Notice2025-15075
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.3
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 8, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 151 (Friday, August 8, 2025)</title>
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[Federal Register Volume 90, Number 151 (Friday, August 8, 2025)]
[Notices]
[Pages 38566-38575]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-15075]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103642; File No. SR-CboeEDGX-2025-065]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Rule 19.3
August 5, 2025.
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 August 4, 2024, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'')
proposes to amend Rule 19.3. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/options/regulation/rule_filings/edgx/">http://markets.cboe.com/us/options/regulation/rule_filings/edgx/</a>), and at the Exchange's Office of the Secretary.
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)(4) to allow the Exchange to list and trade options on
shares or other securities (``Fund Shares'') that are principally
traded on a national securities exchange and are defined as an ``NMS
stock'' under Rule 600 of Regulation NMS and that represent interests
in the VanEck Bitcoin ETF.\3\ Current Rule 19.3(i) provides that,
subject to certain other criteria set forth in that Rule, securities
deemed appropriate for options trading include Fund Shares that
represent certain types of interests,\4\ including interests in
[[Page 38567]]
certain specific trusts that hold financial instruments, money market
instruments, or precious metals (which are deemed commodities).
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\3\ See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008, 3009 (January 17, 2024) (SR-NYSEArca-2021-90; SR-
NYSEArca-2023-44; SR-NYSEArca-2023-58; SR-NASDAQ-2023-016; SR-
NASDAQ-2023-019; SR-CboeBZX-2023-028; SR-CboeBZX-2023-038; SR-
CboeBZX-2023-040; SR-CboeBZX-2023-042; SRCboeBZX-2023-044; and 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)
(``Bitcoin ETP Approval Order'').
\4\ See Rule 19.3(i) which permits options trading on Fund
Shares 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 or iShares
Silver Trust, the Aberdeen Standard Physical Silver Trust, the
Aberdeen Standard Physical Gold Trust, the Aberdeen Standard
Physical Palladium Trust, the Aberdeen Standard Physical Platinum
Trust, the Sprott Physical Gold Trust, the Goldman Sachs Physical
Gold ETF, the Fidelity Wise Origin Bitcoin Fund, the ARK 21Shares
Bitcoin ETF, the iShares Bitcoin Trust, the Grayscale Bitcoin Trust,
the Grayscale Bitcoin Mini Trust, the Bitwise Bitcoin ETF, the
Bitwise Ethereum ETF, the Grayscale Ethereum Trust, the Grayscale
Ethereum Mini Trust, the iShares Ethereum Trust, or the Fidelity
Ethereum Fund.
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The VanEck Bitcoin ETF is a Bitcoin-backed commodity exchange-
traded fund (``ETF'') structured as trusts. Similar to any Fund Share
currently deemed appropriate for options trading under Rule 19.3(i),
the investment objective of the VanEck Bitcoin ETF is for its shares to
reflect the performance of Bitcoin (less the expenses of the trust's
operations), offering investors an opportunity to gain exposure to
Bitcoin without the complexities of Bitcoin delivery. As is the case
for Fund Shares currently deemed appropriate for options trading, the
VanEck Bitcoin ETF represents units of fractional undivided beneficial
interest in the trust, the assets of which consist principally of
Bitcoin and are designed to track Bitcoin or the performance of the
price of Bitcoin and offer access to the Bitcoin market.\5\ The VanEck
Bitcoin ETF provides investors with a cost-efficient alternative that
allows a level of participation in the Bitcoin market through the
securities market. The primary substantive difference between the
VanEck Bitcoin ETF and Fund Shares currently deemed appropriate for
options trading are that Fund Shares may hold securities, certain
financial instruments, and specified precious metals (which are deemed
commodities), while the VanEck Bitcoin ETF holds Bitcoin (which is also
deemed a commodity).
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\5\ The trust may include minimal cash.
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The Exchange believes the VanEck Bitcoin ETF satisfies the
Exchange's initial listing standards for Fund Shares on which the
Exchange may list options. Specifically, the VanEck Bitcoin ETF
satisfies the initial listing standards set forth in Rule 19.3(i), as
is the case for other Fund Shares on which the Exchange lists options
(including trusts that hold commodities). Rule 19.3(i)(1) requires that
Fund Shares either (1) meet the criteria and standards set forth in
Rule 19.3(a) and (b),\6\ or (2) are 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
VanEck Bitcoin ETF satisfies Rule 19.3(i)(1)(B) as each is subject to
this creation and redemption process.
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\6\ Rule 19.3(a) and (b) sets forth the criteria an underlying
security must meet for the Exchange to be able to list options on
the underlying.
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While not required by the Rules for purposes of options listings,
the Exchange believes the VanEck Bitcoin ETF satisfies the criteria and
guidelines set forth in Rule 19.3(a) and (b). Pursuant to Rule 19.3(a),
a security (which includes a Fund Share) on which options may be listed
and traded on the Exchange must be registered with the Securities and
Exchange Commission (``Commission'') and be an NMS stock (as defined in
Rule 600 of Regulation NMS under the Securities Exchange Act of 1934,
as amended (the ``Act'')), and be characterized by a substantial number
of outstanding shares that are widely held and actively traded.\7\ The
VanEck Bitcoin ETF is an NMS Stock as defined in Rule 600 of Regulation
NMS under the Act.\8\ The Exchange believes the VanEck Bitcoin ETF is
characterized by a substantial number of outstanding shares that are
widely held and actively traded.
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\7\ The criteria and guidelines for a security to be considered
widely held and actively traded are set forth in Rule 19.3(b),
subject to exceptions.
\8\ An ``NMS stock'' means any NMS security other than an
option, and an ``NMS security'' means any security or class of
securities for which transaction reports are collected, processed,
and made available pursuant to an effective transaction reporting
plan (or an effective national market system plan for reporting
transaction in listed options). See 17 CFR 242.600(b)(64)
(definition of ``NMS security'') and (65) (definition of ``NMS
stock'').
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As of March 5, 2025, the VanEck Bitcoin ETF had the following
number of shares outstanding:
------------------------------------------------------------------------
Shares
Bitcoin fund outstanding
------------------------------------------------------------------------
VanEck Bitcoin ETF..................................... 49,900,000
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The VanEck Bitcoin ETF had significantly more than 7,000,000 shares
outstanding (approximately 7 times that amount), which is the minimum
number of shares of a corporate stock that the Exchange generally
requires to list options on that stock pursuant to Rule 19.3(b). The
Exchange believes this demonstrates that the VanEck Bitcoin ETF is
characterized by a substantial number of outstanding shares.
Further, the below table contains information regarding the number
of beneficial holders of the VanEck Bitcoin ETF as of the specified
dates:
------------------------------------------------------------------------
Beneficial
Bitcoin fund holders Date
------------------------------------------------------------------------
VanEck Bitcoin ETF.................... 32,469 1/31/25
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As this table shows, the VanEck Bitcoin ETF has significantly more
than 2,000 beneficial holders (approximately 16 times more), which is
the minimum number of holders the Exchange generally requires for
corporate stock in order to list options on that stock pursuant to Rule
19.3(b). Therefore, the Exchange believes the shares of the VanEck
Bitcoin ETF are widely held.\9\
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\9\ The Exchange continues to believe assets under management
(``AUM''), rather than shares outstanding and number of holders, is
a better measure of investable capacity of ETFs and a more
appropriate figure for determining position and exercise limits of
ETFs and looks forward to further discussions with the Commission
staff on this topic.
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As of March 5, 2025, the total trading volume (by shares) for the
trust for the six-month period of September 5, 2024, through March 5,
2025, and the approximate average daily volume
[[Page 38568]]
(``ADV'') (in shares and notional) over the 30-day period of January
21, 2025, through March 5, 2025, for the VanEck Bitcoin ETF was as
follows:
----------------------------------------------------------------------------------------------------------------
6-Month trading 30-Day ADV 30-Day ADV
Bitcoin fund volume (shares) (shares) (notional $)
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF........................................ 133,275,448 794,677 39,163,513.72
----------------------------------------------------------------------------------------------------------------
As demonstrated above, as of March 5, 2025, the six-month trading
volume for the VanEck Bitcoin ETF as of that date was substantially
higher than 2,400,000 shares (approximately 55 times that amount),
which is the minimum 12-month volume the Exchange generally requires
for a corporate stock in order to list options on that security as set
forth in Rule 19.3(b). The Exchange believes this data demonstrates the
VanEck Bitcoin ETF is characterized as having shares that are actively
traded.
Options on the VanEck Bitcoin ETF will 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, 19.4(g) provides that Fund Shares that were initially
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 ceases to be an NMS
stock (see Rule 19.4(b)(4)). Additionally, the Exchange will not open
for trading any additional series of option contracts of the class
covering Fund Shares in any of the following circumstances: (1) in the
case of options covering Fund Shares approved for trading under Rule
19.3(i)(4)(A), in accordance with the terms of 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 Exchange makes further dealing in such options on
the Exchange inadvisable.
Options on the VanEck Bitcoin ETF will be physically settled
contracts with American-style exercise.\10\ Consistent with current
Rule 19.6, which governs the opening of options series on a specific
underlying security (including Fund Shares), the Exchange will open at
least one expiration month for options on the VanEck Bitcoin ETF \11\
at the commencement of trading on the Exchange and may also list series
of options on the VanEck Bitcoin ETF for trading on a weekly,\12\
monthly,\13\ or quarterly \14\ basis. The Exchange may also list long-
term equity option series (``LEAPS'') that expire from 12 to 39 months
from the time they are listed.\15\
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\10\ 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''); and Equity Options Product
Specifications January 3, 2024), available at Equity Options
Specifications (<a href="http://cboe.com">cboe.com</a>); 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).
\11\ See Rule 4.5(b). The monthly expirations are subject to
certain listing criteria for underlying securities described within
Rule 4.3. 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 Rule 4.5(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. 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.
\12\ See Rule 19.6, Interpretation and Policy .05.
\13\ See Rule 19.6, Interpretation and Policy .08.
\14\ See Rule 19.6, Interpretation and Policy .04.
\15\ See Rule 19.8.
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Pursuant to Rule 19.6, Interpretation and Policy .01, which governs
strike prices of series of options on Fund Shares, the interval of
strikes prices for series of options on the VanEck Bitcoin ETF will be
$1 or greater when the strike price is $200 or less and $5 or greater
where the strike price is over $200.\16\ Additionally, the Exchange may
list series of options pursuant to the $1 Strike Price Interval
Program,\17\ the $0.50 Strike Program,\18\ the $2.50 Strike Price
Program,\19\ and the $5 Strike Program.\20\ Pursuant to Rule 21.5,
where the price of a series of the VanEck Bitcoin ETF option 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.\21\ Any and all
new series of the VanEck Bitcoin ETF options that the Exchange lists
will be consistent and comply with the expirations, strike prices, and
minimum increments set forth in Rules 19.6 and 21.5, as applicable.
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\16\ The Exchange notes that for options listed pursuant to the
Short Term Option Series Program, the Monthly Options Series
Program, and the Quarterly Options Series Program, Rule 19.6,
Interpretations and Policies .05, .08, and .04 specifically sets
forth intervals between strike prices on Quarterly Options Series,
Short Term Option Series, and Monthly Options Series, respectively.
\17\ See Rule 19.6, Interpretation and Policy .02.
\18\ See Rule 19.6, Interpretation and Policy .06.
\19\ See Rule 19.6, Interpretation and Policy .03.
\20\ See Rule 19.6(d)(5).
\21\ If options on the VanEck Bitcoin ETF are eligible to
participate in the Penny Interval Program, the minimum increment
will be $0.01 for series with a price below $3.00 and $0.05 for
series with a price at or above $3.00. See 21.5(d) (which describes
the requirements for the Penny Interval Program).
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VanEck Bitcoin ETF options will trade in the same manner as any
other Fund Share options on the Exchange. The Exchange Rules that
currently apply to the listing and trading of all Fund Share options on
the Exchange, including, for example, Rules that govern listing
criteria, expirations, exercise prices, minimum increments, margin
requirements, customer accounts, and trading halt procedures will apply
to the listing and trading of VanEck Bitcoin ETF options 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 commodity Fund Shares already deemed appropriate
for options trading
[[Page 38569]]
on the Exchange pursuant to current Rule 19.3(i).
Pursuant to Rules 18.7 and 18.9, the position and exercise limits,
respectively, for the VanEck Bitcoin ETF option will be 25,000 same
side option contracts.\22\ The Exchange believes these proposed
position and exercise limits considering, among other things, the
approximate six-month average daily volume (``ADV'') and outstanding
shares of the VanEck Bitcoin ETF (which as discussed above demonstrate
that the VanEck Bitcoin ETF is widely held and actively traded and thus
justify these conservatively proposed position limits), as set forth
below, along with market capitalization (as of March 5, 2025):
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\22\ Rule 18.7(a)(1) provides that no Options Member shall make,
for any account in which it has any interest or for the account of
any Customer, an opening transaction on any exchange if the Options
Member has reason to believe that as a result of such transaction
the Options Member or its Customer would, acting alone or in concert
with others, directly or indirectly, exceed the applicable position
limit fixed by Cboe Exchange, Inc. (``Cboe Options''). Cboe Options
Rule 8.30, Interpretation and Policy .10 establishes a position
limit for the Bitcoin Fund options of 25,000.
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Market
Underlying Bitcoin Fund Six-month ADV Outstanding capitalization
(shares) shares ($)
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF......................................... 1,074,802 49,900,000 1,271,859,416
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The Exchange then compared the number of outstanding shares of the
VanEck Bitcoin ETF to those of other ETFs. The following table provides
the approximate average position (and exercise limit) of ETF options
with similar outstanding shares (as of March 5, 2025), compared to the
proposed position and exercise limit for the VanEck Bitcoin ETF
options:
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\23\ Over 90% of the ETFs used for comparison have a limit of at
least 200,000, and more than 75% have a limit of 250,000.
------------------------------------------------------------------------
Average limit
of other ETF Proposed limit
Underlying Bitcoin Fund options (contracts)
(contracts)
------------------------------------------------------------------------
VanEck Bitcoin ETF.................... \23\ 225,000 25,000
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The Exchange considered current position and exercise limits of
options on ETFs with outstanding shares comparable to those of the
VanEck Bitcoin ETF, with the proposed limit significantly lower
(between two and ten times lower) than the average limits of the
options on the other ETFs. As discussed above, the VanEck Bitcoin ETF
is actively held and widely traded (all statistics as of March 5, 2025)
because it: (1) had significantly more than 7,000,000 shares
outstanding, which is the minimum number of shares of a corporate stock
that the Exchange generally requires to list options on that stock
pursuant to Rule 19.3(b)(1); (2) the VanEck Bitcoin ETF (as of the
dates listed above) had significantly more than 2,000 beneficial
holders, which is the minimum number of holders the Exchange generally
requires for corporate stock in order to list options on that stock
pursuant to Rule 19.3(b)(2); and (3) the VanEck Bitcoin ETF had a six-
month trading volume substantially higher than 2,400,000 shares, which
is the minimum 12-month volume the Exchange generally requires for a
security in order to list options on that security as set forth in Rule
19.3(b)(4).
With respect to outstanding shares, if a market participant held
the maximum number of positions possible pursuant to the proposed
position and exercise limits, the equivalent shares represented by the
proposed position/exercise limit would represent the following
approximate percentage of current outstanding shares:
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Proposed position/
exercise limit Outstanding Percentage of
Underlying Bitcoin Fund (in equivalent shares outstanding
shares) shares
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VanEck Bitcoin ETF........................................ 2,500,000 49,900,000 5.01
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As this table demonstrates, if a market participant held the
maximum permissible options positions in VanEck Bitcoin ETF options and
exercised all of them at the same time, that market participant would
control a small percentage of the outstanding shares of the VanEck
Bitcoin ETF.
zCboe [sic] Options Rule 8.30, Interpretation and Policy .02 (which
governs position limits on the Exchange pursuant to Rule 18.7, provides
two methods of qualifying for a position limit tier above 25,000 option
contracts. The first method is based on six-month trading volume in the
underlying security, and the second method is based on slightly lower
six-month trading volume and number of shares outstanding in the
underlying security. An underlying stock or ETF that qualifies for
method two based on trading volume and number of shares outstanding
would be required to have the minimum number of outstanding shares as
shown in middle column of the table below.
The table, which provides the equivalent shares of the position
limits applicable to equity options, including ETFs, further represents
the percentages of the minimum number of outstanding shares that an
underlying stock or ETF must have to qualify for that position limit
(under the second method described above), all of which are higher
[[Page 38570]]
than the percentages for the VanEck Bitcoin ETF.\24\
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\24\ 6,300,000 is the minimum number of outstanding shares an
underlying security must have for the Exchange to continue to list
options on that security, so this would be the smallest number of
outstanding shares permissible for any corporate option that would
have a position limit of 25,000 contract. See Rule 19.4(b)(1). This
rule applies to corporate stock options but not ETF options, which
currently have no requirement regarding outstanding shares of the
underlying ETF for the Exchange to continue listing options on that
ETF. Therefore, there may be ETF options trading for which the
25,000 contract position limits represents an even larger percentage
of outstanding shares of the underlying ETF than set forth above.
------------------------------------------------------------------------
Minimum Percentage of
Position/exercise limit (in outstanding outstanding
equivalent shares) shares shares
------------------------------------------------------------------------
2,500,000............................. \25\ 6,300,000 40.0
5,000,000............................. 40,000,000 12.5
7,500,000............................. 120,000,000 6.3
20,000,000............................ 240,000,000 8.3
25,000,000............................ 300,000,000 8.3
------------------------------------------------------------------------
The equivalent shares represented by the proposed position and
exercise limits for the VanEck Bitcoin ETF as a percentage of
outstanding shares of the VanEck Bitcoin ETF is significantly lower
than the percentage for the lowest possible position limit for equity
options of 25,000 (under 6% compared to 40%) and is lower than that
percentage for each current position limit bucket.\26\
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\25\ This is the minimum number of outstanding shares an
underlying security must have for the Exchange to continue to list
options on that security, so this would be the smallest number of
outstanding shares permissible for any corporate option that would
have a position limit of 25,000 contract. See Rule 4.4,
Interpretation and Policy .01. This rule applies to corporate stock
options but not ETF options, which currently have no requirement
regarding outstanding shares of the underlying ETF for the Exchange
to continue listing options on that ETF. Therefore, there may be ETF
options trading for which the 25,000 contract position limits
represents an even larger percentage of outstanding shares of the
underlying ETF than set forth above.
\26\ As these percentages are based on the minimum number of
outstanding shares an underlying security must have to qualify for
the applicable position limit, these are the highest possible
percentages that would apply to any option subject to that position
and exercise limit.
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Further, the proposed position and exercise limits for the VanEck
Bitcoin ETF option are significantly below the limits that would
otherwise apply pursuant to current Rules 18.7 and 18.9 (by reference
to Cboe Rules 8.30 and 8.42). 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 market capitalization, average daily volume, and high number of
outstanding shares of the VanEck Bitcoin ETF.
All of the above information demonstrates that the proposed
position and exercise limits for the VanEck Bitcoin ETF options are
more than reasonable and appropriate. The trading volume, ADV, and
outstanding shares of the VanEck Bitcoin ETF demonstrate that these
funds are actively traded and widely held, and proposed position and
exercise limits are well below those of other ETFs with similar market
characteristics. The proposed position and exercise limits are the
lowest position and exercise limits available for equity options in the
industry, are extremely conservative, and are more than appropriate
given the VanEck Bitcoin ETF market capitalization, ADV, and high
number of outstanding shares.
Today, the Exchange has an adequate surveillance program in place
for options. Cboe intends to apply those same program procedures to
options on the VanEck Bitcoin ETF that it applies to the Exchange's
other options products.\27\ The Exchange's market surveillance staff
would have access to the surveillances conducted by Cboe BZX Exchange,
Inc.\28\ with respect to the VanEck Bitcoin ETF and would review
activity in the underlying the VanEck Bitcoin ETF when conducting
surveillances for market abuse or manipulation in the options on the
VanEck Bitcoin ETF. 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 information from
its affiliated markets, the Exchange would be able to obtain
information regarding trading in shares of the VanEck Bitcoin ETF from
their primary listing markets and from other markets that trades shares
of the VanEck Bitcoin ETF through ISG. In addition, the Exchange has a
Regulatory Services Agreement with the Financial Industry Regulatory
Authority (``FINRA'') for certain market surveillance, investigation
and examinations functions. Pursuant to a multi-party 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.\29\
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\27\ 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).
\28\ Cboe BZX Exchange, Inc. is an affiliate of the Exchange.
\29\ 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.
---------------------------------------------------------------------------
The underlying shares of spot bitcoin exchange-traded products
(``ETPs''), including the VanEck Bitcoin ETF, are also subject to
safeguards related to addressing market abuse and manipulation. As the
Commission stated in its order approving proposals of several exchanges
to list and trade shares of spot bitcoin-based ETPs, ``[e]ach 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.\30\ The Exchange states that, given the
consistently high correlation between the CME Bitcoin futures market
and the spot bitcoin
[[Page 38571]]
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].'' \31\ In light of surveillance
measures related to both options and futures as well as the underlying
VanEck Bitcoin ETF,\32\ 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 VanEck Bitcoin ETF. Further, the
Exchange will implement any new surveillance procedures it deems
necessary to effectively monitor the trading of options on the VanEck
Bitcoin ETF.
---------------------------------------------------------------------------
\30\ See Bitcoin ETP Approval Order.
\31\ See Bitcoin ETP Approval Order, 89 FR at 3010-11.
\32\ See Securities Exchange Act Release Nos. 99290 (January 8,
2024), 89 FR 2338, 2343, 2347-2348 (January 12, 2024) (SR-CboeBZX-
2023-044) Notice of Filing of Amendment No. 3 to a Proposed Rule
Change to List and Trade Shares of the Fidelity Wise Origin Bitcoin
Fund Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares); and
99288 (January 8, 2024), 89 FR 2387, 2392, 2399--2400 (January 12,
2024) (SR-CboeBZX-2023-028) (Notice of Filing of Amendment No. 5 to
a Proposed Rule Change To List and Trade Shares of the ARK 21Shares
Bitcoin ETF Under BZX Rule 14.11(e)(4), Commodity-Based Trust
Shares). See also Securities Exchange Act Release No. 99306 (January
10, 2024), 89 FR 3008, 3009 (January 17, 2024) (SR-NYSEArca-2021-90;
SR-NYSEArca-2023-44; SR-NYSEArca-2023-58; SR-NASDAQ-2023-016; SR-
NASDAQ-2023-019; SR-CboeBZX-2023-028; SR-CboeBZX-2023-038; SR-
CboeBZX-2023-040; SR-CboeBZX-2023-042; SRCboeBZX-2023-044; and 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)
(``Bitcoin ETP Approval Order'').
---------------------------------------------------------------------------
The Exchange has also analyzed its capacity and represents that it
believes the Exchange and 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 VanEck Bitcoin
ETF 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 VanEck Bitcoin ETF options will be manageable.
The Exchange believes that offering options on the VanEck Bitcoin
ETF will benefit investors by providing them with an additional,
relatively lower cost investing tool to gain exposure to the price of
Bitcoin and hedging vehicle to meet their investment needs in
connection with Bitcoin-related products and positions. The Exchange
expects investors will transact in options on the VanEck Bitcoin ETF in
the unregulated over-the-counter (``OTC'') options market,\33\ but may
prefer to trade such options in a listed environment to receive the
benefits of trading listing options, including (1) enhanced efficiency
in initiating and closing out positions; (2) increased market
transparency; and (3) heightened contra-party creditworthiness due to
the role of OCC as issuer and guarantor of all listed options. The
Exchange believes that listing VanEck Bitcoin ETF options may cause
investors to bring this liquidity to the Exchange, would increase
market transparency and enhance the process of price discovery
conducted on the Exchange through increased order flow. The Fund Shares
that hold financial instruments, money market instruments, or precious
metal commodities on which the Exchange may already list and trade
options are trusts structured in substantially the same manner as the
VanEck Bitcoin ETF and essentially offer the same objectives and
benefits to investors, just with respect to different assets. The
Exchange notes that it has not identified any issues with the continued
listing and trading of any Fund Share options, including Fund Shares
that hold commodities (i.e., precious metals) that it currently lists
and trades on the Exchange.
---------------------------------------------------------------------------
\33\ The Exchange understands from customers that investors have
historically transacted in options on Fund Shares in the OTC options
market if such options were not available for trading in a listed
environment.
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[[Page 38572]]
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.\34\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \35\ 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) \36\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\34\ 15 U.S.C. 78f(b).
\35\ 15 U.S.C. 78f(b)(5).
\36\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposal to list and
trade options on the VanEck Bitcoin ETF 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 VanEck Bitcoin ETF will provide investors with an opportunity to
realize the benefits of utilizing options on the VanEck Bitcoin ETF,
including cost efficiencies and increased hedging strategies. The
Exchange believes that offering VanEck Bitcoin ETF options will benefit
investors by providing them with a relatively lower-cost risk
management tool, which will allow them to manage their positions and
associated risk in their portfolios more easily in connection with
exposure to the price of Bitcoin and with Bitcoin-related products and
positions. Additionally, the Exchange's offering of VanEck Bitcoin ETF
options will provide investors with the ability to transact in such
options in a listed market environment as opposed to in the unregulated
OTC options market, which would increase market transparency and
enhance the process of price discovery conducted on the Exchange
through increased order flow to the benefit of all investors. The
Exchange also notes that it already lists options on other commodity-
based Fund Shares,\37\ which, as described above, are trusts structured
in substantially the same manner as the VanEck Bitcoin ETF and
essentially offer the same objectives and benefits to investors, just
with respect to a different commodity (i.e., Bitcoin rather than
precious metals) and for which the Exchange has not identified any
issues with the continued listing and trading of commodity-backed Fund
Share options it currently lists for trading.
---------------------------------------------------------------------------
\37\ See Rule 19.3(i)(4).
---------------------------------------------------------------------------
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
VanEck Bitcoin ETF satisfy the initial listing standards and continued
listing standards currently in the Exchange Rules applicable to options
on all Fund Shares, including Fund Shares that hold other commodities
already deemed appropriate for options trading on the Exchange.
Additionally, as demonstrated above, the VanEck Bitcoin ETF is
characterized by a substantial number of shares that are widely held
and actively traded. VanEck Bitcoin ETF options will trade in the same
manner as any other Fund Share options--the same Exchange Rules that
currently govern the listing and trading of all Fund Share options,
including permissible expirations, strike prices and minimum
increments, and applicable margin requirements, will govern the listing
and trading of options on the VanEck Bitcoin ETF in the same manner.
The Exchange believes the proposed position and exercise limits are
designed to prevent fraudulent and manipulative acts and practices and
promote just and equitable principles of trade, as they are designed to
address potential manipulative schemes and adverse market impacts
surrounding the use of options, such as disrupting the market in the
security underlying the options. The proposed position and exercise
limits are 25,000 contracts, which is the lowest limit applicable to
any equity options (including ETF and options on other Bitcoin
ETFs).\38\ The Exchange believes the proposed position and exercise
limits are extremely conservative for the VanEck Bitcoin ETF option
given the trading volume and outstanding shares for each. The
information above demonstrates that the average position and exercise
limits of options on ETFs with comparable outstanding shares and
trading volume to those of the VanEck Bitcoin ETF are significantly
higher than the proposed position and exercise limits for the VanEck
Bitcoin ETF options. Therefore, the proposed position and exercise
limits for the VanEck Bitcoin ETF options are conservative relative to
options on ETFs with comparable market characteristics.
---------------------------------------------------------------------------
\38\ See Cboe Options Rule 8.30.
\39\ See <a href="http://Blockchain.com">Blockchain.com</a> [verbar] Charts--Total Circulating
Bitcoin.
---------------------------------------------------------------------------
Further, given that the issuer of the VanEck Bitcoin ETF may create
and redeem shares that represent an interest in Bitcoin, the Exchange
believes it is relevant to compare the size of a position limit to the
market capitalization of the Bitcoin market. As of March 5, 2025, the
global supply of Bitcoin was 19,832,309, and the price of one Bitcoin
was approximately $90,608.57,\39\ which equates to a market
capitalization of approximately $1.797 trillion. Consider the proposed
position and exercise limit of 25,000 option contracts for the VanEck
Bitcoin ETF option. A position and exercise limit of 25,000 same side
contracts effectively restricts a market participant from holding
positions that could result in the receipt of no more than 2,500,000 of
VanEck Bitcoin ETF shares, as applicable (if that market participant
exercised all of its options). The following table shows the share
price of the VanEck Bitcoin ETF on March 5, 2025, the value of
2,500,000 shares of the VanEck Bitcoin ETF at that price, and the
approximate percentage of that value of the size of the Bitcoin market:
----------------------------------------------------------------------------------------------------------------
Value of
2,500,000
Bitcoin fund March 5, 2025 shares of Percentage of
share price ($) Bitcoin fund Bitcoin market
($)
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF........................................... 25.60 64,000,000 0.0035
----------------------------------------------------------------------------------------------------------------
[[Page 38573]]
Therefore, if a market participant with the maximum 25,000 same
side contracts in VanEck Bitcoin ETF options exercised all positions at
one time, such an event would have no practical impact on the Bitcoin
market.
The Exchange also believes the proposed limits are appropriate
given position limits for Bitcoin futures. For example, the Chicago
Mercantile Exchange (``CME'') imposes a position limit of 2,000 futures
(for the initial spot month) on its Bitcoin futures contract.\40\ On
March 5, 2025, CME Mar 25 Bitcoin Futures settled at $90,935. A
position of 2,000 CME Bitcoin futures, therefore, would have a notional
value of $909,350,000. The following table shows the share price of the
VanEck Bitcoin ETF on March 5, 2025, and the approximate number of
option contracts that equates to that notional value:
------------------------------------------------------------------------
Number of
Bitcoin fund March 5, 2025 option
share price ($) contracts
------------------------------------------------------------------------
VanEck Bitcoin ETF.................... 25.60 355,214
------------------------------------------------------------------------
The approximate number of option contracts for the VanEck Bitcoin
ETF that equate to the notional value of CME Bitcoin futures is
significantly higher than the proposed limit of 25,000 options contract
for the VanEck Bitcoin ETF option. The fact that many options
ultimately expire out-of-the-money and thus are not exercised for
shares of the underlying, while the delta of a Bitcoin Future is 1,
further demonstrates how conservative the proposed limits of 25,000
options contracts are for the VanEck Bitcoin ETF options.
The Exchange notes, 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).\41\ 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.\42\ 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 same side position limits
are more than appropriate for the VanEck Bitcoin ETF options.
---------------------------------------------------------------------------
\40\ See CME Rulebook Chapter 350 (description of CME Bitcoin
Futures) and Chapter 5, Position Limit, Position Accountability and
Reportable Level Table in the Interpretations & Special Notices.
Each CME Bitcoin futures contract is valued at five Bitcoins as
defined by the CME CF Bitcoin Reference Rate (``BRR''). See CME Rule
35001.
\41\ See CME Rulebook Chapter 5, Position Limit, Position
Accountability and Reportable Level Table in the Interpretations &
Special Notices.
\42\ Id.
---------------------------------------------------------------------------
The Exchange believes the proposed position and exercise limits in
this proposal will have no material impact to the supply of Bitcoin.
For example, consider again the proposed position limit of 25,000
option contracts for the VanEck Bitcoin ETF option. As noted above, a
position limit of 25,000 same side contracts effectively restricts a
market participant from holding positions that could result in the
receipt of no more than 2,500,000 shares of the applicable VanEck
Bitcoin ETF (if that market participant exercised all its options). As
of March 5, 2025, the VanEck Bitcoin ETF had the number of shares
outstanding set forth in the table below. The table below also sets
forth the approximate number of market participants that could hold the
maximum of 25,000 same side positions in the VanEck Bitcoin ETF that
would equate to the number of shares outstanding of the VanEck Bitcoin:
----------------------------------------------------------------------------------------------------------------
Number of market
Bitcoin fund Shares participants with 25,000
outstanding same side positions
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF................................................. 49,900,000 20
----------------------------------------------------------------------------------------------------------------
This means if 20 market participants had 25,000 same side positions
in VanEck Bitcoin ETF options, each of them would have to
simultaneously exercise all of those options to create a scenario that
may put the underlying security under stress. The Exchange believes it
is highly unlikely for either such event to occur; however, even if
either such event did occur, the Exchange would not expect the VanEck
Bitcoin ETF to be under stress because such an event would merely
induce the creation of more shares through the trust's creation and
redemption process.
As of March 5, 2025, the global supply of Bitcoin was approximately
19,832,309.\43\ Based on the $25.60 price of VanEck Bitcoin ETF share
on March 5, 2025, a market participant could have redeemed one Bitcoin
for approximately 3,539 VanEck Bitcoin ETF shares. Another
70,194,417,201 VanEck Bitcoin ETF shares could be created before the
supply of Bitcoin was exhausted. As a result, 28,078 market
participants would have to simultaneously exercise 25,000 same side
positions in VanEck Bitcoin ETF options to receive shares of the VanEck
Bitcoin ETF holding the entire global supply of Bitcoin. Unlike the
VanEck Bitcoin ETF, the number of shares that corporations may issue is
limited. However, like corporations, which authorize additional shares,
repurchase shares, or split their shares, the VanEck Bitcoin ETF may
create, redeem, or split shares in response to demand. While the supply
of Bitcoin is limited to 21,000,000, it is believed that it will take
more than 100 years to fully mine the remaining Bitcoin. The supply of
Bitcoin is larger than the available
[[Page 38574]]
supply of most securities.\44\ Given the significant unlikelihood of
any of these events ever occurring, the Exchange does not believe
options on the VanEck Bitcoin ETF should be subject to position and
exercise limits even lower than those proposed (which are already equal
to the lowest available limit for equity options in the industry) to
protect the supply of Bitcoin.\45\
---------------------------------------------------------------------------
\43\ See <a href="http://Blockchain.com">Blockchain.com</a> [verbar] Charts--Total Circulating
Bitcoin (which also shows the price of one Bitcoin equal to
$90,608.57).
\44\ The market capitalization of Bitcoin would rank in the top
10 among securities. 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>.
\45\ This would be even more unlikely with respect to the VanEck
Bitcoin ETF for which the Exchange proposes lower position limits.
---------------------------------------------------------------------------
The Exchange believes the available supply of Bitcoin is not
relevant to the determination of position and exercise limits for
options overlying the VanEck Bitcoin ETF. Position and exercise limits
are not a tool that should be used to address a potential limited
supply of the underlying of an underlying. Position and exercise limits
do not limit the total number of options that may be held, but rather
they limit the number of positions a single customer may hold or
exercise at one time.\46\ ``Since the inception of standardized options
trading, the options exchanges have had rules imposing limits on the
aggregate number of options contracts that a member or customer could
hold or exercise.'' \47\ Position and exercise limit rules 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. In particular, position and
exercise limits are designed to minimize the potential for mini-
manipulations and for corners or squeezes of the underlying market. In
addition, such limits serve to reduce the possibility for disruption of
the options market itself, especially in illiquid options classes.''
\48\
---------------------------------------------------------------------------
\46\ For example, suppose an option has a position limit of
25,000 option contracts and there are a total of 10 investors
trading that option. If all 10 investors max out their positions,
that would result in 250,000 option contracts outstanding at that
time. However, suppose 10 more investors decide to begin trading
that option and also max out their positions. This would result in
500,000 option contracts outstanding at that time. An increase in
the number of investors could cause an increase in outstanding
options even if position limits remain unchanged.
\47\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
\48\ See id.
---------------------------------------------------------------------------
The Exchange notes that a Registration Statement on Form S-1 was
filed with the Commission for the VanEck Bitcoin ETF, each of which
described the supply of Bitcoin as being limited to 21,000,000 (of
which approximately 90% had already been mined), and that the limit
would be reached around the year 2140.\49\ The Registration Statement
permits an unlimited number of shares of the applicable the VanEck
Bitcoin ETF to be created. Further, the Commission approved proposed
rule changes that permitted the listing and trading of shares of the
VanEck Bitcoin ETF, which approval did not comment on the sufficient
supply of Bitcoin or address whether there was a risk that permitting
an unlimited number of shares for the VanEck Bitcoin ETF would impact
the supply of Bitcoin.\50\ Therefore, the Exchange believes the
Commission had ample time and opportunity to consider whether the
supply of Bitcoin was sufficient to permit the creation of unlimited
the VanEck Bitcoin ETF shares, and does not believe considering this
supply with respect to the establishment of position and exercise
limits is appropriate given its lack of relevance to the purpose of
position and exercise limits. However, given the significant size of
the Bitcoin supply, the proposed positions limits are more than
sufficient to protect investors and the market.
---------------------------------------------------------------------------
\49\ See Amendment No. 8 to Form S-1 Registration Statement No.
333-251808, filed January 9, 2024.
\50\ See Bitcoin ETP Approval Order.
---------------------------------------------------------------------------
Based on the above information demonstrating, among other things,
that the VanEck Bitcoin ETF is characterized by a substantial number of
outstanding shares that are actively traded and widely held, the
Exchange believes the proposed position and exercise limits are
extremely conservative compared to those of ETF options with similar
market characteristics. 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.\51\
---------------------------------------------------------------------------
\51\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
---------------------------------------------------------------------------
The Exchange represents that it has the necessary systems capacity
to support VanEck Bitcoin ETF options. As discussed above, 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 Unit options, including VanEck Bitcoin
ETF options.
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 the VanEck Bitcoin ETF will
be equally available to all market participants who wish to trade such
options and will trade generally in the same manner as other options.
The Exchange Rules that currently apply to the listing and trading of
all Unit options on the Exchange, including, for example, Rules that
govern listing criteria, expirations, exercise prices, minimum
increments, margin requirements, customer accounts, and trading halt
procedures will apply to the listing and trading of the VanEck Bitcoin
ETF options on the Exchange in the same manner as they apply to other
options on all other Units that are listed and traded on the Exchange.
Also, and as stated above, the Exchange already lists options on other
commodity-based Fund Share.\52\ Further, the VanEck Bitcoin ETF would
need to satisfy the maintenance listing standards set forth in the
Exchange Rules in the same manner as any other Unit for the Exchange to
continue listing options on them.
---------------------------------------------------------------------------
\52\ See Rule 19.3(i)(4).
---------------------------------------------------------------------------
The Exchange does not believe that the proposal to list and trade
options on the VanEck Bitcoin ETF 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 the advent of the VanEck
Bitcoin ETF options trading on the Exchange may make the Exchange a
more attractive marketplace to market participants at other exchanges,
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 VanEck Bitcoin ETF. The Exchange notes
that listing and trading VanEck Bitcoin ETF options on the Exchange
will subject such options to transparent exchange-based rules as well
as price discovery and liquidity, as opposed to alternatively trading
such options in the OTC market.
The Exchange believes that the proposed rule change may relieve any
[[Page 38575]]
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 VanEck Bitcoin ETF
options 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 Bitcoin prices and Bitcoin-related products and positions on a
listed options exchange.
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 written 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 \53\ and Rule 19b-4(f)(6) thereunder.\54\
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)(iii) of the Act \55\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\56\
---------------------------------------------------------------------------
\53\ 15 U.S.C. 78s(b)(3)(A)(iii).
\54\ 17 CFR 240.19b-4(f)(6).
\55\ 15 U.S.C. 78s(b)(3)(A)(iii).
\56\ 17 CFR 240.19b-4(f)(6). 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 the pre-filing requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \57\ under the
Act does not normally become operative prior to 30 days after the date
of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\58\ the
Commission may designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposal may become operative immediately upon filing. The
Commission previously approved the listing and trading of options on
the VanEck Bitcoin Trust.\59\ The Exchange has provided information
regarding the underlying VanEck Bitcoin ETF, including, among other
things, information regarding trading volume, the number of beneficial
holders, and the average daily trading volume of the VanEck Bitcoin
ETF. The proposal also applies the position and exercise limits
pursuant to Rules 18.7 and 18.9 for options on the VanEck Bitcoin ETF
and provides information regarding the surveillance procedures that
will apply to options on the VanEck Bitcoin ETF. The Commission
believes that waiver of the operative delay could benefit investors by
providing an additional venue for trading options on the VanEck Bitcoin
ETF. 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 as operative
upon filing.\60\
---------------------------------------------------------------------------
\57\ 17 CFR 240.19b-4(f)(6).
\58\ 17 CFR 240.19b-4(f)(6)(iii).
\59\ See Securities Exchange Act Release No. 103569 (July 29,
2025) (Order Granting Accelerated Approval of a Proposed Rule
Change, as Modified by Amendment No. 4, to Amend Rules 4.3, 4.20,
and 8.30, to Allow the Exchange to List and Trade Options on the
VanEck Bitcoin ETF) (SR-CBOE-2025-017).
\60\ 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 the 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 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#6b191e070e46080406060e051f182b180e08450c041d"><span class="__cf_email__" data-cfemail="146661787139777b7979717a6067546771773a737b62">[email protected]</span></a>. Please include
file number SR-CboeEDGX-2025-065 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-CboeEDGX-2025-065. 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 filing 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-CboeEDGX-2025-065 and should be
submitted on or before August 29, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\61\
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\61\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-15075 Filed 8-7-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on August 8, 2025.
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.