Notice2025-14545
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Rules Regarding Position and Exercise Limits for Options on the Grayscale Bitcoin Mini Trust (“BTC”) and the Bitwise Bitcoin ETF (“BITB”) and To Permit Flexible Exchange Options on BTC and BITB
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
August 1, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 146 (Friday, August 1, 2025)</title>
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[Federal Register Volume 90, Number 146 (Friday, August 1, 2025)]
[Notices]
[Pages 36238-36242]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-14545]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103568; File No. SR-NYSEARCA-2025-10]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 2, To Amend Rules
Regarding Position and Exercise Limits for Options on the Grayscale
Bitcoin Mini Trust (``BTC'') and the Bitwise Bitcoin ETF (``BITB'') and
To Permit Flexible Exchange Options on BTC and BITB
July 29, 2025.
I. Introduction
On February 3, 2025, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') 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\ a
proposed rule change to amend the position and exercise limits for
options on the Grayscale Bitcoin Mini Trust ETF (``BTC'') and the
Bitwise Bitcoin ETF (``BITB'') (each a ``Fund'' and, together, the
``Funds'') and to permit options on the Funds to trade as Flexible
Exchange (``FLEX'') Equity Options (``FLEX Fund options'').\3\ On
February 14, 2025, the Exchange filed Amendment No. 1 to the proposed
rule change.\4\ The proposed rule change, as modified by Amendment No.
1, was published for comment in the Federal Register on February 24,
2025.\5\ On March 12, 2025, pursuant to Section 19(b)(2) of the Act,\6\
the Commission designated a longer period within which to approve the
proposal, disapprove the proposal, or institute proceedings to
determine whether to disapprove the proposal.\7\ On April 28, 2025, the
Exchange filed Amendment No. 2 to the proposal, which supersedes and
replaces the original filing in its entirety.\8\ On May 23, 2025, the
Commission published notice of Amendment No. 2 and instituted
proceedings under Section 19(b)(2)(B) of the Act \9\ to determine
whether to approve or disapprove the proposal, as modified by Amendment
No. 2.\10\ The Commission received no comments regarding the proposal.
This order approves the proposal, as modified by Amendment No. 2.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The Exchange's initial proposal refers to the ``Grayscale
Bitcoin Mini Trust BTC (`BTC')'' and the ``Bitwise Bitcoin ETF
(`BITB').'' Amendment No. 2 to the proposal, which supersedes and
replaces the original filing in its entirety, refers to the
``Grayscale Bitcoin Mini Trust ETF (`BTC')'' and the ``Bitwise
Bitcoin ETF (`BITB').'' The Exchange's rules use the term
``exchange-traded fund'' to refer to several types of investment
products. See Exchange Rule 5.3-O(g). BTC and BITB are not
registered nor subject to regulation under the Investment Company
Act of 1940. See Amendment No. 4 to Form S-1 for BTC, dated July 26,
2024, available at <a href="https://www.sec.gov/Archives/edgar/data/2015034/000119312524186494/d785023ds1a.htm">https://www.sec.gov/Archives/edgar/data/2015034/000119312524186494/d785023ds1a.htm</a>; Pre-Effective Amendment No. 1 to
Form S-3 for BITB, dated June 23, 2025, available at <a href="https://www.sec.gov/Archives/edgar/data/1763415/000121390025056635/ea0246384-s3a1_bitwise.htm">https://www.sec.gov/Archives/edgar/data/1763415/000121390025056635/ea0246384-s3a1_bitwise.htm</a>.
\4\ Amendment No. 1 revised the proposal to correct rule marking
errors in Exhibit 5 of the proposal.
\5\ See Securities Exchange Act Release No. 102441 (Feb. 18,
2025), 90 FR 10518 (Feb. 24, 2025).
\6\ 15 U.S.C. 78s(b)(2).
\7\ See Securities Exchange Act Release No. 102630 (Mar. 12,
2025), 90 FR 12614 (Mar. 18, 2025). The Commission designated May
25, 2025, as the date by which the Commission shall approve or
disapprove, or institute proceedings to determine whether to approve
or disapprove, the proposed rule change.
\8\ Amendment No. 2 revises the proposal to: make clear that by
removing the current 25,000 contract position limits for BTC and
BITB in Exchange Rule 6.8-O, Commentary .06(f), BTC and BITB will be
subject to the position limits in Exchange Rule 6.8-O, Commentary
.06(a)-(e) that apply to other equity options; make clear any FLEX
and non-FLEX positions in the same underlying Fund must be
aggregated for purposes of calculating the position and exercise
limits; indicate that, under Exchange Rule 6.9-O, exercise limits
for options on an underlying security are the same as the position
limits for options on that underlying; state that the Exchange would
be able to obtain information regarding trading in shares of BTC and
BITB (rather than ``trading activity in the pertinent underlying
securities'') on other exchanges through the Intermarket
Surveillance Group; revise the analysis supporting the proposed
position and exercise limits; and make a technical change to replace
rule text references to ``the Grayscale Bitcoin Mini Trust BTC'' and
``the Bitwise Bitcoin ETF'' with their respective ticker symbols
(i.e., BTC and BITB).
\9\ 15 U.S.C. 78s(b)(2)(B).
\10\ See Securities Exchange Act Release No. 103068 (May 19,
2025), 90 FR 22132 (May 23, 2025) (``Notice and Order Instituting
Proceedings'').
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II. Description of the Proposed Rule Change, as Modified by Amendment
No. 2
As described more fully in the Notice and Order Instituting
Proceedings, the Exchange proposes to amend its rules to provide for
the trading of FLEX Fund options and to apply the position limits in
Exchange Rule 6.8-O, Commentary .06(a)-(e) to options on the Funds.\11\
[[Page 36239]]
Under Exchange Rule 6.9-O, Commentary .01, the exercise limits for
options on an underlying security are the same as the position limits
for options on that security.\12\
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\11\ Exchange Rule 6.8-O establishes a position limit of 250,000
contracts on the same side of the market for options on an
underlying stock or ETF that had trading volume of at least
100,000,000 shares during the most recent six-month trading period
or that had trading volume of at least 75,000,000 shares during the
most recent six-month trading period and has at least 300,000,000
shares currently outstanding; 200,000 contracts on the same side of
the market for options on an underlying stock or ETF that had
trading volume of at least 80,000,000 shares during the most recent
six-month trading period or that had trading volume of at least
60,000,000 shares during the most recent six-month trading period
and has at least 240,000,000 shares currently outstanding; 75,000
contracts on the same side of the market for options on an
underlying stock or ETF that had trading volume of at least
40,000,000 shares during the most recent six-month trading period or
that had trading volume of at least 30,000,000 shares during the
most recent six-month trading period and has at least 120,000,000
shares currently outstanding; 50,000 contracts on the same side of
the market for options on an underlying stock or ETF that had
trading volume of at least 20,000,000 shares during the most recent
six-month trading period or trading volume of at least 15,000,000
shares during the most recent six-month trading period and at least
40,000,000 shares currently outstanding; and 25,000 contracts on the
same side of the market for options on an underlying stock or ETF
that does not satisfy the criteria for a higher limit.
\12\ See Exchange Rule 6.9-O, Commentary .01 and Notice and
Order Instituting Proceedings, 90 FR at 22133, footnote 15.
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Position and Exercise Limits
The Exchange proposes to eliminate the current 25,000-contract
position limit in Exchange Rule 6.8-O, Commentary .06(f) for options on
the Funds and to apply to options on the Funds the position and
exercise limits that apply to other equity options, i.e., the position
and exercise limits in Exchange Rules 6.8-O, Commentary .06(a)-(e) and
6.9-O.\13\ Under Exchange Rule 6.8-O, Commentary .06(e), position
limits for options on the Funds would be subject to six-month reviews
to determine future position and exercise limits.\14\ The Exchange
states that options on the Funds qualify for the 250,000-contract limit
in Exchange Rule 6.8-O Commentary .06(e)(i), which requires that
trading volume for the underlying security in the most recent six
months be at least 100,000,000 shares.\15\
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\13\ See Notice and Order Instituting Proceedings, 90 FR at
22132, footnote 9.
\14\ See id., 90 FR at 22134, footnote 35. Exchange Rule 6.8-O,
Commentary .06(e) states that the Exchange will review the volume
and outstanding share information on all underlying stocks and ETF
shares on which options are traded on the Exchange every six months
to determine which limit will apply.
\15\ See Notice and Order Instituting Proceedings, 90 FR at
22133. See also footnote 11 supra.
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The Exchange states that the reporting requirement for options on
the Funds will remain unchanged and that the Exchange will continue to
require each member that maintains positions in options on the Funds,
on the same side of the market, for its own account or for the account
of a customer, to report certain information to the Exchange, including
the options positions, whether such positions are hedged and, if so, a
description of the hedge(s).\16\ In addition, the Exchange states that
its requirement that members file reports with the Exchange for any
customer who held aggregate large long or short positions on the same
side of the market of 200 or more option contracts of any single class
for the previous day will remain at this level.\17\
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\16\ See Notice and Order Instituting Proceedings at 22135.
\17\ See id.
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FLEX Fund Options
The Exchange proposes to permit the trading of FLEX Fund options.
The Exchange states that FLEX options on ETFs are currently traded in
the over-the-counter (``OTC'') market by a variety of market
participants, including hedge funds, proprietary trading firms, and
pension funds.\18\ The Exchange states that its market for FLEX Fund
options would be more transparent than the OTC market for such options,
and that FLEX Fund options traded on the Exchange present less counter-
party credit risk because they would be issued and guaranteed by the
Options Clearing Corporation (``OCC'').\19\
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\18\ See id.
\19\ See id.
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Under the proposal, positions in FLEX options on each Fund will be
aggregated with positions in non-FLEX options in the same underlying
Fund for the purpose of calculating position and exercise limits for
options on each Fund.\20\ For example, the Exchange states that,
assuming a 250,000-contract position limit for options on BTC, the
Exchange ``would restrict a market participant from holding positions
that could result in the receipt of more than 250,000,000 [sic] shares
of BTC (if that market participant exercised all its BTC options).''
\21\
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\20\ See proposed Exchange Rule 5.35-O(b)(iii). Under Exchange
Rule 6.9-O, exercise limits for options on the Funds will be the
same as the position limits on the Funds. See Exchange Rule 6.9-O
and Notice and Order Instituting Proceedings, 90 FR at 22133,
footnote 15.
\21\ See Notice and Order Instituting Proceedings, 90 FR at
22135. A position of 250,000 BTC options would represent 25,000,000
shares of BTC.
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The Exchange states that it has analyzed its capacity and
represents that it and the Options Price Reporting Authority have the
necessary systems capacity to handle the additional traffic associated
with the listing of FLEX Fund options.\22\ In addition, the Exchange
states that it believes that OTP Holders will not have a capacity issue
as a result of the proposal.\23\ The Exchange further states that it
will monitor the trading volume associated with the additional options
series listed as a result of this proposal and the effect (if any) of
these additional series on market fragmentation and on the capacity of
the Exchange's automated systems.\24\ The Exchange states that the same
surveillance procedures applicable to other options products listed and
traded on the Exchange, including non-FLEX Fund options, will apply to
FLEX Fund options, and that FLEX options products (and their respective
symbols) are integrated into the Exchange's existing surveillance
system architecture and are thus subject to the relevant surveillance
processes.\25\ The Exchange further states that its market surveillance
staff (including staff of the Financial Industry Regulatory Authority,
Inc. (``FINRA''), who perform surveillance and investigative work on
behalf of the Exchange pursuant to a regulatory services agreement),
conducts surveillances with respect to BTC and BITB (the underlying
ETFs) and, as appropriate, would review activity in BTC and BITB when
conducting surveillances for market abuse or manipulation in the FLEX
Fund options.\26\ In addition, the Exchange states that it is a member
of the Intermarket Surveillance Group (``ISG'').\27\ The Exchange
states that ISG members work together to coordinate surveillance and
investigative information sharing in the stock, options, and futures
markets.\28\ The Exchange states that, in addition to the surveillance
that is conducted by the Exchange's market surveillance staff, the
Exchange would also be able to obtain information regarding trading in
shares of BTC and BITB on other exchanges through ISG.\29\ The Exchange
does not believe that allowing FLEX Fund options would render the
marketplace for non-FLEX Fund options, or equity options in general,
more susceptible to manipulative practices.\30\ The Exchange represents
that its existing trading surveillances are adequate to monitor the
trading in BITC and BITB as well as any subsequent trading of FLEX Fund
options on the Exchange.\31\ The Exchange states that it has a
regulatory services agreement with FINRA, pursuant to which FINRA
conducts certain surveillances on behalf of the Exchange.\32\ The
Exchange further states that, pursuant to a multi-party 17d-2 joint
plan, all options exchanges allocate regulatory responsibilities to
[[Page 36240]]
FINRA to conduct certain options-related market surveillances.\33\ In
addition, the Exchange states that it will implement any additional
surveillance procedures it deems necessary to effectively monitor the
trading of BTC and BITB options.\34\
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\22\ See id. at 22136.
\23\ See id.
\24\ See id.
\25\ See id.
\26\ See id.
\27\ See id.
\28\ See id.
\29\ See id.
\30\ See id.
\31\ See id.
\32\ See id.
\33\ See id.
\34\ See id.
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III. Discussion and Commission Findings
After careful consideration, the Commission finds that the proposed
rule change, as modified by Amendment No. 2, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange,\35\ and, in particular,
the requirements of Section 6 of the Act.\36\ Specifically, the
Commission finds that the proposed rule change, as modified by
Amendment No. 2, is consistent with Section 6(b)(5) of the Act,\37\
which requires, among other things, that an exchange have rules
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest.
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\35\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C.78c(f).
\36\ 15 U.S.C. 78f.
\37\ 15 U.S.C. 78f(b)(5).
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A. Position and Exercise Limits
Position and exercise limits serve as a regulatory tool designed to
deter manipulative schemes and adverse market impact surrounding the
use of options. Since the inception of standardized options trading,
the options exchanges have had rules limiting the aggregate number of
options contracts that a member or customer may hold or exercise.
Options position and exercise limits are intended to prevent the
establishment of options positions that can be used or might create
incentives to manipulate or disrupt the underlying market to benefit
the options position.\38\ In addition, such limits serve to reduce the
possibility of disruption in the options market itself, especially in
illiquid classes.\39\ As the Commission has previously recognized,
markets with active and deep trading interest, as well as with broad
public ownership, are more difficult to manipulate or disrupt than less
active and deep markets with smaller public floats.\40\ The Commission
also has recognized that position and exercise limits must be
sufficient to prevent investors from disrupting the market for the
underlying security by acquiring and exercising a number of options
contracts disproportionate to the deliverable supply and average
trading volume of the underlying security.\41\ At the same time, the
Commission has recognized that limits must not be established at levels
that are so low as to discourage participation in the options market by
institutions and other investors with substantial hedging needs or to
prevent specialists and market-makers from adequately meeting their
obligations to maintain a fair and orderly market.\42\
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\38\ See Securities Exchange Act Release No. 39489 (Dec. 24,
1997), 63 FR 276, 279 (Jan. 5., 1998) (order approving File No. SR-
Cboe-97-11) (``Position Limit Order'').
\39\ Id.
\40\ Id.
\41\ See, e.g., Securities Exchange Act Release Nos. 21907 (Mar.
29, 1985), 50 FR 13440, 13441 (Apr. 4, 1985) (order approving File
Nos. SR-CBOE-84-21, SR-Amex-84-30, SR-Phlx-84-25, and SR-PSE-85-1);
and 40875 (Dec. 31, 1998), 64 FR 1842, 1843 (Jan. 12, 1999) (order
approving File Nos. SR-CBOE-98-25; Amex-98-22; PCX-98-33; and Phlx-
98-36).
\42\ See id.
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The Exchange proposes to eliminate the current 25,000-contract
position and exercise limit for options on the Funds and to apply the
position limits in Exchange Rule 6.8-O, Commentary .06(a)-(e) to
options on the Funds.\43\ Under Exchange Rule 6.8-O, Commentary .06(a)-
(e) position limits are based either on the trading volume of the
underlying stock or ETF over the previous six months, or on the trading
volume of the underlying stock or ETF over the previous six months and
the outstanding shares of the underlying stock or ETF.\44\ Position
limits for options on the Funds would be subject to subsequent six-
month reviews to determine future position and exercise limits.\45\ The
Exchange states that options on each of the Funds qualify for the
250,000-contract limit in Exchange Rule 6.8-O, Commentary .06(e)(i),
which requires that the most recent six-month trading volume for the
underlying security be at least 100,000,000 shares.\46\ The Exchange
states that, as of November 25, 2024, the most recent six-month trading
volume for BTC and BITB was 163,712,700 shares and 288,800,860 shares,
respectively.\47\
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\43\ As noted above, exercise limits for options on an
underlying security are the same as the position limits for options
on that underlying security. See Exchange Rule 6.9-O, Commentary
.01.
\44\ See supra footnote 11.
\45\ See Notice and Order Instituting Proceedings, 90 FR at
22134 and Exchange Rule 6.8-O, Commentary .06(e) (providing that,
every six months, the Exchange will review the volume and
outstanding share information on all underlying ETFs on which
options are traded to determine applicable position limits). See
also Rule 6.9-O (providing that exercise limits for options on an
underlying will be the same as the position limits for such
underlying).
\46\ See Notice and Order Instituting Proceedings, 90 FR at
22133.
\47\ See id.
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The Exchange provided data and analysis supporting the proposed
position and exercise limits. The Exchange states that, as of November
25, 2024, BTC had 82,939,964 shares outstanding, market capitalization
of $3,496,748,882, and average daily volume (``ADV'') for the preceding
three months of 2,036,369 shares.\48\ During this same period, BITB had
79,950,100 shares outstanding, market capitalization of $4,095,157,000,
and ADV for the preceding three months of 2,480,478 shares.\49\ The
Exchange states that options on the Funds should be subject to the
250,000-contract limit because ``the significant liquidity present in
each Fund mitigates against the potential for manipulation.'' \50\
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\48\ See id.
\49\ See id.
\50\ Id. at 22135.
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The Exchange also compared the size of the position and exercise
limits to the market capitalization of the bitcoin market, which,
according to the Exchange, had a market capitalization greater than
$1.876 trillion as of November 25, 2024.\51\ The Exchange calculated
that, as of November 25, 2024, a position of 250,000 contracts (which
represents 25,000,000 shares of the underlying Fund) in options on BTC
or BITB would represent 0.06% or 0.07%, respectively, of all bitcoin
outstanding.\52\ The Exchange states that if a 250,000-contract option
position in either Fund were exercised, it ``would have a virtually
unnoticed impact on the entire bitcoin market,'' and, further, that
``[t]his analysis demonstrates that a 250,000-contract position (and
exercise) limit for options on each Fund would be appropriate given the
liquidity of BTC and BITB.'' \53\ The Exchange also states that, as of
November 25, 2024, a position limit of 250,000 contracts would
represent 30.14% of the outstanding shares of BTC and 31.27% of the
outstanding shares of BITB.\54\
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\51\ See id. at 22133.
\52\ See id. at 22134.
\53\ Id. at 22134.
\54\ See id. at 22133.
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The Commission finds that the proposed position and exercise limits
are consistent with the Act, and in particular, with the requirements
in Section 6(b)(5) that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest. As discussed above, the
Commission
[[Page 36241]]
has recognized that position and exercise limits must be sufficient to
prevent investors from disrupting the market for the underlying
security by acquiring and exercising a number of option contracts
disproportionate to the deliverable supply and average trading volume
of the underlying security.\55\ In addition, the Commission has stated
previously that rules regarding position and exercise limits are
intended to prevent the establishment of options positions that can be
used or might create incentives to manipulate or disrupt the underlying
market so as to benefit the options position.\56\ Based on its review
of the data and analysis provided by the Exchange, the Commission
concludes that the proposed position and exercise limits satisfy these
objectives. Specifically, the Commission has considered and reviewed
the Exchange's analysis that, as of November 25, 2024, a position limit
of 250,000 contracts would represent 30.14% of the outstanding shares
of BTC and 31.27% of the outstanding shares of BITB.\57\ The Commission
also has considered and reviewed the Exchange's statements that, as of
November 25, 2024, BTC had 82,939,964 shares outstanding, market
capitalization of $3,496,748,882, and ADV for the preceding three
months of 2,036,369 shares.\58\ As of November 25, 2024, BITB had
79,950,100 shares outstanding, market capitalization of $4,095,157,000,
and ADV for the preceding three months of 2,480,478 shares.\59\ The
Commission further considered and reviewed the Exchange's statement
that for the six-month period ending on November 25, 2024, the trading
volume for BTC and BITB was 163,712,700 shares and 288,800,860,
respectively.\60\
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\55\ See supra note 41 and accompanying text.
\56\ See Securities Exchange Act Release No. 57352 (Feb.19,
2008), 73 FR 10076, 10080 (Feb. 25, 2008) (order approving File No.
SR-Cboe-2008-07).
\57\ See Notice and Order Instituting Proceedings, 90 FR at
22134.
\58\ See id. at 22133, footnote 28 and accompanying text.
\59\ See id. at 22133, footnote 29 and accompanying text.
\60\ See id. at 22133.
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Based on the Commission's review of this information and analysis,
the Commission concludes that the proposed position and exercise limits
are designed to prevent market participants from disrupting the market
for the underlying securities by acquiring and exercising a number of
options contracts disproportionate to the deliverable supply and
average trading volume of the underlying security, and to prevent the
establishment of options positions that can be used or might create
incentives to manipulate or disrupt the underlying market so as to
benefit the options position.
B. FLEX Fund Options
The proposed FLEX Fund options would permit the creation of
customized options on the FLEX Funds, which could help market
participants implement their hedging, risk management, and investment
strategies. In addition, the proposal will extend to the FLEX Fund
options the benefits of trading on the Exchange's options market,
including a centralized market center, an auction market with posted
transparent market quotations and transaction reporting, parameters and
procedures for clearance and settlement, and the guarantee of OCC for
all contracts traded on the Exchange.\61\
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\61\ See Securities Exchange Act Release No. 36841 (Feb. 14,
1996), 61 FR 6666, 6668 (Feb. 21, 1996) (File Nos. Cboe-95-43 and
PCX-95-24) (order approving proposals to provide for the listing and
trading of FLEX options on specified equity securities).
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The position and exercise limits described above will apply to the
FLEX Fund options and positions in FLEX and non-FLEX Fund Options will
be aggregated with positions in the same underlying Fund for purposes
of calculating position and exercise limits.\62\ The Commission finds
that the proposed position and exercise limits for FLEX Fund options
are consistent with the Act, and in particular, with the requirements
in Section 6(b)(5) that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest. By applying the position
and exercise limits for options on the Funds to the FLEX Fund options,
and by requiring the aggregation of positions in FLEX and non-FLEX
options in the respective Funds for position and exercise limit
purposes, the proposed position and exercise limits for FLEX Fund
options are designed to prevent investors from disrupting the market
for the underlying securities by acquiring and exercising a number of
options contracts disproportionate to the deliverable supply and
average trading volume of the underlying securities, and to prevent the
establishment of options positions that could be used or might create
incentives to manipulate or disrupt the underlying market so as to
benefit the options position.
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\62\ See proposed Exchange Rule 5.35-O(b)(iii).
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The Commission previously considered the surveillance procedures
that would apply to the FLEX Fund options when it approved the
Exchange's proposal to list and trade options on the FLEX Funds.\63\
The same surveillance procedures that apply to other options products
listed and traded on the Exchange, including non-FLEX Fund options,
will apply to FLEX Fund options, and the Exchange states that FLEX
options products (and their respective symbols) are integrated into the
Exchange's existing surveillance system architecture and thus are
subject to the relevant surveillance processes.\64\ The Exchange states
that it will implement any additional surveillance procedures it deems
necessary to effectively monitor the trading of the FLEX Fund
options.\65\ The Exchange further states that it is a member of ISG,
that ISG members work together to coordinate surveillance and
investigative information sharing in the stock, options, and futures
markets. In addition to the surveillance conducted by the Exchange's
market surveillance staff, the Exchange would be able to obtain
information regarding trading in shares of the FLEX Funds on other
exchanges through ISG.\66\ Further, in approving proposals to list
bitcoin-based exchange-traded products (``ETPs''), including the Funds,
the Commission found that there were sufficient means to prevent fraud
and manipulation of bitcoin-based ETPs.\67\ Together, these
surveillance procedures should allow the Exchange to investigate
suspected manipulations or other trading abuses in FLEX Fund options.
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\63\ See Securities Exchange Act Release No. 101386 (Oct. 18,
2024), 89 FR 84960, 84971 (Oct. 24, 2024).
\64\ See Notice and Order Instituting Proceedings, 90 FR at
22136.
\65\ See id.
\66\ See id.
\67\ See Securities Exchange Act Release Nos. 99306 (Jan. 10,
2024), 89 FR 3008 (Jan. 17, 2024); and 100610 (Jul. 26, 2024), 89 FR
62821 (Aug. 1, 2024).
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Accordingly, the Commission finds that the Exchange's surveillance
procedures for the FLEX Fund options are designed to prevent fraudulent
and manipulative acts and practices and to protect investors and the
public interest.
IV. Conclusion
For the reasons set forth above, the Commission finds that the
proposed rule change, as modified by Amendment No. 2, is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, the requirements of Section 6(b)(5) of the Act.\68\
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\68\ 15 U.S.C. 78f(b)(5).
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[[Page 36242]]
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\69\ that the proposed rule change (SR-NYSEARCA-2025-10), as
modified by Amendment No. 2, is approved.
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\69\ 15 U.S.C. 78s(b)(2).
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-14545 Filed 7-31-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on August 1, 2025.
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