) (SR-NYSEArca-2019-39) (the ``Wilshire Phoenix
Order''); Order Disapproving a Proposed Rule Change to List and
Trade the Shares of the ProShares Bitcoin ETF and the ProShares
Short Bitcoin ETF, Securities Exchange Act Release No. 83904 (Aug.
22, 2018), 83 FR 43934 (Aug. 28, 2018) (SR-NYSEArca-2017-139) (the
``ProShares Order''); Order Disapproving a Proposed Rule Change
Relating to Listing and Trading of the Direxion Daily Bitcoin Bear
1X Shares, Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily
Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares, and
Direxion Daily Bitcoin 2X Bear Shares Under NYSE Arca Rule 8.200-E,
Securities Exchange Act Release No. 83912 (Aug. 22, 2018), 83 FR
43912 (Aug. 28, 2018) (SR-NYSEArca-2018-02) (the ``Direxion
Order''); Order Disapproving a Proposed Rule Change to List and
Trade the Shares of the GraniteShares Bitcoin ETF and the
GraniteShares Short Bitcoin ETF, Securities Exchange Act Release No.
83913 (Aug. 22, 2018), 83 FR 43923 (Aug. 28, 2018) (SR-CboeBZX-2018-
01) (the ``GraniteShares Order'').
---------------------------------------------------------------------------

    (1) Inherent Resistance to Fraud and Manipulation: that the
underlying commodity market is inherently resistant to fraud and
manipulation;
    (2) Other Means to Prevent Fraud and Manipulation: that there are
other means to prevent fraudulent and manipulative acts and practices
that are sufficient; or
    (3) Surveillance Sharing: that the listing exchange has entered
into a surveillance sharing agreement with a regulated market of
significant size relating to the underlying or reference assets.
    As described below, the Sponsor believes the structure and
operation of the Trust are designed to prevent fraudulent and
manipulative acts and practices, to protect investors and the public
interest, and to respond to the specific concerns that the Commission
may have with respect to potential fraud and manipulation in the
context of an ETH-based ETP.
Surveillance Sharing Agreements With a Market of Significant Size
    In the Prior Spot Digital Asset ETP Disapproval Orders, the
Commission noted its concerns that the Bitcoin market could be subject
to manipulation.\11\ In these orders, the Commission cited numerous
precedents \12\ in which listing proposals were approved based on
findings that the particular market was either inherently resistant to
manipulation or that the listing exchange had entered into a
surveillance sharing agreement with a market of significant size.\13\
The Commission noted that, for commodity-trust ETPs ``there has been in
every case at least one significant, regulated market for trading
futures in the underlying commodity--whether gold, silver, platinum,
palladium or copper--and the ETP listing exchange has entered into
surveillance-sharing agreements with, or held Intermarket Surveillance
Group (the ``ISG'') membership in common with, that market.'' \14\
---------------------------------------------------------------------------

    \11\ See Winklevoss I Order and Winklevoss II Order. The Sponsor
notes that some of the concerns raised are that a significant
portion of Bitcoin trading occurs on unregulated platforms and that
there is a concentration of a significant number of Bitcoin in the
hands of a small number of holders. However, the Sponsor believes
that these facts are not unique to Bitcoin and are true of a number
of commodity and other markets. For instance, some gold bullion
trading takes place on unregulated OTC markets and a significant
percentage of gold is held by a relative few. According to estimates
of the World Gold Council, approximately 22% of total above ground
gold stocks are held by private investors and 17% are held by
foreign governments. See https://www.gold.org/goldhub/data/above-ground-stocks. By comparison, 13.61% of Bitcoin are held by the 86
largest Bitcoin addresses, some of which are known to be cold
storage addresses of large centralized cryptocurrency trading
platforms. See https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html.
    \12\ For an extensive listing of such precedents, see Winklevoss
I Order, 82 FR at 14083 n. 96.
    \13\ The Exchange to date has not entered into surveillance
sharing agreements with any cryptocurrency platform. However, the
CME, which calculates the CME CF BRR, and which has offered
contracts for Bitcoin futures products since 2017, is, as noted
below, a member of the Intermarket Surveillance Group (``ISG''). In
addition, each Constituent Platform has entered into a data sharing
agreement with CME. See https://docs-cfbenchmarks.s3.amazonaws.com/CME+CF+Constituent+Exchanges+Criteria.pdf.
    \14\ See Winklevoss II Order, 83 FR at 37594.
---------------------------------------------------------------------------

    Like the Exchange, the CME \15\ is a member of the ISG, the purpose
of which is ``to provide a framework for the sharing of information and
the coordination of regulatory efforts among exchanges trading
securities and related products to address potential intermarket
manipulations and trading abuses.'' \16\ Membership of a relevant
futures exchange in ISG is sufficient to meet the surveillance-sharing
requirement.\17\
---------------------------------------------------------------------------

    \15\ The CME is regulated by the CFTC, which has broad reaching
anti-fraud and anti-manipulation authority including with respect to
the Bitcoin market since Bitcoin has been designated as a commodity
by the CFTC. See A CFTC Primer on Virtual Currencies (October 17,
2017), available at: https://www.cftc.gov/sites/default/files/idc/groups/public/documents/file/labcftc_primercurrencies100417.pdf (the
``CFTC Primer on Virtual Currencies'') (``The CFTC's jurisdiction is
implicated when a virtual currency is used in a derivatives contract
or if there is fraud or manipulation involving a virtual currency
traded in interstate commerce.''). See also 7 U.S.C. 7(d)(3) (``The
board of trade shall list on the contract market only contracts that
are not readily susceptible to manipulation.'').
    \16\ See https://isgportal.org/overview.
    \17\ See, e.g., Winklevoss II Order, 83 FR at 37594.
---------------------------------------------------------------------------

    The Commission has previously noted that the existence of a
surveillance-sharing agreement by itself is not sufficient for purposes
of meeting the requirements of Section 6(b)(5); the surveillance-
sharing agreement must be with a market of significant size.\18\ The
Commission has also provided an example of how it interprets the terms
``significant market'' and ``market of significant size,'' though that
definition is meant to be illustrative and not exclusive: ``the terms
`significant market' and `market of significant size' . . . 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 it is unlikely that trading in
the ETP would be the predominant influence on prices in that market.''
\19\
---------------------------------------------------------------------------

    \18\ See, e.g., id. at 37589-90.
    \19\ Id. at 37594; see also GraniteShares Order, 83 FR at 43930
n. 85 and accompanying text.
---------------------------------------------------------------------------

    Further, as the Commission explained in the order approving the
first Bitcoin-based ETP (the ``Teucrium Order''), ``the CME is a
`significant market' related to CME bitcoin futures contracts, which
would be the exclusive noncash holdings of the proposed ETP.'' \20\ In
the Teucrium Order, the Commission further elaborated that:
---------------------------------------------------------------------------

    \20\ Securities Exchange Act Release No. 94620 (April 6, 2022),
87 FR 21676 (Apr. 12, 2022) (SR-NYSEArca-2021-53) (Order Granting
Approval of a Proposed Rule Change, as Modified by Amendment No. 2,
to List and Trade Shares of the Teucrium Bitcoin Futures Fund Under
NYSE Arca Rule 8.200-E, Commentary .02 (Trust Issued Receipts)).

[w]ith respect to the proposed ETP, the underlying bitcoin assets
are CME bitcoin futures contracts. The relevant analysis, therefore,
is whether Arca has a comprehensive surveillance-sharing agreement
with a regulated market of significant size related to CME bitcoin
futures contracts . . . [T]aking into consideration the direct
relationship between the regulated market with which Arca has a
surveillance-sharing agreement and the assets held by the proposed
ETP, as well as developments with respect to the CME bitcoin futures
market-- including the launch of exchange-traded funds registered
under the Investment Company Act of 1940 (``1940 Act'') that hold
CME bitcoin futures (``Bitcoin Futures ETFs'')--the Commission
concludes that the Exchange has the requisite surveillance-sharing
agreement.'' \21\
---------------------------------------------------------------------------

    \21\ See id. at 21678.

    Key to the Commission's approval was that the significant regulated
market (i.e., the CME) with which the listing exchange had a
surveillance-sharing agreement, was the same market on which the assets
in the ETP trade.
    The Sponsor believes that the facts and circumstances of this
proposal are the same as that of the Teucrium Order. CME Ether Futures
Contracts are the exclusive holdings of the Trust. The relevant
analysis, therefore, is whether the Exchange has a comprehensive
surveillance-sharing agreement with a regulated market of significant
size

related to CME Ether Futures Contracts, which it does by way of the
ISG.
    The Sponsor also believes it is unlikely that the ETP would become
the predominant influence on prices in the market. While future inflows
to the proposed Trust cannot be predicted, to provide comparable data,
the Sponsor examined the change in market capitalization of ETH with
net inflows into Grayscale Ethereum Trust (ETH) (the ``ETH Trust''), an
Ethereum fund that the Sponsor's affiliate, Grayscale Investments, LLC,
manages. The ETH Trust currently trades on OTC Markets and is largest
and most liquid ETH investment product in the world.\22\ From November
1, 2019 to August 31, 2023, the market capitalization of ETH grew from
$20 billion to $198 billion, a $178 billion increase. Over the same
period, the Trust experienced $1.2 billion of inflows. The cumulative
inflow into the Trust over the stated time period was only 0.6% of the
aggregate growth of ETH's market capitalization.
---------------------------------------------------------------------------

    \22\ To further illustrate the size and liquidity of the Trust,
as of September 6, 2023, compared with global commodity ETPs, the
Trust would rank 24th in assets under management and 83rd in
notional trading volume for the preceding 30 days.
---------------------------------------------------------------------------

    Additionally, the Trust experienced approximately $70.2 billion of
trading volume from November 1, 2019 to August 31, 2023, only 19% of
the CME futures market and 10% of the Index over the same period.
    In summary, based on the Commission's prior reasoning, the Sponsor
believes that the Trust satisfies the Commission's requirements under
the Exchange Act because the CME is the same market on which the assets
of the Trust trade, and the Trust would not otherwise become the
predominant influence in prices in the market.\23\
---------------------------------------------------------------------------

    \23\ While the Commission also considered the launch of
exchange-traded funds registered under the '40 Act as a reason for
its approval in the Teucrium Order, the Sponsor does not believe
this distinction is relevant given the otherwise satisfaction of the
Significant Market Test.
---------------------------------------------------------------------------

Settlement of ETH Contracts and MET Contracts
    According to the Sponsor, each ETH Contract and MET Contract
settles daily to the ETH Contract volume-weighted average price
(``VWAP'') of all trades that occur between 2:59 p.m. and 3:00 p.m.
Central Time, the settlement period, rounded to the nearest tradable
tick.\24\
---------------------------------------------------------------------------

    \24\ VWAP is calculated based first on Tier 1 (if there are
trades during the settlement period); then Tier 2 (if there are no
trades during the settlement period); and then Tier 3 (in the
absence of any trade activity or bid/ask in a given contract month
during the current trading day), as follows. For Tier 1, each
contract month settles to its VWAP of all trades that occur between
14:59:00 and 15:00:00 CT, the settlement period, rounded to the
nearest tradable tick. If the VWAP is exactly in the middle of two
tradable ticks, then the settlement will be the tradable price that
is closer to the contract's prior day settlement price. For Tier 2,
if no trades occur on CME Globex between 14:59:00 and 15:00:00 CT,
the settlement period, then the last trade (or the contract's
settlement price from the previous day in the absence of a last
trade price) is used to determine whether to settle to the bid or
the ask during this period. If the last trade price is outside of
the bid/ask spread, then the contract month settles to the nearest
bid or ask price. If the last trade price is within the bid/ask
spread, or if a bid/ask spread is not available, then the contract
month settles to the last trade price. For Tier 3, in the absence of
any trade activity or bid/ask in a given contract month during the
current trading day, the daily settlement price will be determined
by applying the net change from the preceding contract month to the
given contract month's prior daily settlement price.
---------------------------------------------------------------------------

    ETH Contracts and MET Contracts each expire on the last Friday of
the contract month and are settled with cash. The final settlement
value is based on the CME CF ERR at 4:00 p.m. London time on the
expiration day of the futures contract.
    As proposed, the Trust will rollover its soon to expire Ether
Futures Contracts to extend the expiration or maturity of its position
forward by closing the initial contract holdings and opening a new
longer-term contract holding for the same underlying asset at the then-
current market price. The Trust does not intend to hold any Ether
futures positions into cash settlement.
Net Asset Value
    According to the Sponsor, the Trust's NAV per Share will be
calculated by taking the current market value of its total assets,
subtracting any liabilities, and dividing that total by the number of
Shares.
    The Administrator of the Trust will calculate the NAV once each
trading day, as of the earlier of the close of the New York Stock
Exchange or 4:00 p.m. Eastern Standard Time (EST).
    According to the Sponsor, to determine the value of Ether Futures
Contracts, the Trust's Administrator will use the Ether Futures
Contract settlement price on the exchange on which the contract is
traded, except that the ``fair value'' of Ether Futures Contracts (as
described in more detail below) may be used when Ether Futures
Contracts close at their price fluctuation limit for the day. The
Trust's Administrator will determine the value of Trust investments as
of the earlier of the close of the New York Stock Exchange or 4:00 p.m.
EST. The Trust's NAV will include any unrealized profit or loss on open
Ether Futures Contacts and any other credit or debit accruing to the
Trust but unpaid or not received by the Trust.
    According to the Sponsor, the fair value of the Trust's holdings
will be determined by the Trust's Sponsor in good faith and in a manner
that assesses the future Ether market value based on a consideration of
all available facts and all available information on the valuation
date. When an Ether Futures Contract has closed at its price
fluctuation limit, the fair value determination will attempt to
estimate the price at which such Ether Futures Contract would be
trading in the absence of the price fluctuation limit (either above
such limit when an upward limit has been reached or below such limit
when a downward limit has been reached). Typically, this estimate will
be made primarily by reference to exchange traded instruments at 4:00
p.m. EST on settlement day. The fair value of ETH Contracts and MET
Contracts may not reflect such security's market value or the amount
that the Trust might reasonably expect to receive for the ETH Contracts
and MET Contracts upon its current sale.
Indicative Trust Value
    According to the Sponsor, in order to provide updated information
relating to the Trust for use by investors and market professionals,
ICE Data Indices, LLC will calculate an updated Indicative Trust Value
(``ITV''). The ITV will be calculated by using the prior day's closing
NAV per Share of the Trust as a base and will be updated throughout the
Core Trading Session of 9:30 a.m. E.T. to 4 p.m. E.T. to reflect
changes in the value of the Trust's holdings during the trading day.
    The ITV will be disseminated on a per Share basis every 15 seconds
during the Exchange's Core Trading Session and be widely disseminated
by one or more major market data vendors during the Exchange's Core
Trading Session.\25\
---------------------------------------------------------------------------

    \25\ Several major market data vendors display and/or make
widely available ITVs taken from the Consolidated Tape Association
(``CTA'') or other data feeds.
---------------------------------------------------------------------------

Creation and Redemption of Shares
    According to the Sponsor, the Shares issued by the Trust may only
be purchased by Authorized Purchasers and only in blocks of 10,000
Shares called ``Creation Baskets.'' The amount of the purchase payment
for a Creation Basket is equal to the total NAV of Shares in the
Creation Basket. Similarly, only Authorized Purchasers may redeem
Shares and only in blocks of 10,000 Shares called ``Redemption
Baskets.'' The amount of the redemption proceeds for a Redemption
Basket is equal to the total NAV of Shares in the Redemption Basket.
The purchase price

for Creation Baskets and the redemption price for Redemption Baskets
are the actual NAV calculated at the end of the business day when a
request for a purchase or redemption is received by the Trust.
    ``Authorized Purchasers'' will be the only persons that may place
orders to create and redeem Creation Baskets. Authorized Purchasers
must be (1) either registered broker-dealers or other securities market
participants, such as banks and other financial institutions, that are
not required to register as broker-dealers to engage in securities
transactions, and (2) DTC Participants. An Authorized Purchaser is an
entity that has entered into an Authorized Purchaser Agreement with the
Sponsor.
Creation Procedures
    According to the Sponsor, on any ``Business Day,'' an Authorized
Purchaser may place an order with the Transfer Agent to create one or
more Creation Baskets. For purposes of processing both purchase and
redemption orders, a ``Business Day'' means any day other than a day
when the CME or the New York Stock Exchange is closed for regular
trading. Purchase orders for Creation Baskets must be placed by 3:00
p.m. EST or one hour prior to the close of trading on the New York
Stock Exchange, whichever is earlier. The day on which the Distributor
receives a valid purchase order is referred to as the purchase order
date. If the purchase order is received after the applicable cut-off
time, the purchase order date will be the next Business Day. Purchase
orders are irrevocable.
    By placing a purchase order, an Authorized Purchaser agrees to
deposit cash with the Custodian.
Redemption Procedures
    According to the Sponsor, the procedures by which an Authorized
Purchaser can redeem one or more Creation Baskets will mirror the
procedures for the creation of Creation Baskets. On any Business Day,
an Authorized Purchaser may place an order with the Transfer Agent to
redeem one or more Creation Baskets.
    The redemption procedures allow Authorized Purchasers to redeem
Creation Baskets. Individual shareholders may not redeem directly from
the Trust. By placing a redemption order, an Authorized Purchaser
agrees to deliver the Creation Baskets to be redeemed through DTC's
book entry system to the Trust by the end of the next Business Day
following the effective date of the redemption order or by the end of
such later business day.
Determination of Redemption Distribution
    According to the Sponsor, the redemption distribution from the
Trust will consist of an amount of cash, cash equivalents, and/or
exchange listed Ether futures that is in the same proportion to the
total assets of the Trust on the date that the order to redeem is
properly received as the number of Shares to be redeemed under the
redemption order is in proportion to the total number of Shares
outstanding on the date the order is received.
Delivery of Redemption Distribution
    According to the Sponsor, an Authorized Purchaser who places a
purchase order will transfer to the Custodian the required amount of
cash, cash equivalents, and/or Ether futures by the end of the next
business day following the purchase order date or by the end of such
later business day, not to exceed three business days after the
purchase order date, as agreed to between the Authorized Purchaser and
the Custodian when the purchase order is placed (the ``Purchase
Settlement Date''). Upon receipt of the deposit amount, the Custodian
will direct DTC to credit the number of Creation Baskets ordered to the
Authorized Purchaser's DTC account on the Purchase Settlement Date.
Availability of Information
    The NAV for the Trust's Shares will be disseminated daily to all
market participants at the same time. The intraday, closing, and
settlement prices of the Ether Futures Contracts will be readily
available from the applicable futures exchange websites, automated
quotation systems, published or other public sources, or major market
data vendors. Information regarding the market price and trading volume
of the Shares will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services.
    Complete real-time data for the Ether Futures Contracts will be
available by subscription through on-line information services. ICE
Futures U.S. and CME also provide delayed futures and options on
futures information on current and past trading sessions and market
news free of charge on their respective websites. The specific contract
specifications for Ether Futures Contracts will also be available on
such websites, as well as other financial informational sources.
Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the CTA. Quotation information
for cash equivalents and commodity futures may be obtained from brokers
and dealers who make markets in such instruments. Intra-day price and
closing price level information for the Benchmark will be available
from major market data vendors. The Benchmark value will be
disseminated once every 15 seconds during the Core Trading Session. The
Benchmark components and methodology will be made publicly available on
the CME's website \26\ and the Trust's website (www.grayscale.com).
---------------------------------------------------------------------------

    \26\ See https://www.cmegroup.com/markets/cryptocurrencies/ether/ether.html?gad=1&gclid=CjwKCAjwjaWoBhAmEiwAXz8DBd0hAnxJD205R-TSC-c44r2Ir7YEssof0NkSOiL1zIwJcv7jsAibNhoCglQQAvD_BwE&gclsrc=aw.ds.
---------------------------------------------------------------------------

    In addition, the Trust's website will display the applicable end of
day closing NAV. The daily holdings of the Trust will be available on
the Trust's website. The Trust's website will also include a form of
the prospectus for the Trust that may be downloaded. The website will
include the Shares' ticker and CUSIP information along with additional
quantitative information updated on a daily basis, including: (1) the
prior Business Day's reported NAV and closing price and a calculation
of the premium and discount of the closing price or mid-point of the
bid/ask spread at the time of NAV calculation (the ``Bid/Ask Price'')
against the NAV; and (2) data in chart format displaying the frequency
distribution of discounts and premiums of the daily closing price or
Bid/Ask Price against the NAV, within appropriate ranges, for at least
each of the four previous calendar quarters. The website disclosure of
portfolio holdings will be made daily and will include, as applicable,
(i) the name, quantity, price, and market value of the Trust's
holdings, (ii) the counterparty to and value of forward contracts and
any other financial instruments tracking the Benchmark, and (iii) the
total cash and cash equivalents held in the Trust's portfolio, if
applicable.
    The Trust's website will be publicly available at the time of the
public offering of the Shares and accessible at no charge.
Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Trust.\27\ Trading in Shares of the Trust
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be

halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) the extent to which trading is not occurring in ETH and/or
MET Contracts and the securities and/or the financial instruments
composing the daily disclosed portfolio of the Trust; or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present.
---------------------------------------------------------------------------

    \27\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    The Exchange may halt trading during the day in which an
interruption to the dissemination of the ITV or the value of the
Benchmark occurs. The Benchmark value will be disseminated once every
15 seconds during the Core Trading Session. The Benchmark components
and methodology will be made publicly available. If the interruption to
the dissemination of the ITV, or to the value of the Benchmark persists
past the trading day in which it occurred, the Exchange will halt
trading no later than the beginning of the trading day following the
interruption. In addition, if the Exchange becomes aware that the NAV
with respect to the Shares is not disseminated to all market
participants at the same time, it will halt trading in the Shares until
such time as the NAV is available to all market participants. The
Exchange will obtain a representation from the issuer of the Shares
that the NAV per Share will be calculated and disseminated daily and
will be made available to all market participants at the same time.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. in accordance with
NYSE Arca Rule 7.34-E (Early, Core, and Late Trading Sessions). The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.200-E. The trading of the Shares will
be subject to NYSE Arca Rule 8.200-E, Commentary .02(e), which sets
forth certain restrictions on Equity Trading Permit Holders (``ETP
Holders'') acting as registered Market Makers in Trust Issued Receipts
to facilitate surveillance. For initial and continued listing, the
Trust will be in compliance with Rule 10A-3 under the Act,\28\ and the
Trust will rely on the exception contained in Rule 10A-3(c)(7).\29\ A
minimum of 50,000 Shares of the Trust will be outstanding at the
commencement of trading on the Exchange.
---------------------------------------------------------------------------

    \28\ 17 CFR 240.10A-3.
    \29\ See Rule 10A-3(c)(7), 17 CFR 240.10A-3(c)(7) (stating that
a listed issuer is not subject to the requirements of Rule 10A-3 if
the issuer is organized as an unincorporated association that does
not have a board of directors and the activities of the issuer are
limited to passively owning or holding securities or other assets on
behalf of or for the benefit of the holders of the listed
securities).
---------------------------------------------------------------------------

    Pursuant to NYSE Arca Rule 8.200-E, Commentary .02(e), the ETP
Holder acting as a registered Market Maker in Trust Issued Receipts
must file, with the Exchange, in a manner prescribed by the Exchange,
and keep current a list identifying all accounts for trading the
underlying physical asset or commodity, related futures or options on
futures, or any other related derivatives, which the ETP Holder acting
as registered Market Maker may have or over which it may exercise
investment discretion. No ETP Holder acting as registered Market Maker
in the Trust Issued Receipts shall trade in the underlying physical
asset or commodity, related futures or options on futures, or any other
related derivatives, in an account in which an ETP Holder acting as a
registered Market Maker, directly or indirectly, controls trading
activities, or has a direct interest in the profits or losses thereof,
which has not been reported to the Exchange as required by this Rule.
In addition to the existing obligations under Exchange rules regarding
the production of books and records (see, e.g., Rule 4.4-E), the ETP
Holder acting as a registered Market Maker in Trust Issued Receipts
shall make available to the Exchange such books, records or other
information pertaining to transactions by such entity or 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, as may
be requested by the Exchange.
Surveillance
    The Exchange represents that trading in the Shares of the Trust
will be subject to the existing trading surveillances administered by
the Exchange, as well as cross-market surveillances administered by the
Financial Industry Regulatory Authority (``FINRA'') on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws.\30\ The Exchange represents 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.
---------------------------------------------------------------------------

    \30\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and the Trust's
holdings with other markets and other entities that are members of the
ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may
obtain trading information regarding trading in the Shares and the
Trust's holdings from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares and the
Trust's holdings from markets and other entities that are members of
ISG or with which the Exchange has in place a CSSA. The Exchange is
also able to obtain information regarding trading in the Shares and the
Trust's holdings through ETP Holders, in connection with such ETP
Holders' proprietary or customer trades which they effect through ETP
Holders on any relevant market. The Exchange can obtain market
surveillance information, including customer identity information, with
respect to transactions (including transactions in futures contracts)
occurring on US futures exchanges, which are members of the ISG. In
addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
    The Trust will only hold Ether Futures Contracts that are listed on
an exchange that is a member of the ISG or

is a market with which the Exchange has a CSSA.\31\
---------------------------------------------------------------------------

    \31\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Trust may trade on markets that are members of ISG or with which the
Exchange has in place a CSSA.
---------------------------------------------------------------------------

    All statements and representations made in this filing regarding
(a) the description of the portfolios of the Trust or Benchmark, (b)
limitations on portfolio holdings or the Benchmark, or (c) the
applicability of Exchange listing rules specified in this rule filing
shall constitute continued listing requirements for listing the Shares
on the Exchange.
    The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Trust to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Trust is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an information bulletin (``Information Bulletin'') of
the special characteristics and risks associated with trading the
Shares. Specifically, the Information Bulletin will discuss the
following: (1) the risks involved in trading the Shares during the
Early and Late Trading Sessions when an updated ITV will not be
calculated or publicly disseminated; (2) the procedures for purchases
and redemptions of Shares in Creation Baskets and Redemption Baskets
(and that Shares are not individually redeemable); (3) NYSE Arca Rule
9.2-E(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (4) how information regarding the ITV is disseminated; (5)
how information regarding portfolio holdings is disseminated; (6) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (7) trading information.
    In addition, the Information Bulletin will advise ETP Holders,
prior to the commencement of trading, of the prospectus delivery
requirements applicable to the Trust. The Exchange notes that investors
purchasing Shares directly from the Trust will receive a prospectus.
ETP Holders purchasing Shares from the Trust for resale to investors
will deliver a prospectus to such investors. The Information Bulletin
will also discuss any exemptive, no-action, and interpretive relief
granted by the Commission from any rules under the Act. In addition,
the Information Bulletin will reference that the Trust is subject to
various fees and expenses described in the Registration Statement.
    The Information Bulletin will also disclose the trading hours of
the Shares and that the NAV for the Shares will be calculated after
4:00 p.m. E.T. each trading day. The Information Bulletin will disclose
that information about the Shares will be publicly available on the
Trust's website.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \32\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices and to protect
investors and the public interest in that the Shares will be listed and
traded on the Exchange pursuant to the initial and continued listing
criteria in NYSE Arca Rule 8.200-E. The Exchange has in place
surveillance procedures that are adequate to properly monitor trading
in the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and the Trust's
holdings with other markets and other entities that are members of the
ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may
obtain trading information regarding trading in the Shares and the
Trust's holdings from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares and the
Trust's holdings from markets and other entities that are members of
ISG or with which the Exchange has in place a CSSA. The Exchange is
also able to obtain information regarding trading in the Shares and the
Trust's holdings through ETP Holders, in connection with such ETP
Holders' proprietary or customer trades which they effect through ETP
Holders on any relevant market. The Exchange can obtain market
surveillance information, including customer identity information, with
respect to transactions (including transactions in Ether Futures
Contracts) occurring on US futures exchanges, which are members of the
ISG. The intraday, closing prices, and settlement prices of the Ether
Futures Contracts will be readily available from the applicable futures
exchange websites, automated quotation systems, published or other
public sources, or major market data vendors website or on-line
information services. Information regarding market price and trading
volume of the Shares will be continually available on a real-time basis
throughout the day on brokers' computer screens and other electronic
services.
    Complete real-time data for the Ether Futures Contracts will be
available by subscription from on-line information services. ICE
Futures U.S. and CME also provide delayed futures information on
current and past trading sessions and market news free of charge on the
Trust's website. The specific contract specifications for Ether Futures
Contracts will also be available on such websites, as well as other
financial informational sources. Information regarding options will be
available from the applicable exchanges or major market data vendors.
Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the CTA. The ITV will be
disseminated on a per Share basis every 15 seconds during the
Exchange's Core Trading Session and be widely disseminated by one or
more major market data vendors during the NYSE Arca Core Trading
Session. The Trust's website will also include a form of the prospectus
for the Trust that may be downloaded. The website will include the
Share's ticker and CUSIP information along with additional quantitative
information updated on a daily basis, including, for the Trust: (1) the
prior business day's reported NAV and closing price and a calculation
of the premium and discount of the closing price or mid-point of the
Bid/Ask Price against the NAV; and (2) data in chart format displaying
the frequency distribution of discounts and premiums of the daily
closing price or Bid/Ask Price against the NAV, within appropriate
ranges, for at least each of the four previous calendar quarters. The
website disclosure of portfolio holdings will be made daily and will
include, as applicable, (i) the name, quantity, price, and market value
of Ether Futures

Contracts, (ii) the counterparty to and value of forward contracts, and
(iii) other financial instruments, if any, and the characteristics of
such instruments and cash equivalents, and amount of cash held in the
Trust's portfolio, if applicable.
    Trading in Shares of the Trust will be halted if the circuit
breaker parameters in NYSE Arca Rule 7.12-E have been reached or
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the Shares inadvisable. These may include:
(1) the extent to which trading is not occurring in ETH and/or MET
Contracts and the securities and/or the financial instruments composing
the daily disclosed portfolio of the Trust; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
Trust Issued Receipts based on Ether that will enhance competition
among market participants, to the benefit of investors and the
marketplace. As noted above, the Exchange has in place surveillance
procedures that are adequate to properly monitor trading in the Shares
in all trading sessions and to deter and detect violations of Exchange
rules and applicable federal securities laws.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of Trust
Issued Receipts based on Ether and that will enhance competition among
market participants, to the benefit of investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-NYSEARCA-2023-63 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-NYSEARCA-2023-63. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEARCA-2023-63 and should
be submitted on or before October 24, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21792 Filed 10-2-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 41 (Monday, March 3, 2014)]
[Notices]
[Pages 11835-11836]
[FR Doc No: 2014-04558]

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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549;

Extension:
    Rule 32a-4; OMB Control No. 3235-0530, SEC File No. 270-473.

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 350l et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collections
of information summarized below. The Commission plans to submit these
existing collections of information to the Office of Management and
Budget (``OMB'') for extension and approval.
    Section 32(a)(2) of the Investment Company Act (15 U.S.C. 80a-
31(a)(2)) requires that shareholders of a registered investment
management or face-amount certificate company (collectively, ``funds'')
ratify or reject the selection of the fund's independent public
accountant. Rule 32a-4 (17 CFR 270.32a-4) exempts funds from this
requirement if (i) the fund's board of directors establishes an audit
committee composed solely of independent directors with responsibility
for overseeing the fund's accounting and auditing processes,\1\ (ii)
the fund's board of directors adopts an audit committee charter setting
forth the committee's structure, duties, powers and methods of
operation, or sets forth such provisions in the fund's charter or

bylaws,\2\ and (iii) the fund maintains and preserves permanently in an
easily accessible place a copy of the audit committee charter, and any
modifications to the charter.\3\
---------------------------------------------------------------------------

    \1\ Rule 32a-4(a).
    \2\ Rule 32a-4(b).
    \3\ Rule 32a-4(c).
---------------------------------------------------------------------------

    Each fund that chooses to rely on rule 32a-4 incurs two collection
of information burdens. The first, related to the board of directors'
adoption of the audit committee charter, occurs once, when the
committee is established. The second, related to the fund's maintenance
and preservation of a copy of the charter in an easily accessible
place, is an ongoing annual burden. The information collection
requirement in rule 32a-4 enables the Commission to monitor the duties
and responsibilities of an independent audit committee formed by a fund
relying on the rule. Commission staff estimates that, on average, the
board of directors takes 15 minutes to adopt the audit committee
charter. Commission staff has estimated that with an average of 8
directors on the board,\4\ total director time to adopt the charter is
2 hours. Combined with an estimated 1 hour of paralegal time to prepare
the charter for board review, the staff estimates a total one-time
collection of information burden of 3 hours for each fund. Once a board
adopts an audit committee charter, the charter is preserved as part of
the fund's records. Commission staff estimates that there is no annual
hourly burden associated with preserving the charter in accordance with
the rule.\5\
---------------------------------------------------------------------------

    \4\ This estimate is based on staff discussions with a
representative of an entity that surveys funds and calculates fund
board statistics based on responses to its surveys.
    \5\ No hour burden related to such maintenance of the charter
was identified by the funds the Commission staff surveyed.
---------------------------------------------------------------------------

    Because virtually all existing funds have now adopted audit
committee charters, the annual one-time collection of information
burden associated with adopting audit committee charters is limited to
the burden incurred by newly established funds. Commission staff
estimates that fund sponsors establish approximately 139 new funds each
year,\6\ and that all of these funds will adopt an audit committee
charter in order to rely on rule 32a-4. Thus, Commission staff
estimates that the annual one-time hour burden associated with adopting
an audit committee charter under rule 32a-4 going forward will be
approximately 417 hours.\7\
---------------------------------------------------------------------------

    \6\ This estimate is based on the average number of
notifications of registration on Form N-8A filed from January 2011
through December 2013.
    \7\ This estimate is based on the following calculation: (3.0
burden hours for establishing charter x 139 new funds = 417 burden
hours).
---------------------------------------------------------------------------

    As noted above, all funds that rely on rule 32a-4 are subject to
the ongoing collection of information requirement to preserve a copy of
the charter in an easily accessible place. This ongoing requirement,
which Commission staff estimated has no hourly burden, applies to new
funds that adopt an audit committee charter each year and to all of the
funds that have previously adopted the charter and continue to maintain
it.
    Funds incur internal costs associated with the one-time collection
of information burden related to adopting an audit committee charter.
As noted above, Commission staff estimates that it takes approximately
2 hours of aggregate directors' time at $4000 per hour, and 1 hour of
paralegal time at $175 per hour,\8\ to adopt an audit committee
charter. Thus, Commission staff estimates a total internal cost of
$8175 per fund to adopt the charter \9\ and a total annual cost of
$1,136,325.\10\
---------------------------------------------------------------------------

    \8\ The $175/hour figure for a paralegal is from SIFMA's
Management & Professional Earnings in the Securities Industry 2012,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
    \9\ This estimate is based on the following calculations: ($4000
per hour for directors' time x 2 hours = $8000); ($8000 + $175 =
$8175).
    \10\ This estimate is based on the following calculations:
($8175 cost of hour burden per fund x 139 new funds = $1,136,325).
---------------------------------------------------------------------------

    When funds adopt an audit committee charter in order to rely on
rule 32a-4, they also may incur one-time costs related to hiring
outside counsel to prepare the charter. Commission staff estimates that
those costs average approximately $1500 per fund.\11\ Commission staff
understands that virtually all funds now rely on rule 32a-4 and have
adopted audit committee charters, and thus estimates that the annual
cost burden related to hiring outside legal counsel is limited to newly
established funds.
---------------------------------------------------------------------------

    \11\ Costs may vary based on the individual needs of each fund.
However, based on the staff's conversations with outside counsel
that prepare these charters, legal fees related to the preparation
and adoption of an audit committee charter usually average $1500 or
less. The Commission also understands that the ICI has prepared a
model audit committee charter, which most legal professionals use
when establishing audit committees, thereby reducing the costs
associated with drafting a charter.
---------------------------------------------------------------------------

    As noted above, Commission staff estimates that approximately 139
new funds each year will adopt an audit committee charter in order to
rely on rule 32a-4. Thus, Commission staff estimates that the ongoing
annual cost burden associated with rule 32a-4 in the future will be
approximately $208,500.\12\
---------------------------------------------------------------------------

    \12\ This estimate is based on the following calculations:
($1500 cost of adopting charter x 139 newly established funds =
$208,500).
---------------------------------------------------------------------------

    These estimates of average costs are made solely for the purposes
of the Paperwork Reduction Act. The estimates are not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules.
    The collections of information required by rule 32a-4 are necessary
to obtain the benefits of the rule. The Commission is seeking OMB
approval, because an agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a currently valid OMB control number.
    Written comments are invited on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information has practical
utility; (b) the accuracy of the Commission's estimates of the burdens
of the collections of information; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burdens of the collections of information on respondents,
including through the use of automated collection techniques or other
forms of information technology. Consideration will be given to
comments and suggestions submitted in writing within 60 days of this
publication.
    Please direct your written comments to Thomas Bayer, Chief
Information Officer, Securities and Exchange Commission, C/O Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email
to<EMAIL_ADDRESS>
    Dated: February 25, 2014.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-04558 Filed 2-28-14; 8:45 am]
BILLING CODE 8011-01-P