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SECURITIES AND EXCHANGE COMMISSION (Release No. 34-53521; File No. SR-Amex-2005-072) - page 28 / 32

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which will require 1.5 million ounces of silver to be deposited with the custodian of the Trust.

The Exchange states that Trust assets will grow only to the extent that demand for the Silver

Shares grows and that a wide variety of factors are capable of influencing supply and demand for

silver.

55

The Commission agrees with Amex that, like other derivative products, the Silver Shares

will increase the efficiency and transparency of the market for the underlying instrument, i.e.,

silver. In this regard, the Commission finds that the proposed rule change is in the public

interest.56 The Commission also does not believe that the Silver Shares are likely to cause

serious liquidity problems in the silver market such that approval of the proposed rule change is

not consistent with the Act.

57

A. Surveillance

The Commission also finds that the rules of the Exchange are designed to prevent

fraudulent and manipulative acts and practices. 58 In its response to comment letters, the Amex

represents that it has safeguards to ensure that the trading of the Silver Shares is fair and

consistent with the operation of a public marketplace and the protection of investors and that

surveillance procedures at the Exchange serve to deter and detect potential misconduct and

manipulative acts by members and investors.59

In addition, the Exchange has an information sharing agreement with NYMEX for the

purpose of providing information in connection with trading in or related to silver futures

55

Id.

56

15 U.S.C. 78f(b)(5).

57

15 U.S.C. 78f(b)(5).

58

15 U.S.C. 78f(b)(5).

59

See Wolkoff Letter, supra note 7.

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