Notice2024-28345
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 19.3, Criteria for Underlying Securities, To Allow the Exchange To List and Trade Options on the iShares Bitcoin Trust (“the Trust”)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 3, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 232 (Tuesday, December 3, 2024)</title>
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[Federal Register Volume 89, Number 232 (Tuesday, December 3, 2024)]
[Notices]
[Pages 95871-95878]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-28345]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101778; File No. SR-MEMX-2024-45]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 19.3, Criteria for Underlying Securities, To Allow the Exchange To
List and Trade Options on the iShares Bitcoin Trust (``the Trust'')
November 27, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 27, 2024, MEMX LLC (``MEMX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Commission a proposed rule change
to amend Rule 19.3, Criteria for Underlying Securities. The text of the
proposed rule change is provided in Exhibit 5.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Exchange Rule 19.3 (Criteria for
Underlying Securities) to allow the Exchange to list and trade options
on the iShares Bitcoin Trust (``the Trust''), designating the Trust as
appropriate for options trading on the Exchange. This is a competitive
filing that is based on a similar proposal submitted by Nasdaq ISE, LLC
(``ISE'') and approved by the Securities and Exchange Commission
(``Commission'').\3\
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\3\ See Securities Exchange Act Release No. 101128 (September
20, 2024), 89 FR 78942 (September 26, 2024) (SR-ISE-2024-03) (Self-
Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of
Amendment Nos. 4 and 5 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment Nos. 1, 4, and 5, to
Permit the Listing and Trading of Options on the iShares Bitcoin
Trust).
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Current Exchange Rule 19.3(i) provides that, subject to certain
other criteria set forth in that Rule, securities deemed appropriate
for options trading include shares or other securities (``Fund
Shares''), including but not limited to Partnership Units as defined in
the Rule, that are principally traded on a national securities exchange
and are defined as an ``NMS stock'' under Rule 600 of Regulation NMS
and that meet specified criteria enumerated in the rule. Exchange Rule
19.3(i) provides that such shares or other securities:
(4) represent interests in the SPDR Gold Trust or are issued by the
iShares COMEX Gold Trust or iShares Silver Trusts, provided that all
conditions described under Rule 19.3(i)(1)-(2) are met.
Proposal
The Exchange proposes to amend Exchange Rule 19.3(i) to expand the
list of securities that are appropriate for options trading on the
Exchange.
Description of the Trust \4\
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\4\ See Securities Exchange Act Release No. 99306 (Jan. 10,
2024), 89 FR 3008 (Jan. 17, 2024) (order approving File Nos. SR-
NYSEARCA-2021-90; SR-NYSEARCA-2023-44; SR-NYSEARCA-2023-58;
SRNASDAQ-2023-016; SR-NASDAQ-2023-019; SR-CboeBZX-2023-028; SR-
CboeBZX-2023-038; SRCboeBZX-2023-040; SR-CboeBZX-2023-042; SR-
CboeBZX-2023-044; SR-CboeBZX-2023-072) (Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments
Thereto, To List and Trade Bitcoin-Based Commodity-Based Trust
Shares and Trust Units) for a complete description of the Trust.
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The shares are issued by the Trust, a Delaware statutory trust. The
Trust operates pursuant to a trust agreement (the ``Trust Agreement'')
between the Sponsor, BlackRock Fund Advisors (the ``Trustee'') as the
trustee of the Trust and Wilmington Trust, National Association, as
Delaware trustee. The Trust issues shares representing fractional
undivided beneficial interests in its net assets. The assets of the
Trust consist only of bitcoin, held by a custodian on behalf of the
Trust except under limited circumstances when transferred through the
Trust's prime broker temporarily (described below), and cash. Coinbase
Custody Trust Company, LLC (the ``Bitcoin Custodian'') is the custodian
for the Trust's bitcoin holdings, and maintains a custody account for
the Trust (``Custody Account''); Coinbase, Inc. (the ``Prime Execution
Agent''), an affiliate of the Bitcoin Custodian, is the prime broker
for the Trust and maintains a trading account for the Trust (``Trading
Account''); and Bank of New York Mellon is the custodian for the
Trust's cash holdings (the ``Cash Custodian'' and together with the
Bitcoin Custodian, the ``Custodians'') and the administrator of the
Trust (the ``Trust Administrator''). Under the Trust Agreement, the
Trustee may delegate all or a portion of its duties to any agent, and
has delegated the bulk of the day to day responsibilities to the Trust
Administrator and certain other administrative and recordkeeping
functions to its affiliates and other agents. The Trust is not an
investment company registered under the Investment Company Act of 1940,
as amended. The investment objective of the Trust is to reflect
generally the performance of the price of bitcoin. The Trust seeks to
reflect such performance before payment of the Trust's expenses and
liabilities. The shares are intended to constitute a simple means of
making an investment similar to an investment in bitcoin through the
public securities market rather than by acquiring, holding and trading
bitcoin directly on a peer-to-peer or other basis or via a digital
asset exchange. The shares have been designed to remove the obstacles
represented by the complexities and operational burdens involved in a
direct investment in bitcoin, while at the same time having an
intrinsic value that reflects, at any given time, the investment
exposure to the bitcoin owned by the Trust at such time, less the
Trust's expenses and liabilities. Although the shares are not the exact
equivalent of a direct investment in bitcoin, they provide investors
with an alternative method of achieving investment exposure to bitcoin
through the public securities market, which may be more familiar to
them.
[[Page 95872]]
Custody of the Trust's Bitcoin
An investment in the shares is backed by bitcoin held by the
Bitcoin Custodian on behalf of the Trust. All of the Trust's bitcoin
will be held in the Custody Account, other than the Trust's bitcoin
which is temporarily maintained in the Trading Account under limited
circumstances, i.e., in connection with creation and redemption Basket
\5\ activity or sales of bitcoin deducted from the Trust's holdings in
payment of Trust expenses or the Sponsor's fee (or, in extraordinary
circumstances, upon liquidation of the Trust). The Custody Account
includes all of the Trust's bitcoin held at the Bitcoin Custodian, but
does not include the Trust's bitcoin temporarily maintained at the
Prime Execution Agent in the Trading Account from time to time. The
Bitcoin Custodian will keep all of the private keys associated with the
Trust's bitcoin held in the Custody Account in ``cold storage''.\6\ The
hardware, software, systems, and procedures of the Bitcoin Custodian
may not be available or cost-effective for many investors to access
directly.
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\5\ The Trust issues and redeems Shares only in blocks of 40,000
or integral multiples thereof. A block of 40,000 Shares is called a
``Basket.'' These transactions take place in exchange for Bitcoin.
\6\ The term ``cold storage'' refers to a safeguarding method by
which the private keys corresponding to the Trust's bitcoins are
generated and stored in an offline manner, subject to layers of
procedures designed to enhance security. Private keys are generated
by the Bitcoin Custodian in offline computers that are not connected
to the internet so that they are more resistant to being hacked.
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The Exchange believes that offering options on the Trust will
benefit investors by providing them with an additional, relatively
lower cost investing tool to gain exposure to spot Bitcoin as well as a
hedging vehicle to meet their investment needs in connection with
Bitcoin products and positions. Similar to other commodity-based trusts
on which options may be listed on the Exchange (e.g., SPDR[supreg] Gold
Trust, the iShares COMEX Gold Trust, or the iShares Silver Trust),\7\
the Trust essentially offers the same objectives and benefits to
investors as do other commodity-based trusts on which options may be
listed on the Exchange.
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\7\ See Exchange Rule 19.3(i).
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Options on the Trust will trade in the same manner as options on
other ETFs (otherwise referred to as ``Fund Shares'') on the Exchange.
Exchange Rules that currently apply to the listing and trading of all
options on ETFs on the Exchange, including, for example, Rules that
govern listing criteria, expirations, exercise prices, minimum
increments, position and exercise limits, margin requirements, customer
accounts and trading halt procedures, will apply to the listing and
trading of options on the Trust on the Exchange. Today, these rules
apply to options on the various commodities-based trusts deemed
appropriate for options trading on the Exchange pursuant to Exchange
Rule 19.3(i).
The Exchange's initial listing standards for ETFs on which options
may be listed and traded on the Exchange will apply to the Trust.
Pursuant to Exchange Rule 19.3(a), a security (which includes ETFs) on
which options may be listed and traded on the Exchange must be
registered (with the Commission) and be an NMS stock (as defined in
Rule 600 of Regulation NMS under the Act) and be characterized by a
substantial number of outstanding shares that are widely held and
actively traded. Exchange Rule 19.3(i)(1) requires that, in relevant
part, Funds Shares must either (A) meet the criteria and standards set
forth in Exchange Rule 19.3(a) or Exchange Rule 19.3(b), or (B) be
available for creation or redemption each business day in cash or in
kind from the investment company, commodity pool or other entity at a
price related to net asset value, and the investment company, commodity
pool or other entity is obligated to provide that Fund Shares may be
created even if some or all of the securities and/or cash required to
be deposited have not been received by the Fund, the unit investment
trust or the management investment company, provided the authorized
creation participant has undertaken to deliver the securities and/or
cash as soon as possible and such undertaking is secured by the
delivery and maintenance of collateral consisting of cash or cash
equivalents satisfactory to the Fund, all as described in the Fund's or
unit trust's prospectus.
Options on the Trust will also be subject to the Exchange's
continued listing standards set forth in Exchange Rule 19.4(g), for
Fund Shares deemed appropriate for options trading pursuant to Exchange
Rule 19.3(i). Specifically, Exchange Rule 19.4(g) provides that Fund
Shares that were initially approved for options trading pursuant to
Exchange Rule 19.3(i) will not be deemed to meet the requirements for
continued approval, and the Exchange shall not open for trading any
additional series of option contracts of the class covering such Fund
Shares, if the Fund Shares are delisted from trading pursuant to
Exchange Rule 19.4(b)(4). In addition, options on Fund Shares may be
subject to the suspension of opening transactions in any of the
following circumstances: (1) in the case of options covering Fund
Shares approved for trading under Exchange Rule 19.3(i)(4)(A), in
accordance with the terms of paragraphs (b)(1), (2), and (3) of
Exchange Rule 19.4; (2) in the case of options covering Fund Shares
approved for trading under Exchange Rule 19.3(i)(4)(B), following the
initial twelve-month period beginning upon the commencement of trading
in the Fund Shares on a national securities exchange and are defined as
an NMS stock under Rule 600 of Regulation NMS, there were fewer than 50
record and/or beneficial holders of such Fund Shares for 30 consecutive
days; (3) the value of the index, non-U.S. currency, or portfolio of
commodities including commodity futures contracts, options on commodity
futures contracts, swaps, forward contracts and/or options on physical
commodities and/or financial instruments and money market instruments
on which the Fund Shares are based is no longer calculated or
available; or (4) such other event occurs or condition exists that in
the opinion of the Exchange makes further dealing in such options on
the Exchange inadvisable.
Options on the Trust would be physically settled contracts with
American-style exercise.\8\ Consistent with current Exchange Rule 19.5,
which governs the opening of options series on a specific underlying
security (including ETFs), the Exchange will open at least one
expiration month for options on the Trust \9\ and may also list series
of
[[Page 95873]]
options on the Trust for trading on a weekly,\10\ monthly,\11\ or
quarterly \12\ basis.
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\8\ See Exchange Rule 19.2, which provides that the rights and
obligations of holders and writers are set forth in the Rules of the
Options Clearing Corporation (``OCC''); see also OCC Rules, Chapters
VIII (which governs exercise and assignment) and Chapter IX (which
governs the discharge of delivery and payment obligations arising
out of the exercise of physically settled stock option contracts).
\9\ See Exchange Rule 19.5(b). The monthly expirations are
subject to certain listing criteria for underlying securities
described within Exchange Rule 19.5 and its Interpretations and
Policies. Monthly listings expire the third Friday of the month. The
term ``expiration date'' (unless separately defined elsewhere in the
OCC By-Laws), when used in respect of an option contract (subject to
certain exceptions), means the third Friday of the expiration month
of such option contract, or if such Friday is a day on which the
exchange on which such option is listed is not open for business,
the preceding day on which such exchange is open for business. See
OCC By-Laws Article I, Section 1. Pursuant to Exchange Rule 19.5(c),
additional series of options of the same class may be opened for
trading on the Exchange when the Exchange deems it necessary to
maintain an orderly market, to meet customer demand or when the
market price of the underlying stock moves more than five strike
prices from the initial exercise price or prices. Pursuant to
Exchange Rule 19.5(c), new series of options on an individual stock
may be added until the beginning of the month in which the options
contract will expire. Due to unusual market conditions, the
Exchange, in its discretion, may add a new series of options on an
individual stock until the close of trading on the business day
prior to expiration.
\10\ See Exchange Rule 19.5, Interpretation and Policy .05.
\11\ See Exchange Rule 19.5, Interpretation and Policy .08.
\12\ See Exchange Rule 19.5, Interpretation and Policy .04.
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Pursuant to Exchange Rule 19.5(d)(4), which governs strike prices
of series of options on ETFs, the interval between strike prices of
series of options on ETFs approved for options trading pursuant to
Exchange Rule 19.3(i) shall be fixed at a price per share which is
reasonably close to the price per share at which the underlying
security is traded in the primary market at or about the same time such
series of options is first open for trading on the Exchange, or at such
intervals as may have been established on another options exchange
prior to the initiation of trading on the Exchange. With respect to the
Short Term Options Series or Weekly Program, during the month prior to
expiration of an option class that is selected for the Short Term
Option Series Program, the strike price intervals for the related non-
Short Term Option (``Related non-Short Term Option'') shall be the same
as the strike price intervals for the Short Term Option.\13\
Specifically, the Exchange may open for trading Short Term Option
Series at strike price intervals of (i) $0.50 or greater where the
strike price is less than $100, and $1 or greater where the strike
price is between $100 and $150 for all option classes that participate
in the Short Term Options Series Program; (ii) $0.50 for option classes
that trade in one dollar increments and are in the Short Term Option
Series Program; or (iii) $2.50 or greater where the strike price is
above $150.\14\ Additionally, the Exchange may list series of options
pursuant to the $1 Strike Price Interval Program,\15\ the $0.50 Strike
Program,\16\ and the $2.50 Strike Price Program.\17\ Pursuant to
Exchange Rule 21.5, where the price of a series of options for the
Trust is less than $3.00, the minimum increment will be $0.05, and
where the price is $3.00 or higher, the minimum increment will be $0.10
\18\ consistent with the minimum increments for options on other ETFs
listed on the Exchange. Any and all new series of Trust options that
the Exchange lists will be consistent and comply with the expirations,
strike prices, and minimum increments set forth in Rules 19.5 and 21.5,
as applicable.
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\13\ See Exchange Rule 19.5, Interpretation and Policy .05(e).
\14\ Id.
\15\ See Exchange Rule 19.5, Interpretation and Policy .02.
\16\ See Exchange Rule 19.5, Interpretation and Policy .06.
\17\ See Exchange Rule 19.5, Interpretation and Policy .03.
\18\ See Exchange Rule 21.5.
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Pursuant to Exchange Rules 18.7 \19\ and 18.9, the position and
exercise limits, respectively, for options on the Trust will be 25,000
same side options contracts. In considering the appropriate position
and exercise limits for the Trust, the Exchange reviewed the data
presented by ISE in its filing, specifically in Exhibit 3 of the
filing,\20\ where ISE measured the Trust's market capitalization and
ADV against other industry data as explained further below. In its
filing, ISE considered the Trust's market capitalization and ADV, and
prospective position limit in relation to other securities. In
measuring the Trust against other securities, ISE aggregated market
capitalization and volume data for securities that have defined
position limits utilizing data from The Options Clearing Corporations
(``OCC'').\21\ This pool of data took into consideration 3,984 options
on single stock securities, excluding broad based ETFs.\22\ Next, ISE
aggregated the data based on market capitalization and ADV and grouped
option symbols by position limit utilizing statistical thresholds for
ADV and market capitalization that were one standard deviation above
the mean for each position limit category (i.e., 25,000, 50,000 to
65,000, 75,000, 100,000 to less than 250,000, 250,000 to 400,000,
450,000 to 1,000,000, and greater than or equal to 1,000,000)
(sic).\23\ The OCC publishes a list of position limits for various
contracts listed by other options exchanges, which the Exchange
utilizes whenever it is listing a new product that has already been
listed by another options exchange. For example, like on ISE, a 25,000
contract limit on the Exchange applies to those options having an
underlying security that does not meet the requirements for a higher
options contract limit. ISE performed an exercise to demonstrate the
Trust's position limit relative to other options symbols in terms of
market capitalization and ADV. For reference the market capitalization
for the Trust was 19,789,068 billion \24\ with an ADV, for the
preceding three months prior to August 7, 2024, of greater than 26
million shares.\25\ Today, by comparison, other options symbols with
similar market capitalization and ADV have a position limit in excess
of 400,000.\26\ Therefore, the proposed 25,000 same side position limit
for options on the Trust is extremely conservative relative to these
options symbols which are a full standard deviation above the mean in
comparison.
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\19\ See Regulatory Notice 23-12, available at: <a href="https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf">https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf</a>, which informed Exchange members of the
specific position limits applicable to options trading on MEMX
Options, pursuant to Rule 18.7, as those position limits calculated
and disseminated by the OCC, published daily and which can be found
at: <a href="https://www.theocc.com/market-data/market-data-reports/series-and-trading-data/position-limits">https://www.theocc.com/market-data/market-data-reports/series-and-trading-data/position-limits</a>.
\20\ See Securities Exchange Act Release No. 101128 (September
20, 2024), 89 FR 78942 (September 26, 2024) (SR-ISE-2024-03) (Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment Nos. 1, 4, and 5, to Permit the Listing and Trading of
Options on the iShares Bitcoin Trust) (Exhibit 3) (``IBIT Approval
Order'') (letter from Angela Dunn, Nasdaq ISE, LLC, to Vanessa
Countryman, Secretary, Commission, dated August 21, 2024) (``ISE
Letter'').
\21\ The computations are based on OCC data from August 6, 2024.
Data displaying zero values in market capitalization or ADV were
removed.
\22\ The Trust has one asset and therefore is not comparable to
a broad based ETF where there are typically multiple components.
\23\ See ISE Letter at 10.
\24\ ISE acquired this figure as of August 13, 2024. See <a href="https://www.ishares.com/us/products/333011/isharesbitcoin-trust">https://www.ishares.com/us/products/333011/isharesbitcoin-trust</a>. The global
supply of bitcoin grows each day bitcoin are minted.
\25\ See ISE Letter at 10.
\26\ See, e.g,. iShares[supreg] iBoxx[supreg] $ High Yield
Corporate Bond ETF (``HYG'') with a market capitalization of
13,859,235,000 billion as of November 4, 2024. See <a href="https://www.ishares.com/us/products/239565/isharesiboxx-high-yield-corporate-bond-etf">https://www.ishares.com/us/products/239565/isharesiboxx-high-yield-corporate-bond-etf</a>. The Exchange notes that HYG has a position limit
of 500,000 contracts.
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Second, ISE reviewed the Trust's data relative to the market
capitalization of the entire bitcoin market in terms of exercise risk
and availability of deliverables. Utilizing data as of August 3, 2024,
there were 19,737,193 bitcoins in circulation.\27\ ISE took a price of
$57,000 that equates to a market capitalization of greater than 1.125
trillion U.S. dollars, and applied that to a position limit of 400,000
for options on the Trust.\28\ If a position limit of 400,000 options
were considered (the position limit that would be typically assigned
based upon data) the exercisable risk would represent only 6.6% of the
outstanding shares of the Trust. The 25,000 position limit being sought
only represents 0.4% of the outstanding shares of the Trust. Since the
Trust has a creation and redemption process managed through the issuer,
additionally it can be compared to the position limit sought to the
total market capitalization of the entire bitcoin market. In this case,
the exercisable risk for options on the Trust would be less than 0.01%
of the market capitalization
[[Page 95874]]
of all outstanding bitcoin. Assuming a scenario where all options on
the Trust's shares were exercised given the proposed 25,000 per same
side position limit, this would have a virtually unnoticed impact on
the entire bitcoin market. This analysis demonstrates that the proposed
25,000 per same side position limit is also extremely conservative and
more than appropriate for options on the Trust.
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\27\ See ISE Letter at 10.
\28\ Id.
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Third, ISE reviewed the proposed position limit by comparing it to
position limits for derivative products regulated by the Commodity
Futures Trading Commission (``CFTC''). While the CFTC, through the
relevant Designated Contract Markets, only regulates options positions
based upon delta equivalents (creating a less stringent standard), ISE
examined equivalent bitcoin futures position limits. In particular, ISE
looked at the CME bitcoin futures contract \29\ that has a position
limit of 2,000 futures.\30\ On August 7, 2024, CME bitcoin futures
settled at $55,000.\31\ Taking the position limit of 2,000 futures at a
$5 multiplier \32\ equates to $550 million of notional value for
bitcoin futures. By way of comparison, on August 7, 2024, the Trust
settled at $31.19 per share, which would equate to 17,633,857 shares of
the Trust \33\ if the CME notional position limit were utilized. Since
substantial portions of any distributed options portfolio are likely to
be out of the money on expiration, an options position limit equivalent
to the CME position limit for bitcoin futures (considering that all
options deltas are <=1.00) should be a bit higher than the CME implied
176,338 limit.
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\29\ CME Bitcoin Futures are described in Chapter 350 of CME's
Rulebook.
\30\ See the Position Accountability and Reportable Level Table
in the Interpretations & Special Notices Section of Chapter 5 of
CME's Rulebook.
\31\ See <a href="https://finance.yahoo.com/quote/BTC%3DF/history/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cu">https://finance.yahoo.com/quote/BTC%3DF/history/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cu</a>
Z29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAM7ngaS6ZQS9c2Wzx7JW2IUe-_-
_1FnLyr8TQw4jjkleHyCENfSMIEpPPt2hCzPDEryTVyB78NIwxkwFB5Fuw-
jAYiuSmYJHBriWbV6dYn91VQfzQNt3p0I2RkYL.
\32\ Each bitcoin futures contract is valued at 5 bitcoins as
defined by the CME CF Bitcoin Reference Rate (``BRR''). See CME Rule
35001.
\33\ See ISE Letter at 11.
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Of note, unlike options contracts, CME position limits are
calculated on a net futures equivalent basis by contract and include
contracts that aggregate into one or more base contracts according to
an aggregation ratio(s).\34\ Therefore, if a portfolio includes
positions in options on futures, CME would aggregate those positions
into the underlying futures contracts in accordance with a table
published by CME on a delta equivalent value for the relevant spot
month, subsequent spot month, single month and all month position
limits.\35\ If a position exceeds position limits because of an option
assignment, CME permits market participants to liquidate the excess
position within one business day without being considered in violation
of its rules. Additionally, if at the close of trading, a position that
includes options exceeds position limits for futures contracts, when
evaluated using the delta factors as of that day's close of trading,
but does not exceed the limits when evaluated using the previous day's
delta factors, then the position shall not constitute a position limit
violation. Considering CME's position limits on futures for bitcoin,
the Exchange believes that that the proposed 25,000 per same side
position limit is conservative and more than appropriate for options on
the Trust.
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\34\ See <a href="https://www.cmegroup.com/education/courses/market-regulation/position-limits/positionlimitsaggregation-of-contracts-and-table.htm">https://www.cmegroup.com/education/courses/market-regulation/position-limits/positionlimitsaggregation-of-contracts-and-table.htm</a>.
\35\ Id.
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In analyzing the proposed position limit for options on the Trust,
ISE also considered the supply of bitcoin. Specifically, ISE examined
the number of market participants with position limits that would need
to exercise in unison to put the underlying asset under stress. In the
case of options on the Trust, the proposed 25,000 same side position
limit effectively restricts a market participant from holding positions
that could be exercised in excess of 2,500,000 shares of the Trust.
Utilizing data from August 12, 2024, the Trust had 611,040,000 shares
outstanding, therefore 244 market participants would have to
simultaneously exercise position limits in order to create a scenario
that may put the underlying asset (the Trust) under stress.\36\ The
Exchange notes that historically, from observation only, it appears
that no more than five market participants holding position limits in
any security have exercised in unison in any option. As unlikely an
occurrence as all market participants exercising their position limits
in unison would be, if it were to occur, it should be noted that even
such an occurrence would not likely put the Trust under stress as
economic incentives, would induce the creation of more shares through
the ETF creation and redemption process.
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\36\ See <a href="https://www.ishares.com/us/products/333011/ishares-bitcoin-trust">https://www.ishares.com/us/products/333011/ishares-bitcoin-trust</a>.
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By way of example, given that the current global supply of bitcoin,
the underlying asset of the Trust, is 19,789,068 \37\ and that each
bitcoin can currently be redeemed for 1,755 shares of the Trust,
another 34,729,814,340 shares of the Trust could be created. To exhaust
this supply of the Trust, 13,891 market participants would have to
simultaneously exercise their position limit. Comparing the Trust to
the SPDR Gold Shares (``GLD'') ETF or the iShares Silver Trust
(``SLV'') ETF, which have position limits of 250,000 or ten times the
proposed position limit for the Trust as well as lower shares
outstanding in both products,\38\ it is unjustified to mandate a
different level of stringency with respect to a position limit for
options on the Trust.
---------------------------------------------------------------------------
\37\ This figure was acquired as of August 13, 2024. See <a href="https://www.ishares.com/us/products/333011/isharesbitcoin-trust">https://www.ishares.com/us/products/333011/isharesbitcoin-trust</a>. The global
supply of bitcoin grows each day bitcoin are minted.
\38\ As of August 13, 2024, GLD had 294,000,000 shares
outstanding and SLV had 510,200,000 shares outstanding. See <a href="https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-gold-shares-gld">https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-gold-shares-gld</a> and
<a href="https://www.ishares.com/us/products/239855/ishares-silver-trust-fund">https://www.ishares.com/us/products/239855/ishares-silver-trust-fund</a>.
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The supply of bitcoin does have a limit, which will take years to
fully mint.\39\ The Exchange notes that bitcoin is a viable economic
alternative to traditional assets. The price of goods denominated by
bitcoin has actually declined. This dynamic not only makes a fixed
supply desirable, but a necessary condition of the value added by this
asset in the broader economy. Further, the Exchange notes that
corporations have a limited number of outstanding shares. Corporations
may authorize additional shares, repurchase shares or split their
shares. Similarly, ETFs, like the Trust, may also create, redeem, or
split shares to suit the demand of the marketplace.
---------------------------------------------------------------------------
\39\ A recent article suggested that the remaining supply will
take over 100 years to fully mint. See Sen. Vivek. ``94% of
Bitcoin's Supply Has Now Been Issued.'' Bitcoin Magazine, <a href="https://bitcoinmagazine.com/business/94-of-bitcoins-supply-has-now-been-issued">https://bitcoinmagazine.com/business/94-of-bitcoins-supply-has-now-been-issued</a>. August 19, 2024.
---------------------------------------------------------------------------
Importantly, because the supply of bitcoin is much larger than the
available supply of most securities and the proposed 25,000 contract
position limit is so conservative, the Exchange believes that
evaluating the available supply of bitcoin in establishing a position
limit for options on the Trust would demonstrate that the proposed
limit is safe for investors and the market.\40\ The Trust constitutes
less than 2% of the entire bitcoin supply. When comparing the market
capitalization of bitcoin against the largest securities, bitcoin would
rank 7th among those
[[Page 95875]]
securities.\41\ Further, the Exchange believes that its proposal to
list options on the Trust with a position limit of 25,000 on the same
side is a conservative position limit that does not lend itself to
manipulation in the market given the ample market capitalization and
liquidity in the Trust. If we look to the liquidity statistics of
similar instruments and their concomitant position limits, we are able
to extrapolate a reasonable standard for arriving at a position limit
for a new product. In this case we can look to GLD, SLV, and the
ProShares Bitcoin Strategy ETF (``BITO''). These products have volume
statistics and ``float'' statistics, which gauge liquidity, which are
in line, yet slightly lower than the Trust. All three of these
reference products have position limits of 250,000 contracts. These
reference products are remarkably similar in nature to the Trust; they
are exchange-traded products (``ETPs'') holding one asset in a trust.
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\40\ A supply consideration would likely be valuable for an
option symbol that had far less liquidity than the Trust.
\41\ See <a href="https://companiesmarketcap.com/usa/largest-companies-in-the-usa-by-market-cap/">https://companiesmarketcap.com/usa/largest-companies-in-the-usa-by-market-cap/</a>.
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The Exchange further notes that Exchange Rule 28.3, which governs
margin requirements applicable to trading on the Exchange, including
options on ETFs, will also apply to the trading of the Trust options.
The Exchange proposes the position and exercise limits for the options
on the Trust to be 25,000 contracts on the same side.
The Exchange represents that the same surveillance procedures
applicable to all other options on other ETFs currently listed and
traded on the Exchange will apply to options on the Trust. Also the
Exchange represents that it has the necessary systems capacity to
support the new option series. The Exchange believes that its existing
surveillance and reporting safeguards are designed to deter and detect
possible manipulative behavior which might potentially arise from
listing and trading options on ETFs, including the proposed Trust
options.
Today, the Exchange has an adequate surveillance program in place
for options. The Exchange intends to apply those same program
procedures to options on the Trust that it applies to the Exchange's
other options products.\42\ The Exchange's staff will have access to
the surveillance programs conducted by its affiliate exchange, MEMX
Equities, with respect to trading in the shares of the underlying Trust
when conducting surveillances for market abuse or manipulation in the
options on the Trust. Additionally, the Exchange is a member of the
Intermarket Surveillance Group (``ISG'') under the Intermarket
Surveillance Group Agreement. ISG members work together to coordinate
surveillance and investigative information sharing in the stock,
options, and futures markets. In addition to obtaining surveillance
data from MEMX Equities, the Exchange will be able to obtain
information regarding trading in the shares of the underlying Trust
from Nasdaq, LLC and other markets through ISG. In addition, the
Exchange has a Regulatory Services Agreement with the Financial
Industry Regulatory Authority (``FINRA''). Pursuant to a multi-party
17d-2 joint plan, all options exchanges allocate regulatory
responsibilities to FINRA to conduct certain options related market
surveillance that are common to rules of all options exchanges.\43\
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\42\ The surveillance program includes patterns for price and
volume movements and post-trade surveillance patterns (e.g.,
spoofing, marking the close, pinging).
\43\ Section 19(g)(1) of the Act, among other things, requires
every SRO registered as a national securities exchange or national
securities association to comply with the Act, the rules and
regulations thereunder, and the SRO's own rules, and, absent
reasonable justification or excuse, enforce compliance by its
members and persons associated with its members. See 15 U.S.C.
78q(d)(1) and 17 CFR 240.17d-2. Section 17(d)(1) of the Act allows
the Commission to relieve an SRO of certain responsibilities with
respect to members of the SRO who are also members of another SRO
(``common members''). Specifically, Section 17(d)(1) allows the
Commission to relieve an SRO of its responsibilities to: (i) receive
regulatory reports from such members; (ii) examine such members for
compliance with the Act and the rules and regulations thereunder,
and the rules of the SRO; or (iii) carry out other specified
regulatory responsibilities with respect to such members.
---------------------------------------------------------------------------
The underlying shares of spot bitcoin ETPs, including the Trust,
are also subject to safeguards related to addressing market abuse and
manipulation. As the Commission stated in Bitcoin ETP Order:
Each Exchange has a comprehensive surveillance-sharing agreement
with the CME via their common membership in the Intermarket
Surveillance Group. This facilitates the sharing of information that is
available to the CME through its surveillance of its markets, including
its surveillance of the CME bitcoin futures market.\44\
---------------------------------------------------------------------------
\44\ See Bitcoin ETP Order, 89 FR 3010-11.
---------------------------------------------------------------------------
The Exchange states that, given the consistently high correlation
between the CME bitcoin futures market and the spot bitcoin market, as
confirmed by the Commission through robust correlation analysis, the
Commission was able to conclude that such surveillance sharing
agreements could reasonably be ``expected to assist in surveilling for
fraudulent and manipulative acts and practices in the specific context
of the [Bitcoin ETPs].'' \45\
---------------------------------------------------------------------------
\45\ See Bitcoin ETP Order, 89 FR 3010-11.
---------------------------------------------------------------------------
In light of surveillance measures related to both options and
futures as well as the underlying Trust,\46\ the Exchange believes that
existing surveillance procedures are designed to deter and detect
possible manipulative behavior which might potentially arise from
listing and trading the proposed options on the Trust. Further, the
Exchange represents that it will implement any new surveillance
procedures it deems necessary to effectively monitor the trading of
options on the Trust.
---------------------------------------------------------------------------
\46\ See Securities Exchange Act Release No. 99295 (January 8,
2024), 89 FR 2321, 2334-35 (January 12, 2024) (SR-NASDAQ-2023-016)
(Notice of Filing of Amendment No. 1 to a Proposed Rule Change To
List and Trade Shares of the iShares Bitcoin Trust Under Nasdaq Rule
5711(d)).
---------------------------------------------------------------------------
The Exchange has also analyzed its capacity and represents that it
believes the Exchange and Options Price Reporting Authority or ``OPRA''
have the necessary systems capacity to handle the additional traffic
associated with the listing of new series that may result from the
introduction of options on the Trust up to the number of expirations
currently permissible under the Rules. Because the proposal is limited
to one class, the Exchange believes any additional traffic that may be
generated from the introduction of the Trust options will be
manageable.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\47\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \48\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section (6)(b)(5) \49\ requirement that the rules
of an exchange not be designed
[[Page 95876]]
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\47\ 15 U.S.C. 78f(b).
\48\ 15 U.S.C. 78f(b)(5).
\49\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposal to list and
trade options on the Trust will remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, protect investors because offering options on the Trust
will provide investors with a greater opportunity to realize the
benefits of utilizing options on an ETF based on spot bitcoin,
including cost efficiencies and increased hedging strategies. The
Exchange believes that offering options on a competitively priced ETF
based on spot bitcoin will benefit investors by providing them with an
additional, relatively lower-cost risk management tool, allowing them
to manage, more easily, their positions and associated risks in their
portfolios in connection with exposure to spot bitcoin. Today, the
Exchange lists options on other commodity ETFs structured as a trust,
which essentially offer the same objectives and benefits to investors,
and for which the Exchange has not identified any issues with the
continued listing and trading of options on those ETFs.
The Exchange also believes the proposal to permit options on the
Trust will remove impediments to and perfect the mechanism of a free
and open market and a national market system, because options on the
Trust will comply with current Exchange Rules. Options on the Trust
must satisfy the initial listing standards and continued listing
standards currently in the Exchange Rules, applicable to options on all
ETFs, including options on other commodity ETFs already deemed
appropriate for options trading on the Exchange pursuant to Exchange
Rule 19.3(i). Additionally, as demonstrated above, the Trust is
characterized by a substantial number of shares that are widely held
and actively traded. Further, Exchange Rules that currently govern the
listing and trading of options on ETFs, including permissible
expirations, strike prices, minimum increments, position and exercise
limits (as proposed herein), and margin requirements, will govern the
listing and trading of options on the Trust. The proposed position and
exercise limits for options on the Trust is 25,000 contracts. These
position and exercise limits are the lowest position and exercise
limits available in the options industry, are extremely conservative
and more than appropriate given the Trust's market capitalization,
average daily volume, and high number of outstanding shares. The
proposed position limit, and exercise limit, is consistent with the Act
as it addresses concerns related to manipulation and protection of
investors because, as demonstrated above, the position limit (and
exercise limit) is extremely conservative and more than appropriate
given the Trust is actively traded. In support of the proposed position
and exercise limits for options on the Trust is 25,000 contracts, the
Exchange is citing the in depth analysis ISE did in its filing. As
noted above, in the IBIT Approval Order, ISE considered the: (i)
Trust's market capitalization and ADV, and prospective position limit
in relation to other securities; (ii) market capitalization of the
entire bitcoin market in terms of exercise risk and availability of
deliverables; (iii) proposed position limit by comparing it to position
limits for derivative products regulated by the CFTC; and (iv) supply
of bitcoin. Based on the Exchange's review of IBIT Approval Order, the
Exchange believes that setting position and exercise limits for options
on the Trust of 25,000 contracts is more than appropriate for the
Trust. The proposed position and exercise limits reasonably and
appropriately balance the liquidity provisioning in the market against
the prevention of manipulation. The Exchange believes these proposed
limits are effectively designed to prevent an individual customer or
entity from establishing options positions that could be used to
manipulate the market of the underlying as well as the Bitcoin
market.\50\
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\50\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SRCBOE-1997-11).
---------------------------------------------------------------------------
The Exchange represents that it has the necessary systems capacity
to support options on the Trust. The Exchange believes that its
existing surveillance and reporting safeguards are designed to deter
and detect possible manipulative behavior which might arise from
listing and trading options on ETFs, including the Trust options.
Today, the Exchange has an adequate surveillance program in place for
options. The Exchange intends to apply those same program procedures to
options on the Trust that it applies to the Exchange's other options
products.\51\ The Exchange's staff will have access to the surveillance
programs conducted by its affiliate exchange, MEMX Equities, with
respect to the underlying Trust when conducting surveillances for
market abuse or manipulation in the options on the Trust. The Exchange
will review activity in the underlying Trust when conducting
surveillances for market abuse or manipulation in the options on the
Trust. Additionally, the Exchange is a member of the ISG under the
Intermarket Surveillance Group Agreement. ISG members work together to
coordinate surveillance and investigative information sharing in the
stock, options, and futures markets. In addition to obtaining
surveillance data from MEMX Equities, the Exchange will be able to
obtain information from Nasdaq, LLC and other markets through ISG. In
addition, the Exchange has a Regulatory Services Agreement with FINRA.
Pursuant to a multi-party 17d-2 joint plan, all options exchanges
allocate regulatory responsibilities to FINRA to conduct certain
options-related market surveillance that are common to rules of all
options exchanges.\52\
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\51\ The surveillance program includes patterns for price and
volume movements and post-trade surveillance patterns (e.g.,
spoofing, marking the close, pinging).
\52\ Section 19(g)(1) of the Act, among other things, requires
every SRO registered as a national securities exchange or national
securities association to comply with the Act, the rules and
regulations thereunder, and the SRO's own rules, and, absent
reasonable justification or excuse, enforce compliance by its
members and persons associated with its members. See 15 U.S.C.
78q(d)(1) and 17 CFR 240.17d-2. Section 17(d)(1) of the Act allows
the Commission to relieve an SRO of certain responsibilities with
respect to members of the SRO who are also members of another SRO
(``common members''). Specifically, Section 17(d)(1) allows the
Commission to relieve an SRO of its responsibilities to: (i) receive
regulatory reports from such members; (ii) examine such members for
compliance with the Act and the rules and regulations thereunder,
and the rules of the SRO; or (iii) carry out other specified
regulatory responsibilities with respect to such members.
---------------------------------------------------------------------------
The underlying shares of spot bitcoin ETPs, including the Trust,
are also subject to safeguards related to addressing market abuse and
manipulation. As the Commission stated in Bitcoin ETP Order:
Each Exchange has a comprehensive surveillance-sharing agreement
with the CME via their common membership in the Intermarket
Surveillance Group. This facilitates the sharing of information that is
available to the CME through its surveillance of its markets, including
its surveillance of the CME bitcoin futures market.\53\
---------------------------------------------------------------------------
\53\ See supra note 46.
---------------------------------------------------------------------------
The Exchange states that, given the consistently high correlation
between the CME bitcoin futures market and the spot bitcoin market, as
confirmed by the Commission through robust correlation analysis, the
Commission was able to conclude that such surveillance sharing
agreements could reasonably be ``expected to assist in surveilling for
fraudulent and manipulative acts and
[[Page 95877]]
practices in the specific context of the [Bitcoin ETPs].'' \54\
---------------------------------------------------------------------------
\54\ See Bitcoin ETP Order, 89 FR 3010-11.
---------------------------------------------------------------------------
In light of surveillance measures related to both options and
futures as well as the underlying Trust,\55\ the Exchange believes that
existing surveillance procedures are designed to deter and detect
possible manipulative behavior which might potentially arise from
listing and trading the proposed options on the Trust. Further, the
Exchange represents that it will implement any new surveillance
procedures it deems necessary to effectively monitor the trading of
options on the Trust.
---------------------------------------------------------------------------
\55\ See Securities Exchange Act Release No. 99295 (January 8,
2024), 89 FR 2321, 2334-35 (January 12, 2024) (SR-NASDAQ-2023-016)
(Notice of Filing of Amendment No. 1 to a Proposed Rule Change To
List and Trade Shares of the iShares Bitcoin Trust Under Nasdaq Rule
5711(d)).
---------------------------------------------------------------------------
Finally, the Commission has previously approved the listing and
trading of options on other commodity ETFs structured as a trust, such
as SPDR[supreg] Gold Trust,\56\ the iShares COMEX Gold Trust \57\ the
iShares Silver Trust,\58\ the ETFS Gold Trust,\59\ and the ETFS Silver
Trust.\60\
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\56\ See Securities Exchange Act Release No. 57897 (May 30,
2008), 73 FR 32061 (June 5, 2008) (SR-Amex2008-15; SR-CBOE-2005-11;
SR-ISE-2008-12; SR-NYSEArca-2008-52; and SRPhlx-2008-17) (Order
Granting Approval of a Proposed Rule Change, as Modified, and Notice
of Filing and Order Granting Accelerated Approval of Proposed Rule
Changes, as Modified, Relating to Listing and Trading Options on the
SPDR Gold Trust).
\57\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 75148 (December 10, 2008) (SR-Amex-2008-68; SR-BSE-
2008-51; SR-CBOE-2008-72; SR-ISE-2008-58; SRNYSEArca-2008-66; and
SR-Phlx-2008-58) (Notice of Filing and Order Granting Accelerated
Approval of Proposed Rule Changes Relating to the Listing and
Trading Options on Shares of the iShares COMEX Gold Trust and the
iShares Silver Trust).
\58\ Id.
\59\ See Securities Exchange Act Release No. 61483 (February 3,
2010), 75 FR 6753 (February 10, 2010) (SRCBOE-2010-007; SR-ISE-2009-
106; SR-NYSEAmex-2009-86; and SR-NYSEArca-2009-110) (Order Granting
Approval of Proposed Rule Changes and Notice of Filing and Order
Granting Accelerated Approval of a Proposed Rule Change Relating to
Listing and Trading Options on the ETFS Gold Trust and the ETFS
Silver Trust).
\60\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. In this regard and as
indicated above, the Exchange notes that the rule change is being
proposed as a competitive response to filings submitted by ISE.\61\
---------------------------------------------------------------------------
\61\ See supra note 5.
---------------------------------------------------------------------------
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act as options on the
Trust will be subject to initial listing standards and continued
listing standards the same as other options on ETFs listed on the
Exchange. Further, options on the Trust will be subject to Exchange
Rules that currently govern the listing and trading of options on ETFs,
including permissible expirations, strike prices, minimum increments,
position and exercise limits (including as proposed herein), and margin
requirements. Options on the Trust will be equally available to all
market participants who wish to trade such options. Also, and as stated
above, the Exchange already lists options on other commodity ETFs
structured as a trust.
The Exchange does not believe that the proposal to list to list and
trade options on the Trust will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. To the extent that permitting options on the Trust
to trade on the Exchange may make the Exchange a more attractive
marketplace to market participants, such market participants are free
to elect to become market participants on the Exchange. Additionally,
other options exchanges are free to amend their listing rules, as
applicable, to permit them to list and trade options on the Trust. The
Exchange believes that the proposed rule change may relieve any burden
on, or otherwise promote, competition as it is designed to increase
competition for order flow on the Exchange in a manner that is
beneficial to investors by providing them with a lower-cost option to
hedge their investment portfolios. The Exchange notes that it operates
in a highly competitive market in which market participants can readily
direct order flow to competing venues that offer similar products.
Ultimately, the Exchange believes that offering options on the Trust
for trading on the Exchange will promote competition by providing
investors with an additional, relatively low-cost means to hedge their
portfolios and meet their investment needs in connection with spot
bitcoin prices and bitcoin related products and positions.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \62\ and Rule 19b-
4(f)(6) thereunder.\63\
---------------------------------------------------------------------------
\62\ 15 U.S.C. 78s(b)(3)(A).
\63\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission waives this requirement.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \64\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission previously
approved the listing of options on the Trust.\65\ The Exchange has
provided information regarding the underlying Trust, including, among
other things, information regarding trading volume, the number of
beneficial holders, and the market capitalization of the Trust. The
proposal also establishes position and exercise limits for options on
the Trust and provides information regarding the surveillance
procedures that will apply to options on the Trust. The Commission
believes that waiver of the operative delay could benefit investors by
providing an additional venue for trading options on the Trust.
Therefore, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change operative upon
filing.\66\
---------------------------------------------------------------------------
\64\ 17 CFR 240.19b-4(f)(6)(iii).
\65\ See supra note 3.
\66\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the
[[Page 95878]]
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#99ebecf5fcb4faf6f4f4fcf7edead9eafcfab7fef6ef"><span class="__cf_email__" data-cfemail="94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2">[email protected]</span></a>. Please include
file number SR-MEMX-2024-45 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MEMX-2024-45. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MEMX-2024-45 and should be
submitted on or before December 24, 2024.
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\67\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\67\
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-28345 Filed 12-2-24; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 3, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.