Notice2025-24051
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, Regarding the Adoption of Listing Criteria for Options on a Commodity-Based Trust That Holds Multiple Crypto Assets
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 31, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 247 (Wednesday, December 31, 2025)</title>
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[Federal Register Volume 90, Number 247 (Wednesday, December 31, 2025)]
[Notices]
[Pages 61483-61488]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-24051]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104505; File No. SR-ISE-2025-30]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
of Amendment No. 1 and Order Instituting Proceedings To Determine
Whether To Approve or Disapprove a Proposed Rule Change, as Modified by
Amendment No. 1, Regarding the Adoption of Listing Criteria for Options
on a Commodity-Based Trust That Holds Multiple Crypto Assets
December 23, 2025.
I. Introduction
On September 26, 2025, Nasdaq ISE, LLC (``ISE'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt listing criteria for options on
Commodity-Based Trusts that hold multiple crypto assets. The proposed
rule change was published for comment in the Federal Register on
October 1, 2025.\3\ The Commission received no comments regarding the
proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 104107 (Sept. 26,
2025), 90 FR 47456.
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On November 3, 2025, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to disapprove the
proposed rule change.\5\ On December 17, 2025, the Exchange filed
Amendment No. 1 to the proposed rule change (``Amendment No. 1''),
which supersedes the original filing in its entirety.\6\ The Commission
is publishing this notice to solicit comment on Amendment No. 1 in
Sections II and III below, which sections are being published verbatim
as filed by the Exchange, and is instituting proceedings pursuant to
Section 19(b)(2)(B) of the Act \7\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 104173, 90 FR 51424
(Nov. 17, 2025). The Commission designated December 30, 2025, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ Amendment No. 1 revises the proposal to: delete proposed ISE
Options 4, Section 3(h)(vii) and incorporate the proposed change to
provide for the listing of options on Commodity-Based Trusts that
hold multiple crypto assets into existing ISE Options 4, Section
3(h)(vi); amend Options 4, Section 3(h)(3) to apply the requirements
in Options 4, Section 3(h)(3) to each crypto asset that a Commodity-
Based Trust holds; correct an erroneous cross-reference in Options
4, Section 4(g); add new Options 4, Section 4(g)(3) to establish a
continued listing requirement for options listed pursuant to Options
4, Section 3(h)(vi); and renumber the remaining subparagraphs in
Options 4, Section 4(g).
\7\ 15 U.S.C. 78s(b)(2)(B).
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II. Self-Regulatory Organization's Description of the Proposed Rule
Change, as Modified by Amendment No. 1
The Exchange proposes to amend Options 4, Section 3, Criteria for
Underlying Securities, to adopt a [sic] listing criteria for options on
a Commodity-Based Trust that holds multiple crypto assets. This
Amendment No. 1 supersedes the original filing in its entirety and
proposes to amend the rule text of current Options 3, Section 3(h)(vi)
and (3) in lieu of adopting a new Options 3, Section (h)(vi) and (4),
and amends Options 4, Section 4(g) to add a continued listing
requirement specific to Exchange-Traded Fund Shares listed pursuant to
Options 3, Section (h)(vi).
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/ise/rulefilings">https://listingcenter.nasdaq.com/rulebook/ise/rulefilings</a>,
and at the principal office of the Exchange.
III. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange 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 Exchange 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 ISE Options 4,
Section 3, Criteria for Underlying Securities. Specifically, the
Exchange proposes to amend the criteria for listing options on
Exchange-Traded Fund Shares (``ETFs'') at Options 4, Section 3(h).
On October 24, 2025, ISE's proposal to adopt Options 5, Section
3(h)(vi) was deemed approved.\8\ Currently, Options 4, Section 3(h)(vi)
specifies that ISE may list and trade options on shares of a
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\8\ See Securities Exchange Act Release No. 104210 (November 21,
2025), 90 FR 52727 (November 21, 2025) (SR-ISE-2025-08). See also
<a href="https://www.nasdaqtrader.com/MicroNews.aspx?id=OTA2025-48">https://www.nasdaqtrader.com/MicroNews.aspx?id=OTA2025-48</a>.
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Commodity-Based Trust that meets the generic criteria of The Nasdaq
Stock Market LLC Rule 5711(d) \9\ provided the
[[Page 61484]]
trust holds a single crypto asset.\10\ Further, a Commodity-Based Trust
that meets the requirements of Options 4, Section 3(h)(vi) must also
satisfy the following requirements: (A) the total global supply of the
underlying crypto asset held by the Commodity-Based Trust must have 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 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 the Intermarket Surveillance
Group (``ISG'').
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\9\ Nasdaq Rule 5711(d) permits the listing and trading of
certain qualifying exchange-traded products that physically hold
commodities like precious metals and digital asset commodities on
the Exchange. Pursuant to Nasdaq Rule 5711(d), the term ``Commodity-
Based Trust Shares'' means a security that: (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, 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, less expenses and other
liabilities; (3) in order to reflect the performance as provided in
(d)(iii)(A)(2) above, is issued by a Trust that holds (a) one or
more commodities or commodity-based assets as defined in (d)(iii)(C)
below, 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.
\10\ 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 rely on cryptographic protocols. See Options 4,
Section 3(h)(3).
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At this time, the Exchange proposes to amend Options 4, Section
3(h)(vi) to permit the listing and trading of options on a Commodity-
Based Trust that holds multiple crypto assets in addition to a
Commodity-Based Trust that holds a single crypto asset. As amended,
Options 4, Section 3(h)(vi) would state,
Securities deemed appropriate for options trading shall include
shares or other securities (``Exchange-Traded Fund Shares'') that
are traded on a national securities exchange and are defined as an
``NMS'' stock under Rule 600 of Regulation NMS, and that . . . (vi)
represent interests in a Commodity-Based Trust that meets the
generic criteria of The Nasdaq Stock Market LLC Rule 5711(d), except
that the Commodity-Based Trust holds a single crypto asset or
multiple crypto assets as defined in subparagraph (3) below,
provided that: \11\
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\11\ The Exchange purposes to amend ``meet'' to ``meets.''
Further, the Exchange proposes to amend Options 4, Section 3(h)(3)
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to state,
Additionally, with respect to a Commodity-Based Trust that meets
the requirements of Options 4, Section 3(h)(vi), the following
requirements are satisfied: (A) the total global supply of each
underlying crypto asset(s) held by the Commodity-Based Trust has an
average daily market value of at least $700 million over the last 12
months; and (B) each 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.
With the addition of multiple crypto assets, the criteria would
require each underlying crypto asset to meet the total global supply
figure and to underlie a derivative contract that trades on a market
with which the Exchange has a comprehensive surveillance sharing
agreement. The market value for each underlying crypto asset held by a
Commodity-Based Trust will be calculated by taking the total global
supply of the particular crypto asset multiplied by the token price of
that asset.\12\ The total supply of a crypto asset includes all crypto
assets currently issued and does not include unissued crypto
assets.\13\
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\12\ 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>.
\13\ 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 is
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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As a result of this amendment, the proposed listing criteria would
permit a Commodity-Based Trust that is generically listed on Nasdaq
pursuant to Rule 5711(d) and holds multiple crypto assets to qualify
for the listing of options on that ETF, provided Options 4, Section
3(h)(3) has also been met, as well as the listing criteria in Options
4, Section 3(a) and (b) or Options 4, Section 3(h)(1)(ii).
Similar to options on any ETF, an option on a Commodity-Based Trust
that meets the requirements of Options 4, Section 3(h)(vi) would also
be subject to the Exchange's continued listing standards for options on
ETFs set forth in Options 4, Section 4(g). Currently, pursuant to
Options 4, Section 4(g), ETFs approved for options trading pursuant to
Options 4, Section 3(h) 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 such ETFs
if the ETFs are delisted from trading as provided in subparagraph
(b)(5) of Options 4, Section 4 \14\ or the ETFs are halted or suspended
from trading on their primary market.\15\ With respect to options on
Commodity-Based Trusts that are approved subject to Options 4, Section
3(h)(vi) the Exchange proposes to amend Options 4, Section 4(g) to
adopt a new subparagraph (3) which states, ``In the case of options
covering Fund Shares approved pursuant to Options 4, Section 3(h)(vi),
if the criteria in Options 4, Section 4(h)(3)(A) are no longer
satisfied, as determined by the Exchange on a monthly basis, or if the
criteria in Options 4, Section 4(h)(3)(B) are no longer satisfied.''
\16\ This proposed new criteria would require ETFs that are listed
pursuant to Options 4, Section 3(h)(vi) to continue to meet the
requirements of Options 4, Section 3(h)(3)(A) and (B). The Exchange is
proposing that the criteria in Options 4, Section 4(h)(3)(A) be met on
a monthly basis while the criteria in Options 4, Section 4(h)(3)(B) be
met on a daily basis. The Exchange believes that requiring the criteria
in Options 4, Section 4(h)(3)(A) to be met on a monthly basis is
reasonable given that the Exchange believes that it is unlikely that a
crypto asset with an average daily market value of at least $700
million over the previous twelve months would fail to meet that
standard as a resulting [sic] of trading over a relatively short period
of time. By way of example, if a crypto asset has a market
capitalization of $900 million and traded at that market capitalization
for 15 days in a 20-day trading month, the crypto asset could lose a
substantial amount of its value (up to 88%) and still meet the
criteria. Similarly, a crypto asset with a market capitalization of
$500 million for 15 days in a 20-day trading month, would have to
achieve a market capitalization of $1.3 billion (a 160% increase) in
the last 5 days to meet the criteria. Given the unlikelihood that there
would be a huge movement over a month's period of time and considering
the work that would be required to calculate the criteria on a daily
basis as compared to each month, the Exchange believes that the
proposed
[[Page 61485]]
continued listing obligation for the average daily market value
criteria is sufficient. Further, options on Commodity-Based Trusts that
are approved subject to Options 4, Section 3(h)(vi) would continue to
be subject to Options 4, Section 4(g)(5), as renumbered, which states
that the Exchange may consider suspending open transactions in options
on an ETF if, ``such other event occurs or condition exists that in the
opinion of the Exchange makes further dealing in such options on the
Exchange inadvisable.'' The Exchange may determine at any point to
delist an option on a Commodity-Based Trust that may not have
sufficient liquidity or market demand.
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\14\ The Exchange proposes to amend this cross-reference to
refer to subparagraph (b)(4). This amendment aligns to the rules of
other options exchanges. See NYSE Arca, Inc. Rule 5.4-O, Cboe
Exchange, Inc. Interpretation and Policies .06 of Rule 4.4, Miami
International Securities Exchange, LLC Rule 403(g) and BOX Exchange
LLC Rule 5030(h). The rule as amended provides that the Exchange
will not open for trading any additional series of options on shares
of an ETF if the ETF is no longer an NMS stock as defined in Rule
600 of Reg NMS under the Act.
\15\ See Options 4, Section 4(g).
\16\ The Exchange would renumber the remaining paragraphs in
Options 4, Section 4(g).
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Consistent with current Options 4, Section 5, which governs the
opening of options series on a specific underlying security (including
ETFs), the Exchange would open at least one expiration month \17\ for
options on Commodity-Based Trusts that are approved subject to Options
4, Section 3(h)(vi) and may also list series of options for trading on
a weekly \18\ or quarterly \19\ basis. The Exchange may also list long-
term equity option series (``LEAPS'') that expire from twelve to
thirty-nine months from the time they are listed.\20\
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\17\ See Options 4, Section 5(b). At the commencement of trading
on the Exchange of a particular class of options, the Exchange will
open a minimum of one (1) series of options in that class. The
exercise price of that series will be fixed at a price per share,
relative to the underlying stock price in the primary market at
about the time that class of options is first opened for trading on
the Exchange. The monthly expirations are subject to certain listing
criteria for underlying securities described within Options 4,
Section 5. 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 Options
4, Section 5(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. The opening
of a new series of options shall not affect the series of options of
the same class previously opened. 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 the business day of expiration, or, in the
case of an option contract expiring on a day that is not a business
day, on the second business day prior to expiration.
\18\ See Supplementary .03 to Options 4, Section 5.
\19\ See Supplementary .04 to Options 4, Section 5.
\20\ See Options 4, Section 8.
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Pursuant to Options 4, Section 5(d), which governs strike prices of
series of options on ETFs, the interval between strike prices of series
of options on an ETF, including ETFs listed pursuant to proposed
Options 4, Section 3(h)(vi), would be $1 or greater when the strike
price is $200 or less and $5 or greater when the strike price is
greater than $200.\21\ Additionally, the Exchange may list series of
options pursuant to the $1 Strike Price Interval Program,\22\ the $0.50
Strike Program,\23\ the $2.50 Strike Price Program,\24\ and the $5
Strike Program.\25\ Pursuant to Options 3, Section 3, where the price
of a series of options on an ETF 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.\26\ Any and all new series of options
on Commodity-Based Trusts that are approved subject to Options 4,
Section 3(h)(vi) would be subject to the expirations, strike prices,
and minimum increments set forth in Options 4, Section 5 and Options 3,
Section 3, as applicable.
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\21\ The Exchange notes that for options listed pursuant to the
Short Term Option Series Program, the Quarterly Options Series
Program, and the Monthly Options Series Program, Supplementary
Material .03, .04 and .09 to Options 4, Section 5 set forth the
intervals between strike prices on Short Term Option Series,
Quarterly Options Series, and Monthly Options Series, respectively.
\22\ See Supplementary Material .01 to Options 4, Section 5.
\23\ See Supplementary Material .05 to Options 4, Section 5.
\24\ See Supplementary Material .02 to Options 4, Section 5.
\25\ See Supplementary Material .06 to Options 4, Section 5.
\26\ If options on a Commodity-Based Trust are eligible to
participate in the Penny Interval Program, the minimum increment
would be $0.01 for series with a price below $3.00 and $0.05 for
series with a price at or above $3.00. See Supplementary Material
.01 to Options 3, Section 3 (which describes the requirements for
the Penny Interval Program).
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Further, options on Commodity-Based Trusts that are approved
subject to Options 4, Section 3(h)(vi) 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 Options 4, Section
3(h)(vi) in the same manner.
Position and exercise limits for options on Commodity-Based Trusts
that are approved subject to Options 4, Section 3(h)(vi) would be
determined pursuant to Options 9, Sections 13 and 15, respectively, as
is the case for other options on other ETFs. Position and exercise
limits for options on ETFs 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 limit 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, Options 6C, Section 3, which
governs margin requirements and is applicable to the trading of all
options on the Exchange including options on ETFs, will also apply to
the trading of options on Commodity-Based Trusts listed pursuant to
proposed Options 4, Section 3(h)(vi).
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 Options 4, Section
3(h)(vi). 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
Options 4, Section 3(h)(vi). 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 Options 4, Section 3(h)(3) that each
crypto asset held by the Commodity-Based Trust must underlie a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in ISG.\27\ The Exchange
[[Page 61486]]
will be required to ensure that this requirement is met prior to
listing options on a Commodity-Based Trust listed pursuant to proposed
Options 4, Section 3(h)(vi).
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\27\ 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 the trading of options on Commodity-Based Trusts
that are approved subject to Options 4, Section 3(h)(vi), 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 Options 4, Section 3(h)(vi),\28\ and it has not identified any
issues with the listing and trading of options on those ETFs.
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\28\ 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 Options 4, Section 3(h)(iv). The Exchange filed
rule proposals and received the appropriate regulatory notice or
approval to list the aforementioned options on the ETFs.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\29\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\30\ 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 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) \31\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\29\ 15 U.S.C. 78f(b).
\30\ 15 U.S.C. 78f(b)(5).
\31\ 15 U.S.C. 78(f)(b)(5).
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In particular, the Exchange believes that its proposal to permit
Commodity-Based Trust Shares that hold multiple crypto assets to be
listed and traded 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 amend Options 4, Section
3(h)(vi) to allow the listing and trading of options on units that
represent interests in Commodity-Based Trusts that meet the generic
criteria of Nasdaq Rule 5711(d),\32\ and hold multiple crypto assets in
addition to single crypto assets, is consistent with the Act because it
will permit the Exchange to offer options on certain Commodity-Based
Trusts soon after the listing of the ETF on Nasdaq, provided all
listing criteria have been met. Listing these options will avail market
participants of the opportunity to hedge their positions in the
Commodity-Based Trusts in a timely manner, thereby providing investors
with the ability to hedge their exposure to the underlying Commodity-
Based Trust. Options on Commodity-Based Trusts benefit 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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\32\ See supra note 3 [sic].
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Also, this proposal would permit options on certain Commodity-Based
Trusts to be listed on the Exchange in the same manner as options on
ETFs that are subject to the current listing criteria in Options 4,
Section 3(h). The Exchange notes that the majority of ETFs are able to
list and trade options once the initial listing criteria have been met
without the need for additional approvals. The proposed rule change
would allow the Exchange to likewise list options on certain Commodity-
Based Trusts that meet the proposed listing criteria without the need
for additional approvals.
As proposed, the Exchange would list options on a Commodity-Based
Trust that met the generic criteria of Nasdaq Rule 5711(d), provided
the Commodity-Based Trust held multiple crypto assets. Further, each
crypto asset held by the Commodity-Based Trust would also be required
to satisfy the conditions in proposed Options 4, Section 3(h)(3), which
requires that (A) the total global supply of each underlying crypto
asset held by the Commodity-Based Trust must have an average daily
market value of at least $700 million over the last 12 months; and (B)
each crypto asset held by the Commodity-Based Trust must underlie a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in the ISG.
These requirements are consistent with the Act and the protection
of investors as they should ensure that each crypto asset held by the
underlying ETF has sufficient liquidity prior to listing options, which
will serve to prevent disruption in the underlying market. The Exchange
believes that market supply serves as a good measure of liquidity to
permit options trading in options on Commodity-Based Trusts that holds
multiple crypto assets. Requiring each 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 Nasdaq Rule 5711, should
ensure adequate liquidity prior to listing. Further, ensuring each
crypto asset held by the Commodity-Based Trust underlies a derivatives
contract that trades on a market with which the Exchange has a
comprehensive surveillance sharing agreement, whether directly or
through common membership in the ISG, will provide the Exchange with
information to adequately surveil options on qualifying Commodity-Based
Trusts. Today, the Exchange has a comprehensive surveillance sharing
agreement in place with both the Chicago Mercantile Exchange (``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
[[Page 61487]]
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.
The Exchange's proposal to amend Options 4, Section 4(g) to correct an
erroneous cross-reference will ensure that Options 4, Section 4(g)
indicates that ETF shares approved for options trading pursuant Options
4, Section 3(h) must continue to be NMS stocks to remain eligible for
options trading. This requirement would protect investors and the
public interest by helping to ensure that the ETF shares underlying
options continue to remain liquid.
Further, the proposal adopts new subparagraph (3) to Options 4,
Section 4(g) which will require each crypto asset held by a Commodity-
Based Trust to continue to meet the requirement of Options 4, Section
3(h)(3)(A) on a monthly basis and for the criteria in Options 4,
Section 3(h)(3)(B) to be met on a continuous basis. Accordingly, each
crypto asset held by a Commodity-Based Trust must continue to have a
total global supply with an average daily market value of at least $700
million over the last 12 months, and also must continue to 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 the ISG. The Exchange believes that this
continued listing standard, in addition to requirements of Options 4,
Section 3(h) would protect investors and the public interest by
ensuring that the crypto assets held by the Commodity-Based Trust
continue to remain liquid. The Exchange believes that requiring the
criteria in Options 4, Section 4(h)(3)(A) to be met on a monthly basis
is consistent with the Act and the protection of investors given that
the Exchange believes that it is unlikely that a crypto asset with an
average daily market value of at least $700 million over the previous
twelve months would fail to meet that standard as a resulting [sic] of
trading over a relatively short period of time. By way of example, if a
crypto asset has a market capitalization of $900 million and traded at
that market capitalization for 15 days in a 20-day trading month, the
crypto asset could lose a substantial amount of its value (up to 88%)
and still meet the criteria. Similarly, a crypto asset with a market
capitalization of $500 million for 15 days in a 20-day trading month,
would have to achieve a market capitalization of $1.3 billion (a 160%
increase) in the last 5 days to meet the criteria. Given the
unlikelihood that there would be a huge movement over a month's period
of time and considering the work that would be required to calculate
the criteria on a daily basis as compared to each month, the Exchange
believes that the proposed continued listing obligation for the average
daily market value criteria is sufficient. Further, options on
Commodity-Based Trusts that are approved subject to Options 4, Section
3(h)(vi) would continue to be subject to Options 4, Section 4(g)(5), as
renumbered, which states that the Exchange may consider suspending open
transactions in options on an ETF if, ``such other event occurs or
condition exists that in the opinion of the Exchange makes further
dealing in such options on the Exchange inadvisable.'' The Exchange may
determine at any point to delist an option on a Commodity-Based Trust
that may not have sufficient liquidity or market demand.
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 each 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 Options 4, Section 3(h)(vi),\33\ and it has not identified any
issues with the listing and trading of options on those ETFs.
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\33\ 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 Options 4, Section 3(h)(iv). The Exchange filed
rule proposals and received the appropriate regulatory notice or
approval to list the aforementioned options on the ETFs.
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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.
The Exchange does not believe that the proposal to amend the
listing criteria at Options 4, Section 3(h)(vi), with respect to ETFs,
to adopt new criteria to permit the listing and trading of options on
certain Commodity-Based Trusts that hold multiple crypto assets and
that were listed pursuant to Nasdaq Rule 5711(d), without the need for
additional approvals, will impose any burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. All Members will be able to trade options on qualifying
Commodity-Based Trusts that hold multiple crypto assets in the same
manner. Further, the proposed rules would apply in an equal manner to
options on qualifying Commodity-Based Trusts that contain multiple
crypto assets. 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 amend the
listing criteria at Options 4, Section 3(h)(vi), with respect to ETFs,
to adopt new criteria to permit the listing and trading of options on
certain Commodity-Based Trusts that hold multiple crypto assets and
that were listed pursuant to Nasdaq Rule 5711(d), 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 listing rules,
as applicable, to permit them to list and trade options on Commodity-
Based Trusts that hold multiple crypto assets.
[[Page 61488]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
IV. Proceedings To Determine Whether To Approve or Disapprove SR-ISE-
2025-30, as Modified by Amendment No. 1, and Grounds for Disapproval
Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \34\ to determine whether the proposed rule
change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy issues raised by the proposed rule
change. Institution of proceedings does not indicate that the
Commission has reached any conclusions with respect to any of the
issues involved. Rather, as described below, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change.
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\34\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\35\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with the Act and, in
particular, with Section 6(b)(5) of the Act, which requires, among
other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and to protect
investors and the public interest.\36\
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\35\ Id.
\36\ 15 U.S.C. 78f(b)(5).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, in addition to any
other comments they may wish to submit about the proposed rule change.
In particular, the Commission seeks comment on whether the proposed
initial and continued listing requirements are designed to prevent
fraudulent and manipulative acts and practices and to protect investors
and the public interest, or whether the proposal raises any new or
novel concerns not previously contemplated by the Commission.
V. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal, as modified by Amendment No. 1. In particular, the
Commission invites the written views of interested persons concerning
whether the proposal is consistent with Section 6(b)(5) or any other
provision of the Act, and the rules and regulations thereunder.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral presentation.\37\
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\37\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by January 21, 2026. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
February 4, 2026.
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#750700191058161a1818101b0106350610165b121a03"><span class="__cf_email__" data-cfemail="bdcfc8d1d890ded2d0d0d8d3c9cefdced8de93dad2cb">[email protected]</span></a>. Please include
file number SR-ISE-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-ISE-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-ISE-2025-30 and should be submitted on
or before January 21, 2026. Rebuttal comments should be submitted by
February 4, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12), (57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-24051 Filed 12-30-25; 8:45 am]
BILLING CODE 8011-01-P
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