94802 Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices 

8See Treasury Clearing Release, 89 FR at 2760. 

9See Rule 15c3–3a, Note H(b)(3). 

10See Treasury Clearing Release, 89 FR at 2768. 

11See Exchange Act Release No. 101695 (Nov. 21, 

2024). FICC also filed this proposed rule change as 

an Advance Notice (File No. SR–FICC–2024–802) 

with the Commission pursuant to Section 806(e)(1) 

of Title VIII of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act entitled the Payment, 

Clearing, and Settlement Supervision Act of 2010, 

12 U.S.C. 5465(e)(1), and Rule 19b–4(n)(1)(i) under 

the Exchange Act, 17 CFR 240.19b–4(n)(1)(i). On 

Nov. 21, 2024, the Commission issued a Notice of 

No Objection to Advance Notice SR–FICC–2024– 

802. 

12See File No. SR–FICC–2024–007. 

13See supra note 5 and accompanying text 

(discussing Note H conditions). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 99306 

(January 10, 2024), 89 FR 3008, 3009 (January 17, 

2024) (SR–NYSEArca–2021–90; SR–NYSEArca– 

2023–44; SR–NYSEArca–2023–58; SR–NASDAQ– 

2023–016; SR–NASDAQ–2023–019; SR–CboeBZX– 

2023–028; SR–CboeBZX–2023–038; SR–CboeBZX– 

2023–040; SR–CboeBZX–2023–042; SR–CboeBZX– 

2023–044; and SR–CboeBZX–2023–072) (Order 

Granting Accelerated Approval of Proposed Rule 

Changes, as Modified by Amendments Thereto, to 

List and Trade Bitcoin-Based Commodity-Based 

Trust Shares and Trust Units) (‘‘Bitcoin ETP 

Approval Order’’). 

4See Rule 19.3(i) which permits options trading 

on Fund Shares that (1) represent interests in 

registered investment companies (or series thereof) 

organized as open-end management investment 

companies, unit investment trusts or similar 

entities, and that hold portfolios of securities 

comprising or otherwise based on or representing 

under conditions that ‘‘provide 

maximum protection’’ to the brokerdealer’s customers and PAB account 

holders and that do not diminish the 

customer protection objectives of Rules 

15c3–3 and 15c3–3a.8

Paragraph (b)(3) to Note H sets forth 

the final condition: that the Commission 

has approved rules of the U.S. Treasury 

securities CCA that meet the conditions 

of Note H and has published (and not 

subsequently withdrawn) a notice that 

broker-dealers may include a debit in 

the customer and/or PAB reserve 

computations when depositing cash, 

U.S. Treasury securities, and/or 

qualified customer securities to meet a 

margin requirement of the U.S. Treasury 

securities CCA resulting from positions 

in U.S. Treasury securities of the 

customers or PAB account holders of 

the broker-dealer.9 The Commission 

stated that its staff would analyze the 

U.S. Treasury securities CCA’s approved 

rules and practices regarding the 

treatment of customer position margin 

and make a recommendation as to 

whether they adequately implement the 

customer protection objectives of the 

conditions set forth in Note H.10 If 

satisfied with the staff’s 

recommendation, the Commission 

stated it will publish a positive notice. 

II. Notice 

On November 21, 2024, the Division 

of Trading and Markets, pursuant to 

delegated authority, approved proposed 

rule change SR–FICC–2024–007 (‘‘FICC 

rule change’’).11 The FICC rule change, 

among other things, modifies FICC’s 

Government Securities Division 

Rulebook to address the conditions of 

Note H of the customer and PAB reserve 

computations set forth in Rule 15c3–3a. 

FICC expects to implement the FICC 

rule change by no later than March 31, 

2025, and will announce the effective 

date of the FICC rule change by an 

Important Notice posted to FICC’s 

website.12 The staff has analyzed the 

FICC rule change and made a 

recommendation to the Commission 

that it adequately implements the 

customer protection objectives of the 

conditions set forth in Note H. 

Accordingly, the Commission is 

publishing this notice to advise brokerdealers that they may include a debit in 

their customer and/or PAB reserve 

computations when depositing cash, 

U.S. Treasury securities, and/or 

qualified customer securities to meet a 

margin requirement of FICC resulting 

from positions in U.S. Treasury 

securities of the customers of the brokerdealer.13 Any changes to the relevant 

FICC rules and practices that would 

undermine these customer protection 

objectives could result in the 

Commission withdrawing this notice, at 

which point a broker-dealer could no 

longer include the debit in the customer 

and/or PAB reserve computations. 

By the Commission. 

Dated: November 25, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28058 Filed 11–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101715; File No. SR– 

CboeEDGX–2024–077] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To List Options 

on Certain Bitcoin ETFs 

November 22, 2024 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

21, 2024, Cboe EDGX Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGX Options’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX Options’’) 

proposes to amend Rule 19.3. The text 

of the proposed rule change is provided 

in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 19.3 regarding the criteria for 

underlying securities. Specifically, the 

Exchange proposes to amend Rule 

19.3(i)(4) to allow the Exchange to list 

and trade options on shares or other 

securities (‘‘Fund Shares’’) that are 

principally traded on a national 

securities exchange and are defined as 

an ‘‘NMS stock’’ under Rule 600 of 

Regulation NMS and that represent 

interests in the Fidelity Wise Origin 

Bitcoin Fund (the ‘‘Fidelity Fund’’) and 

the ARK 21Shares Bitcoin ETF (the 

‘‘ARK 21 Fund’’ and, with the Fidelity 

Fund, the ‘‘Bitcoin Funds’’).3 Current 

Rule 19.3(i) provides that, subject to 

certain other criteria set forth in that 

Rule, securities deemed appropriate for 

options trading include Fund Shares 

that represent certain types of interests,4


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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 477 contracts and/or 

options on physical commodities and/or non-U.S. 

currency (‘‘Commodity Pool ETFs’’) or (3) represent 

interests in a trust or similar entity that holds a 

specified non-U.S. currency or currencies deposited 

with the trust or similar entity when aggregated in 

some specified minimum number may be 

surrendered to the trust by the beneficial owner to 

receive the specified non-U.S. currency or 

currencies and pays the beneficial owner interest 

and other distributions on the deposited non-U.S. 

currency or currencies, if any, declared and paid by 

the trust (‘‘Currency Trust Shares’’), or (4) represent 

interests in the SPDR Gold Trust or are issued by 

the iShares COMEX Gold Trust or iShares Silver 

Trust. 

5The trust may include minimal cash. 

6Rule 19.3(a) and (b) sets forth the criteria an 

underlying security must meet for the Exchange to 

be able to list options on the underlying. 

7The criteria and guidelines for a security to be 

considered widely held and actively traded are set 

forth in Rule 19.3(b), subject to exceptions. 

8An ‘‘NMS stock’’ means any NMS security other 

than an option, and an ‘‘NMS security’’ means any 

security or class of securities for which transaction 

reports are collected, processed, and made available 

pursuant to an effective transaction reporting plan 

(or an effective national market system plan for 

reporting transaction in listed options). See 17 CFR 

242.600(b)(64) (definition of ‘‘NMS security’’) and 

(65) (definition of ‘‘NMS stock’’). 

9The Exchange continues to believe assets under 

management (‘‘AUM’’), rather than shares 

outstanding and number of holders, is a better 

measure of investable capacity of ETFs and a more 

appropriate figure for determining position and 

exercise limits of ETFs and looks forward to further 

discussions with the Commission staff on this topic. 

including interests in certain specific 

trusts that hold financial instruments, 

money market instruments, or precious 

metals (which are deemed 

commodities). 

The Bitcoin Funds are Bitcoin-backed 

commodity exchange-traded funds 

(‘‘ETFs’’) structured as trusts. Similar to 

any Fund Share currently deemed 

appropriate for options trading under 

Rule 19.3(i), the investment objective of 

each Bitcoin Fund is for its shares to 

reflect the performance of Bitcoin (less 

the expenses of the trust’s operations), 

offering investors an opportunity to gain 

exposure to Bitcoin without the 

complexities of Bitcoin delivery. As is 

the case for Fund Shares currently 

deemed appropriate for options trading, 

a Bitcoin Fund’s shares represent units 

of fractional undivided beneficial 

interest in the trust, the assets of which 

consist principally of Bitcoin and are 

designed to track Bitcoin or the 

performance of the price of Bitcoin and 

offer access to the Bitcoin market.5 The 

Bitcoin Funds provide investors with 

cost-efficient alternatives that allow a 

level of participation in the Bitcoin 

market through the securities market. 

The primary substantive difference 

between Bitcoin Funds and Fund Shares 

currently deemed appropriate for 

options trading are that Fund Shares 

may hold securities, certain financial 

instruments, and specified precious 

metals (which are deemed 

commodities), while Bitcoin Funds hold 

Bitcoin (which is also deemed a 

commodity). 

The Exchange believes each Bitcoin 

Fund satisfies the Exchange’s initial 

listing standards for Fund Shares on 

which the Exchange may list options. 

Specifically, each Bitcoin Fund satisfies 

the initial listing standards set forth in 

Rule 19.3(i), as is the case for other 

Fund Shares on which the Exchange 

lists options (including trusts that hold 

commodities). Rule 19.3(i)(1) requires 

that Fund Shares either (1) meet the 

criteria and standards set forth in Rule 

19.3(a) and (b),6 or (2) are available for 

creation or redemption each business 

day in cash or in kind from the 

investment company, commodity pool 

or other entity at a price related to net 

asset value, and the investment 

company, commodity pool or other 

entity is obligated to provide that Fund 

Shares may be created even if some or 

all of the securities and/or cash required 

to be deposited have not been received 

by the Fund, the unit investment trust 

or the management investment 

company, provided the authorized 

creation participant has undertaken to 

deliver the securities and/or cash as 

soon as possible and such undertaking 

is secured by the delivery and 

maintenance of collateral consisting of 

cash or cash equivalents satisfactory to 

the Fund, all as described in the Fund’s 

or unit trust’s prospectus. Each Bitcoin 

Fund satisfies Rule 19.3(i)(1)(B) as each 

is subject to this creation and 

redemption process. 

While not required by the Rules for 

purposes of options listings, the 

Exchange believes each Bitcoin Fund 

satisfies the criteria and guidelines set 

forth in Rule 19.3(a) and (b). Pursuant 

to Rule 19.3(a), a security (which 

includes a Fund Share) on which 

options may be listed and traded on the 

Exchange must be registered with the 

Securities and Exchange Commission 

(‘‘Commission’’) and be an NMS stock 

(as defined in Rule 600 of Regulation 

NMS under the Securities Exchange Act 

of 1934, as amended (the ‘‘Act’’)), and 

be characterized by a substantial 

number of outstanding shares that are 

widely held and actively traded.7 Each 

Bitcoin Fund is an NMS Stock as 

defined in Rule 600 of Regulation NMS 

under the Act.8 The Exchange believes 

each Bitcoin Fund is characterized by a 

substantial number of outstanding 

shares that are widely held and actively 

traded. 

As of August 7, 2024, the Bitcoin 

Funds had the following number of 

shares outstanding: 

Bitcoin fund Shares 

outstanding 

Fidelity Fund ......................... 201,100,100 

ARK 21 Fund ........................ 45,495,000 

Each Bitcoin Fund had significantly 

more than 7,000,000 shares outstanding 

(approximately 29 and 6.5 times that 

amount, respectively), which is the 

minimum number of shares of a 

corporate stock that the Exchange 

generally requires to list options on that 

stock pursuant to Rule 19.3(b). The 

Exchange believes this demonstrates 

that each Bitcoin Fund is characterized 

by a substantial number of outstanding 

shares. 

Further, the below table contains 

information regarding the number of 

beneficial holders of the Bitcoin Funds 

as of the specified dates: 

Bitcoin fund Beneficial 

holders Date 

Fidelity Fund ................ 279,656 6/27/2024 

ARK 21 Fund .............. 69,425 6/26/2024 

As this table shows, each Bitcoin 

Fund has significantly more than 2,000 

beneficial holders (approximately 140 

and 35 times more, respectively), which 

is the minimum number of holders the 

Exchange generally requires for 

corporate stock in order to list options 

on that stock pursuant to Rule 19.3(b). 

Therefore, the Exchange believes the 

shares of each Bitcoin Fund are widely 

held.9

The Exchange also believes the shares 

of each Bitcoin Fund are actively traded. 

As of August 7, 2024, the total trading 

volume (by shares) for each fund for the 

six-month period of February 8 through 

August 7, 2024 and the approximate 

average daily volume (‘‘ADV’’) (in 

shares and notional) over the 30-day 


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10The Bitcoin Funds began trading on January 11, 

2024. 

11See Rule 19.2, which provides that the rights 

and obligations of holders and writers are set forth 

in the Rules of the Options Clearing Corporation 

(‘‘OCC’’); and Equity Options Product 

Specifications January 3, 2024), available at Equity 

Options Specifications (cboe.com); see also OCC 

Rules, Chapters VIII (which governs exercise and 

assignment) and Chapter IX (which governs the 

discharge of delivery and payment obligations 

arising out of the exercise of physically settled stock 

option contracts). 

12See Rule 19.6(b). 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 19.6(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. 

13See Rule 19.6, Interpretation and Policy .05. 

14See Rule 19.6, Interpretation and Policy .08. 

15See Rule 19.6, Interpretation and Policy .04. 

16See Rule 19.8. 

17The Exchange notes that for options listed 

pursuant to the Short Term Option Series Program, 

the Monthly Options Series Program, and the 

Quarterly Options Series Program, Rule 19.6, 

Interpretations and Policies .05, .08, and .04 

specifically sets forth intervals between strike 

prices on Quarterly Options Series, Short Term 

Option Series, and Monthly Options Series, 

respectively. 

18See Rule 19.6, Interpretation and Policy .02. 

19See Rule 19.6, Interpretation and Policy .06. 

20See Rule 19.6, Interpretation and Policy .03. 

21See Rule 19.6(d)(5). 

22 If options on a Bitcoin Fund are eligible to 

participate in the Penny Interval Program, the 

minimum increment will be $0.01 for series with 

a price below $3.00 and $0.05 for series with a price 

at or above $3.00. See 21.5(d) (which describes the 

requirements for the Penny Interval Program). 

period of July 9 through August 7, 2024 

for each Bitcoin Fund was as follows: 

Bitcoin fund 

6-month 

trading 

volume 

(shares) 

30-day 

ADV 

(shares) 

30-day 

ADV 

(notional $) 

Fidelity Fund ................................................................................................................................ 1,112,861,581 6,014,335 250,354,755 

ARK 21 Fund ............................................................................................................................... 297,360,739 1,893,335 90,484,307 

As demonstrated above, despite the 

fact that the Bitcoin Funds had been 

trading for approximately seven 

months 10 only as of August 7, 2024, the 

six-month trading volume for each as of 

that date was substantially higher than 

2,400,000 shares (approximately 464 

and 124 times that amount, 

respectively), which is the minimum 12- 

month volume the Exchange generally 

requires for a corporate stock in order to 

list options on that security as set forth 

in Rule 19.3(b). Additionally, as of 

August 7, 2024, the trading volume for 

each Bitcoin Fund was in the top 5% of 

all ETFs that are currently trading. The 

Exchange believes this data 

demonstrates each Bitcoin Fund is 

characterized as having shares that are 

actively traded. 

Options on the Bitcoin Funds will be 

subject to the Exchange’s continued 

listing standards set forth in Rule 19.4(g) 

for Fund Shares deemed appropriate for 

options trading pursuant to Rule 19.3(i). 

Specifically, 19.4(g) provides that Fund 

Shares that were initially approved for 

options trading pursuant to Rule 19.3 

will not be deemed to meet the 

requirements for continued approval, 

and the Exchange shall not open for 

trading any additional series of option 

contracts of the class covering such 

Fund Shares if the security ceases to be 

an NMS stock (see Rule 19.4(b)(4)). 

Additionally, the Exchange will not 

open for trading any additional series of 

option contracts of the class covering 

Fund Shares in any of the following 

circumstances: (1) in the case of options 

covering Fund Shares approved for 

trading under Rule 19.3(i)(4)(A), in 

accordance with the terms of Rule 

19.4(b)(1), (2) and (3); (2) in the case of 

options covering Fund Shares approved 

pursuant to Rule 19.3(i)(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. 

Options on each Bitcoin Fund will be 

physically settled contracts with 

American-style exercise.11 Consistent 

with current Rule 19.6, which governs 

the opening of options series on a 

specific underlying security (including 

Fund Shares), the Exchange will open at 

least one expiration month for options 

on each Bitcoin Fund 12 at the 

commencement of trading on the 

Exchange and may also list series of 

options on a Bitcoin Fund for trading on 

a weekly,13 monthly,14 or quarterly 15

basis. The Exchange may also list longterm equity option series (‘‘LEAPS’’) 

that expire from 12 to 39 months from 

the time they are listed.16

Pursuant to Rule 19.6, Interpretation 

and Policy .01, which governs strike 

prices of series of options on Fund 

Shares, the interval of strikes prices for 

series of options on Bitcoin Funds will 

be $1 or greater when the strike price is 

$200 or less and $5 or greater where the 

strike price is over $200.17 Additionally, 

the Exchange may list series of options 

pursuant to the $1 Strike Price Interval 

Program,18 the $0.50 Strike Program,19

the $2.50 Strike Price Program,20 and 

the $5 Strike Program.21 Pursuant to 

Rule 21.5, where the price of a series of 

a Bitcoin Fund 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 $0.10.22

Any and all new series of Bitcoin Fund 

options that the Exchange lists will be 

consistent and comply with the 

expirations, strike prices, and minimum 

increments set forth in Rules 19.6 and 

21.5, as applicable. 

Bitcoin Fund options will trade in the 

same manner as any other Fund Share 

options on the Exchange. The Exchange 

Rules that currently apply to the listing 

and trading of all Fund Share options on 

the Exchange, including, for example, 

Rules that govern listing criteria, 

expirations, exercise prices, minimum 


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23Rule 18.7(a)(1) provides that no Options 

Member shall make, for any account in which it has 

any interest or for the account of any Customer, an 

opening transaction on any exchange if the Options 

Member has reason to believe that as a result of 

such transaction the Options Member or its 

Customer would, acting alone or in concert with 

others, directly or indirectly, exceed the applicable 

position limit fixed by Cboe Exchange, Inc. (‘‘Cboe 

Options’’). Cboe Options Rule 8.30, Interpretation 

and Policy .10 establishes a position limit for the 

Bitcoin Fund options of 25,000. 

24With respect to the Fidelity Fund, over 80% of 

the ETFs used for comparison have a limit of at 

least 200,000, and more than half have a limit of 

250,000. Additionally, the three-month ADV of the 

majority of the ETFs used for comparison was lower 

than the Fidelity Fund three-month ADV of 

5,665,027 shares. With respect to the ARK 21 Fund, 

nearly 80% of the ETFs used for comparison have 

a limit of at least 75,000 (and up to 250,000). 

Additionally, the three-month ADV of the majority 

of ETFs used for comparison was lower (many more 

than four times lower) than the ARK 21 Fund threemonth ADV of 1,737,327 shares. 

increments, margin requirements, 

customer accounts, and trading halt 

procedures will apply to the listing and 

trading of Bitcoin Funds options on the 

Exchange in the same manner as they 

apply to other options on all other Fund 

Shares that are listed and traded on the 

Exchange, including the precious-metal 

backed commodity Fund Shares already 

deemed appropriate for options trading 

on the Exchange pursuant to current 

Rule 19.3(i). 

Pursuant to Rules 18.7 and 18.9, the 

position and exercise limits, 

respectively, for each Bitcoin Fund 

option will be 25,000 same side option 

contracts.23 The Exchange believes 

these proposed position and exercise 

limits considering, among other things, 

the approximate six-month average 

daily volume (‘‘ADV’’) and outstanding 

shares of each underlying Bitcoin Fund 

(which as discussed above demonstrate 

that each Bitcoin Fund is widely held 

and actively traded and thus justify 

these conservatively proposed position 

limits), as set forth below, along with 

market capitalization (as of August 7, 

2024): 

Underlying bitcoin fund 

Six-month 

ADV 

(shares) 

Outstanding 

shares 

Market 

capitalization 

($) 

Fidelity Fund ........................................................................................ 8,902,893 201,100,100 14,217,013,188 

ARK 21 Fund ....................................................................................... 2,378,886 45,495,000 2,487,666,600 

The Exchange then compared the 

number of outstanding shares of the 

Bitcoin Funds to those of other ETFs. 

The following table provides the 

approximate average position (and 

exercise limit) of ETF options with 

similar outstanding shares (as of August 

27, 2024), compared to the proposed 

position and exercise limit for the 

Bitcoin Fund options:–24

Underlying bitcoin 

fund 

Average Limit 

of other 

ETF options 

(contracts) 

Proposed limit 

(contracts) 

Fidelity Fund ........ 188,110 25,000 

ARK 21 Fund ...... 108,696 25,000 

The Exchange considered current 

position and exercise limits of options 

on ETFs with outstanding shares 

comparable to those of each Bitcoin 

Fund, with the proposed limit 

significantly lower (between two and 

ten times lower) than the average limits 

of the options on the other ETFs. As 

discussed above, the Bitcoin Funds are 

actively held and widely traded: (1) 

each Bitcoin Fund (as of August 7, 2024) 

had significantly more than 7,000,000 

shares outstanding, which is the 

minimum number of shares of a 

corporate stock that the Exchange 

generally requires to list options on that 

stock pursuant to Rule 19.3(b)(1); (2) 

each Bitcoin Fund (as of the dates listed 

above) had significantly more than 

2,000 beneficial holders, which is the 

minimum number of holders the 

Exchange generally requires for 

corporate stock in order to list options 

on that stock pursuant to Rule 

19.3(b)(2); and (3) each Bitcoin Fund 

had a six-month trading volume 

substantially higher than 2,400,000 

shares, which is the minimum 12-month 

volume the Exchange generally requires 

for a security in order to list options on 

that security as set forth in Rule 

19.3(b)(4). 

With respect to outstanding shares, if 

a market participant held the maximum 

number of positions possible pursuant 

to the proposed position and exercise 

limits, the equivalent shares represented 

by the proposed position/exercise limit 

would represent the following 

approximate percentage of current 

outstanding shares: 

Underlying bitcoin fund 

Proposed 

position/ 

exercise 

limit (in equivalent 

shares) 

Outstanding 

shares 

Percentage of 

outstanding 

shares 

(%) 

Fidelity Fund ................................................................................................................................ 2,500,000 201,100,100 1.2 

ARK 21 Fund ............................................................................................................................... 2,500,000 45,495,000 5.5 

As this table demonstrates, if a market 

participant held the maximum 

permissible options positions in one of 

the Bitcoin Fund options and exercised 

all of them at the same time, that market 

participant would control a small 

percentage of the outstanding shares of 

the underlying Bitcoin Fund. 

Cboe Options Rule 8.30, 

Interpretation and Policy .02 (which 

governs position limits on the Exchange 

pursuant to Rule 18.7, provides two 

methods of qualifying for a position 

limit tier above 25,000 option contracts. 

The first method is based on six-month 

trading volume in the underlying 

security, and the second method is 

based on slightly lower six-month 

trading volume and number of shares 

outstanding in the underlying security. 

An underlying stock or ETF that 

qualifies for method two based on 

trading volume and number of shares 

outstanding would be required to have 

the minimum number of outstanding 

shares as shown in middle column of 

the table below. 

The table, which provides the 

equivalent shares of the position limits 

applicable to equity options, including 

ETFs, further represents the percentages 

of the minimum number of outstanding 

shares that an underlying stock or ETF 


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25 6,300,000 is the minimum number of 

outstanding shares an underlying security must 

have for the Exchange to continue to list options on 

that security, so this would be the smallest number 

of outstanding shares permissible for any corporate 

option that would have a position limit of 25,000 

contract. See Rule 19.4(b)(1). This rule applies to 

corporate stock options but not ETF options, which 

currently have no requirement regarding 

outstanding shares of the underlying ETF for the 

Exchange to continue listing options on that ETF. 

Therefore, there may be ETF options trading for 

which the 25,000 contract position limits represents 

an even larger percentage of outstanding shares of 

the underlying ETF than set forth above. 

26As these percentages are based on the 

minimum number of outstanding shares an 

underlying security must have to qualify for the 

applicable position limit, these are the highest 

possible percentages that would apply to any option 

subject to that position and exercise limit. 

must have to qualify for that position 

limit (under the second method 

described above), all of which are higher 

than the percentages for the Bitcoin 

Funds.25

Position/exercise limit 

(in equivalent shares) 

Minimum 

outstanding 

shares 

Percentage 

of outstanding 

shares 

(%) 

2,500,000 ................................................................................................................................................................. 6,300,000 40.0 

5,000,000 ................................................................................................................................................................. 40,000,000 12.5 

7,500,000 ................................................................................................................................................................. 120,000,000 6.3 

20,000,000 ............................................................................................................................................................... 240,000,000 8.3 

25,000,000 ............................................................................................................................................................... 300,000,000 8.3 

The equivalent shares represented by 

the proposed position and exercise 

limits for each Bitcoin Fund as a 

percentage of outstanding shares of the 

underlying Bitcoin Fund is significantly 

lower than the percentage for the lowest 

possible position limit for equity 

options of 25,000 (under 6% compared 

to 40%) and is lower than that 

percentage for each current position 

limit bucket.26

Further, the proposed position and 

exercise limits for each Bitcoin Fund 

option are significantly below the limits 

that would otherwise apply pursuant to 

current Rules 18.7 and 18.9 (by 

reference to Cboe Rules 8.30 and 8.42). 

These position and exercise limits are 

the lowest position and exercise limits 

available in the options industry, are 

extremely conservative and more than 

appropriate given the market 

capitalization, average daily volume, 

and high number of outstanding shares 

of the Bitcoin Funds. 

All of the above information 

demonstrates that the proposed position 

and exercise limits for the Bitcoin Fund 

options are more than reasonable and 

appropriate. The trading volume, ADV, 

and outstanding shares of each Bitcoin 

Fund demonstrate that these funds are 

actively traded and widely held, and 

proposed position and exercise limits 

are well below those of other ETFs with 

similar market characteristics. The 

proposed position and exercise limits 

are the lowest position and exercise 

limits available for equity options in the 

industry, are extremely conservative, 

and are more than appropriate given 

each Bitcoin Fund’s market 

capitalization, ADV, and high number of 

outstanding shares. 


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27The surveillance program includes surveillance 

patterns for price and volume movements as well 

as patterns for potential manipulation (e.g., 

spoofing and marking the close). 

28Cboe BZX Exchange, Inc. is an affiliate of the 

Exchange. 

29Section 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. 

30See Bitcoin ETP Approval Order. 

31See Bitcoin ETP Approval Order, 89 FR at 

3010–11. 

32See Securities Exchange Act Release Nos. 

99290 (January 8, 2024), 89 FR 2338, 2343, 2347– 

2348 (January 12, 2024) (SR–CboeBZX–2023–044) 

Notice of Filing of Amendment No. 3 to a Proposed 

Rule Change to List and Trade Shares of the Fidelity 

Wise Origin Bitcoin Fund Under BZX Rule 

14.11(e)(4), Commodity-Based Trust Shares); and 

99288 (January 8, 2024), 89 FR 2387, 2392, 2399— 

2400 (January 12, 2024) (SR-CboeBZX–2023–028) 

(Notice of Filing of Amendment No. 5 to a Proposed 

Rule Change To List and Trade Shares of the ARK 

21Shares Bitcoin ETF Under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares). See also Securities 

Exchange Act Release No. 99306 (January 10, 2024), 

89 FR 3008, 3009 (January 17, 2024) (SR– 

NYSEArca–2021–90; SR–NYSEArca–2023–44; SR– 

NYSEArca–2023–58; SR–NASDAQ–2023–016; SR– 

NASDAQ–2023–019; SR–CboeBZX–2023–028; SR– 

CboeBZX–2023–038; SR–CboeBZX–2023–040; SR– 

CboeBZX–2023–042; SRCboeBZX–2023–044; and 

SR–CboeBZX–2023–072) (Order Granting 

Accelerated Approval of Proposed Rule Changes, as 

Modified by Amendments Thereto, to List and 

Trade Bitcoin-Based Commodity-Based Trust 

Shares and Trust Units) (‘‘Bitcoin ETP Approval 

Order’’). 

33The Exchange understands from customers that 

investors have historically transacted in options on 

Fund Shares in the OTC options market if such 

options were not available for trading in a listed 

environment. 

34 15 U.S.C. 78f(b). 

Today, the Exchange has an adequate 

surveillance program in place for 

options. Cboe intends to apply those 

same program procedures to options on 

the Bitcoin Funds that it applies to the 

Exchange’s other options products.27

The Exchange’s market surveillance 

staff would have access to the 

surveillances conducted by Cboe BZX 

Exchange, Inc.28 with respect to the 

Bitcoin Funds and would review 

activity in the underlying Bitcoin Funds 

when conducting surveillances for 

market abuse or manipulation in the 

options on the Bitcoin Funds. 

Additionally, the Exchange is a member 

of the Intermarket Surveillance Group 

(‘‘ISG’’) under the Intermarket 

Surveillance Group Agreement. ISG 

members work together to coordinate 

surveillance and investigative 

information sharing in the stock, 

options, and futures markets. In 

addition to obtaining information from 

its affiliated markets, the Exchange 

would be able to obtain information 

regarding trading in shares of the 

Bitcoin Funds from their primary listing 

markets and from other markets that 

trades shares of the Bitcoin Funds 

through ISG. In addition, the Exchange 

has a Regulatory Services Agreement 

with the Financial Industry Regulatory 

Authority (‘‘FINRA’’) for certain market 

surveillance, investigation and 

examinations functions. Pursuant to a 

multi-party 17d–2 joint plan, all options 

exchanges allocate amongst themselves 

and FINRA responsibilities to conduct 

certain options-related market 

surveillance that are common to rules of 

all options exchanges.29

The underlying shares of spot bitcoin 

exchange-traded products (‘‘ETPs’’), 

including the Bitcoin Funds, are also 

subject to safeguards related to 

addressing market abuse and 

manipulation. As the Commission 

stated in its order approving proposals 

of several exchanges to list and trade 

shares of spot bitcoin-based ETPs, 

‘‘[e]ach Exchange has a comprehensive 

surveillance-sharing agreement with the 

CME via their common membership in 

the Intermarket Surveillance Group. 

This facilitates the sharing of 

information that is available to the CME 

through its surveillance of its markets, 

including its surveillance of the CME 

bitcoin futures market.30 The Exchange 

states that, given the consistently high 

correlation between the CME Bitcoin 

futures market and the spot bitcoin 

market, as confirmed by the 

Commission through robust correlation 

analysis, the Commission was able to 

conclude that such surveillance sharing 

agreements could reasonably be 

‘‘expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices in the specific context of the 

[Bitcoin ETPs].’’ 31 In light of 

surveillance measures related to both 

options and futures as well as the 

underlying Bitcoin Funds,32 the 

Exchange believes that existing 

surveillance procedures are designed to 

deter and detect possible manipulative 

behavior which might potentially arise 

from listing and trading the proposed 

options on the Bitcoin Funds. Further, 

the Exchange will implement any new 

surveillance procedures it deems 

necessary to effectively monitor the 

trading of options on Bitcoin ETPs. 

The Exchange has also analyzed its 

capacity and represents that it believes 

the Exchange and OPRA have the 

necessary systems capacity to handle 

the additional traffic associated with the 

listing of new series that may result 

from the introduction of options on 

Bitcoin Funds up to the number of 

expirations currently permissible under 

the Rules. Because the proposal is 

limited to two classes, the Exchange 

believes any additional traffic that may 

be generated from the introduction of 

Bitcoin Fund options will be 

manageable. 

The Exchange believes that offering 

options on Bitcoin Funds will benefit 

investors by providing them with an 

additional, relatively lower cost 

investing tool to gain exposure to the 

price of Bitcoin and hedging vehicle to 

meet their investment needs in 

connection with Bitcoin-related 

products and positions. The Exchange 

expects investors will transact in 

options on Bitcoin Funds in the 

unregulated over-the-counter (‘‘OTC’’) 

options market,33 but may prefer to 

trade such options in a listed 

environment to receive the benefits of 

trading listing options, including (1) 

enhanced efficiency in initiating and 

closing out positions; (2) increased 

market transparency; and (3) heightened 

contra-party creditworthiness due to the 

role of OCC as issuer and guarantor of 

all listed options. The Exchange 

believes that listing Bitcoin Fund 

options may cause investors to bring 

this liquidity to the Exchange, would 

increase market transparency and 

enhance the process of price discovery 

conducted on the Exchange through 

increased order flow. The Fund Shares 

that hold financial instruments, money 

market instruments, or precious metal 

commodities on which the Exchange 

may already list and trade options are 

trusts structured in substantially the 

same manner as Bitcoin Funds and 

essentially offer the same objectives and 

benefits to investors, just with respect to 

different assets. The Exchange notes that 

it has not identified any issues with the 

continued listing and trading of any 

Fund Share options, including Fund 

Shares that hold commodities (i.e., 

precious metals) that it currently lists 

and trades on the Exchange. 

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.34 Specifically, 


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35 15 U.S.C. 78f(b)(5). 36 Id. 37See Rule 19.3(i)(4). 38See Cboe Options Rule 8.30. 39See Blockchain.com | Charts—Total Circulating 

Bitcoin. 

40See CME Rulebook Chapter 350 (description of 

CME Bitcoin Futures) and Chapter 5, Position 

Limit, Position Accountability and Reportable Level 

Table in the Interpretations & Special Notices. Each 

CME Bitcoin futures contract is valued at five 

Bitcoins as defined by the CME CF Bitcoin 

Reference Rate (‘‘BRR’’). See CME Rule 35001. 

41See CME Rulebook Chapter 5, Position Limit, 

Position Accountability and Reportable Level Table 

in the Interpretations & Special Notices. 

42 Id. 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 35 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) 36 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

that the proposal to list and trade 

options on the Bitcoin Funds will 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, protect investors because 

offering options on the Bitcoin Funds 

will provide investors with an 

opportunity to realize the benefits of 

utilizing options on a Bitcoin Fund, 

including cost efficiencies and 

increased hedging strategies. The 

Exchange believes that offering Bitcoin 

Fund options will benefit investors by 

providing them with a relatively lowercost risk management tool, which will 

allow them to manage their positions 

and associated risk in their portfolios 

more easily in connection with 

exposure to the price of Bitcoin and 

with Bitcoin-related products and 

positions. Additionally, the Exchange’s 

offering of Bitcoin Fund options will 

provide investors with the ability to 

transact in such options in a listed 

market environment as opposed to in 

the unregulated OTC options market, 

which would increase market 

transparency and enhance the process of 

price discovery conducted on the 

Exchange through increased order flow 

to the benefit of all investors. The 

Exchange also notes that it already lists 

options on other commodity-based 

Fund Shares,37 which, as described 

above, are trusts structured in 

substantially the same manner as 

Bitcoin Funds and essentially offer the 

same objectives and benefits to 

investors, just with respect to a different 

commodity (i.e., Bitcoin rather than 

precious metals) and for which the 

Exchange has not identified any issues 

with the continued listing and trading of 

commodity-backed Fund Share options 

it currently lists for trading. 

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 the Bitcoin 

Funds satisfy the initial listing 

standards and continued listing 

standards currently in the Exchange 

Rules applicable to options on all Fund 

Shares, including Fund Shares that hold 

other commodities already deemed 

appropriate for options trading on the 

Exchange. Additionally, as 

demonstrated above, each Bitcoin Fund 

is characterized by a substantial number 

of shares that are widely held and 

actively traded. Bitcoin Fund options 

will trade in the same manner as any 

other Fund Share options—the same 

Exchange Rules that currently govern 

the listing and trading of all Fund Share 

options, including permissible 

expirations, strike prices and minimum 

increments, and applicable margin 

requirements, will govern the listing 

and trading of options on Bitcoin Funds 

in the same manner. 

The Exchange believes the proposed 

position and exercise limits are 

designed to prevent fraudulent and 

manipulative acts and practices and 

promote just and equitable principles of 

trade, as they are designed to address 

potential manipulative schemes and 

adverse market impacts surrounding the 

use of options, such as disrupting the 

market in the security underlying the 

options. The proposed position and 

exercise limits are 25,000 contracts, 

which is the lowest limit applicable to 

any equity options (including ETF and 

options on other Bitcoin ETFs).38 The 

Exchange believes the proposed 

position and exercise limits are 

extremely conservative for each Bitcoin 

Fund option given the trading volume 

and outstanding shares for each. The 

information above demonstrates that the 

average position and exercise limits of 

options on ETFs with comparable 

outstanding shares and trading volume 

to those of the Bitcoin Funds are 

significantly higher than the proposed 

position and exercise limits for Bitcoin 

Fund options. Therefore, the proposed 

position and exercise limits for the 

Bitcoin Fund options are conservative 

relative to options on ETFs with 

comparable market characteristics. 

Further, given that the issuer of each 

Bitcoin Fund may create and redeem 

shares that represent an interest in 

Bitcoin, the Exchange believes it is 

relevant to compare the size of a 

position limit to the market 

capitalization of the Bitcoin market. As 

of August 27, 2024, the global supply of 

Bitcoin was 19,745,940, and the price of 

one Bitcoin was approximately 

$59,466.82,39 which equates to a market 

capitalization of approximately $1.165 

trillion. Consider the proposed position 

and exercise limit of 25,000 option 

contracts for each Bitcoin Fund option. 

A position and exercise limit of 25,000 

same side contracts effectively restricts 

a market participant from holding 

positions that could result in the receipt 

of no more than 2,500,000 of Fidelity 

Fund shares or ARK 21 Fund shares, as 

applicable (if that market participant 

exercised all its options. The following 

table shows the share price of each 

Bitcoin Fund on August 27, 2024, the 

value of 2,500,000 shares of the Bitcoin 

Fund at that price, and the approximate 

percentage of that value of the size of 

the Bitcoin market: 

Bitcoin fund 

August 27, 2024 

share price 

($) 

Value of 

2,500,000 Shares 

of 

bitcoin fund 

($) 

Percentage of 

bitcoin market 

(%) 

Fidelity Fund .............................................................................................................. 54.33 135,825,000 0.01 

ARK 21 Fund ............................................................................................................. 62.08 155,200,000 0.01 


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43See Blockchain.com | Charts—Total Circulating 

Bitcoin (which also shows the price of one Bitcoin 

equal to $55,033.47). 

Therefore, if a market participant with 

the maximum 25,000 same side 

contracts in either Fidelity Fund options 

or ARK 21 Fund options exercised all 

positions at one time, such an event 

would have no practical impact on the 

Bitcoin market. 

The Exchange also believes the 

proposed limits are appropriate given 

position limits for Bitcoin futures. For 

example, the Chicago Mercantile 

Exchange (‘‘CME’’) imposes a position 

limit of 2,000 futures (for the initial spot 

month) on its Bitcoin futures contract.40

On August 28, 2024, CME Aug 24 

Bitcoin Futures settled at $58,950. A 

position of 2,000 CME Bitcoin futures, 

therefore, would have a notional value 

of $589,500,000. The following table 

shows the share price of each Bitcoin 

Fund on August 28, 2024 and the 

approximate number of option contracts 

that equates to that notional value: 

Bitcoin fund 

August 28, 

2024 

share price 

($) 

Number of option contracts 

Fidelity Fund ............................................................................................................................................................ 51.47 114,532 

ARK 21 Fund ........................................................................................................................................................... 58.83 100,203 

The approximate number of option 

contracts for each Bitcoin Fund that 

equate to the notional value of CME 

Bitcoin futures is significantly higher 

than the proposed limit of 25,000 

options contract for each Bitcoin Fund 

option. The fact that many options 

ultimately expire out-of-the-money and 

thus are not exercised for shares of the 

underlying, while the delta of a Bitcoin 

Future is 1, further demonstrates how 

conservative the proposed limits of 

25,000 options contracts are for the 

Bitcoin Fund options. 

The Exchange notes, unlike options 

contracts, CME position limits are 

calculated on a net futures-equivalent 

basis by contract and include contracts 

that aggregate into one or more base 

contracts according to an aggregation 

ratio(s).41 Therefore, if a portfolio 

includes positions in options on futures, 

CME would aggregate those positions 

into the underlying futures contracts in 

accordance with a table published by 

CME on a delta equivalent value for the 

relevant spot month, subsequent spot 

month, single month and all month 

position limits.42 If a position exceeds 

position limits because of an option 

assignment, CME permits market 

participants to liquidate the excess 

position within one business day 

without being considered in violation of 

its rules. Additionally, if at the close of 

trading, a position that includes options 

exceeds position limits for futures 

contracts, when evaluated using the 

delta factors as of that day’s close of 

trading but does not exceed the limits 

when evaluated using the previous 

day’s delta factors, then the position 

shall not constitute a position limit 

violation. Considering CME’s position 

limits on futures for Bitcoin, the 

Exchange believes that that the 

proposed same side position limits are 

more than appropriate for the Bitcoin 

Fund options. 

The Exchange believes the proposed 

position and exercise limits will have 

no material impact to the supply of 

Bitcoin. For example, consider again the 

proposed position limit of 25,000 option 

contracts for each Bitcoin Fund option. 

As noted above, a position limit of 

25,000 same side contracts effectively 

restricts a market participant from 

holding positions that could result in 

the receipt of no more than 2,500,000 

shares of the applicable Bitcoin Fund (if 

that market participant exercised all its 

options). As of August 7, 2024, the 

Bitcoin Funds had the number of shares 

outstanding set forth in the table below. 

The table below also sets forth the 

approximate number of market 

participants that could hold the 

maximum of 25,000 same side positions 

in each Bitcoin Fund that would equate 

to the number of shares outstanding of 

that Bitcoin Fund: 

Bitcoin fund Shares 

outstanding 

Number of 

market 

participants 

with 25,000 

same side 

positions 

Fidelity Fund ............................................................................................................................................................ 201,100,100 80 

ARK 21 Fund ........................................................................................................................................................... 45,495,000 18 

This means if 80 market participants 

had 25,000 same side positions in 

Fidelity Fund options, each of them 

would have to simultaneously exercise 

all of those options to create a scenario 

that may put the underlying security 

under stress. Similarly, this means if 18 

market participants had 25,000 same 

side positions in ARK 21 Fund options, 

each of them would have to 

simultaneously exercise all of those 

options to create a scenario that may put 

the underlying security under stress. 

The Exchange believes it is highly 

unlikely for either such event to occur; 

however, even if either such event did 

occur, the Exchange would not expect 

either Bitcoin Fund to be under stress 

because such an event would merely 

induce the creation of more shares 

through the trust’s creation and 

redemption process. 

As of August 7, 2024, the global 

supply of Bitcoin was approximately 

19,736,528.43 Based on the $47.88 price 

of a Fidelity Fund share on August 7, 

2024, a market participant could have 

redeemed one Bitcoin for approximately 

1,149 Fidelity Fund shares. Another 

22,677,270,672 Fidelity Fund shares 

could be created before the supply of 

Bitcoin was exhausted. As a result, 

9,070 market participants would have to 

simultaneously exercise 25,000 same 

side positions in Fidelity Fund options 

to receive shares of the Fidelity Fund 

holding the entire global supply of 

Bitcoin. Similarly, based on the $54.68 

price of an ARK 21 Fund share on 

August 7, 2024, a market participant 

could have redeemed one Bitcoin for 

approximately 1,006 ARK 21 Fund 


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44See Pre-Effective Amendment No. 5 to Form S– 

1 Registration Statement No. 333–254652, Fidelity 

Fund, filed January 9, 2024, at 53–54; and 

Amendment No. 8 to Form S–1 Registration 

Statement No. 333–257474, ARK 21 Fund, filed 

January 9, 2024, at 15. 

45The market capitalization of Bitcoin would 

rank in the top 10 among securities. See https://

companiesmarketcap.com/usa/largest-companiesin-the-usa-by-market-cap/. 

46This would be even more unlikely with respect 

to the Bitcoin Funds for which the Exchange 

proposes lower position limits. 

47Prior to Bitcoin ETFs, the Exchange is unaware 

of any proposed rule change related to position and 

exercise limits for any equity option (including 

commodity ETF options) for which the Commission 

required consideration of whether the available 

supply of an underlying (whether it be a corporate 

stock or an ETF) or the contents of an ETF 

(commodity or otherwise) should be considered 

when an exchange proposed to establish those 

limits. See, e.g., Securities Exchange Act Release 

No. 57894 (May 30, 2008), 73 FR 32061 (June 5, 

2008) (SR–CBOE–2005–11) (approval order in 

which the Commission stated that the ‘‘listing and 

trading of Gold Trust Options will be subject to the 

exchanges’ rules pertaining to position and exercise 

limits and margin’’). The Exchange notes when the 

Commission approved this filing, the position 

limits in Rule 8.30 were the same as they are today. 

For reference, the current position and exercise 

limits for options on SPDR Gold Shares ETF 

(‘‘GLD’’) and options on iShares Silver Trust 

(‘‘SLV’’) are 250,000 contracts, or 10 times that 

proposed position and exercise limit for the Bitcoin 

Fund options. 

48For example, suppose an option has a position 

limit of 25,000 option contracts and there are a total 

of 10 investors trading that option. If all 10 

investors max out their positions, that would result 

in 250,000 option contracts outstanding at that 

time. However, suppose 10 more investors decide 

to begin trading that option and also max out their 

positions. This would result in 500,000 option 

contracts outstanding at that time. An increase in 

the number of investors could cause an increase in 

outstanding options even if position limits remain 

unchanged. 

49See Securities Exchange Act Release No. 39489 

(December 24, 1997), 63 FR 276 (January 5, 1998) 

(SR–CBOE–1997–11). 

50See id. 

51See Pre-Effective Amendment No. 5 to Form S– 

1 Registration Statement No. 333–254652, Fidelity 

Fund, filed January 9, 2024, at 53—54; and 

Amendment No. 8 to Form S–1 Registration 

Statement No. 333–257474, ARK 21 Fund, filed 

January 9, 2024, at 15. 

52See Bitcoin ETP Approval Order. 

53See Securities Exchange Act Release No. 39489 

(December 24, 1997), 63 FR 276 (January 5, 1998) 

(SR–CBOE–1997–11). 

Shares. Another 19,855 ARK 21 Fund 

shares could be created before the 

supply of Bitcoin were exhausted. As a 

result, 7,941 market participants would 

have to simultaneously exercise 25,000 

same side positions in ARK 21 Fund 

options to receive shares of the ARK 21 

Fund holding the entire global supply of 

Bitcoin. Unlike the Bitcoin Funds, the 

number of shares that corporations may 

issue is limited. However, like 

corporations, which authorize 

additional shares, repurchase shares, or 

split their shares, the Bitcoin Funds may 

create, redeem, or split shares in 

response to demand. While the supply 

of Bitcoin is limited to 21,000,000, it is 

believed that it will take more than 100 

years to fully mine the remaining 

Bitcoin.44 The supply of Bitcoin is larger 

than the available supply of most 

securities.45 Given the significant 

unlikelihood of any of these events ever 

occurring, the Exchange does not 

believe options on the Bitcoin Funds 

should be subject to position and 

exercise limits even lower than those 

proposed (which are already equal to 

the lowest available limit for equity 

options in the industry) to protect the 

supply of Bitcoin.46

The Exchange believes the available 

supply of Bitcoin is not relevant to the 

determination of position and exercise 

limits for options overlying the Bitcoin 

Funds.47 Position and exercise limits are 

not a tool that should be used to address 

a potential limited supply of the 

underlying of an underlying. Position 

and exercise limits do not limit the total 

number of options that may be held, but 

rather they limit the number of 

positions a single customer may hold or 

exercise at one time.48 ‘‘Since the 

inception of standardized options 

trading, the options exchanges have had 

rules imposing limits on the aggregate 

number of options contracts that a 

member or customer could hold or 

exercise.’’ 49 Position and exercise limit 

rules are intended ‘‘to prevent the 

establishment of options positions that 

can be used or might create incentives 

to manipulate or disrupt the underlying 

market so as to benefit the options 

position. In particular, position and 

exercise limits are designed to minimize 

the potential for mini-manipulations 

and for corners or squeezes of the 

underlying market. In addition, such 

limits serve to reduce the possibility for 

disruption of the options market itself, 

especially in illiquid options classes.’’ 50

The Exchange notes that a 

Registration Statement on Form S–1 was 

filed with the Commission for each 

Bitcoin Fund, each of which described 

the supply of Bitcoin as being limited to 

21,000,000 (of which approximately 

90% had already been mined), and that 

the limit would be reached around the 

year 2140.51 Each Registration 

Statement permits an unlimited number 

of shares of the applicable Bitcoin ETF 

to be created. Further, the Commission 

approved proposed rule changes that 

permitted the listing and trading of 

shares of each Bitcoin Fund, which 

approval did not comment on the 

sufficient supply of Bitcoin or address 

whether there was a risk that permitting 

an unlimited number of shares for a 

Bitcoin Fund would impact the supply 

of Bitcoin.52 Therefore, the Exchange 

believes the Commission had ample 

time and opportunity to consider 

whether the supply of Bitcoin was 

sufficient to permit the creation of 

unlimited Bitcoin Fund shares, and 

does not believe considering this supply 

with respect to the establishment of 

position and exercise limits is 

appropriate given its lack of relevance to 

the purpose of position and exercise 

limits. However, given the significant 

size of the Bitcoin supply, the proposed 

positions limits are more than sufficient 

to protect investors and the market. 

Based on the above information 

demonstrating, among other things, that 

each Bitcoin Fund is characterized by a 

substantial number of outstanding 

shares that are actively traded and 

widely held, the Exchange believes the 

proposed position and exercise limits 

are extremely conservative compared to 

those of ETF options with similar 

market characteristics. The proposed 

position and exercise limits reasonably 

and appropriately balance the liquidity 

provisioning in the market against the 

prevention of manipulation. The 

Exchange believes these proposed limits 

are effectively designed to prevent an 

individual customer or entity from 

establishing options positions that could 

be used to manipulate the market of the 

underlying as well as the Bitcoin 

market.53

The Exchange represents that it has 

the necessary systems capacity to 

support the new Bitcoin Fund options. 

As discussed above, the Exchange 

believes that its existing surveillance 

and reporting safeguards are designed to 

deter and detect possible manipulative 

behavior which might arise from listing 

and trading Fund Share options, 

including Bitcoin Fund options. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange does not believe that the 

proposed rule change will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

as the Bitcoin Fund options will be 

equally available to all market 

participants who wish to trade such 

options and will trade generally in the 

same manner as other options. The 

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, 


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Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices 94811 

54See Rule 19.3(i)(4) 

55See Securities Exchange Act Release No. 

101387 (October 18, 2024), 89 FR 8498 (October 24, 

2024) (SR–CBOE–2024–035). The Exchange notes 

the Commission recently approved a rule filing of 

another exchange to permit the listing and trading 

of options on the iShares Bitcoin Trust. See 

Securities Exchange Act Release No. 101128 

(September 20, 2024), 89 FR 78942 (September 26, 

2024) (SR–ISE–2024–03). 

56 15 U.S.C. 78s(b)(3)(A). 

57 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Commission 

waives this requirement. 

58 17 CFR 240.19b–4(f)(6)(iii). 

59See Securities Exchange Act Release No. 

101387 (Oct. 18, 2024), 89 FR 84948 (Oct. 24, 2024). 

60For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

minimum increments, margin 

requirements, customer accounts, and 

trading halt procedures will apply to the 

listing and trading of Bitcoin Funds 

options on the Exchange in the same 

manner as they apply to other options 

on all other Fund Shares that are listed 

and traded on the Exchange. Also, and 

as stated above, the Exchange already 

lists options on other commodity-based 

Fund Share.54 Further, the Bitcoin 

Funds would need to satisfy the 

maintenance listing standards set forth 

in the Exchange Rules in the same 

manner as any other Fund Share for the 

Exchange to continue listing options on 

them. 

The Exchange does not believe that 

the proposal to list and trade options on 

Bitcoin Funds will impose any burden 

on intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. To the extent 

that the advent of Bitcoin Fund options 

trading on the Exchange may make the 

Exchange a more attractive marketplace 

to market participants at other 

exchanges, such market participants are 

free to elect to become market 

participants on the Exchange. The 

Commission a rule filing of another 

exchange to permit the listing and 

trading of options on the Bitcoin 

Funds.55 The Exchange notes that listing 

and trading Bitcoin Fund options on the 

Exchange will subject such options to 

transparent exchange-based rules as 

well as price discovery and liquidity, as 

opposed to alternatively trading such 

options in the OTC market. 

The Exchange believes that the 

proposed rule change may relieve any 

burden on, or otherwise promote, 

competition, as it is designed to increase 

competition for order flow on the 

Exchange in a manner that is beneficial 

to investors by providing them with a 

lower-cost option to hedge their 

investment portfolios. The Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to competing venues that offer 

similar products. Ultimately, the 

Exchange believes that offering Bitcoin 

Fund options for trading on the 

Exchange will promote competition by 

providing investors with an additional, 

relatively low-cost means to hedge their 

portfolios and meet their investment 

needs in connection with Bitcoin prices 

and Bitcoin-related products and 

positions on a listed options exchange. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received written 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) of the Act 56 and Rule 19b– 

4(f)(6) thereunder.57

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 58 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission previously 

approved the listing of options on the 

Bitcoin Funds.59 The Exchange has 

provided information regarding the 

underlying Bitcoin Funds, including, 

among other things, information 

regarding trading volume, the number of 

beneficial holders, and the market 

capitalization of the Bitcoin Funds. The 

proposal also establishes position and 

exercise limits for options on the 

Bitcoin Funds and provides information 

regarding the surveillance procedures 

that will apply to options on the Bitcoin 

Funds. The Commission believes that 

waiver of the operative delay could 

benefit investors by providing an 

additional venue for trading Bitcoin 

Fund options. Therefore, the 

Commission believes that waiver of the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change operative upon 

filing. 

Thus, the Commission believes that 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Accordingly, the Commission hereby 

waives the 30-day operative delay and 

designates the proposed rule change 

operative upon filing.60

At any time within 60 days of the 

filing of such 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. 

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 rule-comments@

sec.gov. Please include file number SR– 

CboeEDGX–2024–077 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–CboeEDGX–2024–077. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 


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94812 Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices 

61 17 CFR 200.30–3(a)(12), (59). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Exchange notes that its affiliate exchanges, 

MIAX Options and MIAX Sapphire, submitted 

substantively identical proposals. The Exchange 

notes that all the rules of Chapter III of the MIAX 

Options Exchange, including Rules 307 and 309, are 

incorporated by reference to MIAX Pearl and MIAX 

Sapphire. The Exchange also notes that all of the 

rules of Chapter III of the MIAX Options Exchange, 

including Rules 307 and 309, and the rules of 

Chapter IV of the MIAX Options Exchange, 

including Rule 402, are incorporated by reference 

to MIAX Emerald. 

4On January 10, 2024, the Commission approved 

proposals by NYSE Arca, Inc., The Nasdaq Stock 

Market LLC, and Cboe BZX Exchange, Inc. to list 

and trade the shares of 11 bitcoin-based 

commodity-based trust shares and trust units, 

including the iShares Bitcoin Trust. See Securities 

Exchange Act Release No. 99306 (Jan. 10, 2024), 89 

FR 3008 (Jan. 17, 2024) (order approving File Nos. 

SR–NYSEARCA–2021–90; SR–NYSEARCA–2023– 

44; SR–NYSEARCA–2023–58; SR–NASDAQ–2023– 

016; SR–NASDAQ–2023–019; SR-CboeBZX–2023– 

028; SR-CboeBZX–2023–038; SR-CboeBZX–2023– 

040; SR-CboeBZX–2023–042; SR-CboeBZX–2023– 

044; SR-CboeBZX–2023–072) (‘‘Bitcoin ETP 

Order’’). 

5See Securities Exchange Act Release No. 101387 

(October 18, 2024), 89 FR 84948 (October 24, 2024) 

(SR–CBOE–2024–35)(Self-Regulatory Organizations; 

Cboe Exchange, Inc.; Notice of Filing of 

Amendment Nos. 2 and 3 and Order Granting 

Accelerated Approval of a Proposed Rule Change, 

as Modified by Amendment Nos. 2 and 3, to Permit 

the Listing and Trading of Options on Bitcoin 

Exchange Traded Funds). 

6See Exchange Rule 402(i), which permits 

options trading on ETFS that: (1) represent interests 

in registered investment companies (or series 

thereof) organized as open-end management 

investment companies, unit investment trusts or 

similar entities that hold portfolios of securities 

and/or financial instruments (‘‘Funds’’), including, 

but not limited to, stock index futures contracts, 

options on futures, options on securities and 

indices, equity caps, collars and floors, swap 

agreements, forward contracts, repurchase 

agreements and reverse repurchase agreements (the 

‘‘Financial Instruments’’), and money market 

instruments, including, but not limited to, U.S. 

government securities and repurchase agreements 

(the ‘‘Money Market Instruments’’) comprising or 

otherwise based on or representing investments in 

broad-based indexes or portfolios of securities and/ 

or Financial Instruments and Money Market 

Instruments (or that hold securities in one or more 

other registered investment companies that 

themselves hold such portfolios of securities and/ 

or Financial Instruments and Money Market 

Instruments); (2) represent interests in a trust or 

similar entity that holds a specified non-U.S. 

currency or currencies deposited with the trust 

which when aggregated in some specified minimum 

number may be surrendered to the trust or similar 

entity by the beneficial owner to receive the 

specified non-U.S. currency or currencies and pays 

the beneficial owner interest and other distributions 

on the deposited non-U.S. currency or currencies, 

if any, declared and paid by the trust (‘‘Currency 

Trust Shares’’); (3) represent commodity pool 

interests principally engaged, directly or indirectly, 

in holding and/or managing portfolios or baskets of 

securities, commodity futures contracts, options on 

commodity futures contracts, swaps, forward 

contracts and/or options on physical commodities 

and/or non-U.S. currency (‘‘Commodity Pool 

ETFs’’); (4) are issued by the are issued by the 

SPDR® Gold Trust, the iShares COMEX Gold Trust, 

the iShares Silver Trust, the ETFS Silver Trust, the 

Aberdeen Standard Physical Gold Trust, the ETFS 

Palladium Trust, the ETFS Platinum Trust, the 

Sprott Physical Gold Trust, or the iShares Bitcoin 

Trust; or (5) represent an interest in a registered 

investment company (‘‘Investment Company’’) 

organized as an open-end management company or 

similar entity, that invests in a portfolio of 

securities selected by the Investment Company’s 

investment adviser consistent with the Investment 

Company’s investment objectives and policies, 

which is issued in a specified aggregate minimum 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CboeEDGX–2024–077 and should be 

submitted on or before December 23, 

2024. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.61

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–27987 Filed 11–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101719; File No. SR– 

PEARL–2024–54] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 402, Criteria for Underlying 

Securities, Exchange To Allow the 

Exchange To List and Trade Options 

on the Fidelity Wise Origin Bitcoin 

Fund (the ‘‘Fidelity Fund’’) and the ARK 

21Shares Bitcoin ETF (the ‘‘ARK 21 

Fund’’) 

November 22, 2024. 

Pursuant to the provisions of Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on November 21, 2024, MIAX PEARL, 

LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend Exchange Rule 402, Criteria for 

Underlying Securities 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-equities/pearl-equities/rule-filings, at 

MIAX Pearl’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Exchange Rule 402, Criteria for 

Underlying Securities,3 to allow the 

Exchange to list and trade options on 

Fidelity Wise Origin Bitcoin Fund (the 

‘‘Fidelity Fund’’) and the ARK 21Shares 

Bitcoin ETF (the ‘‘ARK 21 Fund’’ and, 

with the Fidelity Fund, the ‘‘Bitcoin 

Funds’’), designating the Bitcoin Funds 

as appropriate for options trading on the 

Exchange.4 This is a competitive filing 

based on a similar proposal submitted 

by Cboe Exchange, Inc. (‘‘Cboe’’) and 

approved by the Securities and 

Exchange Commission 

(‘‘Commission’’).5

Current Exchange Rule 402(i)(4) 

provides that securities deemed 

appropriate for options trading include 

shares or other securities (‘‘Exchange 

Traded Fund Shares’’ or ‘‘ETFs’’) that 

represent certain types of interests,6


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