[Federal Register Volume 79, Number 220 (Friday, November 14, 2014)]
[Notices]
[Pages 68329-68330]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26948]
[[Page 68329]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73561; File No. SR-NYSEArca-2014-102]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Proposing
To List and Trade Shares of the Greenhaven Coal Fund Under NYSE Arca
Equities Rule 8.200, Commentary .02
November 7, 2014.
I. Introduction
On September 5, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade shares
(``Shares'') of the Greenhaven Coal Fund (the ``Fund''), pursuant to
NYSE Arca Equities Rule 8.200, Commentary .02. On September 18, 2014,
the Exchange filed Amendment No. 1 to the proposed rule change, which
superseded and replaced the proposed rule change as originally filed.
The proposed rule change, as modified by Amendment No. 1, was published
for comment in the Federal Register on September 25, 2014.\3\ The
Commission received no comments on the proposal. This order approves
the proposed rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 73149 (September 19,
2014), 79 FR 57640 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Exchange proposes to list and trade Shares pursuant to NYSE
Arca Equities Rule 8.200, Commentary .02, which permits the listing of
Trust Issued Receipts (``TIRs'').\4\ The Exchange has represented that
the Fund will meet the initial and continued listing requirements
applicable to TIRs in NYSE Arca Equities Rule 8.200 and Commentary .02
thereto.\5\ The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities.\6\
---------------------------------------------------------------------------
\4\ On September 5, 2014, the Fund filed with the Commission a
pre-effective amendment to its registration statement on Form S-1
under the Securities Act of 1933 (15 U.S.C. 77a) relating to the
Fund. (File No. 333-182301) (``Registration Statement'').
\5\ See Notice, supra note 3, 79 FR at 57645.
\6\ See id. at 57646.
---------------------------------------------------------------------------
The Fund is a commodity pool that is organized as a Delaware
statutory trust. The Fund's trustee is Christiana Trust, a division of
Wilmington Savings Fund Society, FSB, and the Fund's sponsor is
GreenHaven Coal Services, LLC (``Sponsor'').\7\ ALPS Distributors, Inc.
will be the Fund's marketing agent and distributor. Bank of New York
Mellon will be the Fund's administrator and transfer agent and will
calculate the net asset value (``NAV'') on a daily basis.
---------------------------------------------------------------------------
\7\ The Sponsor is registered with the Commodity Futures Trading
Commission as a commodity pool operator, and is approved as a member
of the National Futures Association. The Sponsor is a wholly-owned
subsidiary of GreenHaven Group, LLC and is affiliated with
GreenHaven Commodity Services, LLC, a commodities trading firm.
---------------------------------------------------------------------------
The Exchange states that the investment objective of the Fund is to
provide investors with exposure to the daily change in the price of
coal futures, before expenses and liabilities of the Fund. The Fund
intends to achieve this objective by investing substantially all of its
assets in a three-month strip \8\ of the nearest calendar quarter of
Rotterdam coal futures contracts (``Coal Futures'') traded on the CME's
Globex CME ClearPort clearing services trading platforms. All of the
Fund's positions in Coal Futures will be cleared by CME clearing member
firms. The Sponsor will seek to invest the Fund's cash collateral in
13-week U.S. Treasury Bills.
---------------------------------------------------------------------------
\8\ With regard to a ``three-month strip,'' ``strip'' is a term
used in futures markets to describe a series of delivery months for
an individual futures contract. A calendar strip is a three-month
strip of one of the four calendar quarters. For example, a three-
month calendar strip for the third quarter 2014 includes July 2014,
August 2014, and September 2014 coal futures contracts.
---------------------------------------------------------------------------
Additional information regarding the Fund, including the NAV
calculation, operation of the Fund, portfolio composition,
restrictions, risks, fees, expenses, and Share creations and redemption
can be found in the Notice and the Registration Statement.\9\
---------------------------------------------------------------------------
\9\ See supra notes 3 and 4, respectively.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission finds that the Exchange's
proposal to list and trade Shares of the Fund is consistent with the
Exchange Act and the rules and regulations thereunder applicable to a
national securities exchange.\10\ In particular, the Commission finds
that the proposed rule change is consistent with Section 6(b)(5) of the
Exchange Act,\11\ which requires, among other things, that the
Exchange's rules be designed to prevent fraudulent and manipulative
acts and practices, 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. The Commission also finds that the
proposal is consistent with Section 11A(a)(1)(C)(iii) of the Exchange
Act,\12\ which sets forth Congress' 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.
---------------------------------------------------------------------------
\10\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition and
capital formation. See 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
Quotation and last-sale for the Shares will be available via the
facilities of the Consolidated Tape Association.\13\ The Exchange's Web
site will provide daily trading volume, closing prices, and NAV for the
Shares.\14\ NYSE Euronext Global Index Feed and online information
services will provide the intraday Indicative Fund Value (``IFV'') on a
per-Share basis, which will be calculated by one or more major market
vendors every 15 seconds during the Exchange's Core Trading
Session.\15\ The Fund's Web site will post the daily NAV, as well as a
breakdown of the holdings of the Fund.\16\ The Web sites for the Fund
or the Exchange will also provide the following information: (1) The
current NAV per Share daily and the prior business day's NAV and the
reported closing price; (2) the midpoint of the bid-ask price in
relation to the NAV as of the time the NAV is calculated (``Bid-Ask
Price''); (3) calculation of the premium or discount of such price
against such NAV; (4) the bid-ask price of Shares determined using the
highest bid and lowest offer as of the time of calculation of the NAV;
(5) data in chart form displaying the frequency distribution of
discounts and premiums of the Bid-Ask Price against the NAV, within
appropriate ranges for each of the four previous calendar quarters; (6)
the prospectus; and (7) other applicable quantitative information.\17\
---------------------------------------------------------------------------
\13\ See Notice, supra note 3, 79 FR at 57645.
\14\ See id.
\15\ See id.
\16\ See id.
\17\ See id.
---------------------------------------------------------------------------
[[Page 68330]]
Quotation and last-sale information for the Coal Futures will be
widely disseminated through a variety of major market data vendors
worldwide.\18\ The spot price of coal is also available on a 24-hour
basis from major market vendors. The Exchange further represents that
complete real-time price (and volume) data for such contracts is
available by subscription from certain market data vendors.\19\ For
Coal Futures, the CME also provides delayed futures price (and volume)
information on current and past trading sessions and market news free
of charge on its Web site.\20\ The closing price and settlement prices
of Coal Futures are also readily available from the CME.\21\
---------------------------------------------------------------------------
\18\ See id.
\19\ See id.
\20\ See id.
\21\ See id.
---------------------------------------------------------------------------
The Commission believes that the proposal to list and trade Shares
is reasonably designed to promote fair disclosure of information that
may be necessary to price Shares appropriately and to prevent trading
when a reasonable degree of transparency cannot be assured. If the
Exchange becomes aware that the NAV with respect to the Shares is not
disseminated to all market participants at the same time, it will halt
trading in the Shares until such time as the NAV is available to all
market participants.\22\ If the IFV or value of Coal Futures is not
being disseminated as required, the Exchange may halt trading during
the day in which the disruption occurs; if the interruption 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.\23\ The Exchange will also consider halting trading for
the following reasons: (1) The extent to which trading is not occurring
in the Coal Futures; (2) if the creation or redemption of Shares is
suspended for a period that, in the judgment of the Exchange, may
detrimentally impact Exchange trading of the Shares; or (3) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present.\24\
---------------------------------------------------------------------------
\22\ See id. at 57646.
\23\ The Exchange also notes that the Exchange may halt trading
during the day in which an interruption of the dissemination of the
IFV or the value of the applicable futures contracts occurs. See id.
\24\ See id. Additionally, trading in Shares will be subject to
trading halts caused by extraordinary market volatility pursuant to
the Exchange's ``circuit breaker'' rule. See NYSE Arca Equities Rule
7.12.
---------------------------------------------------------------------------
Moreover, the trading of the Shares will be subject to NYSE Arca
Equities Rule 8.200, Commentary .02(e), which sets forth certain
restrictions on Equity Trading Permit (``ETP'') Holders acting as
registered market makers in TIRs to facilitate surveillance. The
Commission notes that the Financial Industry Regulatory Authority
(``FINRA''), on behalf of the Exchange, will communicate as needed
regarding trading in the Shares and the Coal Futures with other markets
and other entities that are members of the Intermarket Surveillance
Group (``ISG''), and FINRA may obtain trading information regarding
trading in the Shares and the Coal Futures from such markets and other
entities that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement.\25\
---------------------------------------------------------------------------
\25\ See Notice, supra note 3, 79 FR at 57646.
---------------------------------------------------------------------------
In support of this proposal, the Exchange has made representations,
including that:
(1) A minimum of 100,000 Shares for the Fund will be outstanding as
of the start of trading on the Exchange.\26\
---------------------------------------------------------------------------
\26\ See id. at 57645.
---------------------------------------------------------------------------
(2) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.\27\
---------------------------------------------------------------------------
\27\ See id. at 57646.
---------------------------------------------------------------------------
(3) Its trading surveillance procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws.\28\
---------------------------------------------------------------------------
\28\ See id.
---------------------------------------------------------------------------
(4) CME is a member of the ISG.\29\
---------------------------------------------------------------------------
\29\ See id.
---------------------------------------------------------------------------
(5) Prior to commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The risks involved
in trading the Shares during the Opening and Late Trading Sessions, or
a portion of the Core Trading Session, when an updated IFV will not be
calculated or publicly disseminated; (2) the procedures for purchases
and redemptions of Shares in Basket size (and that Shares are not
individually redeemable); (3) NYSE Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its ETP Holders to learn the
essential facts relating to every customer prior to trading the Shares;
(4) how information regarding the IFV is disseminated; (5) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (6) trading information.\30\
\30\ See id.
---------------------------------------------------------------------------
This order is based on the Exchange's representations.
For the forgoing reasons, the Commission believes the Exchange's
proposal to list and trade the Shares is consistent with the Exchange
Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\31\ that the proposed rule change (SR-NYSEArca-2014-102),
as modified by Amendment No. 1 thereto, be, and it hereby is, approved.
---------------------------------------------------------------------------
\31\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
---------------------------------------------------------------------------
\32\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-26948 Filed 11-13-14; 8:45 am]
BILLING CODE 8011-01-P