[Federal Register Volume 89, Number 231 (Monday, December 2, 2024)]
[Notices]
[Pages 95253-95255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28104]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101734; File No. SR-Phlx-2024-64]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 9,
Section 13, Position Limits, and Options 8, Section 34, FLEX Trading,
Regarding Options on the Fidelity Wise Origin Bitcoin Fund, the
ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), the
Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin ETF
November 25, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 21, 2024, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the 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 Options 9, Section 13, Position
Limits, and Options 8, Section 34, FLEX Trading.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to: (1) amend Options 9, Section 13, Position
Limits, to limit the position limits for options on the Fidelity Wise
Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin
Trust (BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise
Bitcoin ETF (collectively ``Bitcoin Trusts''); and (2) except FLEX
options on the Bitcoin Trusts from trading as a FLEX option contract.
Options 9, Section 13
Recently, Cboe Exchange, Inc. (``Cboe'') received approvals to list
options on the Fidelity Wise Origin Bitcoin Fund, and the ARK21Shares
Bitcoin ETF.\3\ Also, recently, NYSE American LLC (``NYSE American'')
received approvals to list options on the Fidelity Wise Origin Bitcoin
Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC),
the Grayscale Bitcoin Mini Trust BTC, and
[[Page 95254]]
the Bitwise Bitcoin ETF.\4\ Nasdaq ISE, LLC (``ISE'') filed a rule
change to also list and trade options on the Bitcoin Trusts.\5\ Phlx's
Options 4 Rules were amended by the ISE rule change as those Rules are
incorporated by reference to ISE's Options 4 Rules, so Phlx has the
ability to list the options on the Bitcoin Trusts. The Cboe Approval
Order and the NYSE American Approval Order stated that the position and
exercise limits for each of the Bitcoin Trusts shall be 25,000
contracts. At this time, the Exchange proposes to amend Phlx Option 9,
Section 13 to similarly note that options on the Fidelity Wise Origin
Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust
(BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin
ETF shall have position limits of 25,000 contracts to mirror the Cboe
Approval Order and the NYSE American Approval Order, respectively. Phlx
Options 9, Section 15(a) provides that the exercise limits shall be
determined in the manner described in Options 9, Section 13, therefore
the exercise limits would also be 25,000 contracts for each of the
Bitcoin Trusts.
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\3\ See Securities Exchange Act Release No. 101387 (October 18,
2024), 89 FR 84948 (October 24, 2024) (SR-Cboe-2024-035) (Notice of
Filing of Amendment Nos. 2 and 3 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 2
and 3, To Permit the Listing and Trading of Options on Bitcoin
Exchange-Traded Funds) (``Cboe Approval Order'').
\4\ See Securities Exchange Act Release No. 101386 (October 18,
2024), 89 FR 84960 (October 24, 2024) (SR-NYSEAMER-2024-49) (Notice
of Filing of Amendment No. 3 and Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 3, To Permit
the Listing and Trading of Options on Bitcoin Exchange-Traded Funds)
(``NYSE American Approval Order'').
\5\ See SR-ISE-2024-54.
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Options 8, Section 34
Today, all options series listed on Phlx may trade as a FLEX Order
on Phlx's trading floor.\6\ At this time, the Exchange proposes to note
within Options 8, Section 34(a) that it will not authorize for trading
a FLEX option on each of the Bitcoin Trusts. The Exchange proposes this
amendment in light of the position and exercise limits of 25,000
contracts that were set for the Fidelity Wise Origin Bitcoin Fund, the
ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), the
Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin ETF in the
Cboe Approval Order and the NYSE American Approval Order, respectively.
If the Exchange were to permit trading in a FLEX option for any of the
Bitcoin Trusts, it would establish different position and exercise
limits than those set forth in the Cboe Approval Order and the NYSE
American Approval Order, respectively.
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\6\ Phlx Options 8, Section 34 rule text was previously amended
by two rule changes which are effective, but not yet operative.
These two prior rule changes will be implemented at the same time as
the rule changes proposed herein. See Securities Exchange Act
Release Nos. 97658 (June 7, 2023), 88 FR 38562 (June 13, 2023) (SR-
Phlx-2023-22); and 100321 (June 12, 2024), 89 FR 51580 (June 18,
2024) (SR-Phlx-2024-24). Phlx further delayed the implementation so
that it could implement SR-Phlx-2023-22 while also completing an OCC
industry rule change prior.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, 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.
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\7\ 15 U.S.C. 78f(b)
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange's proposal to amend Options 9, Section 13, Position
Limits, to provide that the position and exercise limits for each of
the Bitcoin Trusts shall be 25,000 contracts is consistent with the Act
as it will conform Phlx's options position and exercise limits with
ISE's options position and exercise limits for the Bitcoin Trusts in
order that there would be the same position and exercise limits on Phlx
and ISE.\9\ Phlx Options 9, Section 15(a) provides that the exercise
limits shall be determined in the manner described in Options 9,
Section 13, therefore the exercise limits would also be 25,000
contracts and also consistent with ISE's options position and exercise
limits for the Bitcoin Trusts.
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\9\ The Exchange believes that other exchanges will adopt
position and exercise limits of 25,000 contracts for each of the
Bitcoin Trusts. All Nasdaq affiliated markets are filing to adopt a
25,000 contract position and exercise limit for options on the
Bitcoin Trusts.
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The Exchange's proposal to amend Options 8, Section 34 to note that
it will not authorize for trading a FLEX option on each of the Bitcoin
Trusts is consistent with the spirit of the Cboe Approval Order and the
NYSE American Approval Order, respectively, that limited the position
and exercise limits for the Bitcoin Trusts to 25,000 contracts. The
proposal will protect investors and the general public because without
this prohibition, trading a FLEX option on the Bitcoin Trusts would
otherwise establish different position and exercise limits than those
set by Cboe Approval Order and the NYSE American Approval Order,
respectively.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
Amending Options 9, Section 13 to provide that the position and
exercise limits for options on each of the Bitcoin Trusts shall be
25,000 contracts does not impose an undue burden on competition as the
position and exercise limits will apply to all trading for options on
the Bitcoin Trusts trading on the Exchange as well as those trading on
other exchanges that file a similar proposal.\10\
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\10\ All Nasdaq affiliated markets are filing to adopt a 25,000
contract position and exercise limit for options on the Bitcoin
Trusts.
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The Exchange's proposal to note that it will not authorize for
trading a FLEX option on any of the Bitcoin Trusts does not impose an
undue burden on competition as no Phlx member will be able to transact
a FLEX option on any of Bitcoin Trusts
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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 \13\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\14\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission waives this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \15\ under the
Act does not normally become operative prior to 30 days after the date
of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the
Commission may designate a shorter time if such action
[[Page 95255]]
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 previously approved the listing of options
on the Fidelity Wise Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF,
the Grayscale Bitcoin Trust (BTC), the Grayscale Bitcoin Mini Trust
BTC, and the Bitwise Bitcoin ETF.\17\ As noted above, Phlx's Options 4
Rules were amended by an ISE rule change \18\ as those Rules are
incorporated by reference to ISE's Options 4 Rules, so Phlx has the
ability to list the options on the Bitcoin Trusts. This proposal
establishes position and exercise limits for options on the Bitcoin
Trusts. The Commission believes that waiver of the operative delay
could benefit investors by assuring that trading in Bitcoin Trust
options are subject to the same position and exercise limits in place
on other exchanges. Therefore, 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 as operative upon filing.\19\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ See Securities Exchange Act Release No. 101387 (October 18,
2024), 89 FR 84948 (October 24, 2024) (SR-Cboe-2024-035) (Notice of
Filing of Amendment Nos. 2 and 3 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 2
and 3, To Permit the Listing and Trading of Options on Bitcoin
Exchange-Traded Funds). See also Securities Exchange Act Release No.
101386 (October 18, 2024), 89 FR 84960 (October 24, 2024) (SR-
NYSEAMER-2024-49) (Notice of Filing of Amendment No. 3 and Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment No. 3, To Permit the Listing and Trading of Options on
Bitcoin Exchange-Traded Funds).
\18\ See SR-ISE-2024-54.
\19\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-Phlx-2024-64 on the subject line.
Paper Comments
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-Phlx-2024-64. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also 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-Phlx-2024-64 and should be
submitted on or before December 23, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12), (59).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-28104 Filed 11-29-24; 8:45 am]
BILLING CODE 8011-01-P