[Federal Register Volume 90, Number 93 (Thursday, May 15, 2025)]
[Notices]
[Pages 20707-20715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08551]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103019; File No. SR-MEMX-2025-11]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Allow the Exchange
To List and Trade Options on the iShares Ethereum Trust
May 9, 2025.
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 May 5, 2025, MEMX LLC (``MEMX'' 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 Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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 is filing with the Commission a proposed rule change
to amend Rule 19.3, Criteria for Underlying Securities to allow the
Exchange to list and trade options on the iShares Ethereum Trust (the
``Trust'') as Fund Shares deemed appropriate for options trading on the
Exchange. The text of the proposed rule change is provided in Exhibit 5
and is available on the Exchange's website at https://info.memxtrading.com/regulation/rules-and-filings/.
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
[[Page 20708]]
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 19.3 regarding the criteria for
underlying securities. Specifically, the Exchange proposes to amend
Rule 19.3(i) to allow the Exchange to list and trade options on shares
or other securities (``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 Trust.
This is a competitive filing based on a similar proposal submitted by
Nasdaq ISE, LLC (``ISE''), which was recently approved by the
Securities and Exchange Commission (the ``Commission'').\5\ Current
Rule 19.3(i) provides that, subject to certain other criteria set forth
in that Rule, securities deemed appropriate for options trading include
Fund Shares that represent certain types of interests,\6\ including
interests in certain specific trusts that hold financial instruments,
money market instruments, precious metals (which are deemed
commodities), or Bitcoin (which is another crypto currency and deemed a
commodity). In addition, Rule 19.3(i) requires that Fund Shares (1)
meet the criteria and standards set forth in Rule 19.3(a) and (b),\7\
or (2) 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 Fund Shares 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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\5\ See Securities Exchange Act Release No. 100661 (August 6,
2024), 89 FR 65690 (August 12, 2024) (SR-ISE-2024-35); and
Securities Exchange Act Release No. 102798 (April 9, 2025) (``ISE
Approval'').
\6\ See Rule 19.3(i), which permits options trading on Fund
Shares that (1) represent interests in registered investment
companies (or series thereof) organized as open-end management
investment companies, unit investment trusts or similar entities,
and that hold portfolios of securities comprising or otherwise based
on or representing investments in indexes or portfolios of
securities (or that hold securities in one or more other registered
investment companies that themselves hold such portfolios of
securities) (``Funds'') 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 repurchase agreements (the ``Financial Instruments''), and
money market instruments, including, but not limited to, U.S.
government securities and repurchase agreements (the ``Money Market
Instruments'') constituting or otherwise based on or representing an
investment in an index or portfolio of securities and/or Financial
Instruments and Money Market Instruments, or (2) represent 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 ETFs'') or (3) represent
interests in a trust or similar entity that holds a specified non-
U.S. currency or currencies 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 or currencies and pays the beneficial
owner interest and other distributions on the deposited non-U.S.
currency or currencies, if any, declared and paid by the trust
(``Currency Trust Shares''), or (4) represent interests in the SPDR
Gold Trust or are issued by the iShares COMEX Gold Trust, the
iShares Silver Trust, Aberdeen Standard Physical Silver Trust,
Aberdeen Standard Physical Gold Trust, Aberdeen Standard Physical
Palladium Trust, Aberdeen Standard Physical Platinum Trust, Sprott
Physical Gold Trust, Goldman Sachs Physical Gold ETF, Fidelity Wise
Origin Bitcoin Fund, ARK 21Shares Bitcoin ETF, iShares Bitcoin
Trust, Grayscale Bitcoin Trust, Grayscale Bitcoin Mini Trust, or
Bitwise Bitcoin ETF.
\7\ Rule 19.3(a) and (b) sets forth the criteria that underlying
securities must satisfy for option contracts on those underlying
securities to be eligible for listing and trading on the Exchange.
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The Exchange proposes to add the Trust to the list of Fund Shares
on which the Exchange may list options in Rule 19.3(i).\8\ The shares
are issued by the Trust, a Delaware statutory trust. The Trust will
operate pursuant to a trust agreement (the ``Trust Agreement'') between
the Sponsor, BlackRock Fund Advisors (the ``Trustee'') as the trustee
of the Trust and will appoint Wilmington Trust, National Association,
as Delaware Trustee of the Trust (the ``Delaware Trustee'') by such
time that the Registration Statement is effective. The Trust issues
Fund Shares representing fractional undivided beneficial interests in
its net assets. The assets of the Trust will consist only of ether
(``ether'' or ``ETH'') held by a custodian on behalf of the Trust,
except under limited circumstances when transferred through the Trust's
prime broker temporarily (described below), and cash. Neither the
Trust, nor the Sponsor, nor the Ether Custodian (as defined below), nor
any other person associated with the Trust will, directly or
indirectly, engage in action where any portion of the Trust's ETH
becomes subject to the Ethereum proof-of-stake validation or is used to
earn additional ETH or generate income or other earnings. Coinbase
Custody Trust Company, LLC (the ``Ether Custodian''), is the custodian
for the Trust's ether holdings, and maintains a custody account for the
Trust (``Custody Account''); Coinbase, Inc. (the ``Prime Execution
Agent''), an affiliate of the Ether Custodian, is the prime broker for
the Trust and maintains a trading account for the Trust (``Trading
Account''); and The Bank of New York Mellon is the custodian for the
Trust's cash holdings (the ``Cash Custodian'' and together with the
Ether Custodian, the ``Custodians'') and the administrator of the Trust
(the ``Trust Administrator''). Under the Trust Agreement, the Trustee
may delegate all or a portion of its duties to any agent, and has
delegated the bulk of the day-to-day responsibilities to the Trust
Administrator and certain other administrative and record-keeping
functions to its affiliates and other agents. The Trust is not an
investment company registered under the Investment Company Act of 1940,
as amended (the ``1940 Act'').
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\8\ The Exchange is also proposing a technical amendment to Rule
19.3(i) to amend the names ``Aberdeen Standard Physical Silver
Trust, Aberdeen Standard Physical Gold Trust, Aberdeen Standard
Physical Palladium Trust, and Aberdeen Standard Physical Platinum
Trust'' to ``abrdn Standard Physical Silver Trust, abrdn Standard
Physical Gold Trust, abrdn Standard Physical Palladium Trust, and
abrdn Standard Physical Platinum Trust'' to amend the names of these
ETFs to reflect their current names. These were renamed effective
March 31, 2022. See https://www.sec.gov/Archives/edgar/data/1459862/000138713122003305/pall-424b3_030822.htm, https://www.sec.gov/Archives/edgar/data/1450923/000138713122003311/sgol-424b3_030822.htm, https://www.sec.gov/Archives/edgar/data/1450922/000138713122003309/sivr-424b3_030822.htm and https://www.sec.gov/Archives/edgar/data/1460235/000138713122003303/pplt-424b3_030822.htm.
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The investment objective of the Trust is to reflect generally the
performance of the price of ether. The Trust seeks to reflect such
performance before payment of the Trust's expenses and liabilities. The
Fund Shares are intended to constitute a simple means of making an
investment similar to an investment in ether through the public
securities market rather than by acquiring, holding and trading ether
directly on a peer-to-peer or other basis or via a digital asset
platform. The Fund
[[Page 20709]]
Shares have been designed to remove the obstacles represented by the
complexities and operational burdens involved in a direct investment in
ether, while at the same time having an intrinsic value that reflects,
at any given time, the investment exposure to the ether owned by the
Trust at such time, less the Trust's expenses and liabilities. Although
the Fund Shares are not the exact equivalent of a direct investment in
ether, they provide investors with an alternative method of achieving
investment exposure to ether through the public securities market,
which may be more familiar to them.
An investment in the Fund Shares is backed by ether held by the
Ether Custodian on behalf of the Trust. All of the Trust's ether will
be held in the Custody Account, other than the Trust's ether which is
temporarily maintained in the Trading Account under limited
circumstances, i.e., in connection with creation and redemption Basket
\9\ activity or sales of ether deducted from the Trust's holdings in
payment of Trust expenses or the Sponsor's fee (or, in extraordinary
circumstances, upon liquidation of the Trust). The Custody Account
includes all of the Trust's ether held at the Ether Custodian, but does
not include the Trust's ether temporarily maintained at the Prime
Execution Agent in the Trading Account from time to time. The Ether
Custodian will keep all of the private keys associated with the Trust's
ether held in the Custody Account in ``cold storage''.\10\ The
hardware, software, systems, and procedures of the Ether Custodian may
not be available or cost-effective for many investors to access
directly.
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\9\ The Trust issues and redeems Shares only in blocks of 40,000
or integral multiples thereof. A block of 40,000 Shares is called a
``Basket.'' These transactions take place in exchange for ether.
\10\ The term ``cold storage'' refers to a safeguarding method
by which the private keys corresponding to the Trust's ether are
generated and stored in an offline manner, subject to layers of
procedures designed to enhance security. Private keys are generated
by the Ether Custodian in offline computers that are not connected
to the internet so that they are more resistant to being hacked.
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The Exchange believes that offering options on the Trust will
benefit investors by providing them with an additional, relatively
lower cost investing tool to gain exposure to spot ether as well as a
hedging vehicle to meet their investment needs in connection with ether
products and positions. Similar to other commodity ETFs in which
options may be listed on the Exchange (e.g., SPDR[supreg] Gold Trust,
the iShares COMEX Gold Trust, the iShares Silver Trust, or the Aberdeen
[sic] Standard Physical Gold Trust),\11\ the proposed ETF is a trust
that essentially offers the same objectives and benefits to investors.
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\11\ See Rule 19.3(i).
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Options on the Trust will trade in the same manner as options on
other ETFs on the Exchange. Exchange Rules that currently apply to the
listing and trading of all options on ETFs on the Exchange, including,
for example, Rules that govern listing criteria, expirations, exercise
prices, minimum increments, position and exercise limits, margin
requirements, customer accounts and trading halt procedures, will apply
to the listing and trading of options on the Trust on the Exchange.
Today, these rules apply to options on the various commodities ETFs
deemed appropriate for options trading on the Exchange pursuant to Rule
19.3(i).
Pursuant to Rule 19.3(a), a security (which includes a Fund Share)
on which options may be listed and traded on the Exchange must be
registered (with the Commission) and be an NMS stock (as defined in
Rule 600 of Regulation NMS under the Securities Exchange Act of 1934,
as amended (the ``Act'')), and be characterized by a substantial number
of outstanding shares that are widely held and actively traded.\12\
Additionally, Rule 19.3(i)(1) requires that Fund Shares either (1) meet
the criteria and standards set forth in Rule 19.3(a) and (b),\13\ or
(2) are available for creation or redemption each business day in cash
or in kind from the investment company, commodity pool or other entity
at a price related to net asset value, and the investment company,
commodity pool or other entity is obligated to provide that Fund Shares
may be created even if some or all of the securities and/or cash
required to be deposited have not been received by the Fund, the unit
investment trust or the management investment company, provided the
authorized creation participant has undertaken to deliver the
securities and/or cash 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 Fund, all as described in
the Fund's or unit trust's prospectus. The Trust satisfies Rule
19.3(i)(1)(B), as each is subject to this creation and redemption
process.
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\12\ The criteria and guidelines for a security to be considered
widely held and actively traded are set forth in Rule 19.3(b),
subject to exceptions.
\13\ Rule 19.3(a) and (b) sets forth the criteria an underlying
security must meet for the Exchange to be able to list options on
the underlying.
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Options on the Trust will be subject to the Exchange's continued
listing standards set forth in Rule 19.4(g) for Fund Shares deemed
appropriate for options trading pursuant to Rule 19.3(i). Specifically,
19.4(g) provides that Fund Shares that were initially approved for
options trading pursuant to Rule 19.3 will not be deemed to meet the
requirements for continued approval, and the Exchange shall not open
for trading any additional series of option contracts of the class
covering such Fund Shares if the security ceases to be an NMS stock
(see Rule 19.4(b)(4)). Additionally, the Exchange will not open for
trading any additional series of option contracts of the class covering
Fund Shares in any of the following circumstances: (1) in the case of
options covering Fund Shares approved for trading under Rule
19.3(i)(1)(A), in accordance with the terms of Rule 19.4(b)(1), (2) and
(3); (2) in the case of options covering Fund Shares approved pursuant
to Rule 19.3(i)(1)(B), following the initial 12-month period beginning
upon the commencement of trading in the Fund Shares on a national
securities exchange and are defined as NMS stock under Rule 600 of
Regulation NMS, there were fewer than 50 record and/or beneficial
holders of such Fund Shares for 30 consecutive days; (3) the value of
the index, non-U.S. currency, portfolio of commodities including
commodity futures contracts, options on commodity futures contracts,
swaps, forward contracts and/or options on physical commodities and/or
Financial Instruments or Money Market Instruments, or portfolio of
securities on which the Fund Shares are based 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 in such options on
the Exchange inadvisable.
Options on the Trust will be physically settled contracts with
American-style exercise.\14\ Consistent with current Rule 19.5, which
governs the opening of options series on a specific underlying security
(including Fund Shares), the Exchange will open at least one expiration
month for options on the Trust \15\ at the commencement of
[[Page 20710]]
trading on the Exchange and may also list series of options on the
Trust for trading on a weekly,\16\ monthly,\17\ or quarterly \18\
basis. The Exchange may also list long-term equity option series
(``LEAPS'') that expire from 12 to 39 months from the time they are
listed.\19\
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\14\ See Rule 19.2, which provides that the rights and
obligations of holders and writers are set forth in the Rules of the
Options Clearing Corporation (``OCC''); see also OCC Rules, Chapters
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).
\15\ See Rule 19.5(b) and (e). The monthly expirations are
subject to certain listing criteria for underlying securities
described within Rule 19.3. 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 19.5(c), additional series of options of the same class may
be opened for trading on the Exchange when the Exchange deems it
necessary to maintain an orderly market, to meet customer demand or
when the market price of the underlying stock moves more than five
strike prices from the initial exercise price or prices. 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.
\16\ See Rule 19.5, Interpretation and Policy .05.
\17\ See Rule 19.5, Interpretation and Policy .08.
\18\ See Rule 19.5, Interpretation and Policy .04.
\19\ See Rule 19.7.
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Pursuant to Rule 19.5, Interpretation and Policy .01, which governs
strike prices of series of options on Fund Shares, the interval of
strike prices for series of options on the Trust will be $1 or greater
when the strike price is $200 or less and $5 or greater where the
strike price is over $200.\20\ Additionally, the Exchange may list
series of options pursuant to the $1 Strike Price Interval Program,\21\
the $0.50 Strike Program,\22\ the $2.50 Strike Price Program,\23\ and
the $5 Strike Program.\24\ Pursuant to Rule 21.5, where the price of a
series of a Trust 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.\25\ Any and all new series of Trust options that the
Exchange lists will be consistent and comply with the expirations,
strike prices, and minimum increments set forth in Rules 19.5 and 21.5,
as applicable.
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\20\ 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 19.5,
Interpretations and Policies .05, .08, and .04, specifically sets
forth intervals between strike prices on Quarterly Options Series,
Short Term Option Series, and Monthly Options Series, respectively.
\21\ See Rule 19.5, Interpretations and Policies .01 and .02.
\22\ See Rule 19.5, Interpretation and Policy .06.
\23\ See Rule 19.5, Interpretation and Policy .03.
\24\ See Rule 19.5(d)(5).
\25\ If options on an Ethereum Fund are eligible to participate
in the Penny Interval Program, the minimum increment will be $0.01
for series with a price below $3.00 and $0.05 for series with a
price at or above $3.00. See Rule 21.5(d) (which describes the
requirements for the Penny Interval Program).
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Trust options will trade in the same manner as any other Fund Share
options on the Exchange. The Exchange Rules that currently apply to the
listing and trading of all Fund Share options on the Exchange,
including, for example, Rules that govern listing criteria,
expirations, exercise prices, minimum increments, margin requirements,
customer accounts, and trading halt procedures will apply to the
listing and trading of Trust options on the Exchange in the same manner
as they apply to other options on all other Fund Shares that are listed
and traded on the Exchange, including the precious-metal and Bitcoin-
backed commodity Fund Shares already deemed appropriate for options
trading on the Exchange pursuant to current Rule 19.3(i).\26\
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\26\ See, e.g., SPDR Gold Trust, iShares COMEX Gold Trust or
iShares Silver Trust, the Aberdeen [sic] Standard Physical Silver
Trust, the Aberdeen [sic] Standard Physical Gold Trust, the Aberdeen
[sic] Standard Physical Palladium Trust, the Aberdeen [sic] Standard
Physical Platinum Trust, the Sprott Physical Gold Trust, the Goldman
Sachs Physical Gold ETF or the Fidelity Wise Origin Bitcoin Fund,
the ARK 21Shares Bitcoin ETF, the iShares Bitcoin Trust, the
Grayscale Bitcoin Trust, the Grayscale Bitcoin Mini Trust, or the
Bitwise Bitcoin ETF.
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Position and exercise limits for options on ETFs, including options
on the Trust, are determined pursuant to Exchange Rules 18.7 and 18.9,
respectively.\27\ Position and exercise limits for ETF options vary
according to the number of outstanding shares and the trading volumes
of the underlying ETF over the past six months, where the largest in
capitalization and the most frequently traded ETFs have an option
position and exercise limits of 250,000 contracts (with adjustments for
splits, re-capitalizations, etc.) on the same side of the market; and
smaller capitalization ETFs have position and exercise limits of
200,000, 75,000, 50,000 or 25,000 contracts (with adjustments for
splits, re-capitalizations, etc.) on the same side of the market.
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\27\ See Regulatory Notice 23-12, available at: https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf, which informed Exchange members of the
specific position limits applicable to options trading on MEMX
Options, pursuant to Rule 18.7, as those position limits calculated
and disseminated by the OCC, published daily and which can be found
at: https://www.theocc.com/market-data/market-data-reports/series-and-trading-data/position-limits.
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Notwithstanding the position limits in Exchange Rule 18.7 and
exercise limits in Exchange Rule 18.9, the Exchange proposes the
position and exercise limits for the options on the Trust to be 25,000
contracts on the same side. The Exchange believes these proposed
position and exercise limits are reasonable and appropriate. In
considering the appropriate position and exercise limits for the Trust
options, the Exchange reviewed the data presented by ISE in the ISE
Approval. In the ISE Approval, ISE considered the Trust's market
capitalization and average daily volume (``ADV'') against those of
other underlying securities, as well as the proposed position and
exercise limit in relation to other options. In measuring the Trust
against other securities, ISE aggregated market capitalization and
volume data for securities that have defined position limits utilizing
data from the OCC.\28\ ISE also considered the trading volume for the
Trust in terms of daily and notional volumes during the period of time
the Trust has been trading from July 23, 2024 through December 14,
2024. The average daily volume for this time period is 5,302,533 shares
and the average notional volume for this time period is
$127,825,276.00. The Trust had 93,352 shareholders.\29\ ISE indicated
both the average daily volume and the average notional volume
experienced an uptick at launch (which can be typical for anticipated
product launches) then levelled off for several months. Renewed growth
in the cryptocurrency market caused increased growth beginning in early
November 2024.
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\28\ ISE represented these computations were based on OCC data
from October 22, 2024, and that data displaying zero values in
market capitalization or ADV were removed.
\29\ ISE represented it obtained this number from Broadridge
Financial Solutions, Inc. on December 19, 2024.
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ISE reviewed the market capitalization and ADV of 3,930 options on
single stock securities excluding ETFs.\30\ Next, ISE aggregated this
data based on market capitalization and ADV and grouped option symbols
by position limit utilizing statistical thresholds for ADV and market
capitalization for each position limit category (i.e., 25,000, 50,000
to 65,000, 75,000, 100,000 to less than 250,000, 250,000 to less than
500,000, 500,000 to 1,000,000 and greater than 1,000,000). Exchange
Rule 18.7 sets out position limits for various contracts. For example,
like ISE, 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. ISE indicated it performed this exercise to
demonstrate the Trust's position limit relative to other options
symbols in terms of market capitalization and ADV.
[[Page 20711]]
For reference the market capitalization for the Trust was 1.16 billion
\31\ with an ADV, for the preceding three months prior to October 22,
2024, of greater than 2.99 million shares. By comparison, other options
symbols with similar market capitalization and ADV have a position
limit of 50,000 contracts or 75,000 contracts.\32\ From a 90-day ADV
perspective, ISE reviewed statistics that indicated that the Trust had
a 90-day ADV greater than each of the stocks in the 100,000 contracts
to 249,000 contracts range. Therefore, the proposed 25,000 same side
position and exercise limits for options on the Trust are conservative.
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\30\ The Trust has one asset and therefore is not comparable to
a broad based ETF where there are typically multiple components.
\31\ ISE acquired this figure as of October 22, 2024. See
https://www.ishares.com/us/products/337614/isharesethereum-trust-etf. The global supply of ether grows each day ether are minted.
\32\ ISE determined the median market capitalization for 50,000
contracts was 788,000,000 million and the median market
capitalization for 75,000 contracts was 1,037,000 billion. Further,
placing the Trust at 50,000 contracts would rank it in the 59th
percentile in market capitalization and placing the Trust at 75,000
contracts would rank it in the 46th percentile in market
capitalization.
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Second, ISE reviewed the Trust's data relative to the market
capitalization of the entire ether market in terms of exercise risk and
availability of deliverables. Utilizing data as of October 22, 2024,
there were 120,392,960 Ethereum in circulation. The price of Ethereum
on October 22, 2024, was $2,620 per coin which equates to a market
capitalization of greater than $315 billion US dollars. If a position
limit of 25,000 options were considered (the position limit that would
be typically assigned based upon data), the exercisable risk would
represent less than 4.3524% of the outstanding shares of the Trust.\33\
Since the Trust has a creation and redemption process managed through
the issuer, ISE additionally compared the position limit sought to the
total market capitalization of the entire Ethereum market. In this
case, the exercisable risk represented by 25,000 options on the Trust
would be less than 0.03% of the market capitalization of all
outstanding ether. Assuming a scenario where all 25,000 options on
ether shares were exercised given the proposed 25,000 per same side
position limit, this would have a virtually unnoticed impact on the
entire ether market. This analysis demonstrates that the proposed
25,000 per same side position limit (and exercise limit) is
conservative and appropriate for options on the Trust.
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\33\ The 4.4% was calculated as follows: 2,500,000 (exercisable
stock from position limit)/57,440,000 (shares outstanding on October
22, 2024) = 4.35237%.
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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 ether futures position limits. In particular, ISE
looked at the CME Ethereum futures contract \34\ that has a position
limit of 8,000 futures.\35\ On October 22, 2024, CME ether futures
settled at $2,629. Using a contract multiplier of $50, a position limit
of 8,000 futures would have a notional value $1.0516 billion (8,000 x
$50 x $2,629). Using an October 22, 2024, share price of $19.91 for
shares of the Trust, a futures position of 8,000 contracts, with a
notional value of $1.0516 billion dollars would equate to an options
position of 528,176 contracts ($1.0516 billion (notional value of 8,000
Ethereum futures contracts)/$19.91 (price of the Trust shares) =
52,817,679 (Trust shares)/100 (the number of shares represented by one
options contract)) = 528,176 options contracts. Because substantial
sums 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 Ethereum (considering that all options deltas are
<=1.00) should be a bit higher than the CME implied 528,176 contract
limit.
---------------------------------------------------------------------------
\34\ CME Ether Futures are described in Chapter 350 of CME's
Rulebook.
\35\ See CME Rulebook, Chapter 5, Position Limit, Position
Accountability and Reportable Level Table in the Interpretations &
Special Notices.
---------------------------------------------------------------------------
The Exchange notes, 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).\36\ 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.\37\ 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. Considering CME's position limits on futures for Ethereum,
the Exchange believes that that the proposed same side position limits
are more than appropriate for the Trust options.
---------------------------------------------------------------------------
\36\ Id.
\37\ Id.
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In analyzing the proposed position limit for options on the Trust,
ISE also considered the supply of ether. Specifically, ISE examined the
number of market participants with a position limit of 25,000 contracts
that would need to exercise in unison to put the underlying asset under
stress. In the case of options on ether, the proposed 25,000 same side
position and exercise limit effectively restricts a market participant
from holding positions that could be exercised in excess of 2,500,000
shares of the Trust. Utilizing data from October 22, 2024, the Trust
had 57,440,000 shares outstanding, therefore 22.976 participants would
have to simultaneously exercise their position limits in order to
create a scenario that may put the underlying asset (shares of the
Trust) under stress. The Exchange notes that historically, from
observation only, it appears that no more than five market participants
holding options positions in any single security have exercised in
unison in any option. As unlikely an occurrence as all market
participants exercising their positions in unison would be, if it were
to occur, it should be noted that even such an occurrence would not
likely put the Trust under stress as economic incentives, would induce
the creation of more shares through the ETF creation and redemption
process.
Further, given that the current global supply of Ethereum, the
underlying asset of the Trust, is 120,392,960 \38\ coins and each
Ethereum coin can currently be exchanged (Ethereum to USD and then USD
to Trust shares) for 131.6 shares of the Trust another 15,843,979,598
shares of the Trust could be created by the underlying ETF. In
addition, as of October 22, 2024, a 25,000 contract position limit for
options on the Trust would represent less than 4.3524% of the
outstanding shares of the Trust (2,500,000 (position limit exercise)/
57,440,000 (shares outstanding of the Trust on October 22, 2024)) =
4.3524%.\39\ Also, as of October
[[Page 20712]]
22, 2024, a 25,000 contract position limit for options on the Trust
would represent less than .01578% of the global supply of ether
(2,500,000 (position limit exercise)/120,392,960 (number of ether) x
131.6 (Trust shares per ether)) = .01578%.
---------------------------------------------------------------------------
\38\ This figure was acquired as of October 22, 2024. See
https://www.ishares.com/us/products/337614/isharesethereum-trust-etf. The global supply of ether grows each day ether are minted.
\39\ See https://coinmarketcap.com/currencies/ethereum/.
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Today, the Exchange has an adequate surveillance program in place
for options. The Exchange intends to apply those same program
procedures to options on the Trust that it applies to the Exchange's
other options products, including options on Fund Shares.\40\ The
Exchange's market surveillance staff would have access to the
surveillances conducted by the Exchange's affiliated equities exchange,
MEMX, LLC, with respect to the Trust and would review activity in the
underlying Trust when conducting surveillances for market abuse or
manipulation in the options on the Trust. Additionally, the Exchange is
a member of the Intermarket Surveillance Group (``ISG'') under the
Intermarket Surveillance Group Agreement. ISG members work together to
coordinate surveillance and investigative information sharing in the
stock, options, and futures markets. In addition to obtaining
information from its affiliated market, the Exchange would be able to
obtain information regarding trading in shares of the Trust from their
primary listing markets and from other markets that trade shares of the
Trust through ISG. In addition, the Exchange has a Regulatory Services
Agreement with the Financial Industry Regulatory Authority (``FINRA'')
for certain market surveillance, investigation and examinations
functions. Pursuant to a multi-party 17d-2 joint plan, all options
exchanges allocate amongst themselves and FINRA responsibilities to
conduct certain options-related market surveillance that are common to
rules of all options exchanges.\41\
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\40\ The surveillance program includes surveillance patterns for
price and volume movements as well as patterns for potential
manipulation (e.g., spoofing and marking the close).
\41\ Section 19(g)(1) of the Act, among other things, requires
every self-regulatory organization (``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 (``common members''). 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.
---------------------------------------------------------------------------
The underlying shares of spot Ethereum ETPs, including the Trust,
are also subject to safeguards related to addressing market abuse and
manipulation. As the Commission stated in its order approving proposals
of several exchanges to list and trade shares of spot Ethereum-based
ETPs,\42\ ``[e]ach Exchange has a comprehensive surveillance-sharing
agreement with the [CME] via their common membership in ISG. This
facilitates the sharing of information that is available to the CME
through its surveillance of its markets, including its surveillance of
the CME Ether futures market.'' \43\ The Exchange states that, given
the consistently high correlation between the CME Ethereum futures
market and the spot Ethereum market, as confirmed by the Commission
through robust correlation analysis, the Commission was able to
conclude that such surveillance sharing agreements could reasonably be
``expected to assist in surveilling for fraudulent and manipulative
acts and practices in the specific context of the [Ethereum ETPs].''
\44\ In light of surveillance measures related to both options and
futures as well as the underlying Trust,\45\ 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 the Trust. Further, the
Exchange will implement any new surveillance procedures it deems
necessary to effectively monitor the trading of options on the Trust.
---------------------------------------------------------------------------
\42\ See Securities Exchange Act Release Nos. 100224 (May 23,
2024), 89 FR 46937 (May 30, 2024) (SR-NYSEArca-2023-70; SR-NYSEArca-
2024-31; SR-NASDAQ-2023-045; SR-CboeBZX-2023-069; SR-CboeBZX-2023-
070; SR-CboeBZX-2023-087; SR-CboeBZX-2023-095; and SR-CboeBZX-2024-
018) (Order Granting Accelerated Approval of Proposed Rule Changes,
as Modified by Amendments Thereto, to List and Trade Shares of
Ether-Based Exchange-Traded Products) (``Ethereum ETP Approval
Order'').
\43\ See Ethereum ETP Approval Order, at 46938 (footnotes
excluded).
\44\ See Ethereum ETP Approval Order, at 46941 (footnote
excluded).
\45\ See Ethereum ETP Approval Order.
---------------------------------------------------------------------------
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 the Trust will be
available via Options Price Reporting Authority (``OPRA'') and major
market data vendors. The Exchange has also analyzed its capacity and
represents that it believes the Exchange and OPRA have the necessary
systems capacity to handle the additional traffic associated with the
listing of new series that may result from the introduction of options
on the Trust up to the number of expirations currently permissible
under the Rules.
The Exchange believes that offering options on the Trust will
benefit investors by providing them with an additional, relatively
lower cost investing tool to gain exposure to the price of Ethereum and
hedging vehicle to meet their investment needs in connection with
Ethereum-related products and positions. The Exchange expects investors
will transact in options on the Trust in the unregulated over-the-
counter (``OTC'') options market,\46\ but may prefer to trade such
options in a listed environment to receive the benefits of trading
listing options, including (1) enhanced efficiency in initiating and
closing out positions; (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 Trust options 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 Fund Shares that hold financial instruments, money
market instruments, precious metal commodities, or Bitcoin on which the
Exchange may already list and trade options are trusts structured in
substantially the same manner as the Trust and essentially offer the
same objectives and benefits to investors, just with respect to
different assets. The Exchange notes that it has not identified any
issues with the continued listing and trading of any Fund Share
options, including Fund Shares that hold commodities (i.e., precious
metals and Bitcoin) that it currently lists and trades on the Exchange.
---------------------------------------------------------------------------
\46\ The Exchange understands from customers that investors have
historically transacted in options on Fund Shares in the OTC options
market if such options were not available for trading in a listed
environment.
---------------------------------------------------------------------------
Finally, the Exchange notes that applicable Exchange rules will
require that customers receive appropriate disclosure before trading
options in the Trust.\47\ Further, brokers opening accounts and
recommending options transactions must comply with relevant customer
suitability standards.\48\
---------------------------------------------------------------------------
\47\ See Rules 26.2(b) and (e).
\48\ See Rule 26.4.
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[[Page 20713]]
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.\49\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \50\ 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) \51\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\49\ 15 U.S.C. 78f(b).
\50\ 15 U.S.C. 78f(b)(5).
\51\ Id.
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposal to list and
trade options on the Trust 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 the Trust
will provide investors with a greater opportunity to realize the
benefits of utilizing options on an ETF based on spot Ethereum,
including cost efficiencies and increased hedging strategies. The
Exchange believes that offering options on a competitively priced ETF
based on spot Ethereum will benefit investors by providing them with an
additional, relatively lower-cost risk management tool, allowing them
to manage, more easily, their positions and associated risks in their
portfolios in connection with exposure to spot Ethereum. Additionally,
the Exchange's offering of Trust options will provide investors with
the ability to transact in such options in a listed market environment
as opposed to in the unregulated 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. Today, the Exchange lists options on other commodity
(including Ethereum) ETFs structured as a trust, which essentially
offer the same objectives and benefits to investors, and for which the
Exchange has not identified any issues with the continued listing and
trading of options on those ETFs.
The Exchange also believes the proposal to permit options on the
Trust will remove impediments to and perfect the mechanism of a free
and open market and a national market system, because options on the
Trust will comply with current Exchange Rules. Options on the Trust
must satisfy the initial listing standards and continued listing
standards currently in the Rules, applicable to options on all ETFs,
including options on other commodity ETFs already deemed appropriate
for options trading on the Exchange pursuant to Rule 19.3(i). Position
and exercise limits for options on ETFs, including options on the
Trust, are determined pursuant to Rules 18.7 and 18.9.\52\
---------------------------------------------------------------------------
\52\ See supra note 26 [sic].
---------------------------------------------------------------------------
Additionally, as demonstrated above, the Trust is characterized by
a substantial number of shares that are widely held and actively
traded. Further, Rules that currently govern the listing and trading of
options on ETFs, including permissible expirations, strike prices,
minimum increments, position and exercise limits (as proposed herein),
and margin requirements, will govern the listing and trading of options
on the Trust.
The Exchange believes the proposed position and exercise limits are
designed to prevent fraudulent and manipulative acts and practices and
promote just and equitable principles of trade, as they are designed 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. The proposed position and exercise
limits for options on each of the Trust are 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 the Trust's market capitalization, ADV,
and high number of outstanding shares. The proposed position limit, and
exercise limit, is consistent with the Act as it addresses concerns
related to manipulation and protection of investors because, as
demonstrated above, the position limit (and exercise limit) is
extremely conservative and more than appropriate given the Trust is
actively traded. In support of the proposed position and exercise
limits for options on the Trust are 25,000 contracts, the Exchange is
citing the in depth analysis ISE did in the ISE Approval. As noted
above, in ISE Approval, ISE considered the: (1) Trust's market
capitalization and ADV, and proposed position limit in relation to
other securities; (2) market capitalization of the entire Ethereum
market in terms of exercise risk and availability of deliverables; (3)
proposed position limit by comparing it to position limits for
derivative products regulated by the CFTC; and (4) supply of Ethereum.
Based on the Exchange's review of these analyses, the Exchange believes
that setting position and exercise limits for options on the Trust at
25,000 contracts is more than appropriate. 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
as well as the Ethereum market.
The Exchange represents that it has the necessary systems capacity
to support the new Trust options. As discussed above, 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 Fund Share options, including Trust
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 the Trust. The Exchange believes that its
surveillance procedures are adequate to properly monitor the trading of
options on the Trust in all trading sessions and to deter and detect
violations of Exchange rules. Specifically, the Exchange's market
surveillance staff will have access to surveillances that it conducts,
and that FINRA conducts on its behalf, with respect to the Trust and,
as appropriate, would review activity in the underlying Fund when
conducting surveillances for market abuse or manipulation in the
options on the Trust. Additionally, the Exchange is a member of the ISG
under the Intermarket Surveillance Group Agreement. ISG members work
together to coordinate surveillance and investigative information
sharing in the stock, options, and futures markets. In
[[Page 20714]]
addition, the Exchange has a Regulatory Services Agreement with the
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 the Trust.
The underlying shares of spot Ethereum ETPs, including the Trust,
are also subject to safeguards related to addressing market abuse and
manipulation. As the Commission stated in its order approving proposals
of several exchanges to list and trade shares of spot Ethereum-based
ETPs, ``[e]ach Exchange has a comprehensive surveillance-sharing
agreement with the CME via their common membership in the Intermarket
Surveillance Group. This facilitates the sharing of information that is
available to the CME through its surveillance of its markets, including
its surveillance of the CME ether futures market.'' \53\ The Exchange
states that, given the consistently high correlation between the CME
Ethereum futures market and the spot Ethereum market, as confirmed by
the Commission through robust correlation analysis, the Commission was
able to conclude that such surveillance sharing agreements could
reasonably be ``expected to assist in surveilling for fraudulent and
manipulative acts and practices in the specific context of the [Ether
ETPs].'' \54\ In light of the foregoing, 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 the Trust. Further, the
Exchange will implement any new surveillance procedures it deems
necessary to effectively monitor the trading of options on Ethereum
ETPs.
---------------------------------------------------------------------------
\53\ See Ethereum ETP Approval Order, 89 FR at 46938.
\54\ See Ethereum ETP Approval Order, 89 FR at 46941.
---------------------------------------------------------------------------
Finally, the Exchange notes that 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 because
applicable Exchange rules will require that customers receive
appropriate disclosure before trading options in the Trust \55\ and
will require that brokers opening accounts and recommending options
transactions must comply with relevant customer suitability
standards.\56\
---------------------------------------------------------------------------
\55\ See Rules 26.2(b) and (e).
\56\ See Rule 26.4.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the 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 Trust options will be equally
available to all market participants who wish to trade such options and
will trade generally in the same manner as other options. The Rules
that currently apply to the listing and trading of all Fund Share
options on the Exchange, including, for example, Rules that govern
listing criteria, expirations, exercise prices, minimum increments,
margin requirements, customer accounts, and trading halt procedures
will apply to the listing and trading of the Trust options on the
Exchange in the same manner as they apply to other options on all other
Fund Shares that are listed and traded on the Exchange. Also, and as
stated above, the Exchange already lists options on other commodity-
based Fund Shares (including Bitcoin-based).\57\ Further, the Trust
would need to satisfy the maintenance listing standards set forth in
the Exchange Rules in the same manner as any other Fund Share for the
Exchange to continue listing options on them.
---------------------------------------------------------------------------
\57\ See Rule 19.3(i).
---------------------------------------------------------------------------
The Exchange does not believe that the proposal to list and trade
options on the Trust 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 the Trust 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. The
Exchange notes that listing and trading Trust 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 Trust 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 Ethereum prices and
Ethereum-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
The Exchange neither solicited nor received comments on the
proposed rule change.
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) of the Act \58\ and Rule 19b-4(f)(6) thereunder.\59\
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 \60\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\61\
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\58\ 15 U.S.C. 78s(b)(3)(A)(iii).
\59\ 17 CFR 240.19b-4(f)(6).
\60\ 15 U.S.C. 78s(b)(3)(A)(iii).
\61\ 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 Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \62\ 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),\63\ the
Commission may designate a shorter time if such action is consistent
with the protection of investors and the public interest. The
[[Page 20715]]
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 iShares Ethereum Trust.\64\ The Exchange has provided information
regarding the underlying iShares Ethereum Trust, including, among other
things, information regarding trading volume, the number of
shareholders, and the market capitalization of the iShares Ethereum
Trust. The proposal also establishes position and exercise limits for
options on the iShares Ethereum Trust and provides information
regarding the surveillance procedures that will apply to iShares
Ethereum Trust options. The Commission believes that waiver of the
operative delay could benefit investors by providing an additional
venue for trading iShares Ethereum Trust options. 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.\65\
---------------------------------------------------------------------------
\62\ 17 CFR 240.19b-4(f)(6).
\63\ 17 CFR 240.19b-4(f)(6)(iii).
\64\ See ISE Approval Order, supra note 5.
\65\ 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).
---------------------------------------------------------------------------
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 will institute proceedings to
determine whether the proposed rule change 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-MEMX-2025-11 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-MEMX-2025-11. 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-MEMX-2025-11 and should be
submitted on or before June 5, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\66\
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\66\ 17 CFR 200.30-3(a)(12) and (59).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025-08551 Filed 5-14-25; 8:45 am]
BILLING CODE 8011-01-P