[Federal Register Volume 91, Number 11 (Friday, January 16, 2026)]
[Notices]
[Pages 2244-2248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-00805]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104592; File No. SR-MEMX-2026-01]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.3 To
Permit the Listing and Trading of Options on Commodity-Based Trust
Shares
January 13, 2026.
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 January 7, 2026, 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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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 Commodity-Based Trust Shares. 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
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 Fund
Shares \5\ that represent interests in a Commodity-Based Trust that
meets the generic criteria of the U.S. securities exchange that is the
primary equities listing market for the Commodity-Based Trust, except
that the Commodity-Based Trust holds a single crypto asset that meets
the following requirements: (i) the total global supply of the
underlying crypto asset held by the Commodity-Based Trust has an
average daily market value of at least $700 million over the last 12
months; and (ii) the crypto asset held by the Commodity-Based Trust
underlies a derivatives contract that trades on a market with which the
Exchange has a comprehensive surveillance sharing agreement, whether
directly or through common membership in the Intermarket Surveillance
Group (``ISG''). For purposes of this section of the Rule, the term
``crypto asset'' means an asset that is generated, issued and/or
transferred using a blockchain or similar distributive ledger
technology network, including but not limited to, assets known as
``tokens,'' ``digital assets,'' ``virtual currencies,'' and ``coins''
and that relies on cryptographic protocols.
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\5\ Rule 19.3(i) states that securities deemed appropriate for
options trading shall include shares or other securities (``Fund
Shares''), including but not limited to Partnership Units as defined
in this Rule, that are principally traded on a national securities
exchange and are defined as an ``NMS stock'' under Rule 600 of
Regulation NMS, and 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 nonU.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,
abrdn Standard Physical Silver Trust, arbdn Standard Physical Gold
Trust, abrdn Standard Physical Palladium Trust, abrdn Standard
Physical Platinum Trust, Sprott Physical Gold Trust, Goldman Sachs
Physical Gold ETF, iShares Bitcoin Trust, Fidelity Wise Origin
Bitcoin Fund, ARK 21Shares Bitcoin ETF, Grayscale Bitcoin Trust,
Grayscale Bitcoin Mini Trust, Bitwise Bitcoin ETF, iShares Ethereum
Trust, Fidelity Ethereum Fund, Grayscale Ethereum Trust ETF,
Grayscale Ethereum Mini Trust ETF, or the Bitwise Ethereum ETF.
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This is a competitive filing substantively identical to a proposal
submitted by another options exchange that has recently been deemed
approved by the Commission.\6\
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\6\ SR-ISE-2025-08 Amendment 1 was deemed approved as of October
24, 2025. See Securities Exchange Act Release No. 104210 (November
18, 2025) 90 FR 52727 (November 21, 2025) (SR-ISE-2025-08) (Self-
Regulatory Organizations; BOX Exchange LLC, Cboe Exchange, Inc.,
Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGX
Exchange, Inc., Miami International Securities Exchange, LLC, MIAX
PEARL, LLC, MIAX Sapphire, LLC, Nasdaq ISE, LLC, New York Stock
Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE National,
Inc., and NYSE Texas, Inc.; Notice of Deemed Approval of Various
Proposed Rule Changes); see also Securities Exchange Act Release No.
102465 (February 20, 2025), 90 FR 10740 (February 26, 2025) (SR-ISE-
2025-08 Amendment 1) (Notice of Filing of Proposed Rule Change to
Adopt Listing Criteria for Options on a Commodity-Based Trust),
which was filed on September 26, 2025, available here: https://www.sec.gov/comments/sr-ise-2025-08/srise202508-663507-1981074.pdf.
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[[Page 2245]]
The proposed rule change would require a Commodity-Based Trust to:
(1) meet the generic criteria of a U.S. equities listing exchange \7\
and hold only a single crypto asset; \8\ (2) meet the criteria and
guidelines set forth in Rule 19.3(a) \9\ and (b),\10\ or Rule
19.3(i)(1)(B); \11\ and (3) meet the requirements of proposed Rule
19.3(i)(5), which are as follows: (A) the total global supply of the
underlying crypto asset held by the Commodity-Based Trust has an
average daily market value of at least $700 million over the last 12
months; and (B) the crypto asset held by the Commodity-Based Trust
underlies a derivatives contract that trades on a market with which the
Exchange has a comprehensive surveillance sharing agreement, whether
directly or through common membership in the ISG. The market value of
the underlying crypto asset will be calculated by taking the total
global supply of the particular crypto asset multiplied by the token
price.\12\ Total supply of crypto assets includes all crypto assets
currently issued and does not include unissued crypto assets.\13\
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\7\ A Commodity-Based Trust is defined in Cboe BZX Exchange,
Inc. 14.11(e)(4), NYSE Arca, Inc. Rule 8.201(c)(1), and The Nasdaq
Stock Market LLC Rule 5711(d)(iv) (the three current U.S. equities
exchanges that serve as primary listing markets) as a security (a)
that is issued by a trust (``Trust'') that holds (1) a specified
commodity deposited with the Trust, or (2) a specified commodity
and, in addition to such specified commodity, cash; (b) that is
issued by such Trust in a specified aggregate minimum number in
return for a deposit of a quantity of the underlying commodity and/
or cash; and (c) that, when aggregated in the same specified minimum
number, may be redeemed at a holder's request by such Trust which
will deliver to the redeeming holder the quantity of the underlying
commodity and/or cash (``Commodity-Based Trust Share'').
\8\ The proposed rule change defines a ``crypto asset'' to mean,
for purposes of proposed Rule 19.3(i)(5), an asset that is
generated, issued and/or transferred using a blockchain or similar
distributive ledger technology network, including but not limited
to, assets known as ``tokens,'' ``digital assets,'' ``virtual
currencies,'' and ``coins'' and that relies on cryptographic
protocols.
\9\ Pursuant to Rule 19.3(a), a security (which includes an ETF/
Fund Share) 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.
\10\ Rule 19.3(b) provides criteria and guidelines when
evaluating potential underlying securities for the listing of
options.
\11\ Rule 19.3(i)(1)(B) provides that the Fund Shares 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
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.
\12\ The market supply information can be obtained from publicly
available sources such as coingecko.com or coinmarketcap.com.
\13\ For example, if Bitcoin were the underlying crypto asset,
the Exchange would consider the total supply of all Bitcoin
currently issued instead of the maximum supply, which would be
currently issued as well as unminted Bitcoin. As of November 4,
2025, Bitcoin's total supply was 19,944,128 (the maximum supply was
21,000,000). See https://www.coingecko.com/en/coins/bitcoin. The
Exchange would calculate market value by utilizing the total supply
number multiplied by the Bitcoin price on that day.
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Further, the Exchange has specified in proposed Rule 19.3(i)(5)
that the crypto asset held by the Commodity-Based Trust must underlie a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in ISG.\14\ The Exchange will be required to
ensure that this requirement is met prior to listing options on a
Commodity-Based Trust pursuant to proposed Rule 19.3(i)(5).
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\14\ For a list of the current members of ISG, see https://isgportal.org/public-members.
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As a result of this proposal, the proposed listing criteria would
permit a Commodity-Based Trust that (a) is generically listed on a U.S.
securities exchange that is the primary equities listing market for the
Commodities-Based Trust and (b) holds a single crypto asset to qualify
for the listing of options on that ETF, provided proposed Rule
19.3(i)(5) has also been met, as well as the listing criteria in Rule
19.3(a) and (b) or Rule 19.3(i)(1)(B).
Similar to options on any ETF, an option on a Commodity-Based Trust
that meets the requirements of proposed Rule 19.3(i)(5) would also be
subject to the Exchange's delisting requirements set forth in Rule
19.4(g) for Fund Shares approved for options trading pursuant to Rule
19.3(i). Rule 19.4(g) provides that Fund Shares 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 is delisted from trading as
provided in Rule 19.4(b)(4) (i.e., the underlying security ceases to be
an ``NMS stock'' as defined in Rule 600 of Regulation NMS under the
Act). In addition, the Exchange shall consider suspension of opening
transactions in any series of options of the class covering Fund Shares
in any of the following circumstances: in the case of options covering
Fund Shares approved pursuant to Rule 19.3(i)(4)(A), in accordance with
Rule 19.4(b)(1), (2), and (3); (2) in the case of options covering Fund
Shares approved pursuant to Rule 19.3(i)(4)(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.
Consistent with current Rule 19.5, which governs the opening of
options series on a specific underlying security (including ETFs), the
Exchange will open at least one expiration month and one series of
options on a Commodity-Based Fund Share \15\ at the commencement of
trading on the Exchange and may also list series of options on a
Commodity-Based Fund
[[Page 2246]]
Share for trading on a weekly,\16\ monthly,\17\ or quarterly basis.\18\
The Exchange may also list long-term options series that expire from 12
to 39 months from the time they are listed.\19\
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\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 Commodity-Based Fund Shares may
be $1 or greater where the strike price is $200 or less or $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 Commodity-Based Fund Share
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 Commodity-Based Fund Share 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, Rule 19.5, Interpretation and
Policy .08 sets forth intervals between strike prices on Short Term
Option Series.
\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 a Commodity-Based Fund Share 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 21.5(d) (which describes
the requirements for the Penny Interval Program).
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Options on a Commodity-Based Trust that may be listed pursuant to
proposed Rule 19.3(i)(5) will trade in the same manner as options on
other ETFs 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, position and exercise
limits, margin requirements, customer accounts, and trading halt
procedures will apply to the listing and trading of options on
Commodity-Based Trust Shares 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.
Position and exercise limits for options, including options on a
Commodity-Based Trust Share, are determined pursuant to Rules 18.7 and
18.9, respectively. Position and exercise limits for options on ETFs
vary according to the number of outstanding shares and the trading
volumes of the underlying security over the past six months, where the
largest in capitalization and the most frequently traded funds have an
option position and exercise limit of 250,000 contracts (with
adjustments for splits, re-capitalizations, etc.) on the same side of
the market; and smaller capitalization funds have position and exercise
limits of 200,000, 75,000, 50,000 or 25,000 contracts (with adjustments
for splits, re-capitalizations, etc.) on the same side of the
market.\26\ Further, the Exchange notes that Rule 28.3, which governs
margin requirements applicable to the trading of all options on the
Exchange, including options on ETFs, will also apply to the trading of
options on a Commodity-Based Trust pursuant to proposed Rule
19.3(i)(5).
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\26\ See Exchange Rules 18.7 and 18.9.
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The Exchange represents it has an adequate surveillance program in
place for options and intends to apply those same program procedures to
options on Commodity-Based Trusts that may be listed pursuant to
proposed Rule 19.3(i)(5) that it applies to the Exchange's other
options products.\27\ 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 Commodity-Based Trusts. 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, 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.\28\ Further, the
Exchange will implement any new surveillance procedures it deems
necessary to effectively monitor the trading of options on Commodity-
Based Trusts pursuant to proposed Rule 19.3(i)(5).
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\27\ 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).
\28\ 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.
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The Exchange has also analyzed its capacity and represents that it
believes the Exchange and the Options Price Reporting Authority
(``OPRA'') have the necessary systems capacity to handle the additional
traffic associated with the listing of new series of options on ETFs,
including on Commodity-Based Trusts pursuant to proposed Rule
19.3(i)(5), up to the number of expirations currently permissible under
the Rules. The Exchange believes any additional traffic generated from
the trading of options on Commodity-Based Trusts listed pursuant to
proposed Rule 19.3(i)(5) would be manageable. The Exchange represents
that Exchange members will not have a capacity issue as a result of
this proposed rule change.
Further, quotation and last sale information for Commodity-Based
Trusts listed pursuant to proposed Rule 19.3(i)(5) 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 Commodity-Based Trusts listed pursuant to
proposed Rule 19.3(i)(5) will be available via OPRA \29\ and major
market data vendors. Finally, the Exchange currently lists options on
Fund Shares that would qualify for listing as an option a Commodity-
Based Trust pursuant to proposed Rule 19.3(i)(5),\30\ and it has not
identified any
[[Page 2247]]
issues with the listing of options on those ETFs.
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\29\ Last sale reports and quotations are the core of the
information that OPRA disseminates. OPRA also disseminates certain
other types of information with respect to the trading of options on
the markets of the OPRA participants, such as the number of options
contracts traded, open interest and end of day summaries. OPRA also
disseminates certain kinds of administrative messages.
\30\ The following Fund Shares currently have options listed on
them on the Exchange: the Fidelity Wise Origin Bitcoin Fund, the ARK
21Shares Bitcoin ETF, the iShares Bitcoin Trust, the Fidelity
Ethereum Fund; the Grayscale Bitcoin Trust, the Grayscale Bitcoin
Mini Trust, the Bitwise Bitcoin ETF, the Bitwise Ethereum ETF, the
Grayscale Ethereum Trust, the Grayscale Ethereum Mini Trust, and the
iShares Ethereum Trust.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\31\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \32\ 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) \33\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\31\ 15 U.S.C. 78f(b).
\32\ 15 U.S.C. 78f(b)(5).
\33\ Id.
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In particular, the Exchange believes the proposal will remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it would allow the Exchange to
immediately list and trade options on Commodity-Based Trusts, provided
the initial listing criteria has been met, without requiring additional
approvals from the Commission.
Specifically, the Exchange's proposed rule change allows the
listing and trading of options on Fund Shares that represent interests
in a Commodity-Based Trust and meet the criteria proposed and discussed
herein. Listing these options will avail market participants of the
opportunity to hedge their positions in the Commodity-Based Trusts in a
timely manner, thereby providing investors with the ability to hedge
their exposure to the underlying Commodity-Based Trust. Options on
Commodity-Based Trusts benefits investors, similar to the listing of
any other option on an ETF, by providing investors with a relatively
lower-cost risk management tool to manage their positions and
associated risk in their portfolios more easily in connection with
exposure to the price of a crypto asset. Additionally, listing options
on Commodity-Based Trusts provides investors with the ability to
transact in such options on a listed market as opposed to the over-the-
counter (``OTC'') options market, which increases market transparency
and enhances the process of price discovery to the benefit of all
investors.
Also, this proposal would permit options on certain Commodity-Based
Trusts to be listed on the Exchange in the same manner as options on
ETFs that are subject to the current listing criteria in Rule 19.3(i).
The Exchange notes that the majority of ETFs are able to list and trade
options once the initial listing criteria have been met without the
need for additional approvals. The proposed rule change would allow
options on certain Commodity-Based Trusts to likewise list and trade
once the proposed listing criteria have been met without the need for
additional approvals.
As proposed, the Exchange would list options on a Commodity-Based
Trust that met the generic criteria of the U.S. equities exchange that
is the primary listing market for the Commodity-Based Trust, provided
the Commodity-Based Trust held only a single crypto asset and satisfied
the conditions in proposed Rule 19.3(i)(5). Specifically, a Commodity-
Based Trust that met the requirements of proposed Rule 19.3(i)(5) would
also have to satisfy the following requirements in proposed Rule
19.3(i)(5): (A) the total global supply of the underlying crypto asset
held by the Commodity-Based Trust has an average daily market value of
at least $700 million over the last 12 months; and (B) the crypto asset
held by the Commodity-Based Trust underlies a derivatives contract that
trades on a market with which the Exchange has a comprehensive
surveillance sharing agreement, whether directly or through common
membership in the ISG.
These requirements are consistent with the Act and the protection
of investors as they should ensure that the underlying ETF has
sufficient liquidity prior to listing options, which will serve to
prevent disruption to the underlying market. The Exchange believes that
market supply serves as a good measure of liquidity to prevent the
addition of options trading on the Commodity-Based Trust from
disrupting the market for the underlying security. Requiring the
underlying crypto asset to have a requisite amount of deliverable
supply, in addition to all the other criteria the ETF is required to
have under the rules of the primary equities listing market for the
ETF, should ensure adequate liquidity prior to listing. Further,
ensuring the crypto asset held by the Commodity-Based Trust underlies a
derivatives contract that trades on a market with which the Exchange
has a comprehensive surveillance sharing agreement, whether directly or
through common membership in the ISG, will provide the Exchange with
information to adequately surveil options on qualifying Commodity-Based
Trusts. Today, the Exchange has a comprehensive surveillance sharing
agreement in place with both the CME and Coinbase Derivatives through
its common membership in ISG. This facilitates the sharing of
information that is available to the CME and Coinbase Derivatives
through their surveillance of their respective markets, including their
surveillance of their respective digital asset futures markets.
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. Options on
qualifying Commodity-Based Trusts must 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 crypto assets already deemed appropriate for options trading on
the Exchange in addition to the proposed criteria. Options on
qualifying Commodity-Based Trusts would 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
position and exercise limits and margin requirements, will govern the
listing and trading of options on qualifying Commodity-Based Trusts.
The Exchange represents that it has the necessary systems capacity to
support the listing and trading of options on qualifying Commodity-
Based Trusts. 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 of
these options on Commodity-Based Trusts, particularly in light of the
additional requirement that the crypto asset held by the Commodity-
Based Trust underlies a derivatives contract that trades on a market
with which the
[[Page 2248]]
Exchange has a comprehensive surveillance sharing agreement, whether
directly or through common membership in ISG.
Finally, today, the Exchange lists and trades options on ETFs that
would qualify for listing as an option on a Commodity-Based Trust under
proposed Rule 19.3(i)(5),\34\ and it has not identified any issues with
the listing and trading of options on those ETFs.
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\34\ See supra note 30.
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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. Options on qualifying
Commodity-Based Trusts would need to satisfy the initial listing
standards set forth in the Exchange Rules in the same manner as any
other ETF before the Exchange could list options on them. Additionally,
options on qualifying Commodity-Based Trusts will be equally available
to all market participants who wish to trade such options. The Rules
currently applicable to the listing and trading of options on ETFs on
the Exchange will apply in the same manner to the listing and trading
of all options on qualifying Commodity-Based Trusts. Additionally, the
Exchange notes that listing and trading options on qualifying
Commodity-Based Trusts 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 in a timely manner. The Exchange does
not believe the proposal will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, as nothing prevents the other options exchanges
from proposing similar rules to list and trade options on Commodity-
Based Trust Shares. Other options exchanges are free to amend their
listing rules, as applicable, to permit them to list and trade options
on Commodity-Based Trusts. As noted herein, a substantively identical
proposal submitted by another options exchange has recently been deemed
approved by the Commission.\35\
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\35\ See supra note 6.
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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
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 \36\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\37\
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\36\ 15 U.S.C. 78s(b)(3)(A)(iii).
\37\ 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 satiisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \38\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\39\ the Commission
may designate a shorter time if such action is consistent with
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission believes that waiving 30-day operative delay is consistent
with the protection of investors and the public interest because the
proposal aligns the rule text relating to Commodity-Based Trust Shares
with the rule text of other exchanges and does not introduce any novel
regulatory issues.\40\ Accordingly, the Commission designates the
proposed rule change to be operative upon filing.\41\
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\38\ 17 CFR 240.19b-4(f)(6).
\39\ 17 CFR 240.19b-4(f)(6)(iii).
\40\ See e.g., Nasdaq ISE, LLC, Options Rules, Options 4,
Section 3(h); Miami International Securities Exchange, LLC Rule 402.
\41\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-MEMX-2026-01 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-2026-01. 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-MEMX-2026-01 and should be submitted on
or before February 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
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\42\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-00805 Filed 1-15-26; 8:45 am]
BILLING CODE 8011-01-P