[Federal Register: November 10, 2005 (Volume 70, Number 217)]
[Notices]
[Page 68490-68501]
[DOCID:fr10no05-163]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52715; File No. SR-NYSE-2005-65]

Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change Regarding the Euro Currency
Trust

November 1, 2005.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is
hereby given that on September 29, 2005, the New York Stock Exchange,
Inc. (``NYSE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, III below, which Items have been prepared by
the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \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 under new NYSE Rules 1300A
et seq. (``Currency Trust Shares'') Euro

Shares, which represent units of fractional undivided beneficial
interest in and ownership of the Euro Currency Trust. The text of the
proposed rule change is set forth below. Proposed new language is in
italics.
* * * * *
NYSE Constitution and Rules

Rule 1300A

Currency Trust Shares

    (a) The provisions of this Rule 1300A series apply only to Currency
Trust Shares. The term ``Currency Trust Shares'' as used in this Rule
and in Rule 1301A means a security that (a) is issued by a trust
(``Trust'') which holds a specified non-U.S. currency deposited with
the Trust; (b) when aggregated in some specified minimum number may be
surrendered to the Trust by the beneficial owner to receive the
specified non-U.S. currency; and (c) pays beneficial owners interest
and other distributions on the deposited non-U.S. currency, if any,
declared and paid by the Trust. While Currency Trust Shares are not
technically Investment Company Units and thus are not covered by Rule
1100, all other rules that reference ``Investment Company Units,'' as
defined and used in Para. 703.16 of the Listed Company Manual,
including, but not limited to Rules 13, 36.30, 98, 104, 460.10, 1002,
and 1005 shall also apply to Currency Trust Shares. When these rules
reference Investment Company Units, the word ``index'' (or derivative
or similar words) will be deemed to be the applicable non-U.S. currency
spot price and the word ``security'' (or derivative or similar words)
will be deemed to be ``Currency Trust Shares''. The term ``applicable
non-U.S. currency'' as used in Rule 1300A and 1301A means the currency
that is held by the trust for a particular issue of Currency Trust
Shares.
    (b) As is the case with Investment Company Units, paragraph (m) of
the Guidelines to Rule 105 shall also apply to Currency Trust Shares.
Specifically, Rule 105(m) shall be deemed to prohibit an equity
specialist, his member organization, other member, allied member or
approved person in such member organization or officer or employee
thereof from acting as a market maker or functioning in any capacity
involving market-making responsibilities in the applicable non-U.S.
currency, options, futures or options on futures on such currency, or
any other derivatives based on such currency. However, an approved
person of an equity specialist entitled to an exemption from Rule
105(m) under Rule 98 may act in a market making capacity, other than as
a specialist in the same issue of Currency Trust Shares in another
market center, options, futures or options on futures on the applicable
non-U.S. currency, or any other derivatives based on such currency.
    (c) Except to the extent that specific provisions in this Rule
govern, or unless the context otherwise requires, the provisions of the
Constitution, all other Exchange Rules and policies shall be applicable
to the trading of Currency Trust Shares on the Exchange. Pursuant to
Exchange Rule 3 (``Security''), Currency Trust Shares are included
within the definition of ``security'' or ``securities'' as those terms
are used in the Constitution and Rules of the Exchange.

Rule 1301A

Currency Trust Shares: Securities Accounts and Orders of Specialists

    (a) The member organization acting as specialist in Currency Trust
Shares is obligated to conduct all trading in the Shares in its
specialist account, subject only to the ability to have one or more
investment accounts, all of which must be reported to the Exchange.
(See Rules 104.12 and 104.13.) In addition, the member organization
acting as specialist in Currency Trust Shares must file with the
Exchange in a manner prescribed by the Exchange and keep current a list
identifying all accounts for trading in the applicable non-U.S.
currency options, futures or options on futures on such currency, or
any other derivatives based on such currency, which the member
organization acting as specialist may have or over which it may
exercise investment discretion. No member organization acting as
specialist in Currency Trust Shares shall trade in the applicable non-
U.S. currency, options, futures or options on futures on such currency,
or any other derivatives based on such currency, in an account in which
a member organization acting as specialist, 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
hereby.
    (b) In addition to the existing obligations under Exchange rules
regarding the production of books and records (see, e.g., Rule
476(a)(11)), the member organization acting as specialist in Currency
Trust Shares shall make available to the Exchange such books, records
or other information pertaining to transactions by such entity or any
member, allied member, approved person, registered or non-registered
employee affiliated with such entity for its or their own accounts in
the applicable non-U.S. currency options, futures or options on futures
on such currency, or any other derivatives on such currency, as may be
requested by the Exchange.
    (c) In connection with trading the applicable non-U.S. currency,
options, futures or options on futures on such currency or any other
derivative on such currency (including Currency Trust Shares), the
specialist registered as such in an issue of Currency Trust Shares
shall not use any material nonpublic information received from any
person associated with a member or employee of such person regarding
trading by such person or employee in the applicable non-U.S. currency,
options, futures or options on futures of such currency, or any other
derivatives on such currency.
* * * * *

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 NYSE 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 these statements may be examined at the places specified in
item IV below and is set forth in sections A, B, and C below.

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

1. Purpose
    The Exchange proposes to list and trade under new NYSE Rules 1300A
et seq. Euro Shares (``Shares''), which represent units of fractional
undivided beneficial interest in and ownership of the Euro Currency
Trust (``Trust''). Rydex Specialized Products LLC is the sponsor of the
Trust (``Sponsor''), The Bank of New York is the trustee of the Trust
(``Trustee''), JPMorgan Chase Bank, N.A., London Branch, is the
depository for the Trust (``Depository''), and Rydex Distributors, Inc.
is the Distributor for the Trust (``Distributor''). The Sponsor,
Trustee, Depository, and Distributor are not affiliated with the
Exchange or one another, with the exception that the Sponsor and
Distributor are affiliated.
    As stated in the Trust's Registration Statement,\4\ the investment
objective of

the Trust is for the Shares to reflect the price of the euro. The
shares are intended to provide institutional and retail investors with
a simple, cost-effective means of gaining investment benefits similar
to those of holding euro.
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    \4\ The Sponsor, on behalf of the Trust, filed the Form S-1 (the
``Registration Statement'') on June 7, 2005, Amendment No. 1 thereto
on August 12, 2005, and Amendment No. 2 thereto on October 25, 2005.
See Registration No. 333-125581.
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Overview of the Foreign Exchange Industry \5\
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    \5\ The Exchange states that, except as otherwise specifically
noted, the information provided in its Rule 19b-4 filing relating to
the Shares, foreign currency markets, movements in foreign currency
or euro pricing, and the like is based entirely on information
included in the Registration Statement.
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    The Exchange represents that the foreign exchange market is the
largest and most liquid financial market in the world. As of April
2004, the foreign exchange market experienced average daily turnover of
approximately $1.88 trillion, which was a 57% increase (at current
exchange rates) from 2001 daily averages. The foreign exchange market
is predominantly an over-the-counter market with no fixed location, and
it operates 24 hours a day, seven days a week. London, New York, and
Tokyo are the principal geographic centers of the worldwide foreign
exchange market, with approximately 58% of all foreign exchange
business executed in the United Kingdom, United States (``US''), and
Japan. Other, smaller markets include Singapore, Zurich, and Frankfurt.
    Approximately 89% of foreign exchange transactions involve the U.S.
dollar (``USD''), and approximately 37% involve the euro. The euro/USD
pair is by far the most-traded currency pair and in recent years has
comprised approximately 28% of the global turnover in foreign exchange.
As of September 26, 2005, $1 USD was worth approximately 0.828 euro,
calculated at the then-current Noon Buying Rate (described below in
``Issuance of the Shares'').\6\
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    \6\ For April 2004, the daily average foreign exchange turnover
of the US dollar against the euro was approximately $550 billion.
See Bank for International Settlements, Triennial Central Bank
Survey, March 2005, Statistical annex tables, Table E-2. In
addition, the reported daily turnover of foreign exchange contracts
(USD against euro) in over-the-counter derivatives markets for April
2004, including outright forwards and Forex swaps, was $1.15
trillion. See id. at 17.
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    The Exchange states that there are three major kinds of
transactions in the traditional foreign exchange markets: Spot
transactions, outright forwards, and foreign exchange swaps. ``Spot''
trades are foreign exchange transactions that settle typically within
two business days with the counterparty to the trade. Spot transactions
account for approximately 35% of reported daily volume in the
traditional foreign exchange markets. ``Forward'' trades, which are
transactions that settle on a date beyond spot, account for 12% of the
reported daily volume, and ``swap'' transactions, in which two parties
exchange two currencies on one or more specified dates over an agreed
period and exchange them again when the period ends, account for the
remaining 53% of volume.
    There also are transactions in currency options, which trade both
over-the-counter and, in the US, on the Philadelphia Stock Exchange
(``Phlx''). Currency futures are transactions in which an institution
buys or sells a standardized amount of foreign currency on an organized
exchange for delivery on one of several specified dates. Currency
futures are traded on a number of regulated markets, including the
International Monetary Market division of the Chicago Mercantile
Exchange (``CME''), the Singapore Exchange Derivatives Trading Limited
(``SGX,'' formerly the Singapore International Monetary Exchange or
SIMEX), and the London International Financial Futures Exchange
(``LIFFE'').\7\ Over 85% of currency derivative products (swaps,
options, and futures) are traded over-the-counter.\8\
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    \7\ Volume in euro futures (Euro FX) on the CME for 2004 was
17,791,457 contracts. The 2005 Euro FX futures volume on the CME
through October 19, 2005 was 25,222,252 contracts. Euro options
(EURFX) volume on the Phlx was 6,162 contracts in June 2005 and
2,918 in July 2005. The 2005 EURFX volume through July was 33,408
contracts. See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005 (confirming Euro FX volume on CME).
    \8\ See Bank for International Settlements, Triennial Central
Bank Survey of Foreign Exchange and Derivatives Market Activity in
April 2004, September 2004 (Tables 2 and 6).
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    Participants in the foreign exchange market have various reasons
for participating. Multinational corporations and importers need
foreign currency to acquire materials or goods from abroad. Banks and
multinational corporations sometimes require specific wholesale funding
for their commercial loan or other foreign investment portfolios. Some
participants hedge open currency exposure through off-balance-sheet
products.
    The primary participants in the foreign exchange market are banks
(including government-controlled central banks), investment banks,
money managers, multinational corporations, and institutional
investors. The most significant participants are the major
international commercial banks that act both as brokers and as dealers.
In their dealer role, these banks maintain long or short positions in a
currency and seek to profit from changes in exchange rates. In their
broker role, the banks handle buy and sell orders from commercial
customers, such as multinational corporations. The banks earn
commissions when acting as agent. They profit from the spread between
the rates at which they buy and sell currency for customers when they
act as principal.
    Typically, banks engage in transactions ranging from $5 million to
$50 million in amount. Although banks will engage in smaller
transactions, the fees that they charge have made the foreign currency
markets relatively inaccessible to individual investors. Some banks
allow individual investors to engage in spot trades without paying
traditional commissions on the trades. Such trading is often not
profitable for individual investors, however, because the banks charge
the investor the spread between the bid and the ask price maintained by
the bank on all purchases and sales. The overall effect of this fee
structure depends on the spread maintained by the bank and the
frequency with which the investor trades. Generally, this fee structure
is particularly disadvantageous to active traders.
    The Sponsor believes that the Trust is the first exchange-traded
fund \9\ whose assets are limited to a particular foreign currency. The
Trust will not hold or trade in any currency swaps, options, futures,
or other currency derivative products, or engage in any foreign
exchange market transactions. The sole assets of the Trust are the euro
deposited into the Deposit Account \10\ upon the creation of Baskets of
50,000 Shares each (as described below), and the euro earned as
interest on the Deposit Account. The investment objective of the Trust
is for the Shares to reflect the price of the euro.\11\ The

Sponsor believes that, for many investors, the Shares represent a cost-
effective investment relative to traditional means of investing in the
foreign exchange market. Because the Shares will be traded on the NYSE,
investors will be able to access the euro market through a traditional
brokerage account, which will provide investors with an efficient means
of implementing investment tactics and strategies that involve the
euro.
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    \9\ The Exchange states that the Trust is not a registered
investment company under the Investment Company Act of 1940 (``1940
Act'') and is not required to register under the 1940 Act.
    \10\ The Deposit Account is the euro account of the Trust
established with the Depository (the London branch of JP Morgan
Chase Bank, N.A.) by the Deposit Account Agreement. The Deposit
Account holds the euro deposited with the Trust.
    \11\ The Sponsor expects interest paid by the Depository on the
deposited euro to offset the Trust's expenses; however, in the event
that the Trust has to sell deposited euro to pay Trust expenses, the
Shares would reflect the price of the euro, less the Trust's
expenses. See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
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    Foreign Currency Regulation. Most trading in the global over-the-
counter foreign currency markets is conducted by regulated financial
institutions such as banks and broker-dealers. In addition, in the US,
the Foreign Exchange Committee of the New York Federal Reserve Bank has
issued Guidelines for Foreign Exchange Trading, and central-bank
sponsored committees in Japan and Singapore have published similar best
practice guidelines. In the United Kingdom, the Bank of England has
published the Non-Investment Products Code, which covers foreign
currency trading. The Financial Markets Association, whose members
include major international banking organizations, has also established
best practices guidelines called the Model Code.
    Participants in the U.S. over-the-counter market for foreign
currencies are generally regulated by their oversight regulators. For
example, participating banks are regulated by the banking authorities.
In addition, in the US, the SEC regulates trading of options on foreign
currencies on the Phlx, and the Commodity Futures Trading Commission
(``CFTC'') regulates trading of futures, options, and options on
futures on foreign currencies on regulated futures exchanges.\12\ Both
the SEC and CFTC have established rules designed to prevent market
manipulation, abusive trade practices, and fraud, as have the exchanges
on which the foreign currency products trade.
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    \12\ The CFTC is an independent government agency with the
mandate to regulate commodity futures and options markets in the US
under the Commodity Exchange Act. In addition to its oversight of
regulated futures exchanges, the CFTC has jurisdiction over certain
foreign currency futures, options, and options on futures
transactions occurring other than on a regulated exchange and
involving retail customers.
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    The Phlx, CME, SGX, and LIFFE have authority to perform
surveillance on their members' trading activities, review positions
held by members and large-scale customers, and monitor the price
movements of options and/or futures markets by comparing them with cash
and other derivative markets' prices.
    The Euro. According to the Registration Statement, in 1998, the
European Central Bank in Frankfurt was organized by Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, and Spain in order to establish a common currency--the euro.
In 2001, Greece joined as the twelfth country adopting the euro as its
national currency. Unlike the U.S. Federal Reserve System, the Bank of
Japan, and other comparable central banks, the European Central Bank is
a central authority that conducts monetary policy for an economic area
consisting of many otherwise largely autonomous states.
    At its inception on January 1, 1999, the euro was launched as an
electronic currency used by banks, foreign exchange dealers, and stock
markets. In 2002, the euro became cash currency for approximately 300
million citizens of 12 European countries. On May 1, 2004, ten
additional countries joined the European Union and, subject to meeting
rigorous criteria established by the European Central Bank, are
expected to adopt the euro as their national currency on or about 2010.
These countries are Cyprus (South), the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.
Although the European countries that have adopted the euro are members
of the European Union, the United Kingdom, Denmark, and Sweden are
European Union members that have not adopted the euro as their national
currency.
Trust's Sponsor, Trustee, Depository, and Distributor
    The Sponsor. The Sponsor of the Trust is Rydex Specialized Products
LLC, a Delaware LLC that is wholly-owned by PADCO Advisors II, Inc., a
privately-held Maryland corporation owned and controlled by two
irrevocable trusts. The Sponsor and its affiliates, collectively, do
business as ``Rydex Investments.''
    The Sponsor is responsible for establishing the Trust and for the
registration of the Shares. The Sponsor generally oversees the
performance of the Trustee and the Trust's principal service providers,
but does not exercise day-to-day oversight over the Trustee or service
providers to the Trust. The Sponsor regularly communicates with the
Trustee to monitor the overall performance of the Trust. The Sponsor,
with assistance and support from the Trustee, is responsible for
preparing and filing periodic reports on behalf of the Trust with the
SEC and will provide any required certification for such reports. The
Sponsor will designate the independent certified public accountants of
the Trust and may, from time to time, employ legal counsel for the
Trust.
    To assist the Sponsor in marketing the Shares and in accordance
with the Depositary Trust Agreement, the Sponsor will enter into a
Distributor Agreement with the Distributor and the Trust. The Sponsor
may determine to engage additional or successor distributors. The fees
of the Distributor (an affiliate of the Sponsor) and of any additional
or successor distributor will be paid by the Sponsor from its fee paid
from the assets of the Trust.
    The Sponsor will maintain a public Web site on behalf of the Trust,
http://www.currencyshares.com, which will contain information about the

Trust and the Shares, and will oversee certain shareholder services,
such as a call center and prospectus delivery.\13\
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    \13\ See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
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    The Sponsor may direct the Trustee in the conduct of its affairs,
but only as provided in the Depositary Trust Agreement. For example,
the Sponsor may direct the Trustee to sell the Trust's euro to pay
expenses, to suspend a redemption order or postpone a redemption
settlement date, or to terminate the Trust if certain criteria are met.
The Sponsor anticipates that, if the market capitalization of the Trust
is less than $300 million (as adjusted for inflation) at any time after
the first anniversary of the Trust's inception, then the Sponsor will,
in accordance with the Depositary Trust Agreement, direct the Trustee
to terminate and liquidate the Trust.
    Fees are paid to the Sponsor as compensation for services performed
under the Depositary Trust Agreement and for services performed in
connection with maintaining the Trust's Web site and marketing the
Shares. The Sponsor's fee is payable monthly in arrears and is accrued
daily at an annual rate equal to 0.40% of the Net Asset Value (``NAV'')
of the Trust.
    The Trustee. The Bank of New York, the Trustee, is generally
responsible for the day-to-day administration of the Trust, including
keeping the Trust's operational records. The Trustee's principal
responsibilities include selling the Trust's euro if needed to pay the
Trust's expenses, calculating the NAV of the Trust and the NAV per
Share, receiving and processing orders from Authorized Participants to
create and redeem Baskets (as discussed below), and coordinating the
processing of such

orders with the Depository and The Depository Trust Company (``DTC'').
The Trustee will earn a monthly fee that will be paid by the Sponsor
from its fee paid from the assets of the Trust.
    The Trustee intends to regularly communicate with the Sponsor to
monitor the over-all performance of the Trust. The Trustee, along with
the Sponsor, consults with the Trust's legal, accounting and other
professional service providers as needed. The Trustee assists and
supports the Sponsor with the preparation of all periodic reports
required to be filed with the SEC on behalf of the Trust.
    Affiliates of the Trustee may, from time to time, act as Authorized
Participants or purchase or sell euro or Shares for their own account,
as agent for their customers, and for accounts over which they exercise
investment discretion.
    The Depository. The London Branch of JPMorgan Chase Bank, N.A., a
U.S. national banking association, is the Depository. The Depository
accepts Trust euro deposited with it as a banker \14\ by Authorized
Participants in connection with the creation of Baskets. The Depository
facilitates the transfer of euro into and out of the Trust through the
euro deposit account maintained with it as a banker by the Trust. The
Depository will not be paid a fee for its services to the Trust but
will be reimbursed for certain expenses.\15\ The Depository may earn a
``spread'' or ``margin'' over the rate of interest it pays to the Trust
on the euro deposit balances.\16\ The Depository and its affiliates
may, from time to time, act as Authorized Participants or purchase or
sell euro or Shares for their own account, as agent for their
customers, and for accounts over which they exercise investment
discretion.
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    \14\ While the Depository will hold the Trust's assets, the
Depository is not a trustee for the Trust or the Shareholders.
    \15\ See infra ``Description of the Trust.''
    \16\ Interest on the Deposit Account accrues daily at an initial
annual nominal rate of Euro Overnight Index Average (``EONIA'')
minus 27 basis points, and is paid monthly. EONIA is calculated by
the European Central Bank and published by the European Banking
Federation on TELERATE. EONIA is the effective overnight reference
rate for the euro and is the benchmark for the competitive market
interest rate to be paid to the Shareholders of the Trust. However,
the Depository is free to invest the Trust's assets as it sees fit,
and is entitled to any proceeds that exceed the interest payable to
the Trust. See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
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    The Distributor. Rydex Distributors, Inc., the Distributor, assists
the Sponsor in developing a marketing plan for the Trust on an ongoing
basis, preparing marketing materials regarding the Shares, including
the content on the Trust's Web site, executing the marketing plan for
the Trust, and providing strategic and tactical research on the global
foreign exchange market. The Distributor and its affiliates may, from
time to time, act as Authorized Participants or purchase or sell euro
or Shares for their own account, as agent for their customers, and for
accounts over which they exercise investment discretion.

Description of the Trust

    General Description. The Exchange states that the Trust will be
formed under the laws of the State of New York as of the date the
Sponsor and the Trustee sign the Depositary Trust Agreement and the
Initial Purchaser makes the initial deposit for the issuance of three
Baskets. A Basket is a block of 50,000 Shares. The Trust holds euro
\17\ and is expected, from time to time, to issue Baskets in exchange
for deposits of euro and to distribute euro in connection with
redemptions of Baskets. The investment objective of the Trust is for
the Shares to reflect the price of the euro. The Shares represent units
of fractional undivided beneficial interest in, and ownership of, the
Trust. The Trust is not managed like a business corporation or an
active investment vehicle. The euro held by the Trust will only be
sold: (1) If needed to pay Trust expenses, (2) in the event the Trust
terminates and liquidates its assets, or (3) as otherwise required by
law or regulation. The Exchange notes that, according to the
Registration Statement, the sale of euro by the Trust is a taxable
event to Shareholders.
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    \17\ The Exchange notes that the Commission has permitted the
listing of prior securities products for which the underlying was a
commodity or otherwise was not a security trading on a regulated
market. See, e.g, Securities Exchange Act Release Nos. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22)
(approving listing and trading on NYSE of StreetTRACK [reg] Gold
Shares); 19133 (October 14, 1982), 47 FR 46946 (October 21, 1982)
(SR-Phlx-81-4) (approving the listing of standardized options on
foreign currencies); 36505 (November 22, 1995), 60 FR 61277
(November 29, 1995) (SR-Phlx-95-42) (approving the listing of
dollar-denominated delivery foreign currency options on the Japanese
Yen); 36165 (August 29, 1995), 60 FR 46653 (September 7, 1995) (SR-
NYSE-94-41) (approving listing standards for, among other things;
currency and currency index warrants).
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    The Trust's assets will consist only of euro on demand deposit in a
euro-denominated, interest-bearing account at JPMorgan Chase, London
Branch.\18\ The Trust will not hold any derivative products. Each Share
represents a proportional interest, based on the total number of Shares
outstanding, in the euro owned by the Trust, less the estimated accrued
but unpaid expenses (both asset-based and non-asset based) of the
Trust. The Sponsor expects that the price of a Share will fluctuate in
response to fluctuations in the price of the euro, and that the price
of a Share will reflect accumulated interest as well as the estimated
accrued but unpaid expenses of the Trust.
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    \18\ Shareholders will not have the protections associated with
ownership of a demand deposit account insured in the US by the
Federal Deposit Insurance Corporation nor the protection provided
under English law.
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    The Trust will terminate upon the occurrence of any of the
termination events listed in the Depositary Trust Agreement and will
otherwise terminate on a specified date in 2045.
    The Sponsor, on behalf of the Trust, intends to request relief from
certain trading requirements of the Exchange Act; it has also requested
guidance on the application of the certification rules for quarterly
and annual reports adopted pursuant to section 302 of the Sarbanes-
Oxley Act of 2002. In addition, the Trust will not be subject to the
Exchange's corporate governance requirements, including the Exchange's
audit committee requirements.\19\
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    \19\ See Securities Exchange Act Release No. 48745 (November 4,
2003), 68 FR 64154 (November 12, 2003) (SR-NYSE-2002-33, SR-NASD-
2002-77, SR-NASD-2002-80, SR-NASD-2002-138, SR-NASD-2002-139, and
SR-NASD-2002-141) (specifically noting that the corporate governance
standards will not apply to, among others, passive business
organizations in the form of trusts). See also Securities Exchange
Act Release No. 47654 (April 9, 2003), 68 FR 18788 (April 16, 2003)
(noting in section II(F)(3)(c) that ``SROs may exclude from Exchange
Act Rule 10A-3's requirements issuers that are organized as trusts
or other unincorporated associations that do not have a board of
directors or persons acting in a similar capacity and whose
activities are limited to passively owning or holding (as well as
administering and distributing amounts in respect of) securities,
rights, collateral or other assets on behalf of or for the benefit
of the holders of the listed securities.'')
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    Trust's Expenses. The Trust's only ordinary recurring expense is
expected to be the Sponsor's fee. The Sponsor is obligated under the
Depositary Trust Agreement to pay the following administrative and
marketing expenses of the Trust: the Trustee's monthly fee, the
Distributor's fee, NYSE listing fees, SEC registration fees, printing
and mailing costs, audit fees and expenses, and up to $100,000 per year
in legal fees and expenses. The Sponsor is also obligated to pay the
costs of the Trust's organizational expenses and the costs of the
initial sale of the Shares, including the applicable SEC registration
fees.
    As stated in the Trust's Registration Statement, the Trust will use
interest earned on the Deposit Account to pay the Sponsor's fee and any
other Trust

expenses that may arise from time to time. If that interest is not
sufficient to fully pay the Sponsor's fee and Trust expenses, then the
Trustee will sell deposited euro as needed.
    The following additional expenses may be charged to the Trust: (1)
Expenses and costs of any extraordinary services performed by the
Trustee or the Sponsor on behalf of the Trust or action taken by the
Trustee or the Sponsor to protect the Trust or interests of
Shareholders; (2) indemnification of the Sponsor; (3) taxes and other
governmental charges; and (4) expenses of the Trust other than those
the Sponsor is obligated to pay pursuant to the Depositary Trust
Agreement.
    Under the Deposit Account Agreement, the Depository is entitled to
invoice the Trustee or debit the Deposit Account for out-of-pocket
expenses. The Trust has also agreed to reimburse the Depository for any
taxes, levies, imposts, deductions, charges, stamp, transaction and
other duties and withholdings in connection with the Deposit Account,
except for such items imposed on the overall net income of the
Depository. Except for the reimbursable expenses just described, the
Depository will not be paid a fee for its services to the Trust.
    Description of the Shares. The Exchange states that the Shares are
not a traditional investment. They are dissimilar from the ``shares''
of a corporation operating a business enterprise, with management and a
board of directors. For example, the Exchange concludes that Trust
Shareholders do not have rights normally associated with owning shares
of a business corporation, including, for example, the right to bring
``oppression'' or ``derivative'' actions. Shareholders have only those
rights explicitly set forth in the Depositary Trust Agreement. All
Shares are of the same class with equal rights and privileges. Each
Share is transferable, is fully paid and non-assessable, and entitles
the holder to vote on the limited matters upon which Shareholders may
vote under the Depositary Trust Agreement (see ``Voting and
Approvals,'' below). The Shares do not entitle their holders to any
conversion or pre-emptive rights or, except as provided below, any
redemption or distribution rights.
    Distributions. The Depositary Trust Agreement requires the Trustee
to promptly distribute ``Surplus Property'' that are in USD and sell or
convert all other Surplus Property into USD and distribute the
proceeds. ``Surplus Property'' includes, among other things, interest
on euro in the Deposit Account that the Trustee determines is not
required to pay estimated Trust expenses within the following month. In
addition, if the Trust is terminated and liquidated, then the Trustee
will distribute to the Shareholders upon surrender of their Shares any
amounts remaining after the satisfaction of all outstanding liabilities
of the Trust and the establishment of such reserves for applicable
taxes, other governmental charges and contingent or future liabilities
as the Trustee shall determine. All distributions will be made monthly
in USD. The Trustee will effectuate the conversion and will determine
the exchange rate, which will be proximate to the Noon Buying Rate on
the record date for the distribution. Shareholders of record on the
record date fixed by the Trustee for any distribution will be entitled
to receive their pro-rata portion of the distribution.\20\
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    \20\ On the last calendar day of each month, the Depository will
deposit into the Deposit Account the accrued but unpaid interest for
that month and pay the accrued Sponsor's fee for the month plus any
other Trust expenses. If the last calendar day of the month is not a
business day, the deposit of interest and payment of the Sponsor's
fee and expenses will be made on the next following business day. In
the event that the interest deposited exceeds the sum of the
Sponsor's fees for the month plus other Trust expenses, if any, then
the Trustee shall convert the excess into dollars based on the Noon
Buying Rate and distribute the dollars promptly to Shareholders of
record on the last calendar day of the month, on a pro rata basis
(in accordance with the number of Shares that they own). The
distribution per Share shall be rounded down to the nearest penny,
and any excess remaining after the rounding shall be retained by the
Trust in euro.
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    Liquidity. The amount of the discount or premium in the trading
price relative to the NAV per Share may be influenced by non-concurrent
trading hours between the major euro markets and the NYSE. The period
of greatest liquidity in the euro market is typically that time of the
day when trading in the European time zones overlap with trading in the
US, which is when over-the-counter market trading in London, New York,
and other centers coincides with futures and options trading on the
euro. While the Shares will trade on the NYSE until 4:15 p.m. (New York
time), liquidity in the over-the-counter market for euro will be
slightly reduced after the close of the London foreign currency
markets.
    Because of the potential for arbitrage inherent in the structure of
the Trust, the Sponsor believes that the Shares will not trade at a
material discount or premium to the value of underlying euro held by
the Trust. The arbitrage process, which, in general, provides investors
the opportunity to profit from differences in prices of assets,
increases the efficiency of the markets, serves to prevent potentially
manipulative efforts, and can be expected to operate efficiently in the
case of the Shares and euro. If the price of the Shares deviates enough
from the price of euro to create a material discount or premium, an
arbitrage opportunity is created. If the Shares are inexpensive
compared to the euro that underlies them, an Authorized Participant,
either on its own behalf or acting as agent for investors,
arbitrageurs, or traders, may buy the Shares at a discount, immediately
redeem them in exchange for euro, and sell the euro in the cash market
at a profit. If the Shares are expensive compared to the euro that
underlies them, an Authorized Participant may sell the Shares short,
buy enough euro to create the number of Shares sold short, acquire the
Shares through the creation process, and deliver the Shares to close
out the short position.\21\ In both instances, the arbitrageur serves
efficiently to correct price discrepancies between the Shares and the
underlying euro.
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    \21\ The Exchange notes that the Trust, which will only hold
euro as an asset in the normal course of its operations, differs
from index-based exchange-traded funds, which may involve a trust
holding hundreds or even thousands of underlying component
securities, necessarily involving in the arbitrage process movements
in a large number of security positions. See, e.g., Securities
Exchange Act Release No. 46306 (August 2, 2002), 67 FR 51916 (August
9, 2002) (SR-NYSE-2002-28) (approving the UTP trading of, among
other things, Vanguard Total Market VIPERs based on the Wilshire
5000 Total Market Index).
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    Voting and Approvals. Shareholders have no voting rights under the
Depositary Trust Agreement, except in limited circumstances. If the
holders of at least 25% of the Shares outstanding determine that the
Trustee is in material breach of its obligations under the Depositary
Trust Agreement, they may provide written notice to the Trustee (or
require the Sponsor to do so) specifying the default and requiring the
Trustee to cure such default. If the Trustee fails to cure such breach
within 30 days after receipt of the notice, the Sponsor, acting on
behalf of the Shareholders, may remove the Trustee. The holders of at
least 66\2/3\% of the Shares outstanding may vote to remove the
Trustee. The Trustee must terminate the Trust at the request of the
holders of at least 75% of the outstanding Shares.
    Book-Entry Form. The Sponsor and the Trustee will apply to DTC for
acceptance of the Shares in its book-entry settlement system. If the
Shares are eligible for book-entry settlement, all Shares will be
evidenced by global certificates issued by the Trustee to DTC and
registered in the name of Cede & Co., as nominee for DTC. The global
certificates will evidence all of the

Shares outstanding at any time. In order to transfer Shares through
DTC, Shareholders must be DTC Participants. The Shares will be
transferable only through the book-entry system of DTC. A Shareholder
that is not a DTC Participant will be able to transfer its Shares
through DTC by instructing the DTC Participant holding its Shares.
Transfers will be made in accordance with standard securities industry
practice.
Issuance of the Shares
    The Trust creates and redeems Shares in Baskets on a continuous
basis. Each Share will initially represent 100 euro.\22\ A Basket is a
block of 50,000 Shares. The creation and redemption of Baskets requires
the delivery to the Trust or the distribution by the Trust of the
amount of euro represented by the Baskets being created or redeemed.
This amount is based on the combined NAV per Share of the number of
Shares included in the Baskets being created or redeemed, determined on
the day the order to create or redeem Baskets is properly received. The
number of Shares outstanding is expected to increase and decrease from
time to time as a result of the creation and redemption of Baskets.
Authorized Participants pay for Baskets with euro. Shareholders pay for
Shares with U.S. dollars.
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    \22\ See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
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    The Trustee expects to determine the NAV of the Trust between 12
p.m. and 2 p.m. (New York time) each business day.\23\ In doing so, the
Trustee values the euro held by the Trust on the basis of the Noon
Buying Rate, which is the USD/euro exchange rate as determined by the
Federal Reserve Bank of New York as of 12 p.m. (New York time) on each
day that the NYSE is open for regular trading.\24\ If, on a particular
business day, the Noon Buying Rate has not been determined and
announced by 2 p.m. (New York time), then the most recent Federal
Reserve Bank of New York determination of the Noon Buying Rate shall be
used to determine the value of the euro held by the Trust, unless the
Trustee, in consultation with the Sponsor, determines that such price
is inappropriate to use as the basis for such valuation. In the event
that the Trustee and the Sponsor determine that the most recent Federal
Reserve Bank of New York determination of the Noon Buying Rate is not
an appropriate basis for valuation of the Trust's euro, they shall
determine an alternative basis for such evaluation to be employed by
the Trustee.
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    \23\ See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
    \24\ The Trustee and the Sponsor may determine to apply an
alternative basis for evaluation in extraordinary circumstances,
such as if the Federal Reserve Bank of New York does not announce a
Noon Buying Rate, or discontinues such announcements, of if there is
an extraordinary change in the spot price of euro after the Noon
Buying Rate is established. In the event the Sponsor and Trustee
determine to use, on a regular and ongoing basis, a source other
than the Noon Buying Rate, the Exchange will make an appropriate
filing pursuant to Rule 19b-4 under the Exchange Act.
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    To calculate the NAV of the Trust, the Trustee will subtract the
Sponsor's accrued fee for the current day from the euro held by the
Trust (including all unpaid interest accrued through the immediately
preceding day). The Trustee also determines the NAV per Share, which
equals the NAV of the Trust divided by the number of outstanding
Shares.\25\ The NAV will be posted on the Trust Web site as soon as the
valuation of the euro held by the Trust is complete (ordinarily by 2
p.m. (New York time)). Ordinarily, it will be posted no more than
thirty minutes after the Noon Buying Rate is published by the Federal
Reserve Bank of New York. All market participants will have access to
this data at the same time and, therefore, no market participant will
have a time advantage in using such data.
---------------------------------------------------------------------------

    \25\ Shares deliverable under a purchase order will be
considered outstanding for purposes of determining NAV per Share;
Shares deliverable under a redemption order will not be considered
outstanding for this purpose.
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Creation and Redemption
    Authorized Participants, which have entered into a Participation
Agreement with the Sponsor and the Trustee, are the only entities that
may place orders to create and redeem Baskets. An Authorized
Participant is a DTC Participant that is registered as a broker-dealer
under the Exchange Act and will be regulated by the National
Association of Securities Dealers, Inc., or else will be exempt from
being (or otherwise will not be required to be) so registered or
regulated, and will be qualified to act as a broker or dealer in the
states or other jurisdictions where the nature of its business so
requires. Certain Authorized Participants may be regulated under
federal and state banking laws and regulations. The Participant
Agreement provides the procedures for the creation and redemption of
Baskets and for the delivery of euro required for creations and
redemptions. Authorized Participants pay a transaction fee of $500 to
the Trustee for each order that they place to create or redeem one or
more Baskets. The transaction fee may be reduced or, with the consent
of the Sponsor, increased. The Trustee shall notify DTC of any
agreement to change the transaction fee and will not implement any
increase in the fee for the redemption of Baskets until thirty days
after the date of the notice. Authorized Participants may sell to other
investors all or part of the Shares included in the Baskets that they
purchase from the Trust. Authorized Participants who make deposits with
the Trust in exchange for Baskets receive no fees, commissions, or
other form of compensation or inducement of any kind from either the
Sponsor or the Trust. No Authorized Participant has any obligation or
responsibility to the Sponsor or the Trust to effect any sale or resale
of Shares.
    Certain Authorized Participants are expected to have the facilities
to participate directly in the global foreign exchange market. In some
cases, an Authorized Participant may acquire euro from, or sell euro
to, an affiliated foreign exchange trading desk, which may profit in
these instances. The Sponsor believes that the size and operation of
the foreign exchange market make it unlikely that an Authorized
Participant's direct activities in the foreign exchange and securities
markets will impact the price of euro or the price of Shares. Each
Authorized Participant will have its own set of rules and procedures,
internal controls, and information barriers as it determines to be
appropriate in light of its own regulatory regime.
    Authorized Participants may act for their own accounts or as agents
for broker-dealers, depositories, and other securities or foreign
currency market participants that wish to create or redeem Baskets. An
order for one or more Baskets may be placed by an Authorized
Participant on behalf of multiple clients.
    Creation Orders. In order to create a Basket, the Authorized
Participant deposits the Basket Euro Amount \26\ with the Depository
and orders Shares from the Trustee.\27\ The Trustee directs

DTC to credit Shares to the Authorized Participant. The Authorized
Participant will then be able to sell Shares to Purchasers on the NYSE
or any other market in which the Shares may trade.
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    \26\ The total deposit required to create each Basket, called
the Basket Euro Amount, is an amount of euro bearing the same
proportion to the number of Baskets to be created as the total
assets of the Trust (net of estimated accrued but unpaid expenses)
bears to the total number of Baskets outstanding on the date that
the order to purchase is properly received. The amount of the
required deposit is determined by dividing the number of euro held
by the Trust (net of estimated accrued but unpaid expenses) by the
number of Baskets outstanding.
    \27\ The Trustee shall determine the Basket Euro Amount ``as
promptly as practicable'' after the Federal Reserve Bank of New York
announces the Noon Buying Rate on each day that the NYSE is open for
regular trading. Ordinarily, this will occur by 2 p.m. (New York
time). The Basket Euro Amount will be published on the Trust's Web
site every day the NYSE is open for regular trading. The Basket Euro
Amount will be published simultaneously with the NAV, between 12
p.m. and 2 p.m. (New York time). See Telephone conference between
Michael Cavalier, Assistant General Counsel, NYSE, and Florence E.
Harmon, Senior Special Counsel, Division of Market Regulation,
Commission, on October 21, 2005.
---------------------------------------------------------------------------

    An Authorized Participant who places a purchase order is
responsible for delivering the Basket Euro Amount to the Deposit
Account by 2:30 p.m. (Central European time) on the third business day
after the purchase order date. Authorized Participants will use the
SWIFT system to make timely deposits through their bank correspondents
in London. Upon receipt of the euro deposit of an Authorized
Participant, the Trustee will direct DTC to credit the number of
Baskets ordered to the Authorized Participant's DTC account. The
expense and risk of delivery, ownership, and safekeeping of euro until
such euro have been received by the Depository shall be borne solely by
the Authorized Participant.
    Redemption Orders. In order to redeem Shares, an Authorized
Participant must send the Trustee a Redemption Order specifying the
number of Baskets (e.g., 50,000 Shares) that the Authorized Participant
wishes to redeem. The Trustee then instructs the Depository to send the
Authorized Participant euro and directs DTC to cancel the Authorized
Participant's Shares that were redeemed.
    The procedures by which an Authorized Participant can redeem one or
more Baskets mirror the procedures for the creation of Baskets. On any
business day, an Authorized Participant may place an order with the
Trustee to redeem one or more Baskets. Redemption orders must be placed
by 4 p.m. (New York time) or the close of regular trading on the NYSE,
whichever is earlier. A redemption order so received is effective on
the date it is received in satisfactory form by the Trustee. The
redemption procedures allow Authorized Participants to redeem Baskets
and do not entitle an individual Shareholder to redeem any Shares in an
amount less than a Basket or to redeem Baskets other than through an
Authorized Participant.
    The redemption distribution due from the Trust is delivered to the
Authorized Participant on the third business day after the redemption
order date if, by 2:30 p.m. (Central European time) on the third
business day after the redemption order date, the Trustee's DTC account
has been credited with the Baskets to be redeemed. If the Trustee's DTC
account has not been credited with all of the Baskets to be redeemed by
that time, then the redemption distribution is delivered to the extent
of whole Baskets received. Any remainder of the redemption distribution
is delivered on the next business day to the extent of remaining whole
Baskets received if the Trustee receives the fee applicable to the
extension of the redemption distribution date that the Trustee may,
from time to time, determine, and the remaining Baskets to be redeemed
are credited to the Trustee's DTC account by 2:30 p.m. (Central
European time) on such next business day. Any further outstanding
amount of the redemption order will be cancelled.\28\
---------------------------------------------------------------------------

    \28\ The Trustee also is authorized to deliver the redemption
distribution notwithstanding that the Baskets to be redeemed are not
credited to the Trustee's DTC account by 2:30 p.m. (Central European
time) on the third business day after the redemption order date if
the Authorized Participant has collateralized its obligation to
deliver the Baskets through DTC's book-entry system on such terms as
the Sponsor and the Trustee may agree upon from time to time. The
Trustee will reject a redemption order if the order is not in proper
form as described in the Participant Agreement or if the fulfillment
of the order, in the opinion of its counsel, might be unlawful.
---------------------------------------------------------------------------

Clearance and Settlement
    If the Shares are eligible for book-entry settlement, individual
certificates will not be issued for the Shares. Instead, global
certificates will be signed by the Trustee and the Sponsor on behalf of
the Trust, registered in the name of Cede & Co., as nominee for DTC,
and deposited with the Trustee on behalf of DTC. The representations,
undertakings, and agreements made on the part of the Trust in the
global certificates will be made and intended for the purpose of
binding only the Trust and not the Trustee or the Sponsor individually.
    Upon the settlement date of any creation, transfer, or redemption
of Shares, DTC will credit or debit, on its book-entry registration and
transfer system, the amount of the Shares so created, transferred, or
redeemed to the accounts of the appropriate DTC Participants. The
Trustee and the Authorized Participants will designate the accounts to
be credited and charged in the case of creation or redemption of
Shares.
    Beneficial ownership of the Shares is limited to DTC Participants,
Indirect Participants,\29\ and persons holding interests through DTC
Participants and Indirect Participants. Ownership of beneficial
interests in the Shares will be shown on, and the transfer of ownership
will be effected only through, records maintained by DTC (with respect
to DTC Participants), the records of DTC Participants (with respect to
Indirect Participants), and the records of Indirect Participants (with
respect to Shareholders that are not DTC Participants or Indirect
Participants). A Shareholder is expected to receive from or through the
DTC Participant maintaining the account through which the Shareholder
purchased its Shares a written confirmation relating to the purchase.
---------------------------------------------------------------------------

    \29\ ``Indirect Participants'' are defined in the Registration
Statement as ``[t]hose banks, brokers, dealers, trust companies and
others that maintain, either directly or indirectly, a custodial
relationship with a DTC Participant.'' See Amendment No. 2 to
Registration No. 333-125581.
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Risk Factors to Investing in the Shares
    An investment in the Shares carries certain risks. The following
risk factors are taken from and discussed in more detail in the
Registration Statement.
     The value of the Shares relates directly to the value of
the euro held by the Trust. Fluctuations in the price of the euro could
materially and adversely affect the value of the Shares.
     The USD/euro exchange rate, like foreign exchange rates in
general, can be volatile and difficult to predict. This volatility
could materially and adversely affect the performance of the Shares.
     The Deposit Account is not entitled to payment at any
office of JP Morgan Chase Bank, N.A. located in the US.
     Shareholders will not have the protections associated with
ownership of a demand deposit account insured in the U.S. by the
Federal Deposit Insurance Corporation nor the protection provided under
English law.
     Euro held in the Deposit Account will not be segregated
from the Depository's assets. If the Depository becomes insolvent, then
its assets might not be adequate to satisfy a claim by the Trust or any
Authorized Participant. In addition, in the event of the insolvency of
the Depository or the U.S. bank of which it is a branch, there may be a
delay and costs incurred in identifying the euro held in the Deposit
Account.
     The Shares are a new securities product. Their value could
decrease if unanticipated operational or trading problems were to
arise.
     Shareholders will not have the protections associated with
ownership of shares in an investment company registered under the 1940
Act.

     Shareholders will not have the rights enjoyed by investors
in certain other financial instruments.
     The Shares may trade at a price which is at, above, or
below the NAV per Share.
     The interest rate earned by the Trust, although
competitive, may not be the best rate available. If the Sponsor
determines that the interest rate is inadequate, then its sole recourse
will be to remove the Depositary and terminate the Deposit Account.
     The possible sale of euro by the Trust to pay expenses, if
required, will reduce the amount of euro represented by each Share on
an ongoing basis regardless of whether the price of a Share rises or
falls in response to changes in the price of the euro.
     The sale of the Trust's deposited euro, if necessary, to
pay expenses at a time when the price of the euro is relatively low
could adversely affect the value of the Shares.
     The Depository owes no fiduciary duties to the Trust or
the Shareholders, is not required to act in their best interest and
could resign or be removed by the Sponsor, triggering early termination
of the Trust.
     The Trust may be required to terminate and liquidate at a
time disadvantageous to Shareholders.
     Redemption orders are subject to rejection by the Trustee
under certain circumstances.
     Substantial sales of euro by the official sector could
adversely affect an investment in the Shares.
     Shareholders that are not Authorized Participants may only
purchase or sell their Shares in secondary trading markets.
     The liability of the Sponsor and the Trustee under the
Depositary Trust Agreement is limited, and, except as set forth in the
Depositary Trust Agreement, they are not obligated to prosecute any
action, suit or other proceeding in respect to any Trust property.
     The Depositary Trust Agreement may be amended to the
detriment of Shareholders without their consent.
     The License Agreement with the Bank of New York may be
terminated by the Bank of New York in the event of a material breach by
the Sponsor. Termination of the License Agreement might lead to early
termination and liquidation of the Trust.
Availability of Information Regarding Euro Prices
    Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a foreign currency, such as euro,
over the Consolidated Tape. However, the last sale price for the Shares
will be disseminated over the Consolidated Tape, as is the case for all
equity securities traded on the Exchange (including exchange-traded
funds). In addition, there is a considerable amount of euro price and
euro market information available on public Web sites and through
professional and subscription services. As is the case with equity
securities generally and exchange-traded funds specifically, in most
instances, real-time information is only available for a fee, and
information available free of charge is subject to delay (typically, 15
to 20 minutes).
    Investors may obtain on a 24-hour basis euro pricing information
based on the euro spot price from various financial information service
providers. Current spot prices are also generally available with bid/
ask spreads from foreign exchange dealers. Complete real-time data for
euro futures and options prices traded on the CME and Phlx are also
available by subscription from information service providers. The CME
and Phlx also provide delayed futures and options information on
current and past trading sessions and market news free of charge on
their respective Web sites.
    There are a variety of other public Web sites that provide
information on foreign currency and the euro, such as Bloomberg (http://www.bloomberg.com/markets/currencies/
 eurafr--currencies.html), which

regularly reports current foreign exchange pricing for a fee. Other
service providers include CBS Market Watch (http://www.marketwatch.com/tools/ stockresearch/globalmarkets) and Yahoo! Finance (http://

finance.yahoo.com/currency). Many of these sites offer price quotations
drawn from other published sources, and as the information is supplied
free of charge, it generally is subject to time delays.\30\ Like bond
securities traded in the over-the-counter market with respect to which
pricing information is available directly from bond dealers, current
euro spot prices are also generally available with bid/ask spreads from
foreign currency dealers.\31\
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    \30\ There may be incremental differences in the euro spot price
among the various information service sources. While the Exchange
believes the differences in the euro spot price may be relevant to
those entities engaging in arbitrage or in the active daily trading
of euro or foreign currency derivatives, the Exchange believes such
differences are likely of less concern to individual investors
intending to hold the Shares as part of a long-term investment
strategy.
    \31\ See, e.g., Securities Exchange Act Release No. 46252 (July
24, 2002), 67 FR 49715 (July 31, 2002) (SR-Amex-2001-35) (noting
that quote and trade information regarding debt securities is widely
available to market participants from a variety of sources,
including broker-dealers, information service providers, newspapers
and Web sites).
---------------------------------------------------------------------------

    In addition, the Trust's Web site will provide the following
information: (1) The euro spot price,\32\ including the bid and offer
and the midpoint between the bid and offer for the euro spot price,
updated every 5 to 10 seconds,\33\ which is an essentially real-time
basis; (2) an intraday indicative value (``IIV'') per share for the
Shares calculated by multiplying the indicative spot price of euro by
the quantity of euro backing each Share, on a 5 to 10 second delay
basis; \34\ (3) a delayed indicative value (subject to a 20 minute
delay), which is used for calculating premium/discount information; (4)
premium/discount information, calculated on a 20 minute delayed basis;
(5) the NAV of the Trust as calculated each business day by the
Sponsor; (6) accrued interest per Share; (7) the daily Federal Reserve
Bank of New York Noon Buying Rate; (8) the Basket Euro Amount; and (9)
the last sale price (under symbol FXE) of the Shares as traded in the
U.S. market, subject to a 20-minute delay, as it is provided free of
charge.\35\ The Exchange will provide on its own public Web site
(http://www.nyse.com) a link to the Trust's Web site. The market prices

for the Shares will also be available from a variety of sources,
including brokerage firms, financial information Web sites, and other
information service providers.
---------------------------------------------------------------------------

    \32\ The Trust Web site's euro spot price will be provided by
The Bullion Desk (http://www.thebulliondesk.com). The NYSE will

provide a link to the Trust Web site. The Bullion Desk is not
affiliated with the Trust, Trustee, Sponsor, Depository,
Distributor, or the Exchange. In the event that the Trust's Web site
should cease to provide this euro spot price information from an
unaffiliated source and the intraday indicative value of the Shares,
the NYSE will commence delisting proceedings for the Shares.
    \33\ The midpoint will be calculated by the Sponsor. The
midpoint is used for purposes of calculating the premium or discount
of the Shares. Assuming a euro spot bid of $1.2235 and an offer of
$1.2236, the midpoint would be calculated as follows:(Euro spot bid
plus ((euro spot offer minus euro spot bid) divided by 2)) or
($1.2235 + (($1.2236-$1.2235)/2)) = $1.22355
    \34\ The intraday indicative value of the Shares is analogous to
the intraday optimized portfolio value (sometimes referred to as the
IOPV), indicative portfolio value, and the intraday indicative value
(sometimes referred to as the IIV) associated with the trading of
exchange-traded funds. See, e.g., Securities Exchange Act Release
No. 46686 (October 18, 2002), 67 FR 65388 (October 24, 2002) (SR-
NYSE-2002-51) for a discussion of indicative portfolio value in the
context of an exchange-traded fund. The Trust's Web site is expected
to indicate that the intraday indicative value and euro spot prices
are subject to an average delay of 5 to 10 seconds.
    \35\ The last sale price of the Shares in the secondary market
is available on a real-time basis for a fee from regular data
vendors.

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Other Characteristics of the Shares
    General Information. A minimum of three Baskets, representing
150,000 Shares, will be outstanding at the commencement of trading on
the Exchange. Each Share initially represents 100 euro, and the value
of Shares outstanding at the start of trading will be approximately
15,000,000 euro.\36\
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    \36\ See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005 (correcting the statement that each Share
represents 100 euro, rather than 40 euro as previously stated).
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    Trading in Shares on the Exchange will be effected normally until
4:15 p.m. (New York time) each business day. The minimum trading
increment for Shares on the Exchange will be $0.01.
    Listing Fees. The Exchange original listing fee applicable to the
listing of the Trust will be $5,000. The annual continued listing fee
for the Trust will be $2,000.
    Continued Listing Criteria. Under the applicable continued listing
criteria, the Shares may be delisted if: (1) Following the initial
twelve-month period beginning upon the commencement of trading of the
Shares, there are fewer than 50 record and/or beneficial holders of the
Shares for 30 or more consecutive trading days; (2) the value of euro
is no longer calculated or available on at least a 15-second delayed
basis from a source unaffiliated with the Sponsor, the Trust, the
Trustee, or the Exchange, or the Exchange stops providing a hyperlink
on the Exchange's Web site to any such unaffiliated euro value; (3) the
IIV is no longer made available on at least a 15-second delayed basis;
or (4) such other event shall occur or condition exist that, in the
opinion of the Exchange, makes further dealings on the Exchange
inadvisable. In addition, the Exchange will remove Shares from listing
and trading upon termination of the Trust.
    Exchange Trading Rules and Policies. The Shares are considered
``securities'' pursuant to NYSE Rule 3 and are subject to all
applicable trading rules. The Exchange's surveillance procedures will
be comparable to those used for investment company units currently
trading on the Exchange and will incorporate and rely upon existing
NYSE surveillance procedures governing equities.
    The Exchange hereby proposes to adopt new NYSE Rule 1300A
(``Currency Trust Shares'') to deal with issues related to the trading
of the Shares. Specifically, for purposes of NYSE Rules 13
(``Definitions of Orders''), 36.30 (``Communications Between Exchange
and Members' Offices: Specialist Post Wires''), 98 (``Restrictions on
Approved Person Associated with a Specialist's Member Organization''),
104 (``Dealings by Specialists''), 105(m) (``Specialists' Interest in
Pools, Options, and Single Stock Futures: Specialist Shall Not Be
Options or Single Stock Futures Market-Maker''), 460.10 (``Specialists
Participating in Contests''), 1002 (``Availability of Automatic
Execution Feature''), and 1005 (``Orders May Not Be Broken Into Smaller
Amounts'') the Shares will be treated the same as Investment Company
Units.\37\ When these Rules discuss Investment Company Units,
references to the word ``index'' (or derivative or similar words) will
be deemed to be references to the applicable currency spot price, and
reference to the word ``security'' (or derivative or similar words)
will be deemed to be references to the Currency Trust Shares. The term
``applicable non-US currency'' as used in proposed NYSE Rules 1300A and
1301A, is defined as the currency held by the Trust for a particular
issue of Currency Trust Shares. Proposed NYSE Rules 1300A and 1301A are
intended to accommodate possible future listings of trusts based on
non-US currencies in addition to the euro. Any Exchange listing of an
issue of Currency Trust Shares will be subject to approval of a
proposed rule change by the Commission pursuant to section 19(b)(2) of
the Exchange Act \38\ and Rule 19b-4 \39\ thereunder.
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    \37\ In particular, proposed NYSE Rule 1300A provides that NYSE
Rule 105(m) is deemed to prohibit an equity specialist, his member
organization, other member, allied member, or approved person in
such member organization or officer or employee thereof from acting
as a market maker or functioning in any capacity involving market-
making responsibilities in the applicable non-US currency, options,
futures, or options on futures on such currency, or any other
derivatives based on such currency, except as otherwise provided
therein.
    \38\ 15 U.S.C. 78s(b)(2).
    \39\ 17 CFR 240.19b-4.
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    The Exchange does not currently intend to exempt Currency Trust
Shares from the Exchange's ``Market-on-Close/Limit-on-Close/Pre-Opening
Price Indications'' Policy, although the Exchange may do so by means of
a rule change in the future if, after having experience with the
trading of the Shares, the Exchange believes such an exemption is
appropriate.
    The Exchange is proposing to adopt new NYSE Rule 1301A (``Currency
Trust Shares: Securities Accounts and Orders of Specialists'') to
ensure that specialists handling Currency Trust Shares provide the
Exchange with all necessary information relating to their trading in
the applicable non-U.S. currency, options, futures contracts and
options thereon or any other derivative on such currency.\40\ As a
general matter, the Exchange has regulatory jurisdiction over its
member organizations and any person or entity controlling a member
organization. The Exchange also has regulatory jurisdiction over a
subsidiary or affiliate of a member organization that is in the
securities business. A member organization subsidiary or affiliate that
does business only in commodities would not be subject to NYSE
jurisdiction, but the Exchange could obtain certain information
regarding the activities of such subsidiary or affiliate through
reciprocal agreements with regulatory organizations of which such
subsidiary or affiliate is a member.
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    \40\ Proposed NYSE Rule 1301A also states that, in connection
with trading the applicable non-US currency, options, futures, or
options on futures, or any other derivatives on such currency
(including Currency Trust Shares), the specialist shall not use any
material nonpublic information received from any person associated
with a member or employee of such person regarding trading by such
person or employee in the applicable non-US currency, options,
futures, or options on futures, or any other derivatives on such
currency. For purposes of proposed NYSE Rule 1301A, ``person
associated with a member'' shall have the same meaning ascribed to
it in section 3(a)(21) of the Exchange Act.
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    Surveillance. The Exchange's surveillance procedures will be
comparable to those used for Investment Company Units and
streetTRACKS[reg] Gold Shares and will incorporate and rely upon
existing NYSE surveillance procedures governing equities. The Exchange
represents that these procedures are adequate to monitor Exchange
trading of the Shares and to detect violations of Exchange rules,
thereby deterring manipulation.\41\
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    \41\ See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
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    The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. 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 is able to
obtain information regarding trading in the Shares, euro options, and
euro futures through NYSE members, in connection with such members'
proprietary or customer trades which they effect on any relevant
market. In addition, the Exchange may obtain trading information via
the Intermarket

Surveillance Group (``ISG'') from other exchanges who are members or
affiliates of the ISG. Specifically, the NYSE can obtain such
information from the Phlx in connection with euro options trading on
the Phlx and from the CME and LIFFE in connection with euro futures
trading on those exchanges.\42\
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    \42\ Phlx is a member of ISG. CME and LIFFE are affiliate
members of ISG.
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    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. Trading on the Exchange in the Shares
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 euro, or
(2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present. In addition,
trading in Shares is subject to trading halts caused by extraordinary
market volatility pursuant to the Exchange's ``circuit breaker''
rule.\43\
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    \43\ See NYSE Rule 80B.
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    Due Diligence. Before a member, member organization, allied member,
or employee thereof recommends a transaction in the Shares, such person
must exercise due diligence to learn the essential facts relative to
the customer pursuant to NYSE Rule 405, and must determine that the
recommendation complies with all other applicable Exchange and federal
rules and regulations. A person making such recommendation should have
a reasonable basis for believing, at the time of making the
recommendation, that the customer has sufficient knowledge and
experience in financial matters that he or she may reasonably be
expected to be capable of evaluating the risks and any special
characteristics of the recommended transaction, and is financially able
to bear the risks of the recommended transaction.
    Information Memo. The Exchange will distribute an Information Memo
to its members in connection with the trading in the Shares. The
Information Memo will discuss the special characteristics and risks of
trading this type of security. Specifically, the Information Memo,
among other things, will discuss what the Shares are, that Shares are
not individually redeemable but are redeemable only in Baskets of
50,000 shares or multiples thereof, how a Basket is created and
redeemed, applicable Exchange rules, the indicative price of euro and
IIV, dissemination information, trading information, and the
applicability of suitability rules.\44\ The Information Memo will also
state that the number of euro required to create a Basket or to be
delivered upon redemption of a Basket may gradually decrease over time
in the event that the Trust is required to sell deposited euro to pay
the Trust's expenses, and that if done at a time when the price of the
euro is relatively low, it could adversely affect the value of the
Shares.\45\ The Information Memo will also reference the fact that
there is no regulated source of last sale information regarding euro,
and that the Commission has no jurisdiction over the trading of euro.
Finally, the Information Memo will also note to members language in the
Registration Statement regarding prospectus delivery requirements for
the Shares.
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    \44\ The Information Memo will also discuss exemptive relief
granted by the Commission from certain rules under the Exchange Act.
The applicable rules are: Rule 10a-1; Rule 200(g) of Regulation SHO;
Section 11(d)(1) and Rule 11d1-2; and Rules 101 and 102 of
Regulation M under the Exchange Act.
    \45\ See Telephone conference between Michael Cavalier,
Assistant General Counsel, NYSE, and Florence E. Harmon, Senior
Special Counsel, Division of Market Regulation, Commission, on
October 21, 2005.
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    2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is
the requirement under section 6(b)(5) \46\ 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 foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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    \46\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act.

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

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
    The Commission is considering granting accelerated approval of the
proposed rule change at the end of a 15-day comment period.\47\
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    \47\ The NYSE has requested accelerated approval of this
proposed rule change prior to the 30th day after the date of
publication of notice of the filing thereof, following the
conclusion of a 15-day comment period. See Telephone conference
between Michael Cavalier, Assistant General Counsel, NYSE, and
Florence E. Harmon, Senior Special Counsel, Division of Market
Regulation, Commission, on October 27, 2005.
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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 Exchange Act. Comments may be submitted
by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NYSE-2005-65 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NYSE-2005-65. This
file number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/rules/sro/shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the

Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of the filing will also be
available for inspection and copying at the principal office of the
NYSE. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File number SR-
NYSE-2005-65 and should be submitted by November 25, 2005.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\48\
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    \48\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-22413 Filed 11-9-05; 8:45 am]

BILLING CODE 8010-01-P