SEC Division of Trading and Markets no-action letter: MACRO Securities Depositor, LLC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF
TRADING AND MARKETS
July 1,2008
Richard F. Kadlick

Skadden, Arps, Slate, Meagher &Flom LLP

Four Times Square

New York, NY 1 Q036

Re:. MACRO.Securities.Depositor,LLC
]FileeNo..TP 08-58.
Dear Mr. Kadlick:
In your letter dated July 1,2008, as supplemented by conversations with the staff of the Division of Trading and Markets ("Stafl"), you request on behalf of MACRO Securities Depositor, LLC (the "Depositor") on its own behalf as well as on behalf of (1) MacroShares $100 Oil Up Trust (the "Up Trust") and MacroShares $100 Oil Down Trust (the ''Down Trust") (collectively ''the Trusts"), both of which are New York trusts created by the Depositor and are passive, unmanaged investment vehicles, (2) the American Stock Exchange ("AMEX") and any other national securities exchange or association on or through which shares of the Trusts ("Shares") may subsequently trade, and (3) persons or entities engaging in transactions in Shares, no-action relief fiom Rules 101 and 102 of Regulation M, Rule 1 Ob- 1 0 and Rule 1 0b- 17 under the Securities Exchange Act of 1934 ("Exchange Act"'), and Section 1 l(d)(l) of the Exchange Act and Rule 1 1 dl -2 thereunder, in connection with secondary market transactions in Shares and the creation or redemption of Creation Units, as discussed in your letter. This response is attached to the enclosed photocopy of your correspondence. Each defined term in this letter has the same meaning asdefined in your letter, unless otherwise noted herein. Response:
With respect to the activity described in your letter, the. Staffwill not recommend to theSecurities and Exchange Commission ("Commission7'). enforcement action in the following circumstances. Rule 101 of Regulation M Generally, Rule 101 of Regulation M is an anti-manipulation regulation that, subject to. certain exceptions, prohibits any "'distribution participant" and its "affiliated purchasers? fiom bidding for, purchasing, or attempting to induce any person to. bid for or pvchase, any security which is the subject of a distribution until after the applicable

Richard F. Kadlick
July 1,2008 restricted period, except as specifically permitted in the Regulation. The provisions of Rule 101 of Regulation M apply to underwriters, prospective underwriters, brokers, dealers, and other persons who. have agreed to participate or areparticipatingin a distribution of securities, and affiliated purchasers of such persons. On the basis. of your. representations and the facts presented, and without necessarily concurring in your analysis, particularly that the Trusts will continuously redeem Shares in. Creation Unit aggregations at their Proportionate Underlying Value and that the secondary market price of Shares should not vary substantially fiom their Proportionate Underlying Value. per Share, the Staff will not recommend enforcement . action to the Commission if persons. who. may be deemed to be participating in a distribution of Shares redeem or otherwise engage in other secondary market transactions in such Shares during their participation in the distribution as represented in your letter. Rule 102 of RegulationM Rule 102 of Regulation M prohibits issuers, selling security holders, or any affiliated purchaser of such person fiom bidding for, purchasing, or attempting to induce any person to bid for or. purchase. a covered security during the. applicable. restricted period in connection with a distribution of securities effected by or on behalf of anissuer or selling security holder.. .Rule 100 of Regulation M defines ccdistribution'y to. mean any offering of securities that is distinguished fiom ordinary trading transactions by the magnitude of the offering and the. presence of special selling efforts and selling methods.. On the basis of your representations and the facts presented, and without necessarily concurring in your analysis, particularly that the Trusts will continuously redeem Shares in Creation Unit aggregations at their Proportionate Underlying Value. and that the secondary market price. of Shares should not vary substantially fiom their Proportionate Underlying Value. per Share, the Staff will not recommend enforcement action to the. Commission if the Trusts effect, and any authorized participant directs, redemptions. of Shares asrepresented in your letter. Rule 1Ob-I 7 Rule lob-17, with certain exceptions, requires an issuer of a class of publicly traded securities to give notice of certain specified actions (for example, a dividend distribution, stock split, or rights offering) relating to such class. of securities in accordancewith Rule: 1Ob-17(b).. On the basis of your representations and the facts presented, and without necessarily concurring in your analysis, particularly that it is not possible for the Distributor to accurately project ten days in advance what dividend, if any,would be paid on a particular record date making compliance with Rule lob-17 impractical, the Staff

Richard F. Kadlick
July 1,2008 will not recommend enforcement action to the Commission if the Depositor is unable to provide the 10 day notice required by Rule 10b-17.
Section 11(d)(1) and Rules.IOb-I0 and 1Id1-2
As we discussed,' we are treating your request for relief as a request that the Staff confirm that it will not recommend enforcement action to the Commission if a broker￾dealer treats Shares, for purposes of therelief fiom Section 1 1 (d)(l) and Rules 1Ob-10 and 1 ldl-2 provided in the Letter re: Derivative Products Committee of the Securities Industry Association (Nov'ember 21,2005) ("Class Relief Letter"), as shares of a Qualifying ETF (as defined in the Class Relief Letter). Based on the facts. and representations set forth in your letter, in particular, the nature of the assets in the Trusts, and without necessarily concurring in your analysis, the Staff will not recommend enfarcement action to the Commission if a broker-dealer treats Shares, for purposes. of the relief fiom Section 11 (d)(l) of the Exchange Act, and Rules 10b-10 and 1 1 d 1-2 thereunder, provided in the Class Relief Letter, as shares of a Qualifying Em. Accordingly, with respect to. the Shares, to. the extent that a broker￾dealer satisfies the other conditions in the Class Relief Letter, it could rely on the exemptive and no-action relief contained therein.. The foregoing no-action positions taken under Rules 101 and 102 of Regulation M, Rule 10b-10, Rule 10b-17, and Section 1l(d)(l) of the Exchange Act and Rule 1ldl-2 are based solely on your representations and the facts presented, and are strictly limited to the application of those rules to transactions involving Shares under the circumstances described above and in your letter. Such transactions should be discontinued, pending presentation of the facts for our consideration, in the event that any material change occurs with respect to any of those fact. or representations. Moreover, the foregoing no￾action positions taken under Rules 101 and 102 of Regulation M and Rule 10b-17 under the Exchange Act are subject to the condition that such transactions in Shares or any related securities are not made for the purpose of creating actual, or apparent, active trading in or raising or otherwise affecting the price of such securities. The foregoing no-action positions are. subject to modification or revocation if at any time the Commission determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act. In addition, persons relying on these no-action positions are directed to the anti-fraud and anti-manipulation provisions of the Exchange Act, particularly Sections 9(a), lo@), and Rule 10b-5 thereunder. Responsibility for compliance with these and other provisions of the federal or state securities laws must rest with persons relying on these no-action positions. The Staff expresses no view with respect to other questions that the proposed transactions may . . .. . . . . Telephone conversation between Matthew A. Daigler, Division of Trading and Markets, Commission, and Eva Valik, Esq.,June 26,2008.

RichardF. Kadlick
July 1,2008 raise, including, but not limited to, the adequacy of disclosure concerning, and the applicability of other federal or state laws or rules or regulations of any self-regulatory organizations to, the proposed transactions. Sincerely, I~os'e~hine J. Tao. Assistant Director Attachment

SKADDEN,ARPS, SLATE,MEAGHER& FLOMLLP
FOUR TIMES SQUARE

NEWYORK 10036-6522

.---

TK! <aI 83 73Sa30aQ

FAX: (21 2)735-2000

WIWlNtl6N
BEUIffi
BRUSSELS
FRANKNRT notio WG
LONDON
MOSGOW July 1,2008 MUPOCI-I
PARIS

SWGAFQRE

SDNM

mm
'IDRONIT)

VLG EXPRESSMAIL AND ELECTRONICMAlX VIENNA

Ms.Josephine Taa
Assistant Direator
Division of Trading and Markets
Securitiesand Exuhange Commission
One Station Plaoe
100 F Street, N,B.
Washington, D.C. 20549-1001
RE: Request afMACRO Securities Depositor, LLCfor No-Action Relief from Rule 101 and 102 ofRegulation MaRule lob10and Rule lob-1 7 promulgated, in each case, under the SecuritiesBxohange Act of 1934 (the "ExchanlreAct"), and
Section 1 l(d\fl) ofthe ExchangeAct mdRule 1ldl-2 promulgated ther~under
Dear Ms.Tao:
We arc writing to you on behalfof MACRO Securities Depositor, UC (the "Depsitorn). The Depositor, on behalf of iQelSaswell as aa behalf of tke MnoroShrues $100 Oil Up Trust(the Trust"), the MacmSha~es$100Oil DownTrust(the ''Down Trust''), the Amerimn Stock Exchange (the "AMBX")and any othernational securities exchangeor national securities association on or though which the shares oftlia Up Trust or Down Trust (generically, the "MaoroShsms"),may subsequently trade (each such organizaxion,a "MarketI1)and psreona and entities engaging in transactions in the MacroShwes, wishes respectflally to reqirestno-action rslief from Rule 101 and 102oPRegulation M, Rule lob-10 and Rule IOb-17 promulgated, in esch ease, under tho Exchanp ACI;and Section 1l(dX1) of the Exchange Act, together with Rulc 1161-2 promulgated thereunder. This letter is divided info three parts. Part I is er summary of the transaction in which the Macroshares will be issued. Pafl TI describes certain ecbnomitchmcteristi~aof the MacroShwes structure. Part I11containstile request for relief. -. 1354271.10-NewYorY Server7A- MSW

Securities and ExchangeCommission
My 1,2008
Pa~e2
Part l: SUMMARY OFTHEMACROSHARES STRUCTURE
The Macro Trusts
Tho Depositor ht~ createdtwoseparate trusts under New Xork law: the "Up and the "DownTruq." We refer tlie two trusts oollectively as the "PqredTrusts,"and each of them, generically, as a "MacroTrust.'' The Up Trustwill isme the MacroShares $100Up Shares{the "& MacroShares")and the Down Trust will issue the MacroShares $100 Down Shares(the "Dovq MacroSharcsql).We refer to the Up MaoroShms nnddhe Down MscroSliares, collectively, as the '%ired Shares,"and, to Up Macrosharesand/or Down MacroShmes, gonericdly, as "MacroShares." Each M~croShareissued by a Macro Twse will represent an undividedbeneficisl ownerslrip interest inthe assets oftl~ttrust. The Up Macroshares have been regisleredunderthe SaouritiesAct of 1933 (the "SecuritiesAct") with tlre Securities and Exchange Commission (the t'Commission")pursuant to Amendment No.1 to the registration statement on Form S-1, file no. 333-1.50282, and the Down Macrosharm have been registered underthe SecuritiesAct with the Commissio~zpursuantto Amendment No. 1 to the regiskatian statement on Fonn 3-1, fileso, 333-150283. The Up Macroshares are listed on the AMEX underthe symbol 'tUOY,"and the Dawn Macroshares are listed on 'theAMEX under the symbol "DOY," The'AMEX,on behalfof the Maoro Trus~,made an application ro the Commission pursuanftoRule l9b-4 ofthe Exchange Act Eo allow for the trading of the MacroShares. Such application was approved an June 27,2008. Each of the Paired Trusts was formed pursuant to a trust agreement among the Deposiror, State StreetBmk and TrustCompany, N,A,,acting in the capacityof a "mistee,"MaoroMarkets LEC, acting inthe oapaolty of an "admlni,strativemea"and MACRO Financial LLC,acting in the capacity of a "marketing agent,'' MacroMwkets LLC is a lirnit~dliability company formad under the Jaws of the State of Delaware. Its primary business is the stru~turingand arlminist~tionof finmcial products which referericethe value of various oo~nmodiryindices, housingprice indices and macroeconomicvariables and which employ Ehe patented MacraShresstructure. MACRO Financial LlLC is a registered broker dealer and an nfflliate of MaoroMarketsLLC. The trustee, acting at the direction of the administrative agent, (i) invests all of the proceeds of each issuance of Paired Shares in bills, notes and bonds guwmteed by the government oftheUnited Smms (generically, "TrepsutiesN),which mare prior to each quarterly distribution date, and in overnigh1repurchase agreements fully collateralized by Treasuries (Treasury ,R&gg" an4 together with Treasuries, ''EligibleJnvgsjme?f,sr), and (ii) reinvests the proceeds received by each of the Paired Trusts (bur than inkrest income, which is diseibuted quarterly to sharelrolders, as described herein) ~ponthe maturity of its filigibleInvestmentsin new Eligible Investments, 1354271.ID-New Yark Scrvcr7A - MSW

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July.1,2008

Howthe MaccroSharca TrananctionWorks
The Paired Shares may arrly bs created and redeemed by authorizsd in one or i.om''MncraSharasUnits"each dwhioh consists of 50,000 Up WroShares and 50,000 Down MacroSlla~8s.6acI1MacroSharesUnitrepresent.an aggmgt)tionof WroShares constitutingthe "Creation Un$' in wliicl~Macroshares may bc created and redeemed. In connec\ion with the issuanoe of each Creation Unit, the Paired Trusts will enter into a settlementcontractpursuantto whiclr one of the trusts will be obligatedto make a payment to the other tsust upon the redemption of the related Creation Unit. If the Applicable Reference Price of Crude oil2on the date when tho settlement contract is terminated in connection w.ith a redern tion ofthe MacroShwes is higher than such Applicable Reference r Price of CrudeOil on die closjng date, the Down Trust will be required to make a payment to the Up TNSL Conversely, if the Applicable Reference hioe of Crude Oil on tbe dare of settlement is less than on the closing date, tlte Up Trust will be required to make a payment to the Down Trust. The purpose of the payment required to be made under the settlement contracts ia to ensure that each of the Paired Trusts holds assets equal to the ProponionareUnderlyingValue (as defined belbw) of the shares being redeemed. ARor making or receivingasettlement payment undor the seitlement contracts, the Paired Trustswill deliver cast1and/or tressuries inm amount equal tosuch ProportSonateUudarlying Value as a find distributiontothe holders ofthe shares being redeemed. On any prioe determination day: the 'IUnderlyinpVduenof each of the Paired Trusts will be mloulstted using that day's Applicable Reference Price afCrude Oil, as defined in footnote 2 below. The Underlying Value of a Macro Trust on any grim determination day will represent thc sham of the aggregate amount of assets on deposit in both that Macro Trust and its Paired Trustto which the shareholders ofthat Ma~ro Trust would be entitled ifthe settlement contrafswere settled onthat day. The "ProportionateUnderlvina Value" of each MrroroShm on any price de~minatioaday will be equal to its share ofthe'underlyingValue of its Macro Tmst. ' An ''Wibri?Rd pat210ipmffis any Wily th~t(I) is r rcgister~dbrbkcrdealcrwd a rncmbcr in good &ding wirh rhe PinencifdInduslry Rcyrlalory Authority ("P1Na411), or a participant inthe seuudties marketssuch as a bonkor other financial Inslilulian Ulat is not required to register asa broker-dealer or he amemberof FSNRA in orderto engage in securitiesmmsncrions;(2) is a pwlieipnntin DTCor has indircct access to the clwing facilidcs of DTCBy virtue of a cumdie1relationshipwith a DTC participant; and (3) has entered into a "meern 5 e@ with the Deposlror, rhc Trustee and the Administrative Agent. The status of each authorizedparticipant for the paired holding crusts as a principnl underwriter breach such trust will be btcrmind in accordancewith the definirionof'sotubryundm-tcr'contained in Section2(a)(29) dlhc 1940Act. The
'tC\aalicablcReferonce Priceof Crude OUnfthe settlementprice of the Ljghr Sweet Crude Oil Futures Contract, as calculalu) and reported by the New York MercantileExchmgc, Inc. ("NYMEXt') on a per barrel basis in U.S. dollarsot d~e end of each ptlce determinnrionday bad upon the tradingthat has occurred in that contract by apen autery and lhat has been published 16 hecmsolidatcd tape or publiclydisseminated. lfNYMOX abandbns itsopen oulcty foml for the Light Sweet Crude Oil Futures Corllract, the Applicable Rtfmnca Price of Crude Oil will be based rm tradingofthe Light Sweet CrudeOil Futures Can1roci60 tlre subsriruk clbctronic aading platform calculated by NYMEX,and, in Ule eventantthe NYMEX License had been terminated by NYmX and MacroMwkots LLC andthe Depositor Itme auceessfillynegotiated a license with a Substiwe Oil Pricc Provider, #re Applicable Rekence Price af Crude Oil will bc bascdnn(he satlmcnt price for Ulc SubstitubRefmncc Oil Pricc that is calmlad for each prlw delcmintllim day. asprovided in such license. The closing date is Ule date on which the arst lsa~kncoofPaired Macrosharesis mode by the Reirtd Trusts. ' A price dcrermlnarionday is any day on which light sweet mdc ail futurescontractstrade by open outcry on Ulc NWEX and a sottlolnent price is determined for such tionmctu in sccordance with the rules ofthe NYMM. 11S427i.lO-NavYork Sewer ?A -MSW 3

Securities and Exchange Commission
July 1,2008
The Paired Trusts will alsd make quarterly distributions of income earned on their Eligible Ynvestments, net oftheir respective fees and expenses, to the holders of the MacroShares. The entitlementof each MacroTmgt to investment "income''(if any) realized onthe Eligible Investments on deposit in bod3 of tho Paired Trustswill be mloulertd fkc eacb day under the terms ofmincome distribntian agreement entered into by the Paired Trusts. Such entitlement will be based on the Applicable Reference Price of Crude Oil on the day of measuromexnt and i8 referred to as each trust's "earn,ebincameam-." On each distributiondate, the required pQmentunder the income distribution agreement will be calculated as thc net oftha entitlementsand linbilities that have accrued during enoh day aFthe preceding ~alculatianperiod for ewh Maoro 'hist, This payment will be made by the trust that has a net liabilityunder the income distribution agreement out dthe net income realized by such trust as of such distributiondao. After eacb Macro Trust has made or received a paymenl:under the income distributionagreement on each distributionpayment date, ir will distribute, an suclt date, its aggregate available income to its shnreholders as a quarterly djstributiol~. Form of the MacroSheres The MacroShares were issued in the form of one or mare global certificatesregistered in tho name of Cede & Co., as the no~ninceof DTC,and deposited with DTC in the United Slates or with Clewstream Banking, sooi&6 anonyme or Burootear Bmk S.A.MV in Europe. Shareholderswill not receive a physical oertifloatc ancl will not bs considered to ba the regimered holders ofthe global certificates representing the MwroShares. Instead, IYTC or its nominee will be recognized as the record owner of the MmShares for all purposes. Under existingindustry prffitice,inthe event the Depositor or the trustee requests any notion by beneficialowners with respect to any MacroShare, DTC will enable its pattioipantsto takc such action and its participants will enable the indirectpartioipants and benefioial ownersof such MacroShares to take such action through tlro DTC participants. Furthmare, if a beneficial owner desiresto tnke any nctionthst DTC, as the record owner of all outstanding MoroShares, is entitled to take, DTC's pnrtioipants will orhenvise act upon he instructions ofthe indirectparticipants and the beneficial owners. Accordingly, to exercise its rights asa shmholder, each beneficial owner of MscmShares must rely upon the protedures of DTC as well as those of DTC participants and any broker, dealer, bank, trust company or other party that clears through or maintainsa custodial relationship, either directly or indirectly, with the DTC participantthrough which such bknefitial owner holds its interest. Moreaver, because each Macro Trust's records will reftect that its sf~aresare held by DTC, the trustee will %w?lish,basod on information provided by DTC, the required materials to the DTC participantswhich, in
t4m, will bresponsible for distributing them to the benefloial owners. Pnircd Optional Redemptions of MacraShares The Up Macrosharesand Pawn Macr6Shates may be redeemed in one or more Creation Unitson any prjca determination day at the direction ofauthorized partioipanD. Such redemptions are referred xa as I'Paired Optional Redemptions.'' All outstandingMacroshares will be sutomatically redeemed on the finalscheduled termination dab scheduled t6 occur in December of 2013 or on the earIy termination date that will follow the occurrence ofcertain "~erminationtrjtri~m'~such as a change in the legal stntus of the Macro Trusts for purposes of the fedoral securities laws, the fhilure, for five (5) oo~~~aeculive business days, of NYMEX or a subsfitwe oil provider to calculatethe Applicable Reference Prim of Crode Oil, or a decrease in the Applicable RefelmcePrim of Crude Oil toor below $15 or an increase in that prioe to or nbove $185, at which points the Underlying Value of the Up Trust or tithe Down

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Trust, as applicable, will be equal to approximately 15% or less of the aggreg.ate assets on deposit in s~tch trust. In connection with a Paired Optional Redemption, one or more settlementconmotswill be settled and the ndiond amount ofthe income distribution agreementwill be reduced ac~ordingly.~On the relevant Redamption Date (as definedbelow), the redeeming autl~orizcrlparticipantswill receive a final distributioneqml to the ProprtionataU~derlyingValue ofthe Up MacroShrves and the Proportionate Underlying Value ofthe Down MacroShareswhich were tendered fat redemption. Authorized participants must place redemption.orders with the administrative agent on ar~yprim determinationday (the "Redemp'tionOrder Dat~'')not later than the time specified from time to time in the ParticipantsAgreement (dcfined hemin in footnote 1). On tl~ebusiness day folbwing the Redemption Order Date or, in She event that the Redemption Order Date is a distribution date or the business day following the disrcibution date, on the thin3 business day after tl~eRedemption Order Date (the "&edemptionDate''), the redeeming authorizedparticipant must deliver'to the trustee the requisite number of Up MaoroSRares and Down MacroShares constimting the number of Creation Units being redeemed and a transaction fe0 payable to tfie trustee. and the adminiswative apnt must deliver to such authorized participant, cash andlor Eligible Inveamenr in an amount equal to the Proportionate UnderlyingValua of the Up Macroshares and Down MmroShares beingredeemed, An order for the issumce of Maomshares in lots eqwd to one or more Creation Units may be placed on my price determinationday at the direction dany existingor prospective shareholder who is an authorizedparticipantand whodslivors immediatelyavailable funds to the bustee in an amount equal to the Proportionate UnderlyingValue of the Up MaoroSharesbeing created and the Proportionate Underlying Value of the Down Ma6rbSberes being created. Such acrea$an of additional Paired Shares is refirred to asa "Paired Issuancc,ff Authorized participnntsmuat deliver screationorder for Pairscl Shares on any price determinationday (the "lssunnceprder Date") prior to the time specified in the Participants Ageoment. On the business day followingthe Issuance Order Date or, i.n zhe went ht ths lssuanoeOrder Date is a distributiondate or the business day follawing the distribution date, on tha third business day aniter the bsuance Order Date (suoh date, the "mwDa&"),the authorized participantmust have delivered to tlio trustoo immediately availablefunds in an mountequal to the aggregate Proportionate Underlyii~g Value ofthe Up MacroSbares and Down MacroShmbeing created plus atransaction fee payable to the trustoa. Following rwoiptof such funds, the trustee will deliver to the authorizedparticipants aooount at DTC,on such lssuanoe Date, Up MaoroShares and Down Macroshares representingthe ntirnber of Creation Units that were issued. Adng at the direction ofthe
administrative agent, the trustee will invest tli~funds delivered by the authorized participant inthe Paired Issuance inEligible Investments. The norronal mountof euh settlement contrAct is equal to the o$gogstc par urnauntof Paired Shms in one Creation Unir. The combined nokbnal mount of all ofthe scttlmwt contmcts entered inlo by the Paired Trum$1my time, as well as lhe notiona! arnouill ofrhe income disuiburlo~regrmenr, wI11 equal iha tiggreBaleamount offinds on deposit in soch trusts, assuming tlmt the ImsUhave not $ufferedany "losses"due to heir txpcnws cxotediog inmrneon hclr EligibleInvemems. The assregate amount of funds on deposit in the Poired Trustswill alwayseqlral.theaggregate par mountof all outstanding Paired Sh@re~, unless, described in he preceding stntencc, tibhcror borh msg exptwescxcccd heir lnwmc from . Eligible Investments.

Securitiesand Exchange Commission
July 1,2008
We note that the process for effecting Paired Optional Redemptionsand Paired Jssuances will wtiliza portions ofthe DTCprocedures established for exchange-traded funds (''EXW'). Dia~cminatienof information about the Mauro$hnrce In orderto provide tho most up-to-date pricing information to investors, markct specialistsand autl~orizedparticipmts wisl~ingto direct a Paired Optianal Redemption or a Paired Issuance of Creation Units, the Depoeitur has entered into a calculatiol~agency ageement with the Ah4EX pursuant to which the AMEX will disseminatethe trading pice of the Up MaoroSlraresand Down MacroShsues by means of the consolidated tape, or on s designated page of the AklEX website located as www.amex.comlamextrader at the end of oaoh business day: (i) every IS seconds throrighout the trading day, the bidlofferprice for ono Up MacroSharo mdone Down MacroSharo, (ii)every 15 seconds throughoutrhs wading day, the Proportionate UnderlyingValue .ref one Up Macroshare and one Pow Macroshare, (iii)every 15 seconds hrougl~ui:the trading day, tho value of theNYMEX benchmark future conmt divided by 4 (because the value of one such contract on the closing date was represented by 4 Up MacroShares) and (iv) the end of day premium or discount of the midpoint of the bidlofir for one Up Macroshare and one Down MacroShare over or to the respective Proportionate Underlying Value ofswoh shares. In addition, at the end of each business day, the administrativeagent will publish on its website located at http://www.macromarke$.com, ths md-of-day market price and the Proportionatz Underlying Vahe of the Up MacmSharesand Down MacroSharesbasecl on the currel~tday's settlement price far the Applicable ReferencePrice of Crude Oil. Tho Passive structure and Limited Activities afthe Macro Trusts Each ofthe M~roTnlsta is a passive, unmanaged investment vshiole which has no dirwtors, officers or cmployooa. Neither Macro Trust ha an audit committee rrnd each trust will rely on the audit ~omrnitteeestablished by tho Depositor to obmply with its reporting obligationsvndesthe Exollange Act. Each Macro Tmst acts only through the trustee or the administrative agent as permitted under or directed by the applicable mstagreement. EsrohMacro Trustsbusiness and activitiesare limited to: (i) issuingand redeeming MacroShares,(ii) entering into the inoome distribution agreament and the settlement wntrmts with its Paired Trust, and (iii)Investing Its funds inEligible hvesme~its pendingapplicatianof such fi~nclsto effect redmptians. MACRO SecuritiesRepsitar, LLCis a Delaware limited liability oompany whicli was organized to act asthe depositor for the MamTrusts, The Depositor is a wholly-owned subsidiary of MaoroMarkets LLC, the owner ofthe patent on the MacroShares structure and the entity which will act as the administrativeagent for the Macro Trusts. The Depositorhas identified and engaged the trustee, the administrative agent, die marketing agents and other seivjce providers for the Macro
Trusts. The actions that may be or are required ro be taken by the smim providers will be governed by thetwms of the mst agreement for each Erust. The Depositor has designated independent:registeredpublic accountantsas auditorsof eacb Macro Trust and may fiom time totime employ legal counsel fir rhe uusrs. None of the Depositor, MacroMmkets LLC, the hustee or any of their respective afjFiliatesor any other person will manage or exeroise mycontrol aver the activities of the Macro Tiwsta, which will be governed whally by tsrms of their respeotive kust agreements. State Street Bank and Trust Company, N.A. will act as a trumsfor both of the Macro Trusts.The trustee will generally be responsible .Ibrthe day-today administration of?heMam Trusts in 1354271.l h-NewYO* Scncr7A - MSW

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accordance with the terms of The respectivetrust a@eementfor each trust. The trustee's principal responsibilities include (i)cflectingPaired Optional Redemptions snd Paind Tss\lances of Macroshares in accordance with the directions of the administrativeagent, (ii)causing the Paired Trusts to make their requirecl paymentsunder the incomedistribution aarecment ~ndthe settlement contracts, (iii)causing the Paired l'lz~ststomake quarterly incomedistributions and final distributions to their shareholders, (iv) administering each ofthe trusts, (v) paying the fees and expenses of each m~stout of available funds, (vi) settling purchase orders for Eligible Tnvestments that were pieced by the administrativeagent, and (vii) performing VA~~OUScalculations, includingthe calculation of the component variables of Underlying Value (G.,the amount of cash and treasuries on deposit in eacb of the Paired Trusts). Theduties of the administreltive agent will inclnde, among other things, (i)investing the funds on deposit in the Macro Trusts and delivered toeach $ust in Paired Issuances by placing purcluse orders for Eligible Investmentsin accordancewith the acquisitionguidelines set forth intlie applicable wst agreement,(ii)seiectingEligibleInvestmentsto be deliveredin oonnwtion wit11Shesettlemem of the settlement contractsand as a fins1 distribution in Raked Optional Redemptions, (iii) lrccepting and 'processing creation orders forPaired Issuances and redemption orders for Paired OptionalRedemptions, and (iv) performing the calculationsdescribed above in "Dissemination dInformarion About the Ma~roShwes.~ We have previouslyobMined no-action relidfiornthe Staffof the Division of Investment Management confirmingthat enforcement action will not be pursued againstMACRO Securities Depositor, LLC, the MACROshares Oil Up Holding Trust, the MACROshares Oil Down Holding Trust, the MACROshares Oil Up Tradeable Trust or the UeZCROshares Oil Down Tradeable Tn~stif such entitiesdo not register as investment companiesunder the 1940Act, Incmettion with the MnoroShares transaction desoribd herein,,theDopositor is relying on such pmviously-obtained no-action in not registeringthe Up Tmst or the Down Trust under the 1940Act, Furthemore, neither of the Macro Trusts will hold ortrade in oornmodity&Ures contra& regulated under the Commodity ExchangeAct, as amended ("af'), by the Commodity Futures TradingCommission. Neither ofthe Macm Trusts are commodity pooh for purpose of the CEA and the Depositor,the astea and tho adminismtive agent are not subject to regulation as commodity pool operators or cammodity tr4cljng advisers. PAIRTIk EXPECTED TRADING OF MACROBRARES The Depositor believesthat the folkwingoharmtaristicswill be exhibited by the MamShares as they are traded in the secondarymarket: (i)the sum ofthe market price ofone Up Macroshare and one Pow MncroShare (the 'Qrnbined Market Pricet')will tend totrack the sum ofthe ProportionateUnderlying Value of oneUp Macroshareand the
hoportionam Underlying Valuc of one Down Macroshare (the ''Combined Pronortionate UnderlvinpValue"), (ii)iftho Combined Market Price beginsto trade downward away from the Combined ProportionateUnderlying Value, market participants will take advantageof the resulting arbitrago appolmnityto redeem Paired Shares at such Combined Proportionate UnderlyingValue in a Paired Optional Redemption, and (iii)if the Combined Market Price trades upward away from the Combined PropartimateUrlderlying Value, market participanls will take Advantage ofxlns resulting arbitrage opportunityto createadditional Paired Sharesat such Combined Proponionate Underlying Value in a PairedIssuance. In the case of both (ii) and (iii) above, the actions taken by market participants will dtherdecrease or increase the supply of MRcroShares and, thereby, bring their Combined Markex Price back in line with their Combined Proportionate Underlying Value. The depositor does not expect that trading in the Macroshares will have any effect on the futures settlement prices for crude oil in light ofthe fact that the PairedTrusts will never acquirethe oil fimres upon the price of which the t1116ts' respective underlyingvalues rus baaed and will, asa rcsult, never be

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buyers or sellers in the oil .Futuresmarkets, and the fact that the worldwide volume of futr~l-estrading in ode oil far cxceeds the expected volume of trading in the MacroSbares. For purposes ,ofunderstanding how the MacroShmea will trade, the Macrosbares maction may be comptued to exchqnge-trade fund (or "m)hnsaotions. The MaoroShares wmsaction is structured differentlythan ETFs insafas as, among other smctwra.1differences, (i) rhe MacroSharestransaction is wholly synthetic and no underlying assets bat reflectthe value of the reference index or price are acquired by $lieMacro Trusts, fli) the MwroSliares transaction co~lsistsof . . "paired''shares consisting of Up MacroS11aresthe value of which increases as tbe value of he referenced asset rises and D~wnMacroShares the value of which increases as the value ofthe referenced asset falls, and (iii)sucl~Paired Shares must be issued and redeemed together in Creation Units. However, the Depositor be4ieves that, in the stxondarymarket, the Applicable Reference Price of Crude Oil will be a key variable in determiningthe marW price ofthe Paired Sheres. Accordingly, with a sufficiently large initial paired issuance oFMacroShares on tlw closing date, together with the creation of suffloicnt liquidity by market makers, premiums or disco~lntsin the CombinedMarket Price ofthe Paired Shares to their Combined Proportionate UnderlyingValue should be corrected by market activity. The level of tho Applicable Reference Price of Crude Oil is available during the course of emh trading day on the consolidated$apeand through various market daw vendors, The formula disclosed in the Up MaoroShares Prospectusand the Dawn MmoShares Prospectusconverts a change in the level ofthe Applicable Reference Price of Crude Oil into lhe Underlying Value for each ofthe Paired Trusts, which c;m also be expressed on a per share bwia uthe Proportionate UnderlyingValue of each MacroSbere. In order to encourage Wading in the MetcrdSharessurd tr,promote liquidity and price tmnsparency, the Depositor has engaged, on behdf oftho Macro Trusts, the AMEX to calculateand make available to the public indicative intraduy ProportioneteUnderlying Values of the UpMacroshares and Down MacroShares for each new indicativevnlue ofths Applicable Reference Price of Crude Oil that is received by the AMEX n15 second Intervals throughout the trading day. Accordingly, both market speoialistsand the individual investor will have at their dispoanl duringthe course of each businessday tlic information .necessaryto make an idormed and rational decision &out whather and at what price to buy or sell MacroShares. To the extentthat the Combined Market h-oe ofthePaired Shms does, frm time to time, diverge from the Combined Proportionace UnderlyingValue of those shares,he Depositor believes that marketspmialistswill take advantage of the resulting arbitrage opportunity to directa Paired Optional Redemption or a Paired Issuance the effect of which will be to bring the
Combined Market Price of the Paired Sharesback inline with their Combined Proportion@eUnderlyingValue. Ifthe Combined Market Price ofthe Paired Shares (tbgether with the transaction casks of effeoting a retlemption) is less than tlwir CombinedProponionare Underlying Value, market ~pecialistawill have an incentiveto take advantage ofthe fact that the Macrosharesstruotureallowsthem to redeem fie shares at any time at tke Combined ProportionateUnderlying Value of those sharesand they will acquire sucl~shares in Ule open market 8nd direct a Paired Optional Redemption. Such redemptionwill reduce the number ofoutstanding shares and cause a.resulting increase in their market price. If the Combined Market Price of the Paired SRares is greater than their Cornbined Propartianate Underlying Value (togeth~rwith the transaotion casts ofeffbctinga paired issuance), market specialists will have an inoentivo to take advantage of the fact that the MacroShares structure allows the PairedTruststa issue shams at any time at the Combined Proportionate Underlying Value ofthose shms and they will direct the twtto effect a Paired Issuance. Such issuancewill increasethe number of outstanding shares and caw s resulting decrease in their Combined Market hico. Even if the Up Macroshares are trading at a premium while, at the snme time, the DownMacrosharesare trading at a discount (or vice-versa), ifthe market specialist csln realize a net

Securities and Exchange Cammission
July 1,2008 gain by effecting either a Paired Optional R4emption (if the Combined Market Price of the Paired Shares would be priced at a net discount to their Combined Proportionate UnderlyingValue) or a Paid Issullnce (ifthe Combined Market Price of the Paired Sh~eswould be priced at a net premium ovmtheir Combined ProportionaXeUnderlying Value), the market specia1.i~will have an incentive to effect such a redemptio~lor issuance. Accordingly, the Depositor believesthat, during any period when the Combined MRrket Price of thePaired Shares is in ewss of, or less than, their Conibinecl Proportionate Underlying Value, 130teflns of the MaoroShwes transaction will permit investors to engage in arbitrage activity that will realign such Combined Market Price with such Combined PloportionateUnderlying Value.
PART Ill. WQUEST BOR RELIEB
Introduction
The Dopositor, on behalf o'fit~eltthe Up Trust and the Down Trust,d~eAMEX, any other Market and persons or entities engaging in transactions in the MacroShares, respectfullyrequests no-action relief from Rule 101 md 102 ofRegulstionM,Rule lob-10 and Rule lob-17 promulgated, in each case, under rho Exohruige Act and Section 1l(d) of the Exchange Act and Rule 1 ld1-2 promulgated thereunder*in connection with transactions in Up MacroShwes and Down MacroShms and the issuance and redemption ofPaired Shares, asdiscussedbelow. I@). Rule 101ofRegulation M; Na-Action Relief for ~econdaryTransactions end Redamptions Genedly, Rub 101of Regulation M is all anti-manipulation regulation that, subjeot to ccmin exceptions, prohibits any I'distributionparrioipant''and its "affiliated pur~hascr[s]~rrom bidding for, purchasing or attempting to induce any person to bid for or purchase, any securiry which is the subject of a "distributionf'until after the applicablerestricted period, except as specifically permitted in Regulation M! The provisions of Rule 101 apply to underwritersand prospectiveunderwriiers, brokers, dealers, an3 other personswho have aped So participate or are partioipating in a distribution. Orders directii~ga Paired Issuance of Paired Shws may be plwed by authorized participants on any price determinationday throughoutthe course of a Macrosharestransaction. Accordingly, a "distributian"of the Paired Shams may be occurring continwously.' The authorized participantswho may from time to time direct Paired Issuances will not be part ofa syndicate or a selIjng goup and will not receive fees or commissions from tlre Macro TnJmin exchange for effiiringsuch issuances and redemptions. Nevertheless, such persons may be deemed to be "undem'ters"or "distributionparticipants,"abecause they may be deemed to be participaring ina distribution. Atco.rAingly,UI~Depositor respectfullyrequestsneaction relief fiam Rule 101 to permit persons who may be dae~nedto be participating in a distributionofMacrasharesto bid for or purchnse, redeem or A Vdlstrjburion" is defi~iedin Section IN@)updcr Regulation M ai ''an offering. . . Ihar, istliminguished from ordinary Mding tr~nsactiansby the rnrrgnitmle ofthe offwing and the presence of $p;peoi@%)lingefforrs and selling mtdiods," 17 C,P.R. 5 242.100(b)(2005). A ''distribution partlcipnnt" is dofmed tts "an underwriter, proptive underwriter, broh, dealer, or other person who ha!! agreedto participate or is participatingin a distribaion." 17C.P.R.bj 242.1~]~2005). 1354271.10-NewYork Server?A - MSW

07/02/2008 14: 16 SKQDDENQRPS + 913038441093P076590 N0.073 Dl1 Securitiesand Exchange C~rnmission July 1,2008 otherwise engage in other secondary mark& transsctialls in suchMacroShms duringtlreir participation

in the distribution.

Paragraph (c)(4) of Rule 101exempts frm its application redee~yble securities issued by open-end management cornpa)lies(as such toms are defined in tlne 1940Act). As discussed in Part I herein, in reliance on no-action relief previously obtained by the Depositor from the Division of Investment Management, the trustswill not be required to register as invesbnentcompanies. Furthermore, although an order fof o Paired Optional Radempti~nmay iyplacedat any time, the market specialist. wishing to effect suoh redemption must tender Paired Shares in the aggregate minimum amount constitutinga CroatianUnit. Nevertkeless, the rationale behind the exemption cant~nedin paragraph (ox41of Rule 101 for rodeornablo securities of open-end management ~ornpaniesis applicableto the Macro Trusts, bmuse the ability toareate and redeem the Maci~Sharesat any time (subject.to the requirement of aggregatingthem in Creation Units) will ensure that the Combined Market Rice of such sharesdoes not diverge significandyfrom their Combined Proportionate Underlying Value. If~he continuous imancc a~ldredemption of MacroShares were to be precluded by the application of Rule 101 to MaoroSharestransactions, the Macro Trusts would not be abb toomate as intended. The purpose of Rule 101 is to prevent persons fram conditioningtlw muket to facililarea distribution. However, MacroSharestransactionsdo not implicate the rnanipulatrive abuses that Rule 101 intendsto prevent. MscroSliares are derivative investmer~tsand their CombinedProportionate Underlying Value, which may be realized by market participa~ltsat any time by effecting a Paired Optional Redemption, is determined by referenceto the value dthe referenced assot,whioh is based on the Applicable Reference Price of Crude Oil; the determination of such value is wholly independcnt of trading in MaoroShares. Any attemptto manipuIatetl-rumarket price ofthe UpMaoroShares is expected to have an offsettingeffect on the market price of the Down MacroSharcs and vice versa, preventingthe price rnanipulstorhm affecting the Combined lkhket Price ofthe Perired Shams, which the Depositor believes will tend to hack their Combined ProportionateUnderlying Valuo, Any divergence berween the Combined Market hioe of Macroshares and tlleir Combined Proportionate Underlying Value js expected to crentc an inoentivefor arbitrage activiqy which will bring such price back inline with Combined ProportionateUnderlyingValue. Pu~ennore,wpplying tJ~erestrictionscontained in Rule 101 to Macrosharestransactions may inhibir this essential arbitrage activity, because suoh application would prevent pasons who may be deemed to be pertioipating in a distribution ofMacroShares fromaquilming such shares in secondary transactions in order to effect a Paired Optionlrl Redemption. Inview of the lack of myreal potential forthe issuance mdsacolidary market Wing of

MacroShwesto affect significantly the pricing ofthose shsres, application of Rule 101to a broker-dealer

or other persons who may be participating in a distribution of Macroshares is unnecessary find could

hinder broker-slealersor other persons intheir creation and redemption activities and in their day-to-day

ordinary business ofbuying and sellingMffimShares and, thus, undermine the potential beneficial market

effect of MacroSharastrading. Therefore, the Depositorrsspectfully requosos that rhe Staffnot

recommend enfor~ement action to the Commission ifpersons who may be deemed to be partioipatingin a

distribution of Macroshares redeem or otherwiseengsge in ather secondarymarket transactions in such

Macroshares during their participation in tha distribution as mpresented above,

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Securities and Exchange Commission
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l(b). Rule 102 of RegulationM: No-Action Rolicffor Redemptions Rule 102 of Regulation h4 prohibit8 issuers, selling securityholders, or any aRliared purchaserof such petson from bidding for, purchasing, or attemptingto induce any person t6 bid for or purchase a covered security during the applicablerestricted period in connection with a distributionof securitieseffected by or on belulfofan issuer or selling security balder.'' Thepurpose of RuIe 102 is similarto the purpose olRk11e101 of RegulationM inthat it soeks to prevent manipulationof &e price of w seaurityduring its distribution and to protat the integrityof the offaing price, 13wed on the reasoning described in the previous paragrap1-1,the Depositor respectfully requests no-action reliof from Bule 102 in order to permit the Macro Trusts to effect.,and any authorized participant to direct, Paired Optional Redemptions of MaccroSliares despite die fact that a continuous offoring ofme MwroShnres is occurring during the eame time as suoli ~xdernptiona.The Macro Trusts reapatiblly submit that sucl~ oxchanges do iiof constitub a manipulative practi.oefor purposesof Rule 102. Although any redemption of MamShareswill have an effect on the market prim dthe MacroSIiaras by decreasingthe supply of such Macroshaws, as discussed above in Piart U:Expected Tradingof the MaoroShores, the fact that such NacroShmes may be rudcemed at any time and the fact that redemptions will always be effected nt the Combined ProportionateUnderlyingVduo of suoh shares, ensuresthat the rnflrketprice of any newly￾created MacroShacesaannat bbe manipulated by nwans of Pnirsd Optional Redemptions of existing shares. Acoordingly, the Depositor ~~ss~xctfully submits that providingno-actionrelidto the Macro Trustsand selling autbon'd participants fram the applicationofRule 102would not be incm~sistenfwith the purpose of such Rule.
2. Rule lob-10 of the Exchaage Actr No-Act9onRelief
Rule lob 10 requires n broker or dealer ehting stransaction in a saiurity for a customerto give or send written notifloationta such customer disclosingthe infonnatiou specified in parngraph(a) ofRule IOb-10, including the identity, price and number of shares or units (or principal mount) ofthe security purchased or sold.'' The Deposibr respectfbllryrequests (A) an interpretive release confirming that the Rule does not apply tothe following set of mmsa~tions:a broker or dealer who is an authorized participant, actingon behalf'of sever4 holders of MacroShaes, (5) tenders such shares for a Paired Optional Redemption and (ii)deliversta each holder of MmcroShares such holder's sl~aredthe Treasuries itreceived as the final distribution in such redemption, or, alternatively, (8)no￾action relieffor these bansactions from the appfioation of Rule lob-10, to the exrent described below. The Depositor is not %questingrelief fiom Rule lob-10 in oonnection wjth Paired issuances (which requiresthe deposit of immediat~tolyavailable funds intothe Paired Trustsratherthan a deposit of any Treasuries or other securities) or purchasesor sales ofMaEroShares in the secondary market. Unless a redemption isbeing effected on a scheduled quarterlydistribution dare or sufficient funds rn available from Paired Issuancesbeing effected on the same day asi the redemption or fr0m the maturity proceeds of the Treasuty Repos held bythe PairedTrusb,the trustee, acting on behalf of the Paired Trusts, will redeem the Paired Shares by deliveringto the ~utborizedparticipant who is effecting the redemption on behalf of im customers, Treasuries with a value (based on their purchase price plus accrued but unpaid income thereon) equal to tho resipecsiveProportionateUnderlyingValues of the " 17 C3.R. Si 240.10b-I0(20051. Wenote that broker-dealer transactions altar are executed in ''U.S.Savings Bondsn ate exemp~dRom Rul~10b-10by pamgraph (0) thereof.

Securitiesand Exchange Cammissi.on
July 1,2008 shares being redeemed. Markst-psMti.cipant on wllase behalf a broker or dealer who is an authorized pwticipantwo~~ldbe eflecting a redemption will already know that they will receive s find distribution equal to the Proportionate Underlying Value of their MacroShares bnnd, therefore, they know the administrative agent's valuation of tlno Treaswiesdehred in the redemption. l'he current market value of ~oseTreasuries may also bo redily determined by referenceto various publicly-availablesources. Accordingly, the Depositor respectfully requests oonflmation that broker or dealerswho cdeern Macroshares an behalfaftheir customers and then deliver to suchGustQmersthe Trewuriesthey received from the Paired Trustsin redemption of such MaoroShares arcs not subjectto th& disclosure obligations set farth in Rule lob-10with rBspectto tlie delivered Treasuries. Atwmatively, the Depositor proposes TWbrokers and dealerswho redeem, on bshalfof a customer, MacroShares and receiveTreasuries ss the finddistributionon those shares, be permitted to provide their customers.witb a statement setting fortii only (f) We Proportionate Underlying Value of each MacroShtue being redeemed and (ii)the type of each Treasury rewived in the Peired Optional Redemption. In view of the fact that Treasuries are essendally casb-squivalent instruments and their priceson any date ofdeterminationare publicly available Barn numeroussouroes, requiring broker and dealers to identifythe market price ofeach type of Treasury being delivered in a redemption would bc an unnecessary burdenand would only provide their customerswith information that the cusorners wn readily obtain elsewhereat no dditional cost. The Comissbn, in.previous na-action le#ets, has grantedthe reliefrequested above, subject:tofile followingconditions, with which the Paired Trusts areprepared to comply:'2(i) confirmation statement of redempticsns of Macrosbareswill oontain all ofthe information specified in pzir~graph(a) of Rule lob-10, other thanthe price and the number of Treasuries received by the customer in the redemption, (ii)any confirmation statementrelating to a redemptionaffectad on behalf of a customerthnt omits the price a number of T~asurieswill contain a stalement tha$suab omitted information will be provided bthe customer upon.requestand (iii) all such requests will be fulfilled in a timeiy manner in acccrrdmce witla paragraph (G) of Rule lob-10.
3. Rule 10b-17of thc Exchange Ack NbAction Relief
Rule lob-I 7, with certain exceptions, requires an issuer of a class of publicly traded secritiesto give notice ofcertain specified actions (for example, a dividend distribution, stocksplit or rightsoffering)relatingto such class of securities.13Most ndtabIy, Rule lob-17 requires kn (10) days' prior dotice for distributions, and suchnotice must describethe amount of cash to be paidon a per share basis. For the reasonsset forth below,the Depositor re~pectfullyrequests no-nctian relieffrom the foregoing requirementdRule I Ob-17 pursuant toparsgraph (bj(2) thereof.14 The Macroshares transaction will have quamly distribution detes that are scheduled to occur on the second businessday preceding each rocard daw, which will occur on the last business day of March, June, Septemberand R~ccmberof each year, On each quarterly distribution date, each of the la See e.g: Vanward kmationtd Equity Index Funda, $#C NeAclionLencu, 2005 WL 850139 (Mw,9.2005). 135r1271.10.Now Yolk Sorwr7A - MSW

Securitiesand Exchange Commission
July 1,2008

Paired Trusts will make a quarterly distribution of incomeon irs MaoroShms to the extent that such trust realized income on its Eligible Investments. Under the income distributionagreement, each ofthe Paired Trusts will be entitledto a portion of tho income realized by both ofthe Paired Trusts b~sedon the Applicable Refeirenoe Priceof Crude Oil and (ha resulting UnderlyingVatua of each such -st an eaoh day of the preceding oalcularionperiod. The Proportionate Underlying Vslue of the M~cmShareswill decrease on the day following each quarterly distribution dste, but that such change will be the result of the making of a scheduled quarterly distributionof available income by the Paired Trusts and will be unrelated to a change in the Applicable Rcferencc Pn'm bfCrude Oil. The partion ofa Macroshare's ProportionateUnderlyingValue that is attributableto accrued income is oabulated based on two variables -(i)the daily aocrual rate (ner ofths applicable fee accrual rdte)that is beingrealized by the Paired Trusts on their Eligible Investments, and (ii)the level of the Applicab.leReference Price of Crude Oil on eaoh day of the calculationperiod that precedes each c~uarterlydistribution date, which will determine how much of its accrued nnd available income each Macro Trustwill be entitled to retain and llow much it must pay to itsPairedTrust, A primary purpose of Rule 10b-17 is taput on notice both the public and the broker￾dealer communi~ytlutthe offeror is intendingto distribute a dividend, enabling the parties in equity transactions and their broker-dealersto take into nocount the corning distributionand adjustthe price paid for the equity ecci~rlrltiesaccordii~gly.'~The Commission, in its adoptingreleaseof Rule 1Ob-17, specificallynoted that "anexemption will b&ranledonly in special circumstances where the purposes of the rule are not applicable and where the NASD does not need the report to enable it to adequately disseminatethe informationto its membera and the investing public."16Tnthe case of quarterly distributions of income in Macroshares transactions, the investing p\lblic and the broker-dealer community will already be aware ofthe dates on which such distributionswill be made onthe MacroShm~and the best estimate of the amount of each such distribution may be made by the investor on any date of determinationby reference to the portion of tho ProportionateUnderlying Value of each MacroSh~rethat is attributableto accrued interest. This is also the only bwis upon which the Depositor could make an estimate of the amount of a qumrly distribution, IHbwever, such estimate will be inaccu~ateif the ApplicableReference Pn'w of Cwdo Oil and, therefore, the respective Propbrtionate Underlying Values ofthe Paired Shares fluclvate significantly during tho Iast 10 days precedingthe distribution date, The Depositor cannot predidor estimate the effect of such volatility in the Applicable Reference Price of Crude Oil. The Camn~issionhas recognizeid the problem
of''lastminute changes'' In the distribution amount noticed by an issuer pursuant to Rule lob- 17. '' Tsl recognr'tianofthis dilemma, paragraph (G) of Rule 1Qb-1.7exempts open-end investmentcompanies and unit inveshenrtrusts which issueredeemable securities from the slpplicasion ofthe Rule. Due to the redeemable namm af the securities that are issued by such entities and the fact that distributionsthereon ase based ilpoo their underlyingvalue which can fluctuate daily, the amounl that will be distributed is, at best, an estimate based on the underlyingvalue at the time when the disftibtionamount is announced and subject to change during the 10-day periad prior . . '"ee Tjmely Advance Notice ofRecord Dates, Exchange ht Release No.34,9076,1971 WL,1261 15 (Feb. 17, I971). See ~do~tion of ~ule 1Ob-17,lExcbange Atr Release No.34,9192,1971 WL 120514, at *I (June 7,1971). 13.54271.10-N Yark Sniwer 74 - MSW

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ro the date dthe actual distribution. Although the Mac~oTrusts are not expectedto be registered investment companies and their shares must be redeemed in aggregstionsof Psird Sharcs constitutingat least onc Creation Unit or integral multiplesthereof, the redeemable nature of the Macroshares Creates a similar problem to that which is addressed by paragraph (o) dRule lob-17. hi addition, in the case oftlie NwroSbares, Paired Optional Redemptions and Paired Issuances, which may be effected an any price determination day, may alter the composition of, andthe yield realized on, the masuries held by the Paired Trusts during the last 10dsys ofeach calculation period, Accordingly, the Depositor respectfully asserts that providing ten days' prior notice of quauterIy income disuibutions would be impractical and that the purpose of Rule lob-17 would not be frumtdif no-action relief fram such Rule were granted for such distributions in MacroSharas trmactians. As notedebove, lhe Commission has recognized impracticality as abasis for dola~pgm announcementof a dividend (as opposed to any deceptive purpose on the part of the issuer) and the Depositor respwtfiully requests no-action relief from the 10 days' prior notice requirement fv dividends contained in Rule 1Ob-17,
4. Secdon Iltd) of $beEvchange Act wad Rule 116-2 promulgatedthereunder
Section 11(6)(1) of the Exchanp Aot generallyprohibits a person who is both a broker
and a dealer from effectingany transaction in whiali the broker-dealerextendscreditto a custameron any security whioh was parc of a new issuein the distribution of which he arvicipated as a member of a solling syndicate or pupwithin thirty days prior to such hansaction! exchange Act Rule 1ldl-2 providesan exemption from Section 1 I(d#l) fot securities issued by s regisbred open-end investment company or unit invcstmont trust with respato transactionsby a broker-dealerwho extendscredit on such securities, rovided the person to whom credit has bean extended bas owned the securities for mar? than thirty days.Pa The Deposiror respectfully requests confirmation that the exemption from Section 1 I (dX 1) that is provided by Rule 1 161-2will be applicableto boththose brokerdealerswho we auth.orizedpnrticipantf with respect to the MaoroSharesl and those broker-dealers engaged in transactions in MaomSbams solely in the secondarymarket.
Section 1l(d)(l) was enacted to address issues engenderedby the segregation of the
hnctions of brokers and dealers and its purpose wasto preventbroker-dealera from "shim-pushing" by offering creditto focilitare tho purchase of newly-issued securities?' However, the Commission has recogriimd in prior no-action letters that both broker-dca.lerswho act as auti~orizedparticipants in ETFs and other open-er~dinvestment companies and broker-dealerswho e~jgagesolely in secondary market transactions do not have incentives to use credit to engage in the ''share-pushing"that Section 1 I(dXI) was designed b prevent?2 The rationales for exempting deemable securities of open-end investment " Jn the wbrds ofthe House ComrdtteemodnyQn rho bill which includedSection Il(d)[l): "[ir] strikes a8one of tho greatcsr potential evils inllerenr in the combination of the broker and deatd function in the same person by assuring U~athe will not inducehis cuslomcrsto buy on crzditsecrrsities which hr:has un&Wen todismibure mthe public." J3.R Rep. No. 73-1383, at 22 (1934). U See, e.g, Ddvalive Producw Cornminee of the SecuritieeInduelry Asibcintioh SEE No-Action Letter 2005 W331 1414, at 44, CNov, 21,200s) (the "$hhtte~tter~).

07/02/2008 14:16 SKRDDEN RRPS + 913038441093P076590 Securitiesmd ExchangeCommission

July 1,2008

companies from the application of Section 1l(d) are dso applicableto the MacroShams. Brokcr-dealen in Macroshares transaction an under no obligation to direct the Paired Issuance of MocroSharesor to participate intheir distrib~tion.Paired Issuances will be directed only in responseto genuine market demand or as a result of arbitr~geopportuniries, and broksr-dealers who act as authoiized participants in MacroSAwes transactions will be required to pay a fee to rein~bursethe trustee ofthe Paired Trusts for tlte administrativecosts of effectingeach Paired Issuance;thus, there is an incmdve for broker-dealers to refibin firom directing a Paired lssuance of MacraShnrcs inthe absence of genuine market demand for such shares. Furthermore, neithor tho broker-dealers who act as authorized participantsnor the broker￾dealers who ongago exclusively in secondmy transactionswill receive any commissions or fss from the Mscro Trusts orthe Depositor for orcatingand distributingMacroShares in oonimst to the remuneration they usually receive for participating in an initial of'feerijng of shares from the issuinginvestment fund or the undewiting syndicate, other than any feethat any underwriter receives for initially underwriting the transaction, as disclosed in the Up MwmSharesProspectus. Fjnally, the derivative nature of the MaoroShares and the daily publication of their Proportionate U~lderlying Value will createa level ofprice tmsparencythat will make MacroShares lransactions less susceptible to "sharepushing." Tf~eCommission has dectned it appropriateto grant mlidfrom the application of Section 1I (dX1) in the past, subjectto the followingWooondiSians with which the Depositor and he Macro Trusts are prepared to comply or to monitor oompliancetherewith by broker-dealers who act as authorized participants?' (i) the broker-dealers who act ns authorized participantsda not,directly or indireotly, receive from the Depositor, either csf the Macro Trustsor any affjliateof any of the foregoing entities,receive any payment, compensatiorl or othereconomic incentiveto promate or sell the MacroShares (other than non-cash compensation permitted under NASD Rule 2830 (IHS)[A), (El) or (C)) and (ii)such brokerdealers du not exrend, maintainor mange forthe extension or maintenan08 of credit to or for a customer on the Macroshares kbrethirty days have elapsed from the date zhat the MacroShwes initially commenced trading (except tnthe extent that such extension, maintenanceor arranging of crudif is otherwise permitted pwswtto Rule 1141-2). Based on the foregoing, the Depositor respectfully requests ctarificatio~lthat Section 1 l(d#l) does not apply to broker-dealers thst enme exoluaiveiy in secondary market tmns~ctiansin the MacroSkareson behalf of themselves or their customers, Further, the Depasitor requesD confirmation th~tbroker-dealers who act as authorized participantsmay treat the MacroShares as shares of a "OualifyinaE-TF"(as defined in the SIA Lemrnoted in foomote number
22, herein) and, in ceIimce on the class exemption granted by that letter, extend credit or maintainor mangefor tho extension or niaintenance of credit on the MacroShares, so long as the rwoconditionsprovided for in the SVA Lemr (and stated above) are satisfied. In addition, the Depositor respectfully requests that both broker-dealerswho act as authorized participants and broker-de@lersengaged solely insecondary market transactions in MaoroShms be permitted to avail themselves afthe exemption provided by Rule 11 dl-2. Althoughthe Paired Trustsare not expected lo be registered as investment companies under tlre 1940 Act, in view of oamin relevant similan't'iesbetween MacroSharea and ETF shmes described above, the Deposit0~ requests d~atbroker-dealers who ant its authorized participants for tho Paired Trusts be permitted to rely on the exemption provided by Rule 1 l d 1-2 to ETFg and other registeredopen-ended investment St?@,id &Teea/so, e.&, strctGTRACKS GoldTrusr, SECNo-AcJonLecter, 2005 WL 3695283, N*1 Occ. 12,2005) (modification ofprior rolicf). 1354271.lO-NcwVotk SEW 74 - MSW

07/02/2008 14:16 SKADDEN ARPS + 913038441093P07659El Securities and Exchange Co~missjon

July I, 2008

companies and unit investmetittrusts which issue tedeemsble securities. In particular, the Depositor requests confirmatianthat broker-dealerswlro act as authorized participants may, in reliance on Rule 1 ld 1-2, directly or indirectly extend oreditor maintain or arrange for the extension or maintenance of credit on MacroShares that have been owned by the personsta whom credit is provided for more than SO days. For the reasons set forth herein, the Depositor respectfully requests no-action reliefhm, or advice regording, the provisions ofthe Exchange Act and the mlos promulgated thereunderwhich arc outlined in this leer. Sincerely, 1354271.10-NcwYork Server 7A-MSW