[Federal Register Volume 90, Number 156 (Friday, August 15, 2025)]
[Notices]
[Pages 39445-39453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-15527]
[[Page 39445]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103684; File No. SR-ISE-2025-23]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To List and Trade
Options on the VanEck Bitcoin ETF
August 12, 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 August 7, 2025, Nasdaq ISE, LLC (``ISE'' 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 list and trade options on the VanEck
Bitcoin ETF.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rulefilings
and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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 list and trade options on the VanEck
Bitcoin ETF by amending Options 4, Section 3, Criteria for Underlying
Securities. Specifically, the Exchange proposes to list and trade
options on an Exchange-Traded Fund or ``ETF'' that represent interests
in the VanEck Bitcoin ETF.\3\ Recently, Cboe Exchange, Inc. (``Cboe'')
received approval to list and trade options on the VanEck Bitcoin
ETF.\4\
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\3\ See Securities Exchange Act Release No. 99306 (January 10,
2024), 89 FR 3008 (January 17, 2024) (SR-CboeBZX-2023-040) (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 ETFs) (``Bitcoin ETP Approval Order'').
\4\ See Securities Exchange Act Release No. 103569 (July 29,
2025) (SR-Cboe-2025-017) (not yet noticed) (``Cboe VanEck Filing'').
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Currently, Options 4, Section 3(h) provides that securities deemed
appropriate for options trading shall include shares or other
securities (``Exchange-Traded Fund Shares'' or ``ETFs'') that are
traded on a national securities exchange and are defined as an ``NMS''
stock under Rule 600 of Regulation NMS, and that meet certain criteria
specified in Options 4, Section 3(h), including that they:
(i) represent interests in registered investment companies (or
series thereof) organized as open-end management investment
companies, unit investment trusts or similar entities that hold
portfolios of securities and/or financial instruments, including,
but not limited to, stock index futures contracts, options on
futures, options on securities and indices, 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'') comprising or otherwise based on or representing
investments in broad-based indexes or portfolios of securities and/
or Financial Instruments and Money Market Instruments (or that hold
securities in one or more other registered investment companies that
themselves hold such portfolios of securities and/or Financial
Instruments and Money Market Instruments) or
(ii) represent interests in a trust or similar entity that holds a
specified non-U.S. currency or currencies deposited with the trust
when aggregated in some specified minimum number may be surrendered
to the trust or similar entity 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
(iii) 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
(iv) represent interests in the iShares Ethereum Trust, the
SPDR[supreg] Gold Trust, the iShares COMEX Gold Trust, the iShares
Silver Trust, the Aberdeen Standard Physical Gold Trust, or the
iShares Bitcoin Trust, or the Fidelity Wise Origin Bitcoin Fund, or
the ARK21Shares Bitcoin ETF, or the Grayscale Bitcoin Trust (BTC),
or the Grayscale Bitcoin Mini Trust BTC, or the Bitwise Bitcoin ETF
or the Fidelity Ethereum Fund, the Bitwise Ethereum ETF, the
Grayscale Ethereum Trust, and Grayscale Ethereum Mini Trust or
(v) represents an interest in a registered investment company
(``Investment Company'') organized as an open-end management company
or similar entity, that invests in a portfolio of securities
selected by the Investment Company's investment adviser consistent
with the Investment Company's investment objectives and policies,
which is issued in a specified aggregate minimum number in return
for a deposit of a specified portfolio of securities and/or a cash
amount with a value equal to the next determined net asset value
(``NAV''), and when aggregated in the same specified minimum number,
may be redeemed at a holder's request, which holder will be paid a
specified portfolio of securities and/or cash with a value equal to
the next determined NAV (``Managed Fund Share'').
In addition to the aforementioned requirements, Options 4,
Section 3(h)(1) and (2) must be met to list options on ETFs.\5\
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\5\ Options 4, Section 3(h)(1) and (2) state that the Exchange-
Traded Fund Shares either (i) meet the criteria and guidelines set
forth in paragraphs (a) and (b) described herein; or (ii) the
Exchange-Traded Fund Shares are available for creation or redemption
each business day from or through the issuing trust, investment
company, commodity pool or other entity in cash or in kind at a
price related to net asset value, and the issuer is obligated to
issue Exchange-Traded Fund Shares in a specified aggregate number
even if some or all of the investment assets and/or cash required to
be deposited have not been received by the issuer, subject to the
condition that the person obligated to deposit the investment assets
has undertaken to deliver them 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 of
the Exchange-Traded Fund Shares, all as described in the Exchange-
Traded Fund Shares' prospectus. Also, the Exchange-Traded Fund
Shares based on international or global indexes, or portfolios that
include non-U.S. securities, shall meet the criteria in Options 4,
Section 3(h)(2)(A)-(F).
The VanEck Bitcoin ETF is a Bitcoin-backed commodity ETF structured
as a trust. Similar to any ETF currently deemed appropriate for options
trading under Options 4, Section 3(h), the investment objective of the
VanEck Bitcoin ETF is for its shares to reflect the performance of
Bitcoin (less the expenses of the trust's operations), offering
investors an opportunity to gain exposure to Bitcoin without the
complexities of Bitcoin delivery. As is the case for ETFs currently
deemed appropriate for options trading, the VanEck Bitcoin ETF's shares
represent units of fractional undivided beneficial interest in the
trust, the assets of which
[[Page 39446]]
consist principally of Bitcoin and are designed to track Bitcoin or the
performance of the price of Bitcoin and offer access to the Bitcoin
market.\6\ The VanEck Bitcoin ETF provides investors with cost-
efficient alternatives that allow a level of participation in the
Bitcoin market through the securities market.
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\6\ The trust may include minimal cash and cash equivalents
(i.e., short-term instruments with maturities of less than three
months).
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The Exchange believes the VanEck Bitcoin ETF satisfies the
Exchange's initial listing standards for ETFs on which the Exchange may
list options. Specifically, the VanEck Bitcoin ETF satisfies the
initial listing standards set forth in Options 4, Section 3(h), as is
the case for other ETFs on which the Exchange lists options (including
trusts that hold commodities). Pursuant to Options 4, Section 3(h)(1)
ETFs either (i) meet the criteria and guidelines set forth in
paragraphs (a) and (b) of Options 4, Section 3; or (ii) the ETFs must
be available for creation or redemption each business day from or
through the issuer in cash or in kind at a price related to net asset
value, and the issuer must be obligated to issue ETFs in a specified
aggregate number even if some or all of the investment assets required
to be deposited have not been received by the issuer, subject to the
condition that the person obligated to deposit the investments has
undertaken to deliver the investment assets as soon as possible and
such undertaking is secured by the delivery and maintenance of
collateral consisting of cash or cash equivalents satisfactory to the
issuer, as provided in the respective prospectus. The VanEck Bitcoin
ETF satisfies Options 4, Section 3(h)(1)(ii), as each is subject to
this creation and redemption process.
While not required by the Rules for purposes of options listings,
the Exchange believes the VanEck Bitcoin ETF satisfies the criteria and
guidelines set forth in Options 4, Section 3(a) which requires that a
security (which includes a ETF) on which options may be listed and
traded on the Exchange must be duly registered (with the Commission)
and be an NMS stock (as defined in Rule 600 of Regulation NMS under the
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.\7\ The VanEck Bitcoin ETF is an NMS
Stock as defined in Rule 600 of Regulation NMS under the Act.\8\ The
Exchange believes the VanEck Bitcoin ETF is characterized by a
substantial number of outstanding shares that are widely held and
actively traded.
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\7\ The criteria and guidelines for a security to be considered
widely held and actively traded are set forth in Options 4, Section
3(b), subject to exceptions.
\8\ An ``NMS stock'' means any NMS security other than an
option, and an ``NMS security'' means any security or class of
securities for which transaction reports are collected, processed,
and made available pursuant to an effective transaction reporting
plan (or an effective national market system plan for reporting
transaction in listed options). See 17 CFR Sec. 242.600(b)(64)
(definition of ``NMS security'') and (65) (definition of ``NMS
stock'').
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Cboe VanEck Filing noted that, as of March 5, 2025, the VanEck
Bitcoin ETF had the following number of shares outstanding:
------------------------------------------------------------------------
Shares
Bitcoin Fund outstanding
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VanEck Bitcoin ETF..................................... 49,900,000
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Cboe VanEck Filing noted that the VanEck Bitcoin ETF had
significantly more than 7,000,000 shares outstanding (approximately 7
times that amount), which is the minimum number of shares of a
corporate stock that the Exchange generally requires to list options on
that stock pursuant to Options 4, Section 3(b)(1). The Exchange
believes this demonstrates that the VanEck Bitcoin ETF is characterized
by a substantial number of outstanding shares. Further, the below table
that was provided in the Cboe VanEck Filing, contains information
regarding the number of beneficial holders of the VanEck Bitcoin ETF as
of the specified dates:
------------------------------------------------------------------------
Beneficial
Bitcoin Fund holders Date
------------------------------------------------------------------------
VanEck Bitcoin ETF............................ 32,469 1/31/25
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This Cboe VanEck Filing table noted that the VanEck Bitcoin ETF has
significantly more than 2,000 beneficial holders (approximately 16
times more), which is the minimum number of holders the Exchange
generally requires for corporate stock in order to list options on that
stock pursuant to Options 4, Section 3(b)(2). Therefore, the Exchange
believes the shares of the VanEck Bitcoin ETF are widely held.
The Exchange also believes the shares of the VanEck Bitcoin ETF are
actively traded. The Cboe VanEck Filing stated that, as of March 5,
2025, the total trading volume (by shares) for the trust for the six-
month period of September 5, 2024, through March 5, 2025, and the
approximate average daily volume (``ADV'') (in shares and notional)
over the 30-day period of January 21, 2025, through March 5, 2025, for
the VanEck Bitcoin ETF was as follows:
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6-Month trading 30-Day ADV 30-Day ADV
Bitcoin Fund volume (shares) (shares) (notional $)
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF..................................... 133,275,448 794,677 39,163,513.72
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As demonstrated above, Cboe noted that as of March 5, 2025, the
six-month trading volume for the VanEck Bitcoin ETF as of that date was
substantially higher than 2,400,000 shares (approximately 55 times that
amount), which is the minimum 12-month volume the Exchange generally
requires for a corporate stock in order to list options on that
security as set forth in Options 4, Section 3(b)(4). The Exchange
believes this data demonstrates the VanEck Bitcoin ETF is characterized
as having shares that are actively traded.
Options on the VanEck Bitcoin ETF will be subject to the Exchange's
continued listing standards set forth in Options 4, Section 4(g) for
ETFs deemed appropriate for options trading pursuant to Options 4,
Section 3(h). Specifically, ETFs approved for trading pursuant to
Options 4, Section 3(h) will not be deemed to meet the requirements for
continued approval, and the Exchange shall not open for trading any
additional series of option contracts of the class covering such ETFs
if the ETFs are delisted from trading as provided in subparagraph
(b)(4) of Options 4, Section 4 \9\ or the ETFs are halted or suspended
from trading on their primary market.\10\ In addition, the Exchange
shall consider the suspension of opening transactions in any series of
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\9\ Options 4, Section 4(b)(4) states that the underlying
security ceases to be an ``NMS stock'' as defined in Rule 600 of
Regulation NMS under the Exchange Act.
\10\ See Options 4, Section 4(g).
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[[Page 39447]]
options of the class covering ETFs in any of the following
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circumstances:
(1) in the case of options covering Exchange-Traded Fund Shares
approved pursuant to Options 4, Section 3(h)(i), in accordance with
the terms of subparagraphs (b)(1), (2), (3) and (4) of Options 4,
Section 4; \11\
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\11\ Options 4, Section 4(b)(1) through (4) provides, if: (1)
there are fewer than 6,300,000 shares of the underlying security
held by persons other than those who are required to report their
security holdings under Section 16(a) of the Act, (2) there are
fewer than 1,600 holders of the underlying security, (3) the trading
volume (in all markets in which the underlying security is traded)
has been less than 1,800,000 shares in the preceding twelve (12)
months, or (4) the underlying security ceases to be an `NMS stock'
as defined in Rule 600 of Regulation NMS under the Exchange Act.
Options 4, Section 3(h)(i) refers to Financial Instruments and Money
Market Instruments.
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(2) in the case of options covering Fund Shares approved
pursuant to Options 4, Section 3(h)(ii),\12\ following the initial
twelve-month period beginning upon the commencement of trading in
the Exchange-Traded Fund Shares on a national securities exchange
and are defined as an ``NMS stock'' under Rule 600 of Regulation
NMS, there were fewer than 50 record and/or beneficial holders of
such Exchange-Traded Fund Shares for 30 or more consecutive trading
days;
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\12\ Options 4, Section 3(h)(ii) refers to Currency Trust
Shares.
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(3) the value of the index or portfolio of securities or non-
U.S. currency, portfolio of commodities including commodity futures
contracts, options on commodity futures contracts, swaps, forward
contracts, options on physical commodities and/or Financial
Instruments and Money Market Instruments, on which the Exchange-
Traded 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 VanEck Bitcoin ETF would be physically settled
contracts with American-style exercise.\13\ Consistent with current
Options 4, Section 5, which governs the opening of options series on a
specific underlying security (including ETFs), the Exchange will open
at least one expiration month for options on the VanEck Bitcoin ETF and
may also list series of options on the VanEck Bitcoin ETF for trading
on a monthly,\14\ weekly \15\ or quarterly \16\ basis. The Exchange may
also list long-term equity option series (``LEAPS'') \17\ that expire
from twelve to thirty-nine months from the time they are listed.
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\13\ See Options 4, Section 2, Rights and Obligations of Holders
and Writers, which provides that the rights and obligations of
holders and writers shall be as set forth in the Rules of the
Clearing Corporation. See also OCC Rules, Chapter VIII, which
governs exercise and assignment, and Chapter IX, which governs the
discharge of delivery and payment obligations arising out of the
exercise of physically settled stock option contracts. OCC Rules can
be located at: https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occ_rules.pdf.
\14\ See Supplementary Material .09 to Options 4, Section 5.
\15\ See Supplementary Material .03 to Options 4, Section 5.
\16\ See Supplementary Material .04 to Options 4, Section 5.
\17\ See Options 4, Section 8.
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Pursuant to Options 4, Section 5(d), which governs strike prices of
series of options on ETFs, the interval between strike prices of series
of options on ETFs approved for options trading pursuant to Section
3(h) of Options 4 shall be fixed at a price per share which is
reasonably close to the price per share at which the underlying
security is traded in the primary market at or about the same time such
series of options is first open for trading on the Exchange, or at such
intervals as may have been established on another options exchange
prior to the initiation of trading on the Exchange. With respect to the
Short Term Options Series or Weekly Program, during the month prior to
expiration of an option class that is selected for the Short Term
Option Series Program, the strike price intervals for the related non-
Short Term Option (``Related non-Short Term Option'') shall be the same
as the strike price intervals for the Short Term Option.\18\
Specifically, the Exchange may open for trading Short Term Option
Series at strike price intervals of (i) $0.50 or greater where the
strike price is less than $100, and $1 or greater where the strike
price is between $100 and $150 for all option classes that participate
in the Short Term Options Series Program; (ii) $0.50 for option classes
that trade in one dollar increments and are in the Short Term Option
Series Program; or (iii) $2.50 or greater where the strike price is
above $150.\19\ Additionally, the Exchange may list series of options
pursuant to the $1 Strike Price Interval Program,\20\ the $0.50 Strike
Program,\21\ the $2.50 Strike Price Program,\22\ and the $5 Strike
Program.\23\ Options 3, Section 3 governs the minimum increment for
bids and offers for both equity and index options. Pursuant to Options
3, Section 3, where the price of a series of options for the VanEck
Bitcoin ETF is less than $3.00 the minimum increment will be $0.05, and
where the price is $3.00 or higher, the minimum increment will be $0.10
\24\ consistent with the minimum increments for options on other ETFs
listed on the Exchange. Any and all new series of VanEck Bitcoin ETF
options that the Exchange lists will be consistent and comply with the
expirations, strike prices, and minimum increments set forth in Options
4, Section 5 and Options 3, Section 3, as applicable.
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\18\ See Supplementary Material .03(e) to Options 4, Section 5.
\19\ Id.
\20\ See Supplementary Material .01 to Options 4, Section 5.
\21\ See Supplementary Material .05 to Options 4, Section 5.
\22\ See Supplementary Material .02 to Options 4, Section 5.
\23\ See Supplementary Material .06 to Options 4, Section 5.
\24\ Options that are eligible to participate in the Penny
Interval Program have a minimum increment of $0.01 below $3.00 and
$0.50 above $3.00. See Supplementary Material .01 to Options 3,
Section 3.
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VanEck Bitcoin ETF options will trade in the same manner as any
other ETF options on the Exchange. The Exchange Rules that currently
apply to the listing and trading of all ETF 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 VanEck Bitcoin ETF options on the Exchange in
the same manner as they apply to other options on all other ETFs that
are listed and traded on the Exchange, including the precious metal
backed commodity ETFs already deemed appropriate for options trading on
the Exchange pursuant to current Options 4, Section 3(h)(iv).
Options 3A, Section 3(a) currently permits the Exchange to
authorize for trading a FLEX option class on any equity security if it
may authorize for trading a non-FLEX option class on that equity
security pursuant to Options 4, Section 3 . The proposed rule change
amends Options 3A, Section 3(a) to exclude the VanEck Bitcoin ETF from
this provision.
The Exchange also proposes to amend Options 9, Sections 13 and 15.
Specifically, the Exchange proposes to amend Options 9, Sections 13 to
provide a position limit of 25,000 same side option contracts for the
VanEck Bitcoin ETF option. Additionally, pursuant to Options 9,
Sections 15, the exercise limits for options on the VanEck Bitcoin ETF
will be equivalent to this proposed position limit.
Cboe determined these proposed position and exercise limits
considering, among other things, the approximate six-month average
daily volume (``ADV'') and outstanding shares of the VanEck Bitcoin ETF
(which as discussed above demonstrate that the
[[Page 39448]]
VanEck Bitcoin ETF is widely held and actively traded and thus justify
these conservatively proposed position limits), as set forth below,
along with market capitalization (as of March 5, 2025):
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Market
Underlying Bitcoin Fund Six-month ADV Outstanding capitalization
(shares) shares ($)
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VanEck Bitcoin ETF..................................... 1,074,802 49,900,000 1,271,859,416
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Cboe then compared the number of outstanding shares of the VanEck
Bitcoin ETF to those of other ETFs. The following table provides the
approximate average position (and exercise limit) of ETF options with
similar outstanding shares (as of March 5, 2025), compared to the
proposed position and exercise limit for the VanEck Bitcoin ETF
options:
------------------------------------------------------------------------
Average limit
of other ETF Proposed limit
Underlying Bitcoin Fund options (contracts)
(contracts)
------------------------------------------------------------------------
VanEck Bitcoin ETF................. 225,000 25,000
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Cboe considered current position and exercise limits of options on
ETFs \25\ with outstanding shares comparable to those of the VanEck
Bitcoin ETF, with the proposed limit significantly lower (between two
and ten times lower) than the average limits of the options on the
other ETFs. As discussed above, the VanEck Bitcoin ETF is actively held
and widely traded (all statistics as of March 5, 2025) because it: (1)
had significantly more than 7,000,000 shares outstanding, which is the
minimum number of shares of a corporate stock that the Exchange
generally requires to list options on that stock pursuant to Options 4,
Section 3(b)(1); had significantly more than 2,000 beneficial holders,
which is the minimum number of holders the Exchange generally requires
for corporate stock in order to list options on that stock pursuant to
Options 4, Section 3(b)(2); and had a six-month trading volume
substantially higher than 2,400,000 shares, which is the minimum 12-
month volume the Exchange generally requires for a security in order to
list options on that security as set forth in Options 4, Section
3(b)(4).
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\25\ Over 90% of the ETFs used for comparison have a limit of at
least 200,000, and more than 75% have a limit of 250,000.
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With respect to outstanding shares, if a market participant held
the maximum number of positions possible pursuant to the proposed
position and exercise limits, the equivalent shares represented by the
proposed position/exercise limit would represent the following
approximate percentage of current outstanding shares:
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Proposed position/
Underlying Bitcoin Fund exercise limit (in Outstanding Percentage of
equivalent shares) shares outstanding shares
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF..................................... 2,500,000 49,900,000 5.01%
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As this table demonstrates, if a market participant held the
maximum permissible options positions in VanEck Bitcoin ETF options and
exercised all of them at the same time, that market participant would
control a small percentage of the outstanding shares of the VanEck
Bitcoin ETF.
Options 9, Section 13(d) provides two methods of qualifying for a
position limit tier above 25,000 option contracts. The first method is
based on six-month trading volume in the underlying security, and the
second method is based on slightly lower six-month trading volume and
number of shares outstanding in the underlying security. An underlying
stock or ETF that qualifies for method two based on trading volume and
number of shares outstanding would be required to have the minimum
number of outstanding shares as shown in middle column of the table
below.
The table from the Cboe VanEck Filing provides the equivalent
shares of the position limits applicable to equity options, including
ETFs, further represents the percentages of the minimum number of
outstanding shares \26\ that an underlying stock or ETF must have to
qualify for that position limit (under the second method described
above), all of which are higher than the percentages for the VanEck
Bitcoin ETF.
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\26\ This is the minimum number of outstanding shares an
underlying security must have for the Exchange to continue to list
options on that security, so this would be the smallest number of
outstanding shares permissible for any corporate option that would
have a position limit of 25,000 contract. See Options 4, Section
4(b). This rule applies to corporate stock options but not ETF
options, which currently have no requirement regarding outstanding
shares of the underlying ETF for the Exchange to continue listing
options on that ETF. Therefore, there may be ETF options trading for
which the 25,000 contract position limits represents an even larger
percentage of outstanding shares of the underlying ETF than set
forth above.
------------------------------------------------------------------------
Minimum Percentage of
Position/ exercise limit (in outstanding outstanding
equivalent shares) shares shares (%)
------------------------------------------------------------------------
2,500,000............................... 6,300,000 40.0
5,000,000............................... 40,000,000 12.5
7,500,000............................... 120,000,000 6.3
20,000,000.............................. 240,000,000 8.3
25,000,000.............................. 300,000,000 8.3
------------------------------------------------------------------------
The equivalent shares represented by the proposed position and
exercise limits for the VanEck Bitcoin ETF as a percentage of
outstanding shares of the VanEck Bitcoin ETF is significantly lower
than the percentage for the lowest possible position limit for equity
options of 25,000 (under 6% compared to 40%) and is lower than that
[[Page 39449]]
percentage for each current position limit bucket.\27\
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\27\ As these percentages are based on the minimum number of
outstanding shares an underlying security must have to qualify for
the applicable position limit, these are the highest possible
percentages that would apply to any option subject to that position
and exercise limit.
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Further, the proposed position and exercise limits for the VanEck
Bitcoin ETF option are significantly below the limits that would
otherwise apply pursuant to current Options 9, Section 13(d). 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 market capitalization, average
daily volume, and high number of outstanding shares of the VanEck
Bitcoin ETF.
All of the above information demonstrates that the proposed
position and exercise limits for the VanEck Bitcoin ETF options are
more than reasonable and appropriate. The trading volume, ADV, and
outstanding shares of the VanEck Bitcoin ETF demonstrate that the trust
is actively traded and widely held, and proposed position and exercise
limits are well below those of other ETFs with similar market
characteristics. The proposed position and exercise limits are the
lowest position and exercise limits available for equity options in the
industry are extremely conservative, and are more than appropriate
given the VanEck Bitcoin ETF's market capitalization, ADV, and high
number of outstanding shares.
Today, the Exchange has an adequate surveillance program in place
for options. ISE intends to apply those same program procedures to
options on the VanEck Bitcoin ETF that it applies to the Exchange's
other options products.\28\ ISE's market surveillance staff would have
access to the surveillances conducted by Nasdaq \29\ with respect to
the VanEck Bitcoin ETF and would review activity in the underlying
VanEck Bitcoin ETF when conducting surveillances for market abuse or
manipulation in the options on the VanEck Bitcoin ETF. Additionally,
ISE 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. The Exchange would be able to
obtain information regarding trading in shares of the VanEck Bitcoin
ETF on other exchanges through ISG.
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\28\ The surveillance program includes real-time patterns for
price and volume movements and post-trade surveillance patterns
(e.g., spoofing, marking the close, pinging, phishing).
\29\ The Nasdaq Stock Market LLC is an affiliated market of ISE.
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In addition, ISE has a Regulatory Services Agreement with the
Financial Industry Regulatory Authority (``FINRA''). Pursuant to a
multi-party 17d-2 joint plan, all options exchanges allocate regulatory
responsibilities to FINRA to conduct certain options-related market
surveillance that are common to rules of all options exchanges.\30\
---------------------------------------------------------------------------
\30\ Section 19(g)(1) of the Act, among other things, requires
every SRO registered as a national securities exchange or national
securities association to comply with the Act, the rules and
regulations thereunder, and the SRO's own rules, and, absent
reasonable justification or excuse, enforce compliance by its
members and persons associated with its members. See 15 U.S.C.
78q(d)(1) and 17 CFR 240.17d-2. Section 17(d)(1) of the Act allows
the Commission to relieve an SRO of certain responsibilities with
respect to members of the SRO who are also members of another SRO
(``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 bitcoin exchange-traded products
(``ETPs''), including the VanEck Bitcoin ETF, 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 bitcoin-based ETPs:
Each 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 bitcoin futures market.\31\
---------------------------------------------------------------------------
\31\ See Bitcoin ETP Approval Order at 3009.
The Exchange states that, given the consistently high correlation
between the CME Bitcoin futures market and the spot bitcoin 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 [Bitcoin ETPs].'' \32\
---------------------------------------------------------------------------
\32\ See Bitcoin ETP Approval Order, 89 FR at 3010-11.
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In light of surveillance measures related to both options and
futures as well as the VanEck Bitcoin ETF,\33\ 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 VanEck Bitcoin ETF.
Further, the Exchange will implement any new surveillance procedures it
deems necessary to effectively monitor the trading of options on the
VanEck Bitcoin ETF.
---------------------------------------------------------------------------
\33\ See supra note 4.
---------------------------------------------------------------------------
The Exchange has also analyzed its capacity and represents that it
believes the Exchange and the Options Price Reporting Authority or
``OPRA'' have the necessary systems capacity to handle the additional
traffic associated with the listing of new series that may result from
the introduction of options on the VanEck Bitcoin ETF up to the number
of expirations currently permissible under the Exchange Rules. Because
the proposal is limited to one class, the Exchange believes any
additional traffic that may be generated from the introduction of the
VanEck Bitcoin ETF options will be manageable.
The Exchange believes that offering options on the VanEck Bitcoin
ETF will benefit investors by providing them with an additional,
relatively lower cost investing tool to gain exposure to the price of
Bitcoin and hedging vehicle to meet their investment needs in
connection with Bitcoin-related products and positions. The Exchange
expects investors will transact in options on the VanEck Bitcoin ETF in
the unregulated over-the-counter (``OTC'') options market,\34\ but may
prefer to trade such options in a listed environment to receive the
benefits of trading listing options, including (1) enhanced efficiency
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 the VanEck Bitcoin ETF 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 ETFs that
hold financial instruments, money market instruments, or precious metal
commodities on which the Exchange may already list and trade options
are trusts structured in substantially the same manner as the VanEck
Bitcoin ETF 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
[[Page 39450]]
trading of any ETF options, including ETFs that hold commodities (i.e.,
precious metals) that it currently lists and trades on the Exchange.
---------------------------------------------------------------------------
\34\ The Exchange understands from customers that investors have
historically transacted in options on ETFs in the OTC options market
if such options were not available for trading in a listed
environment.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\35\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\36\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\35\ 15 U.S.C. 78f(b).
\36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposal to list and
trade options on the VanEck Bitcoin ETF 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 VanEck Bitcoin ETF will provide investors with an opportunity to
realize the benefits of utilizing options on the VanEck Bitcoin ETF,
including cost efficiencies and increased hedging strategies. The
Exchange believes that offering the VanEck Bitcoin ETF options will
benefit investors by providing them with a relatively lower-cost risk
management tool, which will allow them to manage their positions and
associated risk in their portfolios more easily in connection with
exposure to the price of Bitcoin and with Bitcoin-related products and
positions. Additionally, the Exchange's offering of VanEck Bitcoin ETF
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. The
Exchange also notes that it already lists options on other commodity-
based ETFs,\37\ which, as described above, are trusts structured in
substantially the same manner as the VanEck Bitcoin ETF and 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 commodity-backed ETF options it currently lists for
trading.\38\
---------------------------------------------------------------------------
\37\ See Options 3, Section 3(h)(iv).
\38\ See Securities Exchange Act No. 101387 (October 18, 2024)
89 FR 84948 (October 24, 2024) (SRCBOE-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).
---------------------------------------------------------------------------
The Exchange also believes the proposed rule change will remove
impediments to and perfect the mechanism of a free and open market and
a national market system, because it is consistent with current
Exchange Rules previously filed with the Commission.\39\ Options on the
VanEck Bitcoin ETF satisfy the initial listing standards and continued
listing standards currently in the Exchange Rules applicable to options
on all ETFs, including ETFs that hold other commodities already deemed
appropriate for options trading on the Exchange. Additionally, as
demonstrated above, the VanEck Bitcoin ETF is characterized by a
substantial number of shares that are widely held and actively traded.
VanEck Bitcoin ETF options will trade in the same manner as any other
ETF options--the same Exchange Rules that currently govern the listing
and trading of all ETF options, including permissible expirations,
strike prices and minimum increments, and applicable margin
requirements, will govern the listing and trading of options on the
VanEck Bitcoin ETF in the same manner. The Exchange believes the
proposed rule change to exclude the VanEck Bitcoin ETF from being
eligible for trading as FLEX options is consistent with the Act,
because it will permit the Exchange to continue to participate in
ongoing discussions with the Commission regarding appropriate position
limits for ETF options.\40\
---------------------------------------------------------------------------
\39\ See id.
\40\ The Exchange may submit a separate rule filing that would
permit the Exchange to authorize for trading FLEX options on the
VanEck Bitcoin ETF (which filing may propose changes to existing
FLEX option position limits for such options if appropriate).
---------------------------------------------------------------------------
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 in this proposal for the VanEck Bitcoin ETF options are 25,000
contracts, which is currently the lowest limit applicable to any equity
options (including ETF options). The Exchange believes the proposed
position and exercise limits are extremely conservative for the VanEck
Bitcoin ETF option given the trading volume and outstanding shares for
each. The information above demonstrates that the average position and
exercise limits of options on ETFs with comparable outstanding shares
and trading volume to those of the VanEck Bitcoin ETF is significantly
higher than the proposed position and exercise limits for the VanEck
Bitcoin ETF options. Therefore, the proposed position and exercise
limits for the VanEck Bitcoin ETF options are conservative relative to
options on ETFs with comparable market characteristics.
Further, given that the issuer of the VanEck Bitcoin ETF may create
and redeem shares that represent an interest in Bitcoin, the Exchange
believes it is relevant to compare the size of a position limit to the
market capitalization of the Bitcoin market. Cboe noted that, as of
March 5, 2025, the global supply of Bitcoin was 19,832,309, and the
price of one Bitcoin was approximately $90,608.57,\41\ which equates to
a market capitalization of approximately $1.797 trillion. Consider the
proposed position and exercise limit of 25,000 option contracts for the
VanEck Bitcoin ETF option. A position and exercise limit of 25,000 same
side contracts effectively restricts a market participant from holding
positions that could result in the receipt of no more than 2,500,000 of
VanEck Bitcoin ETF shares, as applicable (if that market participant
exercised all of its options). The following table provided by Cboe
shows the share price of the VanEck Bitcoin ETF on March 5, 2025, the
value of 2,500,000 shares of the VanEck Bitcoin ETF at that price, and
the approximate percentage of that value of the size of the Bitcoin
market:
---------------------------------------------------------------------------
\41\ See Blockchain.com Charts--Total Circulating
Bitcoin.
[[Page 39451]]
----------------------------------------------------------------------------------------------------------------
Value of
2,500,000
Bitcoin Fund March 5, 2025 shares of Percentage of
share price ($) Bitcoin fund Bitcoin market
($)
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF..................................... 25.60 64,000,000 0.0035%
----------------------------------------------------------------------------------------------------------------
Therefore, if a market participant with the maximum 25,000 same
side contracts in VanEck Bitcoin ETF options exercised all positions at
one time, such an event would have no practical impact on the Bitcoin
market. The Exchange also believes the proposed limits are appropriate
given position limits for Bitcoin futures. For example, the Chicago
Mercantile Exchange (``CME'') imposes a position limit of 2,000 futures
(for the initial spot month) on its Bitcoin futures contract.\42\ Cboe
noted that on March 5, 2025, CME Mar 25 Bitcoin Futures settled at
$90,935. A position of 2,000 CME Bitcoin futures, therefore, would have
a notional value of $909,350,000. The following table shows the share
price of the VanEck Bitcoin ETF on March 5, 2025, and the approximate
number of option contracts that equates to that notional value:
---------------------------------------------------------------------------
\42\ See CME Rulebook Chapter 350 (description of CME Bitcoin
Futures) and Chapter 5, Position Limit, Position Accountability and
Reportable Level Table in the Interpretations & Special Notices.
Each CME Bitcoin futures contract is valued at five Bitcoins as
defined by the CME CF Bitcoin Reference Rate (``BRR''). See CME Rule
35001.
----------------------------------------------------------------------------------------------------------------
March 5, 2025 share Number of option
Bitcoin Fund price ($) contracts
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF.......................................... 25.60 355,214
----------------------------------------------------------------------------------------------------------------
The approximate number of option contracts for the VanEck Bitcoin
ETF that equate to the notional value of CME Bitcoin futures is
significantly higher than the proposed limit of 25,000 options contract
for the VanEck Bitcoin ETF option. The fact that many options
ultimately expire out-of-the-money and thus are not exercised for
shares of the underlying, while the delta of a Bitcoin Future is 1,
further demonstrates how conservative the proposed limits of 25,000
options contracts are for the VanEck Bitcoin ETF options.
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).\43\ 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.\44\ 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 Bitcoin,
the Exchange believes that the proposed same side position limits are
more than appropriate for the VanEck Bitcoin ETF options.
---------------------------------------------------------------------------
\43\ See CME Rulebook Chapter 5, Position Limit, Position
Accountability and Reportable Level Table in the Interpretations &
Special Notices.
\44\ See id.
---------------------------------------------------------------------------
The Exchange believes the proposed position and exercise limits in
this proposal will have no material impact to the supply of Bitcoin.
For example, consider again the proposed position limit of 25,000
option contracts for the VanEck Bitcoin ETF option. As noted above, a
position limit of 25,000 same side contracts effectively restricts a
market participant from holding positions that could result in the
receipt of no more than 2,500,000 shares of the applicable VanEck
Bitcoin ETF (if that market participant exercised all its options).
Cboe noted that, as of March 5, 2025, the VanEck Bitcoin ETF had the
number of shares outstanding set forth in the table below. The table
below also sets forth the approximate number of market participants
that could hold the maximum of 25,000 same side positions in the VanEck
Bitcoin ETF that would equate to the number of shares outstanding of
the VanEck Bitcoin:
----------------------------------------------------------------------------------------------------------------
Number of market participants
Bitcoin Fund Shares outstanding with 25,000 same side
positions
----------------------------------------------------------------------------------------------------------------
VanEck Bitcoin ETF..................................... 49,900,000 20
----------------------------------------------------------------------------------------------------------------
This means if 20 market participants had 25,000 same side positions
in VanEck Bitcoin ETF options, each of them would have to
simultaneously exercise all of those options to create a scenario that
may put the underlying security under stress. The Exchange believes it
is highly unlikely for either such event to occur; however, even if
either such event did occur, the Exchange would not expect the VanEck
Bitcoin ETF to be under stress because such an event would merely
induce the creation of more shares through the trust's creation and
redemption process.
Cboe also noted that, as of March 5, 2025, the global supply of
Bitcoin was approximately 19,832,309 \45\ and, based
[[Page 39452]]
on the $25.60 price of VanEck Bitcoin ETF share on March 5, 2025, a
market participant could have redeemed one Bitcoin for approximately
3,539 VanEck Bitcoin ETF shares. Cboe also noted that another
70,194,417,201 VanEck Bitcoin ETF shares could be created before the
supply of Bitcoin was exhausted. As a result, 28,078 market
participants would have to simultaneously exercise 25,000 same side
positions in VanEck Bitcoin ETF options to receive shares of the VanEck
Bitcoin ETF holding the entire global supply of Bitcoin. Unlike the
VanEck Bitcoin ETF, the number of shares that corporations may issue is
limited. However, like corporations, which authorize additional shares,
repurchase shares, or split their shares, the VanEck Bitcoin ETF may
create, redeem, or split shares in response to demand. While the supply
of Bitcoin is limited to 21,000,000, it is believed that it will take
more than 100 years to fully mine the remaining Bitcoin. The supply of
Bitcoin is larger than the available supply of most securities. Given
the significant unlikelihood of any of these events ever occurring, the
Exchange does not believe options on the VanEck Bitcoin ETF should be
subject to position and exercise limits even lower than those proposed
(which are already equal to the lowest available limit for equity
options in the industry) to protect the supply of Bitcoin.\46\
---------------------------------------------------------------------------
\45\ See Blockchain.com [verbar] Charts--Total Circulating
Bitcoin (which also shows the price of one Bitcoin equal to
$90,608.57).
\46\ This would be even more unlikely with respect to the VanEck
Bitcoin ETF for which the Exchange proposes lower position limits.
---------------------------------------------------------------------------
The Exchange believes the available supply of Bitcoin is not
relevant to the determination of position and exercise limits for
options overlying the VanEck Bitcoin ETF. Position and exercise limits
are not a tool that should be used to address a potential limited
supply of the underlying of an underlying. Position and exercise limits
do not limit the total number of options that may be held, but rather
they limit the number of positions a single customer may hold or
exercise at one time.\47\ ``Since the inception of standardized options
trading, the options exchanges have had rules imposing limits on the
aggregate number of options contracts that a member or customer could
hold or exercise.'' \48\ Position and exercise limit rules 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 position. In particular, position and
exercise limits are designed to minimize the potential for mini-
manipulations and for corners or squeezes of the underlying market. In
addition, such limits serve to reduce the possibility for disruption of
the options market itself, especially in illiquid options classes.''
\49\
---------------------------------------------------------------------------
\47\ For example, suppose an option has a position limit of
25,000 option contracts and there are a total of 10 investors
trading that option. If all 10 investors max out their positions,
that would result in 250,000 option contracts outstanding at that
time. However, suppose 10 more investors decide to begin trading
that option and also max out their positions. This would result in
500,000 option contracts outstanding at that time. An increase in
the number of investors could cause an increase in outstanding
options even if position limits remain unchanged.
\48\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
\49\ See id.
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The Exchange notes that a Registration Statement on Form S-1 was
filed with the Commission for the VanEck Bitcoin ETF, each of which
described the supply of Bitcoin as being limited to 21,000,000 (of
which approximately 90% had already been mined), and that the limit
would be reached around the year 2140.\50\ The Registration Statement
permits an unlimited number of shares of the applicable the VanEck
Bitcoin ETF to be created. Further, the Commission approved proposed
rule changes that permitted the listing and trading of shares of the
VanEck Bitcoin ETF, which approval did not comment on the sufficient
supply of Bitcoin or address whether there was a risk that permitting
an unlimited number of shares for the VanEck Bitcoin ETF would impact
the supply of Bitcoin.\51\ Therefore, the Exchange believes the
Commission had ample time and opportunity to consider whether the
supply of Bitcoin was sufficient to permit the creation of unlimited
the VanEck Bitcoin ETF shares, and does not believe considering this
supply with respect to the establishment of position and exercise
limits is appropriate given its lack of relevance to the purpose of
position and exercise limits. However, given the significant size of
the Bitcoin supply, the proposed positions limits are more than
sufficient to protect investors and the market.
---------------------------------------------------------------------------
\50\ See Amendment No. 8 to Form S-1 Registration Statement No.
333-251808, filed January 9, 2024.
\51\ See Bitcoin ETP Approval Order.
---------------------------------------------------------------------------
Based on the above information demonstrating, among other things,
that the VanEck Bitcoin ETF is characterized by a substantial number of
outstanding shares that are actively traded and widely held, the
Exchange believes the proposed position and exercise limits are
extremely conservative compared to those of ETF options with similar
market characteristics. 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 Bitcoin
market.\52\
---------------------------------------------------------------------------
\52\ See Securities Exchange Act Release No. 39489 (December 24,
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
---------------------------------------------------------------------------
The Exchange represents that it has the necessary systems capacity
to support VanEck Bitcoin ETF 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 ETF options, including VanEck Bitcoin
ETF options.
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 the VanEck Bitcoin ETF 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 Exchange Rules that currently apply to the listing and trading of
all ETF 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 VanEck Bitcoin
ETF options on the Exchange in the same manner as they apply to other
options on all other ETFs that are listed and traded on the Exchange.
Also, and as stated above, the Exchange already lists options on other
commodity-based ETFs.\53\ Further, the VanEck Bitcoin ETF would need to
satisfy the maintenance listing standards set forth in the Exchange
Rules in the same manner as any other ETF for the Exchange to continue
listing options on them.
---------------------------------------------------------------------------
\53\ See Options 4, Section 3(h)(iv).
---------------------------------------------------------------------------
The Exchange does not believe that the proposal to list and trade
options on the VanEck Bitcoin ETF will impose any burden on intermarket
competition that
[[Page 39453]]
is not necessary or appropriate in furtherance of the purposes of the
Act. To the extent that the advent of the VanEck Bitcoin ETF options
trading on the Exchange may make the Exchange a more attractive
marketplace to market participants at other exchanges, such market
participants are free to elect to become market participants on the
Exchange. Additionally, other options exchanges are free to amend their
listing rules, as applicable, to permit them to list and trade options
on the VanEck Bitcoin ETF. The Exchange notes that listing and trading
VanEck Bitcoin ETF 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 VanEck Bitcoin ETF
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 Bitcoin prices and Bitcoin-related products and positions on a
listed options exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were 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 \54\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\55\
---------------------------------------------------------------------------
\54\ 15 U.S.C. 78s(b)(3)(A)(iii).
\55\ 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 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) \56\ 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),\57\ the
Commission may 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 previously approved the listing and trading of options on
the VanEck Bitcoin ETF.\58\ The Exchange has provided information
regarding the underlying ETF, including, among other things,
information regarding trading volume, the number of beneficial holders,
and the average daily trading volume of the VanEck Bitcoin ETF. The
proposal also establishes position and exercise limits for options on
the ETF and provides information regarding the surveillance procedures
that will apply to VanEck Bitcoin ETF options. The Commission believes
that waiver of the operative delay could benefit investors by providing
an additional venue for trading options on the VanEck Bitcoin ETF.
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.\59\
---------------------------------------------------------------------------
\56\ 17 CFR 240.19b-4(f)(6).
\57\ 17 CFR 240.19b-4(f)(6)(iii).
\58\ See supra note 4.
\59\ 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 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-ISE-2025-23 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-ISE-2025-23. 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 filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection.
All submissions should refer to file number SR-ISE-2025-23 and
should be submitted on or before September 5, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\60\
---------------------------------------------------------------------------
\60\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-15527 Filed 8-14-25; 8:45 am]
BILLING CODE 8011-01-P