Notice2025-21981
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 iShares Bitcoin Trust 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 56231-56234]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-21981]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104284; File No. SR-BOX-2025-29]
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 iShares Bitcoin Trust 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 iShares Bitcoin Trust ETF
(``IBIT''). 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)
[[Page 56232]]
to permit FLEX Equity Options on the iShares Bitcoin Trust ETF
(``IBIT''). This is a competitive filing that is based on a proposal
recently submitted by Nasdaq PHLX LLC (``Nasdaq PHLX'') and approved by
the Commission.\3\
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\3\ See Securities Exchange Act Release No. 103565 (July 29,
2025), 90 FR 36233 (August 1, 2025) (SR-Phlx-2024-72) (Order
Approving a Proposed Rule Change to Permit the Trading of FLEX
Options on Shares of the iShares Bitcoin Trust ETF).
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IBIT is an Exchange-Traded Fund (``ETF'') that holds bitcoin and is
listed on The Nasdaq Stock Market LLC (``Nasdaq'').\4\ On September 20,
2024, Nasdaq ISE, LLC (``ISE'') was the first exchange to receive
approval to list options on IBIT.\5\ On November 27, 2024, the Exchange
began listing and trading IBIT options.\6\ The position and exercise
limits for IBIT options are determined pursuant to Rules 3120 and
3140.\7\ Today, pursuant to Rule 5055(e), IBIT options are not approved
for FLEX trading.\8\ Today, FLEX Equity Options, other than cash-
settled options and those that expire on a third Friday-of-the-month,
have no position limits pursuant to Rule 5055(i).\9\ Therefore, the
position limit determined pursuant to Rule 3120 and exercise limit
determined pursuant to Rule 3140 for IBIT options currently apply to
non-FLEX IBIT options.
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\4\ Nasdaq received approval to list and trade Bitcoin-Based
Commodity-Based Trust Shares in IBIT pursuant to Rule 5711(d) of
Nasdaq. See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008 (January 17, 2024) (SR-NASDAQ-2023-016) (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).
\5\ See Securities Exchange Act Release No. 101128 (September
20, 2024), 89 FR 78942 (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 Approval Order'').
\6\ See Notice 2024-062, dated November 26, 2024 (Bitcoin ETP
Options), available at: <a href="https://boxexchange.com/assets/Notice-2024-062-Bitcoin-ETF-Options-Notice1.pdf">https://boxexchange.com/assets/Notice-2024-062-Bitcoin-ETF-Options-Notice1.pdf</a>.
\7\ Per Rule 3140, the exercise limit for IBIT options is the
same as the position limit for IBIT options as determined by Rule
3120.
\8\ BOX Rule 5055(e) also does not permit FLEX trading on
options on Fidelity Wise Origin Bitcoin Fund, ARK 21Shares Bitcoin
ETF, Grayscale Bitcoin Trust (BTC), Grayscale Bitcoin Mini Trust
BTC, and Bitwise Bitcoin ETF.
\9\ BOX offers FLEX Equity Options which are customized options
that allow investors to tailor contract terms for exchange-listed
options on its trading floor. See BOX Rule 7605.
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At this time, the Exchange proposes to permit IBIT options to
transact as FLEX Equity Options and would require the aggregation of
any FLEX and non-FLEX positions in the same underlying ETF for purposes
of calculating position and exercise limits on such ETF. Thus, for
example, assuming a 250,000-contract position limit for options on
IBIT, 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 IBIT options). The
share 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. For example, if a market participant exercised a long
call position for 25,000 contracts and purchased 2,500,000 shares of
IBIT and this purchase resulted in the value of IBIT shares to trade at
a premium to the value of the (underlying) bitcoin held by IBIT, the
Exchange believes that other market participants would attempt to
arbitrage this price difference by selling short IBIT shares while
concurrently purchasing bitcoin. Those market participants
(arbitrageurs) would then deliver cash to IBIT and receive shares of
IBIT, which would be used to close out any previously established short
position in IBIT. Thus, this creation and redemptions process would
significantly reduce the potential risk of price dislocation between
the value of IBIT shares and the value of bitcoin holdings.
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. The Exchange believes there is room for significant growth if a
comparable FLEX 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 IBIT options. The Exchange also
believes that the trading of FLEX IBIT options would allow these same
market participants to better manage the risk associated with the
volatility of IBIT (the underlying ETF) positions given the enhanced
liquidity that an exchange-traded product would bring.
Additionally, the Exchange believes that FLEX IBIT 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, counterparty credit risk would
be mitigated by the fact that the exchange-traded contracts are issued
and guaranteed by The Options Clearing Corporation (``OCC''). Finally,
the price discovery and dissemination provided by the Exchange and its
participant organizations would lead to more transparent markets. The
Exchange believes that its ability to offer FLEX IBIT 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 IBIT options. The Exchange believes any additional
traffic that would be generated from the trading of FLEX IBIT 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 IBIT options, will apply to FLEX
IBIT options, and that it has the necessary systems capacity to support
such options. 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.\10\ Today, the Exchange has an adequate surveillance program
in place for options. The Exchange intends to apply those same program
procedures to options on the Trust that it applies to the Exchange's
other options products.\11\ The Exchange would review activity in the
underlying Trust when conducting surveillances for market abuse or
manipulation in the options on the Trust. The Exchange does not believe
that allowing FLEX IBIT options would render the marketplace for non-
FLEX IBIT options, or equity options in general, more susceptible to
manipulative practices.
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\10\ BOX FLEX trading occurs on the Trading Floor, in an open
outcry environment. Surveillance staff monitors FLEX trading in open
outcry.
\11\ The surveillance program includes real-time patterns for
price and volume movements and post-trade surveillance patterns
(e.g., spoofing, marking the close, phishing).
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The Exchange represents that its existing trading surveillances are
adequate to monitor the trading in IBIT
[[Page 56233]]
(as well as FLEX IBIT) on the Exchange. Additionally, the Exchange is a
member of the Intermarket Surveillance Group (``ISG'') under the
Intermarket Surveillance Group Agreement. ISG members work together to
coordinate surveillance and investigative information sharing in the
stock, options, and futures markets. For surveillance purposes, the
Exchange would therefore have access to information regarding trading
activity in the pertinent underlying securities. 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.\12\ The Exchange will implement
any additional surveillance procedures it deems necessary to
effectively monitor the trading of IBIT options.
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\12\ 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 IBIT to utilize FLEX IBIT 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 IBIT options. The Exchange believes that introducing FLEX IBIT
options would further broaden the base of investors that use FLEX
Equity Options (and options on IBIT 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''),\13\ in general, and Section 6(b)(5) of the Act,\14\ 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 general to protect investors and the
public interest. Specifically, the Exchange believes that introducing
FLEX IBIT 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 IBIT to utilize
FLEX IBIT options.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposal to permit FLEX IBIT options
would remove impediments to and perfect the mechanism of a free and
open market. The Exchange believes that offering FLEX IBIT options 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 to 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 IBIT options may open up the market for options on
IBIT to more retail investors. Additionally, offering FLEX IBIT options
would serve two primary client types in the capital markets by
permitting ETF and structured return issuers to more precisely tailor
their settlement style and allow other investors to align their
contract durations for calls and puts, as well as settlement-style.
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 IBIT 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 flows to
the benefit of the investing public. A robust and competitive market
requires that exchanges respond to evolving needs in the market by
constantly improving their offerings. Such efforts would be stymied if
exchanges were prohibited from offering innovative products such as the
proposed FLEX IBIT options. The Exchange does not believe that allowing
FLEX IBIT 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
IBIT options. Regarding the proposed FLEX IBIT options, the Exchange
would use the same surveillance procedures currently utilized for FLEX
Equity Options listed on the Exchange (as well as for non-FLEX IBIT
options). The Exchange would review activity in the underlying Trust
when conducting surveillances for market abuse or manipulation in the
options on the Trust. In light of surveillance measures related to both
options and IBIT (the underlying ETF),\15\ the Exchange believes that
[[Page 56234]]
existing surveillance procedures are designed to deter and detect
possible manipulative behavior which might potentially arise from
listing and trading the proposed FLEX IBIT options.
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\15\ See Securities Exchange Act Release No. 99295 (January 8,
2024), 89 FR 2321, 2334-35 (January 12, 2024) (SR-NASDAQ-2023-016)
(Notice of Filing of Amendment No. 1 to a Proposed Rule Change To
List and Trade Shares of the iShares Bitcoin Trust Under Nasdaq Rule
5711(d)).
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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 Nasdaq PHLX that was
recently approved by the Commission.\16\
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\16\ See supra note 3.
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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 IBIT options.
The proposed rule change is designed to allow investors seeking option
exposure to bitcoin to trade FLEX IBIT options. Moreover, the Exchange
believes that the proposal to permit FLEX IBIT 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 IBIT 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 IBIT 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.
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 \17\ and Rule 19b-
4(f)(6) \18\ thereunder, the Exchange has designated this proposal as
one that effects a change that: (i) does not 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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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 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 trading on IBIT
options, without delay, to investors seeking a customized option.
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 IBIT 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.\19\
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\19\ 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#354740595018565a5858505b4146754650561b525a43"><span class="__cf_email__" data-cfemail="c1b3b4ada4eca2aeacaca4afb5b281b2a4a2efa6aeb7">[email protected]</span></a>. Please include
file number SR-BOX-2025-29 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-2025-29. 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-2025-29 and should be submitted on
or before December 26, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-21981 Filed 12-4-25; 8:45 am]
BILLING CODE 8011-01-P
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