Notice2025-23665
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for Underlying Securities, To List and Trade 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
December 23, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 244 (Tuesday, December 23, 2025)</title>
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[Federal Register Volume 90, Number 244 (Tuesday, December 23, 2025)]
[Notices]
[Pages 60187-60192]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23665]
[[Page 60187]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104458; File No. SR-PEARL-2025-49]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for
Underlying Securities, To List and Trade Options on Commodity-Based
Trust Shares
December 18, 2025.
Pursuant to the provisions of 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 December 5, 2025, MIAX PEARL, LLC (``MIAX
Pearl'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by MIAX Pearl. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 402, Criteria for
Underlying Securities, to permit options on Commodity-Based Trust
Shares. Specifically, the Exchange proposes to amend the rule to (1)
redefine Commodity-Based Trust; (2) require additional qualifying
criteria, based on the criteria outlined by the primary listing market
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. This filing also defines a crypto
asset. Additionally, this filing proposes to amend Exchange Rule 403(g)
to update the relevant citations to Exchange Rule 402, which are
revised pursuant to this filing.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings">https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings</a> and at MIAX Pearl's principal office.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, MIAX Pearl 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. MIAX Pearl 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 its listing rules at Exchange Rule
402, Criteria for Underlying Securities.\3\ Specifically, the Exchange
proposes to amend the criteria for listing options on Exchange-Traded
Fund Shares (``ETFs'') at Exchange Rule 402(i). This is a competitive
filing substantively identical to the proposal submitted by Nasdaq ISE,
LLC (``ISE'') to the Securities and Exchange Commission (the
``Commission''), which was recently deemed approved.\4\
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\3\ The Exchange notes that its affiliate options exchanges,
Miami International Securities Exchange, LLC (``MIAX'') and MIAX
Sapphire, LLC (``MIAX Sapphire''), submitted (or will submit)
substantively similar proposals. The Exchange notes that the rules
of Chapter IV of MIAX, including Exchange Rule 402, are incorporated
by reference into the MIAX Emerald, LLC (``MIAX Emerald'') rulebook.
\4\ See Securities Exchange Act Release No. 102465 (February 7,
2025), 90 FR 10740 (February 26, 2025) (SR-ISE-2025-08) (Self-
Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of
Amendment No. 1 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, to Adopt
Listing Criteria for Options on a Commodity-Based Trust) [sic].
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The Exchange initially filed SR-PEARL-2025-08, as Modified by
Partial Amendment Nos. 1 and 2, a proposed rule change to amend its
listing rules at Exchange Rule 402, Criteria for Underlying Securities,
to allow the listing and trading of options on interests in a
Commodity-Based Trust on March 5, 2025, which was published in the
Federal Registrar [sic] on March 19, 2025.\5\ On April 25, 2025, the
Commission issued a notice designating a longer period for Commission
action, which designated June 17, 2025, as the date by which the
Commission shall either approve or disapprove, or institute proceedings
to determine whether to disapprove the filing.\6\ On June 17, 2025, the
Commission issued an order instituting proceedings to determine whether
to approve or disapprove the filing.\7\ The Commission did not receive
any comments on the proposed rule change. On September 8, 2025, the
Commission extended the time period for approving or disapproving the
proposed rule changes, as modified by the applicable Partial
Amendments, for an additional 60 days, designating November 14, 2025 as
the date by which the Commission will either approve or disapprove the
proposed rule change, as modified by the applicable Partial
Amendments.\8\ The Commission did not act to either approve or
disapprove the proposal on or before November 14, 2025, therefore the
proposal, as published in the Federal Register on March 5, 2025, was
deemed approved as of November 14, 2025.\9\ On November 6, 2025, during
the government shutdown, the Exchange submitted Amendment 3 to SR-
PEARL-2025-08. The Exchange is now proposing the current change to
reiterate the changes proposed in Amendment 3 to SR-PEARL-2025-08 to
codify the proposed rule text in the Exchange's Rulebook.
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\5\ See Securities Exchange Act Release No. 102659 (March 5,
2025), 90 FR 12876 (March 19, 2025) (SR-PEARL-2025-08) (Self-
Regulatory Organizations; Notice of Filing of a Proposed Rule
Change, as Modified by Partial Amendment Nos. 1 and 2, by MIAX
PEARL, LLC To Amend Exchange Rule 402, Criteria for Underlying
Securities, To List and Trade Options on Commodity-Based Trust
Share).
\6\ See Securities Exchange Act Release No. 102929 (April 25,
2025), 90 FR 18718 (May 1, 2025) (SR-PEARL-2025-08) (Self-Regulatory
Organizations; MIAX PEARL, LLC; Notice of Designation of a Longer
Period for Commission Action on a Proposed Rule Change, as Modified
by Partial Amendment Nos. 1 and 2, To Amend Exchange Rule 402,
Criteria for Underlying Securities, To List and Trade Options on
Commodity-Based Trust Shares).
\7\ See Securities Exchange Act Release No. 103283 (June 17,
2025), 90 FR 26634 (June 23, 2025) (SR-PEARL-2025-08) (Self-
Regulatory Organizations; Miami International Securities Exchange,
LLC; MIAX PEARL, LLC; MIAX Sapphire, LLC; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove Proposed
Rule Changes, as Modified by Partial Amendments Thereto, To Amend
Rule 402, Criteria for Underlying Securities, To List and Trade
Options on Commodity-Based Trust Shares).
\8\ See Securities Exchange Act Release No. 103903 (September 8,
2025), 90 FR 44123 (September 11, 2025) (SR-PEARL-2025-08)(Self-
Regulatory Organizations; Miami International Securities Exchange,
LLC; MIAX PEARL, LLC; MIAX Sapphire, LLC; Notice of Designation of a
Longer Period for Commission Action on Proceedings To Determine
Whether To Approve or Disapprove a Proposed Rule Change, as Modified
by Partial Amendments Thereto, To Amend Rule 402, Criteria for
Underlying Securities, To List and Trade Options on Commodity-Based
Trust Shares).
\9\ See Securities Exchange Act Release No. 104210 (November 18,
2025), 90 FR 52727 (November 21, 2025) (SR-PEARL-2025-08)(Self-
Regulatory Organizations; BOX Exchange LLC, Cboe Exchange, Inc.,
Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGX
Exchange, Inc., Miami International Securities Exchange, LLC, MIAX
PEARL, LLC, MIAX Sapphire, LLC, Nasdaq ISE, LLC, New York Stock
Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE National,
Inc., and NYSE Texas, Inc.; Notice of Deemed Approval of Various
Proposed Rule Changes).
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The Exchange proposes to amend Rule 402 to adopt new listing
criteria in
[[Page 60188]]
subparagraph (i)(6) to permit the listing and trading of options on a
Commodity-Based Trust that meets the generic listing standards for
Commodity-Based Trust Shares of the applicable primary listing market,
except that the Commodity-Based Trust holds a single crypto asset.\10\
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\10\ For example, a multi-coin ETF would not be subject to
Exchange Rule 402(i)(6). 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. See definition at proposed
Exchange Rule 402(i)(6)(iii).
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On September 17, 2025, the Commission approved proposals by The
Nasdaq Stock Market LLC, Cboe BZX Exchange, Inc. and NYSE Arca, Inc.,
to Adopt Generic Listing Standards for Commodity-Based Trusts.\11\ In
the approval order, the Commission noted that each of the exchanges
proposed to adopt substantially identical ``generic'' listing standards
for Commodity-Based Trusts. Those generic listing standards define the
term shares of a ``Commodity-Based Trust'' as a security \12\ that:
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\11\ See Securities Exchange Act Release No. 103995 (Sept. 17,
2025), 90 FR 45414 (Sept. 22, 2025) (Self-Regulatory Organizations;
The Nasdaq Stock Market LLC; Cboe BZX Exchange, Inc.; NYSE Arca,
Inc.; Order Granting Accelerated Approval of Proposed Rule Changes,
as Modified by Amendments Thereto, To Adopt Generic Listing
Standards for Commodity-Based Trust Shares)(SR-NASDAQ-2025-056; SR-
CboeBZX-2025-104; SR-NYSEARCA-2025-54) (``Generic Listing Standards
for Commodity-Based Trust Shares Approval''). The Exchange believes
that it is appropriate to rely on the generic listing standards
outlined by the primary listing market due to the potential
proliferation of new primary listing markets and the Commission's
acknowledgment that the definition of shares of a Commodity-Based
Trust across those primary listing markets is substantially
identical.
\12\ Shares of the applicable Commodity-Based Trust trade as
equity securities. See Securities Exchange Act Release No. 50603
(Oct. 28, 2004), 69 FR 64614, 64619 (Nov. 5, 2004) (SR-NYSE-2004-22)
(approving the listing and trading of streetTRACKS Gold Shares)
(``Spot Gold Approval Order'') and ETP Request for Comments, infra
note 20, at 34731. See also Nasdaq Rule 5711(d)(ii); proposed BZX
Rule 14.11(e)(4)(B); proposed NYSE Arca Rule 8.201-E(b) (Generic)
(stating that Commodity-Based Trust Shares are included within the
definition of a ``security'' as such term is used in the Exchanges'
rules and are subject to the Exchanges' existing rules governing the
trading of equity securities).
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(1) is issued by a trust, limited liability company, partnership,
or other similar entity (``Trust'') that, if applicable, is operated by
a registered commodity pool operator pursuant to the Commodity Exchange
Act (``CEA''), and is not registered as an investment company pursuant
to the Investment Company Act of 1940, or series or class thereof;
(2) is designed to reflect the performance of one or more reference
assets or an index of reference assets;
(3) in order to reflect the performance, is issued by a Trust that
holds (a) one or more commodities or commodity-based assets, and (b) in
addition to such commodities or commodity-based assets, may hold
securities, cash, and cash equivalents;
(4) is issued by such Trust in a specified aggregate minimum number
in return for a deposit of (a) a specified quantity of the underlying
commodities, commodity-based assets, securities, cash, and/or cash
equivalents or (b) a cash amount with a value based on the next
determined net asset value per Trust share; and
(5) 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 (a) the specified quantity of the underlying
commodities, commodity-based assets, securities, cash, and/or cash
equivalents or (b) a cash amount with a value based on the next
determined net asset value per Trust share.
The Exchange proposes to amend Exchange Rule 402(i) to create a new
subparagraph (6)(iii) that states,\13\
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\13\ The Exchange proposes to renumber current Exchange Rules
402(i)(5)(i) and 402(i)(5)(ii) to Exchange Rules 402(i)(6)(i) and
402(i)(6)(ii) for ease of reference, clarity, and consistency of the
Rulebook.
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Additionally, with respect to a Commodity-Based Trust that meets
the requirements of Exchange Rule 402(i)(6), the following requirements
are satisfied: (A) the total global supply of the underlying crypto a
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. 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 for Commodity-Based Trust
Shares of the applicable primary listing market and hold only a single
crypto asset; (2) meet the criteria and guidelines set forth in
Exchange Rule 402(a) \14\ and (b),\15\ or Exchange Rule
402(i)(6)(i)(B); \16\ and meet the requirements in 402(i)(6)(iii) prior
to listing options on the Commodity-Based Trust.
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\14\ Exchange Rule 402(a) provides that a security (which
includes an ETF) on which options may be listed and traded on the
Exchange must be a security registered (with the Commission) and be
an NMS stock (as defined in Rule 600 of Regulation NMS under the
Act), and the security shall be characterized by a substantial
number of outstanding shares that are widely held and actively
traded.
\15\ Exchange Rule 402(b) provides criteria and guidelines when
evaluating potential underlying securities for the listing of
options.
\16\ Exchange Rule 402(i)(6)(i)(B) 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, Exchange Rule 402(i)(6)(iii) requires Commodity-Based
Trust that meets the requirements of 402(i)(6) 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 Intermarket Surveillance Group
(``ISG'').
The Exchange defines a ``crypto asset'' at Exchange Rule
402(i)(6)(iii) 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.\17\ Total supply of crypto assets
includes all crypto assets currently
[[Page 60189]]
issued and does not include unissued crypto assets.\18\
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\17\ 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>.
\18\ 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.
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Further, the Exchange has specified in proposed Exchange Rule
402(i)(6)(iii) 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.\19\ The Exchange
will be required to ensure that this requirement is met prior to
listing options on a Commodity-Based Trust pursuant to proposed
Exchange Rule 402(i)(6).
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\19\ For a list of the current members and affiliate members
[sic] of ISG, see <a href="https://isgportal.org/publicmembers">https://isgportal.org/publicmembers</a>.
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As a result of this filing, the proposed listing criteria would
permit a Commodity Based Trust that is generically listed on the
applicable primary listing market and holds a single crypto asset to
qualify for the listing of options on that ETF, provided Exchange Rule
402(i)(6)(iii) has also been met, as well as the listing criteria in
Exchange Rule 402(a) and (b), or Exchange Rule 402(i)(6)(i)(B).
Similar to options on any ETF, an option on a Commodity-Based Trust
that meets the requirements of Exchange Rule 402(i)(6) would also be
subject to the Exchange's continued listing standards for options on
ETFs set forth in Exchange Rule 403(g). Pursuant to Exchange Rule
403(g), ETFs approved for options trading pursuant to Exchange Rule
402(i) will not be deemed to meet the requirements for continued
approval, and the Exchange shall not open for trading any additional
series of option contracts of the class covering that such ETFs, if the
ETFs are delisted from trading pursuant to Exchange Rule 403(b)(4),\20\
are halted or suspended from trading in their primary market.\21\
Additionally, options on ETFs may be subject to the suspension of
opening transactions in any of the following circumstances:\22\
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\20\ Exchange Rule 403(b)(5) provides, if an underlying security
is approved for options listing and trading under the provisions of
Rule 402(c), the trading volume of the Original Equity Security (as
therein defined) prior to but not after the commencement of trading
in the Restructure Security (as therein defined), including ``when-
issued'' trading, may be taken into account in determining whether
the trading volume requirement of subparagraph (3) is satisfied.
\21\ See Exchange Rule 403(g). With this filing the Exchange is
also proposing to amend Exchange Rule 403(g) to reflect the changes
in numbering proposed herein for Exchange Rule 402(i).
\22\ See id.
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(1) in the case of options covering ETFs approved for trading under
Exchange Rule 402(i)(6)(i)(A), in accordance with the terms of
paragraphs (b)(1), (2), and (3) of Exchange Rule 403; \23\
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\23\ Exchange Rule 403(b)(1) through (3) provides, if: (1) there
are fewer than 6,300,000 shares of the underlying security held by
persons other than those who are required to report their security
holdings under Section 16(a) of the Act, (2) there are fewer than
1,600 holders of the underlying security, (3) the trading volume (in
all markets in which the underlying security is traded) has been
less than 1,800,000 shares in the preceding twelve (12) months.
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(2) in the case of options covering ETFs approved for trading under
Exchange Rule 402(i)(6)(i)(B), following the initial twelve-month
period beginning upon the commencement of trading in the ETFs on a
national securities exchange and are defined as an NMS stock, there are
fewer than 50 record and/or beneficial holders of such ETFs for 30 or
more consecutive trading days;
(3) the value of the index or portfolio of securities, non-U.S.
currency, or portfolio of commodities including commodity futures
contracts, options on commodity futures contracts, swaps, forward
contracts and/or options on physical commodities and/or financial
instruments and money market instruments on which the ETFs are based is
no longer calculated or available; or
(4) such other event shall occur or condition exist that in the
opinion of the Exchange makes further dealing in such options on the
Exchange inadvisable.
Consistent with current Exchange Rule 404, which governs the
opening of options series on a specific underlying security (including
ETFs), the Exchange will open at least one expiration month \24\ for
options on a Commodity-Based Trust that are approved subject to
Exchange Rule 402(i)(6) and may also list series of options on
Commodity-Based Trust Share for trading on a weekly,\25\ monthly,\26\
or quarterly \27\ basis. The Exchange may also list long-term equity
option series (``LEAPS'') that expire from 12 to 39 months from the
time they are listed.\28\
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\24\ See Exchange Rule 404(b). The monthly expirations are
subject to certain listing criteria for underlying securities
described within Exchange Rule 404 and its Interpretations and
Policies. Monthly listings expire the third Friday of the month. The
term ``expiration date'' (unless separately defined elsewhere in the
OCC By-Laws), when used in respect of an option contract (subject to
certain exceptions), means the third Friday of the expiration month
of such option contract, or if such Friday is a day on which the
exchange on which such option is listed is not open for business,
the preceding day on which such exchange is open for business. See
OCC By-Laws Article I, Section 1. Pursuant to Exchange Rule 404(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. Pursuant to
Exchange Rule 404(e), 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.
\25\ See Exchange Rule 404, Interpretation and Policy .02.
\26\ See Exchange Rule 404, Interpretation and Policy .13.
\27\ See Exchange Rule 404, Interpretation and Policy .03.
\28\ See Exchange Rule 406.
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Pursuant to Exchange Rule 404, Interpretation and Policy .06, which
governs strike prices of series of options on ETFs, the interval
between strike prices of series of options on ETFs approved for options
trading pursuant to Exchange Rule 402(i) shall be fixed at a price per
share which is reasonably close to the price per share at which the
underlying security is traded in the primary market at or about the
same time such series of options is first open for trading on the
Exchange, or at such intervals as may have been established on another
options exchange prior to the initiation of trading on the Exchange.
With respect to the Short Term Options Series or Weekly Program, during
the month prior to expiration of an option class that is selected for
the Short Term Option Series Program, the strike price intervals for
the related non-Short Term Option (``Related non-Short Term Option'')
shall be the same as the strike price intervals for the Short Term
Option.\29\ Specifically, the Exchange may open for trading Short Term
Option Series at strike price intervals of (i) $0.50 or greater where
the strike price is less than $100, and $1 or greater where the strike
price is between $100 and $150 for all option classes that participate
in the Short Term Options Series Program; (ii) $0.50 for option classes
that trade in one dollar increments and are in the Short Term Option
Series Program; or (iii) $2.50 or greater where the strike price is
above $150.\30\ Additionally, the Exchange may list series of options
pursuant to the $1
[[Page 60190]]
Strike Price Interval Program,\31\ the $0.50 Strike Program,\32\ and
the $2.50 Strike Price Program.\33\ Pursuant to Exchange Rule 510,
where the price of a series of options on a Commodity-Based Trust 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 \34\
consistent with the minimum increments for options on other ETFs listed
on the Exchange. Any and all new series of a [sic] Commodity-Based
Trust options that the Exchange lists will be consistent and comply
with the expirations, strike prices, and minimum increments set forth
in Rules 404 and 510, as applicable.
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\29\ See Exchange Rule 404, Interpretation and Policy .02(e).
\30\ Id.
\31\ See Exchange Rule 404, Interpretation and Policy .01.
\32\ See Exchange Rule 404, Interpretation and Policy .04.
\33\ See Exchange Rule 404(f).
\34\ See Exchange Rule 510.
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Further, options on a [sic] Commodity-Based Trusts that are
approved subject to Exchange Rule 402(i)(6) would trade in the same
manner as options on other ETFs on the Exchange. The Exchange Rules
that currently apply to the listing and trading of all options on ETFs
on the Exchange, 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
Commodity-Based Trusts that are approved subject to Exchange Rule
402(i)(6) in the same manner.
Position and exercise limits for options on Commodity-Based Trusts
that are approved pursuant to Exchange Rule 402(i)(6) would be
determined pursuant to Exchange Rules 307 and 309, respectively, as is
the case for other options on other ETFs. Position and exercise limits
for options on ETF vary according to the number of outstanding shares
and the trading volumes of the underlying ETF over the past six months,
where the largest in capitalization and the most frequently traded ETFs
have an option position and exercise limits of 250,000 contracts (with
adjustments for splits, re-capitalizations, etc.) on the same side of
the market; and smaller capitalization ETFs 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.
Further, Exchange Rule 1502, which governs margin requirements
applicable to trading on the Exchange, including options on ETFs, will
also apply to the trading of options on a [sic] Commodity-Based Trusts
listed pursuant to Exchange Rule 402(i)(6).
The Exchange represents that the same surveillance procedures
applicable to all other options on other ETFs currently listed and
traded on the Exchange will apply to the trading of options on
Commodity-Based Trusts that are approved subject to Exchange Rule
402(i)(6).\35\ The Exchange represents that it has the necessary
systems capacity to support the new option series. The Exchange
believes that its existing surveillance and reporting safeguards are
designed to deter and detect possible manipulative behavior which might
potentially arise from listing and trading options on ETFs, including
the listing of options on Commodity-Based Trusts that are approved
subject to Exchange Rule 402(i)(6). Also, the Exchange may obtain
information from designated contract markets that are members of the
ISG 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. The Exchange has specified in proposed Exchange Rule
402(i)(6) 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.\36\ 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
Exchange Rule 402(i)(6).
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\35\ The surveillance program includes real-time patterns for
price and volume movements and post-trade surveillance patterns
(e.g., spoofing, marking the close, pinging, phishing).
\36\ 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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Additionally, the Exchange has also analyzed its capacity and
represents that it believes the Exchange and the Options Price
Reporting Authority or ``OPRA'' have the necessary systems capacity to
handle the additional traffic associated with the listing of new series
of ETFs, including options on a [sic] Commodity-Based Trusts, that are
approved subject to Exchange Rule 402(i)(6), 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 Exchange Rule 402(i)(6),\37\ and it has not identified any
issues with the listing and trading of options on those ETFs.
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\37\ The following ETFs currently have options listed on them on
the Exchange: iShares Bitcoin Trust, the Fidelity Wise Origin
Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin
Trust (BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise
Bitcoin ETF. See Exchange Rule 402(i)(4). 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 the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\38\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \39\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \40\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\38\ 15 U.S.C. 78f(b).
\39\ 15 U.S.C. 78f(b)(5).
\40\ Id.
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In particular, the Exchange believes that its proposal to establish
new listing criteria at Exchange Rule 402(i)(6) 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 Exchange Rule
402(i)(6) to allow the listing and trading of options on units that
represent interests in Commodity-Based Trusts that meet the generic
listing standards for
[[Page 60191]]
Commodity-Based Trust Shares of the applicable primary listing
market,\41\ and hold a single crypto asset, is consistent with the Act
because it will permit the Exchange to offer options on Commodity-Based
Trusts soon after the listing of the ETF on the primary listing market,
provided that all the generic listing standards for that Commodity-
Based Trust on that primary listing market 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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\41\ See supra note 11.
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Also, this proposal would permit options on Commodity-Based Trusts
to be listed on the Exchange in the same manner as all other securities
that are subject to the current listing criteria in Exchange Rule 402.
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
options once the initial listing criteria on the primary listing market
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 applicable primary listing
market, 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 Exchange Rule
402(i)(6)(iii). Specifically, a Commodity-Based Trust that met the
requirements of proposed Exchange Rule 402(i)(6) would also have to
satisfy the following requirements in proposed Exchange Rule
402(i)(6)(iii): (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 applicable primary listing market rules, 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 surveillance 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 Exchange Rule 402(i)(6),\42\ and it has not identified any
issues with the listing and trading of options on those ETFs.
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\42\ The following ETFs currently have options listed on them on
the Exchange: iShares Bitcoin Trust, the Fidelity Wise Origin
Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin
Trust (BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise
Bitcoin ETF. See Exchange Rule 402(i)(4). 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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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. In this regard and as
indicated above, the Exchange notes that the rule change is being
proposed as a competitive response to the filing submitted by ISE.\43\
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\43\ See supra note 4.
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The Exchange does not believe that the proposal to amend the
listing criteria at Exchange Rule 402(i)(6), 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 listing standards for Commodity-
Based Trust Shares of the applicable primary listing market, without
the need for additional approvals, will impose any burden on
[[Page 60192]]
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 Exchange Rule 402(i)(6) 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. Other options exchanges are free to amend their
applicable rules to permit them to list and trade options on Commodity-
Based Trusts.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \44\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\45\
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\44\ 15 U.S.C. 78s(b)(3)(A)(iii).
\45\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission is waiving this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \46\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\47\ the Commission
may designate a shorter time if such action is consistent with
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission believes that waiving 30-day operative delay is consistent
with the protection of investors and the public interest because the
proposal seeks to amend the Exchange's rules to be consistent with an
amendment filed by the Exchange during a government shutdown, and which
would have replaced the proposed rule change that did become effective
if the Commission could have received amendments during the pendency of
the government shutdown.\48\ The proposal also aligns the rule text
relating to Commodity-Based Trust Shares with the rule text of other
exchanges and does not introduce any novel regulatory issues.\49\
Accordingly, the Commission designates the proposed rule change to be
operative upon filing.\50\
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\46\ 17 CFR 240.19b-4(f)(6).
\47\ 17 CFR 240.19b-4(f)(6)(iii).
\48\ See supra Section II.A.1.
\49\ See e.g., Nasdaq ISE, LLC, Options Rules, Options 4,
Section 3(h); Cboe Exchange, Inc. Rule 4.3(a).
\50\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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#cab8bfa6afe7a9a5a7a7afa4beb98ab9afa9e4ada5bc"><span class="__cf_email__" data-cfemail="fd8f889198d09e9290909893898ebd8e989ed39a928b">[email protected]</span></a>. Please include
file number SR-PEARL-2025-49 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-PEARL-2025-49. 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-PEARL-2025-49 and should be submitted on
or before January 13, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
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\51\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23665 Filed 12-22-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 23, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.