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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Notices and records see, e.g., Rule 4.2, the registered Market Maker in CommodityBased Trust Shares shall make available to the Exchange such books, records or other information pertaining to transactions by such entity or registered or non-registered employee affiliated with such entity for its or their own accounts for trading the underlying physical commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives, as may be requested by the Exchange.
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.
The Exchange will halt trading in the Shares under the conditions specified in BZX Rule 11.18. Trading 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 the bitcoin underlying the Shares; or 2 whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares also will be subject to Rule 14.11e4Eii, which sets forth circumstances under which trading in the Shares may be halted.

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Trading Rules The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchanges existing rules governing the trading of equity securities. BZX will allow trading in the Shares during all trading sessions on the Exchange. The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in BZX
Rule 11.11a, the minimum price variation for quoting and entry of orders in securities traded on the Exchange is $0.01 where the price is greater than $1.00 per share or $0.0001 where the price is less than $1.00 per share.
Surveillance The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of the Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws.
Trading of the Shares through the Exchange will be subject to the Exchanges surveillance procedures for derivative products, including Commodity-Based Trust Shares. The
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issuer has represented to the Exchange that it will advise the Exchange of any failure by the Trust or the Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19g1 of the Exchange Act, the Exchange will surveil for compliance with the continued listing requirements. If the Trust or the Shares are not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 14.12.
The Exchange may obtain information regarding trading in the Shares and Bitcoin Futures via ISG, from other exchanges who are members or affiliates of the ISG, or with which the Exchange has entered into a comprehensive surveillance sharing agreement.65
Information Circular Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares.
Specifically, the Information Circular will discuss the following: i The procedures for the creation and redemption of Baskets and that the Shares are not individually redeemable;
ii BZX Rule 3.7, which imposes suitability obligations on Exchange members with respect to recommending transactions in the Shares to customers;
iii how information regarding the IIV
and the Trusts NAV are disseminated;
iv the risks involved in trading the Shares outside of Regular Trading Hours 66 when an updated IIV will not be calculated or publicly disseminated;
v the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and vi trading information.
In addition, the Information Circular will advise members, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Shares. Members purchasing the Shares for resale to investors will deliver a prospectus to such investors. The Information Circular will also discuss any exemptive, noaction and interpretive relief granted by the Commission from any rules under the Act.
2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6b
of the Act 67 in general and Section 6b5 of the Act 68 in particular in that it is 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.
The Commission has approved numerous series of Trust Issued Receipts,69 including Commodity-Based Trust Shares,70 to be listed on U.S.
national securities exchanges. In order for any proposed rule change from an exchange to be approved, the Commission must determine that, among other things, the proposal is consistent with the requirements of Section 6b5 of the Act, specifically including: i The requirement that a national securities exchanges rules are designed to prevent fraudulent and manipulative acts and practices; 71 and ii the requirement that an exchange proposal be designed, in general, to protect investors and the public interest.
The Exchange believes that the proposal is, in particular, designed to protect investors and the public interest.
With the growth of OTC Bitcoin Funds over the past year, so too has grown the potential risk to U.S. investors.
Significant and prolonged premiums and discounts, significant premium/
discount volatility, high fees, insufficient disclosures, and technical hurdles are putting U.S. investor money at risk on a daily basis, via risks that could potentially be eliminated through access to a bitcoin ETP. As such, the Exchange believes that this proposal acts to limit the risk to U.S. investors that are increasingly seeking exposure to bitcoin through the elimination of significant and prolonged premiums and discounts, significant premium/
discount volatility, the reduction of management fees through meaningful competition, the avoidance of risks associated with investing in operating companies that are imperfect proxies for bitcoin exposure, and protection from risk associated with custodying spot bitcoin by providing direct, 1-for-1
exposure to bitcoin in a regulated, transparent, exchange-traded vehicle designed to reduce the likelihood of 67 15

U.S.C. 78f.
U.S.C. 78fb5.
Exchange Rule 14.11f.
70 Commodity-Based Trust Shares, as described in Exchange Rule 14.11e4, are a type of Trust Issued Receipt.
71 See note 54.
68 15

69 See
65 For a list of the current members and affiliate members of ISG, see www.isgportal.com.
66 Regular Trading Hours is the time between 9:30
a.m. and 4:00 p.m. Eastern Time.

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