Notice2026-10147
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 307, Position Limits, and Exchange Rule 309, Exercise Limits, To Increase the Position and Exercise Limits for iShares Bitcoin Trust ETF
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 21, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 98 (Thursday, May 21, 2026)</title>
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[Federal Register Volume 91, Number 98 (Thursday, May 21, 2026)]
[Notices]
[Pages 29997-30003]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10147]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105510; File No. SR-MIAX-2026-20]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Exchange Rule 307, Position Limits, and
Exchange Rule 309, Exercise Limits, To Increase the Position and
Exercise Limits for iShares Bitcoin Trust ETF
May 18, 2026.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on May 7, 2026, Miami International Securities
Exchange, LLC (``MIAX'' or ``Exchange'') filed with the Securities and
Exchange Commission (``Commission'') a proposed rule change as
described in Items I and II below, which Items have been prepared by
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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 307, Position Limits,
and Exchange Rule 309, Exercise Limits to increase the position and
exercise limits for iShares Bitcoin Trust ETF (``IBIT'').
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings</a>, and at MIAX's principal office.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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.
[[Page 29998]]
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 Exchange Rule 307, Position Limits,
and Exchange Rule 309, Exercise Limits,\3\ to permit IBIT to increase
its position and exercise limits for options on IBIT. This is a
competitive filing based on a similar proposal submitted by Nasdaq ISE,
LLC (``ISE'') and approved by the Securities and Exchange Commission
(``Commission'').\4\
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\3\ The Exchange notes that all the rules of Chapter III of
MIAX, including Rules 307 and 309, are incorporated by reference
into the rulebooks of MIAX Emerald, LLC, MIAX Pearl, LLC and MIAX
Sapphire, LLC.
\4\ See Securities Exchange Act Release No. 105317 (April 27,
2026), 91 FR 23333 (April 30, 2026) (SR-ISE-2025-26) (Self-
Regulatory Organizations; Nasdaq ISE, LLC; Order Approving a
Proposed Rule Change, as Modified by Amendment No. 5, to Amend the
Position and Exercise Limits for IBIT Options)(``ISE Approval
Order'').
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IBIT is an Exchange-Traded Funds (``ETF'') that holds bitcoin and
is listed on the Nasdaq Stock Market LLC.\5\ In November 2024, the
Exchange received approval to list options on IBIT.\6\ The position and
exercise limits for IBIT options are stated in Exchange Rule 307,
Position Limits, and Exchange Rule 309, Exercise Limits.\7\
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\5\ Nasdaq received approval to list and trade Bitcoin-Based
Commodity-Based Trust Shares in IBIT pursuant to Rule 5711(d) of
Nasdaq. See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008 (January 17, 2024) (SR-NASDAQ-2023-016) (Order
Granting Accelerated Approval of Proposed Rule Changes, as Modified
by Amendments Thereto, To List and Trade Bitcoin-Based Commodity-
Based Trust Shares and Trust Units). IBIT started trading on January
11, 2024.
\6\ See Securities Exchange Act Release No. 101698 (November 21,
2024), 89 FR 93802 (November 27, 2024) (SR-MIAX-2024-40) (Self-
Regulatory Organizations; MIAX Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 402, Criteria for Underlying Securities, Exchange Rule 307,
Position Limits, and Exchange Rule 309, Exercise Limits To Allow the
Exchange To List and Trade Options on the iShares Bitcoin Trust (the
``Trust'')) (``IBIT Approval Order''). The Exchange began trading
IBIT options on November 20, 2024.
\7\ IBIT currently has a position limit of 250,000 contracts.
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Position limits, and exercise 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. These limits, which are described
in Exchange Rule 307, Position Limits, and Exchange Rule 309, Exercise
Limits, are intended 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. Position
and exercise limits must balance concerns regarding mitigating
potential manipulation and the cost of inhibiting potential hedging
activity that could be used for legitimate economic purposes.
To achieve this balance, the Exchange proposes to increase the
position limits and exercise limits for options on IBIT to 1,000,000
contracts by noting the proposed position limit in Interpretation and
Policy .01 to Exchange Rule 307, Position Limits, and Interpretation
and Policy .01 to Exchange Rule 309, Exercise Limits. The position
limit for options on IBIT is currently set pursuant to Exchange Rule
307(d) where the largest in capitalization and the most frequently
traded stocks and ETFs have an option position limit of 250,000
contracts (with adjustments for splits, re-capitalizations, etc.) on
the same side of the market; and smaller capitalization stocks and ETFs
have position limits of 200,000, 75,000, 50,000 or 25,000 contracts
(with adjustments for splits, recapitalizations, etc.) on the same side
of the market. The Exchange notes that the proposed position limits and
exercise limits for options on IBIT are consistent with existing
position limits and exercise limits for options on iShares MSCI
Emerging Markets, iShares China Large-Cap ETF and iShares MSCI EAFE
ETF.
Composition and Growth Analysis for Underlying ETFs
As stated above, position (and exercise) limits are intended to
prevent the establishment of options positions that can be used or
might create incentives to manipulate the underlying market so as to
benefit options positions. The Commission has recognized that these
limits are designed to minimize the potential for mini-manipulations
and for corners or squeezes of the underlying market, as well as serve
to reduce the possibility for disruption of the options market itself,
especially in illiquid classes.\8\
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\8\ See Securities Exchange Act Release No. 67672 (August 15,
2012), 77 FR 50750 (August 22, 2012) (SR-NYSEAmex-2012-29).
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Per the Commission, ``rules regarding position and exercise limits
are intended to prevent the establishment of options positions that can
be used or might create incentives to manipulate or disrupt the
underlying market so as to benefit the options positions.'' \9\ For
this reason, the Commission requires that ``position and exercise
limits must be sufficient to prevent investors from disrupting the
market for the underlying security by acquiring and exercising a number
of options contracts disproportionate to the deliverable supply and
average trading volume of the underlying security.'' \10\ The Exchange
has observed an ongoing increase in demand in options on IBIT in
2025.\11\ The Exchange believes the current position limit and exercise
limit of 250,000 contracts (the highest position limit available
pursuant to Exchange Rule 307 and exercise limit pursuant to Exchange
Rule 309) will impede trading activity and strategies of investors,
such as use of effective hedging vehicles or income generating
strategies (e.g., buy-write or putwrite), and the ability of Market
Makers to make liquid markets with tighter spreads in IBIT options.
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\9\ See Securities Exchange Act Release No. 101128 (September
20, 2024), 89 FR 78942 (September 26, 2024) (SR-ISE-2024-03) (Notice
of Filing of Amendment Nos. 4 and 5 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1,
4, and 5, To Permit the Listing and Trading of Options on the
iShares Bitcoin Trust) (``ISE IBIT Approval Order'').
\10\ See id.
\11\ In 2025 the Exchange filed to eliminate the 25,000 contract
position and exercise limits for IBIT options and apply the position
and exercise limits in Exchange Rules 307 and 209, respectively, to
IBIT options utilizing November 25, 2024 data. See Securities
Exchange Act Release No. 103644 (August 5, 2025), 90 FR 38521
(August 8, 2025) (SR-MIAX-2025-37) (Self-Regulatory Organizations;
Miami International Securities Exchange, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 307, Position Limits, and Exchange Rule 309, Exercise Limits To
Allow the Exchange To Increase the Position and Exercise Limits for
iShares Bitcoin Trust ETF).
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The Exchange believes that increasing the position limit (and
exercise limit) for options on IBIT to 1,000,000 contracts would enable
liquidity providers to provide additional liquidity to the Exchange, as
well as other options exchange on which they participate. As described
in further detail below, the Exchange believes that the continuously
increasing market capitalization of IBIT options, as well as the highly
liquid markets for those securities, reduces the concerns for potential
market manipulation and/or disruption in the underlying markets upon
increasing position limits, while the rising demand for trading options
on IBIT for legitimate economic purposes compels an increase in
position limits (and corresponding exercise limits).
IBIT currently qualifies for a 250,000 contract position limit
pursuant to the criteria in Exchange Rule 307(d), which requires that,
for the most recent six-month period, trading volume for the underlying
security be at least 100 million shares.\12\ As of February 11,
[[Page 29999]]
2026, the market capitalization for IBIT was 52,661,063,818 \13\ with
an average daily volume (``ADV''), for the preceding 6 months prior to
February 11, 2026 of 61,803,035 shares. By comparison on the same day,
the iShares MSCI Emerging Markets (``EEM'') has an ADV of 29,459,889
shares and an AUM of 27,761,941,292 the iShares China Large-Cap ETF
(``FXI'') has an ADV 31,656,532 and an AUM of 6,594,337,253, and the
iShares MSCI EAFE ETF (``EFA'') has an ADV of 17,215,037 shares and an
AUM of 76,788,457,200.\14\
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\12\ Exchange Rule 307(d) provides at subparagraph (5) that to
be eligible for the 250,000 contract limit, either the most recent
six (6) month trading volume of the underlying security must have
totaled at least 100 million shares or the most recent six-month
trading volume of the underlying security must have totaled at least
seventy-five (75) million shares and the underlying security must
have at least 300 million shares currently outstanding.
\13\ The market capitalization was determined by multiplying a
Net Asset Value of $38.29 by the number of shares outstanding
1,337,920,000 This figure was acquired as of February 11, 2026. See
<a href="https://www.ishares.com/us/products/333011/ishares-Bitcoin-trust-etf">https://www.ishares.com/us/products/333011/ishares-Bitcoin-trust-etf</a>.
\14\ These figures are from February 11, 2026.
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In addition to IBIT's Exchange Rule 307(d) eligibility for
1,000,000 contracts, the Exchange performed additional analysis relying
on data presented in Amendment No. 5,\15\ with respect to IBIT. First,
in Amendment No. 5, ISE considered IBIT's market capitalization and
ADV, and prospective position limit in relation to other securities. In
measuring IBIT against other securities, ISE aggregated market
capitalization and volume data for securities that have defined
position limits utilizing data from The Options Clearing Corporations
(``OCC'').\16\ This pool of data took into consideration 3,797 options
on single stock securities, excluding broad based ETFs.\17\ Next, ISE
aggregated the data based on market capitalization and ADV and grouped
option symbols by position limit utilizing statistical thresholds for
ADV, based on 180 days, and market capitalization that were one
standard deviation above the mean for each position limit category
(i.e., 25,000, 50,000 to 52,000, 75,000, 200,000, 250,000 to 375,000,
450,000 to 650,000, 750,000 to 1,250,000 and, and greater than or equal
to 2,000,000).\18\ ISE performed an exercise to demonstrate IBIT's
position limit relative to other options symbols in terms of market
capitalization and ADV. For reference the market capitalization for
IBIT was $52,661,063,818 \19\ with an ADV, for the preceding 180 days
prior to February 11, 2026, of 61,803,035 shares.\20\
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\15\ See Amendment No. 5 to Proposed Rule Change to Amend the
Position and Exercise Limits for IBIT Options (SR-ISE-2025-26),
filed February 20, 2026, available at <a href="https://www.sec.gov/comments/sr-ise-2025-26/srise202526-707667-2226494.pdf">https://www.sec.gov/comments/sr-ise-2025-26/srise202526-707667-2226494.pdf</a>. (``Amendment No.
5'').
\16\ The computations are based on OCC data from February 11,
2026. Data displaying zero values in market capitalization or ADV
were removed.
\17\ IBIT has one asset and therefore is not comparable to a
broad based ETF where there are typically multiple components.
\18\ These buckets are based on OCC's current positions limits.
See <a href="https://www.theocc.com/marketdata/market-data-reports/series-and-trading-data/position-limits">https://www.theocc.com/marketdata/market-data-reports/series-and-trading-data/position-limits</a>. Exchange Rule 307 sets out
position limits for various contracts. For example, a 25,000
contract limit applies to those options having an underlying
security that does not meet the requirements for a higher options
contract limit. The Exchange notes that position limits may also be
higher due to corporate actions in the underlying equities, such as
a stock split.
\19\ Net Asset Value of $38.29 by the number of shares
outstanding 1,337,920,000 This figure was acquired as of February
11, 2026. See https://www.ishares.com/us/products/333011/ishares-
bitcoin-trust-etf.
\20\ See Amendment No. 5 at 8.
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ADV data 25k 50k-52k 75k 200k 250k-375k 450k-650k 750k-1.25mm >2mm
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# of observations..................... 392 401 547 232 2154 27 8 9
average............................... 91157.18 218871.78 445897.84 664343.12 4749775.74 5176137.15 6008710.88 47286595.89
median................................ 83656 206731 426420 679891.5 2015092 4027803 5637387.5 27354715.0
min................................... 9725 51064 27845 28156 22931 931337 4628363 11811713
max................................... 499461 1211984 3658653 3138784 170721127 19492918 8116652 182173328
standard deviation.................... 57591.57 86620.56 224453.69 242713.70 9812734.84 4852687.63 1079816.30 54318913.92
IBIT Rank............................. 1 1 1 1 15 1 1 3
IBIT % rank........................... 99.75 99.75 99.82 99.57 99.30 96.43 88.89 70.00
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Market cap statistics 25k 50k-52k 75k 200k 250k-375k 450k-650k 750k-1.25mm >2mm
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# of observations..................... 392 401 547 232 2154 27 8 9
average............................... 1,057M 2,401M 4,105M 5,417M 28,792M 65,956M 70,543M 776,666M
median................................ 364M 737M 1,375M 1,551M 3,769M 14,822M 56,721M 49,215M
min................................... 7.697M 16.1M 2.164M 3.030M 0.470M 1,440M 11.43M 371M
max................................... 62.137M 139,006M 102,316M 125,661M 4,070,890M 656,022M 177,131M 4,618,220M
Standard deviation.................... 4,002M 8,164M 8,576M 12,956M 150,096M 142,724M 58,978M 1,529,883M
IBIT rank............................. 2 3 5 5 221 7 5 5
IBIT % rank........................... 99.49 99.25 99.09 97.85 89.74 75.00 44.44 50.00
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Based on the above table, as presented in Amendment No. 5,\21\ if
IBIT were compared to the 10 stocks that have position limits of
750,000 contracts to 1.25 million contracts it would rank in the 45th
percentile for market capitalization and the 89th percentile for ADV.
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\21\ See Amendment No. 5 at 9.
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Second, ISE reviewed IBIT's data relative to the market
capitalization of the entire bitcoin market in terms of exercise risk
and availability of deliverables. As of February 25, 2026, there are
20.5 million bitcoins in circulation.\22\ At a price of $66,938,\23\
that equates to a market capitalization of greater than $1.374 trillion
US. If a position limit of 1,000,000 contracts were considered, the
exercisable risk would represent 7.474% \24\ of the outstanding shares
outstanding of IBIT. Since IBIT has a creation and redemption process
managed through the issuer, additionally it can be compared the
position limit sought to the total market capitalization of the entire
bitcoin market and in that case, the exercisable risk for options on
IBIT would be less than 0.278% of all bitcoin outstanding.\25\ Assuming
a scenario where all options on IBIT shares were exercised given the
proposed 1,000,000-contract position limit (and exercise limits), this
would have a virtually unnoticed impact on the entire bitcoin market.
This analysis demonstrates that the proposed 1,000,000 per same side
position and exercise limits are
[[Page 30000]]
appropriate for options on IBIT given its liquidity.
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\22\ See <a href="https://www.coingecko.com/en/coins/bitcoin">https://www.coingecko.com/en/coins/bitcoin</a>.
\23\ This is the approximate price of Bitcoin from February 11,
2026.
\24\ This percentage is arrived at with this equation:
(1,000,000 contract limit * 100 share per option/1,337,920,000
shares outstanding).
\25\ This number was arrived at with this calculation:
(1,000,000 limit * 100 shares per option * $38.29 IBIT NAV)/
(20,528,687 BTC outstanding * $66,938 BTC price).
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Third, ISE reviewed the proposed position limit by comparing it to
position limits for derivative products regulated by the Commodity
Futures Trading Commission (``CFTC''). While the CFTC, through the
relevant Designated Contract Markets, only regulates options positions
based upon delta equivalents (creating a less stringent standard), ISE
examined equivalent bitcoin futures position limits. In particular, ISE
looked at the CME bitcoin futures contract \26\ that has a position
limit of 2,000 futures.\27\ On February 11, 2026, CME bitcoin futures
settled at $67,71570,406.33.\28\ On February 11, 2026, IBIT settled at
$38.29, which would equate to greater than 17,684,774 shares of IBIT if
the CME notional position limit was utilized. Since substantial
portions of any distributed options portfolio are likely to be out of
the money on expiration, an options position limit equivalent to the
CME position limit for bitcoin futures (considering that all options
deltas are <=1.00) should be a bit higher than the CME implied 176,848
limit. Of note, unlike options contracts, CME position limits are
calculated on a net futures equivalent basis by contract and include
contracts that aggregate into one or more base contracts according to
an aggregation ratio(s).\29\ Therefore, if a portfolio includes
positions in options on futures, CME would aggregate those positions
into the underlying futures contracts in accordance with a table
published by CME on a delta equivalent value for the relevant spot
month, subsequent spot month, single month and all month position
limits.\30\ If a position exceeds position limits because of an option
assignment, CME permits market participants to liquidate the excess
position within one business day without being considered in violation
of its rules. Additionally, if at the close of trading, a position that
includes options exceeds position limits for futures contracts, when
evaluated using the delta factors as of that day's close of trading,
but does not exceed the limits when evaluated using the previous day's
delta factors, then the position shall not constitute a position limit
violation. Based on the aforementioned analysis, the Exchange believes
that the proposed 1,000,000 contracts for position and exercise limits
is appropriate.
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\26\ CME Bitcoin Futures are described in Chapter 350 of CME's
Rulebook.
\27\ See the Position Accountability and Reportable Level Table
in the Interpretations & Special Notices Section of Chapter 5 of
CME's Rulebook.
\28\ 2,000 futures at a 5 bitcoin multiplier (per the contract
specifications) equates to $677,150,000 (2,000 contracts * 5 BTC per
contract * $67,715 price of February BTC future) of notional value.
\29\ See <a href="https://www.cmegroup.com/education/courses/market-regulation/position-limits/positionlimits-aggregation-of-contracts-and-table.htm">https://www.cmegroup.com/education/courses/market-regulation/position-limits/positionlimits-aggregation-of-contracts-and-table.htm</a>.
\30\ Id.
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Fourth, ISE analyzed a position and exercise limit of 1,000,000 for
IBIT options against other options on ETFs with an underling commodity,
namely SPDR Gold Shares (``GLD'') ETF, iShares Silver Trust (``SLV'')
ETF, and ProShares Bitcoin ETF (``BITO'').\31\ GLD has a float of 377
million shares \32\ and a position limit of 250,000 contract. SLV has a
float of 552 million shares,\33\ and a position limit of 250,000
contracts. Finally, BITO has 200.89 million shares outstanding \34\ and
a position limit of 250,000 contracts. As previously noted, position
and exercise 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. A position limit exercise in GLD would
represent 6.63% of the float of GLD; a position limit exercise in SLV
would represent 4.53% of the float of SLV, and a position limit
exercise of BITO would represent 12.44% of the float of BITO. In
comparison, a 1,000,000 contract position limit in IBIT would represent
7.474% \35\ of the float of IBIT. Consequently, the 1,000,000 proposed
IBIT options position and exercise limit is more conservative than the
standard applied to GLD, SLV and BITO, and appropriate.
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\31\ GLD, SLV and BITO each hold one asset in trust similar to
IBIT.
\32\ See <a href="https://www.ssga.com/us/en/intermediary/etfs/spdr-gold-shares-gld">https://www.ssga.com/us/en/intermediary/etfs/spdr-gold-shares-gld</a>.
\33\ See <a href="https://www.ishares.com/us/products/239855/ishares-silver-trust-fund">https://www.ishares.com/us/products/239855/ishares-silver-trust-fund</a>.
\34\ See <a href="https://www.marketwatch.com/investing/fund/bito">https://www.marketwatch.com/investing/fund/bito</a>.
\35\ This percentage is arrived at with this equation:
(1,000,000 contract limit * 100 share per option/1,337,920,000
shares outstanding). This information was captured on February 11,
2026.
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Fifth, the Exchange and ISE note that IBIT began trading in penny
increments as of January 2, 2025 pursuant to the Penny Interval
Program.\36\ The Commission noted that evidence contained in both the
Exchanges' Report and the Cornerstone analysis demonstrates that the
Penny Pilot has benefitted investors and other market participants in
the form of narrower spreads.\37\ The most actively traded options
classes are included in the Penny Program based on certain objective
criteria (trading volume thresholds and initial price tests). As noted
in the Penny Approval Order, the Penny Program reflects a certain level
of trading interest (either because the class is newly listed or a
class that experience a significant growth in investor interest) to
quote in finer trading increments, which in turn should benefit market
participants by reducing the cost of trading such options.\38\ IBIT
options are among a select group of products that have achieved a
certain level of liquidity that have garnered it the ability to trade
in finer increments. Failing to increase position and exercise limits
for IBIT options, now that it is trading in finer increments, may
artificially inhibit liquidity and create price inefficiency. The
Exchange notes that options on iShares MSCI Emerging Markets, iShares
China Large-Cap ETF and iShares MSCI EAFE ETF also trade in penny
increments based on their liquidity.
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\36\ The Exchange may add to the Penny Program a newly listed
option class provided that (i) it is among the 300 most actively
traded multiply listed option classes, as ranked by National Cleared
Volume at OCC, in its first full calendar month of trading and (ii)
the underlying security is priced below $200 or the underlying index
is at an index level below $200. Any option class added under this
provision will be added on the first trading day of the month after
it qualifies and will remain in the Penny Program for one full
calendar year, after which it will be subject to the Annual Review
described in Exchange Rule 501(c)(2). The Exchange may add any
option class to the Penny Program, provided that (i) it is among the
75 most actively traded multiply listed option classes, as ranked by
National Cleared Volume at OCC, in the past six full calendar months
of trading and (ii) the underlying security is priced below $200 or
the underlying index is at an index level below $200. Any option
class added under this provision will be added on the first trading
day of the second full month after it qualifies and will remain in
the Penny Program for the rest of the calendar year, after which it
will be subject to the Annual Review as described in Exchange Rule
501(c)(2). See Exchange Rule 501(c)(2).
\37\ See Securities Exchange Act Release No. 88532 (April 1,
2020), 67 FR 19545, 19548 (April 7, 2020) (File No. 4-443) (Joint
Industry Plan; Order Approving Amendment No. 5 to the Plan for the
Purpose of Developing and Implementing Procedures Designed To
Facilitate the Listing and Trading of Standardized Options To Adopt
a Penny Interval Program) (``Penny Approval Order'').
\38\ Id. at 19548.
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The Exchange believes that IBIT options has demonstrated that it
has more than sufficient liquidity to garner an increased position and
exercise limit of 1,000,000 contracts. The Exchange believes that any
concerns related to manipulation and protection of investors are
mollified by the significant liquidity provision in IBIT. The Exchange
states that, as a general principle, increases in active trading volume
and deep liquidity of the underlying securities do not lead to
manipulation and/or disruption.
The Exchange believes that increasing the position (and exercise)
limits for
[[Page 30001]]
IBIT options would lead to a more liquid and competitive market
environment for IBIT options, which will benefit customers that trade
these options. Further, the reporting requirement for such options
would remain unchanged. Thus, the Exchange will still require that each
member organization that maintains positions in impacted options on the
same side of the market, for its own account or for the account of a
customer, report certain information to the Exchange. This information
includes, but would not be limited to, the options' positions, whether
such positions are hedged and, if so, a description of the hedge(s).
Market-Makers \39\ would continue to be exempt from this reporting
requirement, however, the Exchange may access Market-Maker position
information.\40\ Moreover, the Exchange's requirement that member
organizations file reports with the Exchange for any customer who held
aggregate large long or short positions on the same side of the market
of 200 or more option contracts of any single class for the previous
day will remain at this level and will continue to serve as an
important part of the Exchange's surveillance efforts.\41\
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\39\ Market Makers refers to ``Lead Market Makers,'' ``Primary
Lead Market Makers,'' and ``Registered Market Makers'' collectively.
See Exchanged Rule 100.
\40\ The Options Clearing Corporation (``OCC'') through the
Large option Position Reporting (``LOPR'') system acts as a
centralized service provider for Member compliance with position
reporting requirements by collecting data from each Member or Member
organization, consolidating the information, and ultimately
providing detailed listings of each Member's report to the Exchange,
as well as Financial Industry Regulatory Authority, Inc.
(``FINRA''), acting as its agent pursuant to a regulatory services
agreement (``RSA''). Member means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchanged Rule 100.
\41\ See Exchanged Rule 310.
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The Exchange also has no reason to believe that the growth in
trading volume in IBIT will not continue. Rather, the Exchange expects
continued options volume growth in IBIT as opportunities for investors
to participate in the options markets increase and evolve. The Exchange
believes that the current position and exercise limits in IBIT options
are restrictive and will hamper the listed options markets from being
able to compete fairly and effectively with the over-the-counter
(``OTC'') markets. OTC transactions occur through bilateral agreements,
the terms of which are not publicly disclosed to the marketplace. As
such, OTC transactions do not contribute to the price discovery process
on a public exchange or other lit markets. The Exchange believes that
without the proposed changes to position and exercise limits for IBIT
options, market participants will find the 250,000 contract position
limit an impediment to their business and investment objectives as well
as an impediment to efficient pricing. As such, market participants may
find the less transparent OTC markets a more attractive alternative to
achieve their investment and hedging objectives, leading to a retreat
from the listed options markets, where trades are subject to reporting
requirements and daily surveillance.
The Exchange believes that the existing surveillance procedures and
reporting requirements at the Exchange are capable of properly
identifying disruptive and/or manipulative trading activity. The
Exchange also represents that it has adequate surveillances in place to
detect potential manipulation, as well as reviews in place to identify
continued compliance with the Exchange's listing standards. These
procedures monitor market activity via automated surveillance
techniques to identify unusual activity in both options and the
underlyings, as applicable. The Exchange also notes that large stock
holdings must be disclosed to the Commission by way of Schedules 13D or
13G,\42\ which are used to report ownership of stock which exceeds 5%
of a company's total stock issue and may assist in providing
information in monitoring for any potential manipulative schemes.
Further, the Exchange believes that the current financial requirements
imposed by the Exchange and by the Commission adequately address
concerns regarding potentially large, unhedged positions in equity
options. Current margin and risk-based haircut methodologies serve to
limit the size of positions maintained by any one account by increasing
the margin and/or capital that a member organization must maintain for
a large position held by itself or by its customer.\43\ In addition,
Rule 15c3-1 \44\ imposes a capital charge on member organizations to
the extent of any margin deficiency resulting from the higher margin
requirement.
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\42\ 17 CFR 240.13d-1.
\43\ See Exchange Rules, Chapter 15, Margins.
\44\ 17 CFR 240.15c3-1.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\45\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \46\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section (6)(b)(5) \47\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\45\ 15 U.S.C. 78f(b).
\46\ 15 U.S.C. 78f(b)(5).
\47\ Id.
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The Exchange believes that increasing the position limit and
exercise limit for options on IBIT to 1,000,000 contracts is consistent
with the Act. This proposal will remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, protect investors and the public interest, because it will
provide market participants with the ability to more effectively
execute their trading and hedging activities. Also, based on current
trading volume, the resulting increase in the position (and exercise)
limits for IBIT options may allow Market-Makers to maintain their
liquidity in these options in amounts commensurate with the continued
high consumer demand in IBIT options. The increased position and
exercise limits may also encourage other liquidity providers to
continue to trade on the Exchange rather than shift their volume to OTC
markets, which will enhance the process of price discovery conducted on
the Exchange through increased order flow. Further, this proposed
change would allow institutional investors to utilize IBIT options for
prudent risk management purposes.
In addition, the Exchange believes that the current liquidity in
IBIT will mitigate concerns regarding potential manipulation of IBIT
options and/or disruption of IBIT upon amending the table of position
limits in Interpretation and Policy .01 to Exchange Rule 307 and the
table of exercise limits in Interpretation and Policy .01 to Exchange
Rule 309.
[[Page 30002]]
Comparing IBIT's data, as presented in Amendment No. 5,\48\
relative to the market capitalization of the entire bitcoin market in
terms of exercise risk and availability of deliverables, the Exchange
was able to conclude that if a position limit of 1,000,000 contracts
were considered, the exercisable risk would represent 7.474% \49\ of
the shares outstanding of IBIT. Since IBIT has a creation and
redemption process managed through the issuer (whereby Bitcoin is used
to create IBIT shares), the position limit can be compared to the total
market capitalization of the entire bitcoin market and in that case,
the exercisable risk for options on IBIT would represent less than
0.278% of all bitcoin outstanding.\50\ Comparing the proposed position
limit to position limits for equivalent bitcoin futures position
limits, the analysis demonstrated that a 1,000,000 contracts position
and exercise limits would be appropriate.
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\48\ See Amendment No. 5 at 9.
\49\ This percentage is arrived at with this equation:
(1,000,000 contract limit * 100 share per option/1,337,920,000
shares outstanding). This information was captured on February 11,
2026.
\50\ This number was arrived at with this calculation:
(1,000,000 limit * 100 shares per option * $38.29 IBIT NAV)/
(20,528,687 BTC outstanding * $66,938 BTC price).
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Comparing a position limit of 1,000,000 for IBIT options against
other options on ETFs with an underling commodity, namely GLD, SLV and
BITO, a position limit exercise in GLD represents 6.63% of the float of
GLD, a position limit exercise in SLV represents 4.53% of the float of
SLV, and a position limit exercise of BITO represents 12.44% of the
float of BITO. In comparison, a 1,000,000 contract position limit in
IBIT options would represent 7.474% \51\ of the float of IBIT.
Consequently, a 1,000,000 IBIT options position limit is more
conservative than the standard applied to GLD, SLV and BITO, and
appropriate.
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\51\ This percentage is arrived at with this equation:
(1,000,000 contract limit * 100 share per option/1,337,920,000
shares outstanding). This information was captured on February 11,
2026.
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The Exchange notes that IBIT began trading in penny increments as
of January 2, 2025 pursuant to the Penny Interval Program.\52\ The
Commission noted that evidence contained in both the Exchanges' Report
and the Cornerstone analysis demonstrates that the Penny Pilot has
benefitted investors and other market participants in the form of
narrower spreads.\53\ The most actively traded options classes are
included in the Penny Program based on certain objective criteria
(trading volume thresholds and initial price tests).\54\ As noted in
the Penny Approval Order, the Penny Program reflects a certain level of
trading interest (either because the class is newly listed or a class
that experience a significant growth in investor interest) to quote in
finer trading increments, which in turn should benefit market
participants by reducing the cost of trading such options.\55\ IBIT
options are among a select group of products that have achieved a
certain level of liquidity that have garnered it the ability to trade
in finer increments pursuant to the Penny Interval Program. Failing to
permit IBIT options to potentially increase position and exercise
limits given the trading in finer increments, may artificially inhibit
liquidity and create price inefficiency for IBIT options.
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\52\ The Exchange may add to the Penny Program a newly listed
option class provided that (i) it is among the 300 most actively
traded multiply listed option classes, as ranked by National Cleared
Volume at OCC, in its first full calendar month of trading and (ii)
the underlying security is priced below $200 or the underlying index
is at an index level below $200. Any option class added under this
provision will be added on the first trading day of the month after
it qualifies and will remain in the Penny Program for one full
calendar year, after which it will be subject to the Annual Review
described in Exchange Rule 501(c)(2). The Exchange may add any
option class to the Penny Program, provided that (i) it is among the
75 most actively traded multiply listed option classes, as ranked by
National Cleared Volume at OCC, in the past six full calendar months
of trading and (ii) the underlying security is priced below $200 or
the underlying index is at an index level below $200. Any option
class added under this provision will be added on the first trading
day of the second full month after it qualifies and will remain in
the Penny Program for the rest of the calendar year, after which it
will be subject to the Annual Review as described in Exchange Rule
501(c)(2). See Exchange Rule 501(c)(2).
\53\ See Penny Approval Order.
\54\ Options on iShares MSCI Emerging Markets, iShares China
Large-Cap ETF and iShares MSCI EAFE ETF also trade in penny
increments based on their liquidity.
\55\ See Penny Approval Order at 19548.
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Finally, as discussed above, the Exchange's surveillance and
reporting safeguards continue to be designed to deter and detect
possible manipulative behavior that might arise from increasing or
eliminating position and exercise limits in certain classes. The
Exchange believes that the current financial requirements imposed by
the Exchange and by the Commission adequately address concerns
regarding potentially large, unhedged positions in the options on the
underlying securities, further promoting just and equitable principles
of trading, the maintenance of a fair and orderly market, and the
protection of investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. In this regard and as
indicated above, the Exchange notes that the rule change is being
proposed as a competitive response to filings submitted by ISE.\56\
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\56\ See supra note 4.
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The Exchange does not believe that the proposed rule change will
impose any burden on inter-market competition as the proposal is not
competitive in nature. The Exchange expects that all option exchanges
will adopt substantively similar proposals, such that the Exchange's
proposal would benefit competition. For these reasons, the Exchange
does not believe that the proposed rule change will impose any burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act.
The Exchange's proposal does not burden intra-market competition
because all Members would be subject to the position limits in Exchange
Rule 307(d) and corresponding exercise limits in Exchange Rule 309. The
Exchange believes that the proposed rule change will also provide
additional opportunities for market participants to continue to
efficiently achieve their investment and trading objectives for equity
options on the Exchange.
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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \57\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\58\
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\57\ 15 U.S.C. 78s(b)(3)(A)(iii).
\58\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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[[Page 30003]]
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \59\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The
Commission notes that the proposal will conform the Exchange's IBIT
options position and exercise limits with ISE's IBIT options position
and exercise limits.\60\ Therefore, the proposal raises no novel legal
or regulatory issues. Thus, the Commission believes that waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest. Accordingly, the Commission hereby waives the
30-day operative delay and designates the proposed rule change
operative upon filing.\61\
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\59\ 17 CFR 240.19b-4(f)(6)(iii).
\60\ See supra note 4 and accompanying text.
\61\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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#95e7e0f9f0b8f6faf8f8f0fbe1e6d5e6f0f6bbf2fae3"><span class="__cf_email__" data-cfemail="7c0e091019511f1311111912080f3c0f191f521b130a">[email protected]</span></a>. Please include
file number SR-MIAX-2026-20 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-MIAX-2026-20. 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-MIAX-2026-20 and should be submitted on
or before June 11, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\62\
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\62\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-10147 Filed 5-20-26; 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.