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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices Operation of the Trust and Fund 25
The investment objective of the Fund will be for the Shares to reflect the performance of the price of gold bullion, less the expenses of the Funds operations. Shares of the Fund will represent units of fractional undivided beneficial interest in and ownership of the net assets of the Fund.
The Fund seeks to predominantly hold responsibly sourced gold bullion, defined as London Good Delivery gold bullion bars produced after January 2012 in accordance with London Bullion Market Associations LBMA
Responsible Gold Guidance the Guidance. From time to time, in certain circumstances a portion of the Funds assets may include pre-2012
LBMA gold bullion i.e., London Good Delivery gold bars produced prior to January 2012 which was not subject to the Guidance, including, for example, due to availability constraints. In those circumstances, the Gold Custodian will seek to replace any pre-2012 LBMA gold bullion in the Fund Allocated Account with LBMA good delivery bars produced after January 2012 as soon as is practicable.
The Guidance is a mandatory governance framework for the responsible sourcing of gold applicable to LBMA approved good delivery refiners that is designed to promote the integrity of the global supply chain for the wholesale gold markets. Among other things, the Guidance includes measures to address environmental issues, avoid materials from conflictafflicted areas, and combat money laundering, financing of terrorism, and human rights abuses, including child labor. The Guidance requires each LBMA good delivery refinery to undergo a comprehensive audit, at least annually, in order to confirm compliance with the LBMAs minimum requirements related to the responsible sourcing of gold and to publicly report results audits are made available on the LBMA website. The audits, among other aspects, focus on the refiners management systems and controls, and whether they are robust and appropriate to addressing the refiners risk profile.
Additional information regarding the LBMAs efforts to promote ethical sourcing of gold and a copy of the current version of the Guidance is available at https www.lbma.org.uk/
responsible-sourcing.
The Fund will not trade in gold futures, options, or swap contracts on 25 The description of the operation of the Trust, the Fund, the Shares, and the gold market contained herein are based, in part, on the Registration Statement. See note 4, supra.

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any futures exchange or over-thecounter OTC. The Fund will not hold or trade in commodity futures contracts, commodity interests, or any other instruments regulated by the Commodity Exchange Act. The Funds Cash Custodian may hold cash proceeds from gold sales and other cash received by the Fund.
The Shares are intended to constitute a simple and cost-efficient means of gaining investment benefits similar to those of holding gold bullion directly, by providing investors an opportunity to participate in the responsibly sourced gold market through an investment in the Shares, instead of the traditional means of purchasing, storing and insuring gold.
Operation of the Gold Market The global gold trading market consists of OTC transactions in spot, forwards, and options and other derivatives, together with exchangetraded futures and options.
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 Registration Statement, 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 delivery in settlement of any OTC transaction, will be acceptable for delivery to the Fund, as discussed below.
The most significant gold futures exchange 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, the Shanghai Gold 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 Registration Statement, most trading in physical gold is conducted on the OTC market and is predominantly cleared through London.
In addition to coordinating market activities, the LBMA acts as the principal point of contact between the
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market and its regulators. A primary function of the LBMA is its involvement in the promotion of refining standards by maintenance of the London Good Delivery Lists, which are the lists of LBMA accredited melters and assayers of gold. The LBMA also coordinates market clearing and vaulting, promotes good trading practices and develops standard documentation.
The term loco London refers to gold bars physically held in London that meet the specifications for weight, dimensions, fineness or purity, identifying marks including the assay stamp of an LBMA acceptable refiner, and appearance set forth in the good delivery rules promulgated by the LBMA from time to time. Gold bars meeting these requirements are known as London Good Delivery Bars.
The unit of trade in London is the troy ounce, whose conversion between grams is: 1,000 grams = 32.1507465 troy ounces and 1 troy ounce = 31.1034768
grams. A London Good Delivery Bar is acceptable for delivery in settlement of a transaction on the OTC market.
Typically referred to as 400-ounce bars, a London Good Delivery Bar must contain between 350 and 430 fine troy ounces of gold, 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.
Creation and Redemption of Shares According to the Registration Statement, the Fund will create and redeem Shares on a continuous basis in one or more Creation Units. A Creation Unit equals a block of 50,000 Shares.
The Fund will issue Shares in Creation Units to certain authorized participants Authorized Participants on an ongoing basis. Each Authorized Participant must be a registered brokerdealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions, a participant in The Depository Trust Company DTC, and have entered into an agreement with the Administrator the Participant Agreement, and has established an unallocated gold account with the Gold Custodian or another London Precious Metals Clearing Limited clearing bank.
Creation Units may be created or redeemed only by Authorized Participants. The creation and redemption of Creation Units is only
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