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SECURITIES AND EXCHANGE COMMISSION (Release No. 34-53521; File No. SR-Amex-2005-072) - page 27 / 32





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liquidity problems in the silver market.51 In particular, these commenters contended that the

Silver Shares would negatively impact the silver market because their creation would require the

holding of silver in allocated accounts, which would drain large amounts of silver from the open

market and cause higher prices for silver products. 52 Furthermore, the commenters asserted that

the higher silver prices caused by the creation of the Silver Shares would cause the loss of jobs

specific to the silver industry.


The Exchange responded to these comments by stating that it believes that the listing and

trading of Silver Shares will make the market for silver more efficient and transparent by

providing investors with an easier and more cost-effective alternative for investing in silver. The

Exchange asserts that a transparent marketplace for Silver Shares will allow for a more accurate

representation of the supply and demand for silver, and therefore, a more accurate market price.54

The Exchange also disagrees with some commenters’ assertions that the Trust will reduce the

amount of silver in the marketplace. In this regard, the Exchange notes that, at the

commencement of trading, the Exchange will require 150,000 Silver Shares to be outstanding,

competition, and capital formation. 15 U.S.C. 78c(f).


See letters from Congressman J. Gresham Barrett (3rd District, SC) to Christopher Cox, Chairman, Commission, dated February 16, 2006; Paul A. Miller, Executive Director, Silver Users Association, to Nancy M. Morris, Secretary, Commission, dated February 13, 2006; John Patrick, Vice President, Fujifilm America, Inc., to Nancy M. Morris, Secretary, Commission, dated February 7, 2006; James F. Kirsch, President and Chief Executive Officer, Ferro Corporation, to Nancy M. Morris, Secretary, Commission, dated February 2, 2006; a Memorandum from the CPM Group regarding Silver Inventories, dated January 30, 2006; a Web Comment from Justin D. Reynolds, dated January 29, 2006; and a Web Comment from George Bloom, Jr., dated January 29, 2006. A Web Comment from Theodore Butler, dated February 6, 2006, made positive and negative conclusions about the proposed rule change.




Id. Id. See Wolkoff Letter, supra note 7.


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