false--12-31Q320190001459862UnlimitedUnlimited9705130001459862currency:XPD2019-09-300001459862currency:XPD2018-12-310001459862us-gaap:FairValueInputsLevel2Member2019-09-300001459862us-gaap:FairValueInputsLevel2Member2018-12-3100014598622019-06-3000014598622018-09-3000014598622018-06-3000014598622017-12-3100014598622018-01-012018-12-3100014598622019-04-012019-04-0100014598622019-01-012019-03-3100014598622019-09-3000014598622018-12-3100014598622019-07-012019-09-3000014598622018-07-012018-09-3000014598622018-01-012018-09-3000014598622019-11-0600014598622019-01-012019-09-30utr:oziso4217:USDxbrli:sharesiso4217:USDxbrli:purexbrli:shares

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____________ to _____________

Commission File Number: 001-34589

ABERDEEN STANDARD PALLADIUM ETF TRUST

(Exact name of registrant as specified in its charter)

New York

26-4733157

(State or other jurisdiction of incorporation or

(I.R.S. Employer Identification No.)

organization)

c/o Aberdeen Standard Investments ETFs Sponsor LLC

712 Fifth Avenue, 49th Floor

New York, NY

10019

(Address of principal executive offices)

(Zip Code)

(844) 383-7289

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Aberdeen Standard Physical Palladium Shares ETF

PALL

NYSE Arca

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

o

Accelerated Filer

x

Non Accelerated Filer

o

Smaller Reporting Company

o

Emerging Growth Company

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of November 6, 2019, Aberdeen Standard Palladium ETF Trust had 1,700,000 Aberdeen Standard Physical Palladium Shares ETF outstanding.



ABERDEEN STANDARD PALLADIUM ETF TRUST

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

INDEX

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

15

Item 4.

Controls and Procedures

15

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

16

Item 1A.

Risk Factors

16

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

16

Item 3.

Defaults Upon Senior Securities

16

Item 4.

Mine Safety Disclosures

16

Item 5.

Other Information

16

Item 6.

Exhibits

17

SIGNATURES


ABERDEEN STANDARD PALLADIUM ETF TRUST

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Statements of Assets and Liabilities
At September 30, 2019 (Unaudited) and December 31, 2018

September 30, 2019

December 31, 2018

(Amounts in 000's of US$, except for Share and per Share data)

ASSETS

Investment in palladium (cost: September 30, 2019: $123,154; December 31, 2018: $112,344)

$

225,091

$

185,555

Palladium receivable

11,841

-

Total assets

236,932

185,555

LIABILITIES

Fees payable to Sponsor

112

90

Total Liabilities

112

90

NET ASSETS (1)

$

236,820

$

185,465

(1)Authorized share capital is unlimited with no par value per Share. Shares issued and outstanding at September 30, 2019 were 1,500,000 and at December 31, 2018 were 1,550,000. Net asset values per Share at September 30, 2019 and December 31, 2018 were $157.88 and $119.66, respectively.

See Notes to the Financial Statements


1


ABERDEEN STANDARD PALLADIUM ETF TRUST

Schedules of Investments
At September 30, 2019 (Unaudited) and December 31, 2018

September 30, 2019

Description

oz

Cost

Fair Value

% of Net Assets

Investment in palladium (in 000's of US$, except for oz and percentage data)

Palladium

134,463.4

$

123,154

$

225,091

95.05%

Total investment in palladium

134,463.4

$

123,154

$

225,091

95.05%

Other assets less liabilities

11,729

4.95%

Net assets

$

236,820

100.00%

December 31, 2018

Description

oz

Cost

Fair Value

% of Net Assets

Investment in palladium (in 000's of US$, except for oz and percentage data)

Palladium

146,915.9

$

112,344

$

185,555

100.05%

Total investment in palladium

146,915.9

$

112,344

$

185,555

100.05%

Liabilities

(90)

(0.05)%

Net assets

$

185,465

100.00%

See Notes to the Financial Statements


2


ABERDEEN STANDARD PALLADIUM ETF TRUST

Statements of Operations (Unaudited)
For the three and nine months ended September 30, 2019 and 2018

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

(Amounts in 000's of US$, except for Share and per Share data)

EXPENSES

Sponsor's Fee

$

312

$

210

$

970

$

842

Total expenses

312

210

970

842

Net investment loss

(312)

(210)

(970)

(842)

REALIZED AND UNREALIZED GAINS / (LOSSES)

Realized gain on palladium transferred to pay expenses

120

52

365

268

Realized gain on palladium distributed for the redemption of Shares

4,696

3,914

25,292

30,150

Change in unrealized gain / (loss) on investment in palladium

15,673

14,111

28,727

(35,619)

Total gain / (loss) on investment in palladium

20,489

18,077

54,384

(5,201)

Change in net assets from operations

$

20,177

$

17,867

$

53,414

$

(6,043)

Net increase / (decrease) in net assets per Share

$

14.14

$

12.11

$

34.07

$

(3.08)

Weighted average number of Shares

1,427,174

1,475,000

1,567,857

1,961,905

See Notes to the Financial Statements


3


ABERDEEN STANDARD PALLADIUM ETF TRUST

Statements of Changes in Net Assets (Unaudited)
For the three and nine months ended September 30, 2019 and 2018

Three Months Ended

Three Months Ended

September 30, 2019

September 30, 2018

(Amounts in 000's of US$, except for Share data)

Shares

Amount

Shares

Amount

Opening balance

1,450,000

$

208,729

1,600,000

$

144,896

Net investment loss

(312)

(210)

Realized gain on palladium transferred to pay expenses

4,816

3,966

Change in unrealized gain on investment in palladium

15,673

14,111

Creations

125,000

18,994

-

-

Redemptions

(75,000)

(11,080)

(200,000)

(17,441)

Closing balance

1,500,000

$

236,820

1,400,000

$

145,322

Nine Months Ended

Nine Months Ended

September 30, 2019

September 30, 2018

(Amounts in 000's of US$, except for Share data)

Shares

Amount

Shares

Amount

Opening balance

1,550,000

$

185,465

2,400,000

$

241,555

Net investment loss

(970)

(842)

Realized gain on palladium transferred to pay expenses

25,657

30,418

Change in unrealized gain / (loss) on investment in palladium

28,727

(35,619)

Creations

475,000

67,307

250,000

24,277

Redemptions

(525,000)

(69,366)

(1,250,000)

(114,467)

Closing balance

1,500,000

$

236,820

1,400,000

$

145,322

See Notes to the Financial Statements


4


ABERDEEN STANDARD PALLADIUM ETF TRUST

Financial Highlights (Unaudited)
For the three and nine months ended September 30, 2019 and 2018

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

Per Share Performance (for a Share outstanding throughout the entire period)

Net asset value per Share at beginning of period

$

143.96

$

90.56

$

119.66

$

100.65

Income from investment operations:

Net investment loss

(0.22)

(0.14)

(0.62)

(0.43)

Total realized and unrealized gains or losses on investment in palladium

14.14

13.38

38.84

3.58

Change in net assets from operations

13.92

13.24

38.22

3.15

Net asset value per Share at end of period

$

157.88

$

103.80

$

157.88

$

103.80

Weighted average number of shares

1,427,174

1,475,000

1,567,857

1,961,905

Expense ratio (1)

0.60%

0.60%

0.60%

0.60%

Net investment loss ratio (1)

(0.60)%

(0.60)%

(0.60)%

(0.60)%

Total return, at net asset value (2)

9.67%

14.62%

31.94%

3.13%

(1)Annualized for periods of less than one year.

(2)Total return is not annualized.

See Notes to the Financial Statements

5


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

1. Organization

The Aberdeen Standard Palladium ETF Trust (the “Trust”) is an investment trust formed on December 30, 2009 (the “Date of Inception”), under New York law pursuant to a depositary trust agreement (the “Trust Agreement”) executed by Aberdeen Standard Investments ETFs Sponsor LLC (the “Sponsor”) and The Bank of New York Mellon as Trustee (the “Trustee”). The Trust holds palladium bullion and issues Aberdeen Standard Physical Palladium Shares ETF (“Shares”) in minimum blocks of Shares (also referred to as “Baskets”) in exchange for deposits of palladium and distributes palladium in connection with the redemption of Baskets. Prior to April 1, 2019, the number of Shares that constituted a Basket was 50,000 Shares. Effective April 1, 2019, the Basket size was reduced to 25,000 Shares. Shares represent units of fractional undivided beneficial interest in and ownership of the Trust which are issued by the Trust. The Sponsor is a Delaware limited liability company and a wholly-owned subsidiary of Aberdeen Standard Investments Inc. (“ASII”). ASII is a wholly-owned indirect subsidiary of Standard Life Aberdeen plc. The Trust is governed by the Trust Agreement.

The investment objective of the Trust is for the Shares to reflect the performance of the price of palladium, less the Trust’s expenses and liabilities. The Trust is designed to provide an individual owner of beneficial interests in the Shares (a “Shareholder”) an opportunity to participate in the palladium market through an investment in securities. The fiscal year end for the Trust is December 31.

The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q. In the opinion of the Trust’s management, all adjustments (which consist of normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the nine months ended September 30, 2019 and for all periods presented have been made.

These financial statements should be read in conjunction with the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the operating results for the full year.

6


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

2. Significant Accounting Policies

The preparation of financial statements in accordance with U.S. GAAP requires those responsible for preparing financial statements to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Trust.

2.1. Basis of Accounting

The Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for reporting purposes, the Trust is classified as an Investment Company. 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.

2.2. Valuation of Palladium

The Trust follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Palladium is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London, England vaulting premises. Palladium may also be held by UBS AG, or any other firm selected by the Custodian to hold the Trust’s palladium in the Trust’s allocated account in the firm’s Zurich, Switzerland vault premises on a segregated basis and whose appointment has been approved by the Sponsor (the “Zurich Sub-Custodian”). At September 30, 2019, approximately 96.3% of the Trust’s palladium was held by the Zurich Sub-Custodian.

Palladium is recorded at fair value. The cost of palladium is determined according to the average cost method and the fair value is based on the afternoon session of the twice daily fix of an ounce of palladium administered by the London Metal Exchange (“LME”) (the “LME PM Fix”). Realized gains and losses on transfers of palladium, or palladium distributed for the redemption of Shares, are calculated on a trade date basis as the difference between the fair value and cost of palladium transferred.

The LME is responsible for the administration of the electronic palladium price fixing system (“LMEbullion”) that replicates electronically the manual London palladium fix processes previously employed by the London Platinum and Palladium Fixing Company Ltd (“LPPFCL”), as well as providing electronic market clearing processes for palladium bullion transactions at the fixed prices established by the LME pricing mechanism. LMEbullion, like the previous London palladium fix processes, establishes and publishes fixed prices for troy ounces of palladium 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”).

Once the value of palladium has been determined, the Net Asset Value (the “NAV”) is computed by the Trustee by deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the “Sponsor’s Fee”), from the fair value of the palladium and all other assets held by the Trust.

The Trust recognizes changes in fair value of the investment in palladium as changes in unrealized gains or losses on investment in palladium through the Statement of Operations.

The per Share amount of palladium exchanged for a purchase or redemption is calculated daily by the Trustee, using the LME PM Fix to calculate the palladium amount in respect of any liabilities for which covering palladium sales have not yet been made, and represents the per Share amount of palladium held by the Trust, after giving effect to its liabilities, to cover expenses and liabilities and any losses that may have occurred.

7


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

2. Significant Accounting Policies (Continued)

2.2. Valuation of Palladium (continued)

Fair Value Hierarchy

ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

Level 2

Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments and similar data.

Level 3

Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The investment in palladium is classified as a level 2 asset, as the Trust’s investment in palladium is calculated using primary market pricing sources supported by observable, verifiable inputs.

The categorization of the Trust’s assets is as shown below:

(Amounts in 000's of US$)

September 30, 2019

December 31, 2018

Level 2

Investment in palladium

$

225,091

$

185,555

There were no transfers between levels during the nine months ended September 30, 2019, or the year ended December 31, 2018.

2.3. Palladium Receivable and Payable

Palladium receivable or payable represents the quantity of palladium covered by contractually binding orders for the creation or redemption of Shares respectively, where the palladium has not yet been transferred to or from the Trust’s account. Generally, ownership of palladium is transferred within two business days of the trade date. At September 30, 2019 the Trust had $11,841,027 of palladium receivable for the creation of Shares and no payable for the redemption of Shares. At December 31, 2018, the Trust had no palladium receivable or payable for the creation or redemption of Shares.


8


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

2. Significant Accounting Policies (Continued)

2.4. Creations and Redemptions of Shares

The Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 25,000 Shares effective April 1, 2019. Prior to April 1, 2019, the number of Shares that constituted a Basket was 50,000 Shares). The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions, (2) is a participant in The Depository Trust Company, (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor, and (4) has established an Authorized Participant Unallocated Account with the Trust’s Custodian or other palladium bullion clearing bank. An Authorized Participant Agreement is an agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption of Baskets and for the delivery of the palladium and any cash required for such creations and redemptions. An Authorized Participant Unallocated Account is an unallocated palladium account, either loco London or loco Zurich, established with the Custodian or a palladium bullion clearing bank by an Authorized Participant. 

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 palladium 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. 

Authorized Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement period for Shares is two business days. In the event of a trade date at period end, where a settlement is pending, a respective account receivable and/or payable will be recorded. When palladium is exchanged in settlement of a redemption, it is considered a sale of palladium for financial statement purposes. 

The amount of palladium represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce. As a result, the value attributed to the creation or redemption of Shares may differ from the value of palladium to be delivered or distributed by the Trust. In order to ensure that the correct amount of palladium is available at all times to back the Shares, the Sponsor accepts an adjustment to its management fees in the event of any shortfall or excess on each transaction. For each transaction, this amount is not more than 1/1000th of an ounce of palladium. 

As the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the Outstanding Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.

2.5. Income Taxes

The Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will “flow through” to the Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue Service on that basis.

The Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required as of September 30, 2019 and December 31, 2018.


9


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

2. Significant Accounting Policies (Continued)

2.6. Investment in Palladium

Changes in ounces of palladium and their respective values for the three and nine months ended September 30, 2019 and 2018 are set out below:

Three Months Ended

Three Months Ended

(Amounts in 000's of US$, except for ounces data)

September 30, 2019

September 30, 2018

Ounces of palladium

Opening balance

137,029.7

152,323.9

Creations

4,718.2

-

Redemptions

(7,079.3)

(18,994.2)

Transfers of palladium to pay expenses

(205.2)

(428.6)

Closing balance

134,463.4

132,901.1

Investment in palladium

Opening balance

$

208,833

$

145,165

Creations

7,153

-

Redemptions

(11,080)

(17,441)

Realized gain on palladium distributed for the redemption of Shares

4,696

3,914

Transfers of palladium to pay expenses

(304)

(407)

Realized gain on palladium transferred to pay expenses

120

52

Change in unrealized gain on investment in palladium

15,673

14,111

Closing balance

$

225,091

$

145,394

Nine Months Ended

Nine Months Ended

(Amounts in 000's of US$, except for ounces data)

September 30, 2019

September 30, 2018

Ounces of palladium

Opening balance

146,915.9

228,863.1

Creations

37,852.4

23,800.7

Redemptions

(49,633.9)

(118,869.0)

Transfers of palladium to pay expenses

(671.0)

(893.7)

Closing balance

134,463.4

132,901.1

Investment in palladium

Opening balance

$

185,555

$

241,679

Creations

55,466

24,277

Redemptions

(69,366)

(114,467)

Realized gain on palladium distributed for the redemption of Shares

25,292

30,150

Transfers of palladium to pay expenses

(948)

(894)

Realized gain on palladium transferred to pay expenses

365

268

Change in unrealized gain / (loss) on investment in palladium

28,727

(35,619)

Closing balance

$

225,091

$

145,394


10


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

2. Significant Accounting Policies (Continued)

2.7. Expenses / Realized Gains / Losses

The primary expense of the Trust is the Sponsor’s Fee, which is paid by the Trust through in-kind transfers of palladium to the Sponsor.

The Trust will transfer palladium to the Sponsor to pay the Sponsor’s Fee that will accrue daily at an annualized rate equal to 0.60% of the adjusted net asset value (“ANAV”) of the Trust, paid monthly in arrears.

The Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs, audit fees and certain legal expenses.

For the three months ended September 30, 2019 and 2018, the Sponsor’s Fee was $312,415 and $210,347, respectively. For the nine months ended September 30, 2019 and 2018, the Sponsor’s Fee was $970,513 and $842,359, respectively.

At September 30, 2019 and at December 31, 2018, the fees payable to the Sponsor were $112,223 and $89,688, respectively.

With respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust’s palladium as necessary to pay these expenses. When selling palladium to pay expenses, the Trustee will endeavor to sell the smallest amounts of palladium needed to pay these expenses in order to minimize the Trust’s holdings of assets other than palladium. Other than the Sponsor’s Fee, the Trust had no expenses during the three and nine months ended September 30, 2019 and 2018.

Unless otherwise directed by the Sponsor, when selling palladium the Trustee will endeavor to sell at the price established by the LME PM Fix. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to receive the most favorable price and execution of orders. The Custodian may be the purchaser of such palladium only if the sale transaction is made at the next LME PM Fix or such other publicly available price that the Sponsor deems fair, in each case as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the cost of the palladium sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any sale.

Realized gains and losses result from the transfer of palladium for Share redemptions and / or to pay expenses and are recognized on a trade date basis as the difference between the fair value and cost of palladium transferred.

2.8. Subsequent Events

In accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events, the Trust’s management has evaluated the possibility of subsequent events impacting the Trust’s financial statements through the filing date. During this period, no material subsequent events requiring adjustment to or disclosure in the financial statements were identified.

2.9 Recent Accounting Pronouncements

In October 2018, the SEC posted to the Federal Register their Final Rule Release No. 33-10532, Disclosure Update and Simplification Rule (the “Rule”) which had an effective date of November 5, 2018. The Sponsor has adopted the changes which align the time period presented for the current and comparative periods in the Statement of Operations, Statement of Changes in Net Assets and Note 2.6 in the Notes to the Financial Statements in the Trust’s Form 10-Q for the period ended September 30, 2019.


11


ABERDEEN STANDARD PALLADIUM ETF TRUST

Notes to the Financial Statements (Unaudited)

3. Related Parties

The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee’s and Custodian’s fees are paid by the Sponsor and are not separate expenses of the Trust. The Trustee and the Custodian and their affiliates may from time to time act as Authorized Participants, and purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. In addition the Trustee and the Custodian and their affiliates may from time to time purchase or sell palladium directly, for their own account, as agent for their customers and for accounts over which they exercise investment discretion.

4. Concentration of Risk

The Trust’s sole business activity is the investment in palladium and substantially all the Trust’s assets are holdings of palladium, which creates a concentration of risk associated with fluctuations in the price of palladium. Several factors could affect the price of palladium, including: (i) global palladium supply and demand