Notice2026-00293
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of Proposed Change To Amend Certain Rules To List and Trade Options on the Grayscale CoinDesk Crypto 5 ETF
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 12, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 7 (Monday, January 12, 2026)</title>
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[Federal Register Volume 91, Number 7 (Monday, January 12, 2026)]
[Notices]
[Pages 1222-1229]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-00293]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104552; File No. SR-NYSEAMER-2025-74]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing of Proposed Change To Amend Certain Rules To List and Trade
Options on the Grayscale CoinDesk Crypto 5 ETF
January 7, 2026.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on December 24, 2025, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. 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\ 15 U.S.C. 78a.
\3\ 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 certain Exchange rules to list and
trade options on the Grayscale CoinDesk Crypto 5 ETF. The proposed rule
change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a> and at
the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend certain Exchange rules to list and
trade options on shares or other securities (``Exchange-Traded Fund
Shares'') that are principally traded on a national securities exchange
and are defined as an ``NMS Stock'' under Rule 600 of Regulation NMS
and that represent interests in the Grayscale CoinDesk Crypto 5 ETF
(``GDLC'').\4\
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\4\ See Securities Exchange Act Release No. 103996 (September
17, 2025) 90 FR 45440 (September 22, 2025) (Order Setting Aside
Action by Delegated Authority and Approving a Proposed Rule Change,
as Modified by Amendment No. 1, To Amend NYSE Arca Rule 8.500-E
(Trust Units) and To List and Trade Shares of the Grayscale Digital
Large Cap Fund LLC Under Amended NYSE Arca Rule 8.500-E (Trust
Units) (SR-NYSEARCA-2024-87).
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Current Rule 915 provides that, subject to certain other criteria
set forth in the Rule, securities deemed appropriate for options
trading include Exchange-Traded Fund Shares (or ETFs), as defined in
Commentary .06, that represent certain types of interests \5\
[[Page 1223]]
and exchange-traded products (``ETPs'') structured as trusts that hold
precious metals (which are deemed commodities).\6\ Like ETPs backed by
precious metals (i.e., commodities), the Exchange proposes to allow
options trading on GDLC.\7\
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\5\ See Rule 915, Commentary .06, which permits options trading
on ETFs that are traded on a national securities exchange and are
defined as an ``NMS stock'' in Rule 600(b)(55) of Regulation NMS,
that represent interests in registered investment companies (or
series thereof) organized as open-end management investment
companies, unit investment trusts or similar entities that hold
portfolios of securities and/or financial instruments including, but
not limited to, stock index futures contracts, options on futures,
options on securities and indexes, equity caps, collars and floors,
swap agreements, forward contracts, repurchase agreements and
reverse purchase agreements (the ``Financial Instruments''), and
money market instruments, including, but not limited to, U.S.
government securities and repurchase agreements (the ``Money Market
Instruments'') comprising or otherwise based on or representing
investments in indexes or portfolios of securities and/or Financial
Instruments and Money Market Instruments (or that hold securities in
one or more other registered investment companies that themselves
hold such portfolios of securities and/or Financial Instruments and
Money Market Instruments); interests in a trust or similar entity
that holds a specified non-U.S. currency deposited with the trust or
similar entity when aggregated in some specified minimum number may
be surrendered to the trust by the beneficial owner to receive the
specified non-U.S. currency and pays the beneficial owner interest
and other distributions on deposited non-U.S. currency, if any,
declared and paid by the trust (``Currency Trust Shares'');
commodity pool interests principally engaged, directly or
indirectly, in holding and/or managing portfolios or baskets of
securities, commodity futures contracts, options on commodity
futures contracts, swaps, forward contracts and/or options on
physical commodities and/or non-U.S. currency (``Commodity Pool
Units''); or represents an interest in a registered investment
company (``Investment Company'') organized as an open-end management
investment company or similar entity, that invests in a portfolio of
securities selected by the Investment Company's investment adviser
consistent with the Investment Company's investment objectives and
policies, which is issued in a specified aggregate minimum number in
return for a deposit of a specified portfolio of securities and/or a
cash amount with a value equal to the next determined net asset
value (``NAV''), and when aggregated in the same specified minimum
number, may be redeemed at a holder's request, which holder will be
paid a specified portfolio of securities and/or cash with a value
equal to the next determined NAV (``Managed Fund Share''), or
represent interests in a Commodity-Based Trust that meet the generic
criteria of NYSE Arca Rule 8.201-E (Generic), except that the
Commodity-Based Trust holds a single crypto asset as defined in
subparagraph (c); provided that all of the conditions listed in
Rules 915 and 916 are met.
\6\ See Rule 915, Commentary .10 (permitting the listing and
trading of options on shares of the following trusts: SPDR Gold
Trust, the iShares COMEX Gold Trust the iShares Silver Trust, the
ETFS Gold Trust, and the ETFS Silver Trust, pursuant to Rules 915
and 916).
\7\ See proposed Rule 915, Commentary .10(a) (added to include
the listing and trading of options on shares of GDLC, pursuant to
Rules 915 and 916).
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GDLC is one of the world's largest diversified crypto investment
funds by assets under management as of the date of this filing. GDLC
has approximately $479.7 million in assets under management,\8\ and its
shares have historically traded in the millions of dollars in daily
volume and are held by more than a quarter of a million American
investors accounts seeking exposure to the fund's large cap digital
assets \9\ without the cost and complexity of purchasing any of the
individual assets directly.\10\
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\8\ As of November 21, 2025.
\9\ As of November 21, 2025, GDLC's components and their
weightings were Bitcoin (76.02%), Ether (14.90%), XRP (5.26%),
Solana (3.15%), and Cardano (0.67%).
\10\ As of the date of this filing.
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Like ETFs and ETPs currently deemed appropriate for options
trading, the investment objective of GDLC is for its shares to reflect
the value of the fund's components (less the fund's expenses and other
liabilities), offering investors an opportunity to gain investment
exposure to the digital assets held by the fund. Each share of GDLC
represents units of fractional undivided beneficial interest in the
fund, the assets of which consist of five of the most widely-held
digital assets and is designed to track such digital assets or the
performance of the price of such digital assets and offer access to the
digital asset market.\11\ GDLC provides investors with cost-efficient
alternatives that allow a level of participation in the digital assets
held by the fund through the securities market. The primary substantive
difference between GDLC and Exchange-Traded Fund Shares currently
deemed appropriate for options trading are that Exchange-Traded Fund
Shares may hold securities, certain financial instruments, and
specified precious metals (which are deemed commodities), while GDLC
holds bitcoin and other digital assets (which are also deemed
commodities).
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\11\ The trust may include minimal cash.
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The Exchange believes GDLC satisfies the Exchange's initial listing
standards set forth in Commentary .01 to Rule 915.\12\ The Exchange
notes that GDLC also satisfies the listing standard applied to ETFs
traded on the Exchange that they be available for creation and
redemption each business day as set forth in Commentary .06(a)(ii).\13\
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\12\ Commentary .01 to Rule 915 provides for guidelines to be by
the Exchange when evaluating potential underlying securities for
Exchange option transactions.
\13\ Commentary .06(a)(ii) requires that ETFs must be available
for creation or redemption each business day from or through the
issuer in cash or in kind at a price related to net asset value, and
the issuer must be obligated to issue ETFs in a specified aggregate
number even if some or all of the investment assets required to be
deposited have not been received by the issuer, subject to the
condition that the person obligated to deposit the investments has
undertaken to deliver the investment assets 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, as provided in the respective prospectus.
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As an initial matter, GDLC satisfies the criteria and guidelines
set forth in Rule 915(a). Pursuant to Rule 915(a), a security on which
options may be listed and traded on the Exchange must be duly
registered (with the Commission) and be an NMS stock (as defined in
Rule 600 of Regulation NMS under the Act) and be characterized by a
substantial number of outstanding shares that are widely held and
actively traded.\14\ GDLC is an NMS Stock as defined in Rule 600 of
Regulation NMS under the Act.\15\ The Exchange believes GDLC is
characterized by a substantial number of outstanding shares that are
widely held and actively traded.
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\14\ The criteria and guidelines for a security to be considered
widely held and actively traded are set forth in Commentary .01 to
Rule 915, subject to exceptions.
\15\ An ``NMS stock'' means any NMS security other than an
option, and an ``NMS security'' means any security or class of
securities for which transaction reports are collected, processed,
and made available pursuant to an effective transaction reporting
plan (or an effective national market system plan for reporting
transaction in listed options). See 17 CFR 242.600(b)(64)
(definition of ``NMS security'') and (65) (definition of ``NMS
stock'').
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As of November 21, 2025, GDLC had the following number of shares
outstanding (and corresponding market capitalization):
------------------------------------------------------------------------
Shares Market value
Underlying fund outstanding (11/21/2025)
------------------------------------------------------------------------
GDLC.................................. 12,007,400 $480.1M
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As shown above, GDLC has significantly more than 7,000,000 shares
outstanding, which is the minimum number of shares of a corporate stock
that the Exchange generally requires to list options on that stock
pursuant to Commentary .01(1) to Rule 915. The Exchange believes this
demonstrates that GDLC is characterized by a substantial number of
outstanding shares.
Further, the table below contains information regarding the number
of beneficial holders of GDLC, as of September 24, 2024:
------------------------------------------------------------------------
Beneficial holders (9/
Underlying fund 24/2024)
------------------------------------------------------------------------
GDLC............................................. 16,121
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As the table above shows, GDLC has significantly more than 2,000
beneficial holders (approximately 8 times more), which is the minimum
number of holders the Exchange generally requires for corporate stock
in order to list options on that stock pursuant to pursuant to
Commentary .01(2) to Rule 915. Therefore, the Exchange believes the
shares of GDLC are widely held.
In addition, the Exchange believes the shares of GDLC are actively
traded. As of November 21, 2025, the total trading volume (by shares
and notional) for GDLC since it began trading \16\ and the average
daily volume (``ADV'') over the 30-day period of October 21 through
November 21, 2025, was as follows: \17\
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\16\ GDLC began trading on September 9, 2025. Thus, the
measurement period for the trading volume (shares/notional) is
September 9, 2025 through November 21, 2025 for GDLC (i.e., two
months).
\17\ See FactSet, 11/21/2025, <a href="https://www.factset.com/data-attribution">https://www.factset.com/data-attribution</a>.
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Trading volume Trading volume
Underlying fund (shares) (notional $) ADV (shares)
----------------------------------------------------------------------------------------------------------------
GDLC...................................................... 9,220,524 $483.195M 199,137
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[[Page 1224]]
As demonstrated above, even though GDLC has been trading for less
than one year, its trading volume is substantially higher than
2,400,000 shares (approximately four times that amount), which is the
minimum 12-month volume the Exchange generally requires for a corporate
stock in order to list options on that security as set forth in
Commentary .01 to Rule 915. The Exchange believes this data
demonstrates that GDLC is characterized by a substantial number of
outstanding shares that are actively traded.
In addition to satisfying the Exchange's initial listing standards,
options on GDLC will be subject to the Exchange's continued listing
standards as set forth in Commentary .07 to Rule 916.\18\ Pursuant to
Commentary .07 to Rule 916, the Exchange will not open for trading any
additional series of option contracts covering a fund traded on the
Exchange if such fund ceases to be an ``NMS stock'' as provided for
Commentary .01(5) to Rule 915 or the fund is halted from trading on its
primary market.\19\ Additionally, options on funds traded on the
Exchange may be subject to the suspension of opening transactions as
follows: (1) the fund no longer meets the terms of Commentary .01 to
Rule 916; (2) following the initial twelve-month period beginning upon
the commencement of trading of the fund, there are fewer than 50 record
and/or beneficial holders of the fund for 30 or more consecutive
trading days; (3) the value of the underlying commodity is no longer
calculated or available; or (4) such other event occurs or condition
exists that in the opinion of the Exchange makes further dealing on the
Exchange inadvisable.
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\18\ The Exchange proposes to amend Commentary .11 to Rule 916
to include GDLC in the list of ETPs deemed ``Exchange-Traded Fund
Shares''--of ETFs--for purposes of the continued listing standards
set forth in Commentary .07 to Rule 916. See proposed Commentary .11
to Rule 916. For avoidance of doubt, the Exchange refers ``funds''
rather than ``ETFs'' to make clear that GDLC is subject to these
continued listing standards.
\19\ See Commentary .07 to Rule 916.
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Options on GDLC will be physically settled contracts with American-
style exercise.\20\ Consistent with Rule 903, which governs the opening
of options series on a specific underlying security (including ETFs and
ETPs), the Exchange will open at least one expiration month for options
on GDLC \21\ at the commencement of trading on the Exchange and may
also list series of options on GDLC for trading on a weekly,\22\
monthly,\23\ or quarterly \24\ 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.\25\
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\20\ See Rule 902 (Rights and Obligations of Holders and
Writers), which provides that the rights and obligations of holders
and writers of option contracts of any class of options dealt in on
the Exchange shall be as set forth in the Rules of the Clearing
Corporation. See also OCC Rules, Chapter VIII, which governs
exercise and assignment, and Chapter IX, which governs the discharge
of delivery and payment obligations arising out of the exercise of
physically settled stock option contracts. OCC Rules can be located
at: <a href="https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occrules.pdf">https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occrules.pdf</a>.
\21\ See Rule 903(c), Commentary .03. The monthly expirations
are subject to certain listing criteria for underlying securities
described within Rule 915. 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 Rule 903(d), additional series of options of the same class may
be opened for trading on the Exchange when the Exchange deems it
necessary to maintain an orderly market, to meet customer demand or
when the market price of the underlying stock moves more than five
strike prices from the initial exercise price or prices. New series
of options on an individual stock may be added until the beginning
of the month in which the options contract will expire. Due to
unusual market conditions, the Exchange, in its discretion, may add
a new series of options on an individual stock until the close of
trading on the business day prior to expiration.
\22\ See Rule 903(h).
\23\ See Rule 903, Commentary .11.
\24\ See Rule 903, Commentary .09.
\25\ See Rule 903, Commentary .03.
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Pursuant to Rule 903, Commentary .05(a), which governs strike
prices of series of options on ETFs, the interval between strike prices
of series of options on GDLC will be $1 or greater when the strike
price is $200 or less and $5 or greater where the strike price is over
$200.\26\ Additionally, the Exchange may list series of options
pursuant to the $1 Strike Price Interval Program,\27\ the $0.50 Strike
Program,\28\ the $2.50 Strike Price Program,\29\ and the $5 Strike
Program.\30\ Pursuant to Rule 960NY, where the price of a series of
GDLC option 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.\31\ Any and all new series of GDLC options that the Exchange
lists will be consistent and comply with the expirations, strike
prices, and minimum increments set forth in Rules 903 and 960NY, as
applicable.
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\26\ The Exchange notes that for options listed pursuant to the
Short Term Option Series Program, the Monthly Options Series
Program, and the Quarterly Options Series Program, Rule 903(h) and
Commentaries .09 and .03 to Rule 903, specifically set forth
intervals between strike prices on Quarterly Options Series, Short
Term Option Series, and Monthly Options Series, respectively.
\27\ See Rule 903, Commentary .06.
\28\ See Rule 903, Commentary .13.
\29\ See Rule 903, Commentary .07(a).
\30\ See Rule 903, Commentary .12.
\31\ If options on GDLC are eligible to participate in the Penny
Interval Program, the minimum increment of $0.01 below $3.00 and
$0.50 above $3.00 would apply. See Rule 960NY(a)(3). See also Rule
960.1NY (which describes the requirements for the Penny Interval
Program).
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Further, the Exchange notes that Rule 462, which governs margin
requirements applicable to the trading of all options on the Exchange,
including options on ETFs and ETPs, will also apply to the trading of
GDLC options.
Rule 903G(a)(1) permits the Exchange to authorize for trading a
FLEX option class on any equity security if it may authorize for
trading a non-FLEX option class on that equity security pursuant to
Rule 915.\32\ At this time, the Exchange is not proposing to permit
GDLC options to trade as FLEX options.\33\ Rule 903G(a)(1) currently
specifies this exception.\34\
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\32\ See Rule 903G(a)(1). See generally Section 15 (Flexible
Exchange (``FLEX'') Options).
\33\ The Exchange will continue ongoing discussions with the
Commission regarding appropriate position limits for GDLC and will
submit a separate rule filing that would permit the Exchange to
authorize for trading FLEX options on GDLC (which filing may propose
changes to existing FLEX option position limits for such options if
appropriate).
\34\ See Rule 903G(a)(1) (providing, in relevant part, that the
Exchange may approve and open for trading any FLEX Equity Options
series on any equity security that is eligible for Non-FLEX Options
trading under Rule 915 ``except those set forth in Commentary .10(a)
to Rule 915,'' i.e., GDLC).
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Position and Exercise Limits
Position and exercise limits for options, including options on
GDLC, are determined pursuant to Rules 904 and 905, respectively.
Position and exercise limits for options vary according to the number
of outstanding shares and the trading volumes of the underlying
security over the past six months, where the largest in capitalization
and the most frequently traded funds have an option position and
exercise limit of 250,000 contracts (with adjustments for splits, re-
capitalizations, etc.) on the same side of the market; and smaller
capitalization funds have position and exercise limits of 200,000,
75,000, 50,000 or 25,000 contracts (with adjustments for splits, re-
capitalizations, etc.) on the same side of the market.\35\
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\35\ See Commentary .07(a)-(d) to Rule 904. For an option to be
eligible for the 50,000-contract limit, the security underlying the
option must have most recent six-month trading volume of at least
20,000,000 shares, or most recent six-month trading volume of at
least 15,000,000 shares and at least 40,000,000 shares currently
outstanding. For an option to be eligible for the 75,000-contract
limit, the underlying security must have most recent six-month
trading volume of at least 40,000,000 shares, or most recent six-
month trading volume of at least 30,000,000 shares and at least
120,000,000 shares currently outstanding. For an option to be
eligible for the 200,000-contract limit, the underlying security
must have most recent six-month trading volume of at least
80,000,000 shares, or most recent six-month trading volume of at
least 60,000,000 shares and at least 240,000,000 shares currently
outstanding. For an option to be eligible for the 250,000-contract
limit, the security underlying the option must have most recent six-
month trading volume of at least 100,000,000 shares, or most recent
six-month trading volume of at least 75,000,000 shares and at least
300,000,000 shares currently outstanding. The 25,000-contract limit
applies to options on underlying securities that do not qualify for
a higher contract limit. See Commentary .07(e) to Rule 904. In
addition, Commentary .07(f) to Rule 904 establishes higher position
limits for options on certain ETFs.
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[[Page 1225]]
Position limits are designed to limit the number of options
contracts traded on the Exchange in an underlying security that an
investor, acting alone or in concert with others directly or
indirectly, may control. The purpose of position limits, which are set
forth in Rule 904, is to address potential manipulative schemes and
adverse market impacts surrounding the use of options, such as
disrupting the market in the security underlying the options. As such,
position limits must balance concerns regarding mitigating potential
manipulation and the cost of inhibiting potential hedging activity that
investors may use for legitimate economic purposes. To achieve this
balance, the Exchange proposes to set the position and exercise limits
for options on GDLC at 25,000 contracts, a limit which has already been
approved for options on IBIT, an ETP that holds a single digital asset,
bitcoin.\36\ Capping the position limit at 25,000 contracts, the lowest
limit available in options, would help to mitigate the risk of
potential manipulative schemes and protect investors as this number is
conservative for GDLC options and therefore appropriate given its
liquidity. Additionally, pursuant to Rule 905, the exercise limits for
options on GDLC will be equivalent to this proposed position limit.
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\36\ See proposed Rule 904, Commentary .07(f).
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The Exchange determined this proposed position and exercise limits
considering, among other things, the approximate six-month average
daily volume (``ADV'') and outstanding shares of GDLC (which as
discussed above demonstrates that GDLC is widely held and actively
traded and thus justify these conservatively proposed position limits),
as set forth below, along with market capitalization (as of November
21, 2025):
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Market
Underlying fund Six-month ADV Outstanding capitalization
shares ($)
----------------------------------------------------------------------------------------------------------------
GDLC..................................................... 146,800 12,007,400 $480.1M
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The Exchange then compared the number of outstanding shares of GDLC
to those of other ETFs. The following table provides the approximate
average position (and exercise) limit of ETF options with similar
outstanding shares (as of November 21, 2025), compared to the proposed
position and exercise limit for GDLC options:
------------------------------------------------------------------------
Average limit of other Proposed limit
Underlying fund ETF options (contracts) (contracts)
------------------------------------------------------------------------
GDLC........................ 225,000 25,000
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The Exchange considered current position and exercise limits of
options on ETFs \37\ with outstanding shares comparable to those of
GDLC, with the proposed limit significantly lower (between two and ten
times lower) than the average limits of the options on the other ETFs.
As discussed above, GDLC is actively held and widely traded (all
statistics as of November 21, 2025) because it: (1) has significantly
more than 7,000,000 shares outstanding, which is the minimum number of
shares of a corporate stock that the Exchange generally requires to
list options on that security pursuant to Commentary .01(1) under Rule
915; (2) GDLC (as of the dates listed above) has significantly more
than 2,000 beneficial holders, which is the minimum number of holders
the Exchange generally requires for corporate stock in order to list
options on that stock pursuant to Commentary .01(2) under Rule 915; and
(3) GDLC has a six-month trading volume substantially higher than
2,400,000 shares, which is the minimum 12-month volume the Exchange
generally requires for a security in order to list options on that
security as set forth in Commentary .01(3) under Rule 915.
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\37\ Over 90% of the ETFs used for comparison have a limit of at
least 200,000 contracts, and more than 75% have a limit of 250,000
contracts.
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With respect to outstanding shares, if a market participant held
the maximum number of positions possible pursuant to the proposed
position and exercise limits, the equivalent shares represented by the
proposed position/exercise limit would represent the following
approximate percentage of current outstanding shares:
----------------------------------------------------------------------------------------------------------------
Proposed position/exercise Percentage of
Underlying fund limit (in equivalent Outstanding outstanding
shares) shares shares
----------------------------------------------------------------------------------------------------------------
GDLC............................................. 2,500,000 12,007,400 20.82
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[[Page 1226]]
As this table demonstrates, if a market participant held the
maximum permissible options positions in GDLC options and exercised all
of them at the same time, that market participant would control a small
percentage of the outstanding shares of the underling fund.
Exchange Rule 904, Commentary .07, provides two methods of
qualifying for a position limit tier above 25,000 option contracts. The
first method is based on six-month trading volume in the underlying
security, and the second method is based on slightly lower six-month
trading volume and number of shares outstanding in the underlying
security. An underlying stock or ETF that qualifies for method two
based on trading volume and number of shares outstanding would be
required to have the minimum number of outstanding shares as shown in
middle column of the table below. The table, which provides the
equivalent shares of the position limits applicable to equity options,
including ETFs, further represents the percentages of the minimum
number of outstanding shares \38\ that an underlying stock or ETF must
have to qualify for that position limit (under the second method
described above), all of which are higher than the percentages for
GDLC.
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\38\ This is the minimum number of outstanding shares an
underlying security must have for the Exchange to continue to list
options on that security, so this would be the smallest number of
outstanding shares permissible for any corporate option that would
have a position limit of 25,000 contract. See Rule 916, Commentary
.01(1). This rule applies to corporate stock options but not ETF
options, which currently have no requirement regarding outstanding
shares of the underlying ETF for the Exchange to continue listing
options on that ETF. Therefore, there may be ETF options trading for
which the 25,000 contract position limit represents an even larger
percentage of outstanding shares of the underlying ETF than set
forth above.
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Position/exercise limit (in equivalent
shares) Minimum outstanding shares Percentage of outstanding shares
----------------------------------------------------------------------------------------------------------------
2,500,000 6,300,000 40
5,000,000 40,000,000 12.5
7,500,000 120,000,000 6.3
20,000,000 240,000,000 8.3
25,000,000 300,000,000 8.3
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The equivalent shares represented by the proposed position and
exercise limits for GDLC as a percentage of outstanding shares of the
underlying fund is significantly lower than the percentage for the
lowest possible position limit for equity options of 25,000 (under 6%
compared to 40%) and is lower than that percentage for each current
position limit bucket.\39\
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\39\ As these percentages are based on the minimum number of
outstanding shares an underlying security must have to qualify for
the applicable position limit, these are the highest possible
percentages that would apply to any option subject to that position
and exercise limit.
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Based on the foregoing, the Exchange believes the proposal to list
options on GDLC with positions and exercise limits of 25,000 on the
same side, the lowest position limit available in the options industry,
is conservative and appropriate given the market capitalization,
average daily volume, and high number of outstanding shares for the
underlying fund.
The proposed position and exercise limits reasonably and
appropriately balance the liquidity provisioning in the market against
the prevention of manipulation. The Exchange believes these proposed
limits are effectively designed to prevent an individual customer or
entity from establishing options positions that could be used to
manipulate the market of the underlying fund as well as the digital
assets that comprise the underlying fund.\40\
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\40\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
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As described herein, the Exchange rules that currently apply to the
listing and trading of options on the Exchange, including, for example,
rules that govern listing criteria, expiration and exercise prices,
minimum increments, margin requirements, customer accounts and trading
halt procedures will apply to the listing and trading of options on
GDLC on the Exchange in the same manner as they apply to all other
options on ETFs and ETPs that are listed and traded on the Exchange,
including options on other commodity ETPs deemed appropriate for
options trading on the Exchange pursuant to Commentary .10 to Rule 915.
Further, as described above, Exchange rules regarding position and
exercise limits will likewise apply to options on GDLC except that, as
proposed, the position and exercise limits will be set at 25,000 on the
same side.
* * * * *
The Exchange notes that options on GDLC would not be available for
trading until The Options Clearing Corporation (``OCC'') represents to
the Exchange that it is fully able to clear and settle such options.
The Exchange has also analyzed its capacity and represents that it and
The Options Price Reporting Authority (``OPRA'') have the necessary
systems capacity to handle the additional traffic associated with the
listing of options on GDLC. The Exchange believes any additional
traffic that would be generated from the trading of options on GDLC
would be manageable. The Exchange represents that Exchange members will
not have a capacity issue as a result of this proposed rule change.
The Exchange represents that the same surveillance procedures
applicable to all other options currently listed and traded on the
Exchange will apply to options on GDLC, and that it has the necessary
systems capacity to support the new option series. The Exchange's
existing surveillance and reporting safeguards are designed to deter
and detect possible manipulative behavior which might arise from
listing and trading options on ETFs and ETPs, such as (existing)
commodity-backed ETP options as well as the proposed options on GDLC.
The Exchange believes that its surveillance procedures are adequate to
properly monitor the trading of options on GDLC in all trading sessions
and to deter and detect violations of Exchange rules.
Specifically, the Exchange's market surveillance staff also
conducts surveillances with respect to the underlying fund and, as
appropriate, would review activity in the underlying fund when
conducting surveillances for market abuse or manipulation in the
options on GDLC. Additionally, the Exchange is a member of the
Intermarket Surveillance Group (``ISG'') under the ISG Agreement. ISG
members work together to coordinate surveillance and investigative
information sharing in the stock, options, and futures markets. In
addition, the Exchange has a Regulatory Services Agreement (``RSA'')
with the Financial Industry Regulatory Authority (``FINRA''). Pursuant
to a
[[Page 1227]]
multi-party 17d-2 joint plan, all options exchanges allocate regulatory
responsibilities to FINRA to conduct certain options-related market
surveillances.\41\ Further, the Exchange will implement any new
surveillance procedures it deems necessary to effectively monitor the
trading of options on GDLC.
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\41\ Section 19(g)(1) of the Act, among other things, requires
every SRO registered as a national securities exchange or national
securities association to comply with the Act, the rules and
regulations thereunder, and the SRO's own rules, and, absent
reasonable justification or excuse, enforce compliance by its
members and persons associated with its members. See 15 U.S.C.
78q(d)(1) and 17 CFR 240.17d-2. Section 17(d)(1) of the Act allows
the Commission to relieve an SRO of certain responsibilities with
respect to members of the SRO who are also members of another SRO.
Specifically, Section 17(d)(1) allows the Commission to relieve an
SRO of its responsibilities to: (i) receive regulatory reports from
such members; (ii) examine such members for compliance with the Act
and the rules and regulations thereunder, and the rules of the SRO;
or (iii) carry out other specified regulatory responsibilities with
respect to such members.
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In light of surveillance measures related to both options and
futures as well as the underlying fund, the Exchange believes that
existing surveillance procedures are designed to deter and detect
possible manipulative behavior which might potentially arise from
listing and trading the proposed options on GDLC.
Finally, quotation and last sale information for ETFs is available
via the Consolidated Tape Association (``CTA'') high speed line.
Quotation and last sale information for such securities is also
available from the exchange on which such securities are listed.
Quotation and last sale information for options on GDLC will be
available via OPRA and major market data vendors.
The Exchange believes that offering options on GDLC will benefit
investors by providing them with an additional, relatively lower cost
investing tool to gain exposure to the price of the digital assets that
comprise the underlying fund and hedging vehicle to meet their
investment needs in connection with such products and positions. The
Exchange expects investors will transact in options on GDLC in the
unregulated over-the-counter (``OTC'') options market,\42\ but may
prefer to trade such options in a listed environment to receive the
benefits of trading listed options, including (1) enhanced efficiency
in initiating and closing out position; (2) increased market
transparency; and (3) heightened contra-party creditworthiness due to
the role of OCC as issuer and guarantor of all listed options. The
Exchange believes that listing options on GDLC may cause investors to
bring this liquidity to the Exchange, would increase market
transparency and enhance the process of price discovery conducted on
the Exchange through increased order flow. The Exchange notes that the
ETPs that hold precious metal commodities on which the Exchange may
already list and trade options are trusts structured in substantially
the same manner as GDLC and essentially offer the same objectives and
benefits to investors, just with respect to different assets.
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\42\ The Exchange understands from customers that investors have
historically transacted in options on ETFs in the OTC options market
if such options were not available for trading in a listed
environment.
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \43\ in general and furthers the
objectives of Section 6(b)(5) of the Act \44\ in particular, in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------
\43\ 15 U.S.C. 78f(b).
\44\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposal to list and
trade options on GDLC 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 offering options on GDLC will
provide investors with an opportunity to realize the benefits of
utilizing options on a fund that includes bitcoin and other digital
assets, including cost efficiencies and increased hedging strategies.
The Exchange believes that offering GDLC options will benefit
investors by providing them with a relatively lower-cost risk
management tool, which will allow them to manage their positions and
associated risk in their portfolios more easily in connection with
exposure to the price of multiple digital assets, including bitcoin,
and with digital asset-related products and positions. Additionally,
the Exchange's offering of GDLC options will provide investors with the
ability to transact in such options in a listed market environment as
opposed to in the OTC options market, which would increase market
transparency and enhance the process of price discovery conducted on
the Exchange through increased order flow to the benefit of all
investors. The Exchange also notes that it already lists options on
other commodity-based ETPs,\45\ which, as described above, are trusts
structured in substantially the same manner as GDLC and offer the same
objectives and benefits to investors.
---------------------------------------------------------------------------
\45\ See Rule 915, Commentary .10.
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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. As detailed above,
options on GDLC satisfy the initial listing standards currently in the
Exchange rules applicable to options on all ETFs and ETPs, including
ETPs that hold other commodities already deemed appropriate for options
trading on the Exchange. Additionally, as demonstrated above, GDLC is
characterized by a substantial number of shares that are widely held
and actively traded. GDLC options will trade in the same manner as any
other ETF or ETP options--the same Exchange rules that currently govern
the listing and trading of other options, including initial and
continued listing requirements, permissible expirations, strike prices,
minimum increments, and margin requirements, will govern the listing
and trading of options on GDLC.
The Exchange believes the proposed rule change to exclude GDLC from
being eligible for trading as FLEX options is consistent with the Act,
because it will permit the Exchange to continue to participate in
ongoing discussions with the Commission regarding appropriate position
limits for options on GDLC.\46\
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\46\ The Exchange will submit a separate rule filing that would
permit the Exchange to authorize for trading FLEX options on GDLC
(which filing may propose changes to existing FLEX option position
limits for such options if appropriate).
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The proposed position and exercise limit for options on GDLC is
25,000 contracts. These position and exercise limits are the lowest
position and exercise limits available in the options industry, are
extremely conservative and more than appropriate given GDLC's market
capitalization, average daily volume, number of beneficial holders, and
high number of outstanding shares. The proposed position and exercise
limits are consistent with the Act as they address concerns related to
manipulation and protection of investors because the proposed position
and exercise limits are extremely conservative and more than
appropriate given GDLC is actively traded.
The Exchange also believes the proposed rule change to Rule
903G(a), to make clear that options on GDLC is
[[Page 1228]]
not eligible for FLEX trading, will remove impediments to and perfect
the mechanism of a free and open market and a national market system
because it adds clarity and transparency to Exchange rules making them
easier to navigate and understand to the benefit of investors and the
public interest.
The Exchange represents that it has the necessary systems capacity
to support the new GDLC options. 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 options, including GDLC options. The Exchange's
existing surveillance and reporting safeguards are designed to deter
and detect possible manipulative behavior which might arise from
listing and trading options on ETFs and ETPs, such as (existing)
precious metal-commodity backed ETP options as well as the proposed
options on GDLC. The Exchange believes that its surveillance procedures
are adequate to properly monitor the trading of options on GDLC in all
trading sessions and to deter and detect violations of Exchange rules.
Specifically, the Exchange's market surveillance staff also
conducts surveillances with respect to the underlying fund and, as
appropriate, would review activity in the underlying fund when
conducting surveillances for market abuse or manipulation in options on
GDLC. Additionally, the Exchange is a member of the ISG under the ISG
Agreement. ISG members work together to coordinate surveillance and
investigative information sharing in the stock, options, and futures
markets. In addition, the Exchange is a party to an RSA with FINRA and,
as noted herein, pursuant to a multi-party 17d-2 joint plan, all
options exchanges allocate regulatory responsibilities to FINRA to
conduct certain options-related market surveillances. Further, the
Exchange will implement any new surveillance procedures it deems
necessary to effectively monitor the trading of options on GDLC.
In light of surveillance measures related to both options and
futures as well as the underlying fund, the Exchange believes that
existing surveillance procedures are designed to deter and detect
possible manipulative behavior which might potentially arise from
listing and trading the proposed options on GDLC. Further, the Exchange
will implement any new surveillance procedures it deems necessary to
effectively monitor the trading of options on GDLC.
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.
Intramarket Competition: The Exchange does not believe that the
proposed rule change will impose any burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act as options on GDLC would need to satisfy the initial listing
standards set forth in Exchange rules in the same manner as any other
ETF options before the Exchange could list and trade them.
Additionally, GDLC options 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 options on GDLC. Also, and as stated above, the Exchange already
lists options on other commodity-based ETPs.\47\
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\47\ See Rule 915, Commentary .10.
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Intermarket Competition: The Exchange does not believe that the
proposal to list and trade options on GDLC will impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the extent that the advent
of GDLC options trading on the Exchange may make the Exchange a more
attractive marketplace to market participants at other exchanges, such
market participants are free to elect to become market participants on
the Exchange. Additionally, other options exchanges are free to amend
their listing rules, as applicable, to permit them to list and trade
options on GDLC. The Exchange notes that listing and trading GDLC
options 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. The Exchange notes that it operates
in a highly competitive market in which market participants can readily
direct order flow to competing venues that offer similar products.
Ultimately, the Exchange believes that offering GDLC options for
trading on the Exchange will promote competition by providing investors
with an additional, relatively low-cost means to hedge their portfolios
and meet their investment needs in connection with exposure to the
price of multiple digital assets, including bitcoin, and with digital
asset-related products and positions on a listed options exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be 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#ccbeb9a0a9e1afa3a1a1a9a2b8bf8cbfa9afe2aba3ba"><span class="__cf_email__" data-cfemail="2755524b420a44484a4a424953546754424409404851">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2025-74 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-NYSEAMER-2025-74. 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
[[Page 1229]]
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-NYSEAMER-2025-74 and should be submitted on or
before February 2, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\48\
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\48\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-00293 Filed 1-9-26; 8:45 am]
BILLING CODE 8011-01-P
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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.