Notice2025-20686
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5020 (Criteria for Underlying Securities) To Adopt Listing Criteria for Options on Commodity-Based Trust Shares
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 24, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 224 (Monday, November 24, 2025)</title>
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[Federal Register Volume 90, Number 224 (Monday, November 24, 2025)]
[Notices]
[Pages 53029-53034]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-20686]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104225; File No. SR-BOX-2025-28]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Rule
5020 (Criteria for Underlying Securities) To Adopt Listing Criteria for
Options on Commodity-Based Trust Shares
November 19, 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 November 14, 2025, BOX Exchange LLC (``Exchange'') filed with the
Securities and Exchange Commission (``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 from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 5020 (Criteria for Underlying
Securities) to adopt listing criteria for options on Commodity-Based
Trust Shares. Specifically, the Exchange is proposing to amend Rule
5020 to (1) redefine a Commodity-Based Trust Share, (2) require
additional qualifying criteria to list options on a Commodity-Based
Trust, and (3) require that the crypto asset held by the Commodity-
Based Trust have a comprehensive surveillance sharing agreement. The
text of the proposed rule change is available from the principal office
of the Exchange, and also on the Exchange's internet website at <a href="https://rules.boxexchange.com/rulefilings">https://rules.boxexchange.com/rulefilings</a>.
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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 purpose of this filing is to amend Rule 5020 (Criteria for
Underlying Securities). Specifically, the Exchange proposes to modify
Rule 5020(h), regarding the criteria for listing and trading options on
Exchange-Traded Fund Shares (``ETFs''), to allow options on units that
represent interests in a trust that is a Commodity-Based Trust. The
Exchange initially filed SR-BOX-2025-12, a proposed rule change to
amend its listing rules at Rule 5020 (Criteria for Underlying
Securities) to allow the listing and trading of options on interests in
a Commodity-Based Trust on April 25, 2025. On May 7, 2025, the Exchange
filed Amendment No. 1 to the proposed rule change and SR-BOX-2025-12
was published in the Federal Register on May 15, 2025.\3\ On June 17,
2025, the Securities and Exchange Commission (the ``Commission'')
issued an order instituting proceedings and designated November 11,
2025, as the date by which to issue an order approving or disapproving
SR-BOX-2025-12.\4\ The Commission did not act to either approve or
disapprove SR-BOX-2025-12 on or before November 11, 2025, therefore the
proposal, as published in the Federal Register on May 15, 2025, was
deemed approved as of November
[[Page 53030]]
12, 2025. On November 5, 2025, during the government shutdown, the
Exchange submitted SR-BOX-2025-12, Amendment 2. The Exchange is now
proposing the current rule change to reiterate the changes proposed in
SR-BOX-2025-12, Amendment 2 to codify the proposed rule text in the
Exchange's Rulebook.\5\ The Exchange also notes that this proposal is
competitive as a substantially identical proposal from Nasdaq ISE, LLC
(``Nasdaq ISE'') was deemed approved by the Commission.\6\
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\3\ See Securities Exchange Act Release No. 103015 (May 9,
2025), 90 FR 20699 (May 15, 2025) (Notice of Filing of Proposed Rule
Change, as Modified by Amendment No. 1, to Amend Rule 5020 (Criteria
for Underlying Securities) to Permit the Listing of Options on
Commodity-Based Trust Shares).
\4\ See Securities Exchange Act Release No. 103284 (June 17,
2025), 90 FR 26629 (June 23, 2025) (Order Instituting Proceedings to
Determine Whether to Approve or Disapprove a Proposed Rule Change,
as Modified by Amendment No. 1, to Amend Rule 5020, Criteria for
Underlying Securities, to Permit the Listing of Options on
Commodity-Based Trust Shares).
\5\ See Regulatory Notice 2025-059 (Proposal to List and Trade
Certain Options on a Commodity-Based Trust Deemed Approved).
Available at <a href="https://boxexchange.com/assets/Notice-2025-059-Proposal-to-List-and-Trade-Certain-Options-on-a-Commodity-Based-Trust-Deemed-Approved.pdf">https://boxexchange.com/assets/Notice-2025-059-Proposal-to-List-and-Trade-Certain-Options-on-a-Commodity-Based-Trust-Deemed-Approved.pdf</a>. The Exchange notes that in Amendment No.
2 to SR-BOX-2025-12, proposed 5020(h)(v) provided that the security
must represent interests in a Commodity-Based Trust that meet the
generic criteria of The Nasdaq Stock Market LLC Rule 5711(d), but
the Exchange is now proposing to require that the security meets the
generic criteria of the U.S. securities exchange that is the primary
equities listing market for the Commodity-Based Trust.
\6\ SR-ISE-2025-08, Amendment 1 was deemed approved as of
October 27, 2025. See Securities Exchange Act Release No. 102465
(February 20, 2025), 90 FR 10740 (February 26, 2025) (SR-ISE-2025-08
Amendment 1) (Notice of Filing of Proposed Rule Change to Amend
Options 4, Section 3, Criteria for Underlying Securities to permit
options on Commodity-Based Trust Shares).
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The Exchange proposes to amend Rule 5020 to adopt new listing
criteria in subparagraph (h)(v) to permit the listing and trading of
options on a Commodity-Based Trust that meets the generic criteria of a
U.S. securities exchange that is the primary equities listing market
for the Commodity-Based Trust,\7\ except that the Commodity-Based Trust
holds a single crypto asset as defined in subparagraph (3) below.
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\7\ A Commodity-Based Trust is defined in Cboe BZX Exchange,
Inc. 14.11(e)(4), NYSE Arca, Inc. Rule 8.201(c)(1), and The Nasdaq
Stock Market LLC Rule 5711(d)(iv) (the three current U.S. equities
exchanges that serve as primary listing markets) as a security (a)
that is issued by a trust (``Trust'') that holds (1) a specified
commodity deposited with the Trust, or (2) a specified commodity
and, in addition to such specified commodity, cash; (b) that is
issued by such Trust in a specified aggregate minimum number in
return for a deposit of a quantity of the underlying commodity and/
or cash; and (c) that, when aggregated in the same specified minimum
number, may be redeemed at a holder's request by such Trust which
will deliver to the redeeming holder the quantity of the underlying
commodity and/or cash (``Commodity-Based Trust Share'').
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The Exchange also proposes to amend Rule 5020(h) to create a new
subparagraph (3) that states:
Additionally, with respect to a Commodity-Based Trust that meets
the requirements of Rule 5020(v), the following requirements are
satisfied: (A) the total global supply of the underlying crypto
asset held by the Commodity-Based Trust has an average daily market
value of at least $700 million over the last 12 months; and (B) the
crypto asset held by the Commodity-Based Trust underlies a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly
or through common membership in the Intermarket Surveillance Group
(``ISG''). For purposes of this rule the term ``crypto asset'' means
an asset that is generated, issued and/or transferred using a
blockchain or similar distributive ledger technology network,
including but not limited to, assets known as ``tokens,'' ``digital
assets,'' ``virtual currencies,'' and ``coins'' and that relies on
cryptographic protocols.
The proposed additional criteria would require a Commodity-Based
Trust to: (1) meet the generic criteria of the U.S securities exchange
that is the primary equities listing market for the Commodity-Based
Trust and hold only a single crypto asset; (2) meet the criteria and
guidelines set forth in Rules 5020(a) \8\ and (b),\9\ or Rule
5020(h)(1)(ii); \10\ and (3) meet the requirements in Rule 5020(h)(3)
prior to listing options on the Commodity-Based Trust.
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\8\ Rule 5020(a) provides that Underlying securities with
respect to which put or call options contracts are approved for
listing and trading on BOX must meet the following criteria: (1) the
security must be registered with the SEC and be an ``NMS stock'' as
defined in Rule 600 of Regulation NMS under the Exchange Act; and
(2) the security shall be characterized by a substantial number of
outstanding shares that are widely held and actively traded.
\9\ Rule 5020(b) provides criteria and guidelines when
evaluating potential underlying securities for the listing of
options.
\10\ Rule 5020(h)(1)(ii) provides that the Exchange-Traded Fund
Shares are available for creation or redemption each business day
from or through the issuing trust, investment company, commodity
pool or other entity in cash or in kind at a price related to net
asset value, and the issuer is obligated to issue Exchange-Traded
Fund Shares in a specified aggregate number even if some or all of
the investment assets and/or cash required to be deposited have not
been received by the issuer, subject to the condition that the
person obligated to deposit the investment assets has undertaken to
deliver them 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 issuer of the Exchange-Traded
Fund Shares, all as described in the Exchange-Traded Fund Shares'
prospectus.
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As proposed, Rule 5020(h)(3) requires a Commodity-Based Trust that
meets the requirements of proposed 5020(h)(v) to also satisfy the
following requirements: (A) the total global supply of the underlying
crypto asset held by the Commodity-Based Trust has an average daily
market value of at least $700 million over the last 12 months; and (B)
the crypto asset held by the Commodity-Based Trust underlies a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in the ISG.
The Exchange defines a ``crypto asset'' at proposed Rule 5020(h)(3)
to mean, for purposes of this rule, an asset that is generated, issued
and/or transferred using a blockchain or similar distributive ledger
technology network, including but not limited to, assets known as
``tokens,'' ``digital assets,'' ``virtual currencies,'' and ``coins''
and that relies on cryptographic protocols. The market value of the
underlying crypto asset will be calculated by taking the total global
supply of the particular crypto asset multiplied by the token
price.\11\ Total supply of crypto assets includes all crypto assets
currently issued and does not include unissued crypto assets.\12\
Further, the Exchange has specified in proposed Rule 5020(h)(3) that
the crypto asset held by the Commodity-Based Trust must underlie a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in ISG.\13\ The Exchange will be required to
ensure that this requirement is met prior to listing options on a
Commodity-Based Trust pursuant to proposed Rule 5020(h)(v). As a result
of this amendment, the proposed listing criteria would permit a
Commodity-Based Trust that is generically listed on a U.S. securities
exchange that is the primary equities listing market for the Commodity-
Based Trust and holds a single crypto asset to qualify for the listing
of options on that ETF, provided Rule 5020(h)(3) has also been met, as
well as the listing criteria in Rules 5020(a) and (b) or Rule
5020(h)(1)(ii).
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\11\ The market supply information can be obtained from publicly
available sources such as <a href="http://coingecko.com">coingecko.com</a> or <a href="http://coinmarketcap.com">coinmarketcap.com</a>.
\12\ For example, if Bitcoin were the underlying crypto asset,
the Exchange would consider the total supply of all Bitcoin
currently issued instead of the maximum supply, which would be
currently issued as well as unminted Bitcoin. As of September 12,
2025, Bitcoin's total supply was 19,919,915 (the maximum supply was
21,000,000). See <a href="https://www.coingecko.com/en/coins/bitcoin">https://www.coingecko.com/en/coins/bitcoin</a>. The
Exchange would calculate market value by utilizing the total supply
number multiplied by the Bitcoin price on that day.
\13\ For a list of the current members and affiliate members of
ISG, see <a href="https://isgportal.org/public-members">https://isgportal.org/public-members</a>.
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The Exchange lastly proposes to amend Rule 5020(h)(iv) to replace
the language that was added in SR-BOX-2025-12, Amendment 1, with the
previously existing rule text. Specifically, the Exchange is proposing
to replace current subsection (h)(iv) with the following:
(iv) Represents interests in the SPDR[supreg] Gold Trust, the
iShares COMEX Gold Trust, the iShares Silver Trust, the abrdn Gold
ETF
[[Page 53031]]
Trust, the abrdn Silver ETF Trust, the abrdn Palladium ETF Trust,
the abrdn Platinum ETF Trust, the Sprott Physical Gold Trust, the
iShares Bitcoin Trust, the Grayscale Bitcoin Trust, the Grayscale
Bitcoin Mini Trust, the Bitwise Bitcoin ETF, the Fidelity Wise
Origin Bitcoin Fund, the ARK 21Shares Bitcoin ETF, the iShares
Ethereum Trust, the Grayscale Ethereum Trust ETF, the Grayscale
Ethereum Mini Trust ETF, the Bitwise Ethereum ETF, or the Fidelity
Ethereum Fund; or.
The Exchange is proposing this change to revert existing Rule
5020(h)(iv) back to its previously existing rule text, because the
proposed new subsection (h)(v) detailed in SR-BOX-2025-12, Amendment 2,
and the current filing, codifies the requirements for Commodity-Based
Trusts, thus making the previous change to 5020(h)(iv) unnecessary and
duplicative. Accordingly, the Exchange is to amend Rule 5020(h)(iv) to
align with the proposed changes herein.
The Exchange's initial listing standards in Rule 5020(a) will apply
to options on Commodity-Based Trust Shares. Rule 5020(a) requires that,
a security on which options may be listed and traded on the Exchange
must be duly registered (with the Commission) and be an NMS stock (as
defined in Rule 600 of Regulation NMS under the Act) and be
characterized by a substantial number of outstanding shares that are
widely held and actively traded.\14\ Further, for an ETF to qualify for
options transactions pursuant to Rule 5020(h), the ETF must either (1)
meet the criteria for underlying securities set forth in Rule 5020(a)
and (b),\15\ or (2) be available for creation and redemption each
business day as set forth in Rule 5020(h)(1).\16\
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\14\ See BOX Rules 5020(a) and (b).
\15\ The criteria and guidelines for a security to be considered
widely held and actively traded are set forth in BOX Rule 5020(b),
subject to the exceptions outlined in Rule 5020(b)(6).
\16\ BOX Rule 5020(h)(1) requires that the Exchange-Traded Fund
Shares are available for creation or redemption each business day
from or through the issuing trust, investment company, commodity
pool or other entity in cash or in kind at a price related to net
asset value, and the issuer is obligated to issue Exchange-Traded
Fund Shares in a specified aggregate number even if some or all of
the investment assets and/or cash required to be deposited have not
been received by the issuer, subject to the condition that the
person obligated to deposit the investment assets has undertaken to
deliver them 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 issuer of the Exchange-Traded
Fund Shares, all as described in the Exchange-Traded Fund Shares'
prospectus.
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Additionally, Commodity-Based Trust Shares will also be subject to
the Exchange's continued listing standards for options on ETFs,
including those set out in Rule 5030(h). Moreover, Commodity-Based
Trust Shares will not be deemed to meet the requirements for continued
approval, and the Exchange will not open for trading any additional
series of option contracts covering Commodity-Based Trust Shares if
such security ceases to be an ``NMS stock'' as provided for in Rule
5030(b)(6) or the Commodity-Based Trust Share is halted from trading on
its primary market.\17\ The Exchange notes that ETFs that hold
financial instruments, money market instruments, or precious metal
commodities on which the Exchange may already list and trade options
pursuant to Rule 5020(h), are trusts structured in substantially the
same manner as options on a Commodity-Based Trust Share 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 ETF options,
including ETFs that hold commodities that it currently lists and trades
on BOX.
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\17\ See BOX Rule 5030(h).
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Consistent with Rule 5050, which governs the opening of options
series on a specific underlying security (including ETFs), BOX will
open at least one expiration month for options on a Commodity-Based
Trust Share \18\ at the commencement of trading on BOX and may also
list series of options on such Commodity-Based Trust Share for trading
on a weekly,\19\ monthly,\20\ or quarterly \21\ basis. BOX may also
list long-term equity option series (``LEAPS'') that expire from twelve
to one hundred eighty months from the time they are listed.\22\
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\18\ See BOX Rule 5050(b). The standard expirations are subject
to certain listing criteria for underlying securities described
within BOX Rule 5020. Standard 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 BOX Rule
5050(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 in the case of an
option contract expiring on a business day, or, in the case of an
option contract expiring on a day that is not a business day, on the
second business day prior to the expiration.
\19\ See BOX IM-5050-6.
\20\ See BOX IM-5050-13.
\21\ See BOX IM-5050-4.
\22\ See BOX Rule 5070.
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Pursuant to IM-5050-1(b), which governs strike prices of series of
options on ETFs, the interval between strike prices of series of
options on a Commodity-Based Trust Share will be $1 or greater when the
strike price is $200 or less and $5 or greater where the strike price
is over $200.\23\ Additionally, BOX may list series of options pursuant
to the $1 Strike Price Interval Program,\24\ the $0.50 Strike
Program,\25\ the $2.50 Strike Price Program,\26\ and the $5.00 Strike
Program.\27\ Pursuant to Rule 7050, where the price of a series of
options on a Commodity-Based Trust Share 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.\28\ Any and all new series
of options on a Commodity-Based Trust Share that BOX lists will be
consistent and comply with the expirations, strike prices, and minimum
increments set forth in Rules 5050 and 7050, as applicable. Further,
the Exchange notes that Rule Series 10100, which governs margin
requirements applicable to the trading of all options on BOX, including
options on ETFs, will also apply to the trading of options on a
Commodity-Based Trust Share.
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\23\ 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, IM-5050-6, IM-
5050-13, and IM-5050-4, specifically set forth intervals between
strike prices on Short Term Option Series, Monthly Options Series,
and Quarterly Options Series, respectively.
\24\ See BOX IM-5050-2.
\25\ See BOX IM-5050-5.
\26\ See BOX IM-5050-3.
\27\ See BOX Rule 5050(d)(5).
\28\ If options on a Commodity-Based Trust Share are eligible to
participate in the Penny Interval Program, the minimum increment of
$0.01 below $3.00 and $0.05 above $3.00 would apply. See BOX Rule
7050(a)(3). See also BOX Rule 7260 (which describes the requirements
for the Penny Interval Program).
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Options on a Commodity-Based Trust Share will trade in the same
manner as options on other ETFs on BOX. The Exchange Rules that
currently apply to the listing and trading of all options on ETFs on
BOX, including, for example, Rules that govern listing criteria,
expirations, exercise prices, minimum increments, position and exercise
limits, margin requirements, customer accounts and trading halt
procedures would apply to the listing and trading of options on a
Commodity-Based Trust Share on BOX in the same manner as they apply to
other options on all other ETFs that are listed and traded on BOX.
[[Page 53032]]
Position and exercise limits for options, including options on a
Commodity-Based Trust Share are determined pursuant to Rules 3120 and
3140, respectively. Position and exercise limits for options on ETFs
vary according to the number of outstanding shares and the trading
volumes of the underlying security over the past six months, where the
largest in capitalization and the most frequently traded funds have an
option position and exercise limit of 250,000 contracts (with
adjustments for splits, re-capitalizations, etc.) on the same side of
the market; and smaller capitalization funds have position and exercise
limits of 200,000, 75,000, 50,000 or 25,000 contracts (with adjustments
for splits, re-capitalizations, etc.) on the same side of the
market.\29\
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\29\ See BOX Rules 3120(d) and 3140(c).
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The Exchange represents that the surveillance procedures applicable
to all other options on ETFs will apply to options on Commodity-Based
Trust Shares, and that the Exchange has the necessary systems capacity
to support the new option series. The Exchange's existing surveillance
and reporting safeguards are designed to deter and detect possible
manipulative behavior which might arise from listing and trading
options on ETFs, including options on Commodity-Based Trust Shares.
Also, the Exchange may obtain trading information via the ISG \30\
related to a financial instrument that is based, in whole or in part,
upon an interest in or performance of a crypto asset, as applicable,
from other exchanges who are members of the ISG. The Exchange has
specified in proposed Rule 5020(h)(3) that each crypto asset held by
the Commodity-Based Trust must underlie a derivatives contract that
trades on a market with which the Exchange has a comprehensive
surveillance sharing agreement, whether directly or through common
membership in ISG.\31\ The Exchange will be required to ensure that
this requirement is met prior to listing options on a Commodity-Based
Trust listed pursuant to proposed Rule 5020(h)(v). In addition, the
Exchange has a Regulatory Services Agreement with the Financial
Industry Regulatory Authority (``FINRA''). Pursuant to a multi-party
17d-2 joint plan, all options exchanges allocate regulatory
responsibilities to FINRA to conduct certain options-related market
surveillances. Further, the Exchange will implement any new
surveillance procedures it deems necessary to effectively monitor the
trading of options on Commodity-Based Trust Shares.
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\30\ A complete list of the current members of the ISG, is
available at <a href="http://www.isgportal.org">http://www.isgportal.org</a>.
\31\ There are a number of futures contracts on digital asset
commodities that are listed and trading on the CME and Coinbase
Derivatives, both of which are ISG members. See <a href="https://www.cmegroup.com/markets/cryptocurrencies.html#products">https://www.cmegroup.com/markets/cryptocurrencies.html#products</a>. See also
<a href="https://www.coinbase.com/derivatives">https://www.coinbase.com/derivatives</a>.
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The Exchange has also analyzed its capacity and represents that it
believes the Exchange and the Options Price Reporting Authority
(``OPRA'') have the necessary systems capacity to handle the additional
traffic associated with the listing of new series of ETFs, including
options on a Commodity-Based Trust Share, up to the number of
expirations currently permissible under the Exchange Rules.
Finally, today, the Exchange lists and trades options on ETFs that
would qualify for listing as an option on a Commodity-Based Trust under
proposed Rule 5020(h)(v),\32\ and it has not identified any issues with
the listing and trading of options on those ETFs.
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\32\ The following ETFs currently have options listed on them on
the Exchange: iShares Bitcoin Trust ETF (IBIT), the Fidelity Wise
Origin Bitcoin Fund (FBTC), the ARK21Shares Bitcoin ETF (ARKB), the
Grayscale Bitcoin Trust ETF (GBTC), the Grayscale Bitcoin Mini Trust
ETF (BTC), and the Bitwise Bitcoin ETF (BITB). See Rule 5020(h)(iv).
The Exchange filed rule proposals and received the appropriate
regulatory notice or approval to list the aforementioned options on
the ETFs.
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2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\33\ in general, and Section
6(b)(5) of the Act,\34\ in particular, in that it is designed to
promote just and equitable principles of trade, 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.
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\33\ 15 U.S.C. 78f(b).
\34\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that its proposal to establish
new listing criteria at Rule 5020(h)(v) with respect to options on
Commodity-Based Trusts, without the need for additional approvals, 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 it would allow the Exchange to immediately list and trade
qualifying options on Commodity-Based Trusts, provided the initial
listing criteria has been met, without any additional approvals from
the Commission.
Specifically, the Exchange's proposal to adopt Rule 5020(h)(v) to
allow the listing and trading of options on units that represent
interests in Commodity-Based Trusts that meet the generic criteria of
the U.S. securities exchange that is the primary equities listing
market for the Commodity-Based Trust,\35\ and hold a single crypto
asset, is consistent with the Act because it will permit the Exchange
to offer options on certain Commodity-Based Trusts soon after the
listing of the ETF on Nasdaq, provided all listing criteria have been
met. Listing these options will avail market participants of the
opportunity to hedge their positions in the Commodity-Based Trusts in a
timely manner, thereby providing investors with the ability to hedge
their exposure to the underlying Commodity-Based Trust. Options on
Commodity-Based Trusts benefits investors, similar to the listing of
any other option on an ETF, by providing investors with a relatively
lower-cost risk management tool to manage their positions and
associated risk in their portfolios more easily in connection with
exposure to the price of a crypto asset. Additionally, listing options
on Commodity-Based Trusts provides investors with the ability to
transact in such options on a listed market as opposed to the OTC
options market, which increases market transparency and enhances the
process of price discovery to the benefit of all investors.
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\35\ See supra note 7.
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Also, this proposal would permit options on certain Commodity-Based
Trusts to be listed on the Exchange in the same manner as options on
ETFs that are subject to the current listing criteria in Rule 5020(h).
The Exchange notes that the majority of ETFs are able to list and trade
options once the initial listing criteria have been met without the
need for additional approvals. The proposed rule change would allow
options on certain Commodity-Based Trusts to likewise list and trade
once the proposed listing criteria have been met without the need for
additional approvals.
As proposed, the Exchange would list options in a Commodity-Based
Trust that met the generic criteria of the U.S. securities exchange
that is the primary equities listing market for the Commodity-Based
Trust, provided the Commodity-Based Trust held only a single crypto
asset. Further, these options on Commodity-Based Trusts would also be
required to satisfy the conditions in proposed Rule 5020(h)(3).
Specifically, a Commodity-Based Trust that met the requirements of
proposed
[[Page 53033]]
Rule 5020(h)(v) would also have to satisfy the following requirements
in proposed Rule 5020(h)(3): (A) the total global supply of the
underlying crypto asset held by the Commodity-Based Trust has an
average daily market value of at least $700 million over the last 12
months; and (B) the crypto asset held by the Commodity-Based Trust
underlies a derivatives contract that trades on a market with which the
Exchange has a comprehensive surveillance sharing agreement, whether
directly or through common membership in the ISG.
These requirements are consistent with the Act and the protection
of investors as they should ensure that the underlying ETF has
sufficient liquidity prior to listing options, which will serve to
prevent disruption to the underlying market. The Exchange believes that
market supply serves as a good measure of liquidity to prevent the
addition of options trading on the Commodity-Based Trust from
disrupting the market for the underlying security. Requiring the
underlying crypto asset to have a requisite amount of deliverable
supply, in addition to all the other criteria the ETF is required to
have under the rules of the primary equities listing market for the
ETF, should ensure adequate liquidity prior to listing. Further,
ensuring the crypto asset held by the Commodity-Based Trust underlies a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in the ISG, will provide the Exchange with
information to adequately surveil options on qualifying Commodity-Based
Trusts. Today, the Exchange has a comprehensive surveillance sharing
agreement in place with both the CME and Coinbase Derivatives through
its common membership in ISG. This facilitates the sharing of
information that is available to the CME and Coinbase Derivatives
through their surveillance of their respective markets, including their
surveillance of their respective digital asset futures markets.
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
qualifying Commodity-Based Trusts must satisfy the initial listing
standards and continued listing standards currently in the Exchange
Rules, applicable to options on all ETFs, including ETFs that hold
other crypto assets already deemed appropriate for options trading on
the Exchange in addition to the proposed criteria. Options on
qualifying Commodity-Based Trusts would trade in the same manner as any
other ETF options--the same Exchange Rules that currently govern the
listing and trading of all ETF options, including permissible
expirations, strike prices and minimum increments, and applicable
position and exercise limits and margin requirements, will govern the
listing and trading of options on qualifying Commodity-Based Trusts.
The Exchange represents that it has the necessary systems capacity
to support the listing and trading of options on qualifying Commodity-
Based Trusts. 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 of
these options on Commodity-Based Trust, particularly in light of the
additional requirement that the crypto asset held by the Commodity-
Based Trust underlies a derivatives contract that trades on a market
with which the Exchange has a comprehensive surveillance sharing
agreement, whether directly or through common membership in ISG.
Finally, today, the Exchange lists and trades options on ETFs that
would qualify for listing as an option on a Commodity-Based Trust under
proposed Rule 5020(h)(v),\36\ and it has not identified any issues with
the listing and trading of options on those ETFs.
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\36\ See supra note 32.
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The Exchange believes the proposed changes to Rule 5020(h)(iv) will
remove impediments to and perfect the mechanism of a free and open
market and a national market system, because it will revert the rule
text back to the previously existing language to remove the now
unnecessary and duplicative requirements relating to Commodity-Based
Trust Shares and conform the subsection with the changes proposed
herein.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal to amend the
listing criteria at Rule 5020(h)(v), with respect to ETFs, to adopt new
criteria to permit the listing and trading of options on certain
Commodity-Based Trusts that hold a single crypto asset, and that were
listed pursuant to the generic criteria of the U.S. securities exchange
that is the primary equities listing market for the Commodity-Based
Trust, without the need for additional approvals, will impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Options on qualifying
Commodity-Based Trusts would need to satisfy the initial listing
standards set forth in the Exchange Rules in the same manner as any
other ETF before the Exchange could list options on them. Additionally,
options on qualifying Commodity-Based Trusts will be equally available
to all market participants who wish to trade such options. The Exchange
Rules currently applicable to the listing and trading of options on
ETFs on the Exchange will apply in the same manner to the listing and
trading of all options on qualifying Commodity-Based Trusts.
Additionally, the Exchange notes that listing and trading options
on qualifying Commodity-Based Trusts 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 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 in a timely manner.
The Exchange does not believe that the proposal to adopt new
listing criteria at Rule 5020(h)(v) to permit the listing and trading
of certain options on a Commodity-Based Trust, without the need for
additional approvals, will impose any burden on intermarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act, as nothing prevents other options exchanges from proposing
similar rules to list and trade options on Commodity-Based Trusts.
Other options exchanges are free to amend their listing rules, as
applicable, to permit them to list and trade options on Commodity-Based
Trusts. As noted herein, a substantively identical proposal submitted
by another options exchange has recently been deemed approved by the
Securities and Exchange Commission.\37\
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\37\ See supra note 6.
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The Exchange does not believe the proposed change to revert Rule
5020(h)(iv) back to the previously existing rule text will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act because it seeks to remove the
now unnecessary and duplicative requirements relating to Commodity-
Based Trust Shares and
[[Page 53034]]
conform the subsection with the changes proposed herein.
As such, 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
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\38\
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\38\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires a self-regulatory organization to give the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \39\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\40\ 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 Exchange
states that waiver of the 30-day operative delay would be consistent
with the protection of investors and the public interest because it
would ensure fair competition among the exchanges and reduce the
potential for investor confusion. The Exchange states that waiver of
the 30-day operative delay would allow the Exchange to update Rule 5020
to codify the changes proposed in SR-BOX-2025-12, Amendment 2, which
was filed during the government shutdown, and which is substantially
similar in all material respects to a proposal submitted by another
exchange that was recently deemed approved by the Commission.\41\ For
these reasons, the Commission finds that waiver of the 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 proposal operative upon filing.\42\
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\39\ 17 CFR 240.19b-4(f)(6).
\40\ 17 CFR 240.19b-4(f)(6)(iii).
\41\ See supra note 6.
\42\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \43\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\43\ 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#7103041d145c121e1c1c141f0502310214125f161e07"><span class="__cf_email__" data-cfemail="89fbfce5eca4eae6e4e4ece7fdfac9faeceaa7eee6ff">[email protected]</span></a>. Please include
file number SR-BOX-2025-28 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-BOX-2025-28. 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-BOX-2025-28 and should be submitted on
or before December 15, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\44\
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\44\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-20686 Filed 11-21-25; 8:45 am]
BILLING CODE 8011-01-P
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