Item
1. Business
The
purpose of the Aberdeen Standard Platinum ETF Trust (the “Trust”) is to own platinum transferred to the Trust
in exchange for shares issued by the Trust (“Shares”). Each Share represents a fractional undivided beneficial interest
in and ownership of the Trust. The assets of the Trust consist solely of platinum bullion. The Trust was formed on December
30, 2009 when an initial deposit of platinum was made in exchange for the issuance of two Baskets (a “Basket” consists
of 50,000 Shares).
The
sponsor of the Trust is Aberdeen Standard Investments ETFs Sponsor LLC (the “Sponsor”). The trustee of the Trust is
The Bank of New York Mellon (the “Trustee”) and the custodian is JPMorgan Chase Bank N.A., London Branch (the “Custodian”).
The
Trust’s Shares at redeemable value increased from $712,718,535 at December 31, 2019 to $1,329,606,858 at December 31, 2020,
the Trust’s fiscal year end. Outstanding Shares in the Trust increased from 7,950,000 at December 31, 2019 to 13,300,000
at December 31, 2020.
The
Trust is not managed like a corporation or an active investment vehicle. The Trust has no directors, officers or employees. It
does not engage in any activities designed to obtain a profit from or to improve the losses caused by changes in the price of platinum.
The platinum held by the Trust will only be delivered to pay the remuneration due to the Sponsor (the “Sponsor’s
Fee”), distributed to Authorized Participants (defined below) in connection with the redemption of Baskets or sold (1) on
an as-needed basis to pay Trust expenses not assumed by the Sponsor, (2) in the event the Trust terminates and liquidates its
assets, or (3) as otherwise required by law or regulation.
The
Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under
such act. The Trust does not and will not hold or trade in commodities futures contracts, “commodity interests” or
any other instruments regulated by the Commodity Exchange Act (the “CEA”), as administered by the Commodity Futures
Trading Commission (the “CFTC”) and the National Futures Association (“NFA”). The Trust is not a commodity
pool for purposes of the CEA and the Shares are not “commodity interests,” and neither the Sponsor nor the Trustee
is subject to regulation as a commodity pool operator or a commodity trading advisor in connection with the Shares. The Trust
has no fixed termination date.
The
Sponsor of the registrant maintains an Internet website at www.aberdeenstandardetfs.us through which the registrant’s annual
reports on Form 10-K, quarterly reports on Form 10-Q, and amendments to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are made available free of charge as soon as
reasonably practicable after they have been filed or furnished to the Securities and Exchange Commission (the “SEC”).
Additional information regarding the Trust may also be found on the SEC’s EDGAR database at www.sec.gov.
Trust
Objective
The
investment objective of the Trust is for the Shares to reflect the performance of the price of platinum bullion, less the expenses
of the Trust’s operations. The Shares are intended to constitute a simple and cost-effective means of making an investment
similar to an investment in physical platinum. An investment in physical platinum requires expensive and sometimes complicated
arrangements in connection with the assay, transportation, warehousing and insurance of the metal. Traditionally, such expense
and complications have resulted in investments in physical platinum being efficient only in amounts beyond the reach of many
investors.
The
Shares are intended to provide institutional and retail investors with a simple and cost-efficient means, with minimal credit
risk, of gaining investment benefits similar to those of holding platinum bullion. The Shares offer an investment that:
● Is
Easily Accessible. The Shares trade on the NYSE Arca and provide institutional and retail investors with indirect access to
the platinum bullion market. The Shares are bought and sold on the NYSE Arca like any other exchange-listed securities.
The close of the NYSE Arca trading session is 4:00 p.m. New York time.
● Is
Relatively Cost Effective. The Sponsor expects that, for many investors, costs associated with buying and selling the Shares
in the secondary market and the payment of the Trust’s ongoing expenses will be lower than the costs associated with buying
and selling platinum bullion and storing and insuring platinum bullion in a traditional allocated platinum account.
● Has
Minimal Credit Risk. The Shares represent an interest in physical bullion owned by the Trust (other than an amount held
in unallocated form which is not sufficient to make up a whole plate or which is held temporarily to effect a creation
or redemption of Shares). Physical Bullion of the Trust in the Custodian’s possession is not subject to borrowing
arrangements with third parties. Other than the platinum temporarily being held in an unallocated platinum account
with the Custodian, the physical bullion of the Trust is not subject to counterparty or credit risks. See“Risk
Factors—Platinum held in the Trust’s unallocated platinum account and any Authorized Participant’s
unallocated platinum account is not segregated from the Custodian’s assets...” This contrasts with most
other financial products that gain exposure to bullion through the use of derivatives that are subject to counterparty and
credit risks.
Investing
in the Shares does not insulate the investor from certain risks, including price volatility. See “Risk Factors.”
Overview
of the Platinum Industry
This
section provides a brief introduction to the platinum industry by looking at some of the key participants, detailing the primary
sources of demand and supply.
In
this annual report, the term “ounces” refers to troy ounces.
Platinum
Group Metals
Platinum
and palladium are the two best known metals of the six platinum group metals (“PGMs”). Platinum and palladium have
the greatest economic importance and are found in the largest quantities. The other four—iridium, rhodium, ruthenium and
osmium—are produced only as co-products of platinum and palladium.
PGMs
are found primarily in South Africa and Russia. South Africa is the world’s leading platinum producer and one of the largest
palladium producers. Russia is the largest producer of palladium and most production is concentrated in the Norilsk region. All
of South Africa’s production is sourced from the Bushveld Igneous Complex, which hosts the world’s largest resource
of PGMs. Together, South Africa and Russia accounted for over 84% of platinum supply and 79% of palladium supply
in 2019.
World
Platinum Supply and Demand 2010-2019
The
following table sets forth a summary of the world platinum supply and demand from 2010 to 2019 and is based on information reported
by Johnson Matthey, PGM Market Report – May 2020.
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(thousands of ounces)
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2010
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2011
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2012
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2013
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2014
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2015
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2016
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2017
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2018
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2019
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Supply
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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South Africa
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|
|
4,635
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|
|
|
4,860
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|
|
|
4,110
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|
|
|
4,208
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|
|
|
3,547
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|
|
|
4,572
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|
|
|
4,392
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|
|
|
4,459
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|
|
|
4,467
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|
|
|
4,402
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Russia
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|
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825
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|
|
|
835
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|
|
801
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|
|
|
736
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|
|
|
700
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|
|
|
670
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|
|
|
717
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|
|
|
692
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|
|
|
687
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716
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Others
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|
590
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|
790
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769
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|
891
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896
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865
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988
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961
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959
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979
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Total Supply
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6,050
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|
|
|
6,485
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|
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5,680
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5,835
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|
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5,143
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6,107
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|
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6,097
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|
|
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6,112
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|
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6,113
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|
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6,097
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Demand by Application
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Autocatalyst
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3,075
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3,185
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3,158
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3,000
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3,103
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|
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3,228
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3,330
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3,292
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|
|
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3,051
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|
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2,885
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Chemical
|
|
|
440
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|
|
|
470
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|
|
452
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|
|
528
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|
|
|
523
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|
|
|
502
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|
|
475
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|
|
|
504
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|
|
|
540
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|
|
|
698
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Electrical
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|
230
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|
|
|
230
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|
|
|
176
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|
|
|
218
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|
|
|
225
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|
|
|
228
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|
|
|
230
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|
|
|
234
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|
|
|
266
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|
|
|
145
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Glass
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|
|
385
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|
|
|
515
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|
|
|
153
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|
|
100
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|
|
|
212
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|
|
|
227
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|
|
|
246
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|
|
|
364
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|
|
|
478
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|
|
224
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Investment
|
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|
655
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|
|
460
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|
|
450
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|
871
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|
|
277
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|
|
451
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620
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|
356
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67
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1,253
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Jewelry
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2,420
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2,475
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2,783
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3,028
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2,897
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2,746
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|
|
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2,412
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2,296
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|
|
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2,269
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2,100
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Medical & Biomedical
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230
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230
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223
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|
214
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|
|
|
214
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|
|
|
215
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|
|
218
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|
220
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|
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221
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249
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Petroleum
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170
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|
210
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|
112
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|
|
159
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|
|
165
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|
|
|
140
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|
|
176
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|
|
220
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|
|
372
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|
219
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Other
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|
300
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|
|
320
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|
395
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|
|
433
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|
|
438
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|
|
441
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|
|
458
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|
|
|
476
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|
582
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|
|
577
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Total Gross Demand
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7,905
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8,095
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7,902
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8,551
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8,054
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8,178
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|
|
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8,165
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7,962
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7,846
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8,350
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Recycling
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Autocatalyst
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-1,085
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|
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-1,240
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|
|
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-1,120
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|
|
|
-1,206
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|
|
|
-1,272
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|
|
|
-1,112
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|
|
|
-1,159
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|
|
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-1,279
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|
|
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-1,338
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|
|
|
-1,630
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|
Jewelry
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|
|
-735
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|
|
|
-810
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|
|
|
-895
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|
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|
-790
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|
|
|
-762
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|
|
|
-574
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|
|
|
-738
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|
|
|
-638
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|
|
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-36
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|
|
|
-477
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Other
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|
-10
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|
|
|
-10
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|
|
|
-22
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|
|
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-24
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|
|
|
-27
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|
|
|
-29
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|
|
|
-32
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|
|
|
-34
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|
|
|
-731
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|
|
|
-58
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Total Recycling
|
|
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-1,830
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|
|
|
-2,060
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|
|
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-2,037
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|
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|
-2,020
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|
|
|
-2,061
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|
|
|
-1,715
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|
|
|
-1,929
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|
|
|
-1,951
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|
|
|
-2,105
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|
|
|
-2,165
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|
|
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|
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|
|
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|
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|
|
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|
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|
|
|
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|
|
|
|
|
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|
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|
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Total Net Demand
|
|
|
6,075
|
|
|
|
6,035
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|
|
|
5,865
|
|
|
|
6,531
|
|
|
|
5,993
|
|
|
|
6,463
|
|
|
|
6,236
|
|
|
|
6,011
|
|
|
|
5,741
|
|
|
|
6,185
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
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|
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Movements in Stocks
|
|
|
-25
|
|
|
|
450
|
|
|
|
-185
|
|
|
|
-696
|
|
|
|
-850
|
|
|
|
-356
|
|
|
|
-139
|
|
|
|
101
|
|
|
|
372
|
|
|
|
-88
|
|
Source:
World Platinum Investment Council, Johnson Matthey PGM Market Report - May 2020
The
following are some of the main characteristics of the platinum market illustrated by the table:
The
main supplier of platinum is South Africa, providing over 72% of total mine supply in 2019. Russia is the second largest supplier
of platinum. Its share of world mine production has averaged around 12.4% of total mine supply over the past ten years. Scrap
supply from recycling of autocatalyst and other sources have accounted for about 34% from 2015 to 2019, on average.
Over
the past decade, jewelry demand for platinum peaked at 36% of total demand in 2014. Jewelry demand has since declined to 25% of
total demand in 2019, consistent with the year prior. Autocatalyst demand for platinum accounted for around 35% of total demand
at the end of 2019. Investment demand soared to 15% of total demand in 2019, far above the 1% of total demand in 2018.
Historical
Chart of the Price of Platinum
The
price of platinum is volatile and fluctuations are expected to have a direct impact on the value of the Shares. However, movements
in the price of platinum in the past are not a reliable indicator of future movements. The following chart illustrates the
movements in the price of an ounce of platinum in U.S. Dollars from December 31, 2010 to December 31, 2020 and is based on information
provided by Bloomberg:
Platinum
prices had been on the rise until the Japanese earthquake in early 2011, coupled with the unfolding of the European financial
crisis with Portugal being bailed out, weighed on platinum performance in the second half of 2011. Platinum prices dropped by
26% in the six months to December 2011, from a high of $1,840 per troy ounce in June to a low of $1,369 per troy ounce in December
2011. Continued weakness in the European auto market weighed on platinum performance since then, with prices only partially recovering
from 2011 lows. In 2012, platinum prices rose on the back of supply disruptions in South Africa, which accounts for over 80% of
the world's supply of platinum. A strike at one of South Africa's biggest platinum mines caused the price of platinum to rise
from $1,387 to $1,709 per ounce in August 2012. At the beginning of 2013, Anglo American Platinum, the world's biggest producer
of the metal, announced its intention to close four mine shafts and its consideration of selling another mine complex as part
of a radical overhaul of its South African operations. This statement prompted a strong reaction on platinum prices, which rose
from $1,656 to $1,736 per ounce in the days following the announcement, on fears of a further tightening in platinum supply. However,
platinum's correlation to gold weighed on platinum prices in 2013 overall. Prolonged strikes at South African mines in 2014 led
to the deepest supply deficit in platinum since 1975 (the earliest date we have supply and demand data). However, that failed
to arrest the price slide which saw prices fall 11% in 2014, highlighting the extent of negative sentiment towards industrially-exposed
precious metals. Despite autocatalyst demand for platinum increasing in 2015, tightening nitrogen oxide emission standards have
led to pessimism about the future demand for platinum-heavy diesel autocatalysts relative to palladium-heavy gasoline autocatalysts.
Further pessimistic outlook for South Africa's economy and its currency the South African Rand weighed on platinum prices throughout
2017, and platinum continued to fall in 2018 driven by lackluster investor sentiment, a stronger US dollar, weaker diesel demand
and rising mine supply. Platinum prices bounced back, rising 19.9% to $952 per ounce at the end of 2019. After seeing the price
fall as low as $593 per ounce on March 19, 2020, platinum rebounded from pandemic lows and finished the year at $1,068 per ounce.
The steep climb in palladium price has led some investors to conclude that platinum appears under-valued, in view of its potential
to substitute for palladium in automotive applications in the future. Additionally, the outlook for mining in South Africa is
increasingly uncertain, with producers facing steep increases in electricity prices, periodic disruption to power supplies and
a risk of industrial action during forthcoming wage negotiations.
Operation
of the Platinum Market
The
global trade in platinum consists of Over-the-Counter (“OTC”) transactions in spot, forwards, and options and
other derivatives, together with exchange-traded futures and options.
Global
Over-The-Counter Market
The
OTC market trades on a 24-hour per day continuous basis and accounts for most global platinum trading. Market makers, as well
as others in the OTC market, trade with each other and with their clients on a principal-to-principal basis. All risks and issues
of credit are between the parties directly involved in the transaction. Market makers include the market making members of the
London Platinum and Palladium Market (“LPPM”), the trade association that acts as the coordinator for activities conducted
on behalf of its members and other participants in the LPPM. Five member participants of the LPPM are currently participating
in the electronic LME PM Fix (as described below) process administered by the London Metal Exchange (“LME”). The OTC
market provides a relatively flexible market in terms of quotes, price, size, destinations for delivery and other factors. Bullion
dealers customize transactions to meet clients’ requirements. The OTC market has no formal structure and no open outcry
meeting place.
The
main centers of the OTC market are London, New York, Hong Kong and Zurich. Mining companies, manufacturers of jewelry and industrial
products, together with investors and speculators, tend to transact their business through one of these market centers. Centers
such as Dubai and several cities in the Far East also transact substantial OTC market business, typically involving jewelry and
small plates or ingots (1 kilogram or less) and will hedge their exposure by selling into one of these main OTC centers. Precious
metals dealers have offices around the world and most of the world’s major bullion dealers are either members or associate
members of the London Bullion Market Association (“LBMA”) and/or the LPPM. In the OTC market, the standard size of
platinum trades between market makers is 1,000 ounces.
Liquidity
in the OTC market can vary from time to time during the course of the 24-hour trading day. Fluctuations in liquidity are reflected
in adjustments to dealing spreads—the differential between a dealer’s “buy” and “sell” prices.
The period of greatest liquidity in the platinum market generally occurs at the time of day when trading in the European time
zones overlaps with trading in the United States, which is when OTC market trading in London, New York, Zurich and other centers
coincides with futures and options trading on the Commodity Exchange, Inc. (“COMEX”), a designated contract market
with the CME Group. This period lasts for approximately four hours each New York business day morning.
The Platinum Market
The
Zurich and London Platinum Bullion Market
Although
the market for physical platinum is distributed globally, most platinum is stored and most OTC market trades are cleared through
Zurich. As of September 1, 2009, London also serves as a center for the clearing of OTC trades in platinum. In addition to coordinating
market activities, the LPPM acts as the principal point of contact between the market and its regulators. A primary function of
the LPPM is its involvement in the promotion of refining standards by maintenance of the “London/Zurich Good Delivery Lists,”
which are the lists of LPPM accredited refiners of platinum. The LPPM also coordinates market clearing and vaulting, promotes
good trading practices and develops standard documentation.
Platinum
is traded generally on a “loco Zurich” basis, meaning the precious metal is physically held in vaults in Zurich or
is transferred into accounts established in Zurich. As of September 1, 2009, platinum began trading on a “loco London”
basis as well, meaning the precious metal is physically held in vaults in London or is transferred into accounts established in
London. The basis for settlement and delivery of a loco Zurich spot trade is payment (generally in U.S. Dollars) two business
days after the trade date against delivery. Delivery of the platinum can either be by physical delivery or through the clearing
systems to an unallocated account.
The
unit of trade in London and Zurich is the troy ounce, whose conversion between grams is: 1,000 grams is equivalent to 32.1507465
troy ounces, and one troy ounce is equivalent to 31.1034768 grams. A good delivery platinum plate or ingot is acceptable for delivery
in settlement of a transaction on the OTC market (a “Good Delivery Platinum Plate or Ingot”). A Good Delivery Platinum
Plate or Ingot must contain between 32 and 192 troy ounces of platinum with a minimum fineness (or purity) of 999.5 parts per
1,000 (99.95%), be of good appearance, and be easy to handle and stack. The platinum content of a platinum Good Delivery Platinum
Plate or Ingot is calculated by multiplying the gross weight by the fineness of the plate or ingot. A Good Delivery Platinum Plate
or Ingot must also bear the stamp of one of the refiners who are on the LPPM approved list. Unless otherwise specified, the platinum
spot price always refers to the “Good Delivery Standards” set by the LPPM. Business is generally conducted over the
phone and through electronic dealing systems.
Since
December 1, 2014, the LME has been administering the operation of an electronic platinum bullion price fixing systems (“LMEbullion”)
that replicates electronically the manual London platinum fix processes previously employed by the London Platinum and Palladium
Fixing Company Ltd (“LPPFCL”), as well as providing electronic market clearing processes for platinum bullion transactions
at the fixed prices established by the LME pricing mechanism. The LME’s electronic price fixing processes, like the previous
London platinum fix processes, establishes and publishes fixed prices for troy ounces of platinum twice each London trading day
during fixing sessions beginning at 9:45 a.m. London time (the “LME AM Fix”) and 2:00 p.m. London time (the “LME
PM Fix”). In addition to utilizing the same London platinum fix standards and methods, the LME also supervises the platinum
electronic price fixing processes through its market operations, compliance, internal audit and third-party complaint handling
capabilities in order to support the integrity of the LME PM Fix. The LME, in administering LMEbullion, uses a pricing methodology
that meets the administrative and regulatory needs of platinum market participants, including the International Organization of
Securities Commissions’ (IOSCO) Principles for Financial Benchmarks.
Daily
during London trading hours the LME AM Fix and the LME PM Fix each provide reference platinum prices for that day’s trading.
Many long-term contracts are priced on the basis of either the LME AM Fix or the LME PM Fix, and market participants will usually
refer to one or the other of these prices when looking for a basis for valuations. The Trust values its platinum on the basis
of the LME PM Fix.
The
LME PM Fix results from LMEbullion. Formal participation in the LME PM Fix is limited to participating LPPM members. Five LPPM
member participants are currently participating in establishing the LME PM Fix (Goldman Sachs International, HSBC Bank USA NA,
ICBC Standard Bank plc, Johnson Matthey plc and BASF Metals Ltd.). Any other market participant wishing to participate in the
trading on the LME PM Fix is required to do so through one of the participating LPPM members.
Orders
are placed either with one of the participating LPPM member participants or with another precious metals dealer who will then
be in contact with a participating LPPM member during the fixing. The fix begins with the chair of the pricing function submitting
an opening price into the administration screen in LMEbullion, reflecting the market price and other data, prevailing at the opening
of the fix. This is relayed by the LPPM member participants to their dealing rooms which have direct communication with all interested
parties. Any member participant may enter the fixing process at any time, or adjust or withdraw his order. The platinum price
is adjusted up or down until all the buy and sell orders are electronically matched, at which time the price is declared fixed.
All orders are transacted on the basis of this fixed price, which is instantly relayed to the market through various media.
The
LBMA and the LME have asserted that the LME’s electronic price fixing processes are similar to the non-electronic processes
previously used to establish the applicable London platinum fix where the London platinum fix process adjusted the platinum price
up or down until all the buy and sell orders entered by the participating LPPM members are matched, at which time the price was
declared fixed. Nevertheless, the LME PM Fix has several advantages over the previous London platinum fix. The LME’s electronic
price fixing processes are intended to be transparent. The LME asserts that its electronic price fixing processes are fully auditable
by third parties since an audit trail exists from the beginning of each fixing session. The LME also asserts that the market operation,
compliance, internal audit and third-party complaint handling capabilities of the LME will support the integrity of the LME PM
Fix.
Since
December 1, 2014, the Sponsor determined that the London platinum fix, which has been revised based on the new LME method and
is now known as the LBMA Platinum Price (PM), which we refer to herein as the LME PM Fix, is an appropriate basis for valuing
platinum bullion received upon purchase of the Trust’s Shares, delivered upon redemption of the Trust’s Shares and
for determining the value of the Trust’s platinum bullion each trading day. The “Benchmark Price” (as defined
in the Trust Agreement) of the Trust’s platinum bullion as of any day is the LME PM Fix for such day.
As
of December 1, 2014, the LPPFCL transferred the ownership of the historic and future intellectual property of the twice daily
“fix” for platinum and palladium bullion to a subsidiary company of the LBMA.
Futures
Exchanges
The
most significant platinum futures exchanges are the COMEX, a designated contract market within the CME Group, and the Tokyo Commodity Exchange, Inc. (“TOCOM”). The
COMEX is the largest exchange in the world for trading precious metals futures and options and launched platinum futures in 1956,
followed with options in 1990. The TOCOM has been trading platinum since 1984. Trading on these exchanges is based on fixed delivery
dates and transaction sizes for the futures and options contracts traded. Trading costs are negotiable. As a matter of practice,
only a small percentage of the futures market turnover ever comes to physical delivery of the platinum represented by the contracts
traded. Both exchanges permit trading on margin. Margin trading can add to the speculative risk involved given the potential for
margin calls if the price moves against the contract holder. The COMEX trades platinum futures almost continuously (with one short
break in the evening) through its CME Globex electronic trading system and clears through its central clearing system. On June
6, 2003, the TOCOM adopted a similar clearing system. In each case, the exchange acts as a counterparty for each member for clearing
purposes.
Market
Regulation
The
global platinum markets are overseen and regulated by both governmental and self-regulatory organizations. In addition, certain
trade associations have established rules and protocols for market practices and participants. In the United Kingdom, responsibility
for the regulation of the financial market participants, including the major participating members of the LPPM falls under
the authority of the Financial Conduct Authority (“FCA”) as provided by the Financial Services and Markets Act 2000
(“FSM Act”). Under this act, all UK-based banks, together with other investment firms, are subject to a range of requirements,
including fitness and properness, capital adequacy, liquidity, and systems and controls.
The
FCA is responsible for regulating investment products, including derivatives, and those who deal in investment products. Regulation
of spot, commercial forwards, and deposits of platinum not covered by the FSM Act is provided for by The London Code of Conduct
for Non-Investment Products, which was established by market participants in conjunction with the Bank of England.
The
TOCOM has authority to perform financial and operational surveillance on its members’ trading activities, scrutinize positions
held by members and large-scale customers, and monitor the price movements of futures markets by comparing them with cash and
other derivative markets’ prices. To act as a Futures Commission Merchant Broker on the TOCOM, a broker must obtain a license
from Japan’s Ministry of Economy, Trade and Industry (“METI”), the regulatory authority that oversees the operations
of the TOCOM.
The
US Commodity Futures Trading Commission (“CFTC”) regulates trading in commodity contracts, such as futures, options
and swaps. In addition, under the Commodity Exchange Act of 1936 (“CEA”), the CFTC has jurisdiction to prosecute manipulation
and fraud in any commodity (including precious metals) traded in interstate commerce as spot as well as deliverable forwards.
The CFTC is the exclusive regulator of U.S. commodity exchanges and clearing houses.
Secondary
Market Trading
While
the Trust’s investment objective is for the Shares to reflect the performance of platinum bullion, less the expenses
of the Trust, the Shares may trade in the secondary market on the NYSE Arca at prices that are lower or higher relative to their
net asset value (the value of the Trust’s assets less its liabilities (“NAV”)) per Share. The amount of the
discount or premium in the trading price relative to the NAV per Share may be influenced by non-concurrent trading hours between
the NYSE Arca, COMEX and the London and Zurich platinum markets. While the Shares trade on the NYSE Arca until 4:00 PM New
York time, liquidity in the global platinum market is reduced after the close of the COMEX at 1:30 PM New York time. As a
result, during this time, trading spreads, and the resulting premium or discount, on the Shares may widen.
Valuation
of Platinum and Computation of Net Asset Value
On
each day that the NYSE Arca is open for regular trading, as promptly as practicable after 4:00 PM New York time, on such day (Evaluation
Time), the Trustee evaluates the platinum held by the Trust and determine both the ANAV and the NAV of the Trust.
At
the Evaluation Time, the Trustee values the Trust’s platinum on the basis of that day’s LME PM Fix or, if no LME PM
Fix is made on such day, the next most recent LME PM Fix determined prior to the Evaluation Time will be used, unless the Sponsor
determines that such price is inappropriate as a basis for evaluation. In the event the Sponsor determines that the LME PM Fix
or such other publicly available price as the Sponsor may deem fairly represents the commercial value of the Trust’s platinum
is not an appropriate basis for evaluation of the Trust’s platinum, it shall identify an alternative basis for such evaluation
to be employed by the Trustee. Neither the Trustee nor the Sponsor shall be liable to any person for the determination that the
LME PM Fix or such other publicly available price is not appropriate as a basis for evaluation of the Trust’s platinum or
for any determination as to the alternative basis for such evaluation provided that such determination is made in good faith.
See “Operation of the Platinum Market—The Platinum Market” for a description of the LME PM Fix.
Once
the value of the platinum has been determined, the Trustee subtracts all estimated accrued but unpaid fees (other than the
fees accruing for such day on which the valuation takes place which are computed by reference to the value of the Trust or
its assets), expenses and other liabilities of the Trust from the total value of the platinum and any other assets of
the Trust. The resulting figure is the adjusted net asset value (“ANAV”) of the Trust. The ANAV of the Trust is used
to compute the Sponsor’s Fee.
All
fees accruing for the day on which the valuation takes place which are computed by reference to the value of the Trust or
its assets shall be calculated using the ANAV calculated for such day. The Trustee shall subtract from the ANAV the amount of
accrued fees so computed for such day and the resulting figure is the NAV of the Trust. The Trustee also determines the NAV
per Share by dividing the NAV of the Trust by the number of the Shares outstanding as of the close of trading on the NYSE Arca
(which includes the net number of any Shares created or redeemed on such evaluation day).
The
Trustee’s estimation of accrued but unpaid fees, expenses and liabilities are conclusive upon all persons interested
in the Trust and no revision or correction in any computation made under the Trust Agreement will be required by reason of any
difference in amounts estimated from those actually paid.
Trust
Expenses
The
Trust’s only ordinary recurring expense is the Sponsor’s Fee. In exchange for the Sponsor’s Fee, the Sponsor
has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee’s monthly fee
and out-of-pocket expenses, the Custodian’s fee and reimbursement of the Custodian’s expenses under the Custody Agreements,
Exchange listing fees, SEC registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses.
The
Sponsor’s Fee accrues daily at an annualized rate equal to 0.60% of the adjusted net asset value of the Trust and is payable
monthly in arrears. The Sponsor, from time to time, may temporarily waive all or a portion of the Sponsor’s Fee at its discretion
for a stated period of time. Presently, the Sponsor does not intend to waive any of its fee.
Furthermore,
the Sponsor may, in its sole discretion, agree to rebate all or a portion of the Sponsor’s Fee attributable to Shares held
by certain institutional investors subject to minimum Shareholding and lock up requirements as determined by the Sponsor to foster
stability in the Trust’s asset levels. Any such rebate will be subject to negotiation and written agreement between the
Sponsor and the investor on a case by case basis. The Sponsor is under no obligation to provide any rebates of the Sponsor’s
Fee. Neither the Trust nor the Trustee will be a party to any Sponsor’s Fee rebate arrangements negotiated by the Sponsor.
The
Sponsor’s Fee is paid by delivery of platinum to an account maintained by the Custodian for the Sponsor on an unallocated
basis, monthly on the first business day of the month in respect of fees payable for the prior month. The delivery is of that
number of ounces of platinum which equals the daily accrual of the Sponsor’s Fee for such prior month calculated at the
LME PM Fix.
The
Trustee will, when directed by the Sponsor, and, in the absence of such direction, may, in its discretion, sell platinum in such
quantity and at such times as may be necessary to permit payment in cash of Trust expenses not assumed by the Sponsor. The Trustee
is authorized to sell platinum at such times and in the smallest amounts required to permit such payments as they become due,
it being the intention to avoid or minimize the Trust’s holdings of assets other than platinum. Accordingly, the amount
of platinum to be sold will vary from time to time depending on the level of the Trust’s expenses and the market price of platinum.
The Custodian is authorized to purchase from the Trust, at the request of the Trustee, platinum needed to cover Trust expenses
not assumed by the Sponsor at the price used by the Trustee to determine the value of the platinum held by the Trust on the date
of the sale.
The
Sponsor’s Fee for the year ended December 31, 2020 was $5,187,040 (December 31, 2019: $3,705,285; December 31, 2018: $3,050,913).
Cash
held by the Trustee pending payment of the Trust’s expenses will not bear any interest.
Deposit
of Platinum; Issuance of Shares
The
Trust creates and redeems Shares from time to time, but only in one or more Baskets of 50,000 Shares. Only registered
broker-dealers, or other securities market participants not required to register as broker-dealers such as banks or other
financial institutions, who (1) are participants in the DTC and (2) have entered into written agreements with the
Sponsor and the Trustee (each an “Authorized Participant”) can deposit platinum and receive Baskets of
Shares in exchange.
The
creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of
the amount of platinum represented by the Baskets being created or redeemed, the amount of which is based on the combined
NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem
Baskets is properly received.
All
platinum bullion deposited with the Custodian or for the Custodian by the Zurich Sub-Custodian1 must be of at least
a minimum fineness (or purity) of 999.5 parts per 1,000 (99.95%) and otherwise conform to the rules, regulations practices and
customs of the LPPM, including the specifications for Good Delivery Plate or Ingot.
Creation
and redemption orders are accepted on “business days” the NYSE Arca is open for regular trading. Settlements of such
orders requiring receipt or delivery, or confirmation of receipt or delivery, of platinum in the United Kingdom, Zurich or
another jurisdiction occurs on “business days” when (1) banks in the United Kingdom, Zurich or such other jurisdiction
and (2) the London or Zurich platinum markets are regularly open for business. If such banks or the London or Zurich platinum
markets are not open for regular business for a full day, such a day will only be a “business day” for settlement
purposes if the settlement procedures can be completed by the end of such day.
On
any business day, an Authorized Participant may place an order with the Trustee to purchase one or more Baskets. Purchase orders
must be placed no later than 3:59:59 p.m. on each business day the NYSE Arca is open for regular trading. A purchase order so
received is effective on the date it is received in satisfactory form by the Trustee. By placing a purchase order, an Authorized
Participant agrees to deposit platinum with the Trust, as described below. Prior to the delivery of Baskets for a purchase
order, the Authorized Participant must also have wired to the Trustee the non-refundable transaction fee due for the purchase
order (as explained under “Creation and Redemption Transaction Fee” below).
________________
1The Zurich Sub-Custodian is any firm selected
by the Custodian to hold the Trust’s platinum in the Trust Allocated Account (defined below) in the firm’s Zurich
vault premises on a segregated basis and whose appointment has been approved by the Sponsor. The Custodian will use
reasonable care in selecting any Zurich Sub-Custodian. As of the date of this annual report, the Zurich Sub-Custodian that
the Custodian uses is UBS AG.
An
Authorized Participant who places a purchase order is responsible for crediting its Authorized Participant Unallocated Account,
either loco London or loco Zurich, with the required platinum deposit amount by the second business day in London or Zurich
following the purchase order date. Upon receipt of the platinum deposit amount, the Custodian, after receiving appropriate
instructions from the Authorized Participant and the Trustee, will transfer on the second business day following the purchase
order date the platinum deposit amount from the Authorized Participant Unallocated Account to the unallocated platinum
account of the Trust established with the Custodian under the Unallocated Account Agreement between the Trustee and the Custodian
(the “Trust Unallocated Account”) and the Trustee will direct the Depository Trust Company (the “DTC”)
to credit the number of Baskets ordered to the Authorized Participant’s DTC account. Acting on standing instructions given
by the Trustee, the Custodian will transfer the platinum deposit amount from the Trust Unallocated Account to the allocated platinum
account of the Trust established with the Custodian under the Allocated Account Agreement between the Trustee and the Custodian
(the “Trust Allocated Account”), by transferring specific platinum plates or ingots from its inventory or the
inventory of the Zurich Sub-Custodian to the Trust Allocated Account. The Trust’s Unallocated Account Agreement and Allocated
Account Agreement are referred to collectively as the “Custody Agreements.”
Withdrawal
of Platinum; Redemption of Shares
The
procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets.
On any business day, an Authorized Participant may place an order with the Trustee to redeem one or more Baskets. Redemption orders
must be placed no later than 3:59:59 p.m. on each business day the NYSE Arca is open for regular trading. A redemption order so
received is effective on the date it is received in satisfactory form by the Trustee. The redemption procedures allow Authorized
Participants to redeem Baskets and do not entitle an individual owner of beneficial interests in the Shares (a “Shareholder”)
to redeem any Shares in an amount less than a Basket, or to redeem Baskets other than through an Authorized Participant.
By
placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through DTC’s book-entry
system to the Trust not later than the second business day following the effective date of the redemption order. Prior to the
delivery of the redemption distribution for a redemption order, the Authorized Participant must also have wired to the Trustee
the non-refundable transaction fee due for the redemption order (as explained under “Creation and Redemption Transaction
Fee” below).
The
redemption distribution from the Trust consists of a credit to the redeeming Authorized Participant’s Authorized Participant
Unallocated Account, either loco London or loco Zurich, representing the amount of the platinum held by the Trust evidenced
by the Shares being redeemed. Fractions of a fine ounce of platinum included in the redemption distribution smaller than
0.001 of a fine ounce are disregarded. Redemption distributions are subject to the deduction of any applicable tax or other governmental
charges which may be due. If a loco swap or physical transfer is necessary to effect a loco London or loco Zurich redemption,
the settlement of loco London or loco Zurich redemption deliveries may be delayed more than two, but not more than five, business
days.
Creation
and Redemption Transaction Fee
To
compensate the Trustee for services in processing the creation and redemption of Baskets, an Authorized Participant is required
to pay a transaction fee to the Trustee of $500 per order to create or redeem Baskets. An order may include multiple Baskets.
The transaction fee may be reduced, increased or otherwise changed by the Trustee with the consent of the Sponsor. The Trustee
shall notify DTC of any agreement to change the transaction fee and will not implement any increase in the fee for the redemption
of Baskets until 30 days after the date of the notice.
The
Sponsor
The
Sponsor is a Delaware limited liability company and a wholly-owned subsidiary of Aberdeen Standard Investments Inc. (“ASII”).
Aberdeen Standard Investments is a brand of the investment businesses of Standard Life Investments plc, its affiliates and subsidiaries.
In the United States, Aberdeen Standard Investments is the marketing name for the following affiliated, registered investment
advisers: ASII, Aberdeen Asset Managers Ltd., Aberdeen Standard Investments Australia Ltd., Aberdeen Standard Investments (Asia)
Ltd., Aberdeen Capital Management, LLC, Aberdeen Standard Investments ETFs Advisors LLC and Standard Life Investments (Corporate
Funds) Ltd.
The
Sponsor’s office is located at c/o Aberdeen Standard Investments ETFs Sponsor LLC, 712 Fifth Avenue, 49th Floor, New York,
NY 10019. Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, the sole member of the
Sponsor, ASII, is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the sole
member of the Sponsor.
The
Sponsor’s Role
The
Sponsor arranged for the creation of the Trust, the registration of the Shares for their public offering in the United States
and the listing of the Shares on the NYSE Arca. The Sponsor has agreed to assume the following administrative and marketing expenses
incurred by the Trust: the Trustee’s monthly fee and out-of-pocket expenses, the Custodian’s fee and the reimbursement
of the Custodian’s expenses under the Custody Agreements, Exchange listing fees, SEC registration fees, printing and mailing
costs, audit fees and up to $100,000 per annum in legal expenses. The Sponsor also paid the costs of the Trust’s organization
and the initial sale of the Shares, including the applicable SEC registration fees.
The
Sponsor does not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor may remove the Trustee and appoint
a successor Trustee (i) if the Trustee ceases to meet certain objective requirements (including the requirement that it have capital,
surplus and undivided profits of at least $150 million), (ii) if, having received written notice of a material breach of its obligations
under the Trust Agreement, the Trustee has not cured the breach within 30 days, or (iii) if the Trustee refuses to consent to
the implementation of an amendment to the Trust’s initial Internal Control Over Financial Reporting. The Sponsor also has
the right to replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is
not the surviving entity or, in its discretion, on the fifth anniversary of the creation of the Trust or on any subsequent third
anniversary thereafter. The Sponsor also has the right to approve any new or additional custodian that the Trustee may wish to
appoint and any new or additional Zurich Sub-Custodian that the Custodian may wish to appoint.
The
Sponsor or one of its affiliates or agents (1) develops a marketing plan for the Trust on an ongoing basis, (2) prepares marketing
materials regarding the Shares, including the content of the Trust’s website and (3) executes the marketing plan for the
Trust.
The
Trustee
The
Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with trust powers (“BNYM”),
serves as the Trustee. BNYM has a trust office at 2 Hanson Place, Brooklyn, New York 11217. BNYM is subject to supervision by
the New York State Financial Services Department and the Board of Governors of the Federal Reserve System. Information regarding
creation and redemption Basket composition, NAV of the Trust, transaction fees and the names of the parties that have each executed
an Authorized Participant Agreement may be obtained from BNYM. A copy of the Trust Agreement is available for inspection at BNYM’s
trust office identified above. Under the Trust Agreement, the Trustee is required to have capital, surplus and undivided profits
of at least $150 million. As of December 31, 2020, the Trustee was in compliance with these conditions.
The
Trustee’s Role
The
Trustee is generally responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational
records. The Trustee’s principal responsibilities include (1) transferring the Trust’s platinum as needed to
pay the Sponsor’s Fee in platinum (platinum transfers are expected to occur approximately monthly in the ordinary course),
(2) valuing the Trust’s platinum and calculating the NAV of the Trust and the NAV per Share, (3) receiving and processing
orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such orders with the Custodian
and DTC, (4) selling the Trust’s platinum as needed to pay any extraordinary Trust expenses that are not assumed by
the Sponsor, (5) when appropriate, making distributions of cash or other property to Shareholders, and (6) receiving and reviewing
reports from or on the Custodian’s custody of and transactions in the Trust’s platinum. The Trustee shall, with respect
to directing the Custodian, act in accordance with the instructions of the Sponsor. If the Custodian resigns, the Trustee shall
appoint an additional or replacement Custodian selected by the Sponsor. The Trustee intends to regularly communicate with the
Sponsor to monitor the overall performance of the Trust. The Trustee does not monitor the performance of the Custodian, the Zurich
Sub-Custodian, or any other sub-custodian other than to review the reports provided by the Custodian pursuant to the Custody Agreements.
The Trustee, along with the Sponsor, will liaise with the Trust’s legal, accounting and other professional service providers
as needed. The Trustee will assist and support the Sponsor with the preparation of all periodic reports required to be filed with
the SEC on behalf of the Trust.
The
Trustee’s monthly fees and out-of-pocket expenses are paid by the Sponsor.
Affiliates
of the Trustee may from time to time act as Authorized Participants or purchase or sell platinum or Shares for their own
account, as agent for their customers and for accounts over which they exercise investment discretion. Affiliates of the Trustee
are subject to the same transaction fee as other Authorized Participants.
The
Custodian
JPMorgan
Chase Bank, N.A. (“JPMorgan”) serves as the Custodian of the Trust’s platinum. JPMorgan is a national banking
association organized under the laws of the United States of America. JPMorgan is subject to supervision by the Federal Reserve
Bank of New York and the Federal Deposit Insurance Corporation. JPMorgan’s London office is regulated by the FCA and is
located at 25 Bank Street, Canary Wharf, London, E14 5JP, United Kingdom. JPMorgan is a subsidiary of JPMorgan Chase & Co.
While the United Kingdom operations of the Custodian are regulated by the FCA, the custodial services provided by the Custodian
and any sub-custodian, including the Zurich Sub-Custodian under the Custody Agreements, are presently not a regulated activity
subject to the supervision and rules of the FCA. The Zurich Sub-Custodian that the Custodian currently uses is UBS AG, which is
located at 45 Bahnhofstrasse, 8021 Zurich, Switzerland.
The
Custodian’s Role
The
Custodian is responsible for safekeeping of the Trust platinum deposited with it by Authorized Participants in connection with
the creation of Baskets. The Custodian is also responsible for selecting the Zurich Sub-Custodian and its other sub-custodians,
if any. The Custodian facilitates the transfer of platinum in and out of the Trust through the unallocated platinum accounts it
will maintain for each Authorized Participant and the unallocated and allocated platinum accounts it will maintain for the Trust.
The Custodian holds at its London, England vault premises that portion of the Trust’s allocated platinum to be held in London.
The Zurich Sub-Custodian holds at its London and Zurich vault premises that portion of the Trust’s allocated platinum to
be held in Zurich on behalf of the Custodian. The Custodian is responsible for allocating specific plates or ingots of physical
platinum to the Trust’s allocated platinum account. The Custodian provides the Trustee with regular reports detailing the
platinum transfers in and out of the Trust’s unallocated and allocated platinum accounts and identifying the platinum plates
or ingots held in the Trust’s allocated platinum account.
The
Custodian’s fees and expenses under the Custody Agreements are paid by the Sponsor.
The
Custodian and its affiliates may from time to time act as Authorized Participants or purchase or sell platinum or Shares for their
own account, as agent for their customers and for accounts over which they exercise investment discretion. The Custodian and its
affiliates are subject to the same transaction fee as other Authorized Participants.
Inspection
of Platinum
Under
the Custody Agreements, the Trustee, the Sponsor and the Sponsor’s auditors and inspectors may, only up to twice a year,
visit the premises of the Custodian and the Zurich Sub-Custodian for the purpose of examining the Trust’s platinum
and certain related records maintained by the Custodian. Under the Allocated Account Agreement, the Custodian agreed to procure
similar inspection rights from the Zurich Sub-Custodian. Visits by auditors and inspectors to the Zurich Sub-Custodian's
facilities will be arranged through the Custodian. Other than with respect to the Zurich Sub-Custodian, the Trustee and the Sponsor
have no right to visit the premises of any sub-custodian for the purposes of examining the Trust’s platinum or any
records maintained by the sub-custodian, and no sub-custodian is obligated to cooperate in any review the Trustee or the Sponsor
may wish to conduct of the facilities, procedures, records or creditworthiness of such sub-custodian.
The
Sponsor has exercised its right to visit the Custodian and the Zurich Sub-Custodian, in order to examine the platinum and
the records maintained by them. Inspections were conducted by Inspectorate International Limited, a leading commodity inspection
and testing company retained by the Sponsor, as of August 14, 2020. Due to unprecedented social lock-down policies implemented in the UK and Switzerland to help prevent the spread of COVID-19, neither the
Sponsor, nor Inspectorate, were able to perform a physical inspection of the Trust's platinum at December 31, 2020. In lieu of a physical
inspection, the Sponsor performed alternative procedures to verify the platinum held by the Trust at December 31, 2020. These procedures
included confirmation of the platinum bar list and total ounces of platinum held by the Custodian at December 31, 2020, and an independent
recalculation of ounces of platinum for each creation or redemption transaction from August 14, 2020, the date of the last physical inspection,
through December 31, 2020. The Sponsor and Inspectorate also virtually inspected a selection of platinum bars held by the Custodian on
behalf of the Trust, verifying the weight of the bars and that the serial numbers of the bars selected matched the records of the Trust.
Description
of the Shares
General
The
Trustee is authorized under the Trust Agreement to create and issue an unlimited number of Shares. The Trustee creates Shares
only in Baskets (a Basket equals a block of 50,000 Shares) and only upon the order of an Authorized Participant. The Shares represent
units of fractional undivided beneficial interest in and ownership of the Trust and have no par value. Any creation and issuance
of Shares above the amount registered on the Trust’s then-current and effective registration statement with the SEC will
require the registration of such additional Shares.
Description
of Limited Rights
The
Shares do not represent a traditional investment and Shareholders should not view them as similar to shares of a corporation operating
a business enterprise with management and a board of directors. Shareholders do not have the statutory rights normally associated
with the ownership of shares of a corporation, including, for example, the right to bring “oppression” or “derivative”
actions. All Shares are of the same class with equal rights and privileges. Each Share is transferable, is fully paid and non-assessable
and entitles the holder to vote on the limited matters upon which Shareholders may vote under the Trust Agreement. The Shares
do not entitle their holders to any conversion or pre-emptive rights, or, except as provided below, any redemption rights or rights
to distributions.
Distributions
If
the Trust is terminated and liquidated, the Trustee will distribute to the Shareholders any amounts remaining after the satisfaction
of all outstanding liabilities of the Trust and the establishment of such reserves for applicable taxes, other governmental charges
and contingent or future liabilities as the Trustee shall determine. Shareholders of record on the record date fixed by the Trustee
for a distribution will be entitled to receive their pro rata portion of any distribution.
Voting
and Approvals
Under
the Trust Agreement, Shareholders have no voting rights, except in limited circumstances. The Trustee may terminate the Trust
upon the agreement of Shareholders owning at least 75% of the outstanding Shares. In addition, certain amendments to the Trust
Agreement require advance notice to the Shareholders before the effectiveness of such amendments, but no Shareholder vote or approval
is required for any amendment to the Trust Agreement.
Redemption
of the Shares
The
Shares may only be redeemed by or through an Authorized Participant and only in Baskets.
Book-Entry
Form
Individual
certificates will not be issued for the Shares. Instead, one or more global certificates is deposited by the Trustee with DTC
and registered in the name of Cede & Co., as nominee for DTC. The global certificates evidence all of the Shares outstanding
at any time. Under the Trust Agreement, Shareholders are limited to (1) participants in DTC such as banks, brokers, dealers and
trust companies (DTC Participants), (2) those who maintain, either directly or indirectly, a custodial relationship with a DTC
Participant (Indirect Participants), and (3) those banks, brokers, dealers, trust companies and others who hold interests in the
Shares through DTC Participants or Indirect Participants. The Shares are only transferable through the book-entry system of DTC.
Shareholders who are not DTC Participants may transfer their Shares through DTC by instructing the DTC Participant holding their
Shares (or by instructing the Indirect Participant or other entity through which their Shares are held) to transfer the Shares.
Transfers will be made in accordance with standard securities industry practice.
Custody
of the Trust’s Platinum
Custody
of the physical platinum deposited with and held by the Trust is provided by the Custodian at the London vault and by the Zurich
Sub-Custodian selected by the Custodian in the Zurich vault and by other sub-custodians on a temporary basis. The Custodian is
a market maker, clearer and approved weigher under the rules of the LPPM.
The
Custodian is the custodian of the physical platinum credited to Trust Allocated Account in accordance with the Custody Agreements.
The Custodian segregates the physical platinum credited to the Trust Allocated Account from any other precious metal it holds
or holds for others by entering appropriate entries in its books and records, and requires the Zurich Sub-Custodian to also segregate
the physical platinum of the Trust from the other platinum held by it for other customers of the Custodian and the Zurich Sub-Custodian’s
other customers. The Custodian requires the Zurich Sub-Custodian to identify in its books and records the Trust as having the
rights to the physical platinum credited to its Trust Allocated Account. Under the Custody Agreements, the Trustee, the Sponsor
and the Sponsor’s auditors and inspectors may inspect the vaults of the Custodian and the Zurich Sub-Custodian. See “Inspection
of Platinum”.
The
Custodian, as instructed by the Trustee on behalf of the Trust, is authorized to accept, on behalf of the Trust, deposits of platinum
in unallocated form. Acting on standing instructions specified in the Custody Agreements, the Custodian will or will require the
Zurich Sub-Custodian to allocate platinum deposited in unallocated form with the Trust by selecting plates or ingots of platinum
for deposit to the Trust Allocated Account. All physical platinum allocated to the Trust must conform to the rules, regulations,
practices and customs of the LPPM.
The
process of withdrawing platinum from the Trust for a redemption of a Basket follows the same general procedure as for depositing platinum
with the Trust for a creation of a Basket, only in reverse. Each transfer of platinum between the Trust Allocated Account
and the Trust Unallocated Account connected with a creation or redemption of a Basket may result in a small amount of platinum
being held in the Trust Unallocated Account after the completion of the transfer. In making deposits and withdrawals between the
Trust Allocated Account and the Trust Unallocated Account, the Custodian will use commercially reasonable efforts to minimize
the amount of platinum held in the Trust Unallocated Account as of the close of each business day. See “Deposit of
Platinum; Issuance of Shares” and “Withdrawal of Platinum; Redemption of Shares.”
United
States Federal Income Tax Consequences
The
following discussion of the material US federal income tax consequences generally applies to the purchase, ownership and disposition
of Shares by a US Shareholder (as defined below), and certain US federal income tax consequences that may apply to an investment
in Shares by a Non-US Shareholder (as defined below). The discussion is based on the United States Internal Revenue Code of 1986
as amended (the “Code”). The discussion below is based on the Code, United States Treasury Regulations (“Treasury
Regulations”) promulgated under the Code and judicial and administrative interpretations of the Code, all as in effect on
the date of this annual report and all of which are subject to change either prospectively or retroactively. The tax treatment
of Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including broker-dealers, traders,
banks and other financial institutions, insurance companies, real estate investment trusts, tax-exempt entities, Shareholders
whose functional currency is not the U.S. Dollar or other investors with special circumstances) may be subject to special rules
not discussed below. In addition, the following discussion applies only to investors who hold Shares as “capital assets”
within the meaning of Code section 1221 and not as part of a straddle, hedging transaction or a conversion or constructive sale
transaction. Moreover, the discussion below does not address the effect of any state, local or foreign tax law or any transfer
tax on an owner of Shares. Purchasers of Shares are urged to consult their own tax advisors with respect to all federal, state,
local and foreign tax law or any transfer tax considerations potentially applicable to their investment in Shares, including substantial
changes to the Code made in the Tax Cuts and Jobs Act (P.L. 115-97).
For
purposes of this discussion, a “US Shareholder” is a Shareholder that is:
● An
individual who is treated as a citizen or resident of the United States for US federal income tax purposes;
● A
corporation (or other entity treated as a corporation for US federal tax purposes) created or organized in or under the laws of
the United States or any political subdivision thereof;
● An
estate, the income of which is includible in gross income for US federal income tax purposes regardless of its source; or
● A
trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one
or more US persons have the authority to control all substantial decisions of the trust.
A
Shareholder that is not a US Shareholder as defined above (other than a partnership, or an entity treated as a partnership for
US federal tax purposes) generally is considered a “Non-US Shareholder” for purposes of this discussion. For US federal
income tax purposes, the treatment of any beneficial owner of an interest in a partnership, including any entity treated as a
partnership for US federal income tax purposes, generally depends upon the status of the partner and upon the activities of the
partnership. Partnerships and partners in partnerships should consult their tax advisors about the US federal income tax consequences
of purchasing, owning and disposing of Shares.
Taxation
of the Trust
The
Trust is classified as a “grantor trust” for US federal income tax purposes. As a result, the Trust itself is not
subject to US federal income tax. Instead, the Trust’s income and expenses “flow through” to the Shareholders,
and the Trustee reports the Trust’s income, gains, losses and deductions to the Internal Revenue Service (“IRS”)
on that basis.
Taxation
of US Shareholders
Shareholders
generally are treated, for US federal income tax purposes, as if they directly owned a pro rata share of the underlying assets
held by the Trust. Shareholders are also treated as if they directly received their respective pro rata share of the Trust’s
income, if any, and as if they directly incurred their respective pro rata share of the Trust’s expenses. In the case of
a Shareholder that purchases Shares for cash, its initial tax basis in its pro rata share of the assets held by the Trust at the
time it acquires its Shares is equal to its cost of acquiring the Shares. In the case of a Shareholder that acquires its Shares
as part of a creation of a Basket, the delivery of platinum to the Trust in exchange for the Shares is not a taxable event
to the Shareholder, and the Shareholder’s tax basis and holding period for the Shares are the same as its tax basis and
holding period for the platinum delivered in exchange therefore (except to the extent of any cash contributed for such Shares).
For purposes of this discussion, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the
same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares,
should consult their tax advisors.
When
the Trust sells or transfers platinum, for example to pay expenses, a Shareholder generally will recognize a gain or loss in an
amount equal to the difference between (1) the Shareholder’s pro rata share of the amount realized by the Trust upon the
sale or transfer and (2) the Shareholder’s tax basis for its pro rata share of the platinum that was sold or transferred.
Such gain or loss will generally be long-term or short-term capital gain or loss, depending upon whether the Shareholder has a
holding period in its Shares of longer than one year. A Shareholder’s tax basis for its share of any platinum sold by the
Trust generally will be determined by multiplying the Shareholder’s total basis for its Share immediately prior to the sale,
by a fraction the numerator of which is the amount of platinum sold, and the denominator of which is the total amount of the platinum
held in the Trust immediately prior to the sale. After any such sale, a Shareholder’s tax basis for its pro rata share of
the platinum remaining in the Trust will be equal to its tax basis for its Shares immediately prior to the sale, less the portion
of such basis allocable to its share of the platinum that was sold.
Upon
a Shareholder’s sale of some or all of its Shares, the Shareholder will be treated as having sold a pro rata share of the platinum
held in the Trust at the time of the sale. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an
amount equal to the difference between (1) the amount realized pursuant to the sale of the Shares, and (2) the Shareholder’s
tax basis for the Shares sold, as determined in the manner described in the preceding paragraph.
A
redemption of some or all of a Shareholder’s Shares in exchange for the underlying platinum represented by the Shares
redeemed generally will not be a taxable event to the Shareholder. The Shareholder’s tax basis for the platinum received
in the redemption generally will be the same as the Shareholder’s tax basis for the Shares redeemed. The Shareholder’s
holding period with respect to the platinum received should include the period during which the Shareholder held the Shares
redeemed. A subsequent sale of the platinum received by the Shareholder will be a taxable event.
An
Authorized Participant and other investors may be able to re-invest, on a tax-deferred basis, in-kind redemption proceeds received
from exchange-traded products that are substantially similar to the Trust in the Trust’s Shares. Authorized Participants
and other investors should consult their tax advisors as to whether and under what circumstances the reinvestment in the Shares
of proceeds from substantially similar exchange-traded products can be accomplished on a tax-deferred basis.
Under
current law, gains recognized by individuals, estates or trusts from the sale of “collectibles,” including physical
platinum, held for more than one year are taxed at a maximum federal income tax rate of 28%, rather than the 20% rate applicable
to most other long-term capital gains. For these purposes, gains recognized by an individual upon the sale of Shares held for
more than one year, or attributable to the Trust’s sale of any physical platinum which the Shareholder is treated (through
its ownership of Shares) as having held for more than one year, generally will be taxed at a maximum rate of 28%. The tax rates
for capital gains recognized upon the sale of assets held by an individual US Shareholder for one year or less or by a corporate
taxpayer are generally the same as those at which ordinary income is taxed.
In
addition, high-income individuals and certain trusts and estates are subject to a 3.8% Medicare contribution tax that is imposed
on net investment income and gain. Shareholders should consult their tax advisor regarding this tax.
Brokerage
Fees and Trust Expenses
Any
brokerage or other transaction fees incurred by a Shareholder in purchasing Shares is treated as part of the Shareholder’s
tax basis in the Shares. Similarly, any brokerage fee incurred by a Shareholder in selling Shares reduces the amount realized
by the Shareholder with respect to the sale.
Shareholders
will be required to recognize gain or loss upon a sale of platinum by the Trust (as discussed above), even though some or
all of the proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata
share of each expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are
individuals, estates or trusts, however, may be required to treat some or all of the expenses of the Trust, to the extent that
such expenses may be deducted, as miscellaneous itemized deductions. Under the Tax Cuts and Jobs Act (P.L. 115-97),
miscellaneous itemized deductions, including expenses for the production of income, will not be deductible for either regular
federal income tax or alternative minimum tax purposes for taxable years beginning after December 31, 2017 and before January
1, 2026.
Investment
by Regulated Investment Companies
Mutual
funds and other investment vehicles which are “regulated investment companies” within the meaning of Code section
851 should consult with their tax advisors concerning (1) the likelihood that an investment in Shares, although they are a “security”
within the meaning of the Investment Company Act of 1940, may be considered an investment in the underlying platinum for
purposes of Code section 851(b), and (2) the extent to which an investment in Shares might nevertheless be consistent with preservation
of their qualification under Code section 851. In recent administrative guidance, the IRS stated that it will no longer issue
rulings under Code section 851(b) relating to the determination of whether or not an instrument or position is a “security”,
but, instead, intends to defer to guidance from the SEC for such determination.
United
States Information Reporting and Backup Withholding Tax for US and Non-US Shareholders
The
Trustee or the appropriate broker will file certain information returns with the IRS, and provides certain tax-related information
to Shareholders, in accordance with applicable Treasury Regulations. Each Shareholder will be provided with information regarding
its allocable portion of the Trust’s annual income (if any) and expenses.
A
US Shareholder may be subject to US backup withholding tax in certain circumstances unless it provides its taxpayer identification
number and complies with certain certification procedures. Non-US Shareholders may have to comply with certification procedures
to establish that they are not a US person in order to avoid the backup withholding tax.
The
amount of any backup withholding tax will be allowed as a credit against a Shareholder’s US federal income tax liability
and may entitle such a Shareholder to a refund, provided that the required information is furnished to the IRS.
Income
Taxation of Non-US Shareholders
The
Trust does not expect to generate taxable income except for gains (if any) upon the sale of platinum. A Non-US Shareholder generally
is not subject to US federal income tax with respect to gains recognized upon the sale or other disposition of Shares, or upon
the sale of platinum by the Trust, unless (1) the Non-US Shareholder is an individual and is present in the United States
for 183 days or more during the taxable year of the sale or other disposition, and the gain is treated as being from United States
sources; or (2) the gain is effectively connected with the conduct by the Non-US Shareholder of a trade or business in the United
States.
Taxation
in Jurisdictions other than the United States
Prospective
purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their
own tax advisers as to the tax consequences, under the laws of such jurisdiction (or any other jurisdiction not being the United
States to which they are subject), of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular,
as to whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale,
redemption or other dealing.
ERISA
and Related Considerations
The
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or Code section 4975 impose certain requirements
on certain employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities,
Keogh plans, and certain commingled investment vehicles or insurance company general or separate accounts in which such plans
or arrangements are invested (collectively, “Plans”), and on persons who are fiduciaries with respect to the investment
of “plan assets” of a Plan. Government plans and some church plans are not subject to the fiduciary responsibility
provisions of ERISA or the provisions of section 4975 of the Code, but may be subject to substantially similar rules under other
federal law, or under state or local law (“Other Law”).
In
contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for making such investment should
carefully consider, taking into account the facts and circumstances of the Plan and the “Risk Factors” discussed above
and whether such investment is consistent with its fiduciary responsibilities under ERISA or Other Law, including, but not limited
to: (1) whether the investment is permitted under the Plan’s governing documents, (2) whether the fiduciary has the authority
to make the investment, (3) whether the investment is consistent with the Plan’s funding objectives, (4) the tax effects
of the investment on the Plan, and (5) whether the investment is prudent considering the factors discussed in this report. In
addition, ERISA and Code section 4975 prohibit a broad range of transactions involving assets of a plan and persons who are “parties
in interest” under ERISA or “disqualified persons” under section 4975 of the Code. A violation of these rules
may result in the imposition of significant excise taxes and other liabilities. Plans subject to Other Law may be subject to similar
restrictions.
It
is anticipated that the Shares will constitute “publicly offered securities” as defined in the Department of Labor
“Plan Asset Regulations,” §2510.3-101 (b)(2) as modified by section 3(42) of ERISA. Accordingly, pursuant to
the Plan Asset Regulations, only Shares purchased by a Plan, and not an interest in the underlying assets held in the Trust, should
be treated as assets of the Plan, for purposes of applying the “fiduciary responsibility” rules of ERISA and the “prohibited
transaction” rules of ERISA and the Code. Fiduciaries of plans subject to Other Law should consult legal counsel to determine
whether there would be a similar result under the Other Law.
Investment
by Certain Retirement Plans
Code
section 408(m) provides that the acquisition of a “collectible” by an individual retirement account (“IRA”)
or a participant-directed account maintained under any plan that is tax-qualified under Code section 401(a) (“Tax Qualified
Account”) is treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom
the Tax Qualified Account is maintained, of an amount equal to the cost to the account of acquiring the collectible. The term
“collectible” is defined to include, with certain exceptions, “any metal or gem”. The IRS has issued several
private letter rulings to the effect that a purchase by an IRA, or by a participant-directed account under a Code section 401(a)
plan, of publicly-traded shares in a trust holding precious metals will not be treated as resulting in a taxable distribution
to the IRA owner or Tax Qualified Account participant under Code section 408(m). However the private letter rulings provide that,
if any of the Shares so purchased are distributed from the IRA or Tax Qualified Account to the IRA owner or Tax Qualified Account
participant, or if any precious metal is received by such IRA or Tax Qualified Account upon the redemption of any of the Shares
purchased by it, the Shares or precious metal so distributed will be subject to federal income tax in the year of distribution,
to the extent provided under the applicable provisions of Code sections 408(d), 408(m) or 402. Accordingly, potential IRA or Tax
Qualified Account investors are urged to consult with their own professional advisors concerning the treatment of an investment
in Shares under Code section 408(m).
Item
1A. Risk Factors
Shareholders
should consider carefully the risks described below before making an investment decision. Shareholders should also refer to the
other information included in this report, including the Trust’s financial statements and the related notes.
RISKS RELATED TO PLATINUM
The
price of platinum may be affected by the sale of ETVs tracking platinum markets.
To
the extent existing exchange traded vehicles (“ETVs”) tracking platinum markets represent a significant proportion
of demand for physical platinum bullion; large redemptions of the securities of these ETVs could negatively affect physical platinum
bullion prices and the price and NAV of the Shares.
Crises
may motivate large-scale sales of platinum which could decrease the price of platinum and adversely affect an investment in the
Shares.
The
possibility of large-scale distress sales of platinum in times of crisis may have a short-term negative impact on the price of
platinum and adversely affect an investment in the Shares. For example, the 2008 financial credit crisis resulted in significantly
depressed prices of platinum largely due to forced sales and deleveraging from institutional investors such as hedge funds and
pension funds. Crises in the future may impair platinum’s price performance which would, in turn, adversely affect an investment
in the Shares.
Several
factors may have the effect of causing a decline in the prices of platinum and a corresponding decline in the price of Shares.
Among them:
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A
significant increase in platinum hedging activity by platinum producers. Should there
be an increase in the level of hedge activity of platinum producing companies, it could
cause a decline in world platinum prices, adversely affecting the price of the Shares.
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A
significant change in the attitude of speculators, investors and central banks towards
platinum. Should the speculative community take a negative view towards platinum or central
banking authorities determine to sell national platinum reserves, either event could
cause a decline in world platinum prices, negatively impacting the price of the Shares.
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A
widening of interest rate differentials between the cost of money and the cost of platinum
could negatively affect the price of platinum which, in turn, could negatively affect
the price of the Shares.
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A
combination of rising money interest rates and a continuation of the current low cost
of borrowing platinum could improve the economics of selling platinum forward. This could
result in an increase in hedging by platinum mining companies and short selling by speculative
interests, which would negatively affect the price of platinum. Under such circumstances,
the price of the Shares would be similarly affected.
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Autocatalysts,
automobile components that use platinum, accounted for approximately 47% of the net global
demand in platinum in 2019. While the automotive sector in China and the US is showing
signs of recovery, the European market is currently experiencing declining demand and,
in certain cases, solvency concerns. Reduced automotive industry sales in Europe may
result in a decline in autocatalyst demand.
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A
decline in the global automotive industry may impact the price of platinum and affect
the price of the Shares.
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A
decline in the automobile industry or a shift from gasoline-powered to electric vehicles may have the effect of causing a decline
in the prices of platinum and a corresponding decline in the price of Shares.
Autocatalysts,
automobile components for emissions control that use platinum, accounted for approximately 39% of the global demand in platinum
in 2019. Reduced automotive industry sales or a shift from gasoline-powered to electric vehicles may result in a decline in autocatalyst
demand. A contraction in the global automotive industry or more widespread acceptance of electric vehicles may impact the price
of platinum and affect the price of the Shares.
The
value of the Shares relates directly to the value of the platinum held by the Trust and fluctuations in the price of platinum
could materially adversely affect an investment in the Shares.
The
Shares are designed to mirror as closely as possible the performance of the price of platinum bullion, and the value of the Shares
relates directly to the value of the platinum held by the Trust, less the Trust’s liabilities (including estimated accrued
but unpaid expenses). The price of platinum has fluctuated widely over the past several years. Several factors may affect the
price of platinum, including:
Global
platinum supply, which is influenced by such factors as production and cost levels in major platinum-producing countries such
as South Africa. Recycling, autocatalyst demand, industrial demand, jewelry demand and investment demand are also important drivers
of platinum supply and demand;
● Investors’
expectations with respect to the rate of inflation;
● Currency
exchange rates;
● Interest
rates;
● Investment
and trading activities of hedge funds and commodity funds; and
● Global
or regional political, economic or financial events and situations.
In
addition, investors should be aware that there is no assurance that platinum will maintain its long-term value in terms of purchasing
power in the future. In the event that the price of platinum declines, the Sponsor expects the value of an investment in the Shares
to decline proportionately.
RISKS RELATED TO THE SHARES
The
sale of the Trust’s platinum to pay expenses not assumed by the Sponsor at a time of low platinum prices could
adversely affect the value of the Shares.
The
Trustee sells platinum held by the Trust to pay Trust expenses not assumed by the Sponsor on an as-needed basis irrespective
of then-current platinum prices. The Trust is not actively managed and no attempt will be made to buy or sell platinum
to protect against or to take advantage of fluctuations in the price of platinum. Consequently, the Trust’s platinum
may be sold at a time when the platinum price is low, resulting in a negative effect on the value of the Shares.
The
value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor or the Trustee under the Trust
Agreement.
Under
the Trust Agreement, each of the Sponsor and the Trustee has a right to be indemnified from the Trust for any liability or expense
it incurs without gross negligence, bad faith, willful misconduct, willful malfeasance or reckless disregard on its part. That
means the Sponsor or the Trustee may require the assets of the Trust to be sold in order to cover losses or liability suffered
by it. Any sale of that kind would reduce the NAV of the Trust and the value of the Shares.
The
Shares may trade at a price which is at, above or below the NAV per Share and any discount or premium in the trading price relative
to the NAV per Share may widen as a result of non-concurrent trading hours between the NYSE Arca and London, Zurich and COMEX.
The
Shares may trade at, above or below the NAV per Share. The NAV per Share fluctuates with changes in the market value of the Trust’s
assets. The trading price of the Shares fluctuates in accordance with changes in the NAV per Share as well as market supply and
demand. The amount of the discount or premium in the trading price relative to the NAV per Share may be influenced by non-concurrent
trading hours between the NYSE Arca and the major platinum markets. While the Shares trade on the NYSE Arca until 4:00 p.m. New
York time, liquidity in the market for platinum is reduced after the close of the major world platinum markets, including London,
Zurich and the COMEX. As a result, during this time, trading spreads, and the resulting premium or discount on the Shares, may
widen.
A
possible “short squeeze” due to a sudden increase in demand of Shares that largely exceeds supply may lead to price
volatility in the Shares.
Investors
may purchase Shares to hedge existing platinum exposure or to speculate on the price of platinum. Speculation on the price of
platinum may involve long and short exposures. To the extent aggregate short exposure exceeds the number of Shares available for
purchase (for example, in the event that large redemption requests by Authorized Participants dramatically affect Share liquidity),
investors with short exposure may have to pay a premium to repurchase Shares for delivery to Share lenders. Those repurchases
may in turn, dramatically increase the price of the Shares until additional Shares are created through the creation process. This
is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in Shares that are
not directly correlated to the price of platinum.
Purchasing
activity in the platinum market associated with Basket creations or selling activity following Basket redemptions may affect the
price of platinum and Share trading prices. These price changes may adversely affect an investment in the Shares.
Purchasing
activity associated with acquiring the platinum required for deposit into the Trust in connection with the creation of Baskets
may increase the market price of platinum, which will result in higher prices for the Shares. Increases in the market price of
platinum may also occur as a result of the purchasing activity of other market participants. Other market participants may attempt
to benefit from an increase in the market price of platinum that may result from increased purchasing activity of platinum connected
with the issuance of Baskets. Consequently, the market price of platinum may decline immediately after Baskets are created. If
the price of platinum declines, the trading price of the Shares will also decline.
Selling
activity associated with sales of platinum withdrawn from the Trust in connection with the redemption of Baskets may decrease
the market price of platinum, which will result in lower prices for the Shares. Decreases in the market price of platinum may
also occur as a result of the selling activity of other market participants. If the price of platinum declines, the trading price
of the Shares will also decline.
The
Sponsor is unable to ascertain whether the platinum price movements since the commencement of the Trust’s initial public
offering on January 8, 2010 were attributable to the Trust’s Basket creation and redemption process or independent metal
market forces or both. Nevertheless, the Trust and the Sponsor cannot provide assurance that future Basket creations or redemptions
will have no effect on the platinum metal prices and, consequently, Share trading prices.
Since
there is no limit on the amount of platinum that the Trust may acquire, the Trust, as it grows, may have an impact on the supply
and demand of platinum that ultimately may affect the price of the Shares in a manner unrelated to other factors affecting the
global market for platinum.
The
Trust Agreement places no limit on the amount of platinum the Trust may hold. Moreover, the Trust may issue an unlimited number
of Shares, subject to registration requirements, and thereby acquire an unlimited amount of platinum. The global market for platinum
is characterized by supply and demand constraints that are generally not present in the markets for other precious metals such
as gold and silver. From 2015 to 2019, world platinum mine supply averaged 6.1 million ounces, while world demand averaged
10.1 million ounces. If the amount of platinum acquired by the Trust is large enough in relation to global platinum supply and
demand, further in-kind creations and redemptions of Shares could have an impact on the supply and demand of platinum unrelated
to other factors affecting the global market for platinum. Such an impact could affect the price for platinum that would directly
affect the price at which Shares are traded on the Exchange or the price of future Baskets created or redeemed by the Trust. The
Trust and the Sponsor cannot provide Shareholders any assurance that increased metal holdings by the Trust in the future will
have no such long-term metal price impact thereby affecting Share trading prices.
The
Shares and their value could decrease if unanticipated operational or trading problems arise.
There
may be unanticipated problems or issues with respect to the mechanics of the Trust’s operations and the trading of the Shares
that could have a material adverse effect on an investment in the Shares. In addition, although the Trust is not actively “managed”
by traditional methods, to the extent that unanticipated operational or trading problems or issues arise, the Sponsor’s
past experience and qualifications may not be suitable for solving these problems or issues.
Discrepancies,
disruptions or unreliability of the LME PM Fix could impact the value of the Trust’s platinum and the market price of the
Shares.
The
Trustee values the Trust’s platinum pursuant to the LME PM Fix. In the event that the LME PM Fix proves to be an inaccurate
benchmark, or the LME PM Fix varies materially from the prices determined by other mechanisms for valuing platinum, the value
of the Trust’s platinum and the market price of the Shares could be adversely impacted. Any future developments in the LME
PM Fix, to the extent it has a material impact on the LME PM Fix, could adversely impact the value of the Trust’s platinum
and the market price of the Shares. It is possible that electronic failures or other unanticipated events may occur that could
result in delays in the announcement of, or the inability of the benchmark to produce, the LME PM Fix on any given date. Furthermore,
any actual or perceived disruptions that result in the perception that the LME PM Fix is vulnerable to actual or attempted manipulation
could adversely affect the behavior of market participants, which may have an effect on the price of platinum. If the LME PM Fix
is unreliable for any reason, the price of platinum and the market price for the Shares may decline or be subject to greater volatility.
If
the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions
the effect of which would be to keep the price of the Shares closely linked to the price of platinum by allowing the market participants
to profit from divergences, may not exist and, as a result, the price of the Shares may fall.
If
the processes of creation and redemption of Shares (which depend on timely transfers of platinum to and by the Custodian) encounter
any unanticipated difficulties, potential market participants who would otherwise be willing to purchase or redeem Baskets to
take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying
platinum may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect.
If this is the case, the liquidity of Shares may decline and the price of the Shares may fluctuate independently of the price
of platinum and may fall. Additionally, redemptions could be suspended for any period during which (1) the NYSE Arca is closed
(other than customary weekend or holiday closings) or trading on the NYSE Arca is suspended or restricted, or (2) an emergency
exists as a result of which delivery, disposal or evaluation of the platinum is not reasonably practicable.
The
liquidity of the Shares may be affected by the withdrawal from participation of one or more Authorized Participants.
In
the event that one or more Authorized Participants having substantial interests in Shares or otherwise responsible for a significant
portion of the Shares’ daily trading volume on the Exchange withdraw from participation, the liquidity of the Shares will
likely decrease which could adversely affect the market price of the Shares and result in Shareholders incurring a loss on their
investment.
Shareholders
do not have the protections associated with ownership of shares in an investment company registered under the Investment Company
Act of 1940 or the protections afforded by the Commodity Exchange Act (“CEA”).
The
Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under
such act. Consequently, Shareholders do not have the regulatory protections provided to investors in investment companies. The
Trust does and will not hold or trade in commodity futures contracts, “commodity interests” or any other instruments
regulated by the CEA, as administered by the CFTC and the NFA. Furthermore, the Trust is not a commodity pool for purposes of
the CEA and the Shares are not “commodity interests”, and neither the Sponsor nor the Trustee is subject to regulation
by the CFTC as a commodity pool operator or a commodity trading advisor in connection with the Trust or the Shares. Consequently,
Shareholders do not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools operated
by registered commodity pool operators or advised by commodity trading advisors.
The
Trust may be required to terminate and liquidate at a time that is disadvantageous to Shareholders.
If
the Trust is required to terminate and liquidate, such termination and liquidation could occur at a time which is disadvantageous
to Shareholders, such as when platinum prices are lower than the platinum prices at the time when Shareholders purchased their
Shares. In such a case, when the Trust’s platinum is sold as part of the Trust’s liquidation, the resulting proceeds
distributed to Shareholders will be less than if platinum prices were higher at the time of sale.
The
lack of an active trading market for the Shares may result in losses on investment at the time of disposition of the Shares.
Although
Shares are listed for trading on the NYSE Arca, it cannot be assumed that an active trading market for the Shares will develop
or be maintained. If an investor needs to sell Shares at a time when no active market for Shares exists, such lack of an active
market will most likely adversely affect the price the investor receives for the Shares (assuming the investor is able to sell
them).
Shareholders
do not have the rights enjoyed by investors in certain other vehicles.
As
interests in an investment trust, the Shares have none of the statutory rights normally associated with the ownership of shares
of a corporation (including, for example, the right to bring “oppression” or “derivative” actions). In
addition, the Shares have limited voting and distribution rights (for example, Shareholders do not have the right to elect directors
or approve amendments to the Trust Agreement and do not receive dividends).
An
investment in the Shares may be adversely affected by competition from other methods of investing in platinum.
The
Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the platinum
industry and other securities backed by or linked to platinum, direct investments in platinum and investment vehicles similar
to the Trust. Market and financial conditions, and other conditions beyond the Sponsor’s control, may make it more attractive
to invest in other financial vehicles or to invest in platinum directly, which could limit the market for the Shares and reduce
the liquidity of the Shares.
The
amount of platinum represented by each Share will decrease over the life of the Trust due to the recurring deliveries of platinum
necessary to pay the Sponsor’s Fee in-kind and potential sales of platinum to pay in cash the Trust expenses not assumed
by the Sponsor. Without increases in the price of platinum sufficient to compensate for that decrease, the price of the Shares
will also decline proportionately over the life of the Trust.
The
amount of platinum represented by each Share decreases each day by the Sponsor’s Fee. In addition, although the
Sponsor has agreed to assume all organizational and certain administrative and marketing expenses incurred by the Trust (the Trustee’s monthly fee and out-of-pocket expenses, the Custodian’s fee and reimbursement of the Custodian’s expenses
under the Custody Agreements, Exchange listing fees, SEC registration fees, printing and mailing costs, audit fees and up to $100,000
per annum in legal expenses), in
exceptional cases certain Trust expenses may need to be paid by the Trust. Because the Trust does not have any income, it
must either make payments in-kind by deliveries of platinum (as is the case with the Sponsor’s Fee) or it must
sell platinum to obtain cash (as in the case of any exceptional expenses). The result of these sales
of platinum and recurring deliveries of platinum to pay the Sponsor’s Fee in-kind is a decrease in the amount
of platinum represented by each Share. New deposits of platinum, received in exchange for new Shares issued by the
Trust, will not reverse this trend.
A
decrease in the amount of platinum represented by each Share results in a decrease in each Share’s price even if the
price of platinum bullion does not change. To retain the Share’s original price, the price of platinum must increase.
Without that increase, the lesser amount of platinum represented by the Share will have a correspondingly lower price. If
this increase does not occur, or is not sufficient to counter the lesser amount of platinum represented by each Share, Shareholders
will sustain losses on their investment in Shares.
An
increase in Trust expenses not assumed by the Sponsor, or the existence of unexpected liabilities affecting the Trust, will require
the Trustee to sell larger amounts of platinum, and will result in a more rapid decrease of the amount of platinum represented
by each Share and a corresponding decrease in its value.
RISKS RELATED TO THE CUSTODY OF PLATINUM
The
Trust’s platinum may be subject to loss, damage, theft or restriction on access.
There
is a risk that part or all of the Trust’s platinum could be lost, damaged or stolen. Access to the Trust’s platinum
could also be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Any of these
events may adversely affect the operations of the Trust and, consequently, an investment in the Shares.
The
Trust’s lack of insurance protection and the Shareholders’ limited rights of legal recourse against the Trust, the
Trustee, the Sponsor, the Custodian, the Zurich Sub-Custodian and any other sub-custodian exposes the Trust and its Shareholders
to the risk of loss of the Trust’s platinum for which no person is liable.
The
Trust does not insure its platinum. The Custodian maintains insurance with regard to its business on such terms and conditions
as it considers appropriate in connection with its custodial obligations and is responsible for all costs, fees and expenses arising
from the insurance policy or policies. The Trust is not a beneficiary of any such insurance and does not have the ability to dictate
the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian maintains adequate insurance
or any insurance with respect to the platinum held by the Custodian on behalf of the Trust. In addition, the Custodian and
the Trustee do not require the Zurich Sub-Custodian or any other direct or indirect sub-custodians to be insured or bonded with
respect to their custodial activities or in respect of the platinum held by them on behalf of the Trust. Further, Shareholders’
recourse against the Trust, the Trustee and the Sponsor under New York law, the Custodian, the Zurich Sub-Custodian and any other
sub-custodian under English law, and any other sub-custodian under the law governing their custody operations is limited. Consequently,
a loss may be suffered with respect to the Trust’s platinum which is not covered by insurance and for which no person
is liable in damages.
The
Custodian’s limited liability under the Custody Agreements and English law may impair the ability of the Trust to recover
losses concerning its platinum and any recovery may be limited, even in the event of fraud, to the market value of the platinum
at the time the fraud is discovered.
The
liability of the Custodian is limited under the Custody Agreements. Under the Custody Agreements between the Trustee and the Custodian
which establish the Trust’s unallocated platinum account (“Unallocated Account”) and the Trust’s
allocated platinum account (“Allocated Account”), the Custodian is only liable for losses that are the direct
result of its own negligence, fraud or willful default in the performance of its duties. Any such liability is further limited
to the market value of the platinum lost or damaged at the time such negligence, fraud or willful default is discovered by
the Custodian provided the Custodian notifies the Trust and the Trustee promptly after the discovery of the loss or damage. Under
each Authorized Participant Unallocated Bullion Account Agreement (between the Custodian and an Authorized Participant establishing
an Authorized Participant Unallocated Account), the Custodian is not contractually or otherwise liable for any losses suffered
by any Authorized Participant or Shareholder that are not the direct result of its own gross negligence, fraud or willful default
in the performance of its duties under such agreement, and in no event will its liability exceed the market value of the balance
in the Authorized Participant Unallocated Account at the time such gross negligence, fraud or willful default is discovered by
the Custodian. For any Authorized Participant Unallocated Bullion Account Agreement between an Authorized Participant and
another platinum clearing bank, the liability of the platinum clearing bank to the Authorized Participant may be greater
or lesser than the Custodian’s liability to the Authorized Participant described in the preceding sentence, depending on
the terms of the agreement. In addition, the Custodian will not be liable for any delay in performance or any non-performance
of any of its obligations under the Allocated Account Agreement, the Unallocated Account Agreement or the Authorized Participant
Unallocated Bullion Account Agreement by reason of any cause beyond its reasonable control, including acts of God, war or
terrorism. As a result, the recourse of the Trustee or a Shareholder, under English law, is limited. Furthermore, under English
common law, the Custodian, the Zurich Sub-Custodian, or any other sub-custodian will not be liable for any delay in the performance
or any non-performance of its custodial obligations by reason of any cause beyond its reasonable control.
The
obligations of the Custodian, the Zurich Sub-Custodian and any other sub-custodians are governed by English law, which may
frustrate the Trust in attempting to seek legal redress against the Custodian, the Zurich Sub-Custodian or any other sub-custodian
concerning its platinum.
The
obligations of the Custodian under the Custody Agreements are, and the Authorized Participant Unallocated Bullion Account
Agreements may be, governed by English law. The Custodian has entered into arrangements with the Zurich Sub-Custodian and
may enter into arrangements with any other sub-custodians for the custody or temporary holding of the Trust’s platinum,
which arrangements may also be governed by English law. The Trust is a New York common law trust. Any United States, New York
or other court situated in the United States may have difficulty interpreting English law (which, insofar as it relates to custody
arrangements, is largely derived from court rulings rather than statute), LPPM rules or the customs and practices in the London
custody market. It may be difficult or impossible for the Trust to sue the Zurich Sub-Custodian or any other sub-custodian
in a United States, New York or other court situated in the United States. In addition, it may be difficult, time consuming and/or
expensive for the Trust to enforce in a foreign court a judgment rendered by a United States, New York or other court situated
in the United States.
Although
the relationship between the Custodian and the Zurich Sub-Custodian concerning the Trust’s allocated platinum is expressly
governed by English law, a court hearing any legal dispute concerning their arrangement may disregard that choice of law and apply
Swiss law, in which case the ability of the Trust to seek legal redress against the Zurich Sub-Custodian may be frustrated.
The
obligations of the Zurich Sub-Custodian under its arrangement with the Custodian with respect to the Trust’s allocated platinum
is expressly governed by English law. Nevertheless, a court in the United States, England or Switzerland may determine that English
law should not apply and, instead, apply Swiss law to that arrangement. Not only might it be difficult or impossible for a United
States or English court to apply Swiss law to the Zurich Sub-Custodian's arrangement, but application of Swiss law may, among
other things, alter the relative rights and obligations of the Custodian and the Zurich Sub-Custodian to the extent that a loss
to the Trust’s platinum may not have adequate or any legal redress. Further, the ability of the Trust to seek legal
redress against the Zurich Sub-Custodian may be frustrated by application of Swiss law.
The
Trust may not have adequate sources of recovery if its platinum is lost, damaged, stolen or destroyed.
If
the Trust’s platinum is lost, damaged, stolen or destroyed under circumstances rendering a party liable to the Trust,
the responsible party may not have the financial resources sufficient to satisfy the Trust’s claim. For example, as to a
particular event of loss, the only source of recovery for the Trust might be limited to the Custodian, the Zurich Sub-Custodian
or any other sub-custodian or, to the extent identifiable, other responsible third parties (e.g., a thief or terrorist), any of
which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of the Trust.
Shareholders
and Authorized Participants lack the right under the Custody Agreements to assert claims directly against the Custodian, the Zurich
Sub-Custodian, and any other sub-custodian.
Neither
the Shareholders nor any Authorized Participant have a right under the Custody Agreements to assert a claim of the Trust against
the Custodian, the Zurich Sub-Custodian or any other sub-custodian. Claims under the Custody Agreements may only be asserted by
the Trustee on behalf of the Trust.
The
Custodian is reliant on the Zurich Sub-Custodian for the safekeeping of all or a substantial portion of the Trust’s platinum.
Furthermore, the Custodian has limited obligations to oversee or monitor the Zurich Sub-Custodian. As a result, failure by any
Zurich Sub-Custodian to exercise due care in the safekeeping of the Trust’s platinum could result in a loss to the Trust.
Platinum
generally trades on a loco London or loco Zurich basis whereby the physical platinum is held in vaults located in London or Zurich
or is transferred into accounts established in London or Zurich. The Custodian does not have a vault in Zurich and is reliant
on the Zurich Sub-Custodian for the safekeeping of all or a substantial portion of the Trust’s allocated platinum. Other
than obligations to (1) use reasonable care in appointing the Zurich Sub-Custodian, (2) require any Zurich Sub-Custodian to segregate
the platinum held by it for the Trust from any other platinum held by it for the Custodian and any other customers of the Custodian
by making appropriate entries in its books and records and (3) ensure that the Zurich Sub-Custodian provides confirmation to the
Trustee that it has undertaken to segregate the platinum held by it for the Trust, the Custodian is not liable for the acts or
omissions of the Zurich Sub-Custodian. Other than as described above, the Custodian does not undertake to monitor the performance
by the Zurich Sub-Custodian of its custody functions. The Trustee’s obligation to monitor the performance of the Custodian
is limited to receiving and reviewing the reports of the Custodian. The Trustee does not monitor the performance of the Zurich
Sub-Custodian or any other sub-custodian. In addition, the ability of the Trustee and the Sponsor to monitor the performance of
the Custodian may be limited because under the Custody Agreements, the Trustee and the Sponsor have only limited rights to visit
the premises of the Custodian or the Zurich Sub-Custodian for the purpose of examining the Trust’s platinum and certain
related records maintained by the Custodian or the Zurich Sub-Custodian.
As
a result of the above, any failure by any Zurich Sub-Custodian to exercise due care in the safekeeping of the Trust’s platinum
may not be detectable or controllable by the Custodian or the Trustee and could result in a loss to the Trust.
The
Custodian relies on its Zurich Sub-Custodian to hold the platinum allocated to the Trust Allocated Account and used to settle
redemptions. As a result, settlement of platinum in connection with redemptions loco London may require more than two days.
The
Custodian is reliant on its Zurich Sub-Custodian to hold the platinum allocated to the Trust Allocated Account in order to effect
redemption of Shares. As a result, in the case for redemption orders electing platinum deliveries to be received loco London,
it may take longer than two business days for platinum to be credited to the Authorized Participant Unallocated Account, which
may result in a delay of settlement of the redemption order that is settled loco London.
Because
the Trustee does not, and the Custodian has limited obligations to, oversee and monitor the activities of sub-custodians who may
hold the Trust’s platinum, failure by the sub-custodians to exercise due care in the safekeeping of the Trust’s platinum
could result in a loss to the Trust.
Under
the Allocated Account Agreement, the Custodian may appoint from time to time one or more sub-custodians to hold the Trust’s
platinum on a temporary basis pending delivery to the Custodian. The sub-custodians which the Custodian currently uses are The
Bank of Nova Scotia – ScotiaMocatta, Brinks Global Services Inc., HSBC Bank plc, ICBC Standard Bank plc, Malca-Amit UK Ltd.
London, Malca-Amit SA Zurich and UBS Zurich. The Custodian has selected the Zurich Sub-Custodian, and the Zurich Sub-Custodian
maintains custody of all of the Trust’s allocated platinum to be held in Zurich for the Custodian. The Custodian is required
under the Allocated Account Agreement to use reasonable care in appointing the Zurich Sub-Custodian and any other sub-custodians,
making the Custodian liable only for negligence or bad faith in the selection of such sub-custodians, and has an obligation to
use commercially reasonable efforts to obtain delivery of the Trust’s platinum from any sub-custodians appointed by the
Custodian. Otherwise, the Custodian is not liable for the acts or omissions of its sub-custodians. These sub-custodians may in
turn appoint further sub-custodians, but the Custodian is not responsible for the appointment of these further sub-custodians.
The Custodian does not undertake to monitor the performance by sub-custodians of their custody functions or their selection of
further sub-custodians. The Trustee does not monitor the performance of the Custodian other than to review the reports provided
by the Custodian pursuant to the Custody Agreements and does not undertake to monitor the performance of any sub-custodian. Furthermore,
except for the Zurich Sub-Custodian, the Trustee may have no right to visit the premises of any sub-custodian for the purposes
of examining the Trust’s platinum or any records maintained by the sub-custodian, and no sub-custodian will be obligated
to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records or creditworthiness of such
sub-custodian. In addition, the ability of the Trustee to monitor the performance of the Custodian may be limited because under
the Allocated Account Agreement and the Unallocated Account Agreement the Trustee has only limited rights to visit the premises
of the Custodian and the Zurich Sub-Custodian for the purpose of examining the Trust’s platinum and certain related records
maintained by the Custodian and the Zurich Sub-Custodian.
The
obligations of any sub-custodian of the Trust’s platinum are not determined by contractual arrangements but by LPPM rules
and London platinum market customs and practices, which may prevent the Trust’s recovery of damages for losses on its platinum
custodied with sub-custodians.
Except
for the Custodian’s arrangement with the Zurich Sub-Custodian, there are expected to be no written contractual arrangements
between sub-custodians that hold the Trust’s platinum and the Trustee or the Custodian because traditionally such arrangements
are based on the LPPM’s rules and on the customs and practices of the London Platinum market. In the event of a legal dispute
with respect to or arising from such arrangements, it may be difficult to define such customs and practices. The LPPM’s
rules may be subject to change outside the control of the Trust. Under English law, neither the Trustee nor the Custodian would
have a supportable breach of contract claim against a sub-custodian for losses relating to the safekeeping of platinum. If the
Trust’s platinum is lost or damaged while in the custody of a sub-custodian, the Trust may not be able to recover damages
from the Custodian or the sub-custodian. Whether a sub-custodian will be liable for the failure of sub-custodians appointed by
it to exercise due care in the safekeeping of the Trust’s platinum will depend on the facts and circumstances of the particular
situation. Shareholders cannot be assured that the Trustee will be able to recover damages from sub-custodians whether appointed
by the Custodian or by another sub-custodian for any losses relating to the safekeeping of platinum by such sub-custodians.
Platinum
bullion allocated to the Trust in connection with the creation of a Basket may not meet the London/Zurich Good Delivery Standards
and, if a Basket is issued against such platinum, the Trust may suffer a loss.
Neither
the Trustee nor the Custodian independently confirms the fineness of the platinum allocated to the Trust in connection with the
creation of a Basket. The platinum bullion allocated to the Trust by the Custodian may be different from the reported fineness
or weight required by the LPPM’s standards for platinum plates or ingots delivered in settlement of a platinum trade (London/Zurich
Good Delivery Standards), the standards required by the Trust. If the Trustee nevertheless issues a Basket against such platinum,
and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a
loss.
Platinum
held in the Trust’s unallocated platinum account and any Authorized Participant’s unallocated platinum account is
not segregated from the Custodian’s assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy
a claim by the Trust or any Authorized Participant. In addition, in the event of the Custodian’s insolvency, there may be
a delay and costs incurred in identifying the bullion held in the Trust’s allocated platinum account.
Platinum
which is part of a deposit for a purchase order or part of a redemption distribution is held for a time in the Trust Unallocated
Account and, previously or subsequently in, the Authorized Participant Unallocated Account of the purchasing or redeeming Authorized
Participant. During those times, the Trust and the Authorized Participant, as the case may be, have no proprietary rights to any
specific plates or ingots of platinum held by the Custodian and are each an unsecured creditor of the Custodian with respect to
the amount of platinum held in such unallocated accounts. In addition, if the Custodian fails to allocate the Trust’s platinum
in a timely manner, in the proper amounts or otherwise in accordance with the terms of the Unallocated Account Agreement, or if
a sub-custodian fails to so segregate platinum held by it on behalf of the Trust, unallocated platinum will not be segregated
from the Custodian’s assets, and the Trust will be an unsecured creditor of the Custodian with respect to the amount so
held in the event of the insolvency of the Custodian. In the event the Custodian becomes insolvent, the Custodian’s assets
might not be adequate to satisfy a claim by the Trust or the Authorized Participant for the amount of platinum held in their respective
unallocated platinum accounts.
In
the case of the insolvency of the Custodian, a liquidator may seek to freeze access to the platinum held in all of the accounts
held by the Custodian, including the Trust Allocated Account. Although the Trust would be able to claim ownership of properly
allocated platinum, the Trust could incur expenses in connection with asserting such claims, and the assertion of such a claim
by the liquidator could delay creations and redemptions of Baskets.
In
issuing Baskets, the Trustee relies on certain information received from the Custodian which is subject to confirmation after
the Trustee has relied on the information. If such information turns out to be incorrect, Baskets may be issued in exchange for
an amount of platinum which is more or less than the amount of platinum which is required to be deposited with the Trust.
The
Custodian’s definitive records are prepared after the close of its business day. However, when issuing Baskets, the Trustee
relies on information reporting the amount of platinum credited to the Trust’s accounts which it receives from the
Custodian during the business day and which is subject to correction during the preparation of the Custodian’s definitive
records after the close of business. If the information relied upon by the Trustee is incorrect, the amount of platinum actually
received by the Trust may be more or less than the amount required to be deposited for the issuance of Baskets.
GENERAL
RISKS
The
Trust relies on the information and technology systems of the Trustee, the Custodian, the Marketing Agent and, to a lesser degree,
the Sponsor, which could be adversely affected by information systems interruptions, cybersecurity attacks or other disruptions
which could have a material adverse effect on the Trust’s record keeping and operations.
The
Custodian, the Trustee and the Marketing Agent depend upon information technology infrastructure, including network, hardware
and software systems to conduct their business as it relates to the Trust. A cybersecurity incident, or a failure to protect their
computer systems, networks and information against cybersecurity threats, could result in a loss of information and adversely
impact their ability to conduct their business, including their business on behalf of the Trust. Despite implementation of network
and other cybersecurity measures, their security measures may not be adequate to protect against all cybersecurity threats.
Uncertainty
regarding the effects of Brexit could adversely affect the price of the Shares.
The
United Kingdom left the European Union (the “EU”) (“Brexit”) on January 31, 2020, subject to a transitional
period which ended December 31, 2020. During the transitional period, although the United Kingdom was no longer a member state of the
EU, it remained subject to EU law and regulations as if it were still a member state. The United Kingdom and the EU were to negotiate
the terms of their future trading relationship during the transitional period. On December 24, 2020, negotiators representing
the United Kingdom and the EU came to a preliminary trade agreement, which was subsequently ratified by the UK Parliament. The
trade agreement must also be ratified by the European Parliament.
The
unavoidable uncertainties and events related to Brexit could increase taxes and costs of business and cause volatility in currency
exchange rates and interest rates. Brexit could adversely affect the performance of contracts in existence at the date of Brexit
and European, United Kingdom or worldwide political, regulatory, economic or market conditions and could contribute to instability
in political institutions, regulatory agencies and financial markets. Brexit could also lead to legal uncertainty and politically
divergent national laws and regulations as a new relationship between the United Kingdom and EU is defined and the United Kingdom
determines which EU laws to replace or replicate. Any of these effects of Brexit, and others that cannot be anticipated, could
adversely affect the price of the Shares. In addition, the risk that Standard Life Aberdeen plc, the parent of the Sponsor and
which is headquartered in the United Kingdom, failed to adequately prepare for the end of Brexit’s transitional period could
have significant customer, reputation and capital impacts for Standard Life Aberdeen plc and its subsidiaries, including those
providing services to the Trust; however, Standard Life Aberdeen plc and its subsidiaries have detailed contingency planning in
place to seek to manage the consequences of Brexit to the Trust and to avoid any disruption on the Trust and to the services they
provide. Given the fluidity and complexity of the situation, we cannot provide assurance that the Trust will not be adversely
impacted despite these preparations.
The
Trust as well as the Sponsor and its service providers are vulnerable to the effects of public health crises, including the ongoing
novel coronavirus pandemic.
The
respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies
and markets around the world, including the United States. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time.
Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have
experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect
adversely the value and liquidity of the Trust's investments. The ultimate economic fallout from the pandemic, and the long-term
impact on economies, markets, industries and individual issuers, including the Trust and its service providers, are not known.
The information technology and other operational systems upon which the Trust’s service providers rely could be impaired
and the ability of employees of the Trust’s service providers to perform essential tasks on behalf of the Trust could be
disrupted. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented
actions to support local and global economies and the financial markets. The impact of these measures, and whether they will be
effective to mitigate the economic and market disruption, will not be known for some time.