Notice2025-16181
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Exchange Rule 307, Position Limits, and Exchange Rule 309, Exercise Limits To Allow the Exchange To Increase the Position and Exercise Limits for Grayscale Bitcoin Trust ETF, Grayscale Bitcoin Mini Trust ETF, and the Bitwise Bitcoin ETF
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 25, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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[Federal Register Volume 90, Number 162 (Monday, August 25, 2025)]
[Notices]
[Pages 41426-41431]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-16181]
[[Page 41426]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103749; File No. SR-MIAX-2025-38]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed
Change To Amend Exchange Rule 307, Position Limits, and Exchange Rule
309, Exercise Limits To Allow the Exchange To Increase the Position and
Exercise Limits for Grayscale Bitcoin Trust ETF, Grayscale Bitcoin Mini
Trust ETF, and the Bitwise Bitcoin ETF
August 20, 2025.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 14, 2025, Miami International Securities Exchange, LLC
(``MIAX'' or the ``Exchange'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 307, Position Limits,
and Exchange Rule 309, Exercise Limits to increase the position and
exercise limits for for [sic] Grayscale Bitcoin Trust ETF (``GBTC''),
Grayscale Bitcoin Mini Trust ETF (``BTC''), and the Bitwise Bitcoin ETF
(``BITB'') (collectively, the ``Bitcoin ETFs'').
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings</a>, and at MIAX's principal office.
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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Exchange Rule 307, Position Limits,
and Exchange Rule 309, Exercise Limits,\4\ to permit the Bitcoin ETFs
to increase the position and exercise limits for options on each
Bitcoin ETF from 25,000 contracts by removing each Bitcoin ETF from
Interpretation and Policy .01 to Exchange Rule 307 and Interpretation
and Policy .01 to Exchange Rule 309. This is a competitive filing based
on similar proposals submitted by NYSE Arca Inc. (``NYSE Arca''), Cboe
Exchange, Inc. (``Cboe''), and Nasdaq ISE, LLC (``ISE'') and approved
by the Securities and Exchange Commission (``Commission'').\5\
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\4\ The Exchange notes that all the rules of Chapter III of
MIAX, including Rules 307 and 309, are incorporated by reference
into the rulebooks of MIAX Emerald, LLC, MIAX Pearl, LLC and MIAX
Sapphire, LLC.
\5\ See Securities Exchange Act Release Nos. 103567 (July 29,
2025) 90 FR 36253 (August 1, 2025) (SR-NYSEArca-2025-07) (Self-
Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 3, To Amend Rules
Regarding Position and Exercise Limits for Options on the Grayscale
Bitcoin Trust (``GBTC'') and To Permit Flexible Exchange Options on
GBTC); 103587 (July 29, 2025) 90 FR 36238 (August 1, 2025) (SR-
NYSEArca-2025-10) ((collectively, the ``NYSE Arca Approval
Orders''); 103663 (Augusts 8, 2025) (SR-CBOE-2025-056) (Self-
Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change to Amend its Rules
Regarding the Position and Exercise Limits for Options on the
iShares Bitcoin Trust ETF, Grayscale Bitcoin Trust ETF, Grayscale
Bitcoin Mini Trust BTC, and the Bitwise Bitcoin ETF) (``Cboe
Approval Order''); and 103643 (August 5, 2025) (SR-ISE-2025-22)
(Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Amend FLEX,
Position and Exercise Limit Rules for the Grayscale Bitcoin Mini
Trust ETF, the Bitwise Bitcoin ETF, and the Grayscale Bitcoin Trust
ETF) (``ISE Approval Order'').
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Each Bitcoin ETF is an exchange-traded fund (``ETF'') that holds
Bitcoin and is listed on a national equities exchange.\6\ In November
2024, the Exchange received approval to list options on GBTC, BTC, and
BITB options.\7\ The position and exercise limits for each Bitcoin ETF
options are 25,000 contracts as stated in Interpretation and Policy .01
to Exchange Rule 307, Position Limits, and Interpretation and Policy
.01 to Exchange Rule 309, Exercise Limits the lowest limit available in
options.\8\
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\6\ NYSE Arca received approval to list and trade Bitcoin-Based
Commodity-Based Trust Shares in GBTC, BTC, and BITB pursuant to NYSE
Arca Rule 8.201-E(c)(1). See Securities Exchange Act Release Nos.
99306 (January 10, 2024), 89 FR 3008 (January 17, 2024) (Order
Granting Accelerated Approval of Proposed Rule Changes, as Modified
by Amendments Thereto, to list and trade options on, among other
ETFs, GBTC) (SR-NYSEARCA-2021-90); 100610 (July 26, 2024) (order
approving listing and trading of Commodity-Based Trust Shares of
BTC, among other ETFs), 89 FR 62821 (August 1, 2024) (SR NYSEARCA-
2023-45); and 99306 (January 10, 2024), 89 FR 3008 (January 17,
2024) (order approving listing and trading of Commodity-Based Trust
Shares of BITB, among other ETFs) (SR-NYSEARCA-2021-90).
\7\ See Securities Exchange Act Release No. 101716 (November 21,
2024), 89 FR 94856 (November 29, 2024) (SR-MIAX-2024-42) (Self-
Regulatory Organizations; MIAX Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 402, Criteria for Underlying Securities, Exchange Rule 307,
Position Limits, and Exchange Rule 309, Exercise Limits To Allow the
Exchange To List and Trade Options on the Grayscale Bitcoin Trust,
the Grayscale Bitcoin Mini Trust, and the Bitwise Bitcoin
ETF)(``Bitcoin ETF Options Notice'').
\8\ See Interpretation and Policy .01 to Exchange Rule 307 and
Interpretation and Policy .01 to Exchange Rule 309.
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Per the Commission ``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 positions.'' \9\ For
this reason, the Commission requires 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.'' \10\ Based on its
review of the data and analysis provided by the Exchange, the
Commission concluded that the 25,000 contract position limit for the
Bitcoin ETF Options satisfied these objectives.\11\
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\9\ See Securities Exchange Act Release No. 101128 (September
20, 2024), 89 FR 78942, 78946 (September 26, 2024) (SR-ISE-2024-03)
(Notice of Filing of Amendment Nos. 4 and 5 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment Nos. 1, 4, and 5, To Permit the Listing and Trading of
Options on the iShares Bitcoin Trust) (``IBIT Options Approval
Order'').
\10\ See id.
\11\ See id; Securities Exchange Act Release Nos. 101386
(October 18, 2024), 89 FR 84960 (October 24, 2024) (SR-NYSEAMER-
2024-49) (the ``GBTC, BTC, and BITB Options Approval Order'').
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While the Exchange proposed an aggregated 25,000 contract position
limit for each Bitcoin ETF option in its rule filings to list and trade
these options, it nonetheless believed that evidence existed to support
a much higher position limit. Specifically, the Commission has
considered and reviewed the Exchange's analysis and NYSE Arca's
analysis as it was
[[Page 41427]]
presented by the Exchange in the Bitcoin ETF Options Notice that the
exercisable risk associated with a position limit of 25,000 contracts
represented only 0.9% of the outstanding shares of GBTC; 0.7% of the
outstanding shares of BTC; and 3.6% of the outstanding shares of
BITB.\12\ The Commission also has considered and reviewed the
Exchange's statement in its Bitcoin ETF Options Notice that with a
position limit of 25,000 contracts on the same side of the market for
each Bitcoin ETF option: (1) with 284,570,100 shares of GBTC
outstanding, 114 market participants would have to simultaneously
exercise their positions to place GBTC under stress; (2) with
366,950,100 shares of BTC outstanding, 147 market participants would
have to simultaneously exercise their positions to place BTC under
stress; and (3) with 68,690,000 shares of BITB outstanding, 27 market
participants would have to simultaneously exercise their positions to
place BITB under stress.\13\ Based on the Commission's review of this
information and analysis, the Commission concluded that the proposed
position and exercise limits of 25,000 contracts for each of GBTC, BTC,
and BITB options were designed 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, 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.\14\
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\12\ See GBTC, BTC, and BITB Options Approval Order, at 84970
(data as of August 30, 2024).
\13\ See GBTC, BTC, and BITB Options Approval Order, at 84971
(data as of August 30, 2024).
\14\ See IBIT Options Approval Order, at 78946; and GBTC, BTC,
and BITB Options Approval Order, at 84971.
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Each Bitcoin ETF option would qualify for a 250,000 contract
position limit pursuant to the criteria in Exchange Rule 307(d)(5),
which requires that, for the most recent six-month period, trading
volume for the underlying security be at least 100 million shares.\15\
As of November 25, 2024, the market capitalization and average daily
volume (``ADV''), for the preceding three months,\16\ for each Bitcoin
ETF was:
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\15\ Exchange Rule 307, Position Limits, provides at
subparagraph (d)(5) that to be eligible for the 250,000 contract
limit, either the most recent six (6) month trading volume of the
underlying security must have totaled at least 100 million shares or
the most recent six (6) month trading volume of the underlying
security must have totaled at least seventy-five (75) million shares
and the underlying security must have at least 300 million shares
currently outstanding.
\16\ The market capitalization for each Bitcoin ETF was
determined by multiplying a settlement price ($75.42--GBTC, $42.16--
BTC, $51.70--BITB) by the number of shares outstanding (GBTC--
273,950,100, BTC--82,939,964, BITB--79,950,100). GBTC, BTC, and BITB
data acquired from FactSet.
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Three-month ADV
Bitcoin ETF Market capitalization (shares)
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GBTC.............................................................. $20,661,316,542 3,829,597
BTC............................................................... 3,496,748,882 2,036,369
BITB.............................................................. 4,095,157,000 2,480,478
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Therefore, each Bitcoin ETF is well-above the requisite 100,000,000
shares necessary to qualify for the 250,000,000 contract position and
exercise limit. Also, as of November 25, 2024, there are 19,787,762
bitcoins in circulation.\17\ At a price of $94,830,\18\ that equates to
a market capitalization of greater than $1.876 trillion US. If a
position limit of 250,000 contracts were considered, the exercisable
risk would represent 9.13%.\19\ 30.14%,\20\ and 31.27% \21\ of GBTC,
BTC, and BITB shares outstanding, respectively. Given each Bitcoin
ETF's liquidity, the current 25,000 position limit is extremely
conservative.
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\17\ See <a href="https://www.coingecko.com/en/coins/bitcoin">https://www.coingecko.com/en/coins/bitcoin</a>.
\18\ This is the approximate price of bitcoin from 4:00 p.m. ET
on November 25, 2024.
\19\ This percentage is arrived at with this equation: (250,000
contract limit * 100 shares per option/273,950.100 shares
outstanding).
\20\ This percentage is arrived at with this equation: (250,000
contract limit * 100 shares per option/82,939,964 BTC shares
outstanding).
\21\ This percentage is arrived at with this equation: (250,000
contract limit * 100 shares per option/79,950,100 BITB shares
outstanding).
\22\ See <a href="https://www.coingecko.com/en/coins/bitcoin">https://www.coingecko.com/en/coins/bitcoin</a>.
\23\ This is the approximate price of Bitcoin from 4:00 p.m. ET
on November 25, 2024.
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Position limits, and exercise limits, are designed to limit the
number of options contracts traded on the exchange in an underlying
security that an investor, acting alone or in concert with others
directly or indirectly, may control. These limits, which are described
in Exchange Rules 307 and 309, are intended 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. Position and exercise limits must balance concerns regarding
mitigating potential manipulation and the cost of inhibiting potential
hedging activity that could be used for legitimate economic purposes.
To achieve this balance, the Exchange proposes to remove each
Bitcoin ETF from the table of position limits in Interpretation and
Policy .01 to Exchange Rule 307 as well as the table of exercise limits
in Interpretation and Policy .01 to Exchange Rule 309 so that options
on each Bitcoin ETF may trade similar to all other options for which
the Exchange has not filed to otherwise increase the position limits to
levels outside of the limits of Exchange Rule 307(d). As a result of
removing each Bitcoin ETF from the aforementioned tables, it would
increase the position and exercise limits for options on each Bitcoin
ETF from 25,000 to 250,000 contracts based on the parameters of
Exchange Rule 307(d). By removing each Bitcoin ETF from the
aforementioned tables, each Bitcoin ETF would be subject to subsequent
six (6) month reviews to determine future position and exercise limits
similar to all other options subject to Exchange Rules 307 and 309.
With respect to GBTC, BTC, and BITB, the Exchange reviewed data
presented by NYSE Arca in its filings to amend the position and
exercise limits for GBTC, BTC, and BITB options. First, the Exchange
reviewed NYSE Arca's comparison of the market capitalization of each of
these three Bitcoin ETFs relative to the market capitalization of the
entire Bitcoin market in terms of exercise risk and availability of
deliverables. As noted above, as of November 25, 2024, there were
19,787,762 Bitcoins in circulation.\22\ At a price of $94,830 per
Bitcoin,\23\ that equates to a market capitalization of greater than
$1.876 trillion. If a position (and exercise) limit of 250,000
contracts were considered, the exercisable risk
[[Page 41428]]
would represent 9.13%,\24\ 30.14%,\25\ and 31.27% \26\ of GBTC, BTC,
and BITB shares outstanding, respectively. Since each of GBTC, BTC, and
BITB has a creation and redemption process managed through the issuer
(whereby Bitcoin is used to create shares of each such Bitcoin ETF),
the position and exercise limit can be compared to the total market
capitalization of the entire Bitcoin market, and in that case, the
exercisable risk for options on GBTC, BTC, and BITB would represent
less than 0.10%,\27\ 0.06%,\28\ and 0.07%,\29\ respectively, of all
Bitcoin outstanding. The Exchange notes that if each of GBTC, BTC, and
BITB options were subject to a 250,000-contract position and exercise
limit (based on each ETF's trading volume), and if all options on GBTC,
BTC, or BITB shares were exercised at once, this occurrence would have
a virtually unnoticed impact on the entire Bitcoin market. This NYSE
Arca analysis demonstrates that a 250,000-contract position (and
exercise) limit for each of GBTC, BTC, and BITB options would be
appropriate given each of these Bitcoin ETF's liquidity.
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\24\ This percentage is arrived at with this equation: (250,000
contract limit * 100 shares per option/273,950,100 shares
outstanding).
\25\ This percentage is arrived at with this equation: (250,000
contract limit * 100 shares per option/82,939,964 shares
outstanding).
\26\ This percentage is arrived at with this equation: (250,000
contract limit * 100 shares per option/79,950,100 BITB shares
outstanding).
\27\ This number was arrived at with this calculation: ((250,000
limit * 100 shares per option * $75.42 settle)/(19,787,762 Bitcoin
outstanding * $94,830 Bitcoin price)).
\28\ This number was arrived at with this calculation: ((250,000
limit * 100 shares per option * $42.16 settle)/(19,787,762 Bitcoin
outstanding * $94,830 Bitcoin price)).
\29\ This number was arrived at with this calculation: ((250,000
limit * 100 shares per option * $51.70 settle)/(19,787,762 Bitcoin
outstanding * $94,830 Bitcoin price)).
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Additionally, NYSE Arca reviewed the proposed position limit by
comparing it to position limits for derivative products regulated by
the Commodity Futures Trading Commission (``CFTC''). While the CFTC,
through the relevant Designated Contract Markets, only regulates
options positions based upon delta equivalents (creating a less
stringent standard), NYSE Arca examined equivalent bitcoin futures
position limits. In particular, NYSE Arca looked at the CME bitcoin
futures contract \30\ that has a position limit of 2,000 futures.\31\
On October 22, 2024, CME bitcoin futures settled at $94,945.\32\ On
October 22, 2024, GBTC settled at $53.64, BTC settled at $29.90, and
BITB settled at $36.74, which would equate to greater than 17,700,410
shares of GBTC, 31,754,180 shares of BTC, and 25,842,406 shares of
BITB, if the CME notional position limit was utilized.\33\ Since
substantial portions of any distributed options portfolio are likely to
be out of the money on expiration, an options position limit equivalent
to the CME position limit for bitcoin futures (considering that all
options deltas are <=1.00) should be a bit higher than the CME implied
175,578 limit.
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\30\ CME Bitcoin Futures are described in Chapter 350 of CME's
Rulebook.
\31\ See the Position Accountability and Reportable Level Table
in the Interpretations & Special Notices Section of Chapter 5 of
CME's Rulebook.
\32\ 2,000 futures at a 5 bitcoin multiplier (per the contract
specifications) equates to $949,450,000 (2000 contracts * 5 BTC per
contract * $94,945 price of November BTC future) of notional value.
\33\ Id.
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Of note, unlike options contracts, CME position limits are
calculated on a net futures equivalent basis by contract and include
contracts that aggregate into one or more base contracts according to
an aggregation ratio(s).\34\ Therefore, if a portfolio includes
positions in options on futures, CME would aggregate those positions
into the underlying futures contracts in accordance with a table
published by CME on a delta equivalent value for the relevant spot
month, subsequent spot month, single month and all month position
limits.\35\ If a position exceeds position limits because of an option
assignment, CME permits market participants to liquidate the excess
position within one business day without being considered in violation
of its rules. Additionally, if at the close of trading, a position that
includes options exceeds position limits for futures contracts, when
evaluated using the delta factors as of that day's close of trading,
but does not exceed the limits when evaluated using the previous day's
delta factors, then the position shall not constitute a position limit
violation. Based on the aforementioned analysis, the Exchange believes
that the proposed 250,000 contracts for position and exercise limits is
appropriate.
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\34\ See <a href="https://www.cmegroup.com/education/courses/market-regulation/position-limits/positionlimits-aggregation-of-contracts-and-table.htm">https://www.cmegroup.com/education/courses/market-regulation/position-limits/positionlimits-aggregation-of-contracts-and-table.htm</a>.
\35\ Id.
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Finally, NYSE Arca also compared a position and exercise limit of
250,000 contracts for GBTC, BTC, and BITB against the position and
exercise limits for GLD and SLV options. GLD has a float of 306.1
million shares \36\ and a position limit of 250,000 contract. SLV has a
float of 520.7 million shares,\37\ and a position limit of 250,000
contracts. As previously noted, position and exercise limits are
designed to limit the number of options contracts traded on the
exchange in an underlying security that an investor, acting alone or in
concert with others directly or indirectly, may control. A position
limit exercise in GLD would represent 8.17% of the float of GLD; and a
position limit exercise in SLV would represent 4.8% of the float of
SLV. In comparison, a 250,000 contract position limit would represent
9.13% of the GBTC float, 30.14% of the BTC float, and 31.27% of the
BITB float. A 250,000 contract position and exercise limit for each of
GBTC, BTC, and BITB is comparable with the standard applied to GLD and
SLV and is therefore appropriate.
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\36\ See <a href="https://www.ssga.com/us/en/intermediary/etfs/spdr-gold-shares-gld">https://www.ssga.com/us/en/intermediary/etfs/spdr-gold-shares-gld</a>.
\37\ See <a href="https://www.ishares.com/us/products/239855/ishares-silver-trust-fund">https://www.ishares.com/us/products/239855/ishares-silver-trust-fund</a>.
\38\ Market Makers refers to ``Lead Market Makers,'' ``Primary
Lead Market Makers,'' and ``Registered Market Makers'' collectively.
See Exchange Rule 100.
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The Exchange believes the above information demonstrates that each
Bitcoin ETF option has more than sufficient liquidity to garner an
increased position and exercise limit of 250,000 contracts. The
Exchange believes that any concerns related to manipulation and
protection of investors are mollified by the significant liquidity
provision in each Bitcoin ETF. The Exchange states that, as a general
principle, increases in active trading volume and deep liquidity of the
underlying securities do not lead to manipulation and/or disruption.
Additionally, the Exchange believes the proposed rule change would lead
to a more liquid and competitive market environment for the Bitcoin ETF
options, which will benefit customers that trade these options.
Further, the reporting requirement for such options would remain
unchanged. Thus, the Exchange will still require that each member
organization that maintains positions in impacted options on the same
side of the market, for its own account or for the account of a
customer, report certain information to the Exchange. This information
includes, but would not be limited to, the options' positions, whether
such positions are hedged and, if so, a description of the hedge(s).
Market-Makers \38\ would continue to be exempt from this reporting
requirement, however, the Exchange may access Market-Maker position
information.\39\
[[Page 41429]]
Moreover, the Exchange's requirement that member organizations 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 and will continue to serve as an important part of the
Exchange's surveillance efforts.\40\
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\39\ The Options Clearing Corporation (``OCC'') through the
Large option Position Reporting (``LOPR'') system acts as a
centralized service provider for Member compliance with position
reporting requirements by collecting data from each Member or Member
organization, consolidating the information, and ultimately
providing detailed listings of each Member's report to the Exchange,
as well as Financial Industry Regulatory Authority, Inc.
(``FINRA''), acting as its agent pursuant to a regulatory services
agreement (``RSA''). Member means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\40\ See Exchange Rule 310.
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The Exchange also has no reason to believe that the growth in
trading volume in Bitcoin ETF options will not continue. Rather, the
Exchange expects continued options volume growth in the Bitcoin ETF
options as opportunities for investors to participate in the options
markets increase and evolve. The Exchange believes that the current
position and exercise limits applicable to the Bitcoin ETF options are
restrictive and will hamper the listed options markets from being able
to compete fairly and effectively with the over-the-counter (``OTC'')
markets. OTC transactions occur through bilateral agreements, the terms
of which are not publicly disclosed to the marketplace. As such, OTC
transactions do not contribute to the price discovery process on a
public exchange or other lit markets. The Exchange believes that
without the proposed changes to position and exercise limits for the
Bitcoin ETF options, market participants will find the 25,000 contract
position limit an impediment to their business and investment
objectives as well as an impediment to efficient pricing. As such,
market participants may find the less transparent OTC markets a more
attractive alternative to achieve their investment and hedging
objectives, leading to a retreat from the listed options markets, where
trades are subject to reporting requirements and daily surveillance.
However, the Exchange notes that each Bitcoin ETF options position
limits would be reviewed on a six month basis, pursuant to Exchange
Rule 307(d), similar to other options.
The Exchange represents that the same surveillance procedures
applicable to all other options on other ETFs currently listed and
traded on the Exchange will apply to options on each Bitcoin ETF
options. Also the Exchange represents that it has the necessary systems
capacity to support the new option series. The Exchange believes that
its existing surveillance and reporting safeguards are designed to
deter and detect possible manipulative behavior which might potentially
arise from listing and trading options on ETFs, including the Bitcoin
ETF options.
The Exchange believes that the existing surveillance procedures and
reporting requirements at the Exchange are capable of properly
identifying disruptive and/or manipulative trading activity. The
Exchange also represents that it has adequate surveillances in place to
detect potential manipulation, as well as reviews in place to identify
continued compliance with the Exchange's listing standards. These
procedures monitor market activity via automated surveillance
techniques to identify unusual activity in both options and the
underlyings, as applicable. The Exchange also notes that large stock
holdings must be disclosed to the Commission by way of Schedules 13D or
13G,\41\ which are used to report ownership of stock which exceeds 5%
of a company's total stock issue and may assist in providing
information in monitoring for any potential manipulative schemes.
Further, the Exchange believes that the current financial requirements
imposed by the Exchange and by the Commission adequately address
concerns regarding potentially large, unhedged positions in equity
options. Current margin and risk-based haircut methodologies serve to
limit the size of positions maintained by any one account by increasing
the margin and/or capital that a member organization must maintain for
a large position held by itself or by its customer.\42\ In addition,
Rule 15c3-1 \43\ imposes a capital charge on member organizations to
the extent of any margin deficiency resulting from the higher margin
requirement.
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\41\ 17 CFR 240.13d-1.
\42\ See Exchange Rules, Chapter 15, Margins.
\43\ 17 CFR 240.15c3-1.
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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.\44\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \45\ 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) \46\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\44\ 15 U.S.C. 78f(b).
\45\ 15 U.S.C. 78f(b)(5).
\46\ Id.
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The Exchange believes that removing each Bitcoin ETF options from
the table of position limits in Interpretation and Policy .01 to
Exchange Rule 307 and the table of exercise limits in Interpretation
and Policy .01 to Exchange Rule 309, so their position limit would be
reviewed similar to all other options for which the Exchange has not
filed to otherwise establish the position limits to levels outside of
the position limits of Exchange Rule 307(d) is consistent with the Act.
This proposal will remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
protect investors and the public interest, because it will provide
market participants with the ability to more effectively execute their
trading and hedging activities. Also, based on current trading volume,
the resulting increase in the position (and exercise) limits for each
of the Bitcoin ETF options may allow Market-Makers to maintain their
liquidity in these options in amounts commensurate with the continued
high consumer demand in the Bitcoin ETF options. Subjecting options on
each Bitcoin ETF to the position limits in Exchange Rule 307(d) and
corresponding exercise limits in Exchange Rule 309 may also encourage
other liquidity providers to continue to trade on the Exchange rather
than shift their volume to OTC markets, which will enhance the process
of price discovery conducted on the Exchange through increased order
flow. Further, this proposed change would allow institutional investors
to utilize the Bitcoin ETF options for prudent risk management
purposes. The Exchange notes that each of the Bitcoin ETF position
limits would be reviewed on a six month basis, pursuant to Exchange
Rule 307(d), similar to other options.
In addition, the Exchange believes that the current liquidity in
each Bitcoin ETF will mitigate concerns regarding potential
manipulation of each Bitcoin ETF options and/or disruption of each
[[Page 41430]]
Bitcoin ETF upon amending the table of position limits in
Interpretation and Policy .01 to Exchange Rule 307 and the table of
exercise limits in Interpretation and Policy .01 to Exchange Rule 309.
In support of the proposed rule change, the Exchange cites the in-
depth analysis NYSE Arca did in its filings, as noted above, NYSE Arca
considered, among other things: (1) applicable Bitcoin ETF's market
capitalization and ADV, and a 250,000 contract position and exercise
limit in relation to the position limits of options on other
securities; (2) market capitalization of the entire Bitcoin market in
terms of exercise risk and availability of deliverables; and (3)
comparing a 250,000 contract position limit to position limits for
derivative products regulated by the CFTC. Based on the Exchange's
review of these analyses, the Exchange believes that subjecting the
Bitcoin ETF options to the position (and exercise) limits set forth in
Interpretation and Policy .01 to Exchange Rule 307 and the table of
exercise limits in Interpretation and Policy .01 to Exchange Rule 309
is more than appropriate. 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.\47\
Finally, as discussed above, the Exchange's surveillance and
reporting safeguards continue to be designed to deter and detect
possible manipulative behavior that might arise from increasing or
eliminating position and exercise limits in certain classes. The
Exchange believes that the current financial requirements imposed by
the Exchange and by the Commission adequately address concerns
regarding potentially large, unhedged positions in the options on the
underlying securities, further promoting just and equitable principles
of trading, the maintenance of a fair and orderly market, and the
protection of investors.
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\47\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. In this regard and as
indicated above, the Exchange notes that the rule change is being
proposed as a competitive response to filings submitted by NYSE Arca,
Cboe and ISE.\48\
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\48\ See supra note 4.
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The Exchange's proposal does not burden intra-market competition
because all Members would be subject to the position limits in Exchange
Rule 307(d) and corresponding exercise limits in Exchange Rule 309. The
Exchange believes that the proposed rule change will also provide
additional opportunities for market participants to continue to
efficiently achieve their investment and trading objectives for Bitcoin
ETF options on the Exchange.
The Exchange does not believe that the proposed rule change will
impose any burden on inter-market competition as the proposal is not
competitive in nature. The Exchange expects that all option exchanges
will adopt substantively similar proposals, such that the Exchange's
proposal would benefit competition. For these reasons, the Exchange
does not believe that the proposed rule change will impose any burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
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 \49\ and Rule 19b-4(f)(6) thereunder.\50\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \51\ and Rule 19b-
4(f)(6)(iii) thereunder.\52\
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\49\ 15 U.S.C. 78s(b)(3)(A)(iii).
\50\ 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.
\51\ 17 CFR 240.19b-4(f)(6).
\52\ 15 U.S.C. 78s(b)(3)(A)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) \53\ 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),\54\ 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 removal of the 25,000 contract
position and exercise limits for Bitcoin ETF options, such that those
funds will be subject to the position and exercise limits as determined
for equity options for which no set limit has been otherwise
established on that exchange.\55\ The Exchange is proposing similarly
to remove of the 25,000 contract position and exercise limit for
Bitcoin ETF options, such that those funds will be subject to the
position and exercise limits as determined by the position limit rules
at Rule 307. The Exchange has provided information regarding Bitcoin
ETF options, including, among other things, information regarding
trading volume, and the market capitalization of Bitcoin ETF options
and surveillance procedures that will apply. The Commission notes that
the proposal raises no new or novel legal issues and would simply
provide an additional venue for trading Bitcoin ETF options with
position and exercise limits that may be higher than 25,000 contracts.
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.\56\
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\53\ 17 CFR 240.19b-4(f)(6).
\54\ 17 CFR 240.19b-4(f)(6)(iii).
\55\ See supra Note 4.
\56\ 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).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of
[[Page 41431]]
the purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings under Section 19(b)(2)(B) \57\
of the Act to determine whether the proposed rule change should be
approved or disapproved.
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\57\ 15 U.S.C. 78s(b)(2)(B).
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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#1361667f763e707c7e7e767d6760536076703d747c65"><span class="__cf_email__" data-cfemail="c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3">[email protected]</span></a>. Please include
file number SR-MIAX-2025-38 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-MIAX-2025-38. 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-MIAX-2025-38 and should be submitted on
or before September 15, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\58\
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\58\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-16181 Filed 8-22-25; 8:45 am]
BILLING CODE 8011-01-P
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