December 12, 2005

David Yeres, Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, NY 10019

Dear Mr. Yeres:

By letter dated January 27, 2005, the staff of the Division of Market Regulation ("Staff"), among other things, provided no-action relief from Section 11(d)(1) of the Securities Exchange Act of 1934 ("Exchange Act") to allow broker-dealers that do not create or redeem shares ("Shares") issued by the iShares COMEX Gold Trust ("Trust"), but engage in both proprietary and customer transactions in Shares exclusively in the secondary market, to extend or maintain or arrange for the extension or maintenance of credit on Shares in connection with such secondary market transactions. In the letter requesting relief ("COMEX Gold Letter"), counsel stated: "The Trust notes that no broker-dealer, or any natural person associated with such broker-dealer, directly or indirectly (including through any affiliate of such broker-dealer), receives from the Trust complex any payment, compensation or other economic incentive to promote or sell Shares to persons outside of the Trust complex, other than non-cash compensation permitted under NASD Rule 2830(1)(5)(A), (B) or (C)" (footnotes deleted).

Recently, the Staff, pursuant to delegated authority, extended the relief from Section 11(d)(1) of the Exchange Act previously available only for broker-dealers that traded the shares of particular exchange-traded funds ("ETFs") solely in the secondary market ("Non-AP Broker-Dealers") to include broker-dealers involved in the issuance and redemption of shares of certain ETFs as authorized participants, i.e., broker-dealers that have entered into agreements with the distributor of the ETF to purchase or redeem "baskets" of the ETF's shares ("AP Broker-Dealers"). This relief is conditioned on neither the AP Broker-Dealer nor any natural person associated with the AP Broker-Dealer, directly or indirectly (including through any affiliate of the AP Broker-Dealer), receiving from the fund complex any payment, compensation or other economic incentive to promote or sell the shares of the ETF to persons outside the fund complex, other than non-cash compensation permitted under NASD Rule 2830(l)(5)(A), (B), or (C). In addition, this relief is unavailable for the first 30 days after the ETF's shares initially commence trading.¹

Moreover, in a recent letter regarding a commodity-based exchange-traded trust similar to the Trust,² the Staff granted no-action relief from Section 11(d)(1) to allow an Authorized Participant (as defined in the Euro Currency Letter) to extend credit or maintain or arrange for the extension or maintenance of credit on Shares (as defined in the Euro Currency Letter) in reliance on the class exemption granted in the Class Relief Letter, provided that the Authorized Participant satisfies conditions 1 and 2 set forth in the Class Relief Letter. In taking this position, the Staff noted in particular the substantial similarities between the trust in the Euro Currency Letter and ETFs and the nature of the assets held in the trust.

In light of the Class Relief Letter and the Euro Currency Letter, the substantial similarities between the Trust and ETFs, and the nature of the assets held in the Trust, we are hereby modifying the position taken in the COMEX Gold Letter. Specifically, the Staff will not recommend enforcement action to the Commission under Section 11(d)(1) of the Exchange Act against an Authorized Participant (as defined in the COMEX Gold Letter) that extends credit or maintains or arranges for the extension or maintenance of credit on Shares of the Trust in reliance on the class exemption granted in the Class Relief Letter, provided that the Authorized Participant satisfies condition 1³ set forth in the Class Relief Letter.⁴

Endnotes

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¹See Letter re: Securities Industry Association (Nov. 21, 2005) ("Class Relief Letter").

²See Letter re: Rydex Specialized Products LLC (Dec. 5, 2005) ("Euro Currency Letter").

³For purposes of this position, the Shares would be considered shares of a Qualifying ETF (as defined in the Class Relief Letter) and the Trust complex (as defined in the COMEX Gold Letter) would be considered a "fund complex" (as defined in the Class Relief Letter).

⁴The Authorized Participants have already satisfied condition 2 set forth in the Class Relief Letter.

http://www.sec.gov/divisions/marketreg/mr-noaction/ishares121205.htm