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Federal Register / Vol. 86, No. 209 / Tuesday, November 2, 2021 / Notices
research providers, such as the Glass Lewis Proxy Review. The Sponsor will also use compliance with precious metals industry standards as an objective factor in its evaluation of mining companies. Each mining company with high ESG ratings and favorable recommendations from proxy voting research providers that complies with precious metals industry standards will be designated as an ESG Approved Mining Company.
Second, the Sponsor will evaluate individual mine site locations of each ESG Approved Mining Company. Each mine location of an ESG Approved Mining Company will then be evaluated by the Sponsor as follows: 1 The performance of each mine against various indicators in the Mining Association of Canadas Towards Sustainable Mining standards; 2 using the ESG factors described above; and 3
whether such mine is in a heightened risk or conflict area. Each mining location of that ESG Approved Mining Company that a the Sponsor determines to meet the Mining Association of Canadas Towards Sustainable Mining standards and the ESG factors, and b is not in a heightened risk or conflict area will be designated as an ESG Approved Mine.
Only ESG Approved Mines will be permitted to supply the raw material for ESG Approved Gold to the Mint, which will then refine the raw material to create ESG Approved Gold for the Trust.
This means that the provenance of ESG
Approved Gold will be known to the Trust.
Heightened risk or conflict areas include areas where:
Human rights abuses, forced or child labor, war crimes or genocide are prevalent;
mines are involved in direct or indirect support to non-state actors that use arms without legal authority;
mines transport gold or supplies along routes that involve payment of illegal taxes or extortions; and mines are involved in money laundering or terrorism financing.
The Sponsor will be responsible for any costs associated with researching, establishing and maintaining the ESG
Criteria, assessing mining companies and mines against certain of the ESG
Criteria and the diligence of the Trusts ESG Approved Gold Holdings. The Sponsor will conduct research on each mining company using its in-house investment professionals, and may use the services of outside consultants.
The Trust will not trade in gold futures, options or swap contracts on any futures exchange or over the counter OTC. The Trust will not
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hold or trade in commodity futures contracts, commodity interests, or any other instruments regulated by the Commodity Exchange Act. The Trusts Cash Custodian may hold cash temporarily received from the sale of gold. The Trusts assets will only consist of ESG Approved Gold, unallocated gold and cash.
Operation of the Gold Market The global trade in gold consists of OTC transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options. The ESG Criteria and the processes and methods for refining and using ESG Approved Gold for the Trusts operations have been developed by the Sponsor specifically for the Trust, and thus no ESG Approved Gold that meets the ESG Criteria has been produced. Therefore, there have been no market transactions in ESG Approved Gold. The Trust is not aware of a separate market for ESG Approved Gold and does not believe that one will develop. ESG Approved Gold will be a subset of allocated gold bullion that is already currently refined by the Mint for its customers.
The OTC gold market includes spot, forward, and option and other derivative transactions conducted on a principal-to-principal basis. While this is a global, nearly 24-hour per day market, its main centers are London, New York, and Zurich.
According to the Exchange, most OTC
market trades are cleared through London. The LBMA plays an important role in setting OTC gold trading industry standards. A London Good Delivery Bar as described below, which is acceptable for settlement of any OTC transaction, will be acceptable for delivery to the Trust in connection with the issuance of Creation Units defined below.
The most significant gold futures exchange in the U.S. is COMEX, operated by Commodities Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc., and a subsidiary of the Chicago Mercantile Exchange Group the CME Group.
Other commodity exchanges include the Tokyo Commodity Exchange TOCOM, the Multi Commodity Exchange Of India MCX, the Shanghai Futures Exchange, ICE Futures US the ICE, and the Dubai Gold &
Commodities Exchange. The CME
Group and ICE are members of the Intermarket Surveillance Group ISG.
The London Gold Bullion Market According to the Exchange, most trading in physical gold is conducted on
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the OTC market, predominantly in London. LBMA coordinates various OTC-market activities, including clearing and vaulting, acts as the principal intermediary between physical gold market participants and the relevant regulators, promotes good trading practices and develops standard market documentation. In addition, the LBMA promotes refining standards for the gold market by maintaining the London Good Delivery List, which identifies refiners of gold that have been approved by the LBMA. In the OTC
market, gold bars that meet the specifications for weight, dimensions, fineness or purity, identifying marks including the assay stamp of an LBMAacceptable refiner and appearance described in The Good Delivery Rules for Gold and Silver Bars published by the LBMA are referred to as London Good Delivery Bars. A London Good Delivery Bar typically called a 400
ounce bar must contain between 350
and 430 fine troy ounces of gold 1 troy ounce = 31.1034768 grams, with a minimum fineness or purity of 995
parts per 1,000 99.5%, be of good appearance and be easy to handle and stack. The fine gold content of a gold bar is calculated by multiplying the gross weight of the bar expressed in units of 0.025 troy ounces by the fineness of the bar. A London Good Delivery Bar must also bear the stamp of one of the refiners identified on the London Good Delivery List.
Following the enactment of the Financial Markets Act 2012, the Prudential Regulation Authority of the Bank of England is responsible for regulating most of the financial firms that are active in the bullion market, and the Financial Conduct Authority is responsible for consumer and competition issues. Trading in spot, forwards and wholesale deposits in the bullion market is subject to the NonInvestment Products NIPS Code adopted by market participants.
Creation and Redemption of Shares The Trust will create and redeem Shares on a continuous basis in one or more blocks of 25,000 Shares a block of 25,000 Shares is called a Creation Unit. As described below, the Trust will issue Shares in Creation Units to certain authorized participants Authorized Participants on an ongoing basis.
Creation Units may be created or redeemed only by Authorized Participants. Orders must be placed by 3:59 p.m. Eastern Time E.T.. The day on which a Trust receives a valid purchase or redemption order is the order date. In connection with creations
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