Notice: Self-Regulatory Organizations Proposed Rule Changes

21074 Federal Register / Vol. 71, No.
78 / Monday, April 24, 2006 / Notices
proposed rule change at the end of a 15- For the Commission, by the Division of ‘‘Shares’’) of the iShares GSCI
day comment period.46 Market Regulation, pursuant to delegated Commodity—Indexed Trust (‘‘Trust’’),
authority.47 which will issue units of beneficial
IV. Solicitation of Comments Nancy M. Morris, interest representing fractional
Interested persons are invited to Secretary. undivided beneficial interests in the net
submit written data, views and [FR Doc. E6–6073 Filed 4–21–06; 8:45 am] assets of the Trust. NYSE Rules 1300B
arguments concerning the foregoing, BILLING CODE 8010–01–P and 1301B are set forth below, with new
including whether the proposed rule text underlined:
change, as amended, is consistent with Rule 1300B
the Act. Comments may be submitted by SECURITIES AND EXCHANGE
any of the following methods: COMMISSION Commodity Trust Shares
Electronic Comments [Release No. 34–53659; File No. SR–NYSE– (a) The provisions of this Rule 1300B
2006–17] series apply only to Commodity Trust
• Use the Commission’s Internet Shares. The term ‘‘Commodity Trust
comment form (http://www.sec.gov/ Self-Regulatory Organizations; New Shares’’ as used in this Rule and in Rule
rules/sro.shtml); or York Stock Exchange LLC; Notice of 1301B means a security that (a) is
Filing of Proposed Rule Change and issued by a trust (‘‘Trust’’) which (i) is
• Send an e-mail to rule- Amendment No. 1 Thereto To List and
comments@sec.gov. Please include File a commodity pool that is managed by a
Trade Shares of the iShares GSCI commodity pool operator registered as
Number SR–NYSE–2006–20 on the Commodity Indexed Trust Under New
subject line. such with the Commodity Futures
Rules 1300B and 1301B, et seq. Trading Commission, and (ii) which
Paper Comments April 17, 2006. holds positions in futures contracts on
• Send paper comments in triplicate Pursuant to section 19(b)(1) of the a specified commodity index, or
to Nancy M. Morris, Secretary, Securities Exchange Act of 1934 interests in a commodity pool which, in
Securities and Exchange Commission, (‘‘Act’’),1 and Rule 19b–4 thereunder,2 turn, holds such positions; (b) when
Station Place, 100 F Street, NE., notice is hereby given that on March 7, aggregated in some specified minimum
Washington, DC 20549–1090. 2006, the New York Stock Exchange number may be surrendered to the Trust
LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with by the beneficial owner to receive
All submissions should refer to File positions in futures contracts on a
the Securities and Exchange
Number SR–NYSE–2006–20. This file specified index and cash or short term
Commission (‘‘Commission’’) the
number should be included on the securities. The term ‘‘futures contract’’
proposed rule change as described in
subject line if e-mail is used. To help the is commonly known as a ‘‘contract of
Items I, II, and III below, which items
Commission process and review your have been prepared by the NYSE. On sale of a commodity for future delivery’’
comments more efficiently, please use March 24, 2006, the Exchange filed set forth in section 2(a) of the
only one method. The Commission will Amendment No. 1 to the proposed rule Commodity Exchange Act. While
post all comments on the Commission’s change.3 The Commission is publishing Commodity Trust Shares are not
Internet Web site (http://www.sec.gov/ this notice to solicit comments on the technically Investment Company Units
rules/sro.shtml). Copies of the proposed rule change, as amended, from and thus are not covered by Rule 1100,
submission, all subsequent interested persons. all other rules that reference
amendments, all written statements ‘‘Investment Company Units,’’ as
with respect to the proposed rule I. Self-Regulatory Organization’s
defined and used in Para. 703.16 of the
change that are filed with the Statement of the Terms of Substance of
Listed Company Manual, including, but
Commission, and all written the Proposed Rule Change
not limited to Rules 13, 36.30, 98, 104,
communications relating to the The NYSE proposes to list and trade 460.10, 1002, and 1005 shall also apply
proposed rule change between the under new NYSE Rules 1300B, et seq. to Commodity Trust Shares. When these
Commission and any person, other than shares (‘‘Commodity Trust Shares’’ or rules reference Investment Company
those that may be withheld from the Units, the word ‘‘index’’ (or derivative or
public in accordance with the 47 17 CFR 200.30–3(a)(12). similar words) will be deemed to be the
provisions of 5 U.S.C. 552, will be 1 15 U.S.C. 78s(b)(1).
applicable commodity index and the
available for inspection and copying in 2 17 CFR 240.19b–4.
word ‘‘security’’ (or derivative or similar
3 In Amendment No. 1, the NYSE made some
the Commission’s Public Reference words) will be deemed to be
technical and clarifying changes. In addition, the
Room. Copies of such filing also will be Exchange added Supplementary Material .10 to its ‘‘Commodity Trust Shares’’.
available for inspection and copying at proposed Rule 1301B, applying the provisions of its (b) As is the case with Investment
the principal office of the NYSE. All proposed Rules 1300B(b) and 1301B to certain
Company Units, paragraph (m) of the
comments received will be posted securities listed on the Exchange pursuant to
section 703.19 (‘‘Other Securities’’) of the NYSE Guidelines to Rule 105 shall also apply
without change; the Commission does Listed Company Manual, in addition to the to Commodity Trust Shares.
not edit personal identifying securities in this proposal. Specifically, NYSE Rules Specifically, Rule 105(m) shall be
information from submissions. You 1300B(b) and 1301B would apply to securities
deemed to prohibit an equity specialist,
should submit only information that listed under section 703.19 where the price of such
securities is based in whole or part on the price of his member organization, other member,
you wish to make available publicly. All a commodity or commodities, a commodities index, allied member or approved person in
submissions should refer to File or any futures contracts or other derivatives based such member organization or officer or
Number SR–NYSE–2006–20 and should thereon. Examples of the securities to which these
employee thereof from acting as a
be submitted on or before May 9, 2006. securities will apply are the subjects of File No. SR–
market maker or functioning in any
rmajette on PROD1PC67 with NOTICES
NYSE–2006–16 (proposal to list and trade Index-

Linked Securities of Barclays Bank PLC (‘‘Notes’’) capacity involving market-making
46 The NYSE has requested accelerated approval linked to the performance of the Dow Jones-AIG responsibilities in the physical
of this proposed rule change prior to the 30th day Commodity Index Total Return TM and File No. SR–
after the date of publication of the notice of the NYSE–2006–20 (proposal to list and trade Notes
commodities included in, or options,
filing thereof, following the conclusion of a 15-day linked to the performance of GSCI Total Return futures or options on futures on, the
comment period. April 10 Telephone Conference. Index). index underlying an issue of Commodity
VerDate Aug<31>2005 14:56 Apr 21, 2006 Jkt 208001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\24APN1.SGM 24APN1
Federal Register / Vol. 71, No. 78 / Monday, April 24, 2006 / Notices 21075
Trust Shares, or any other derivatives in which a member organization acting II. Self-Regulatory Organization’s
based on such index or based on any as specialist, directly or indirectly, Statement of the Purpose of, and
commodity included in such index. controls trading activities, or has a Statutory Basis for, the Proposed Rule
However, an approved person of an direct interest in the profits or losses Change
equity specialist entitled to an thereof, which has not been reported to In its filing with the Commission, the
exemption from Rule 105(m) under Rule the Exchange as required hereby. NYSE included statements concerning
98 may act in a market making (b) In addition to the existing the purpose of, and basis for, the
capacity, other than as a specialist in obligations under Exchange rules proposed rule change as amended and
the same issue of Commodity Trust regarding the production of books and discussed any comments it received on
Shares in another market center, in records (see, e.g., Rule 476(a)(11)), the the proposed rule change. The text of
physical commodities included in, or member organization acting as these statements may be examined at
options, futures or options on futures the places specified in Item IV below.
specialist in Commodity Trust Shares
on, the index underlying an issue of The Exchange has prepared summaries,
shall make available to the Exchange
Commodity Trust Shares, or any other set forth in sections A, B and C below,
such books, records or other information
derivatives based on such index or of the most significant aspects of such
pertaining to transactions by such entity
based on any commodity included in statements.
or any member, allied member,
such index.
(c) Except to the extent that specific approved person, registered or non- A. Self-Regulatory Organization’s
provisions in this Rule govern, or unless registered employee affiliated with such Statement of the Purpose of, and
the context otherwise requires, the entity for its or their own accounts in Statutory Basis for, the Proposed Rule
provisions of all Exchange Rules and options, futures or options on futures Change
policies shall be applicable to the on, an index underlying an issue of
1. Purpose
trading of Commodity Trust Shares on Commodity Trust Shares in which the
member organization acts as specialist; The Exchange proposes to list and
the Exchange. Pursuant to Exchange
or in any commodity included in such trade Commodity Trust Shares under
Rule 3 (‘‘Security’’), Commodity Trust
index; or in any other derivatives based new NYSE Rules 1300B et seq. The
Shares are included within the Trust, a Delaware statutory trust, will
definition of ‘‘security’’ or ‘‘securities’’ on such index or based on any
commodity included in such index, as issue Shares that represent fractional
as those terms are used in the rules of undivided beneficial interests in its net
the Exchange. may be requested by the Exchange.
assets. Substantially all of the assets of
(c) In connection with trading any the Trust consist of its holdings of the
Rule 1301B
physical commodity included in, or limited liability company interests of a
Commodity Trust Shares: Securities options, futures or options on futures commodity pool (‘‘Investing Pool
Accounts and Orders of Specialists on, an index underlying an issue of Interests’’), which are the only securities
(a) The member organization acting Commodity Trust Shares in which the in which the Trust may invest. That
as specialist in Commodity Trust Shares member organization acts as specialist, commodity pool, iShares GSCI
is obligated to conduct all trading in the or any other derivatives based on such Commodity—Indexed Investing Pool
Shares in its specialist account, subject index (including Commodity Trust LLC (‘‘Investing Pool’’), holds long
only to the ability to have one or more Shares) or based on any commodity positions in futures contracts on the
investment accounts, all of which must included in such index, the specialist GSCI Excess Return Index (‘‘CERFs’’),
be reported to the Exchange. (See Rules registered as such in an issue of which are listed on the Chicago
104.12 and 104.13.) In addition, the Commodity Trust Shares shall not use Mercantile Exchange (‘‘CME’’), and will
member organization acting as any material nonpublic information post margin in the form of cash or short-
specialist in Commodity Trust Shares received from any person associated term securities to collateralize these
must file with the Exchange in a manner with a member or employee of such futures positions. According to the
prescribed by the Exchange and keep person regarding trading by such person Trust’s registration statement,4 it is the
current a list identifying all accounts for or employee in the options, futures or objective of the Trust that the
trading in the physical commodities options on futures on an index performance of the Shares will
included in, or options, futures or underlying an issue of Commodity Trust correspond generally to the performance
options on futures on, an index Shares in which the member of the GSCI Total Return Index
underlying an issue of Commodity Trust organization acts as specialist; or in any (‘‘Index’’) before payment of the Trust’s
Shares in which the member other derivatives on such index; or in and the Investing Pool’s expenses and
organization acts as specialist, or any any commodity included in such index liabilities. The Trust and the Investing
other derivatives based on such index or or any derivatives on such commodity. Pool are each commodity pools
based on any commodity included in Supplementary Material: managed by a commodity pool operator
such index, which the member registered as such with the Commodity
organization acting as specialist may .10 The provisions of Rule 1300B (b) Futures Trading Commission (‘‘CFTC’’).
have or over which it may exercise and Rule 1301B shall apply to securities Neither the Trust nor the Investing Pool
investment discretion. No member listed on the Exchange pursuant to is an investment company registered
organization acting as specialist in Section 703.19 (‘‘Other Securities’’) of under the Investment Company Act of
Commodity Trust Shares shall trade in the Listed Company Manual where the 1940 (‘‘Investment Company Act’’).
physical commodities included in, or price of such securities is based in The Shares are intended to constitute
options, futures or options on futures whole or part on the price of (a) a a relatively cost-effective means of
on, an index underlying an issue of commodity or commodities, (b) any achieving investment exposure to the
Commodity Trust Shares in which the futures contracts or other derivatives

member organization acts as specialist, based on a commodity or commodities; 4 The sponsor of the Trust (‘‘Sponsor’’), Barclays
or any other derivatives based on such or (c) any index based on either (a) or Global Investors International, Inc., on behalf of the
(b) above. Trust, filed the Form S–1 (the ‘‘Registration
index or based on any commodity Statement’’) on July 22, 2005, as amended. See
included in such index, in an account * * * * * Registration No. 333–126810.
21076 Federal Register / Vol. 71, No. 78 / Monday, April 24, 2006 / Notices
performance of the Index, which is Company, a banking corporation that is Sponsor’’),8 a subsidiary of The
intended to reflect the performance of a not affiliated with the Sponsor or the Goldman Sachs Group Inc. The Index
diversified group of commodities. Trustee.7 Sponsor is a broker-dealer.9
Although the Shares will not be the The GSCI–ER reflects the return of an
b. The Investing Pool uncollaterized investment in the
exact equivalent of an investment in the
underlying futures contracts and The Investing Pool will hold long contracts comprising the GSCI, and in
Treasury securities represented by the positions in CERFs, which are cash- addition incorporates the economic
Index, the Shares are intended to settled futures contracts listed on the effect of ‘‘rolling’’ the contracts included
provide investors with an alternative CME that have a term of approximately in the GSCI as they near expiration.
way of participating in the commodities five years after listing and whose ‘‘Rolling’’ a futures contract means
market. settlement at expiration is based on the closing out a position in an expiring
value of the GSCI Excess Return Index futures contract and establishing an
a. The Sponsor and Trustee equivalent position in the contract on
(‘‘GSCI-ER’’) at that time. The Investing
The Sponsor’s primary business Pool will also earn interest on the assets the same commodity with the next
function is to act as Sponsor and used to collateralize its holdings of expiration date. The Index reflects the
commodity pool operator of the Trust CERFs. Trading on the CME Globex return of the GSCI–ER, together with the
and manager of the Investing Pool electronic trading platform of CERFs return on specified U.S. Treasury
(‘‘Manager’’), as discussed below.5 The commenced effective March 12, 2006 for securities that are deemed to have been
advisor to the Investing Pool trade date March 13, 2006. held to collateralize a hypothetical long
(‘‘Advisor’’) is Barclays Global Fund Each CERF is a contract that provides position in the futures contracts
Advisors, a California corporation and for cash settlement, at expiration, based comprising the GSCI. If Goldman, Sachs
an indirect subsidiary of Barclays Bank upon the final settlement value of the & Co. (‘‘Goldman Sachs’’) ceases to
PLC. GSCI–ER at the expiration of the maintain the GSCI–ER, the Trust,
As Manager, Barclays Global Investors contract multiplied by a fixed dollar through the Investing Pool, may seek
International, Inc. will serve as multiplier. The final settlement value is investment results that correspond
commodity pool operator of the determined for this purpose. generally to the Index by holding a
Investing Pool and be responsible for its Accordingly, a position in CERFs fully-collateralized investment in a
administration. The Manager will provides the holder with the positive or successor index, or an index that, in the
arrange for and pay the costs of negative return on the GSCI–ER during opinion of the Manager, is reasonably
organizing the Investing Pool. The the period in which the position is held. similar to the GSCI–ER.10
Manager has delegated some of its The Trust, through the Investing Pool,
On a daily basis, most market
responsibilities for administering the will be a passive investor in CERFs and
participants with positions in CERFs are
Investing Pool to the Administrator, the cash or Short-Term Securities 11
obligated to pay, or entitled to receive,
Investors Bank & Trust Company, which posted as margin to collateralize the
cash (known as ‘‘variation margin’’) in
in turn, has employed the Investing Pool an amount equal to the change in the 8 Telephone conference between Michael
Administrator and the Tax daily settlement level of the CERF from Cavalier, Assistant General Counsel, NYSE, and
Administrator (Pricewaterhouse the preceding trading day’s settlement Florence Harmon, Senior Special Counsel,
Coopers) to maintain various records on level (or, initially, the contract price at Commission, on April 13, 2006 (‘‘April 13
behalf of the Investing Pool. Telephone Conference’’).
which the position was entered into). 9 Id.
The trustee of the Trust (‘‘Trustee’’) is Specifically, if the daily settlement price 10 In the event the Trust utilizes any index that
Barclays Global Investors, N.A., a of the contract increases over the is a successor to or similar to the GSCI–ER or the
national banking association affiliated previous day’s price, the seller of the GSCI Total Return Index, the Exchange will file a
with the Sponsor. The Trustee is contract must pay the difference to the proposed rule change pursuant to Rule 19b–4 under
responsible for the day-to-day the Act. Such filing would address, among other
buyer, and if the daily settlement price things, the characteristics of the successor or
administration of the Trust. Day-to-day is less than the previous day’s price, the substitute index and the Exchange’s surveillance
administration includes: (i) Processing buyer of the contract must pay the procedures applicable to such index. Unless
orders for the creation and redemption difference to the seller. The Investing approved for continued trading, the Exchange
of Baskets (as described below, with would commence delisting proceedings. See
Pool, however, and certain other ‘‘Continued Listing Criteria,’’ infra. Telephone
each Basket an aggregation of 50,000 categories of investors, will be required conference between Michael Cavalier, Assistant
Shares); (ii) coordinating with the to deposit initial margin equal to 100% General Counsel, NYSE, and Florence Harmon,
Manager of the Investing Pool the of the value of the CERF position at the Senior Special Counsel, Commission, on April 10,
receipt and delivery of consideration 2006 (‘‘April 10 Telephone Conference’’).
time it is established. The Exchange will also file a proposed rule
transferred to, or by, the Trust in The GSCI–ER is calculated based on change pursuant to Rule 19b–4 if GSCI substantially
connection with each issuance and the same commodities included in the changes either the Index component selection
redemption of Baskets; and (iii) Goldman Sachs Commodity Index methodology or the weighting methodology. In
calculating the net asset value of the addition, the Exchange will file a proposed rule
(‘‘GSCI’’), which is a production- change pursuant to Rule 19b–4 whenever GSCI
Trust on each Business Day.6 The weighted index of the prices of a adds a new component to the Index using pricing
Trustee has delegated these diversified group of futures contracts on information from a market with which the
responsibilities to the Trust physical commodities. The GSCI, the
Exchange does not have a previously existing
Administrator, Investors Bank & Trust information sharing agreement or switches to using
GSCI–ER and the Index are pricing information from such a market with
5 Barclays Global Investors International, Inc. is a
administered, calculated, and published respect to an existing component when such
by Goldman, Sachs & Co. (‘‘Index component constitutes more than 10% of the
commodity pool operator registered with the CFTC. weight of the Index. Unless approved for continued
6 The Trust Registration Statement defines trading, the Exchange would commence delisting
‘‘Business Day’’ as any day (1) on which none of 7 Except as otherwise specifically noted, the proceedings. See ‘‘Continued Listing Criteria,’’
the following occurs: (a) The NYSE is closed for information provided in this proposed rule filing infra. April 10 Telephone Conference.
regular trading, (d) the CME is closed for regular relating to the Trust and the Shares, commodities 11 ‘‘Short-Term Securities’’ means U.S. Treasury
trading, or (c) the Federal Reserve transfer system markets, and related information is based entirely Securities or other short-term securities and similar
is closed for cash wire transfers, or (2) the Trustee on information included in the Registration securities, in each case that are eligible as margin
determines that it is able to conduct business. Statement. deposits under the rules of the CME.
Investing Pool’s CERF positions. Neither GSCI or the positions or other assets the value of the contracts fluctuate. For
the Trust nor the Investing Pool will held by the Investing Pool. most market participants, the initial
engage in any activities designed to margin requirement for CERFs is
c. Futures Contracts on the GSCI–ER
obtain a profit from, or to ameliorate generally expected to be 3% to 5%.
losses caused by, changes in the value The assets of the Investing Pool will Certain market participants (known as
of CERFs or securities posted as margin. consist of CERFs and cash or Short- ‘‘100% margin participants’’), however,
The Investing Pool, and some other Term Securities posted as margin to will be required to deposit with their
types of market participants, will be collateralize the Investing Pool’s CERF FCM initial margin in an amount equal
required to deposit margin with a value positions. Futures contracts and options to 100% of the value of the CERF on the
equal to 100% of the value of each CERF on futures contracts on the GSCI, which date the position is established. The
position at the time it is established. does not reflect the excess return FCM, in turn, will be required to deliver
Those market participants not subject to embedded in the GSCI-ER, have been to the CME clearing house initial margin
the 100% margin requirement are traded on the CME since 1992. CERFs in a specified amount and pledge to the
required to deposit margin generally are listed and traded separately from the clearing house, pursuant to a separate
with a value of 3% to 5% of the GSCI futures contracts and options on custody arrangement, an amount equal
established position. Interest paid on futures contracts. to the remainder of the 100% margin
the collateral deposited as margin, net of CERFs trading is subject to the rules amount posted by 100% margin
expenses, will be reinvested by the of the CME. According to the participants, either from amounts
Investing Pool or, at the Trustee’s Registration Statement, CERFs trade on posted by those 100% margin
discretion, may be distributed from time GLOBEX, the CME’s electronic trading participants or from its own assets. The
to time to the Shareholders. The system, and do not trade through open separate custody arrangement will be
Investing Pool’s profit or loss on its outcry on the floor of the CME.12 either an account with the FCM or a
CERF positions should correlate with Transactions in CERFs are cleared third party custody account.
increases and decreases in the value of through the CME clearing house by the As a result of these arrangements, a
the GSCI–ER, although this correlation trader’s futures commission merchant 100% margin participant buying a CERF
will not be exact. The interest on the (‘‘FCM’’) acting as its agent. Under these will be subject to substantially greater
collateral deposited by the Investing clearing arrangements, the CME clearing initial margin requirements than other
Pool as margin, together with the house becomes the buyer to each market participants, but will not be
returns corresponding to the member FCM representing a seller of the required to pay any additional amounts
performance of the GSCI–ER, is contract and the seller to each member to its FCM as variation margin if the
expected to result in a total return for FCM representing a buyer of the value of the CERFs declines. Instead, the
the Investing Pool that corresponds contract. As a result of these clearing FCM will be obligated to make variation
generally, but is not identical, to the arrangements, each trader holding a margin payments to the clearinghouse
Index. Differences between the returns position in CERFs is subject to the credit in respect of CERFs held by 100%
of the Investing Pool and the Index may risk of the CME clearing house and the margin participants, which it will
be based on, among other factors, any FCM carrying its position in CERFs. withdraw from the separate custody
differences between the return on the Each CERF is a contract that provides account (and, in turn, from the 100%
assets used by the Investing Pool to for cash settlement, at expiration, based margin posted by those participants).
collateralize its CERF positions and the upon the final settlement value of the If the daily settlement price increases,
U.S. Treasury rate used to calculate the GSCI–ER at the expiration of the the FCM will receive variation margin
return component of the Index, timing contract, multiplied by a fixed dollar from the clearinghouse for the account
differences, differences between the multiplier. The final settlement value is of the 100% margin participant, which
weighting of the Investing Pool’s determined for this purpose on the date it will hold in the separate custody
proportion of assets invested in CERFs set forth in the Trust prospectus. On a account for the benefit of 100% margin
versus the Index, and the payment of daily basis, most market participants participants. The buyer will not,
expenses and liabilities by the Investing with positions in CERFs are obligated to however, be entitled to receive this
Pool. The Trust’s net asset value will pay, or entitled to receive, cash (known variation margin from its FCM (until the
reflect the performance of the Investing as ‘‘variation margin’’) in an amount liquidation or final settlement of its
Pool, its sole investment. equal to the change in the daily CERF position). The buyer will be
The Investing Pool will be managed settlement level of the CERF from the entitled to receive interest or other
by the Advisor, which will invest all of preceding trading day’s settlement level income on the assets it has deposited as
the Investing Pool’s assets in long (or, initially, the contract price at which margin or that are credited to the
positions in CERFs and post margin in the position was entered into). custody account on its behalf from time
the form of cash or Short-Term Specifically, if the daily settlement price to time.
Securities to collateralize the CERF of the contract increases over the Upon liquidation or settlement of a
positions. Any cash that the Investing previous day’s price, the seller of the CERF, a 100% margin participant will
Pool accepts as consideration from the contract must pay the difference to the receive from its FCM its initial margin
Trust for Investing Pool Interests will be buyer, and if the daily settlement price deposit, adjusted for variation margin
used to purchase additional CERFs, in is less than the previous day’s price, the paid or received by the FCM with
an amount that the Advisor determines buyer of the contract must pay the respect to the contract during the time
will enable the Investing Pool to achieve difference to the seller. it was held by the participant (or the
investment results that correspond with Futures contracts also typically proceeds from liquidation of any
the Index, and to collateralize the require deposits of initial margin as well investments made with such funds for
CERFs. According to the Registration as payments of daily variation margin as the benefit of the participant under the
Statement, the Advisor will not engage terms of its custody arrangement with
12 Trading hours for CERFs on GLOBEX will be
in any activities designed to obtain a the carrying FCM).
as follows: Sunday, 6 p.m. to 2:40 p.m. (next day)
profit from, or to ameliorate losses (New York time); Monday to Thursday, 6 p.m. to
The 100% margin participants will
caused by, changes in value of any of 2:40 p.m. (next day) and 3 p.m. to 5 p.m. (New York include any market participant that is:
the commodities represented by the time). (i) An investment company registered
under the Investment Company Act; or ‘‘Authorized Participant’’ (defined physical commodities that satisfy
(ii) an investment fund, commodity below) requesting the creation of specified criteria. The GSCI reflects the
pool, or other similar type of pooled additional Baskets typically will transfer level of commodity prices at a given
trading vehicle (other than a pension CERFs and cash (or, in the discretion of time and is designed to be a measure of
plan or fund) that is offered to the the Trustee, Short-Term Securities in the performance over time of the
public pursuant to an effective lieu of cash) to the Trust in return for markets for these commodities. The
registration statement filed under the Shares.13 commodities represented in the GSCI
Securities Act of 1933, regardless of The Trust will simultaneously are those physical commodities on
whether it is also registered under the contribute to the Investing Pool the which active and liquid contracts are
Investment Company Act , and that has CERFs (and any cash or securities) traded on trading facilities in major
its principal place of business in the received from the Authorized industrialized countries. The
United States. Participant in return for an increase in commodities included in the GSCI are
The Investing Pool will be a 100% its Investing Pool Interests. If an EFP is
weighted, on a production basis, to
margin participant. The Investing Pool executed in connection with the
reflect the relative significance (in the
will satisfy the 100% margin redemption of one or more Baskets, an
view of the Index Sponsor, in
requirement by depositing with the Authorized Participant will transfer to
Clearing FCM cash or Short-Term the Trust the interests being redeemed consultation with its Policy Committee
Securities with a value equal to 100% and the Trust will transfer to the described below) of those commodities
of the value of each long position in Authorized Participant CERFs, cash or to the world economy. The fluctuations
CERFs. Short-Term Securities. In order to obtain in the level of the GSCI are intended
According to the Registration the CERFs, cash or Short-Term generally to correlate with changes in
Statement, CERFs differ from traditional Securities to be transferred to the the prices of those physical
futures contracts in another significant Authorized Participant, the Trust will commodities in global markets.
respect. In contrast to other types of redeem an equivalent portion of its The Index Sponsor makes the official
futures contracts, which are typically interest in the Investing Pool Interests. calculations of the value of the Index.14
listed with monthly, bimonthly or At present, this calculation is performed
quarterly expirations, CERFs will be d. The Index and the GSCI–ER
continuously and is reported on Reuters
listed only with approximately five-year The Index and the GSCI–ER were Page GSCI and is updated on Reuters at
expirations. A buyer or seller of CERFs established in May of 1991. The Index least every fifteen seconds during NYSE
will be able to trade CERFs on the reflects the value of an investment in trading hours for the Shares and during
market maintained by the CME and will the GSCI–ER together with a Treasury
business hours on each Business Day on
consequently be able to liquidate its bill return. The GSCI–ER reflects the
which the offices of Goldman, Sachs in
position at any time, subject to the returns that are potentially available
New York City are open for business. In
existence of a liquid market. If a party through a rolling uncollaterized
investment in the contracts comprising the event that the Exchange is open for
to a CERF wishes to hold its position to
the GSCI. business on a day that is not a GSCI
expiration, however, it will be necessary
Because futures contracts have Business Day, the Exchange will not
to maintain the position for up to five
scheduled expirations, or delivery permit trading of the Shares on that
years. According to the Registration
Statement, as a CERF nears expiration, months, as one contract nears expiration day.15 The settlement prices for the
it is anticipated, but there can be no it becomes necessary to close out the Index and GSCI–ER are also reported on
assurance, that the CME will list an position in that delivery month and Reuters Page GSCI at the end of each
additional CERF with an approximately establish a position in the next available GSCI Business Day and on Bloomberg
five-year expiration. delivery month. This process is referred page GSCIER index.
Creation and redemption of interests to as ‘‘rolling’’ the position forward. The
e. The Policy Committee
in the Trust, and the corresponding GSCI–ER is designed to reflect the
creation and redemption of interests in return from rolling each contract The Index Sponsor has established a
the Investing Pool, will generally be included in the GSCI in this manner Policy Committee to assist it with the
effected through transactions in into the next available delivery month operation of the GSCI.16 The principal
‘‘exchanges of futures for physicals,’’ or as it nears expiration. This is purpose of the Policy Committee is to
‘‘EFPs.’’ EFPs involve contemporaneous accomplished by selling the position in advise the Index Sponsor with respect
transactions in futures contracts and the the first delivery month and purchasing to, among other things, the calculation
underlying cash commodity or a closely a position of equivalent value in the of the GSCI, the effectiveness of the
related commodity. In a typical EFP, the second delivery month. If the price of GSCI as a measure of commodity futures
buyer of the futures contract sells the the second contract is lower than the market performance and the need for
underlying commodity to the seller of price of the first contract, the ‘‘rolling’’
changes in the composition or the
the futures contract in exchange for a process results in a greater quantity of
methodology of the GSCI. The Policy
cash payment reflecting the value of the the second contract being acquired for
Committee acts solely in an advisory
commodity and the relationship the same value. Conversely, if the price
of the second contract is higher than the and consultative capacity. All decisions
between the price of the commodity and
price of the first contract, the ‘‘rolling’’ with respect to the composition,
the related futures contract. According
to the Registration Statement, in the process results in a smaller quantity of
14 Goldman, Sachs & Co., which is a broker/
context of CERFs, CME rules permit the the second contract being acquired for
dealer, calculates the GSCI and GSCI–ER. April 13
execution of EFPs consisting of the same value. Telephone Conference.
simultaneous purchases (sales) of CERFs The GSCI itself is an index on a
15 See ‘‘Calculation of the Index,’’ infra.
and sales (purchases) of Shares. This production-weighted basket of principal 16 The GSCI is a separate index from the Index;
mechanism will generally be used by however, the value of the Index (and GSCI–ER
13 Authorized Participants will require access to index) is derived from the GSCI, as described
the Trust in connection with the a commodities account in connection with creation/ below. The component selection for the GSCI
creation and redemption of Baskets. redemption activity of Shares. April 13 Telephone would obviously affect the Index and the GSCI–ER.
Specifically, it is anticipated that an Conference. April 13 Telephone Conference.
calculation and operation of the GSCI (ii) The commodity must be the more from the date the determination is
are made by the Index Sponsor.17 subject of a contract that: made, as well as for all expiration or
The Policy Committee generally meets (a) Is denominated in U.S. dollars; settlement dates during that five-month
in October of each year. Prior to the (b) Is traded on or through an period.
meeting, the Index Sponsor determines exchange, facility or other platform, (v) Volume data with respect to the
the commodities to be included in the referred to as a ‘‘trading facility,’’ that contract must be available for at least
GSCI for the following calendar year has its principal place of business or the three months immediately preceding
and the weighting factors for each operations in a country that is a member the date on which the determination is
commodity. The Policy Committee’s of the Organization for Economic made.
members receive the proposed Cooperation and Development and: (vi) A contract that is not included in
composition of the GSCI in advance of (1) Makes price quotations generally the GSCI at the time of determination
the meeting and discuss the available to its members or participants and that is based on a commodity that
composition at the meeting. The Index (and, if the Index Sponsor is not such is not represented in the GSCI at that
Sponsor also consults the Policy a member or participant, to the Index time must, in order to be added to the
Committee on any other significant Sponsor) in a manner and with a GSCI at that time, have a total dollar
matters with respect to the calculation frequency that is sufficient to provide value traded, over the relevant period,
and operation of the GSCI. The Policy reasonably reliable indications of the as the case may be and annualized, of
Committee may, if necessary or level of the relevant market at any given at least $15 billion. The total dollar
practicable, meet at other times during point in time; value traded is the dollar value of the
the year as issues arise that warrant its (2) Makes reliable trading volume total quantity of the commodity
consideration. information available to the Index underlying transactions in the relevant
The Policy Committee currently Sponsor with at least the frequency contract over the period for which the
consists of eight persons, three of whom required by the Index Sponsor to make calculation is made, based on the
are employees of the Index Sponsor or the monthly determinations; average of the daily contract reference
its affiliates and five of whom are not (3) Accepts bids and offers from prices on the last day of each month
affiliated with the Index Sponsor. multiple participants or price providers; during the period.
and (vii) A contract that is already
f. Composition of the GSCI (4) Is accessible by a sufficiently included in the GSCI at the time of
Because the value of the Index (which broad range of participants. determination and that is the only
the Shares track) reflects the futures (iii) The price of the relevant contract contract on the relevant commodity
contracts included in the GSCI, the that is used as a reference or benchmark included in the GSCI must, in order to
Exchange describes below the index by market participants, referred to as the continue to be included in the GSCI
methodology for the GSCI.18 In order to ‘‘daily contract reference price,’’ after that time, have a total dollar value
be included in the GSCI, a contract must generally must have been available on a traded, over the relevant period, as the
satisfy the following eligibility criteria: continuous basis for at least two years case may be and annualized, of at least
(i) The contract must: prior to the proposed date of inclusion $5 billion and at least $10 billion during
(a) Be in respect of a physical in the GSCI. In appropriate at least one of the three most recent
commodity and not a financial circumstances, however, the Index annual periods used in making the
commodity; Sponsor, in consultation with its Policy determination.
(b) Have a specified expiration or Committee, may determine that a (viii) A contract that is not included
term, or provide in some other manner shorter time period is sufficient or that in the GSCI at the time of determination
for delivery or settlement at a specified historical daily contract reference prices and that is based on a commodity on
time, or within a specified period, in the for that contract may be derived from which there are one or more contracts
future; and daily contract reference prices for a already included in the GSCI at that
(c) Be available, at any given point in similar or related contract. The daily time must, in order to be added to the
time, for trading at least five months contract reference price may be (but is GSCI at that time, have a total dollar
prior to its expiration or such other date not required to be) the settlement price value traded, over the relevant period,
or time period specified for delivery or or other similar price published by the as the case may be and annualized, of
settlement. relevant trading facility for purposes of at least $30 billion.
17 As mentioned above, Goldman, Sachs & Co., a
margining transactions or for other (ix) A contract that is already
broker-dealer, is the Index Sponsor of the GSCI, the
purposes. included in the GSCI at the time of
GSCI–ER and the Index, and in that capacity the (iv) At and after the time a contract is determination and that is based on a
company calculates those indices. Goldman, Sachs included in the GSCI, the daily contract commodity on which there are one or
& Co. has represented to the Trust Sponsor that reference price for that contract must be more contracts already included in the
they: (i) Have or will, prior to issuance of the
Shares, put in place policies reasonably designed to
published between 10 a.m. and 4 p.m., GSCI at that time must, in order to
prevent the use and dissemination by Goldman, New York time, on each Business Day continue to be included in the GSCI
Sachs & Co. employees in violation of applicable relating to that contract by the trading after that time, have a total dollar value
laws, rules and regulations, of material, non-public facility on or through which it is traded
information relating to changes in the composition
traded, over the relevant period, as the
or method of computation or calculation of the
and must generally be available to all case may be and annualized, of at least
Index; and (ii) periodically check the application of members of, or participants in, that $10 billion and at least $20 billion
such policies as they related to Goldman, Sachs & trading facility (and, if the Index during at least one of the three most
Co. employees directly responsible for such Sponsor is not such a member or
changes. In addition, the Policy Committee
recent annual periods used in making
members are subject to written policies with respect participant, to the Index Sponsor) on the the determination.
same day from the trading facility or (x) A contract that is:
to material, non-public information. April 13

Telephone Conference. through a recognized third-party data (a) Already included in the GSCI at
18 Telephone conference between Michael
vendor. Such publication must include, the time of determination must, in order
Cavalier, Assistant General Counsel, NYSE, and
Florence Harmon, Senior Special Counsel,
at all times, daily contract reference to continue to be included after that
Commission, on April 14, 2006 (‘‘April 14 prices for at least one expiration or time, have a reference percentage dollar
Telephone Conference’’). settlement date that is five months or weight of at least 0.10%. The ‘‘reference
percentage dollar weight’’ of a contract first, provided that no further contracts entry, between the pairs of contract
represents the current value of the will be included if such inclusion expirations included in the GSCI that at
quantity of the underlying commodity would result in the portion of the GSCI any given point in time will be involved
that is included in the Index at a given attributable to that commodity in the rolls to be effected in the next
time. This figure is determined by exceeding a particular level. three roll periods; and (ii) a contract that
multiplying the contract production (b) If additional contracts could be is not included in the GSCI at the time
weight of a contract, or ‘‘CPW,’’ by the included with respect to several of determination must, in order to be
average of its daily contract reference commodities at the same time, that added to the GSCI at that time, have a
prices on the last day of each month procedure is first applied with respect reference percentage dollar weight of at
during the relevant period. These to the commodity that has the smallest least 1.00%.
amounts are summed for all contracts portion of the GSCI attributable to it at
the time of determination. Subject to the The contracts currently included in
included in the GSCI and each the GSCI are all futures contracts traded
contract’s percentage of the total is then other eligibility criteria described above,
the contract with the highest total on the New York Mercantile Exchange,
determined. The CPW of a contract is its Inc. (‘‘NYM’’), the ICE Futures (‘‘ICE’’),
weight in the Index. quantity traded on that commodity will
be included. Before any additional the CME, the Chicago Board of Trade
(b) Not included in the GSCI at the
contracts on the same commodity or on (‘‘CBT’’), the Coffee, Sugar & Cocoa
time of determination must, in order to
any other commodity are included, the Exchange, Inc. (‘‘CSC’’), the New York
be added to the GSCI at that time, have
portion of the GSCI attributable to all Cotton Exchange (‘‘NYC’’), the Kansas
a reference percentage dollar weight of
commodities is recalculated. The City Board of Trade (‘‘KBT’’), the
at least 0.75%.
(xi) In the event that two or more selection procedure described above is COMEX Division of the New York
contracts on the same commodity satisfy then repeated with respect to the Mercantile Exchange, Inc. (‘‘CMX’’) and
the eligibility criteria: contracts on the commodity that then the London Metal Exchange (‘‘LME’’).
(a) Such contracts will be included in has the smallest portion of the GSCI The futures contracts currently
the GSCI in the order of their respective attributable to it. included in the GSCI, their percentage
total quantity traded during the relevant Beginning in 2007, in order for a dollar weights (as of January 20, 2006),
period (determined as the total quantity contract to be included in the GSCI: (i) their market symbols and the exchanges
of the commodity underlying The trading facility in which the on which they are traded, trading hours
transactions in the relevant contract), contract is traded must allow market (New York time), Average Daily Trading
with the contract having the highest participants to execute spread Volume (‘‘ADTV’’) for 2005, and units
total quantity traded being included transactions, through a single order per contract are as follows:
PDW 01/20/06 Market sym- Trading Fa- ADTV (con- Units

Commodity (percent) bol cility tracts) (per contract
Crude Oil ................................................................................ 30.05 CL ................ NYM ............ 237,535 1,000 bbls
Brent Crude Oil ...................................................................... 13.81 LCO ............. ICE .............. 114,628 1,000 gal
Natural Gas ............................................................................ 10.30 NG ............... NYM ............ 76,139 10,000 gal
Heating Oil ............................................................................. 8.16 HO ............... NYM ............ 76,139 10,000 gal
Gasoline ................................................................................. 7.84 HU ............... NYM ............ 52,406 42,000 gal
Gas Oil ................................................................................... 4.41 LGO ............. ICE .............. 41,561 100 Mtons
Live Cattle .............................................................................. 2.88 LC ................ CME ............ 23,173 40,000 lbs
Wheat ..................................................................................... 2.47 W ................. CBT ............. 38,838 5,000 bushels
Aluminum ............................................................................... 2.88 IA ................. LME ............. 120,568 25 Mtons
Corn ....................................................................................... 2.46 C ................. CBT ............. 101,308 5,000 bushels
Copper ................................................................................... 2.37 IC ................ LME ............. 76,116 25 Mtons
Soybeans ............................................................................... 1.77 S .................. CBT ............. 73,957 5,000 bushels
Lean Hogs ............................................................................. 2.00 LH ............... CME ............ 16,449 40,000 lbs
Gold ....................................................................................... 1.73 GC ............... CMX ............ 63,232 100 oz
Sugar ..................................................................................... 1.30 SB ............... CSC ............. 51,822 112,000 lbs
Cotton .................................................................................... 0.99 CT ............... NYC ............. 15,335 50,000 lbs
Red Wheat ............................................................................. 0.90 KW .............. KBT ............. 14,613 5,000 bushels
Coffee .................................................................................... 0.80 KC ............... CSC ............. 15,888 37,500 lbs
Standard Lead ....................................................................... 0.29 IL ................. LME ............. 16,128 25 Mtons
Feeder Cattle ......................................................................... 0.78 FC ............... CME ............ 4,042 40,000 lbs
Zinc ........................................................................................ 0.54 IZ ................. LME ............. 42,070 25 Mtons
Primary Nickel ........................................................................ 0.82 IN ................ LME ............. 13,812 6 Mtons
Cocoa ..................................................................................... 0.23 CC ............... CSC ............. 10,291 10 Mtons
Silver ...................................................................................... 0.20 SI ................. CMX ............ 22,017 5,000 oz
The hours of trading (New York time)

of the commodities in the chart above
are as follows:
Commodity Trading facility Trading hours (NY time)

Crude Oil ..................................................................................................................................... NYM ...................... 10 am–2:30 pm.

Brent Crude Oil ........................................................................................................................... ICE ........................ 8 pm–5:00 pm (next day).
Natural Gas ................................................................................................................................. NYM ...................... 10 am–2:30 pm.
Heating Oil ................................................................................................................................... NYM ...................... 10:05 am–2:30 pm.
Commodity Trading facility Trading hours (NY time)
Gasoline ...................................................................................................................................... NYM ...................... 10:05 am–2:30 pm.

Gas Oil ........................................................................................................................................ ICE ........................ 8 pm–5:00 pm (next day).
Live Cattle ................................................................................................................................... CME ...................... 10:05 am–2 pm.
Wheat .......................................................................................................................................... CBT ....................... 10:30 am–2:15 pm.
Aluminum ..................................................................................................................................... LME ....................... 6:55 am–12 pm.
Corn ............................................................................................................................................. CBT ....................... 10:30 am–2:15 pm.
Copper ......................................................................................................................................... LME ....................... 7 am–12 pm.
Soybeans ..................................................................................................................................... CBT ....................... 10:30 am–2:15 pm.
Lean Hogs ................................................................................................................................... CME ...................... 9:10 am–1 pm.
Gold ............................................................................................................................................. CMX ...................... 8:20 am–1:30 pm.
Sugar ........................................................................................................................................... CSC ...................... 9 am–12 pm.
Cotton .......................................................................................................................................... NYC ...................... 10:30 am–2:15 pm.
Red Wheat .................................................................................................................................. KBT ....................... 10:30 am–2:15 pm.
Coffee .......................................................................................................................................... CSC ...................... 9:15 am–12:30 pm.
Standard Lead ............................................................................................................................. LME ....................... 7:05 am–11:50 am.
Feeder Cattle ............................................................................................................................... CME ...................... 10:05 am–2 pm.
Zinc .............................................................................................................................................. LME ....................... 7:10 am–11:55 am.
Primary Nickel ............................................................................................................................. LME ....................... 7:10 am–11:55 am.
Cocoa .......................................................................................................................................... CSC ...................... 8 am–11:50 am.
Silver ............................................................................................................................................ CMX ...................... 8:25 am–1:25 pm.
The quantity of each of the contracts relative to the production of the no longer satisfy that criteria, if any,
included in the GSCI is determined on commodity. will be deleted.
the basis of a five-year average, referred In addition, the Index Sponsor The Index Sponsor, in consultation
to as the ‘‘world production average,’’ of performs this calculation on a monthly with its Policy Committee, also
the production quantity of the basis and, if the multiple of any contract determines whether modifications in
underlying commodity as published by is below the prescribed threshold, the the selection criteria or the methodology
the United Nations Statistical Yearbook, for determining the composition and
composition of the GSCI is reevaluated,
the Industrial Commodity Statistics weights of and for calculating the GSCI
based on the criteria and weighting
Yearbook and other official sources. are necessary or appropriate in order to
procedure described above. This
However, if a commodity is primarily a assure that the GSCI represents a
procedure is undertaken to allow the
regional commodity, based on its measure of commodity market
GSCI to shift from contracts that have
production, use, pricing, transportation performance. The Index Sponsor has the
or other factors, the Index Sponsor, in lost substantial liquidity into more
discretion to make any such
consultation with its Policy Committee, liquid contracts during the course of a modifications, in consultation with its
may calculate the weight of that given year. As a result, it is possible that Policy Committee.
commodity based on regional, rather the composition or weighting of the
GSCI will change on one or more of g. Total Dollar Weight of the GSCI
than world, production data. At present,
natural gas is the only commodity the these monthly evaluation dates. The The total dollar weight of the GSCI is
weights of which are calculated on the likely circumstances under which the the sum of the dollar weight of each of
basis of regional production data, with Index Sponsor would be expected to the underlying commodities. The dollar
the relevant region defined as North change the composition of the Index weight of each such commodity on any
America. during a given year, however, are: (i) A given day is equal to:
The five-year moving average is substantial shift of liquidity away from • The daily contract reference price;
updated annually for each commodity a contract included in the Index as • Multiplied by the appropriate CPW;
included in the GSCI, based on the most described above; or (ii) an emergency, and
recent five-year period (ending such as a natural disaster or act of war • During a roll period, the
approximately two years prior to the or terrorism, that causes trading in a appropriate ‘‘roll weights’’ (discussed
date of calculation and moving particular contract to cease permanently below).
backwards) for which complete data for or for an extended period of time. In The daily contract reference price
all commodities is available. The CPWs either event, the Index Sponsor will used in calculating the dollar weight of
used in calculating the GSCI are derived consult with the Policy Committee in each commodity on any given day is the
from world or regional production connection with the changes to be made most recent daily contract reference
averages, as applicable, of the relevant and will publish the nature of the price made available by the relevant
commodities, and are calculated based changes, through Web sites, news media trading facility, except that the daily
on the total quantity traded for the or other outlets, with as much prior contract reference price for the most
relevant contract and the world or notice to market participants as is recent prior day will be used if the
regional production average, as reasonably practicable. Moreover, exchange is closed or otherwise fails to
applicable, of the underlying regardless of whether any changes have publish a daily contract reference price
commodity. However, if the volume of occurred during the year, the Index on that day. In addition, if the trading
trading in the relevant contract, as a Sponsor reevaluates the composition of facility fails to make a daily contract
multiple of the production levels of the the GSCI, in consultation with its Policy reference price available or publishes a
commodity, is below specified Committee, at the conclusion of each daily contract reference price that, in
thresholds, the CPW of the contract is year, based on the above criteria. Other the reasonable judgment of the Index
reduced until the threshold is satisfied. commodities that satisfy that criteria, if Sponsor, reflects manifest error, the
This is designed to ensure that trading any, will be added to the GSCI. relevant calculation will be delayed
in each contract is sufficiently liquid Commodities included in the GSCI that until the price is made available or
corrected; provided, that, if the price is hypothetical investment in the GSCI at number of Shares outstanding at the
not made available or corrected by 4 a rate equal to the interest rate on a time the calculation is made.
p.m. New York time, the Index Sponsor specified U.S. Treasury bill. The NAV for each Business Day on
may, if it deems that action to be which the NYSE is open for regular
j. Valuation of CERFs; Computation of trading will be distributed through
appropriate under the circumstances,
Trust’s Net Asset Value major market data vendors and will be
determine the appropriate daily contract
reference price for the applicable futures On each Business Day on which the published online at http://
contract in its reasonable judgment for NYSE is open for regular trading, as www.iShares.com, or any successor
purposes of the relevant GSCI soon as practicable after the close of thereto. The Trust will update the NAV
calculation.19 regular trading of the Shares on the as soon as practicable after each
NYSE (normally, 4:15 p.m., New York subsequent NAV is calculated.
h. Calculation of the GSCI–ER time), the Trustee will determine the net
The value of the GSCI-ER on any GSCI asset value (‘‘NAV’’) of the Trust and k. Creations of Baskets
Business Day is equal to the product of: per share as of that time. The Trust will offer Shares on a
(i) The value of the GSCI-ER on the The Trustee will value the Trust’s continuous basis on each business day,
immediately preceding GSCI Business assets based upon the determination by but only in Baskets consisting of 50,000
Day multiplied by (ii) one plus the sum the Manager, which may act through the Shares. Baskets will be typically issued
of the contract daily return 20 on the Investing Pool Administrator, of the only in exchange for an amount of
GSCI Business Day on which the NAV of the Investing Pool. The Manager CERFs and cash (or, in the discretion of
calculation is made. The value of the will determine the NAV of the Investing the Trustee, Short-Term Securities in
GSCI-ER has been normalized such that Pool as of the same time that the Trustee lieu of cash) equal to the Basket Amount
its hypothetical level on January 2, 1970 determines the NAV of the Trust. for the Business Day on which the
was 100. The Manager will value the Investing creation order was received by the
Pool’s long position in CERFs on the Trustee. The Basket Amount for a
i. Calculation of the Index basis of that day’s announced CME Business Day will have a per Share
The value of the Index on any GSCI settlement price for the CERF. The value value equal to the NAV as of such day.
Business Day is equal to the product of: of the Investing Pool’s CERF position However, orders received by the Trustee
(i) The value of the Index on the (including any related margin) will after 2:40 p.m., New York time, will be
immediately preceding GSCI Business equal the product of: (i) The number of treated as received on the next following
Day multiplied by (ii) one plus the sum CERF contracts owned by the Investing Business Day. The Trustee will notify
of the contract daily return and the Pool and (ii) the settlement price on the the Authorized Participants of the
Treasury bill return on the GSCI date of calculation. If there is no Basket Amount on each Business Day
Business Day on which the calculation announced CME settlement price for the prior to the opening of the Exchange.
is made, multiplied by (iii) one plus the CERF on a Business Day, the Manager Before the Trust will issue any
Treasury bill return for each non-GSCI will use the most recently announced Baskets to an Authorized Participant,
Business Day since the immediately CME settlement price unless the that Authorized Participant must deliver
preceding GSCI Business Day. The Manager determines that that price is to the Trustee a written creation order
Treasury bill return is the return on a inappropriate as a basis for evaluation. indicating the number of Baskets it
The daily settlement price for the CERF intends to purchase and providing other
19 If such actions by the Index Sponsor are
is established by the CME shortly after details with respect to the procedures by
implemented on more than a temporary basis, the which the Baskets will be transferred.
Exchange will contact the Commission Staff and, as
the close of trading in Chicago at 2:40
necessary, file a proposed rule change pursuant to p.m. New York time on each trading The Trustee will acknowledge the
Rule 19b-4 seeking Commission approval to day.21 creation order unless it or the Sponsor
continue to trade the Shares. Unless approved for Once the value of the CERFs and decides to refuse the order as described
continued trading, the Exchange would commence interest earned on any assets posted as
delisting proceedings. See ‘‘Continued Listing
in the prospectus.
Criteria,’’ infra; April 10 Telephone Conference. margin and any other assets of the Upon the transfer of the required
20 The contract daily return on any given day is Investing Pool has been determined, the consideration of CERFs and cash (or, in
equal to the sum, for each of the commodities Manager will subtract all accrued the discretion of the Trustee, Short-
included in the GSCI, of the applicable daily expenses and liabilities of the Investing Term Securities in lieu of cash) in the
contract reference price on the relevant contract
multiplied by the appropriate CPW and the
Pool as of the time of calculation in amounts, and to the accounts, specified
appropriate ‘‘roll weight,’’ divided by the total order to calculate the net asset value of by the Trustee, and the Trustee’s
dollar weight of the GSCI on the preceding day, the Investing Pool. The Manager, or the transaction fee per Basket (described
minus one. Investing Pool Administrator on its below), the Trustee will deliver the
The ‘‘roll weight’’ of each commodity reflects the behalf, will then calculate the value of appropriate number of Baskets to the
fact that the positions in contracts must be
liquidated or rolled forward into more distant the Trust’s Investing Pool Interest and Depository Trust Company (‘‘DTC’’)
contract expirations as they near expiration. If provide this information to the Trustee. account of the Authorized Participant.
actual positions in the relevant markets were rolled Once the value of the Trust’s In limited circumstances and with the
forward, the roll would likely need to take place Investing Pool Interests have been approval of the Trustee, Baskets may be
over a period of days. Since the GSCI is designed
to replicate the performance of actual investments determined and provided to the Trustee, created for cash, in which case the
in the underlying contracts, the rolling process the Trustee will subtract all accrued Authorized Participant will be required
incorporated in the GSCI also takes place over a expenses and other liabilities of the to pay any additional issuance costs,
period of days at the beginning of each month, Trust from the total value of the assets including the costs to the Investing Pool
referred to as the ‘‘roll period.’’ On each day of the
roll period, the ‘‘roll weights’’ of the first nearby of the Trust, in each case as of the of establishing the corresponding CERF
calculation time. The resulting amount position.
contract expirations on a particular commodity and

the more distant contract expiration into which it is the NAV of the Trust. The Trustee Only Authorized Participants can
is rolled are adjusted, so that the hypothetical will determine the NAV per Share by transfer the required consideration and
position in the contract on the commodity that is
included in the GSCI is gradually shifted from the dividing the NAV of the Trust by the receive Baskets in exchange. Authorized
first nearby contract expiration to the more distant Participants may act for their own
contract expiration. 21 April 10 Telephone Conference. accounts or as agents for broker-dealers,
custodians, and other securities market providing other details with respect to plus any expenses, taxes or charges
participants that wish to create or the procedures by which the required (such as stamp taxes or stock transfer
redeem Baskets. An Authorized Basket Amount will be transferred. The taxes or fees) related to the creation or
Participant will have no obligation to Trustee will acknowledge the surrender for redemption. The Trustee
create or redeem Baskets for itself or on redemption order unless it or the will be entitled to reimburse itself from
behalf of other persons. An order for one Sponsor decides to refuse the the assets of the Trust for all expenses
or more baskets may be placed by an redemption order as described in the and disbursements incurred by it for
Authorized Participant on behalf of Trust prospectus. extraordinary services it may provide to
multiple clients. The Sponsor and the After the delivery by the Authorized the Trust or in connection with any
Trustee will maintain a current list of Participant to the Trustee’s DTC account discretionary action the Trustee may
Authorized Participants. of the total number of Shares to be take to protect the Trust or the interests
No Shares will be issued unless and redeemed by an Authorized Participant, of the holders to the extent not paid by
until the Trustee receives confirmation the Trustee will deliver to the order of the Sponsor.
that: (i) The required consideration has the redeeming Authorized Participant
been received in the account or redemption proceeds consisting of n. Dissemination of Information
accounts specified by the Trustee; and CERFs and cash (or, in the discretion of Relating to the Shares, Trust Holdings,
(ii) the Manager confirms that Investing the Trustee, Short-term Securities in and Relevant Indices
Pool Interests with an initial value equal lieu of cash). In connection with a The Web site for the Trust (http://
to the consideration received for the redemption order, the redeeming www.iShares.com), which will be
Shares have been issued to the Trust. It Authorized Participant authorizes the publicly accessible at no charge, will
is expected that delivery of the Shares Trustee to deduct from the proceeds of contain the following information: (i)
will be made against transfer of redemption a transaction fee per Basket The prior Business Day’s NAV and the
consideration on the next Business Day (described below). In limited reported closing price; (ii) the mid-point
(T+1) following the Business Day on circumstances and with the approval of of the bid-ask price in relation to the
which the creation order is received by the Trustee, Baskets may be redeemed NAV as of the time the NAV is
the Trustee. If the Trustee has not for cash, in which case the Authorized calculated (the ‘‘Bid-Ask Price’’); (iii)
received the required consideration for Participants will be required to pay any calculation of the premium or discount
the Shares to be delivered on the additional redemption costs, including of such price against such NAV; (iv)
delivery date, by 11 a.m., New York the costs to the Investing Pool of data in chart form displaying the
time, the Trustee may cancel the liquidating the corresponding CERF frequency distribution of discounts and
creation order.22 position. The Trust will receive these premiums of the Bid-Ask Price against
redemption proceeds pursuant to the the NAV, within appropriate ranges for
l. Redemptions of Baskets Trust’s contemporaneous redemption of each of the four previous calendar
Authorized Participants may typically Investing Pool Interests of quarters; (v) the prospectus; (vi) the
surrender Baskets in exchange only for corresponding value. Shares can be holdings of the Trust, including CERFs,
an amount of CERFs and cash (or, in the surrendered for redemption only in cash and Treasury securities; (vii) the
discretion of the Trustee, Short-Term Baskets consisting of 50,000 Shares Basket Amount; and (viii) other
Securities in lieu of cash) equal to the each. applicable quantitative information. The
Basket Amount on the Business Day the It is expected that delivery of the Exchange on its Web site at http://
redemption request is received by the CERFs, cash or Short-term Securities to www.nyse.com will include a hyperlink
Trustee. However, redemption requests the redeeming Shareholder will be made to the Trust’s Web site at http://
received by the Trustee after 2:40 p.m., against transfer of the Baskets on the www.iShares.com.
New York time (or, on any day on next Business Day following the As described above, the NAV for the
which the CME is scheduled to close Business Day on which the redemption Fund will be calculated and
early, after the close of trading of CERFs request is received by the Trustee. If the disseminated daily. The NYSE also
on the CME on such day), will be Trustee’s DTC account has not been intends to disseminate, during NYSE
treated as received on the next following credited with the total number of Shares trading hours for the Trust on a daily
Business Day. Holders of Baskets who to be redeemed pursuant to the basis by means of CTA/CQ High Speed
are not Authorized Participants will be redemption order by 11 a.m., New York Lines information with respect to the
able to redeem their Baskets only time, on the delivery date, the Trustee Indicative Value (as discussed below),
through an Authorized Participant. It is may cancel the redemption order. DTC recent NAV, and Shares outstanding.
expected that Authorized Participants will accept the Shares for settlement The Exchange will also make available
may redeem Baskets for their own through its book-entry settlement on http://www.nyse.com daily trading
accounts or on behalf of Shareholders system. Shares do not have any voting volume, closing prices, and the NAV.
who are not Authorized Participants, rights. Real-time information is available
but they are under no obligation to do about the Trust’s holdings in the
m. Fees and Expenses of the Trustee Investing Pool. Various data vendors
so.
Before surrendering Baskets for Each order for the creation of Baskets and news publications publish futures
redemption, an Authorized Participant must be accompanied by a payment to prices and data. Futures quotes and last
must deliver to the Trustee a written the Trustee of a transaction fee per sale information for the commodities
request indicating the number of Basket of $10.00 multiplied by the underlying the Index and the CERFs are
Baskets it intends to redeem and number of CERFs included in the Basket widely disseminated through a variety
Amount. For redemption orders, the of market data vendors worldwide,
redeeming Authorized Participant will including Bloomberg and Reuters. In
22 The price at which the Shares trade should be
disciplined by arbitrage opportunities created by authorize the Trustee to deduct from the addition, complete real-time data for
the ability to purchase or redeem shares of the Trust proceeds of the redemption a such futures, including the CERFs, is
in Basket size. This should help ensure that the
Shares will not trade at a material discount or
transaction fee per Basket equal to available by subscription from Reuters
premium to their net asset value or redemption $10.00 multiplied by the number of and Bloomberg. The futures exchanges
value. CERFs included in the Basket Amount, or which the underlying commodities
and CERFs trade also provide delayed trading, spreads and resulting premiums 19b–4 under the Act,27 seeking approval
futures information on current and past or discounts may widen, and, therefore, to continue trading the Notes and unless
trading sessions and market news increase the difference between the approved, the Exchange will commence
generally free of charge on their price of the Shares and the NAV of the delisting the Shares if:
respective Web sites. The specific Shares. Indicative Value on a per Share • The Index Sponsor substantially
contract specifications for the futures basis disseminated during NYSE trading change either the Index component
contracts are also available from the hours should not be viewed as a real selection methodology or the weighting
futures exchanges on their Web sites as time update of the NAV, which is methodology;
well as other financial informational calculated only once a day. The • If a new component is added to the
sources. Exchange believes that dissemination of Index (or pricing information is used for
As stated above, major market data the Indicative Value provides additional a new or existing component) that
vendors will disseminate at least every information that is not otherwise constitutes more than 10% of the weight
15 seconds (during the time that the available to the public and is useful to of the Index with whose principal
Shares trade on the Exchange) the GSCI professionals and investors in trading market the Exchange does not
and Index values. Additionally, major connection with the Shares trading on have a comprehensive surveillance
market data vendors will disseminate at the Exchange or creation or redemption sharing agreement; 28 or
least every 15 seconds (during the time of the Shares. • If a successor or substitute index is
that the Shares trade on the Exchange) p. Other Characteristics of the Shares used in connection with the Shares. The
the value of the GSCI–ER, which the filing will address, among other things
CERFs (held by the Investing Pool) i. General Information the listing and trading characteristics of
trading on CME are designed to track.23 A minimum of three Baskets, the successor or substitute index and
Daily settlement values for the GSCI, the representing 150,000 Shares, will be the Exchange’s surveillance procedures
Index, and the GSCI–ER are also widely outstanding at the commencement of applicable thereto.
disseminated.24 trading on the Exchange. q. Exchange Trading Rules and Policies
Trading in Shares on the Exchange
o. Indicative Value will be effected normally until 4:15 p.m. The Shares are considered
In order to provide updated each day on which the Exchange is open ‘‘securities’’ pursuant to NYSE Rule 3
information relating to the Trust for use for trading. The minimum trading and are subject to all applicable trading
by investors, professionals, and other increment for Shares on the Exchange rules.
persons, the Exchange will disseminate will be $0.01. The Trust is exempt from corporate
through the facilities of CTA an updated governance requirements in section
ii. Fees 303A of the NYSE Listed Company
Indicative Value on a per Share basis as
calculated by Bloomberg. The Indicative The Exchange original listing fee Manual, including the Exchange’s audit
Value will be disseminated at least applicable to the listing of the Trust will committee requirements in Section
every 15 seconds from 9:30 a.m. to 4:15 be $5,000. The annual continued listing 303A.06.29
p.m. New York time. The Indicative fee for the Trust will be $2,000. The Exchange will adopt new NYSE
Value will be calculated based on the iii. Continued Listing Criteria Rule 1300B (‘‘Commodity Trust
cash and collateral in a Basket Amount Shares’’) to deal with issues related to
Under the applicable continued the trading of the Shares. Specifically,
divided by 50,000, adjusted to reflect
listing criteria, the Shares may be for purposes of NYSE Rules 13
the market value of the investments
delisted as follows: (i) Following the (‘‘Definitions of Orders’’), 36.30
held by the Investing Pool, i.e., CERFs.25
initial twelve-month period beginning (‘‘Communications Between Exchange
The Indicative Value will not reflect
upon the commencement of trading of and Members’ Offices’’), 98
price changes to the price of an
the Shares, there are fewer than 50
underlying commodity between the
record and/or beneficial holders of the 27 17 CFR 240.19b–4.
close of trading of the futures contract
Shares for 30 or more consecutive 28 April 10 Telephone Conference.
at the relevant futures exchange and the
trading days; (ii) the value of the Index 29 See Rule 10A–3(c)(7), 17 CFR 240.10A–3(c)(7)
close of trading on the NYSE at 4:15
ceases to be calculated or available on (stating that a listed issuer is not subject to the
p.m. New York time. requirements of Rule 10A–3 if the issuer is
at least a 15-second basis from a source
When the market for futures trading organized as a trust or other unincorporated
unaffiliated with the Sponsor, the Trust association that does not have a board of directors
for each of the Index commodities is
or the Trustee; (iii) the Indicative Value and the activities of the issuer are limited to
open, the Indicative Value can be
ceases to be available on at least a 15- passively owning or holding securities or other
expected to closely approximate the assets on behalf of or for the benefit of the holders
second delayed basis; or (iv) such other
value per Share of the Basket Amount. of the listed securities).
event shall occur or condition exist that,
However, during NYSE trading hours See also Securities Exchange Act Release No.
in the opinion of the Exchange, makes 48745 (November 4, 2003), 68 FR 64154 (November
when the futures contracts have ceased
further dealings on the Exchange 12, 2003) (SR–NYSE–2002–33, SR–NASD–2002–77,
inadvisable. In addition, the Exchange et al.) (specifically noting that the corporate
23 The value of a Share may accordingly be
governance standards will not apply to, among
influenced by non-concurrent trading hours will remove Shares from listing and others, passive business organizations in the form
between the NYSE and the various futures trading upon termination of the Trust. of trusts); Securities Exchange Act Release No.
exchanges on which the futures contracts based on Additionally, the Exchange will file a 47654 (April 25, 2003), 68 FR 18787 (April 16,
the Index commodities are traded. While the Shares proposed rule change pursuant to Rule 2003) (noting in Section II(F)(3)(c) that ‘‘SROs may
will trade on the NYSE from 9:30 a.m. to 4:15 p.m. exclude from Exchange Act Rule 10A–3’s
New York time, the table above lists the trading 19b–4 under the Act,26 seeking approval
requirements issuers that are organized as trusts or
hours for each of the Index commodities underlying to continue trading the Shares and other unincorporated associations that do not have
the futures contracts. unless approved, the Exchange will
a board of directors or persons acting in a similar

24 April 13 Telephone Conference.
commence delisting the Shares if: capacity and whose activities are limited to
25 Telephone conference between Michael passively owning or holding (as well as
Additionally, the Exchange will file a
Cavalier, Assistant General Counsel, NYSE, and administering and distributing amounts in respect
Florence Harmon, Senior Special Counsel, proposed rule change pursuant to Rule of) securities, rights, collateral or other assets on
Commission, on April 5, 2006 (authorizing behalf of or for the benefit of the holders of the
clarification of sentence). 26 17 CFR 240.19b–4. listed securities.’’)
(‘‘Restrictions on Approved Person least every 15 seconds is no longer Under proposed NYSE Rule 1301B(a),
Associated with a Specialist’s Member calculated or available.32 the member organization acting as
Organization), 104 (‘‘Dealings by specialist in a Section 703.19 security:
Specialists’’), 105(m) (‘‘Guidelines for ii. Specialists’ Trading Obligations (i) Will be obligated to conduct all
Specialist’s’’ Specialty Stock Option New Supplementary Material .10 to trading in the specialty security in its
Transactions Pursuant to Rule 105’’), proposed NYSE Rule 1301B would specialist account, (subject only to the
460.10 (‘‘Specialists Participating in apply the provisions of proposed Rule ability to have one or more investment
Contests’’), 1002 (‘‘Availability of 1300B(b) and Rule 1301B to certain accounts, all of which must be reported
Automatic Feature’’), and 1005 (‘‘Order securities listed on the Exchange to the Exchange); (ii) will be required to
May Not Be Broken Into Smaller pursuant to section 703.19 (‘‘Other
file with the Exchange and keep current
Accounts’’), the Shares will be treated a list identifying all accounts for trading
Securities’’) of the NYSE Listed
similar to Investment Company Units.30 in the physical commodities included
When these Rules discuss Investment Company Manual. Specifically,
in, or derivative instruments based on
Company Units, references to the word proposed NYSE Rules 1300B(b) and
the relevant index, which the member
index (or derivative or similar words) 1301B will apply to securities listed
organization acting as specialist may
will be deemed to be references to the under section 703.19 where the price of
have or over which it may exercise
applicable commodity or commodity such securities is based in whole or part
investment discretion; and (iii) will be
index price and reference to the word on the price of a commodity or prohibited from trading in physical
security (or derivative or similar words) commodities, a commodities index, or commodities included in, or derivative
will be deemed to be references to the any futures contracts or other instruments based on the relevant
Commodity Index Trust Shares. derivatives based thereon. Examples of index, in an account in which a member
The Exchange does not currently the securities to which Supplementary organization acting as specialist,
intend to exempt Commodity Trust Material .10 will apply are the subjects controls trading activities which have
Shares from the Exchange’s ‘‘Market-on- of the following File Nos.: (i) SR–NYSE– not been reported to the Exchange as
Close/Limit-on-Close/Pre-Opening Price 2006–16 (proposal to list and trade required by proposed NYSE Rule 1301B.
Indications’’ Policy, although the Index-Linked Securities of Barclays Under Rule 1301B(b), the member
Exchange may do so by means of a rule Bank PLC linked to the performance of organization acting as specialist in a
change in the future if, after having the Dow Jones-AIG Commodity Index relevant section 703.19 security will be
experience with the trading of the Total ReturnTM); (ii) SR–NYSE–2006–19 required to make available to the
Shares, the Exchange believes such an (proposal to list and trade Index-Linked Exchange such books, records or other
exemption is appropriate. Securities of Barclays Bank PLC linked information pertaining to transactions
to the performance of the Goldman by the member organization and other
i. Trading Halts Sachs Crude Oil Total Return IndexTM); specified persons for its or their own
With respect to trading halts, the and (iii) File No. SR–NYSE–2006–20 accounts in derivative instruments on
Exchange may consider all relevant (proposal to list and trade Index-Linked an index underlying such section 703.19
factors in exercising its discretion to Securities of Barclays Bank PLC linked security or any commodity included in
halt or suspend trading in the Shares. to the performance of the GSCI Total such index, as may be requested by the
Trading on the Exchange in the Shares Return Index TM). Exchange. This requirement is in
may be halted because of market As a result of application of proposed addition to existing obligations under
conditions or for reasons that, in the NYSE Rule 1300B(b), the specialist in a Exchange rules regarding the production
view of the Exchange, make trading in relevant security listed under section of books and records. Under proposed
the Shares inadvisable. These may 703.19 (‘‘Section 703.19 security’’), the NYSE Rule 1301B(c), in connection
include (1) the extent to which trading specialist’s member organization and with trading derivative instruments
is not occurring in the underlying other specified persons will be based on an index underlying a relevant
commodities or (2) whether other prohibited under paragraph (m) of section 703.19 security in which the
unusual conditions or circumstances member organization acts as specialist,
NYSE Rule 105 Guidelines from acting
detrimental to the maintenance of a fair the specialist could not use any material
as market maker or functioning in any
and orderly market are present. In nonpublic information received from
capacity involving market-making
addition, trading in Shares is subject to any person associated with a member or
responsibilities in the physical
trading halts caused by extraordinary employee of such person regarding
commodities included in, or options,
market volatility pursuant to Exchange’s trading by such person or employee in
futures or options on futures on, the
‘‘circuit breaker’’ rule.31 The Exchange derivative instruments based on the
index underlying the relevant section
will halt trading in the Shares if the underlying index or in any commodity
703.19 security, or any other derivatives
value of the Index is no longer included in such index.
(collectively, ‘‘derivative instruments’’)
calculated or available on at least a 15-
based on such index. A specialist r. Surveillance
second basis through one or more major
entitled to an exemption under NYSE
market data vendors during the time the The Exchange represents that its
Rule 98 from paragraph (m) of NYSE
Shares trade on the NYSE, or if the surveillance procedures are adequate to
Rule 105 Guidelines could act in a
Indicative Value per Share updated at properly monitor the trading of the
market making capacity in physical
Shares and the Index components. The
commodities included in, or derivative
30 In particular, proposed NYSE Rule 1300B
Exchange will rely upon existing NYSE
provides that NYSE Rule 105(m) is deemed to instruments based on such index, other
surveillance procedures governing
prohibit an equity specialist, his member than as a specialist in the same section
organization, other member, allied member or equities with respect to surveillance of
703.19 security in another market
the Shares. The Exchange believes that
approved person in such member organization or

center.
officer or employee thereof from acting as a market these procedures are adequate to
maker or functioning in any capacity involving monitor Exchange trading of the Shares,
market-making responsibilities in the applicable 32 In such events, the Exchange would
futures contracts, except as otherwise provided immediately contact the Commission to discuss
to detect violations of Exchange rules,
therein. measures that may be appropriate under the consequently deterring manipulation. In
31 NYSE Rule 80B. circumstances. this regard, the Exchange currently has
the authority under NYSE Rule 476 to s. Due Diligence 6(b)(5) 35 that an exchange have rules
request the Exchange specialist in the Before a member, member that are designed to prevent fraudulent
Shares to provide NYSE Regulation with organization, allied member or and manipulative acts and practices, to
information that the specialist uses in employee thereof recommends a promote just and equitable principles of
connection with pricing the Shares on transaction in the Shares, such person trade, to remove impediments to, and
the Exchange, including specialist must exercise due diligence to learn the perfect the mechanism of a free and
proprietary or other information essential facts relative to the customer open market and, in general, to protect
regarding securities, commodities, pursuant to NYSE Rule 405, and must investors and the public interest.
futures, options on futures or other determine that the recommendation B. Self-Regulatory Organization’s
derivative instruments. The Exchange complies with all other applicable Statement on Burden on Competition
believes it also has authority to request Exchange and Federal rules and
any other information from its regulations. A person making such The Exchange believes that the
members—including floor brokers, recommendation should have a proposed rule change would not impose
specialists and ‘‘upstairs’’ firms—to reasonable basis for believing, at the any burden on competition that is not
fulfill its regulatory obligations.33 time of making the recommendation, necessary or appropriate in furtherance
that the customer has sufficient of the purposes of the Act.
With regard to the Index components,
the Exchange can obtain market knowledge and experience in financial C. Self-Regulatory Organization’s
surveillance information, including matters that he or she may reasonably be Statement on Comments on the
customer identity information, with expected to be capable of evaluating the Proposed Rule Change Received From
respect to transactions occurring on the risks and any special characteristics of Members, Participants or Others
New York Mercantile Exchange the recommended transaction, and is
The Exchange has not solicited, and
(‘‘NYMEX’’), the Kansas City Board of financially able to bear the risks of the
does not intend to solicit, comments on
Trade, ICE and the LME, pursuant to its recommended transaction.
this proposed rule change. The
comprehensive information sharing t. Information Memo Exchange has not received any written
agreements with each of those comments from members or other
The Exchange will distribute an
exchanges. All of the other trading interested parties.
information memo (‘‘Memo’’) to its
venues on which current Index
members in connection with the trading III. Date of Effectiveness of the
components are traded are members of
in the Shares. The Memo will discuss Proposed Rule
the Intermarket Surveillance Group
the special characteristics and risks of
(‘‘ISG’’) and the Exchange therefore has Within 35 days of the date of
trading this type of security.
access to all relevant trading publication of this notice in the Federal
Specifically, the Memo, among other
information with respect to those Register or within such longer period (i)
things, will discuss what the Shares are,
contracts without any further action as the Commission may designate up to
that Shares are not individually
being required on the part of the 90 days of such date if it finds such
redeemable but are redeemable only in
Exchange. If at any time the Index longer period to be appropriate and
Baskets of 50,000 shares or multiples
Sponsor includes in the Index a contract publishes its reasons for so finding or
thereof, how a Basket is created and
traded on any other market which is not (ii) as to which the self-regulatory
redeemed, applicable Exchange rules,
a member or affiliate of the ISG and organization consents, the Commission
the Indicative Value, dissemination
with respect to which the Exchange will:
information, trading information and
does not have a preexisting (A) By order approve such proposed
the applicability of suitability rules, and
comprehensive information sharing rule change; or
exemptive relief granted by the (B) Institute proceedings to determine
agreement previously reviewed and Commission from certain rules under
found acceptable by the Commission, whether the proposed rule change
the Act.34 The Memo will also reference should be disapproved.
then, prior to the inclusion of such that the Trust is subject to various fees
contract in the Index, the Exchange will: The NYSE has requested accelerated
and expenses described in the approval of the proposed rule change
(i) Enter into adequate information Registration Statement. Finally, the
sharing arrangements with that other prior to the thirtieth day after the date
Memo will also note to members of publication of notice in the Federal
market; and (ii) contact the Commission language in the Registration Statement
to discuss measures that may be Register, following the conclusion of a
regarding prospectus delivery 15-day comment period. While the
appropriate under the circumstances, requirements for the Shares. The Memo
including whether the Exchange should Commission will not grant accelerated
will also reference the fact that there is approval at this time, the Commission
file proposed rule change seeking no regulated source of last sale
Commission approval prior to the will consider granting accelerated
information regarding physical approval of the proposal at the close of
inclusion of the new contract in the commodities and that the Commission
Index. the abbreviated comment period of 15
has no jurisdiction over the trading of days from the date of publication of the
physical commodities or the futures proposal in the Federal Register.
33 As a general matter, the Exchange has
contracts on which the value of the
regulatory jurisdiction over its member IV. Solicitation of Comments
organizations and any person or entity controlling shares is based.
a member organization. The Exchange also has 2. Statutory Basis Interested persons are invited to
regulatory jurisdiction over a subsidiary or affiliate submit written data, views, and
of a member organization that is in the securities The Exchange believes that the basis arguments concerning the foregoing,
business. A member organization subsidiary or under the Act for this proposed rule including whether the proposed rule
affiliate that does business only in commodities

would not be subject to NYSE jurisdiction, but the change is the requirement under section change is consistent with the Act.
Exchange could obtain certain information Comments may be submitted by any of
regarding the activities of such subsidiary or 34 The applicable rules are: Rule 10a–1; Rule
affiliate through reciprocal agreements with 200(g) of Regulation SHO; section 11(d)(1) and Rule the following methods:
regulatory organizations of which such subsidiary 11d1–2; and Rules 101 and 102 of Regulation M
or affiliate is a member. under the Act. 35 15 U.S.C. 78f(b)(5).
Electronic Comments SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s

COMMISSION Statement of the Purpose of, and
• Use the Commission’s Internet Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ [Release No. 34–53670; File No. SR–Phlx–
2006–21]
Change
rules/sro.shtml); or
1. Purpose
• Send an e-mail to rule- Self-Regulatory Organizations;
comments@sec.gov. Please include File Philadelphia Stock Exchange, Inc.; Previously, the Exchange adopted a
No. SR–NYSE–2006–17 on the subject Notice of Filing and Immediate cancellation fee of $1.10 per
Effectiveness of Proposed Rule cancellation order to be assessed on
line.
Change Relating To Delaying member organizations for each
Paper Comments Implementation of Its Cancellation Fee cancelled AUTOM-delivered 6 order in
excess of the number of orders executed
• Send paper comments in triplicate April 18, 2006. on the Exchange by that member
to Nancy M. Morris, Secretary, Pursuant to Section 19(b)(1) of the organization in a given month.7 The
Securities and Exchange Commission, Securities Exchange Act of 1934 cancellation fee was not to be assessed
100 F Street, NE., Washington, DC (‘‘Act’’) 1, and Rule 19b–4 thereunder,2 in a month in which fewer than 500
20549–1090. notice is hereby given that on March 31, AUTOM-delivered orders were
All submissions should refer to File 2006, the Philadelphia Stock Exchange, cancelled. Simple cancels and cancel-
Number SR–NYSE–2006–17. This file Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with replacement orders were the types of
number should be included on the the Securities and Exchange orders that were to be counted when
Commission (‘‘Commission’’) the calculating the number of AUTOM-
subject line if e-mail is used. To help the
proposed rule change as described in delivered orders.8 The objective of the
Commission process and review your
Items I, II, and III, below, which Items fee was to discourage excessive use of
comments more efficiently, please use have been prepared by the Phlx. The cancellations.9
only one method. The Commission will Phlx has filed the proposed rule change Prior to implementing the
post all comments on the Commission’s as one establishing or changing a due, cancellation fee, the Exchange analyzed
Internet Web site (http://www.sec.gov/ fee, or other charge imposed by the Phlx data and then discussed with member
rules/sro.shtml). Copies of the under Section 19(b)(3)(A)(ii) 3 and Rule organizations the potential effect of the
submission, all subsequent 19b–4(f)(2) thereunder,4 which renders fee. However, it later came to the
amendments, all written statements the proposal effective upon filing with attention of the Exchange that the data
with respect to the proposed rule the Commission. The Commission is analyzed by the Exchange was
change that are filed with the publishing this notice to solicit incomplete. Therefore, member
Commission, and all written comments on the proposed rule change organizations, based on the Exchange’s
communications relating to the from interested persons. analysis, did not believe it was
proposed rule change between the I. Self-Regulatory Organization’s necessary to monitor the use of
Commission and any person, other than Statement of the Terms of Substance of cancellation orders by any of their
those that may be withheld from the the Proposed Rule Change respective customers. In actuality, the
public in accordance with the assessment of the cancellation fee for
The Exchange proposes to amend the some member organizations greatly
provisions of 5 U.S.C. 552, will be
effective date for the cancellation fee it exceeded the estimated amount that was
available for inspection and copying in recently established 5 from January 2,
the Commission’s Public Reference communicated to them.
2006 to May 1, 2006. The Exchange also At this time, the Exchange has
Room. Copies of such filing also will be proposes to clarify that the cancellation
available for inspection and copying at discussed with the affected member
fee will not be assessed on any organizations the amount of the
the principal office of the Exchange. All cancellation orders received prior to the cancellation fees that would have been
comments received will be posted opening of trading. incurred based on revised and complete
without change; the Commission does January and February 2006 data.
not edit personal identifying II. Self-Regulatory Organization’s
Statement of the Purpose of, and Therefore, the Exchange proposes to
information from submissions. You delay implementation of the
Statutory Basis for, the Proposed Rule
should submit only information that cancellation fee until May 1, 2006 to
Change
you wish to make available publicly. All allow member organizations the
submissions should refer to File In its filing with the Commission, the
opportunity either to change behavior or
Number SR–NYSE–2006–17 and should Phlx included statements concerning
be submitted on or before May 9, 2006. the purpose of and basis for the 6 AUTOM is the Exchange’s electronic order
proposed rule change and discussed any delivery, routing, execution and reporting system,
For the Commission, by the Division of comments it received on the proposed which provides for the automatic entry and routing
Market Regulation, pursuant to delegated rule change. The text of these statements of equity option and index option orders to the
authority.36 may be examined at the places specified Exchange trading floor. See Exchange Rules
1014(b)(ii) and 1080.
Nancy M. Morris, in Item IV below. The Phlx has prepared 7 See supra note 5.
Secretary. summaries, set forth in Sections A, B, 8 A cancel-replacement order is a contingency
[FR Doc. E6–6077 Filed 4–21–06; 8:45 am] and C below, of the most significant order consisting of two or more parts, which require
aspects of such statements. the immediate cancellation of a previously received
BILLING CODE 8010–01–P
order prior to the replacement of a new order with
1 15
new terms and conditions. If the previously placed
U.S.C. 78s(b)(1).
order is already filled partially or in its entirety, the

2 17 CFR 240.19b–4. replacement order is automatically canceled or
3 15 U.S.C. 78s(b)(3)(A)(ii).
reduced by such number. See Exchange Rule
4 17 CFR 240.19b–4(f)(2). 1066(c)(7).
5 See Securities Exchange Act Release No. 53226 9 The proposal did not cover orders delivered
(February 3, 2006), 71 FR 7602 (February 13, 2006) through the Exchange’s Floor Broker Management
36 17 CFR 200.30–3(a)(12). (SR–Phlx–2005–92). System.

Notice: Self-Regulatory Organizations Proposed Rule Changes

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Notice: Self-Regulatory Organizations Proposed Rule Changes

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21074 Federal Register / Vol. 71, No.

78 / Monday, April 24, 2006 / Notices

NYSE–2006–16 (proposal to list and trade Index-

Commodity Trust Shares in which the futures contracts or other derivatives

15 See ‘‘Calculation of the Index,’’ infra.

to material, non-public information. April 13

PDW 01/20/06 Market sym- Trading Fa- ADTV (con- Units

The hours of trading (New York time)

Commodity Trading facility Trading hours (NY time)

Crude Oil ..................................................................................................................................... NYM ...................... 10 am–2:30 pm.

Commodity Trading facility Trading hours (NY time)

Gasoline ...................................................................................................................................... NYM ...................... 10:05 am–2:30 pm.

contract expirations on a particular commodity and

22 The price at which the Shares trade should be

a board of directors or persons acting in a similar

approved person in such member organization or

affiliate that does business only in commodities

Electronic Comments SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s

order is already filled partially or in its entirety, the

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