Notice2025-21980
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing of Proposed Rule Change To Amend BOX Rule 5055 (FLEX Equity Options) To Permit FLEX Equity Options on the Grayscale Bitcoin Trust, the Grayscale Bitcoin Mini Trust, 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
December 5, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 232 (Friday, December 5, 2025)</title>
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[Federal Register Volume 90, Number 232 (Friday, December 5, 2025)]
[Notices]
[Pages 56241-56244]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-21980]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104283; File No. SR-BOX-2025-30]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
of Proposed Rule Change To Amend BOX Rule 5055 (FLEX Equity Options) To
Permit FLEX Equity Options on the Grayscale Bitcoin Trust, the
Grayscale Bitcoin Mini Trust, and the Bitwise Bitcoin ETF
December 2, 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 17, 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 BOX Rule 5055 (FLEX Equity Options)
to permit FLEX Equity Options on the Grayscale Bitcoin Trust, the
Grayscale Bitcoin Mini Trust, and the Bitwise Bitcoin ETF. The text of
the proposed rule change is available from the principal office of the
Exchange, at the Commission's Public Reference Room 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 Exchange proposes to amend BOX Rule 5055 (FLEX Equity Options)
to permit the Grayscale Bitcoin Trust (``GBTC''), the Grayscale Bitcoin
Mini Trust ETF (``BTC''), and the Bitwise Bitcoin ETF (``BITB'') (each
a ``Fund'' and, collectively, the ``Funds'') to trade as FLEX Equity
Options and to require the aggregation of any FLEX and non-FLEX
positions on the same underlying ETF for purposes of calculating
position and exercise limits as set forth in Rules 3120 and 3140.\3\
This is a competitive filing that is based on a proposal recently
submitted by NYSE American LLC (``NYSE American'') and approved by the
Commission.\4\
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\3\ FLEX Equity Options are customized equity contracts that
allow investors to tailor contract terms for exchange-listed equity
options. See generally BOX Rule 5055 (FLEX Equity Options).
\4\ See Securities Exchange Act Release No. 103566 (July 29,
2025), 90 FR 36250 (August 1, 2025) (SR-NYSEAMER-2024-78) (Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, to
Permit the Trading of FLEX Options on Shares of the Grayscale
Bitcoin Trust, the Grayscale Bitcoin Mini Trust ETF, and the Bitwise
Bitcoin ETF).
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Background
Each Fund is an ETF that holds bitcoin and is listed on NYSE Arca,
Inc. (``NYSE Arca'').\5\ Recently, the Commission approved options
trading on the Funds.\6\ For each Fund, the position and exercise
limits are determined pursuant to Rules 3120 and 3140.\7\ FLEX Equity
Options are not generally subject to position or exercise limits.\8\
Today, pursuant to Rule 5055(e), Fund options are not approved for FLEX
trading.\9\ Therefore, the position and exercise limits applicable to
options on each Fund currently apply solely to non-FLEX Fund options.
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\5\ 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) (Order Granting Accelerated Approval of
Proposed Rule Changes, as Modified by Amendments Thereto, to list
and trade options in GBTC and BITB), 89 FR 3008 (January 17, 2024)
(SR-NYSEARCA-2021-90); 100610 (July 26, 2024) (Order Granting
Approval of Proposed Rule Changes, as Modified by Amendment No. 1,
to permit the listing and trading of options on BTC), 89 FR 62821
(August 1, 2024) (SR-NYSEARCA-2023-45) [sic].
\6\ See Securities Exchange Act Release No. 101386 (October 18,
2024), 89 FR 84960 (October 24, 2024) (SR-NYSEAMER-2024-49) (Order
approving the listing and trading of options on GBTC, BTC, and BITB,
pursuant to Rule 915, Commentary .10(a) (the ``Fund Options Approval
Order'').
\7\ Per Rule 3140, the exercise limit for options on each Fund
is the same as the position limit for that Fund as determined by
Rule 3120. See BOX Rules 3120 and 3140.
\8\ See BOX Rule 5055(i).
\9\ Rule 5055(e) also does not permit FLEX trading on options on
FBTC and ARKB.
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Proposal
The Exchange proposes to permit options on each Fund to trade as
FLEX Equity Options and would require the aggregation of any FLEX and
non-FLEX positions in the same underlying Fund for purposes of
calculating the position and exercise limits applicable to each
Fund.\10\ Thus, for example, assuming a 250,000-contract position limit
for options on BTC, the Exchange would restrict a market participant
from holding positions that could result in the receipt of more than
250,000,000 shares (if that market participant exercised all its BTC
options). Further, the Exchange believes that the share creation and
redemption process unique to ETFs would mitigate any potential risk of
manipulation in FLEX Fund Options. The creation and redemption process
available to each ETF is designed to ensure that an ETF's price closely
tracks the value of its underlying asset(s). For example, if a market
participant exercised a long call position for 25,000 contracts and
[[Page 56242]]
purchased 2,500,000 shares of GBTC and this purchase resulted in the
value of GBTC shares to trade at a premium to the value of the
(underlying) bitcoin held by GBTC, the Exchange believes that other
market participants would attempt to arbitrage this price difference by
selling short GBTC shares while concurrently purchasing bitcoin. Those
market participants (arbitrageurs) would then deliver cash to GBTC and
receive shares of GBTC, which would be used to close out any previously
established short position in GBTC. Thus, this creation and redemptions
process would significantly reduce the potential risk of price
dislocation between the value of shares in each Fund and the value of
bitcoin holdings.
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\10\ See proposed Rules 5055(e) and (i).
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The Exchange understands that FLEX options on ETFs are currently
traded in the over-the-counter (``OTC'') market by a variety of market
participants, e.g., hedge funds, proprietary trading firms, and pension
funds, to name a few. The Exchange believes there is room for
significant growth if a comparable product were introduced for trading
on a regulated market. The Exchange expects that users of these OTC
products would be among the primary users of FLEX Fund Options. The
Exchange also believes that the trading of FLEX Fund Options would
allow these same market participants to better manage the risk
associated with the volatility of positions in the underlying ETF
(i.e., GBTC, BTC, or BITB) given the enhanced liquidity that an
exchange-traded product would bring. Additionally, the Exchange
believes that FLEX Fund Options traded on the Exchange would have three
important advantages over the contracts that are traded in the OTC
market. First, as a result of greater standardization of contract
terms, exchange-traded contracts should develop more liquidity. Second,
counter-party credit risk would be mitigated by the fact that the
contracts are issued and guaranteed by The Options Clearing Corporation
(``OCC''). Finally, the price discovery and dissemination provided by
the Exchange and its members would lead to more transparent markets.
The Exchange believes that its ability to offer FLEX Fund Options would
aid it in competing with the OTC market and at the same time expand the
universe of products available to interested market participants. The
Exchange believes that an exchange-traded alternative may provide a
useful risk management and trading vehicle for market participants and
their customers.
The Exchange has analyzed its capacity and represents that it and
The Options Price Reporting Authority (``OPRA'') have the necessary
systems capacity to handle the additional traffic associated with the
listing of FLEX Fund Options. The Exchange believes any additional
traffic that would be generated from the trading of FLEX Fund Options
would be manageable. The Exchange believes Participants will not have a
capacity issue as a result of this proposed rule change. The Exchange
will monitor the trading volume associated with the additional options
series listed as a result of this proposed rule change and the effect
(if any) of these additional series on the capacity of the Exchange's
automated systems.
The Exchange represents that the same surveillance procedures
applicable to the Exchange's other options products listed and traded
on the Exchange, including non-FLEX options in each Fund, will apply to
FLEX Fund Options, and that it has the necessary systems capacity to
support such options. The Exchange believes that its surveillance
procedures are adequate to properly monitor the trading of options on
the Funds and to deter and detect violations of Exchange rules. FLEX
options products (and their respective symbols) are integrated into the
Exchange's existing surveillance system architecture and are thus
subject to the relevant surveillance processes. The Exchange does not
believe that allowing FLEX Fund Options would render the marketplace
for non-FLEX options in any of the Funds, or equity options in general,
more susceptible to manipulative practices.
The Exchange represents that its existing trading surveillances are
adequate to monitor the trading in GBTC, BTC, and BITB, as well as any
subsequent trading of FLEX Fund Options on the Exchange. Additionally,
the Exchange is a member of the Intermarket Surveillance Group
(``ISG'') under the ISG Agreement. ISG members work together to
coordinate surveillance and investigative information sharing in the
stock, options, and futures markets. For surveillance purposes, the
Exchange would therefore have access to information regarding trading
activity in GBTC, BTC, and BITB and in other pertinent underlying
securities on other exchanges through ISG. In addition, the Exchange
has a regulatory services agreement with the Financial Industry
Regulatory Authority (``FINRA''), pursuant to which FINRA conducts
certain surveillances on behalf of the Exchange. Further, pursuant to a
multi-party 17d-2 joint plan, all options exchanges allocate regulatory
responsibilities to FINRA to conduct certain options-related market
surveillances.\11\ The Exchange will implement any additional
surveillance procedures it deems necessary to effectively monitor the
trading of FLEX Fund Options.
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\11\ Section 19(g)(1) of the Act, among other things, requires
every 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.
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.
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The proposed rule change is designed to allow investors seeking to
trade options on the Funds to utilize FLEX Fund Options. The Exchange
believes that offering innovative products flows to the benefit of the
investing public. A robust and competitive market requires that
exchanges respond to participants' evolving needs by constantly
improving their offerings. Such efforts would be stymied if exchanges
were prohibited from offering innovative products such as the proposed
FLEX Fund Options. The Exchange believes that introducing FLEX Fund
Options would further broaden the base of investors that use FLEX
Equity Options (and options on the Funds in general) to manage their
trading and investment risk, including investors that currently trade
in the OTC market for customized options. The proposed rule change is
also designed to encourage market makers to shift liquidity from the
OTC market to the Exchange, which, it believes, will enhance the
process of price discovery conducted on the Exchange through increased
order flow.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\12\ in general, and Section 6(b)(5) of the Act,\13\ in
particular, in that it is 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 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
[[Page 56243]]
general to protect investors and the public interest. Specifically, the
Exchange believes that introducing FLEX Fund Options will increase
order flow to the Exchange, increase the variety of options products
available for trading, and provide a valuable tool for investors to
manage risk. The proposed rule change is designed to allow investors
seeking to trade options on any of the Funds to utilize FLEX Fund
Options. The Exchange believes that the proposal to permit FLEX Fund
Options would remove impediments to and perfect the mechanism of a free
and open market. The Exchange believes that offering FLEX Fund Options
and to require aggregation of any FLEX and non-FLEX positions in the
same underlying ETF for the Funds for the purposes of calculating
position and exercise limits will benefit investors by providing them
with an additional, relatively lower cost investing tool to gain
exposure to the price of bitcoin and provide a hedging vehicle to meet
their investment needs in connection with a bitcoin-related product.
Moreover, the proposal would broaden the base of investors that use
FLEX Equity Options to manage their trading and investment risk,
including investors that currently trade in the OTC market for
customized options. By trading a product in an exchange-traded
environment (that is currently being used in the OTC market), the
Exchange would be able to compete more effectively with the OTC market.
The Exchange believes the proposed rule change is designed to prevent
fraudulent and manipulative acts and practices in that it would lead to
the migration of options currently trading in the OTC market to trading
on the Exchange. Also, any migration to the Exchange from the OTC
market would result in increased market transparency and enhance the
process of price discovery conducted on the Exchange through increased
order flow. The Exchange also believes that offering FLEX Fund Options
may appeal to retail investors interested in options trading (both FLEX
and non-FLEX) on GBTC, BTC, and BITB.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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Additionally, the Exchange believes the proposed rule change is
designed to remove impediments to and to perfect the mechanism for a
free and open market and a national market system, and, in general, to
protect investors and the public interest in that it should create
greater trading and hedging opportunities and flexibility. The proposed
rule change should also result in enhanced efficiency in initiating and
closing out positions and heightened contra-party creditworthiness due
to the role of OCC as issuer and guarantor of FLEX Fund Options.
Further, the proposed rule change would result in increased competition
by permitting the Exchange to offer products that are currently used in
the OTC market.
The Exchange believes that offering innovative products benefits
the investing public. A robust and competitive market requires that
exchanges respond to the evolving needs of their members by constantly
improving their offerings. Such efforts would be stymied if exchanges
were prohibited from offering innovative products such as the proposed
FLEX Fund Options. The Exchange does not believe that allowing FLEX
Fund Options would render the marketplace for equity options more
susceptible to manipulative practices.
Finally, the Exchange represents that it has an adequate
surveillance program in place to detect manipulative trading in FLEX
Fund Options. Regarding the proposed FLEX Fund Options, the Exchange
would use the same surveillance procedures utilized for FLEX Equity
Options currently listed on the Exchange (as well as for non-FLEX
options on each Fund). In light of surveillance measures related to
both options and the underlying Funds,\14\ 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 FLEX Fund Options.
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\14\ See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008, 3009 (January 17, 2024) (File Nos. 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).
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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 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 a filing submitted by NYSE American that was
recently approved by the Commission.\15\
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\15\ See supra, note 4.
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The Exchange does not believe that its proposed rule change will
impose any burden on intra-market competition as all market
participants would have the option of utilizing the FLEX Fund Options.
The proposed rule change is designed to allow investors seeking option
exposure to bitcoin to trade FLEX Fund Options. Moreover, the Exchange
believes that the proposal to permit FLEX Fund Options would broaden
the base of investors that use FLEX Equity Options to manage their
trading and investment risk, including investors that currently trade
in the OTC market for customized options.
The Exchange does not believe that its proposed rule change will
impose any burden on intermarket competition as all market participants
would have the option of utilizing the FLEX Fund Options. The Exchange
notes that it operates in a highly competitive market in which market
participants can readily direct order flow to competing venues. The
proposed rule change would support that intermarket competition by
allowing the Exchange to offer additional functionality to
Participants. The Exchange believes that the proposed FLEX Fund Options
will increase the variety of options products available for trading in
general and bitcoin-related products in particular and, as such, will
provide a valuable tool for investors to manage risk. As such, the
Exchange believes that this proposal does not create an undue burden on
intermarket competition. Rather, the Exchange believes that the
proposed rule would bolster intermarket competition by promoting fair
competition among individual markets. The Exchange notes that competing
options exchanges are free to file similar proposals for FLEX Fund
Options.
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
Pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) \17\ thereunder, the Exchange has designated this proposal as
one that effects a change that: (i) does not
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significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days after the
date of the filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6). 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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The Exchange has requested that the Commission waive the 30-day
operative delay period. The Exchange stated that waiver of the
operative delay is consistent with the protection of investors and the
public interest because it will ensure fair competition among the
exchanges by allowing the Exchange to offer FLEX Fund Options, without
delay, to investors seeking customized options.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because the proposal does not raise any novel regulatory issues and
waiver will allow the Exchange to offer FLEX trading on GBTC, BTC, and
BITB options, without delay, to investors seeking a customized option.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposed rule change to be operative upon filing.\18\
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\18\ 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 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#eb999e878ec6888486868e859f98ab988e88c58c849d"><span class="__cf_email__" data-cfemail="7301061f165e101c1e1e161d0700330016105d141c05">[email protected]</span></a>. Please include
file number SR-BOX-2025-30 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-2025-30. 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-2025-30 and should be submitted on
or before December 26, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-21980 Filed 12-4-25; 8:45 am]
BILLING CODE 8011-01-P
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