[Federal Register Volume 91, Number 159 (Wednesday, August 19, 2026)]
[Notices]
[Pages 53686-53693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-16854]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106137; File No. SR-CboeBZX-2026-065]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To List and Trade Shares of 3x Gold
ETF, 3x Silver ETF, 3x Bitcoin ETF, 3x Ether ETF, 3x Crude Oil ETF, and
3x Natural Gas ETF, Each a Series of the VS Trust, Under BZX Rule
14.11(e)(4) (Commodity-Based Trust Shares)
August 14, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 10, 2026, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to list and trade shares of 3x Gold ETF, 3x
Silver ETF, 3x Bitcoin ETF, 3x Ether ETF, 3x Crude Oil ETF, and 3x
Natural Gas ETF (each, a ``Fund'' and together, the ``Funds''), each a
series of the VS Trust (the ``Trust''), under BZX Rule 14.11(e)(4),
which sets forth generic listing standards for Commodity-Based Trust
Shares.
The text of the proposed rule change is also available on the
Commission's website (https://www.sec.gov/rules/sro.shtml), the
Exchange's website (https://www.cboe.com/us/equities/regulation/rule_filings/bzx/), 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 Shares of each of the Funds
under BZX Rule 14.11(e)(4), which governs the listing and trading of
Commodity-Based Trust Shares on the Exchange.\3\
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\3\ See Securities Exchange Act Nos. 103995 (September 17, 2025)
90 FR 45414 (September 22, 2025) (SR-CboeBZX-2025-104) (Order
Granting Accelerated Approval of Proposed Rule Changes, as Modified
by Amendments Thereto, To Adopt Generic Listing Standards for
Commodity-Based Trust Shares) (the ``Approval Order''); 106011 (July
29, 2026) 91 FR 48957 (August 3, 2026) (SR-CboeBZX-2026-061) (Order
Granting Accelerated Approval of a Proposed Rule Change to Amend
Rule 14.11(e)(4) (Commodity-Based Trust Shares)) (the
``Amendment''), which amended the generic listing standards to,
among other things, permit actively-managed Commodity-Based Trust
Shares, add a definition of ``digital commodity,'' and allow up to
15% of the net asset value of a trust's holdings to consist of
certain assets that do not meet the generic eligibility criteria.
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Each Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of a
particular commodity: gold, silver, bitcoin, ether, light sweet crude
oil, and natural gas (for each Fund, the ``Reference Commodity''), and
measures the performance of that Reference Commodity using the price of
the Reference Commodity in a specified portfolio of first-month or
second-month futures contracts on the Reference Commodity (for each
Fund, a ``Benchmark''), as further described under ``Description of the
Funds'' below.
The Funds will pursue their investment objectives by investing in
futures contracts that comprise the Benchmark (``Benchmark Futures
Contracts''), together with cash and Cash Equivalents (as defined in
BZX Rule 14.11(e)(4)(C)(iv)) that will serve as collateral or margin
for a Fund's investments. The Sponsor (defined below) will increase and
decrease the number of Benchmark Futures Contracts that each Fund holds
in order to accommodate purchases and redemptions of Shares and to
account for changes in the value of the Benchmark so that each Fund can
meet its daily investment objective.
To the extent that Benchmark Futures Contracts become unavailable
for investment (for example, due to price limits, accountability
levels, increased margin levels, exchange position limits, margin
requirements, futures commission merchant (``FCM'')-imposed position
limits, or FCM risk mitigation requirements), the Funds may invest in:
(i) futures contracts on the Reference Commodity that settle beyond the
second month; (ii) exchange-traded funds (``ETFs'') that provide
exposure to the Reference Commodity; \4\ (iii) exchange-traded products
(``ETPs'') that provide exposure to the Reference Commodity; \5\ and
(iv) listed options on ETFs, ETPs or Benchmark Futures Contracts.
Investing in these instruments allows each Fund to continue to meet its
daily investment objective when Benchmark Futures Contracts are
unavailable. The ETPs and ETFs in which a Fund may invest, as
identified for each Fund below, are referred to collectively herein as
the ``Benchmark-Linked ETPs'' and ``Benchmark-Linked ETFs'',
respectively. All of a Fund's investments are eligible investments for
a Commodity-Based Trust Share to be listed and traded under the generic
Commodity-Based Trust Shares Rules, as discussed below.
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\4\ ETFs are investment companies registered under the
Investment Company Act that operate pursuant to Rule 6c-11 under the
Investment Company Act of 1940 (the ``Investment Company Act'') or
an exemptive order issued by the Commission and whose shares are
registered under the Securities Act of 1933 (the ``Securities
Act'').
\5\ ETPs are funds whose shares are registered under the
Securities Act, but are not registered as investment companies under
the Investment Company Act.
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The Funds do not meet the standard set forth in BZX Rule
14.11(e)(4)(F), which prohibits leveraged products.\6\ Because each
Fund seeks daily results, before fees and expenses, equal to three
times (3x) the daily performance of its Benchmark, the Funds do not
satisfy that standard.
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\6\ Under BZX Rule 14.11(e)(4)(F), ``[t]he Trust may not seek,
directly or indirectly, to provide investment returns that
correspond to the performance of an index, benchmark, or reference
value by a specified multiple, or to provide investment returns that
have an inverse or multiple inverse relationship to the performance
of an index, benchmark, or reference value, over a predetermined
period of time.''
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BZX Rule 14.11(e)(4)(A) provides that the ``Exchange. . .may submit
a rule
[[Page 53687]]
filing pursuant to Section 19(b) of the Exchange Act to permit the
listing and trading of Commodity-Based Trust Shares that do not meet
the standards set forth in this BZX Rule 14.11(e)(4) on an initial or
continuing basis.'' The Exchange is, accordingly, proposing to list the
Shares pursuant to a rule filing under Section 19(b). In proposing to
list the Shares pursuant to BZX Rule 14.11(e)(4), each Fund and its
Shares will comply with all other provisions of BZX Rule 14.11(e)(4),
as amended.
Description of the Trust
The Trust \7\ will file a registration statement on Form S-1 under
the Securities Act of 1933 (the ``1933 Act'').\8\ The Trust currently
operates as, and is registered as, a commodity pool with the U.S.
Commodity Futures Trading Commission (the ``CFTC''), and the Funds will
operate as, and be registered as, commodity pools with the CFTC.
Neither the Trust nor any Fund will be registered as an investment
company under the Investment Company Act of 1940.
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\7\ The Trust is organized as a statutory trust under the
Delaware Statutory Trust Act (``DSTA''). Each Fund will operate as a
``series'' of the Trust pursuant to Sec. 3806(b) of the DSTA.
\8\ The description of the Funds and their Shares contained
herein are based on a draft of the registration statement. A
registration statement for the Trust is not yet effective, and the
Shares will not trade on the Exchange until such time that the
registration statement is effective.
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Description of the Fund's Service Providers
Volatility Shares LLC is the sponsor (the ``Sponsor'') of the Trust
\9\ and is a commodity pool operator pursuant to the Commodity Exchange
Act and is registered with the CFTC. The Sponsor is a service provider
to the Trust and performs day-to-day management of the assets of the
Funds. U.S. Bancorp Fund Services, LLC is the transfer agent, fund
accountant, and Administrator for the Trust and the Funds
(``Administrator''). U.S. Bank National Association serves as custodian
for the Trust (the ``Custodian'').
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\9\ The Sponsor, whose principal office is located at 2000 PGA
Boulevard, Suite 4440, Palm Beach Gardens, FL 33408, manages the
Trust and will manage the Funds. Wilmington Trust, National
Association, a national banking association, is the sole Trustee of
the Trust. The rights and duties of the Trustee and the Sponsor with
respect to the offering of the Shares and Fund management and the
shareholders are governed by the provisions of the DSTA and by the
Trust Agreement between Wilmington Trust, National Association and
the Sponsor. Under the Trust Agreement, the Sponsor has exclusive
management and control of all aspects of the Trust's business.
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Description of the Funds
3x Gold ETF
The Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of gold, as
measured by the daily changes in the price of a specified portfolio of
first- and second-month futures contracts on gold that will trade on
the Commodity Exchange, Inc. (``COMEX''), a subsidiary of the CME Group
Inc. (the ``Gold Futures Benchmark''). The Gold Futures Benchmark will
comprise a portfolio of futures positions that will roll over a period
of five business days in each of January, March, May, July, September,
and November, beginning on the sixth business day and ending on the
tenth business day of each respective month. Each day during the roll
period, approximately 20% of the expiring futures positions will be
rolled into a new contract with a longer dated expiry.
The Fund will not invest in physical gold, but rather seeks to
achieve its investment objective primarily through investment in
futures contracts on gold, cash, and Cash Equivalents (as defined in
BZX Rule 14.11(e)(4)(C)(iv)). The futures contracts in which the Fund
invests will trade primarily on COMEX, but may trade on any other
exchange that is a DCM and ISG member (as such terms are defined
herein) (together, the ``Gold Futures Contracts'').
To the extent that Gold Futures Contracts comprising the Gold
Futures Benchmark become unavailable for investment (for example, due
to price limits, accountability levels, exchange position limits,
margin requirements, FCM-imposed position limits, or FCM risk
mitigation requirements), the Fund may invest in: (i) futures contracts
on gold that settle beyond the second month; (ii) shares of other ETPs
that provide exposure to gold (``Gold-Linked ETPs''); (iii) shares of
ETFs that provide exposure to gold (``Gold-Linked ETFs''); and (iv)
exchange traded options on Gold Futures Contracts, Gold-Linked ETPs or
Gold-Linked ETFs.
3x Silver ETF
The Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of silver, as
measured by the daily changes in the price of a specified portfolio of
first- and second-month futures contracts on silver that will trade on
COMEX (the ``Silver Futures Benchmark''). The Silver Futures Benchmark
will comprise a portfolio of futures positions that will roll over a
period of five business days in each of February, April, June, August,
and November, beginning on the sixth business day and ending on the
tenth business day of each respective month. Each day during the roll
period, approximately 20% of the expiring futures positions will be
rolled into a new contract with a longer dated expiry.
The Fund does not invest in physical silver, but rather seeks to
achieve its investment objective primarily through investment in
futures contracts on silver, cash, and Cash Equivalents (as defined in
BZX Rule 14.11(e)(4)(C)(iv)). The futures contracts in which the Fund
invests will trade primarily on COMEX, but may trade on any other
exchange that is a DCM and ISG member (as such terms are defined
herein) (together, the ``Silver Futures Contracts'').
To the extent that Silver Futures Contracts comprising the Silver
Futures Benchmark become unavailable for investment (for example, due
to price limits, accountability levels, exchange position limits,
margin requirements, FCM-imposed position limits, or FCM risk
mitigation requirements), the Fund may invest in: (i) futures contracts
on silver that settle beyond the second month; (ii) shares of other
ETPs that provide exposure to silver (``Silver-Linked ETPs''); (iii)
shares of ETFs that provide exposure to silver (``Silver-Linked
ETFs''); and (iv) exchange traded options on Silver Futures Contracts,
Silver-Linked ETPs or Silver-Linked ETFs.
3x Bitcoin ETF
The Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of bitcoin,
as measured by the daily changes in the price of a specified portfolio
of first- and second-month futures contracts on bitcoin that trade on
the Chicago Mercantile Exchange Inc. (``CME''), a subsidiary of the CME
Group Inc. (the ``Bitcoin Futures Benchmark''). The Bitcoin Futures
Benchmark will comprise a portfolio of futures positions that will roll
each month from the near month contract to expire to the next month
contract to expire over a five-day roll period, beginning on the sixth
business day prior to the expiry of the near month contract. Each day
during the roll period, approximately 20% of the expiring futures
positions will be rolled into the next month to expire contract.
The Fund does not invest in physical bitcoin, but rather seeks to
achieve its investment objective primarily through investment in
futures contracts on bitcoin, cash, and Cash Equivalents (as defined in
BZX Rule 14.11(e)(4)(C)(iv)). The futures contracts in which the Fund
invests will trade primarily on the CME,
[[Page 53688]]
but may trade on any other exchange that is a DCM and ISG member (as
such terms are defined herein (together, the ``Bitcoin Futures
Contracts'').
To the extent that Bitcoin Futures Contracts comprising the Bitcoin
Futures Benchmark become unavailable for investment (for example, due
to price limits, accountability levels, exchange position limits,
margin requirements, FCM-imposed position limits, or FCM risk
mitigation requirements), the Fund may invest in: (i) futures contracts
on bitcoin that settle beyond the second month; (ii) shares of other
ETPs that provide exposure to bitcoin (``Bitcoin-Linked ETPs''); (iii)
shares of ETFs that provide exposure to bitcoin (``Bitcoin-Linked
ETFs''); and (iv) exchange traded options on Bitcoin Futures Contracts,
Bitcoin-Linked ETPs or Bitcoin-Linked ETFs.
3x Ether ETF
The Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of ether, as
measured by the daily changes in the price of a specified portfolio of
first- and second-month futures contracts on ether that will trade on
the CME (the ``Ether Futures Benchmark''). The Ether Futures Benchmark
will comprise a portfolio of futures positions that will roll each
month from the near month contract to expire to the next month contract
to expire over a five-day roll period, beginning on the sixth business
day prior to the expiry of the near month contract. Each day during the
roll period, approximately 20% of the expiring futures positions will
be rolled into the next month to expire contract.
The Fund does not invest in physical ether, but rather seeks to
achieve its investment objective primarily through investment in
futures contracts on ether, cash, and Cash Equivalents (as defined in
BZX Rule 14.11(e)(4)(C)(iv)). The futures contracts in which the Fund
invests will trade primarily on the CME, but may trade on any other
exchange that is a DCM and ISG member (as such terms are defined herein
(together, the ``Ether Futures Contracts'').
To the extent that Ether Futures Contracts comprising the Ether
Futures Benchmark become unavailable for investment (for example, due
to price limits, accountability levels, exchange position limits,
margin requirements, FCM-imposed position limits, or FCM risk
mitigation requirements), the Fund may invest in: (i) futures contracts
on ether that settle beyond the second month; (ii) shares of other ETPs
that provide exposure to ether (``Ether-Linked ETPs''); (iii) shares of
ETFs that provide exposure to ether (``Ether-Linked ETFs''); and (iv)
exchange traded options on Ether Futures Contracts, Ether-Linked ETPs
or Ether-Linked ETFs.
3x Crude Oil ETF
The Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of light,
sweet crude oil, as measured by the daily changes in the price of a
specified portfolio of first- and second-month futures contracts on
light, sweet crude oil that trade on the New York Mercantile Exchange,
Inc. (``NYMEX''), a subsidiary of CME Group Inc. (the ``Crude Oil
Futures Benchmark''). The Crude Oil Futures Benchmark will comprise a
portfolio of futures positions that will roll each month from the near
month contract to expire to the next month contract to expire over a
five-day roll period, beginning on the first business day of the month.
Each day during the roll period, approximately 20% of the expiring
futures positions will be rolled into the next month to expire
contract.
The Fund will not invest in physical light, sweet crude oil, but
rather seeks to achieve its investment objective primarily through
investment in futures contracts on light, sweet crude oil, cash, and
Cash Equivalents (as defined in BZX Rule 14.11(e)(4)(C)(iv)). The
futures contracts in which the Fund invests trade primarily on the
NYMEX, but may trade on any other exchange that is a DCM and ISG member
(as such terms are defined herein (together, the ``Crude Oil Futures
Contracts'').
To the extent that Crude Oil Futures Contracts comprising the Crude
Oil Futures Benchmark become unavailable for investment (for example,
due to price limits, accountability levels, exchange position limits,
margin requirements, FCM-imposed position limits, or FCM risk
mitigation requirements), the Fund may invest in: (i) futures contracts
on light, sweet crude oil that settle beyond the second month; (ii)
shares of other ETPs that provide exposure to light, sweet crude oil
(``Crude Oil-Linked ETPs''); (iii) shares of ETFs that provide exposure
to light sweet crude oil (``Crude Oil-Linked ETFs''); and (iv) exchange
traded options on Crude Oil Futures Contracts, Crude Oil-Linked ETPs or
Crude Oil-Linked ETFs.
3x Natural Gas ETF
The Fund seeks daily investment results, before fees and expenses,
that correspond to three times (3x) the daily performance of natural
gas, as measured by the daily changes in the price of a specified
portfolio of first- and second-month futures contracts on natural gas
that trade on the NYMEX (the ``Natural Gas Futures Benchmark''). The
Natural Gas Futures Benchmark will comprise a portfolio of futures
positions that will roll each month from the near month contract to
expire to the next month contract to expire over a five-day roll
period, beginning on the sixth business day of the month. Each day
during the roll period, approximately 20% of the expiring futures
positions will be rolled into the next month to expire contract (the
``Natural Gas Futures Benchmark'')
The Fund will not invest in physical natural gas, but rather seeks
to achieve its investment objective primarily through investment in
futures contracts on natural gas, cash, and Cash Equivalents (as
defined in BZX Rule 14.11(e)(4)(C)(iv)). The futures contracts in which
the Fund invests trade primarily on the NYMEX, but may trade on any
other exchange that is a DCM and ISG member (as such terms are defined
herein (together, the ``Natural Gas Futures Contracts'').
To the extent that Natural Gas Futures Contracts comprising the
Natural Gas Futures Benchmark become unavailable for investment (for
example, due to price limits, accountability levels, exchange position
limits, margin requirements, FCM-imposed position limits, or FCM risk
mitigation requirements), the Fund may invest in: (i) futures contracts
on natural gas that settle beyond the second month; (ii) shares of
other ETPs that provide exposure to natural gas (``Natural Gas-Linked
ETPs''); (iii) shares of ETFs that provide exposure to natural gas
(``Natural Gas-Linked ETFs''); and (iv) exchange traded options on
Natural Gas Futures Contracts, Natural Gas-Linked ETPs or Natural Gas-
Linked ETFs.
Compliance With BZX Rule 14.11(e)(4)
The Funds do not meet the standard set forth in BZX Rule
14.11(e)(4)(F), which prohibits leveraged \10\ products. Because each
Fund seeks daily results, before fees and expenses, equal to three
times (3x) the daily performance of its Benchmark, the Funds do not
satisfy that standard. In proposing to list the Shares pursuant to BZX
Rule 14.11(e)(4), each Fund and its Shares
[[Page 53689]]
will comply with all other provisions of BZX Rule 14.11(e)(4), as
amended.
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\10\ Under Rule 14.11(e)(4)(F), ``[t]he Trust may not seek,
directly or indirectly, to provide investment returns that
correspond to the performance of an index, benchmark, or reference
value by a specified multiple, or to provide investment returns that
have an inverse or multiple inverse relationship to the performance
of an index, benchmark, or reference value, over a predetermined
period of time.''
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Purchases and Redemptions of Creation Units
The Fund will create and redeem Shares from time to time only in
large blocks of a specified number of Shares or multiples thereof
(``Creation Units'') for cash. A Creation Unit is a block of 10,000
Shares, or as otherwise determined by the Sponsor. Except when
aggregated in Creation Units, the Shares are not redeemable securities.
On any Business Day, an authorized participant may place an order
with the sub-administrator to create one or more Creation Units. The
total cash payment required to create each Creation Unit is the NAV of
10,000 Shares of the applicable Fund on the purchase order date plus
the applicable transaction fee.
The procedures by which an authorized participant can redeem one or
more Creation Units mirror the procedures for the purchase of Creation
Units. On any Business Day, an authorized participant may place an
order with the Administrator to redeem one or more Creation Units. The
redemption proceeds for each Fund consist of the cash redemption
amount. The cash redemption amount is equal to the NAV of the number of
Creation Unit(s) of each Fund requested in the authorized participant's
redemption order as of the time of the calculation of a Fund's NAV on
the redemption order date, less transaction fees.
Initial and Continued Listing
The Shares of each Fund will conform to the initial and continued
listing criteria under BZX Rule 14.11(e)(4) except as otherwise
provided herein. The Exchange represents that, for initial and
continued listing, the Fund and the Trust must be in compliance with
Rule 10A-3 under the Act. A minimum of 100,000 Shares of each Fund will
be outstanding at the commencement of trading on the Exchange. The
Exchange will obtain a representation from the Sponsor of the Shares
that the NAV per Share for the Fund will be calculated daily and will
be made available to all market participants at the same time.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Funds. The Exchange will halt trading in
the Shares under the conditions specified in BZX Rule 11.18 and Rule
14.11(e)(4)(j). Trading may be halted because of market conditions or
for reasons that, in the view of the Exchange, make trading in the
Shares inadvisable. These may include: (1) the extent to which trading
has ceased in the underlying commodity or Commodity-Based Assets
comprising the Fund's portfolio; (2) the extent to which trading is not
occurring in the securities and/or the financial instruments composing
the daily disclosed portfolio of the Funds; (3) the existence of a
national, regional, or localized disruption that necessitates a trading
halt to maintain a fair and orderly market; or (4) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.
In addition, the Exchange will halt trading in the Shares if the
Exchange becomes aware that the Net Asset Value of the Fund is not
being disseminated to all market participants at the same time, and
will maintain such halt until the Net Asset Value is available to all
market participants.\11\ Further, as required under BZX Rule
14.11(e)(4)(J), as amended, if the Exchange becomes aware that the
information required by BZX Rule 14.11(e)(4)(E)(i) is not disseminated
to all market participants at the same time, the Exchange will halt
trading in the Shares until such time as such information is available
to all market participants. The Exchange may also halt trading during
the day on which an interruption to the dissemination of any of the
following occurs: (1) the value of the underlying reference asset or
index, if it is no longer calculated or made widely available on at
least a 15-second delayed basis from a source unaffiliated with the
Sponsor, the Trust, the custodian, or the Exchange; or (2) the Intraday
Indicative Value, if it is no longer made widely available to all
market participants on at least a 15-second basis during Regular
Trading Hours; or (3) the information set forth in BZX Rule
14.11(e)(4), if it is no longer disclosed in accordance with the
requirements of paragraph (E) of that Rule. If any such interruption
persists past the trading day on which it occurred, the Exchange will
halt trading no later than the beginning of the trading day following
the interruption. If the Shares are trading on the Exchange pursuant to
unlisted trading privileges, the Exchange will halt trading as
specified in BZX Rule 11.18.
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\11\ The Gold Futures Benchmark, the Silver Futures Benchmark,
the Bitcoin Futures Benchmark, the Ether Futures Benchmark, the
Crude Oil Futures Benchmark, and the Natural Gas Futures Benchmark
are herein referred to as a Fund's ``Benchmark.''
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Firewalls
If the value of the Shares is based in whole or in part on an index
that is maintained by a broker-dealer, the broker-dealer will erect and
maintain a ``firewall'' around the personnel responsible for the
maintenance of such index or who have access to information concerning
changes and adjustments to the index. Any advisory committee,
supervisory board, or similar entity that advises an index licensor or
administrator, or that makes decisions regarding the index composition,
methodology, and related matters, must implement and maintain, or be
subject to, procedures designed to prevent the use and dissemination of
material, non-public information regarding the applicable index.
In addition, if the Trust is affiliated with any entity that has
the ability to influence the price or supply of a commodity, or a
commodity underlying a Commodity-Based Asset, held by the Trust, the
Trust will (i) implement and maintain a ``firewall'' between any such
entity and the Trust; (ii) have written policies and procedures
designed to prevent the use and dissemination of material, non-public
information regarding the Trust; and (iii) have written policies and
procedures designed to prevent fraudulent, deceptive, or manipulative
acts, practices, or courses of business with respect to the Trust and
such commodity.
Surveillance
Trading of the Shares through the Exchange will be subject to the
Exchange's surveillance procedures for derivative products, including
Commodity-Based Trust Shares. All of the futures contracts held by each
Fund will trade on markets that are a member of ISG or affiliated with
a member of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.\12\ The Exchange, FINRA, on behalf of
the Exchange, or both will communicate regarding trading in the Shares
and the underlying listed instruments, including listed derivatives
held by each Fund, with the ISG, other markets or entities who are
members or affiliates of the ISG, or with which the Exchange has
entered into a comprehensive surveillance sharing agreement. In
addition, the Exchange, FINRA, on behalf of the Exchange, or
[[Page 53690]]
both may obtain information regarding trading in the Shares and the
underlying listed instruments, including listed derivatives, held by
each Fund from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. The Exchange also has a general policy prohibiting
the distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding the
description of the reference assets, limitations on portfolio holdings
or reference assets, dissemination and availability of the reference
asset and IIV, and the applicability of Exchange rules specified in
this filing shall constitute continued listing requirements for each
Fund. The issuer has represented to the Exchange that it will advise
the Exchange of any failure by each Fund or the Shares to comply with
the continued listing requirements, and, pursuant to its obligations
under Section 19(g)(1) of the Act, the Exchange will surveil for
compliance with the continued listing requirements. If any Fund or the
Shares are not in compliance with the applicable listing requirements,
the Exchange will commence delisting procedures under Exchange Rule
14.12.
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\12\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com. The Exchange notes that not all
components of each Fund's holdings may trade on markets that are
members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) the procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) BZX Rule 3.7, which imposes suitability
obligations on Exchange members with respect to recommending
transactions in the Shares to customers; (3) Interpretation and Policy
.01 of BZX Rule 3.7 which imposes a duty of due diligence on its
Members to learn the essential facts relating to every customer prior
to trading the Shares; \13\ (4) how information regarding the IIV and
the Fund's holdings is disseminated; (5) the risks involved in trading
the Shares outside of Regular Trading Hours \14\ when an updated IIV
will not be calculated or publicly disseminated; (6) the requirement
that members deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
and (7) trading information.
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\13\ Specifically, in part, Interpretation and Policy .01 of
Rule 3.7 states ``[n]o Member shall recommend to a customer a
transaction in any such product unless the Member has a reasonable
basis for believing at the time of making the recommendation that
the customer has such knowledge and experience in financial matters
that he may reasonably be expected to be capable of evaluating the
risks of the recommended transaction and is financially able to bear
the risks of the recommended position.
\14\ See Exchange Rule 1.5(w).
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Further, the Exchange states that FINRA has implemented increased
sales practice and customer margin requirements for FINRA members
applicable to inverse, leveraged and inversed leveraged securities
(which include the Shares) and options on such securities, as described
in FINRA Regulatory Notices 09-31 (June 2009), 09-53 (August 2009), and
09-65 (November 2009) (collectively, ``FINRA Regulatory Notices'').
Members that carry customer accounts will be required to follow the
FINRA guidance set forth in these notices.
In addition, the Information Circular will advise members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to each Fund. Members purchasing Shares from each Fund for
resale to investors will deliver a prospectus to such investors. The
Information Circular will also discuss any exemptive, no-action and
interpretive relief granted by the Commission from any rules under the
Act. In addition, the Information Circular will reference that each
Fund is subject to various fees and expenses described in the Trust's
registration statement. The Information Circular will also disclose the
trading hours of the Shares of each Fund and the applicable NAV
calculation time for the Shares. The Information Circular will disclose
that information about the Shares of each Fund will be publicly
available on each Fund's website.
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.\15\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \16\ 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) \17\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ Id.
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The Commission has approved Generic Listing Standards for
Commodity-Based Trust Shares as set forth in BZX Rule 14.11(e)(4).\18\
In the Approval Order, the Commission found that the Generic Listing
Standards were consistent with the Exchange Act and the rules and
regulations thereunder applicable to a national securities exchange,
and in particular that the Generic Listing Standards were consistent
with Section 6(b)(5) of the Act. The Commission has since approved
amendments to the Generic Listing Standards to, among other things,
permit actively-managed Commodity-Based Trust Shares, add a definition
of ``digital commodity,'' and allow up to 15% of the net asset value of
a trust's holdings to consist of certain assets that do not meet the
generic eligibility criteria, and likewise found those amendments
consistent with Section 6(b)(5) of the Act. Each Fund and the Shares
will comply with all applicable requirements of BZX Rule 14.11(e)(4),
as amended, except that the Funds do not meet the standard set forth in
BZX Rule 14.11(e)(4)(F) because each Fund seeks performance results
that correspond to three times (3x) the daily performance of its
Benchmark. BZX Rule 14.11(e)(4)(A) expressly contemplates that an
exchange may submit a 19b-4 filing for Commodity-Based Trust Shares
that do not meet all of the standards set forth in BZX Rule
14.11(e)(4), and the Exchange submits this filing pursuant to that
authority.
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\18\ Supra note 3.
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The Exchange believes that notwithstanding the Funds' deviation
from BZX Rule 14.11(e)(4)(F), the proposed rule change is consistent
with Section 6(b)(5) of the Act for the following reasons.
The Underlying Reference Commodities Satisfy the BZX Rule
14.11(e)(4)(D) Eligibility Criteria
Each Fund achieves its 3x leveraged investment objective primarily
through Commodity-Based Assets--principally Benchmark Futures
Contracts--whose underlying Reference Commodities
[[Page 53691]]
independently satisfy the eligibility criteria of BZX Rule
14.11(e)(4)(D). Specifically, each of gold, silver, bitcoin, ether,
crude oil, and natural gas underlies a futures contract that has been
made available to trade on a Designated Contract Market (``DCM'') for
at least six months, with respect to which the Exchange has a
comprehensive surveillance-sharing agreement, directly or through
common ISG membership. The Gold Futures Contracts and Silver Futures
Contracts trade primarily on COMEX; the Bitcoin Futures Contracts and
Ether Futures Contracts trade primarily on the CME; and the Crude Oil
Futures Contracts and Natural Gas Futures Contracts trade primarily on
NYMEX. COMEX, CME, and NYMEX are each DCMs and ISG members. Benchmark
Futures Contracts also may trade on any other exchange that is a DCM
and ISG member.
In addition, the 3x leveraged structure of the Funds does not alter
or undermine the surveillance rationale underlying the BZX Rule
14.11(e)(4)(D) eligibility criteria: each Fund achieves its leveraged
investment objective primarily through Benchmark Futures Contracts that
would be surveilled through ISG and DCM channels regardless of whether
a fund sought non-leveraged exposure to the Funds' respective
Benchmarks.
The Funds also may invest in cash, Cash Equivalents, Benchmark-
Linked ETFs, Benchmark-Linked ETPs, and exchange-traded options on
Benchmark Futures Contracts, Benchmark-Linked ETFs or Benchmarked-
Linked ETPs, all of which are eligible instruments under BZX Rule
14.11(e)(4).
The 3x Exposure Is Achieved Primarily Through CFTC or SEC-Regulated
Instruments
Each Fund typically will achieve its 3x exposure through Benchmark
Futures Contracts, cash and Cash Equivalents that serve as collateral
for margin purposes with respect to those Benchmark Futures Contracts.
The Benchmark Futures Contracts are traded on CFTC-regulated DCMs,
subject to CFTC oversight, position limit rules, accountability levels,
and the full panoply of Commodity Exchange Act protections. The
presence of CFTC regulation over the instruments held by the Funds and
the markets on which those instruments trade mitigates the risk of
fraud or manipulation that could affect the prices of those instruments
and, in turn, the NAV and market price of the Shares.
In addition, the exchanges on which Benchmark Futures Contracts
trade (e.g., the CME, NYMEX or COMEX) set margin levels, and require
margin to be posted by a Fund with any futures commission merchant that
the Fund uses for Benchmark Futures Contracts transactions. The purpose
of margin in futures contracts is to act as a performance bond. It
ensures that both buyers and sellers have the necessary capital to
fulfill their financial obligations and cover any potential daily
losses. Futures commission merchants must abide by the rules of futures
exchange and also those of the CFTC and the National Futures
Association (``NFA'').
As well, Each Fund operates as a registered commodity pool, and the
Sponsor is a registered commodity pool operator subject to CFTC and NFA
regulation. This additional layer of federal regulatory oversight--
beyond what a physical commodity-based exchange-traded product would be
subject to--provides meaningful protections for investors and the
public interest, further mitigating concerns about fraud or
manipulation.
The Funds also may invest in Benchmark-Linked ETFs, Benchmark-
Linked ETPs, and listed options thereon, as well as options on
Benchmark Futures Contracts. Benchmark-Linked ETFs and Benchmark-Linked
ETPs are well regulated under the federal securities laws. Listed
options on Benchmark-Linked ETFs and Benchmark-Linked ETPs are
regulated by the SEC primarily through oversight of exchanges and
clearing agencies. It enforces strict rules on the brokers who sell
them and mandates reporting to prevent fraud, while delegating day-to-
day enforcement and risk limits to various self-regulatory
organizations, including Financial Industry Regulatory Authority, Inc.
(``FINRA'').
BZX Rule 14.11(e)(4)(F)--Leveraged Products
The Funds do not meet the standard set forth in BZX Rule
14.11(e)(4)(F), which prohibits leveraged \19\ products. Because the
Funds will directly seek to provide returns that correspond to three
times (3x) their respective Benchmarks, the Funds are not eligible to
rely on BZX Rule 14.11(e)(4) without separate approval.
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\19\ Supra note 10.
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The Exchange notes that the Commission has recognized, in the
context of ETFs, that ``the mere addition of active management to a
portfolio that would otherwise qualify for generic listing as an index-
based ETF should not affect the portfolio's susceptibility to
manipulation or the availability of arbitrage between the ETF and its
underlying portfolio,'' and has stated that this principle holds true
for Commodity-Based Trust Shares as well. The same reasoning applies to
the Funds' leveraged structure: the 3x daily investment objective does
not change the susceptibility of a Fund's portfolio to manipulation,
because each Fund obtains its exposure primarily through the same
Benchmark Futures Contracts--traded on CFTC-regulated DCMs that are ISG
members--that would be surveilled regardless of whether the Fund sought
leveraged or unleveraged exposure to the same underlying Reference
Commodity. As the Commission has further observed, consistently
applying listing standards across products with economic exposures to
the same underlying commodities levels the playing field between
issuers, which should promote competition and more readily afford
investors greater investment options.
The Exchange believes that Shares of the Funds are appropriate for
listing and trading on the Exchange. Leveraged ETFs aim to give
investors amplified exposure to daily market moves without the need for
an investor to establish separate margin accounts and individually
trade futures contracts or other derivative instruments. They also
allow market professionals and institutions to effectively, quickly,
efficiently and relatively inexpensively hedge other positions that
they may have in their portfolio. The principal risks of investing in
Shares are explained in detail in each Fund's prospectus. In addition,
detailed information about Share performance, Fund holdings, and Fund
value, among other things, will be available on a daily basis on the
Funds' website, as discussed in greater detail below.
Last, shares of approximately 67 exchange-traded investment
products that seek performance of either three times (3x) or the
inverse of three times (-3x) a benchmark or index are currently listed
for trading on a national securities exchange: fifty one ETFs that are
registered under the Investment Company Act and sixteen exchange-traded
notes issue shares that are debt issuances of large financial
institutions and are registered under the 1933 Act.
BZX Rule 14.11(e)(4)--Other Provisions
NAV and IIV Transparency
The NAV per Share for each Fund will be calculated daily and
disseminated to all market participants at the same time. An intraday
indicative value (``IIV'') for each Fund will be disseminated every 15
seconds during
[[Page 53692]]
Regular Trading Hours through the facilities of the consolidated tape
association (``CTA'') and Consolidated Quotation System (``CQS'') high-
speed lines and will be available through online information services
such as Bloomberg and Reuters. This level of price transparency, which
is consistent with the requirements of BZX Rule 14.11(e)(4)(E), is
sufficient to enable market participants to assess the fair value of
the Shares throughout the trading day notwithstanding the leveraged
nature of the Funds.
For the foregoing reasons, the Exchange believes that the policy
concerns the Commission identified in approving the Generic Listing
Standards are adequately addressed with respect to each Fund, and that
the listing and trading of the Shares is consistent with Section
6(b)(5) of the Act.
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices because, as
described above, each of the underlying Reference Commodities satisfies
the BZX Rule 14.11(e)(4)(D) eligibility criteria, the Funds invest
primarily in CFTC-regulated instruments traded on DCMs that are ISG
members, and each Fund is subject to CFTC oversight as a registered
commodity pool. Each Fund's portfolio will be valued daily and the NAV
per Share will be calculated and disseminated to all market
participants at the same time. An IIV will be disseminated every 15
seconds during Regular Trading Hours. The Exchange will halt trading in
the Shares under the conditions specified in BZX Rule 14.11(e)(4)(J),
including when trading is not occurring in the financial instruments
composing a Fund's portfolio or when other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.
In addition, consistent with BZX Rule 14.11(e)(4) and the trading
halt and firewall provisions described above, the Exchange will halt
trading in the Shares if it becomes aware that the NAV of a Fund is not
disseminated to all market participants at the same time, and may halt
trading upon an interruption to the dissemination of the value of the
underlying reference asset or the IIV, or where the information
required under BZX Rule 14.11(e)(4) is no longer disclosed in
accordance with paragraph (E) of that Rule. The Exchange will also
implement the firewall requirements applicable to Commodity-Based Trust
Shares, including, if the value of the Shares is based in whole or in
part on an index maintained by a broker-dealer, the erection and
maintenance of a firewall around the personnel responsible for the
maintenance of, or who have access to information concerning changes
and adjustments to, such index, and, if the Trust is affiliated with
any entity that has the ability to influence the price or supply of a
commodity (or a commodity underlying a Commodity-Based Asset) held by
the Trust, the maintenance of a firewall between any such entity and
the Trust together with written policies and procedures designed to
prevent the use and dissemination of material, non-public information
and to prevent fraudulent, deceptive, or manipulative acts, practices,
or courses of business.
The Exchange believes that the proposed rule change is designed to
promote just and equitable principles of trade because the Trust will
be subject to the full panoply of Exchange rules applicable to
Commodity-Based Trust Shares, including BZX Rule 3.7, which imposes
suitability obligations on Exchange members with respect to
recommending transactions in the Shares to customers, and
Interpretation and Policy .01 of BZX Rule 3.7, which imposes a duty of
due diligence on members to learn the essential facts relating to every
customer prior to trading the Shares. Prior to the commencement of
trading, the Exchange will inform its members in an Information
Circular of the special characteristics and risks associated with
trading the Shares, including the procedures for purchases and
redemptions of Shares in Creation Units, the risks involved in trading
the Shares outside Regular Trading Hours when an updated IIV will not
be calculated or publicly disseminated, and the prospectus delivery
requirements applicable to each Fund.
The Exchange believes that the proposed rule change is designed to
remove impediments to and perfect the mechanism of a free and open
market and a national market system because the Shares will be listed
and traded on the Exchange pursuant to BZX Rule 14.11(e)(4), and each
Fund will comply with all applicable initial and continued listing
requirements thereunder, except as otherwise proposed herein. Each Fund
and the Shares will be in compliance with Rule 10A-3 under the Act as a
condition of initial and continued listing.\20\ A minimum of 100,000
Shares will be outstanding at the commencement of trading. The Sponsor
has represented to the Exchange that the NAV per Share of each Fund
will be calculated daily and made available to all market participants
at the same time. Pricing information, including the prior business
day's NAV per Share, the BZX Official Closing Price, premium/discount
calculations, and historical distribution data, will be publicly
available on the Sponsor's website. Quotation and last-sale information
regarding the Shares will be disseminated through the facilities of the
CTA.
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\20\ The Funds expect to rely on the exception under Rule 10A-
3(c)(7)(i).
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The Exchange believes that the proposed rule change is designed to
protect investors and the public interest because the Funds will
provide investors with access to a leveraged investment product
overseen and operated by a commodity pool operator that can be traded
throughout the day on a national securities exchange, while maintaining
the transparency, surveillance, and regulatory oversight protections
described above.
The Sponsor is not a broker-dealer and is not affiliated with any
broker-dealer; in the event the Sponsor or any of its affiliates
becomes affiliated with a broker-dealer, it will implement and maintain
a firewall with respect to access to information concerning the
composition and/or changes to each Fund's portfolio. All statements and
representations made in this filing regarding the description of the
portfolio or limitations on portfolio holdings or reference assets
shall constitute continued listing requirements. The issuer has
represented to the Exchange that it will advise the Exchange of any
failure by the Funds to comply with the continued listing requirements,
and, pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will surveil for compliance with the continued listing
requirements. If the Funds are not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under BZX Rule 14.12.
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 believes that
the proposed rule change will enhance competition by providing
investors with access to an additional set of exchange-traded
investment products that seek leveraged exposure to commodities,
thereby broadening the range of instruments available for trading on a
national securities exchange. To the extent that the listing and
trading of the Shares
[[Page 53693]]
attracts order flow to the Exchange, other exchanges are free to list
and trade similar products pursuant to their own rules, including their
own generic listing standards for commodity-based trust shares.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition, as the Shares will be
available to all categories of market participants in the same manner
as any other Commodity-Based Trust Shares listed and traded on the
Exchange. All Exchange members will have equal access to trading the
Shares on the Exchange, and the rules governing trading in the Shares--
including the Exchange's rules relating to order types, priority, and
execution--will apply uniformly to all such members.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition. BZX Rule 14.11(e)(4)(A)
expressly permits the Exchange to file a proposed rule change pursuant
to Section 19(b) of the Act to list Commodity-Based Trust Shares that
do not meet the Generic Listing Standards, and each of Nasdaq and NYSE
Arca has an equivalent provision in its own generic listing standards
for commodity-based trust shares. Accordingly, any national securities
exchange with a comparable listing rule framework may seek Commission
approval to list products similar to those proposed here. The proposed
rule change does not confer any exclusive advantage on the Exchange or
on any particular market participant.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be 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-CboeBZX-2026-065 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-CboeBZX-2026-065. 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-CboeBZX-2026-065 and should be submitted
on or before September 9, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-16854 Filed 8-18-26; 8:45 am]
BILLING CODE 8011-01-P