Federal Register: December 7, 2007 (Volume 72, Number 235)
DOCID: fr07de07-88 FR Doc E7-23747
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-56880; File No. SR-Amex-2006-96]
NOTICE: NOTICES
DOCID: fr07de07-88
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; American Stock Exchange LLC; Order Approving Proposed Rule Change, as Modified by Amendment Nos. 1, 2, 3, 4, 5, and 6 Thereto, Relating to the Listing and Trading of Trust Units of the Nuveen Commodities Income and Growth Fund
DOCUMENT SUMMARY:
December 3, 2007.
I. Introduction
On October 12, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b4
thereunder \2\ to list and trade trust units of the Nuveen Commodities
Income and Growth Fund (``Fund'') (``Shares'') pursuant to proposed
Amex Rules 1600 et. seq. On March 2, 2007, March 21, 2007, May 14,
2007, August 15, 2007, August 28, 2007, and September 17, 2007 the Amex
submitted Amendment Nos. 1, 2, 3, 4, 5, and 6, respectively, to the
proposed rule change. The proposed rule change, as amended, was
published for comment in the Federal Register on September 25, 2007.\3\
The Commission received one comment letter regarding the proposal.\4\ This order approves the proposed rule change, as amended.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ See Securities Exchange Act Release No. 56465 (September 19, 2007), 72 FR 54489 (``Notice'').
\4\ See letter to Nancy M. Morris, Secretary, Commission, from
John G. Gaine, President, Managed Funds Association (``MFA''), dated October 15, 2007 (``MFA Letter'').
II. Description of the Proposal
The Exchange proposes to add Amex rules 1600 et seq. that would
permit the listing and trading of units of a trust or other similar
entity (``Trust Units'') that invests in the assets of a trust,
partnership, limited liability company, corporation or other similar
entity constituted as a commodity pool that holds investments
comprising or otherwise based on futures contracts, options on futures
contracts, forward contracts, commodities and high credit quality
shortterm fixed income securities or other securities. Pursuant to
these proposed rules, the Amex proposes to list and trade the Shares,
which represent beneficial ownership interests in the assets of the
Fund, which in turn, consist solely of units (``Master Fund Units'') of
the Nuveen Commodities Income and Growth Master Fund LLC (the ``Master
Fund''). The Exchange also proposes to amend section 141 of the Amex
Company Guide (``Company Guide'') regarding listing fees to accommodate the listing of Trust Units.\5\
\5\ The Amex original listing fee applicable to the listing of
the Fund is $5,000. Under Section 141 of the Company Guide, the
annual listing fee will be based upon the yearend aggregate number
of units in all series of the Fund outstanding at the end of each calendar year.
As described in the Exchange's proposal,\6\ the Fund's primary
investment objective is to seek total return through broad exposure to
the commodities markets. The Fund's secondary objective is to provide
investors with monthly income and capital distributions not commonly
associated with commodity investments. The Master Fund will invest in
commodity futures and forward contracts, options on commodity futures
and forward contracts, and overthecounter (``OTC'') commodity options
in the following commodity groups: energy, industrial metals, precious
metals, livestock, agriculturals, and tropical foods and fibers and may in the future include other commodity investments that
[[Page 69260]]
become the subject of commodity futures trading.\7\
\6\ For a more detailed description of the Fund and Master Fund,
including their structure, investment objectives, holdings,
applicable exchange listing and trading rules, disclosure of pricing
information, surveillance, and other regulation, see Notice at 5448994.
\7\ For information regarding the futures contracts and other
investments in which the Master Fund may invest, see Notice at 54490.
The Fund and the Master Fund are commodity pools. The Master Fund is managed by Nuveen Commodities Asset Management, LLC (the ``Manager''). The Manager is registered as a commodity pool operator (the ``CPO'') and a commodity trading advisor (the ``CTA'') with the Commodity Futures Trading Commission (``CFTC'') and is a member of the National Futures Association (``NFA'').
The Manager will serve as the CPO and CTA of the Fund and the
Master Fund. The Manager will determine the Master Fund's overall
investment strategy, including: (i) The selection and ongoing
monitoring of the Master Fund's subadvisors; (ii) the management of
the Fund's and Master Fund's business affairs; and (iii) the provision
of certain clerical, bookkeeping and other administrative services.
Gresham Investment Management LLC (the ``Commodity SubAdvisor'') will
invest on a notional basis substantially all of the Master Fund's
assets in commodity futures and forward contracts pursuant to a
proprietary commodity investment strategy (the Tangible Asset
Program[supreg] (``TAP[supreg]'')) \8\ and a risk management program.
The Commodity SubAdvisor is a Delaware limited liability company and
is registered with the CFTC as a CTA and a CPO and is a member of the
NFA. The Commodity SubAdvisor is also registered with the Commission
as an investment adviser. Nuveen Asset Management (the ``Collateral
SubAdvisor''), an affiliate of the Manager, will invest the Master
Fund's collateral in shortterm, investment grade quality debt
instruments. The Collateral SubAdvisor is registered with the Commission as an investment adviser.
\8\ TAP[supreg] is an actively managed, rulesbased commodity
investment strategy. TAP[supreg] is fundamental in nature and is
designed to maintain consistent, fully collateralized exposure to
commodities as an asset class. TAP[supreg] does not require the
existence of price trends in order to be successful. TAP[supreg]
currently requires investment in futures or forward contracts for
three commodities in each of the energy, industrial metals,
livestock, agriculturals, tropical foods and fibers and precious
metal commodity groups. Commodity group weightings and individual
commodity weightings are chosen by a process that blends twothirds
of five year global production value and onethird of five year
value of commodity futures contracts traded in dollars. The process
constrains the weightings of each commodity group such that no group
may constitute more than 35% of TAP[supreg] and no single commodity
interest can constitute more than 70% of its group. In addition, each commodity is rebalanced.
The Exchange submits that proposed Amex Rules 1600 et seq. will accommodate the listing and trading of Trust Units.\9\
\9\ Pursuant to Commentary .01 to proposed Amex Rule 1602, the
Exchange shall file separate proposals under Section 19(b) of the
Act before listing and trading separate and distinct Trust Units
designated on different underlying investments, commodities, assets and/or portfolios.
III. Comment Letter and Response
The Commission received one comment letter, submitted by the
MFA,\10\ which expressed concerns about the daily disclosure of the
Fund's holdings and net asset value (``NAV''). MFA believed that such
daily disclosure is proper in the case of traditional exchangetraded
funds (``ETFs'') because it facilitates the daily creation and
redemption of units, which lowers the tracking error between an ETF's
NAV and the trading price of such ETF.\11\ In the case of the Fund,
however, which does not provide for a continuous creation and
redemption process, MFA argued that disclosure of the Fund's assets has
no ``commercially reasonable purpose,'' and may frustrate continued
innovation and ultimately harm investors. The MFA believed that daily
disclosure could allow market participants to discover proprietary
trading strategies through reverse engineering. MFA argued that this
could result in frontrunning and also remove incentives for the
formation of new closedend funds and strategies.\12\ Likewise, daily
disclosure of the Fund's NAV, in the MFA's view, is not necessary and
may have negative consequences. MFA believed that closedend exchange
traded commodity pools such as the Fund should be subject to the same
NAV and portfolio holding disclosure requirements applicable to closed end exchangetraded registered investment companies.\13\
\10\ See MFA Letter, supra note 4.
\11\ See id. at 12.
\12\ See id. at 24.
\13\ See id. at 45. MFA noted that many closedend registered
investment companies report their NAV weekly and the Investment
Company Act of 1940 requires only quarterly portfolio holdings disclosure for closedend registered investment companies.
In its response,\14\ the Exchange disagreed with the MFA regarding
disclosure of the Fund's NAV. Amex argued that daily disclosure allows
investors to determine whether actual discounts or premiums to NAV per
share based on supply and demand and future expectation are consistent
with market fundamentals.\15\ With respect to the daily disclosure of
the Fund's holdings, Amex largely agreed with MFA's comments, noting
that it did not believe the daily portfolio holdings disclosure
requirement to be particularly helpful or necessary, and agreeing that
the Fund's structure does not provide for a mechanism to cause the market price per share to track NAV per share.\16\
\14\ See letter to Nancy M. Morris, Secretary, Commission, from
Jeffrey P. Burns, Vice President and Associate General Counsel, Exchange, dated November 7, 2007.
\15\ Id. at 3.
\16\ Id. at 12. Though the Exchange in its current letter
believed that there was significant justification to eliminate the
proposed requirement or daily portfolio holdings disclosure, the
Exchange did not file an amendment to propose such a change with respect to the Fund.
IV. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\17\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\18\ which
requires that the rules of an exchange be designed, among other things,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the public interest.
\17\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
\18\ 15 U.S.C. 78f(b)(5).
The Commission further believes that the proposal is consistent
with section 11A(a)(1)(C)(iii) of the Act,\19\ which sets forth
Congress's finding that it is in the public interest and appropriate
for the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in
securities. As described in the Notice, the Exchange represents that
futures, forwards and related exchange traded options, quotes and last
sale information for the commodity contracts held by the Fund are
widely disseminated through a variety of market data vendors worldwide,
including Bloomberg and Reuters. In addition, the Exchange further
represents that complete realtime data for such futures, forwards and
exchange traded options is available by subscription from Reuters and
Bloomberg. The relevant futures and forward exchanges also provide
delayed futures and forward contract information on current and past trading
[[Page 69261]]
sessions and market news free of charge on their respective Web sites.
The contract specifications for the futures and forward contracts are
also available from the futures and forward exchanges on their Web
sites as well as other financial informational sources. Finally, the
Web site for the Fund and the Manager, which will be publicly
accessible at no charge, will contain the following information: (a)
The prior business day's NAV and the reported closing price; (b)
calculation of the premium or discount of such price against such NAV; and (c) other applicable quantitative information.
\19\ 15 U.S.C. 78k1(a)(1)(C)(iii).
Furthermore, the Commission believes that the proposal to list and
trade the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately.
The Commission notes that the Exchange will, prior to listing, obtain a
representation from the Fund that the NAV per share will be calculated
daily and made available to all market participants at the same
time.\20\ In addition, the Exchange represents that disclosure of the
portfolio composition of the Fund will be made to all market
participants at the same time.\21\ Moreover, the Exchange notes that
each of the Manager, the Commodity Broker, and the Commodity Sub
Advisor has represented to the Exchange that it will establish firewall
procedures with respect to personnel who have access to information
concerning changes and adjustments to components of the Fund to prevent
the use and dissemination of material nonpublic information.\22\
Further, the trading of the Shares is subject to the specialist prohibitions in Proposed Amex Rule 1603.
\20\ See proposed Amex Rule 1602(a)(ii).
\21\ See Notice, supra note 3, at note 15.
\22\ See Notice at 54492.
The Commission also believes that the Exchange's trading halt rules are reasonably designed to prevent trading in the Shares when transparency is impaired. Proposed Amex Rule 1602(b)(ii) provides that the Exchange will halt trading in the Shares if the circuit breaker parameters of Amex Rule 117 have been reached. In exercising its discretion to halt or suspend trading in the Shares, the Exchange may consider factors such as those set forth in Amex Rule 918C(b) in addition to other factors that may be relevant. In particular, if the portfolio holdings and net asset value per share are not being disseminated as required, the Exchange may halt trading during the day in which the interruption to the dissemination of the portfolio holdings or net asset value per share occurs. If the interruption to the dissemination of the portfolio holdings or net asset value per share 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.
The Commission further believes that the trading rules and procedures to which the Shares will be subject pursuant to this proposal are consistent with the Act. The Exchange has represented that the Shares are equity securities subject to Amex's rules governing the trading of equity securities.
In support of this proposal, the Exchange has made the following representations:
(1) The Exchange's surveillance procedures are adequate to properly
monitor the trading of the Shares. Specifically, Amex will rely on its
existing surveillance procedures governing Index Fund Shares. In
addition, Amex has represented that it has information sharing
agreements with the InterContinental Exchange, the Chicago Mercantile
Exchange, and the New York Mercantile Exchange and may obtain market
surveillance information from other exchanges, including the Chicago
Board of Trade, London Metals Exchange, and the New York Board of Trade through the Intermarket Surveillance Group.
(2) Prior to the commencement of trading, the Exchange will inform
its members and member organizations in an Information Circular
regarding the prospectus or delivery requirements that apply to the
Shares. The Information Circular will also provide guidance with regard
to member firm compliance responsibilities when effecting transactions
in the Shares and highlighting the special risks and characteristics of
the Funds and Shares, as well as applicable Exchange rules. In
addition, the Information Circular will also reference the fact that
there is no regulated source of last sale information regarding
physical commodities and note the respective jurisdictions of the SEC and CFTC .
This approval order is based on the Exchange's representations.
Finally, the Commission believes that the daily disclosure requirements relating to the Fund's holdings and NAV are appropriate. Specifically, the Commission believes that daily disclosure of the Fund's NAV per share should aid investors in determining the degree to which the Shares are tracking the Fund's NAV per share. The Commission believes that the same is true for daily disclosure of the holdings of the Fund as such disclosure provides additional transparency. In addition, the Commission notes that the Exchange did not file an amendment seeking to change this disclosure requirement. Accordingly, the Commission does not believe that the commenter's assertions form a basis either to disapprove or to delay approval of the Exchange's proposed rule change and listing of the Fund.
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,\23\ that the proposed rule change (SRAmex200696), as modified, be, and it hereby is, approved.
\23\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\
\24\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E723747 Filed 12607; 8:45 am]
BILLING CODE 801101P
SUMMARY:
American Stock Exchange LLC,
DOCUMENT BODY 2:
December 3, 2007.
I. Introduction
On October 12, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b4
thereunder \2\ to list and trade trust units of the Nuveen Commodities
Income and Growth Fund (``Fund'') (``Shares'') pursuant to proposed
Amex Rules 1600 et. seq. On March 2, 2007, March 21, 2007, May 14,
2007, August 15, 2007, August 28, 2007, and September 17, 2007 the Amex
submitted Amendment Nos. 1, 2, 3, 4, 5, and 6, respectively, to the
proposed rule change. The proposed rule change, as amended, was
published for comment in the Federal Register on September 25, 2007.\3\
The Commission received one comment letter regarding the proposal.\4\ This order approves the proposed rule change, as amended.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ See Securities Exchange Act Release No. 56465 (September 19, 2007), 72 FR 54489 (``Notice'').
\4\ See letter to Nancy M. Morris, Secretary, Commission, from
John G. Gaine, President, Managed Funds Association (``MFA''), dated October 15, 2007 (``MFA Letter'').
II. Description of the Proposal
The Exchange proposes to add Amex rules 1600 et seq. that would
permit the listing and trading of units of a trust or other similar
entity (``Trust Units'') that invests in the assets of a trust,
partnership, limited liability company, corporation or other similar
entity constituted as a commodity pool that holds investments
comprising or otherwise based on futures contracts, options on futures
contracts, forward contracts, commodities and high credit quality
shortterm fixed income securities or other securities. Pursuant to
these proposed rules, the Amex proposes to list and trade the Shares,
which represent beneficial ownership interests in the assets of the
Fund, which in turn, consist solely of units (``Master Fund Units'') of
the Nuveen Commodities Income and Growth Master Fund LLC (the ``Master
Fund''). The Exchange also proposes to amend section 141 of the Amex
Company Guide (``Company Guide'') regarding listing fees to accommodate the listing of Trust Units.\5\
\5\ The Amex original listing fee applicable to the listing of
the Fund is $5,000. Under Section 141 of the Company Guide, the
annual listing fee will be based upon the yearend aggregate number
of units in all series of the Fund outstanding at the end of each calendar year.
As described in the Exchange's proposal,\6\ the Fund's primary
investment objective is to seek total return through broad exposure to
the commodities markets. The Fund's secondary objective is to provide
investors with monthly income and capital distributions not commonly
associated with commodity investments. The Master Fund will invest in
commodity futures and forward contracts, options on commodity futures
and forward contracts, and overthecounter (``OTC'') commodity options
in the following commodity groups: energy, industrial metals, precious
metals, livestock, agriculturals, and tropical foods and fibers and may in the future include other commodity investments that
[[Page 69260]]
become the subject of commodity futures trading.\7\
\6\ For a more detailed description of the Fund and Master Fund,
including their structure, investment objectives, holdings,
applicable exchange listing and trading rules, disclosure of pricing
information, surveillance, and other regulation, see Notice at 5448994.
\7\ For information regarding the futures contracts and other
investments in which the Master Fund may invest, see Notice at 54490.
The Fund and the Master Fund are commodity pools. The Master Fund is managed by Nuveen Commodities Asset Management, LLC (the ``Manager''). The Manager is registered as a commodity pool operator (the ``CPO'') and a commodity trading advisor (the ``CTA'') with the Commodity Futures Trading Commission (``CFTC'') and is a member of the National Futures Association (``NFA'').
The Manager will serve as the CPO and CTA of the Fund and the
Master Fund. The Manager will determine the Master Fund's overall
investment strategy, including: (i) The selection and ongoing
monitoring of the Master Fund's subadvisors; (ii) the management of
the Fund's and Master Fund's business affairs; and (iii) the provision
of certain clerical, bookkeeping and other administrative services.
Gresham Investment Management LLC (the ``Commodity SubAdvisor'') will
invest on a notional basis substantially all of the Master Fund's
assets in commodity futures and forward contracts pursuant to a
proprietary commodity investment strategy (the Tangible Asset
Program[supreg] (``TAP[supreg]'')) \8\ and a risk management program.
The Commodity SubAdvisor is a Delaware limited liability company and
is registered with the CFTC as a CTA and a CPO and is a member of the
NFA. The Commodity SubAdvisor is also registered with the Commission
as an investment adviser. Nuveen Asset Management (the ``Collateral
SubAdvisor''), an affiliate of the Manager, will invest the Master
Fund's collateral in shortterm, investment grade quality debt
instruments. The Collateral SubAdvisor is registered with the Commission as an investment adviser.
\8\ TAP[supreg] is an actively managed, rulesbased commodity
investment strategy. TAP[supreg] is fundamental in nature and is
designed to maintain consistent, fully collateralized exposure to
commodities as an asset class. TAP[supreg] does not require the
existence of price trends in order to be successful. TAP[supreg]
currently requires investment in futures or forward contracts for
three commodities in each of the energy, industrial metals,
livestock, agriculturals, tropical foods and fibers and precious
metal commodity groups. Commodity group weightings and individual
commodity weightings are chosen by a process that blends twothirds
of five year global production value and onethird of five year
value of commodity futures contracts traded in dollars. The process
constrains the weightings of each commodity group such that no group
may constitute more than 35% of TAP[supreg] and no single commodity
interest can constitute more than 70% of its group. In addition, each commodity is rebalanced.
The Exchange submits that proposed Amex Rules 1600 et seq. will accommodate the listing and trading of Trust Units.\9\
\9\ Pursuant to Commentary .01 to proposed Amex Rule 1602, the
Exchange shall file separate proposals under Section 19(b) of the
Act before listing and trading separate and distinct Trust Units
designated on different underlying investments, commodities, assets and/or portfolios.
III. Comment Letter and Response
The Commission received one comment letter, submitted by the
MFA,\10\ which expressed concerns about the daily disclosure of the
Fund's holdings and net asset value (``NAV''). MFA believed that such
daily disclosure is proper in the case of traditional exchangetraded
funds (``ETFs'') because it facilitates the daily creation and
redemption of units, which lowers the tracking error between an ETF's
NAV and the trading price of such ETF.\11\ In the case of the Fund,
however, which does not provide for a continuous creation and
redemption process, MFA argued that disclosure of the Fund's assets has
no ``commercially reasonable purpose,'' and may frustrate continued
innovation and ultimately harm investors. The MFA believed that daily
disclosure could allow market participants to discover proprietary
trading strategies through reverse engineering. MFA argued that this
could result in frontrunning and also remove incentives for the
formation of new closedend funds and strategies.\12\ Likewise, daily
disclosure of the Fund's NAV, in the MFA's view, is not necessary and
may have negative consequences. MFA believed that closedend exchange
traded commodity pools such as the Fund should be subject to the same
NAV and portfolio holding disclosure requirements applicable to closed end exchangetraded registered investment companies.\13\
\10\ See MFA Letter, supra note 4.
\11\ See id. at 12.
\12\ See id. at 24.
\13\ See id. at 45. MFA noted that many closedend registered
investment companies report their NAV weekly and the Investment
Company Act of 1940 requires only quarterly portfolio holdings disclosure for closedend registered investment companies.
In its response,\14\ the Exchange disagreed with the MFA regarding
disclosure of the Fund's NAV. Amex argued that daily disclosure allows
investors to determine whether actual discounts or premiums to NAV per
share based on supply and demand and future expectation are consistent
with market fundamentals.\15\ With respect to the daily disclosure of
the Fund's holdings, Amex largely agreed with MFA's comments, noting
that it did not believe the daily portfolio holdings disclosure
requirement to be particularly helpful or necessary, and agreeing that
the Fund's structure does not provide for a mechanism to cause the market price per share to track NAV per share.\16\
\14\ See letter to Nancy M. Morris, Secretary, Commission, from
Jeffrey P. Burns, Vice President and Associate General Counsel, Exchange, dated November 7, 2007.
\15\ Id. at 3.
\16\ Id. at 12. Though the Exchange in its current letter
believed that there was significant justification to eliminate the
proposed requirement or daily portfolio holdings disclosure, the
Exchange did not file an amendment to propose such a change with respect to the Fund.
IV. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\17\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\18\ which
requires that the rules of an exchange be designed, among other things,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the public interest.
\17\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
\18\ 15 U.S.C. 78f(b)(5).
The Commission further believes that the proposal is consistent
with section 11A(a)(1)(C)(iii) of the Act,\19\ which sets forth
Congress's finding that it is in the public interest and appropriate
for the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in
securities. As described in the Notice, the Exchange represents that
futures, forwards and related exchange traded options, quotes and last
sale information for the commodity contracts held by the Fund are
widely disseminated through a variety of market data vendors worldwide,
including Bloomberg and Reuters. In addition, the Exchange further
represents that complete realtime data for such futures, forwards and
exchange traded options is available by subscription from Reuters and
Bloomberg. The relevant futures and forward exchanges also provide
delayed futures and forward contract information on current and past trading
[[Page 69261]]
sessions and market news free of charge on their respective Web sites.
The contract specifications for the futures and forward contracts are
also available from the futures and forward exchanges on their Web
sites as well as other financial informational sources. Finally, the
Web site for the Fund and the Manager, which will be publicly
accessible at no charge, will contain the following information: (a)
The prior business day's NAV and the reported closing price; (b)
calculation of the premium or discount of such price against such NAV; and (c) other applicable quantitative information.
\19\ 15 U.S.C. 78k1(a)(1)(C)(iii).
Furthermore, the Commission believes that the proposal to list and
trade the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately.
The Commission notes that the Exchange will, prior to listing, obtain a
representation from the Fund that the NAV per share will be calculated
daily and made available to all market participants at the same
time.\20\ In addition, the Exchange represents that disclosure of the
portfolio composition of the Fund will be made to all market
participants at the same time.\21\ Moreover, the Exchange notes that
each of the Manager, the Commodity Broker, and the Commodity Sub
Advisor has represented to the Exchange that it will establish firewall
procedures with respect to personnel who have access to information
concerning changes and adjustments to components of the Fund to prevent
the use and dissemination of material nonpublic information.\22\
Further, the trading of the Shares is subject to the specialist prohibitions in Proposed Amex Rule 1603.
\20\ See proposed Amex Rule 1602(a)(ii).
\21\ See Notice, supra note 3, at note 15.
\22\ See Notice at 54492.
The Commission also believes that the Exchange's trading halt rules are reasonably designed to prevent trading in the Shares when transparency is impaired. Proposed Amex Rule 1602(b)(ii) provides that the Exchange will halt trading in the Shares if the circuit breaker parameters of Amex Rule 117 have been reached. In exercising its discretion to halt or suspend trading in the Shares, the Exchange may consider factors such as those set forth in Amex Rule 918C(b) in addition to other factors that may be relevant. In particular, if the portfolio holdings and net asset value per share are not being disseminated as required, the Exchange may halt trading during the day in which the interruption to the dissemination of the portfolio holdings or net asset value per share occurs. If the interruption to the dissemination of the portfolio holdings or net asset value per share 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.
The Commission further believes that the trading rules and procedures to which the Shares will be subject pursuant to this proposal are consistent with the Act. The Exchange has represented that the Shares are equity securities subject to Amex's rules governing the trading of equity securities.
In support of this proposal, the Exchange has made the following representations:
(1) The Exchange's surveillance procedures are adequate to properly
monitor the trading of the Shares. Specifically, Amex will rely on its
existing surveillance procedures governing Index Fund Shares. In
addition, Amex has represented that it has information sharing
agreements with the InterContinental Exchange, the Chicago Mercantile
Exchange, and the New York Mercantile Exchange and may obtain market
surveillance information from other exchanges, including the Chicago
Board of Trade, London Metals Exchange, and the New York Board of Trade through the Intermarket Surveillance Group.
(2) Prior to the commencement of trading, the Exchange will inform
its members and member organizations in an Information Circular
regarding the prospectus or delivery requirements that apply to the
Shares. The Information Circular will also provide guidance with regard
to member firm compliance responsibilities when effecting transactions
in the Shares and highlighting the special risks and characteristics of
the Funds and Shares, as well as applicable Exchange rules. In
addition, the Information Circular will also reference the fact that
there is no regulated source of last sale information regarding
physical commodities and note the respective jurisdictions of the SEC and CFTC .
This approval order is based on the Exchange's representations.
Finally, the Commission believes that the daily disclosure requirements relating to the Fund's holdings and NAV are appropriate. Specifically, the Commission believes that daily disclosure of the Fund's NAV per share should aid investors in determining the degree to which the Shares are tracking the Fund's NAV per share. The Commission believes that the same is true for daily disclosure of the holdings of the Fund as such disclosure provides additional transparency. In addition, the Commission notes that the Exchange did not file an amendment seeking to change this disclosure requirement. Accordingly, the Commission does not believe that the commenter's assertions form a basis either to disapprove or to delay approval of the Exchange's proposed rule change and listing of the Fund.
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,\23\ that the proposed rule change (SRAmex200696), as modified, be, and it hereby is, approved.
\23\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\
\24\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E723747 Filed 12607; 8:45 am]
BILLING CODE 801101P