Notice2025-11096
Self-Regulatory Organizations; NYSE American LLC, NYSE Arca Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Changes To Amend Rules To Permit Options on Commodity-Based Trust Shares
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
June 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 115 (Tuesday, June 17, 2025)</title>
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[Federal Register Volume 90, Number 115 (Tuesday, June 17, 2025)]
[Notices]
[Pages 25687-25689]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-11096]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103240; File Nos. SR-NYSEAMER-2025-07, NYSEARCA-2025-
16]
Self-Regulatory Organizations; NYSE American LLC, NYSE Arca Inc.;
Order Instituting Proceedings To Determine Whether To Approve or
Disapprove Proposed Rule Changes To Amend Rules To Permit Options on
Commodity-Based Trust Shares
June 12, 2025.
I. Introduction
On February 24, 2025, NYSE American LLC (``NYSE American'') and
NYSE Arca Inc. (``NYSE Arca'') (each an ``Exchange''; collectively, the
``Exchanges'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\
proposed rule changes to amend their respective rules to allow the
Exchanges to list and trade options on Commodity-Based Trust Shares.\3\
The proposed rule changes were published for comment in the Federal
Register on March 17, 2025.\4\ The Commission has not received any
comments on the proposed rule changes.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See, infra, note 10 and accompanying text.
\4\ See Securities Exchange Act Release No. 102555 (Mar. 10,
2025), 90 FR 12189 (``NYSE American Notice''); Securities Exchange
Act Release No. 102577 (Mar. 11, 2025), 90 FR 12377 (``NYSE Arca
Notice'') (collectively, ``Notices'').
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On April 25, 2025, pursuant to Section 19(b)(2) of the Act,\5\ the
Commission designated a longer period within which to approve the
proposed rule changes, disapprove the proposed rule changes, or
institute proceedings to determine whether to disapprove the proposed
rule changes.\6\ This order institutes proceedings under Section
19(b)(2)(B) of the Act \7\ to determine whether to approve or
disapprove the proposed rule changes.
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\5\ 15 U.S.C. 78s(b)(2).
\6\ See Securities Exchange Act Release No. 102931 (Apr. 25,
2025), 90 FR 18717 (May 1, 2025) and Securities Exchange Act Release
No. 102930 (Apr. 25, 2025), 90 FR 18718 (May 1, 2025) (each
designating June 15, 2025, as the date by which the Commission shall
either approve, disapprove, or institute proceedings to determine
whether to disapprove the proposed rule changes).
\7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Changes
As described more fully in the Notices, the Exchanges propose to
amend their listing rules to allow the listing and trading of options
on units that represent interests in a trust that is a Commodity-Based
Trust.\8\
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\8\ See Notices, supra note 4. See also proposed NYSE American
Rule 915, Commentary .10 and Rule 916, Commentary .11; proposed NYSE
Arca Rule 5.3-O(g), Commentary .10 and Rule 5.4-O, Commentary .02.
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Specifically, the Exchanges propose, in their rules relating to the
criteria for underlying securities, to remove references to the
SPDR[supreg] Gold Trust, the iShares COMEX Gold Trust, the iShares
Silver Trust, the ETFS Silver Trust, ETFS Gold Trust, the ETFS
Palladium Trust, the ETFS Platinum, the iShares Bitcoin Trust, the
Fidelity Wise Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF, the
Grayscale Bitcoin Trust (BTC), the Grayscale Bitcoin Mini Trust BTC,
and the Bitwise Bitcoin ETF, which are all Commodity-Based Trust
Shares.\9\ In addition, the Exchanges propose to state that securities
deemed appropriate for options trading shall include shares or other
securities (``Exchange-Traded Fund Shares'') that represent interests
in ``a security (a) issued by a trust that holds (1) a specified
commodity deposited with the trust, or (2) a specified commodity and,
in addition to such specified commodity, cash; (b) that is issued by
such trust in a specified aggregate minimum number in return for a
deposit of a quantity of the underlying commodity and/or cash; and (c)
that, when aggregated in the same specified minimum number, may be
redeemed at a holder's request by such trust which will deliver to the
redeeming holder the quantity of the underlying commodity and/or cash
(`Commodity-Based Trust Share').'' \10\
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\9\ See Notices, supra note 4. See also proposed NYSE American
Rule 915, Commentary .10 and Rule 916, Commentary .11; proposed NYSE
Arca Rule 5.3-O(g), Commentary .10 and Rule 5.4-O, Commentary .02.
\10\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12378. See also proposed NYSE American Rule
915, Commentary .10; proposed NYSE Arca Rule 5.3-O(g), Commentary
.10.
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As a result of these proposed rule changes, the Exchanges' listing
criteria would allow any exchange traded fund (``ETF'') approved to
list on the primary market as a Commodity-Based Trust Share to qualify
as an underlying for options traded on the Exchanges, provided other
listing criteria have been met, without requiring additional approvals
from the Commission.\11\ The Exchanges state that offering options on
Commodity-Based Trust Shares provides investors with the ability to
hedge exposure to the underlying security.\12\ Additionally, the
Exchanges state that options on a Commodity-Based Trust Share provide
investors with the ability to transact in such options in a listed
market environment, which would increase market transparency and
enhance the process of price discovery conducted on the Exchanges
through increased order flow to the benefit of all investors.\13\
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\11\ See NYSE American Notice, supra note 4, at 12192; NYSE Arca
Notice, supra note 4, at 12380.
\12\ See id.
\13\ See id.
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The Exchanges state that options on a Commodity-Based Trust Share
will trade in the same manner as options on other ETFs on the
Exchanges.\14\ The Exchanges' rules that currently apply to the listing
and trading of all options on ETFs on each Exchange, including, for
example, rules that govern listing
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criteria,\15\ including continued listing standards,\16\
expirations,\17\ exercise/strike prices,\18\ minimum increments,\19\
position and exercise limits,\20\ margin requirements,\21\ customer
accounts,\22\ and trading halt procedures \23\ would apply to the
listing and trading of options on a Commodity-Based Trust Share on the
Exchanges in the same manner as they apply to other options on all
other ETFs that are listed and traded on the Exchanges.
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\14\ See id.
\15\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12378. See also NYSE American Rule 915;
NYSE Arca Rule 5.3-O.
\16\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12378. See also NYSE American Rule 916,
Commentary .07; NYSE Arca Rule 5.4-O(k). The Exchanges state
Commodity-Based Trust Shares will not be deemed to meet the
requirements for continued approval, and the Exchanges shall not
open for trading any additional series of option contracts covering
Commodity-Based Trust Shares if such security ceases to be an ``NMS
stock'' as provided for in NYSE American Rule 916 or NYSE Arca Rule
5.4-O(b)(5) or if the Commodity-Based Trust Share is halted from
trading on its primary market. See NYSE American Notice, supra note
4, at 12190; NYSE Arca Notice, supra note 4, at 12378.
\17\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12379. The Exchanges state that the
Exchanges would open at least one expiration month for options on a
Commodity-Based Trust Share and may also list series of options on a
Commodity-Based Trust Share for trading on a weekly, monthly, or
quarterly basis. Id. The Exchanges state that they may also list
long-term equity option series (``LEAPS'') that expire from twelve
to thirty-nine months from the time they are listed. Id.
\18\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12379.
\19\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12379. See also NYSE American Rules 903 and
960NY; NYSE Arca Rules 6.4-O and 6.72-O.
\20\ See NYSE American Notice, supra note 4, at 12191; NYSE Arca
Notice, supra note 4, at 12379. The Exchanges state that position
and exercise limits for options on ETFs vary according to the number
of outstanding shares and the trading volumes of the underlying
security over the past six months, where the largest in
capitalization and the most frequently traded funds have an option
position and exercise limit of 250,000 contracts (with adjustments
for splits, re-capitalizations, etc.) on the same side of the
market; and smaller capitalization funds have position and exercise
limits of 200,000, 75,000, 50,000 or 25,000 contracts (with
adjustments for splits, re-capitalizations, etc.) on the same side
of the market. Id.
\21\ See NYSE American Notice, supra note 4, at 12191; NYSE Arca
Notice, supra note 4, at 12379. See also NYSE American Rule 462;
NYSE Arca Rule 4.16-O.
\22\ See NYSE American Notice, supra note 4, at 12191; NYSE Arca
Notice, supra note 4, at 12379.
\23\ See id.
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In addition, the Exchanges state the surveillance procedures
applicable to all other options on ETFs will apply to options on
Commodity-Based Trust Shares.\24\ The Exchanges also state that they
have analyzed their capacity and state that the Exchanges and the
Options Price Reporting Authority (``OPRA'') have the necessary systems
capacity to handle the additional traffic associated with the listing
of new series of ETFs, including options on a Commodity-Based Trust
Share, up to the number of expirations currently permissible under the
Exchange Rules.\25\ The Exchanges state that they may obtain trading
information via the Intermarket Surveillance Group (``ISG'') from other
exchanges who are members of the ISG and that the Exchanges have a
Regulatory Services Agreement with the Financial Industry Regulatory
Authority.\26\ The Exchanges state that they have not identified any
issues with the continued listing and trading of any ETF options,
including ETFs that hold commodities (i.e., precious metals) that they
currently list and trade.\27\
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\24\ See NYSE American Notice, supra note 4, at 12190; NYSE Arca
Notice, supra note 4, at 12379.
\25\ See NYSE American Notice, supra note 4, at 12191; NYSE Arca
Notice, supra note 4, at 12379.
\26\ See NYSE American Notice, supra note 4, at 12191; NYSE Arca
Notice, supra note 4, at 12379.
\27\ See NYSE American Notice, supra note 4, at 12192; NYSE Arca
Notice, supra note 4, at 12380.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEAMER-2025-07 and NYSEARCA-2025-16 and Grounds for Disapproval Under
Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \28\ to determine whether the proposed rule
changes should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule changes. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule changes.
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\28\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\29\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule changes' consistency with Section 6(b)(5)
of the Act,\30\ which requires, among other things, that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and protect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
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\29\ See id.
\30\ 15 U.S.C. 78f(b)(5).
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Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the [Act]
and the rules and regulations issued thereunder . . . is on the self-
regulatory organization that proposed the rule change.'' \31\ The
description of a proposed rule change, its purpose and operation, its
effect, and a legal analysis of its consistency with applicable
requirements must all be sufficiently detailed and specific to support
an affirmative Commission finding,\32\ and any failure of a self-
regulatory organization to provide this information may result in the
Commission not having a sufficient basis to make an affirmative finding
that a proposed rule change is consistent with the Act and the
applicable rules and regulations.\33\ The Commission is instituting
proceedings to allow for additional consideration and comment on the
issues raised herein, including as to whether the proposals are
consistent with the Act. In particular, the Commission asks commenters
to address the potential market impacts of allowing the listing and
trading of options on Commodity-Based Trust Shares.
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\31\ 17 CFR 201.700(b)(3).
\32\ See id.
\33\ See id.
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposals. In particular, the Commission invites the written
views of interested persons concerning whether the proposals are
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4 under the Act,\34\ any
request for an opportunity to make an oral presentation.\35\
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\34\ 17 CFR 240.19b-4.
\35\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule changes should be
approved or disapproved by July 8, 2025. Any person who wishes to file
a rebuttal to any other person's submission must file that rebuttal by
July 22, 2025.
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#a4d6d1c8c189c7cbc9c9c1cad0d7e4d7c1c78ac3cbd2"><span class="__cf_email__" data-cfemail="cfbdbaa3aae2aca0a2a2aaa1bbbc8fbcaaace1a8a0b9">[email protected]</span></a>. Please include
file numbers SR-NYSEAMER-2025-07 and NYSEARCA-2025-16 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 numbers SR-NYSEAMER-2025-07 and
NYSEARCA-2025-16. These file numbers 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
changes that are filed with the Commission, and all written
communications relating to the proposed rule changes 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
filings 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 numbers
SR-NYSEAMER-2025-07 and NYSEARCA-2025-16 and should be submitted on or
before July 8, 2025. Rebuttal comments should be submitted by July 22,
2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(57).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-11096 Filed 6-16-25; 8:45 am]
BILLING CODE 8011-01-P
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