Notice2025-05586
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Allow the Exchange To List Options on Certain ETFs That Hold Precious Metals (Including Gold, Silver, Palladium, and Platinum)
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
April 2, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 62 (Wednesday, April 2, 2025)</title>
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[Federal Register Volume 90, Number 62 (Wednesday, April 2, 2025)]
[Notices]
[Pages 14502-14507]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-05586]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102734; File No. SR-MEMX-2025-07]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Allow the Exchange
To List Options on Certain ETFs That Hold Precious Metals (Including
Gold, Silver, Palladium, and Platinum)
March 27, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 14, 2025, MEMX LLC (``MEMX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') a 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 to allow the
Exchange to list and trade options on the Aberdeen Standard Physical
Silver Trust (``SIVR''), the Aberdeen Standard Physical Gold Trust
(``SGOL''), the Aberdeen Standard Physical Palladium Trust (``PALL''),
the Aberdeen Standard Physical Platinum Trust (``PPLT''), the Sprott
Physical Gold Trust (``PHYS''), and the Goldman Sachs Physical Gold ETF
(``AAAU'') (the ``Precious Metal ETFs'') as Fund Shares deemed
appropriate for options trading on the Exchange. The text of the
proposed rule change is provided in Exhibit 5 and is available on the
Exchange's website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.
[[Page 14503]]
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 Rule 19.3 regarding the criteria for
underlying securities. Specifically, the Exchange proposes to amend
Rule 19.3(i) to allow the Exchange to list and trade options on the
Aberdeen Standard Physical Silver Trust (``SIVR''), the Aberdeen
Standard Physical Gold Trust (``SGOL''), the Aberdeen Standard Physical
Palladium Trust (``PALL''), the Aberdeen Standard Physical Platinum
Trust (``PPLT''), the Sprott Physical Gold Trust (``PHYS''), and the
Goldman Sachs Physical Gold ETF (``AAAU'') (the ``Precious Metal
ETFs'') as Fund Shares deemed appropriate for options trading on the
Exchange. Rule 19.3(i) provides that securities deemed appropriate for
options trading include shares or other securities (``Fund Shares'')
that represent certain types of interests,\3\ and Rule 19.3(i)(4), in
particular, includes Fund Shares that represent interest in the SPDR
Gold Trust, the iShares COMEX Gold Trust, and the iShares Silver Trust.
The proposed rule change expands the Fund Shares under Rule 19.3(i)(4)
deemed appropriate for options trading on the Exchange to include the
Precious Metal ETFs. This is a competitive filing based on a similar
proposal submitted by Cboe EDGX Exchange, Inc. (``EDGX'').\4\
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\3\ Specifically, Rule 19.3(i) states that securities deemed
appropriate for options trading shall include shares or other
securities (``Fund Shares''), including but not limited to
Partnership Units as defined in this 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 (1) represent
interests in registered investment companies (or series thereof)
organized as open-end management investment companies, unit
investment trusts or similar entities, and that hold portfolios of
securities comprising or otherwise based on or representing
investments in indexes or portfolios of securities (or that hold
securities in one or more other registered investment companies that
themselves hold such portfolios of securities) (``Funds '') and/or
financial instruments including, but not limited to, stock index
futures contracts, options on futures, options on securities and
indexes, equity caps, collars and floors, swap agreements, forward
contracts, repurchase agreements and reverse repurchase agreements
(the ``Financial Instruments''), and money market instruments,
including, but not limited to, U.S. government securities and
repurchase agreements (the ``Money Market Instruments'')
constituting or otherwise based on or representing an investment in
an index or portfolio of securities and/or Financial Instruments and
Money Market Instruments, or (2) represent commodity pool interests
principally engaged, directly or indirectly, in holding and/or
managing portfolios or baskets of securities, commodity futures
contracts, options on commodity futures contracts, swaps, forward
contracts and/or options on physical commodities and/or non-U.S.
currency (``Commodity Pool ETFs'') or (3) represent interests in a
trust or similar entity that holds a specified non-U.S. currency or
currencies deposited with the trust or similar entity when
aggregated in some specified minimum number may be surrendered to
the trust by the beneficial owner to receive the specified non-U.S.
currency or currencies and pays the beneficial owner interest and
other distributions on the deposited non-U.S. currency or
currencies, if any, declared and paid by the trust (``Currency Trust
Shares''), or (4) represent interests in the SPDR Gold Trust or are
issued by the iShares COMEX Gold Trust, the iShares Silver Trust,
iShares Bitcoin Trust, Fidelity Wise Origin Bitcoin Fund, the ARK
21Shares Bitcoin ETF, Grayscale Bitcoin Trust, Grayscale Bitcoin
Mini Trust, or the Bitwise Bitcoin ETF.
\4\ See Securities Exchange Act Release No. 102278 (January 24,
2025), 90 FR 8550 (January 30, 2025) (SRCboeEDGX-2025-004) (Self-
Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change to Allow the
Exchange to List Options Certain ETFs that Hold Precious Metals
(Including Gold, Silver, Palladium, and Platinum)).
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Like the SPDR Gold Trust, iShares COMEX Gold Trust, and the iShares
Silver Trust, the Precious Metal ETFs are precious metal-backed
commodity ETFs structured as trusts. Specifically, each trust's
investment objective is for its shares to reflect the performance of
the price of the applicable precious metal (less the expenses of the
trust's operations), offering investors an opportunity to gain exposure
to precious metals without the complexities of physical delivery of the
metals. Each trust issues shares, which represent units of fractional
undivided beneficial interest in the trust, the assets of which consist
principally of the applicable precious metal.\5\ Each Precious Metal
ETF is a competitively priced commodity ETF and provides investors with
a cost-efficient alternative that allows a level of participation in
the gold, silver, palladium, or platinum market, as applicable, through
the securities market. Likewise, each Precious Metal ETF trust also
issues shares that represent fractional undivided beneficial interest
in the respective trust, each of which holds the applicable physical
precious metal and is designed to track that precious metal or the
performance of the price of that precious metal and offer access to the
precious metal market.
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\5\ Each trust may include minimal cash.
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The Exchange believes that offering options on the Precious Metal
ETFs will benefit investors by providing them with additional,
relatively lower cost investing tools to gain exposure to the price of
gold, silver, palladium, or platinum, as applicable, and hedging
vehicles to meet their investment needs in connection with precious
metal-related products and positions. As described above, the precious
metal-backed ETFs on which the Exchange may already list and trade
options are trusts structured in substantially the same manner as the
Precious Metal ETFs and essentially offer the same objectives and
benefits to investors. The Exchange notes it has not identified any
issues with the continued listing and trading of the precious metal-
backed ETF options that it currently lists and trades on the Exchange.
The Precious Metal ETF options will trade in the same manner as any
other ETF option on the Exchange. The Exchange Rules that currently
apply to the listing and trading of all ETF options on the Exchange,
including, for example, Rules that govern listing criteria, expiration
and 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 Precious Metal ETFs
on the Exchange in the same manner as they apply to other options on
all other Fund Shares that are listed and traded on the Exchange,
including the precious metal-backed ETFs already deemed appropriate for
options trading on the Exchange pursuant to Rule 19.3(i)(4).
The Exchange's initial listing standards for ETFs on which options
may be listed and traded on the Exchange will apply to the Precious
Metal ETFs. The Exchange notes that each Precious Metal ETF satisfies
the initial listing standards as set forth in Rule 19.3(a) and (b).
Pursuant to Rule 19.3(a), a security (which includes an ETF) on which
options may be listed and traded on the Exchange must be duly
registered and be an NMS stock, and be characterized by a substantial
number of outstanding shares that are
[[Page 14504]]
widely held and actively traded. As of December 31, 2024, the 12-month
ADV, the market capitalization, and the net asset value (``NAV'') of
the shares of each Precious Metal ETF were as follows:
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Market
Precious metal ETF 12-Monday ADV capitalization NAV ($)
(shares) ($)
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SIVR....................................................... 1,024,715 1.46B 28.46
SGOL....................................................... 3,472,735 3.79B 25.27
PALL....................................................... 111,790 361M 85.07
PPLT....................................................... 158,599 1.05B 85.98
PHYS....................................................... 2,155,974 8.49B 20.85
AAAU....................................................... 2,320,231 898M 26.17
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Pursuant to Rule 19.3(b), an underlying security (which includes a
Fund Share) on which options may be listed and traded must have a
minimum of 7,000,000 shares of the underlying security owned by persons
other than those required to report their stock holdings under Section
16(a) of the Securities and Exchange Act (the ``Act''), a minimum of
2,000 holders of the underlying security, and trading volume of at
least 2,400,000 shares in the preceding 12 months.\6\ As of December
31, 2024, the outstanding shares and total 12-month trading volume for
the shares of each Precious Metal ETF were as follows: \7\
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\6\ Rule 19.3(b) also requires the issuer of the underlying
security to be in compliance with any applicable requirements of the
Act or rules thereunder and requires the underlying security to meet
certain minimum share price requirements.
\7\ The number of shareholders is not publicly available for the
Precious Metal ETFs; however, given the significant number of
outstanding shares and trading volume, it is reasonable to believe
the number of shareholders is above 2,000.
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12-Month trading
Precious metal ETF Outstanding shares volume (shares)
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SIVR.......................... 51.5M 258,228,060
SGOL.......................... 150.7M 875,129,339
PALL.......................... 4.3M 28,171,185
PPLT.......................... 12.2M 39,966,888
PHYS.......................... 418.1M 543,305,346
AAAU.......................... 34.5M 584,698,096
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Pursuant to Rule 19.3(i)(1), Fund Shares must meet either (i) the
criteria and standards set forth in Rule 19.3(a) and (b) or (ii) 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. The Exchange represents that, at a minimum,
each Precious Metal ETF satisfies Rule 19.3(i)(1)(B).\8\
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\8\ See SIVR Prospectus (February 12, 2024, as supplemented
August 15, 2024), available at <a href="https://www.abrdn.com/docs?editionId=82b65f8a-4066-4200-b795-43de6f9839d1">https://www.abrdn.com/docs?editionId=82b65f8a-4066-4200-b795-43de6f9839d1</a>; SGOL Prospectus
(October 21, 2022, as supplemented August 14, 2024), available at
<a href="https://www.abrdn.com/docs?editionId=0430a588-a44d-412c-9b1a-3b5065d7d05d">https://www.abrdn.com/docs?editionId=0430a588-a44d-412c-9b1a-3b5065d7d05d</a>; PALL Prospectus (September 27, 2023, as supplemented
August 14, 2024), available at <a href="https://www.abrdn.com/docs?editionId=ed376abe-d762-48f6-a36e-a8c317d6f043">https://www.abrdn.com/docs?editionId=ed376abe-d762-48f6-a36e-a8c317d6f043</a>; PPLT Prospectus
(January 19, 2024, as supplemented August 14, 2024), available at
<a href="https://www.abrdn.com/docs?editionId=1dbe36b9-a949-4d2d-985d-85bbb98ef54b">https://www.abrdn.com/docs?editionId=1dbe36b9-a949-4d2d-985d-85bbb98ef54b</a>; PHYS Prospectus (September 6, 2024, as supplemented
December 6, 2024), available at <a href="https://sprott.com/media/24rllbzr/phys-prospectus-supplement-en.pdf">https://sprott.com/media/24rllbzr/phys-prospectus-supplement-en.pdf</a>; and AAAU Prospectus (March 25,
2022), available at <a href="https://am.gs.com/enus/individual/funds/detail/PV103623/38150K103/goldman-sachs-physical-gold-etf">https://am.gs.com/enus/individual/funds/detail/PV103623/38150K103/goldman-sachs-physical-gold-etf</a>.
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Each Precious Metal ETF will also be subject to the Exchange's
continued listing standards set forth in Rule 19.4(g) for Fund Shares
deemed appropriate for options trading pursuant to Rule 19.3(i).
Specifically, Rule 19.4(g) provides that Fund Shares approved for
options trading pursuant to Rule 19.3 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 security is delisted from trading as
provided in Rule 19.4(b)(4) (i.e., the underlying security ceases to be
an ``NMS stock'' as defined in Rule 600 of Regulation NMS under the
Act). In addition, the Exchange shall consider suspension of opening
transactions in any series of options of the class covering Fund Shares
in any of the following circumstances: in the case of options covering
Fund Shares approved pursuant to Rule 19.3(i)(4)(A), in accordance with
Rule 19.4(b)(1), (2), and (3); (2) in the case of options covering Fund
Shares approved pursuant to Rule 19.3(i)(4)(B), following the initial
12-month period beginning upon the commencement of trading in the Fund
Shares on a national securities exchange and are defined as 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, 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 or Money Market Instruments,
or portfolio of securities 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
[[Page 14505]]
Exchange makes further dealing in such options on the Exchange
inadvisable.
Precious Metal ETF options will be physically settled contracts
with American-style exercise.\9\ Consistent with 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
and one series of options on each Precious Metal ETF \10\ and may also
list series of options on each Precious Metal ETF for trading on
weekly,\11\ monthly,\12\ or quarterly basis.\13\ The Exchange may also
list long-term options series that expire from 12 to 39 months from the
time they are listed.\14\
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\9\ See 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 IX (which
governs the discharge of delivery and payment obligations arising
out of the exercise of physically settled stock option contracts).
\10\ See Rule 19.5(b) and (e).
\11\ See Rule 19.5, Interpretation and Policy .05.
\12\ See Rule 19.5, Interpretation and Policy .08.
\13\ See Rule 19.5, Interpretation and Policy .04.
\14\ See Rule 19.7.
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Pursuant to Rule 19.5, Interpretation and Policy .01, which governs
strike prices of series of options on Fund Shares, the interval of
strike prices may be $1 or greater where the strike price is $200 or
less or $5 or greater where the strike price is over $200.\15\
Additionally, the Exchange may list series of options pursuant to the
$1 Strike Price Interval Program,\16\ the $0.50 Strike Program,\17\ the
$2.50 Strike Price Program,\18\ and the $5 Strike Program.\19\ Pursuant
to Rule 21.5, which governs the minimum quoting increment for option
contracts traded on the Exchange, the minimum increment for series of
Precious Metal ETF options will be $0.05 if the options series is
trading at less than $3.00 and $0.10 if the options series is trading
at $3.00 or higher.\20\ Any and all new series of any Precious Metal
ETF option that the Exchange lists will be consistent and comply with
the expirations, strike prices and minimum increments set forth in 19.5
and 21.5, as applicable.
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\15\ The Exchange notes that for options listed pursuant to the
Short Term Option Series Program, Rule 19.5, Interpretation and
Policy .05 sets forth intervals between strike prices for Short Term
Option Series.
\16\ See Rule 19.5, Interpretations and Policies .01 and .02.
\17\ See Rule 19.5, Interpretation and Policy .06.
\18\ See Rule 19.5, Interpretation and Policy .03.
\19\ See Rule 19.5(d)(5).
\20\ If options on a Precious Metal ETF are eligible to
participate in the Penny Interval Program, the minimum increment for
those options will be $0.01 if the series is trading below $3.00 and
$0.05 if the series is trading at $3.00 or higher. See Rule 21.5(a).
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Position and exercise limits for options on ETFs, including options
the Precious Metal ETFs, will be determined pursuant to Rules 18.7 and
18.9, respectively.\21\ The Exchange further notes that Exchange Rule
28.3, which governs margin requirements applicable to the trading of
all options on the Exchange, including options on ETFs, will also apply
to the trading of the Precious Metal ETF options.\22\
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\21\ 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>. Certain of the Precious Metal ETF
options are already available for trading and are subject to the
following position limits: SIVR--250,000 contracts; SGOL--250,000
contracts; PALL--50,000 contracts; PPLT--75,000 contracts; and
AAAU--250,000 contracts. Given the volume of the remaining Precious
Metal ETF, PHYS, over the previous six months, the Exchange
anticipates that PHYS will be subject to a 250,000 contract position
limit.
\22\ Pursuant to Rule 28.3, an Options Member is bound by the
initial and maintenance margin requirements of either Cboe Options
or the New York Stock Exchange (``NYSE'') (as they may elect from
time to time). As noted below, the rules of certain options
exchanges, including Cboe Options and EDGX, authorize each of those
exchanges to list for trading certain of the Precious Metal ETF
options.
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The Exchange represents it has an adequate surveillance program in
place for options, including precious metal-backed ETF options. The
Exchange intends to apply those same program procedures to options on
the Precious Metal ETFs that it applies to the Exchange's other options
products, including other precious metal-backed ETF options it
currently lists for trading.\23\ The Exchange's surveillance staff will
have access to the surveillances conducted by the Exchange's affiliated
market, MEMX Equities, with respect to the Precious Metal ETFs and
would review activity in the underlying Precious Metal ETFs when
conducting surveillances for market abuse or manipulation in the
options on the Precious Metal ETFs. 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 would be able to
obtain information regarding trading in shares of the Precious Metal
ETFs from their primary listing markets and from other markets that
trades shares of the Precious Metal ETFs through ISG. In addition, MEMX
has a Regulatory Services Agreement with the Financial Industry
Regulatory Authority (``FINRA'') for certain market surveillance,
investigation and examinations functions. Pursuant to a multiparty 17d-
2 joint plan, all options exchanges allocate amongst themselves and
FINRA responsibilities to conduct certain options-related market
surveillance that are common to rules of all options exchanges.\24\
Also, the Exchange may obtain information from the CME Group New York
Mercantile Exchange, Inc. (``NYMEX'') (a member of the Intermarket
Surveillance Group) related to any financial instrument that is based,
in whole or in part, upon an interest in or performance of gold,
silver, palladium, or platinum (as applicable). The Exchange believes
that its 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 Precious Metal
ETFs. Further, the Exchange will implement any new surveillance
procedures it deems necessary to effectively monitor the trading of
options on the Precious Metal ETFs.
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\23\ The surveillance program includes surveillance patterns for
price and volume movements as well as patterns for potential
manipulation (e.g., spoofing and marking the close).
\24\ Section 19(g)(1) of the Act, among other things, requires
every self-regulatory organization (``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.
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The Exchange has also analyzed its capacity and represents that it
believes the Exchange and the Options Price Reporting Authority
(``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 Precious Metal ETFs up to the number
of expirations currently permissible under the Rules. Because the
proposal is limited to six classes, the Exchange believes any
additional traffic that may
[[Page 14506]]
be generated from the introduction of Precious Metal ETF 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.\25\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \26\ 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) \27\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\25\ 15 U.S.C. 78f(b).
\26\ 15 U.S.C. 78f(b)(5).
\27\ Id.
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In particular, the Exchange believes that the proposal to list and
trade options on the Precious Metal ETFs 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 Precious Metal ETFs will provide investors with greater opportunity
to realize the benefits of utilizing options on commodity-based ETFs,
including cost efficiencies and increased hedging strategies. The
Exchange believes that offering options on competitively priced
precious metal-backed commodity ETFs will benefit investors by
providing them with an additional, relatively lower cost risk
management tool allowing them to more easily manage their positions and
associated risk in their portfolios in connection with exposure to the
prices of certain precious metals and with precious metal-related
products and positions. The Exchange also notes that it already lists
options on other precious metal-based ETFs, which, as described above,
are trusts structured in substantially the same manner as the Precious
Metal ETFs and 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 the precious metal-backed ETF
options it currently lists for trading.
The Exchange also believes the proposed rule change will remove
impediments to and perfect the mechanism of a free and open market and
a national market system, because it is consistent with current
Exchange Rules, previously filed with the Commission. Options on the
Precious Metal ETFs must satisfy the initial listing standards and
continued listing standards currently in the Exchange Rules, applicable
to options on all Fund Shares, including other precious metal-backed
ETFs already deemed appropriate for options trading on the Exchange.
Precious Metal ETF options will trade in the same manner as any other
ETF--the same Exchange Rules that currently govern the listing and
trading of all ETF options, including permissible expirations, strike
prices and minimum increments, and applicable position and exercise
limits and margin requirements, will govern the listing and trading of
options on the Precious Metal ETFs in the same manner. Further, the
rules of several other options exchanges authorize those exchanges to
list options on some or all of the Precious Metal ETFs (which rules
would have been previously approved and found to be consistent with the
Act by the Commission).\28\
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\28\ See Cboe Options Rule 4.3, Interpretation and Policy
.06(a)(4); see also EDGX Rule 19.3(i)(4).
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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. 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 each Precious Metal ETF
satisfies initial listing standards set forth in the Exchange Rules,
and options on each Precious Metal ETF will be equally available to all
market participants who wish to trade such options. The Exchange Rules
currently applicable to the listing and trading of options on Fund
Shares on the Exchange will apply in the same manner to the listing and
trading of all options traded on the Precious Metal ETFs. Also, and as
stated above, the Exchange already lists options on other precious-
metal-based ETFs.
The Exchange does not believe that the proposal to list and trade
options on the Precious Metal ETFs will impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because the rules of other
exchanges already authorize those exchanges to list options on some or
all of the Precious Metal ETFs.\29\ As a result, 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 an alternative venue to trade these options. 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 the Precious Metal ETFs options for trading on the Exchange
will promote competition by providing investors with additional,
relatively low-cost means to hedge their portfolios and meet their
investment needs in connection with precious metal prices and precious
metal-related products and positions on a listed options exchange.
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\29\ Id.
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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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \30\ and Rule 19b-4(f)(6) thereunder.\31\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\32\
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\30\ 15 U.S.C. 78s(b)(3)(A)(iii).
\31\ 17 CFR 240.19b-4(f)(6).
\32\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 Exchange has satisfied this requirement.
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[[Page 14507]]
A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of the filing. However,
Rule 19b-4(f)(6)(iii) \33\ permits the Commission to designate a
shorter time if such action is consistent with protection of investors
and the public interest. The Exchange has requested that the Commission
waive the 30-day operative delay so that the proposed rule change may
become operative immediately upon filing. The Commission believes that
waving the 30-day operative delay is consistent with the protection of
investors and the public interest because the proposal will allow MEMX
to adopt rules already in place at another exchange to permit the
listing and trading of options on the Precious Metal ETFs and, in so
doing, the proposal does not introduce any novel regulatory issues.
Accordingly, the Commission designates the proposed rule change to be
operative upon filing.\34\
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\33\ 17 CFR 240.19b-4(f)(6).
\34\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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#e290978e87cf818d8f8f878c9691a2918781cc858d94"><span class="__cf_email__" data-cfemail="780a0d141d551b1715151d160c0b380b1d1b561f170e">[email protected]</span></a>. Please include
file number SR-MEMX-2025-07 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-2025-07. 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-2025-07 and should be
submitted on or before April 23, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-05586 Filed 4-1-25; 8:45 am]
BILLING CODE 8011-01-P
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