94794 Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices 

87 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 101128 

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

2024) (SR–ISE–2024–03) (Notice of Filing of 

Amendment Nos. 4 and 5 and Order Granting 

Accelerated Approval of a Proposed Rule Change, 

as Modified by Amendment Nos. 1, 4, and 5, to 

Permit the Listing and Trading of Options on the 

iShares Bitcoin Trust) (‘‘IBIT Approval Order’’). 

5See Securities Exchange Act Release No. 101387 

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

(SE–CBOE–2024–035) (Notice of Filing of 

Amendment Nos. 2 and 3 and Order Granting 

Accelerated Approval of a Proposed Rule Change, 

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

the Listing and Trading of Options on Bitcoin 

Exchange-Traded Funds) (‘‘FBTC and ARKB 

Approval Order’’). 

6See Securities Exchange Act Release No. 101386 

(October 18, 2024), 89 FR 84960 (October 24, 2024) 

(SR–NYSEAMER–2024–49) (Order approving the 

listing and trading of options on shares of the 

Grayscale Bitcoin Trust (BTC) (symbol: GBTC), the 

Grayscale Bitcoin Mini Trust (BTC) (symbol: BTC), 

and the Bitwise Bitcoin ETF (symbol: BITB)) (the 

‘‘American Bitcoin Options Approval Order’’). See 

also NYSE American Rule 915, Commentary .10(a). 

Taken together with the IBIT Approval Order and 

the FBTC and ARKB Approval Order, the Bitcoin 

Approval Order, further illustrates that this 

proposal does not raise any new or novel issues not 

previously considered by the Commission. 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

PEARL–2024–53 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–PEARL–2024–53. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–PEARL–2024–53 and should be 

submitted on or before December 20, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.87

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–27990 Filed 11–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101712; File No. SR– 

NYSEARCA–2024–100] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To List and Trade Option 

Contracts on the iShares Bitcoin Trust, 

the Fidelity Wise Origin Bitcoin Fund, 

and the ARK21Shares Bitcoin ETF 

November 22, 2024. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 20, 2024, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. 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 proposes to list and 

trade option contracts on the iShares 

Bitcoin Trust, the Fidelity Wise Origin 

Bitcoin Fund, and the ARK21Shares 

Bitcoin ETF. The proposed rule change 

is available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 5.3–O (Criteria for Underlying 

Securities), Rule 5.4–O (Withdrawal of 

Approval of Underlying Securities), 

Rule 5.32–O (Terms of FLEX Options), 

and Rule 6.8–O (Position Limits),) to 

allow the Exchange to list and trade 

options on the following exchangetraded products: the iShares Bitcoin 

Trust (‘‘iShares Bitcoin’’ or ‘‘IBIT’’), the 

Fidelity Wise Origin Bitcoin Fund 

(‘‘Fidelity Wise’’ or ‘‘FBTC’’), and the 

ARK21Shares Bitcoin ETF (‘‘ARK21’’ or 

‘‘ARKB’’) (collectively, the ‘‘Bitcoin 

Funds’’ or ‘‘Funds’’). 

The Exchange notes that this is a 

competitive filing as the Commission 

recently approved rule proposals by 

Nasdaq ISE, LLC (‘‘ISE’’) and Cboe 

Exchange, Inc. (‘‘Cboe’’) to allow the 

listing and trading of options on IBIT4

and on FBTC and ARKB, respectively.5

The Exchange notes that bitcoin-backed 

ETPs are already approved for options 

trading on its affiliated exchange, NYSE 

American LLC.6 As discussed below, 

the Exchange believes options on the 

Bitcoin Funds would permit hedging, 

and allow for more liquidity, better 

price efficiency, and less volatility with 

respect to the underlying Funds. 

Further, permitting the listing of such 


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7To be eligible for options trading, ETFs and 

ETPs must satisfy the initial listing criteria set forth 

in Rule 5.3–O(g)(1) through (2). 8Rule 5.3–O(g) permits options trading on ETFs 

that are traded on a national securities exchange 

and are defined as an ‘‘NMS stock’’ in Rule 

600(b)(55) of Regulation NMS, that represent 

interests in registered investment companies (or 

series thereof) organized as open-end management 

investment companies, unit investment trusts or 

similar entities that hold portfolios of securities 

and/or financial instruments including, but not 

limited to, stock index futures contracts, options on 

futures, options on securities and indexes, equity 

caps, collars and floors, swap agreements, forward 

contracts, repurchase agreements and reverse 

purchase 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 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); interests in a trust or similar entity 

that holds a specified non-U.S. currency 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 and pays 

the beneficial owner interest and other distributions 

on deposited non-U.S. currency, if any, declared 

and paid by the trust (‘‘Currency Trust Shares’’); 

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 Units’’); or represents an interest 

in a registered investment company (‘‘Investment 

Company’’) organized as an open-end management 

investment company or similar entity, that invests 

in a portfolio of securities selected by the 

Investment Company’s investment adviser 

consistent with the Investment Company’s 

investment objectives and policies, which is issued 

in a specified aggregate minimum number in return 

for a deposit of a specified portfolio of securities 

and/or a cash amount with a value equal to the next 

determined net asset value (‘‘NAV’’), and when 

aggregated in the same specified minimum number, 

may be redeemed at a holder’s request, which 

holder will be paid a specified portfolio of 

securities and/or cash with a value equal to the next 

determined NAV (‘‘Managed Fund Share’’); 

provided that all of the conditions listed in Rules 

5.3–O and 5.4–O are met. See Rule 5.3–O(g)(i)–(iii) 

and (vii). 

9Rule 5.3–O(g) permits the listing and trading of 

options on shares of the following trusts: SPDR 

Gold Trust, the iShares COMEX Gold Trust, the 

iShares Silver Trust, the ETFS Silver Trust, the 

ETFS Gold Trust, ETFS Palladium Trust, or ETFS 

Platinum Trust. See Rule 5.3–O(g)(iv)–(vi) and 

(viii)–(ix). 

10See proposed Rule 5.3–O, Commentary .01 

(The Exchange may list and trade options on shares 

of IBIT, FBTC, and ARKB, pursuant to Rules 5.3– 

O and 5.4–O). 

11Each trust may include minimal cash. 

12Rule 5.3–O(a) provides for guidelines to be 

used by the Exchange when evaluating potential 

underlying securities for Exchange option 

transactions. 

13Rule 5.3–O(g)(1)(B) requires that ETFs must be 

available for creation or redemption each business 

day from or through the issuer in cash or in kind 

at a price related to net asset value, and the issuer 

must be obligated to issue ETFs in a specified 

aggregate number even if some or all of the 

investment assets required to be deposited have not 

been received by the issuer, subject to the condition 

that the person obligated to deposit the investments 

has undertaken to deliver the investment assets as 

soon as possible and such undertaking is secured 

by the delivery and maintenance of collateral 

consisting of cash or cash equivalents satisfactory 

to the issuer, as provided in the respective 

prospectus. 

14The criteria and guidelines for a security to be 

considered widely held and actively traded are set 

forth in Rule 5.3–O(a), subject to exceptions. 

15An ‘‘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’’). 

options would enhance the 

transparency and efficiency of markets 

in these and correlated products. 

Rule 5.3–O provides that, subject to 

certain other criteria set forth in the 

Rule,7 securities deemed appropriate for 

options trading include ExchangeTraded Fund Shares (or ETFs) that 

represent certain types of interests 8 and 

exchange-traded products (‘‘ETPs’’) 

structured as trusts that hold precious 

metals (which are deemed 

commodities).9 Like ETPs backed by 

precious metals (i.e., commodities), the 

Exchange proposes to allow options 

trading on the Bitcoin Funds that hold 

Bitcoin—which is also deemed a 

commodity.10

The Bitcoin Funds are structured as 

trusts that hold bitcoin. Like ETFs and 

ETPs currently deemed appropriate for 

options trading, the investment 

objective of each Bitcoin Fund trust 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. Each 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.11 The 

Bitcoin Funds provide investors with 

cost-efficient alternatives that allow a 

level of participation in the Bitcoin 

market through the securities market. 

The Exchange believes each Bitcoin 

Fund satisfies the Exchange’s initial 

listing standards set forth in Rule 5.3– 

O(a).12 The Exchange notes that the 

Bitcoin Funds also satisfy the listing 

standard applied to ETFs traded on the 

Exchange that they be available for 

creation and redemption each business 

day as set forth in Rule 5.3–O(g)(1)(B).13

First, each of the Bitcoin Funds satisfy 

the criteria and guidelines set forth in 

Rule 5.3–O. Pursuant to Rule 5.3–O(b), 

a security on which options may be 

listed and traded on the Exchange must 

be duly registered (with the 

Commission) and be an NMS stock (as 

defined in Rule 600 of Regulation NMS 

under the Act) and be characterized by 

a substantial number of outstanding 

shares that are widely held and actively 

traded.14 Each of the Bitcoin Funds is an 

NMS Stock as defined in Rule 600 of 

Regulation NMS under the Act.15 The 

Exchange believes each Bitcoin Fund is 

characterized by a substantial number of 

outstanding shares that are widely held 

and actively traded. 

The Bitcoin Funds had the following 

number of shares outstanding: 

Bitcoin Fund Shares 

outstanding 

IBIT (as of 8/12/24) .............. 611,040,000 

FBTC (as of 8/7/24) .............. 201,100,100 

ARKB (as of 8/7/24) ............. 45,495,000 

As shown above, each of the Bitcoin 

Funds 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 the Exchange’s rules. 

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. 

Bitcoin 

Fund Number of beneficial holders 

IBIT .......... 193,956 (as of 5/22/23). 

FBTC ....... 279,656 (as of 6/27/24). 

ARKB ....... 69,425 (as of 6/26/24). 

Each Bitcoin Fund has 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 

pursuant to the Exchange’s rules. 

Therefore, the Exchange believes the 

shares of each Bitcoin Fund are widely 

held. 

In addition, the Exchange believes the 

shares of each Bitcoin Fund are actively 

traded. The total trading volume (by 

shares and notional) for these funds 

since they began trading and the average 

daily volume (‘‘ADV’’) over the 30-day 


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16The Exchange proposes to adopt Commentary 

.02 to Rule 5.4–O to specify that for purposes of the 

continued listing standards set forth in Rule 5.3– 

O(k), the Bitcoin Funds will be deemed ‘‘ExchangeTraded Fund Shares.’’ See proposed Commentary 

.02 to Rule 5.4–O. 

17See Rule 5.4–O(k). 

18See Rule 6.5–O (Rights and Obligations of 

Holders and Writers), which provides that the rights 

and obligations of holders and writers of option 

contracts of any class of options dealt in on the 

Exchange shall be as set forth in the Rules of the 

Clearing Corporation. See also OCC Rules, Chapter 

VIII, which governs exercise and assignment, and 

Chapter IX, which governs the discharge of delivery 

and payment obligations arising out of the exercise 

of physically settled stock option contracts. OCC 

Rules can be located at: https://www.theocc.com/ 

getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/ 

occrules.pdf. 

19See Rule 6.4–O(d). The monthly expirations are 

subject to certain listing criteria for underlying 

securities described within Rule 5.3–O. 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 903(d), 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. 

20See Rule 6.4–O, Commentary .07. 

21See Rule 6.4–O, Commentary .09. 

22See Rule 6.4–O, Commentary .08. 

23See Rule 6.4–O(d). 

24The 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 6.4–O, 

Commentary .07 through .09, specifically set forth 

intervals between strike prices on Quarterly 

Options Series, Short Term Option Series, and 

Monthly Options Series, respectively. 

25See Rule 6.4–O, Commentary .04. 

26See Rule 6.4–O, Commentary .13. 

27See Rule 6.4–O, Commentary .03. 

28See Rule 6.4–O, Commentary .10. 

29 If options on a Bitcoin Fund are eligible to 

participate in the Penny Interval Program, the 

minimum increment of $0.01 below $3.00 and 

$0.50 above $3.00 would apply. See Rule 6.4– 

O(a)(3). See also Rule 6.72A–O (which describes the 

requirements for the Penny Interval Program). 

30See Rule 5.32–O(f)(1). See generally Section 4 

(Flexible Exchange (‘‘FLEX’’) Options). 

31The Exchange will continue ongoing 

discussions with the Commission regarding 

appropriate position limits for the Bitcoin Funds 

and plans to submit a separate rule filing that 

would permit the Exchange to authorize for trading 

FLEX options on the Funds (which filing may 

propose changes to existing FLEX option position 

limits for such options if appropriate). 

32See proposed Rule 5.32(f)(1) (providing, in 

relevant part, that the Exchange may approve and 

open for trading any FLEX Equity Options series on 

any equity security that is eligible for Non-FLEX 

period of July 9 through August 7, 2024, 

was as follows: 

Bitcoin Fund 

Trading 

volume 

(shares) 

Trading 

volume 

(notional $) 

ADV 

(shares) 

IBIT (as of 5/13/24) ...................................................................................................................... 34,825,921 1,246,060,738 26,000,000 

FBTC (as of 8/7/24) ..................................................................................................................... 1,112,861,581 250,354,755 6,014,335 

ARKB (as of 8/7/24) .................................................................................................................... 279,360,739 90,484,307 1,893,335 

As demonstrated above, even though 

these Bitcoin Funds have been trading 

for less than one year, the trading 

volume for each is 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. The Exchange believes this 

data demonstrates each Bitcoin Fund is 

characterized by a substantial number of 

outstanding shares that are actively 

traded. 

In addition to satisfying the 

Exchange’s initial listing standards, 

options on Bitcoin Funds will be subject 

to the Exchange’s continued listing 

standards as set forth in Rule 5.4–O.16

Pursuant to Rule 5.4–O(b)(5), the 

Exchange will not open for trading any 

additional series of option contracts 

covering a fund traded on the Exchange 

if such fund ceases to be an ‘‘NMS 

stock’’ or the fund is halted from trading 

on its primary market.17 Additionally, 

options on funds traded on the 

Exchange may be subject to the 

suspension of opening transactions as 

follows: (1) the fund no longer meets the 

terms of Rule 5.4–O(b)(1)–(4); (2) 

following the initial twelve-month 

period beginning upon the 

commencement of trading of the fund, 

there are fewer than 50 record and/or 

beneficial holders of the fund for 30 or 

more consecutive trading days; (3) the 

value of the underlying commodity 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 on the 

Exchange inadvisable. 

Options on each Bitcoin Fund will be 

physically settled contracts with 

American-style exercise.18 Consistent 

with Rule 6.4–O, which governs the 

opening of options series on a specific 

underlying security (including ETFs and 

ETPs), the Exchange will open at least 

one expiration month for options on 

each Bitcoin Fund 19 at the 

commencement of trading on the 

Exchange and may also list series of 

options on Bitcoin Funds for trading on 

a weekly,20 monthly,21 or quarterly 22

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

that expire from twelve to thirty-nine 

months from the time they are listed.23

Pursuant to Rule 6.4–O, Commentary 

.05(a), which governs strike prices of 

series of options on ETFs, the interval 

between strike prices of 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 $200.24 Additionally, the Exchange 

may list series of options pursuant to 

the $1 Strike Price Interval Program,25

the $0.50 Strike Program,26 the $2.50 

Strike Price Program,27 and the $5 Strike 

Program.28 Pursuant to Rule 6.72–O, 

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 $0.10.29

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 6.4–O and 

6.72–O, as applicable. Further, the 

Exchange notes that Rule 4.16–O, which 

governs margin requirements applicable 

to the trading of all options on the 

Exchange, including options on ETFs 

and ETPs, will also apply to the trading 

of Bitcoin Fund options. 

Rule 5.32(f)(1) permits the Exchange 

to authorize for trading a FLEX option 

class on any equity security if it may 

authorize for trading a non-FLEX option 

class on that equity security pursuant to 

Rule 5.3–O.30 At this time, the Exchange 

is not proposing to permit Bitcoin Fund 

options to trade as FLEX options.31 The 

Exchange therefore proposes to modify 

Rule 5.32(f)(1) to specify this exception, 

which will add clarity and transparency 

to Exchange Rules.32


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Options trading under Rule 5.3–O ‘‘except those set 

forth in Commentary .01 to Rule 5.3–O,’’ i.e., the 

Bitcoin Funds). 

33See Commentary .06(a)–(e) to Rule 6.8–O. For 

an option to be eligible for the 50,000-contract limit, 

the security underlying the option must have most 

recent six-month trading volume of at least 

20,000,000 shares, or most recent six-month trading 

volume of at least 15,000,000 shares and at least 

40,000,000 shares currently outstanding. For an 

option to be eligible for the 75,000-contract limit, 

the underlying security must have most recent sixmonth trading volume of at least 40,000,000 shares, 

or most recent six-month trading volume of at least 

30,000,000 shares and at least 120,000,000 shares 

currently outstanding. For an option to be eligible 

for the 200,000-contract limit, the underlying 

security must have most recent six-month trading 

volume of at least 80,000,000 shares, or most recent 

six-month trading volume of at least 60,000,000 

shares and at least 240,000,000 shares currently 

outstanding. For an option to be eligible for the 

250,000-contract limit, the security underlying the 

option must have most recent six-month trading 

volume of at least 100,000,000 shares, or most 

recent six-month trading volume of at least 

75,000,000 shares and at least 300,000,000 shares 

currently outstanding. The 25,000-contract limit 

applies to options on underlying securities that do 

not qualify for a higher contract limit. See 

Commentary .07(c) to Rule 6.8–O. In addition, 

Commentary .07(f) to Rule 6.8–O establishes higher 

position limits for options on certain ETFs. 

34See proposed 6.8–O, Commentary .07(f) See 

supra notes 4 and 5 (regarding the IBIT Approval 

Order and the FBTC and ARKB Approval Order). 

See also NYSE American Rule 904, Commentary 

.07(f) (setting 25,000 position limits for the 

Grayscale Bitcoin Trust (BTC) (symbol: GBTC), the 

Grayscale Bitcoin Mini Trust (BTC) (symbol: BTC), 

and the Bitwise Bitcoin ETF (symbol: BITB)). 

35The Exchange may file a subsequent rule 

change to amend the position and exercise limit for 

options on any or all the Bitcoin Funds based on 

additional data regarding trading activity, to 

continue to balance any concerns regarding 

manipulation. A higher position limit would allow 

institutional investors to utilize options on the 

Bitcoin Funds for prudent risk management 

purposes. 

36See Securities Exchange Act Release No. 39489 

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

(SR–CBOE–1997–11). 

Position and Exercise Limits 

Position and exercise limits for 

options, including options on Bitcoin 

Funds, are determined pursuant to 

Rules 6.8–O and 6.9–O, respectively. 

Position and exercise limits for options 

vary according to the number of 

outstanding shares and the trading 

volumes of the underlying security over 

the past six months, where the largest in 

capitalization and the most frequently 

traded funds have an option position 

and exercise limit of 250,000 contracts 

(with adjustments for splits, recapitalizations, etc.) on the same side of 

the market; and smaller capitalization 

funds have position and exercise limits 

of 200,000, 75,000, 50,000 or 25,000 

contracts (with adjustments for splits, 

re-capitalizations, etc.) on the same side 

of the market.33

Position limits are designed to limit 

the number of options contracts traded 

on the Exchange in an underlying 

security that an investor, acting alone or 

in concert with others directly or 

indirectly, may control. The purpose of 

position limits is 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. 

Accordingly, position limits must 

balance concerns regarding mitigating 

potential manipulation and the cost of 

inhibiting potential hedging activity that 

investors may use for legitimate 

economic purposes. To achieve this 

balance, the Exchange proposes to set 

the position and exercise limits for the 

options on the Bitcoin Funds at 25,000 

contracts, which limits are already in 

place for the Bitcoin Funds as traded on 

other options exchanges and the bitcoinbacked ETPs available for options 

trading on NYSE American LLC.34

Capping the position limit at 25,000 

contracts, the lowest limit available in 

options, would address concerns related 

to manipulation and protection of 

investors as this number is conservative 

for the Bitcoin Funds and therefore 

appropriate given their liquidity. The 

Exchange believes that the proposed 

25,000-contract position limit is 

conservative for options on the Bitcoin 

Funds.35

Based on the foregoing, the Exchange 

believes the proposal to list options on 

the Bitcoin Funds with positions and 

exercise limits of 25,000 on the same 

side, the lowest position limit available 

in the options industry, is conservative 

and appropriate given the market 

capitalization, average daily volume, 

and high number of outstanding shares 

for each of the Bitcoin Funds. 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 Bitcoin Funds as well 

as the Bitcoin market.36

As described herein, options on the 

Bitcoin Funds will trade in the same 

manner as any other ETF or ETP options 

on the Exchange, except that the Bitcoin 

Funds will not be eligible for FLEX 

options trading. The Exchange Rules 

that currently apply to the listing and 

trading of options on the Exchange, 

including, for example, Rules that 

govern listing criteria, expiration and 

exercise prices, minimum increments, 

margin requirements, customer accounts 

and trading halt procedures will apply 

to the listing and trading of Bitcoin 

Funds on the Exchange in the same 

manner as they apply to all other ETFs 

and ETPs that are listed and traded on 

the Exchange, including the precious 

metal-backed commodity ETPs already 

deemed appropriate for options trading 

on the Exchange. Further, as described 

above, Exchange Rules regarding 

position and exercise limits will 

likewise apply to options on the Bitcoin 

Funds except that, as proposed, the 

position and exercise limits will be set 

at 25,000 on the same side. 

* * * * * 

The Exchange notes that options on 

Bitcoin Funds would not be available 

for trading until The Options Clearing 

Corporation (‘‘OCC’’) represents to the 

Exchange that it is fully able to clear 

and settle such options. The Exchange 

has also analyzed its capacity and 

represents that it and The Options Price 

Reporting Authority (‘‘OPRA’’) have the 

necessary systems capacity to handle 

the additional traffic associated with the 

listing of options on Bitcoin Funds. The 

Exchange believes any additional traffic 

that would be generated from the 

trading of options on Bitcoin Funds 

would be manageable. The Exchange 

represents that Exchange members will 

not have a capacity issue as a result of 

this proposed rule change. 

The Exchange represents that the 

same surveillance procedures applicable 

to all other options currently listed and 

traded on the Exchange will apply to 

options on Bitcoin Funds, and that it 

has the necessary systems capacity to 

support the new option series. The 

Exchange’s existing surveillance and 

reporting safeguards are designed to 

deter and detect possible manipulative 

behavior which might arise from listing 

and trading options on ETFs and ETPs, 

such as (existing) precious metal-backed 

ETP options, as well as the proposed 

options on Bitcoin Funds. The Exchange 

believes that its surveillance procedures 

are adequate to properly monitor the 

trading of options on Bitcoin Funds in 

all trading sessions and to deter and 

detect violations of Exchange rules. 

Specifically, the Exchange’s market 

surveillance staff also conducts 

surveillances with respect to the Bitcoin 

Funds and, as appropriate, would 

review activity in the underlying Funds 

when conducting surveillances for 

market abuse or manipulation in the 

options on each Trust. Additionally, the 

Exchange is a member of the 

Intermarket Surveillance Group (‘‘ISG’’) 

under the ISG Agreement. ISG members 

work together to coordinate surveillance 

and investigative information sharing in 

the stock, options, and futures markets. 

The Exchange will be able to obtain 


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37Section 19(g)(1) of the Act, among other things, 

requires every SRO registered as a national 

securities exchange or national securities 

association to comply with the Act, the rules and 

regulations thereunder, and the SRO’s own rules, 

and, absent reasonable justification or excuse, 

enforce compliance by its members and persons 

associated with its members. See 15 U.S.C. 

78q(d)(1) and 17 CFR 240.17d–2. Section 17(d)(1) 

of the Act allows the Commission to relieve an SRO 

of certain responsibilities with respect to members 

of the SRO who are also members of another SRO. 

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. 

38See Securities Exchange Act Release No. 99306 

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

(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; 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 

Order’’). 

39See Bitcoin ETP Order, 89 FR at 3009. 

40See Bitcoin ETP Order, 89 FR at 3010–11. 41See Amendment No. 1 to Proposed Rule 

Change to List and Trade Shares of the iShares 

Bitcoin Trust under Nasdaq Rule 5711(d), 

Commodity-Based Trust Shares (SR–NASDAQ– 

2023–016), filed Jan. 5, 2024, available at https:// 

www.sec.gov/comments/sr-nasdaq-2023-016/ 

srnasdaq2023016-357659-883042.pdf; Amendment 

No. 5 to 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 

(SR–CboeBZX–2023–028), filed Jan. 5, 2024, 

available at https://www.sec.gov/comments/srcboebzx-2023-028/srcboebzx2023028-358679- 

884202.pdf; and Amendment No. 3 to 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 (SR– 

CboeBZX–2023–044), filed Jan. 5, 2024, available at 

https://www.sec.gov/comments/sr-cboebzx-2023- 

044/srcboebzx2023044-358759-884163.pdf. 

42The Exchange understands from customers that 

investors have historically transacted in options on 

ETFs in the OTC options market if such options 

were not available for trading in a listed 

environment. 

43 15 U.S.C. 78f(b). 

44 15 U.S.C. 78f(b)(5). 

information regarding trading in the 

shares of the underlying Trusts from 

Nasdaq, LLC, Cboe Exchange, Inc., and 

other markets on which the Trusts trade 

through the ISG. In addition, the 

Exchange has a Regulatory Services 

Agreement (‘‘RSA’’) with the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’). Pursuant to a multi-party 

17d–2 joint plan, all options exchanges 

allocate regulatory responsibilities to 

FINRA to conduct certain optionsrelated market surveillances.37 Further, 

the Exchange will implement any new 

surveillance procedures it deems 

necessary to effectively monitor the 

trading of options on the Bitcoin Funds. 

The underlying shares of spot bitcoin 

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 exchangetraded products (‘‘Bitcoin ETP 

Order’’ 38): 

Each Exchange has a comprehensive 

surveillance-sharing agreement with the 

CME via their common membership in 

the Intermarket Surveillance Group. 

This facilitates the sharing of 

information that is available to the CME 

through its surveillance of its markets, 

including its surveillance of the CME 

bitcoin futures market.39

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, and given that the ‘‘CME’s 

surveillance can assist in detecting [the 

impact of fraud or manipulation] on 

CME bitcoin future prices,’’ 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].’’ 40

In light of surveillance measures 

related to both options and futures as 

well as the underlying Bitcoin Funds,41

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. 

Finally, quotation and last sale 

information for ETFs is available via the 

Consolidated Tape Association (‘‘CTA’’) 

high speed line. Quotation and last sale 

information for such securities is also 

available from the exchange on which 

such securities are listed. Quotation and 

last sale information for options on 

Bitcoin Funds will be available via 

OPRA and major market data vendors. 

The Exchange believes that offering 

options on the 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,42 but may prefer to 

trade such options in a listed 

environment to receive the benefits of 

trading listed options, including (1) 

enhanced efficiency in initiating and 

closing out position; (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 options on the 

Bitcoin Funds 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 Exchange 

notes that the ETPs that hold 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 options 

on any ETFs or ETPs that hold 

commodities (i.e., precious metals) that 

it currently lists and trades on the 

Exchange. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 

Section 6(b) of the Act 43 in general and 

furthers the objectives of Section 6(b)(5) 

of the Act 44 in particular, in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

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 lower-cost risk management 

tool, which will allow them to manage 

their positions and associated risk in 

their portfolios more easily in 

connection with exposure to the price of 

Bitcoin and with Bitcoin-related 

products and positions. Additionally, 

the Exchange’s offering of Bitcoin Fund 


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45See Rule 5.3–O(g). 

46The Exchange will submit a separate rule filing 

that would permit the Exchange to authorize for 

trading FLEX options on the Bitcoin Funds (which 

filing may propose changes to existing FLEX option 

position limits for such options if appropriate). 

47See Bitcoin ETP Order, 89 FR at 3009. 

48See Bitcoin ETP Order, 89 FR at 3010–11. 

49See Amendment No. 1 to Proposed Rule 

Change to List and Trade Shares of the iShares 

Bitcoin Trust under Nasdaq Rule 5711(d), 

Commodity-Based Trust Shares (SR–NASDAQ– 

2023–016), filed Jan. 5, 2024, available at https:// 

www.sec.gov/comments/sr-nasdaq-2023-016/ 

srnasdaq2023016-357659-883042.pdf; Amendment 

No. 5 to 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 

(SR–CboeBZX–2023–028), filed Jan. 5, 2024, 

available at https://www.sec.gov/comments/srcboebzx-2023-028/srcboebzx2023028-358679- 

884202.pdf; and Amendment No. 3 to 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 (SR– 

CboeBZX–2023–044), filed Jan. 5, 2024, available at 

https://www.sec.gov/comments/sr-cboebzx-2023- 

044/srcboebzx2023044-358759-884163.pdf. 

options will provide investors with the 

ability to transact in such options in a 

listed market environment as opposed 

to in the unregulated OTC 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 

ETPs,45 which, as described above, are 

trusts structured in substantially the 

same manner as the 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 ETP 

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 ETFs 

and ETPs, including ETPs 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 ETF or ETP options—the same 

Exchange Rules that currently govern 

the listing and trading of options, 

including permissible expirations, strike 

prices, minimum increments, and 

margin requirements, will govern the 

listing and trading of options on the 

Bitcoin Funds in the same manner. 

The Exchange believes the proposed 

rule change to exclude the Bitcoin 

Funds from being eligible for trading as 

FLEX options is consistent with the Act, 

because it will permit the Exchange to 

continue to participate in ongoing 

discussions with the Commission 

regarding appropriate position limits for 

options on the Bitcoin Funds.46

The proposed position and exercise 

limit for options on the Bitcoin Funds 

is 25,000 contracts. These position and 

exercise limits are the lowest position 

and exercise limits available in the 

options industry, are extremely 

conservative and more than appropriate 

given the Bitcoin Funds’ market 

capitalization, average daily volume, 

number of beneficial holders, and high 

number of outstanding shares. The 

proposed position and exercise limits 

are consistent with the Act as they 

addresses concerns related to 

manipulation and protection of 

investors because the position and 

exercise limits are extremely 

conservative and more than appropriate 

given the Bitcoin Funds are actively 

traded. 

The Exchange also believes the 

proposed rule change to Rule 5.32–O, to 

make clear that options on the Bitcoin 

Funds are not eligible for FLEX trading, 

will remove impediments to and perfect 

the mechanism of a free and open 

market and a national market system 

because it adds clarity and transparency 

to Exchange Rules making them easier 

to navigate and understand to the 

benefit of investors and the public 

interest. 

The Exchange represents that it has 

the necessary systems capacity to 

support the new Bitcoin Fund options. 

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 options, 

including Bitcoin Fund options. The 

Exchange’s existing surveillance and 

reporting safeguards are designed to 

deter and detect possible manipulative 

behavior which might arise from listing 

and trading options on ETFs and ETPs, 

such as (existing) precious metalcommodity backed ETP options as well 

as the proposed options on Bitcoin 

Funds. The Exchange believes that its 

surveillance procedures are adequate to 

properly monitor the trading of options 

on Bitcoin Funds in all trading sessions 

and to deter and detect violations of 

Exchange rules. 

Specifically, the Exchange’s market 

surveillance staff also conducts 

surveillances with respect to the Bitcoin 

Funds and, as appropriate, would 

review activity in the underlying Funds 

when conducting surveillances for 

market abuse or manipulation in the 

options on each Trust. Additionally, the 

Exchange is a member of the 

Intermarket Surveillance Group (‘‘ISG’’) 

under the ISG Agreement. ISG members 

work together to coordinate surveillance 

and investigative information sharing in 

the stock, options, and futures markets. 

The Exchange will be able to obtain 

information regarding trading in the 

shares of the underlying Trusts from 

Nasdaq, LLC, Cboe Exchange, Inc., and 

other markets on which the Trusts trade 

through the ISG. In addition, the 

Exchange is a party to an RSA with 

FINRA and pursuant to a multi-party 

17d–2 joint plan, all options exchanges 

allocate regulatory responsibilities to 

FINRA to conduct certain optionsrelated market surveillances. Further, 

the Exchange will implement any new 

surveillance procedures it deems 

necessary to effectively monitor the 

trading of options on the Bitcoin Funds. 

The underlying shares of spot bitcoin 

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.’’ 47 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, and given that the ‘‘CME’s 

surveillance can assist in detecting [the 

impact of fraud or manipulation] on 

CME bitcoin future prices,’’ 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].’’ 48 In light of surveillance 

measures related to both options and 

futures as well as the underlying Bitcoin 

Funds,49 the Exchange believes that 

existing surveillance procedures are 

designed to deter and detect possible 


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94800 Federal Register / Vol. 89, No. 230 / Friday, November 29, 2024 / Notices 

50Rule 5.3–O(g) permits the listing and trading of 

options on shares of the following trusts: SPDR 

Gold Trust, the iShares COMEX Gold Trust, the 

iShares Silver Trust, the ETFS Silver Trust, the 

ETFS Gold Trust, ETFS Palladium Trust, or ETFS 

Platinum Trust. See Rule 5.3–O(g)(iv)–(vi) and 

(viii)–(ix). 

51See also supra notes 4 and 5 (regarding the IBIT 

Approval Order and the FBTC and ARKB Approval 

Order). 

52 15 U.S.C. 78s(b)(3)(A)(iii). 

53 17 CFR 240.19b–4(f)(6). 

54 15 U.S.C. 78s(b)(3)(A)(iii). 

55 17 CFR 240.19b–4(f)(6). In addition, Rule 19b4(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. 56 17 CFR 240.19b–4(f)(6). 57 17 CFR 240.19b–4(f)(6)(iii). 58See Securities Exchange Act Release No. 

101128 (September 20, 2024), 89 FR 78942 

(September 26, 2024) (SR–ISE–2024–03) (SelfRegulatory Organizations; Nasdaq ISE, LLC; Notice 

of Filing of Amendment Nos. 4 and 5 and Order 

Granting Accelerated Approval of a Proposed Rule 

Change, as Modified by Amendment Nos. 1, 4, and 

5, to Permit the Listing and Trading of Options on 

the iShares Bitcoin Trust). See also Securities 

Exchange Act Release No. 101387 (October 18, 

2024), 89 FR 84948 (October 24, 2024) (SR–Cboe– 

2024–035) (Notice of Filing of Amendment Nos. 2 

and 3 and Order Granting Accelerated Approval of 

a Proposed Rule Change, as Modified by 

Amendment Nos. 2 and 3, To Permit the Listing and 

Trading of Options on Bitcoin Exchange-Traded 

Funds). 

59For 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). 

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. 

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. 

Intramarket Competition: 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 options on the Bitcoin Funds would 

need to satisfy the initial listing 

standards set forth in the Exchange 

Rules in the same manner as any other 

option on an ETF before the Exchange 

could list these options. Additionally, 

Bitcoin Fund options will be equally 

available to all market participants who 

wish to trade such options. The 

Exchange Rules currently applicable to 

the listing and trading of options on 

ETFs on the Exchange will apply in the 

same manner to the listing and trading 

of all options on the Bitcoin Funds. 

Also, and as stated above, the Exchange 

already lists options on other 

commodity-based ETPs.50

Intermarket Competition: 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. As noted 

herein, this is a competitive filing as the 

Commission recently approved the 

listing and trading of options on the 

Bitcoin Funds on other options 

exchanges.51

Additionally, other options exchanges 

are free to amend their listing rules, as 

applicable, to permit them to list and 

trade options on the Bitcoin Funds. 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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 52 and Rule 

19b–4(f)(6) thereunder.53 Because the 

foregoing proposed rule change does 

not: (i) significantly affect the protection 

of investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

for 30 days from the date on which it 

was filed, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 54 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.55

A proposed rule change filed under 

Rule 19b–4(f)(6) 56 under the Act does 

not normally become operative prior to 

30 days after the date of the filing. 

However, pursuant to Rule 19b– 

4(f)(6)(iii),57 the Commission may 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay so that the proposal may become 

operative immediately upon filing. The 

Commission previously approved the 

listing of options on iShares Bitcoin 

Trust, the Fidelity Wise Origin Bitcoin 

Fund, and the ARK21Shares Bitcoin 

ETF.58 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 Bitcoin Fund options. 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 as operative upon 

filing.59

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 


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60 17 CFR 200.30–3(a)(12). 

1See Standards for Covered Clearing Agencies for 

U.S. Treasury Securities and Application of the 

Broker-Dealer Customer Protection Rule With 

Respect to U.S. Treasury Securities, Exchange Act 

Release No. 99149 (Dec. 13, 2023), 89 FR 2714 (Jan. 

16, 2024) (‘‘Treasury Clearing Release’’). 

2See Treasury Clearing Release, 89 FR at 2760– 

68. See also 17 CFR 240.15c3–3a (the formula for 

computing reserve requirements under the 

customer protection rule) (‘‘Rule 15c3–3a’’); 17 CFR 

240.15c3–3 (the customer protection rule) (‘‘Rule 

15c3–3’’). Rule 15c3–3 requires a broker-dealer to 

compute the net amount of cash owed to customers 

and PAB account holders under a formula in Rule 

15c3–3a (‘‘customer and PAB reserve 

computations’’). Generally, broker-dealers must 

perform their customer and PAB reserve 

computations and make any required deposits in a 

special reserve account at a bank weekly. See 

paragraph (e)(3) to Rule 15c3–3. 

3See Treasury Clearing Release, 89 FR at 2760– 

68. 

4See id. The amendments also modified Note B 

to Item 2 of the customer and PAB reserve 

computations to provide that this item in the 

reserve computations must include as a credit the 

market value of customers’ and PAB account 

holders’ securities on deposit at a U.S. Treasury 

CCA. See id. at 2761. 

5See Treasury Clearing Release, 89 FR at 2760– 

68. 

6See Rule 15c3–3a, Note H(a) and (b)(1). 

7See Rule 15c3–3a, Note H(b)(2). 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSEARCA–2024–100 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–NYSEARCA–2024–100. 

This file number should be included on 

the subject line if email is used. To help 

the Commission process and review 

your comments more efficiently, please 

use only one method. The Commission 

will post all comments on the 

Commission’s internet website (https:// 

www.sec.gov/rules/sro.shtml). Copies of 

the submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NYSEARCA–2024–100 and should 

be submitted on or before December 20, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.60

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–27995 Filed 11–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101729] 

Notice Pursuant to Rule 15c3–3a, Note 

H(b)(3) Regarding Application of the 

Customer Protection Rule Reserve 

Computations With Respect to U.S. 

Treasury Securities 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Notice. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’) is 

publishing notice that broker-dealers 

may include a debit in the customer 

protection rule reserve computations 

when depositing cash, U.S. Treasury 

securities, and/or qualified customer 

securities to meet a margin requirement 

of the Fixed Income Clearing 

Corporation (‘‘FICC’’) resulting from 

positions in U.S. Treasury securities of 

the customers of the broker-dealer. 

FOR FURTHER INFORMATION CONTACT: 

Randall W. Roy, Deputy Associate 

Director; Raymond Lombardo, Assistant 

Director; or Sheila Dombal Swartz, 

Senior Special Counsel, at (202) 551– 

5500, Office of Broker-Dealer Finances, 

Division of Trading and Markets; 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–7010. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On December 13, 2023, the 

Commission adopted rules under the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) to amend the 

standards applicable to covered clearing 

agencies for U.S. Treasury securities 

(‘‘U.S. Treasury securities CCAs’’) to 

enhance risk management practices for 

central counterparties in the U.S. 

Treasury market and facilitate 

additional clearing of U.S. Treasury 

securities transactions.1 The 

Commission also amended the formula 

for computing reserve account 

requirements under the broker-dealer 

customer protection rule.2 The 

amendments to the formula—which are 

set forth in Rule 15c3–3a—permit 

margin required and on deposit with a 

U.S. Treasury securities CCA to be 

included as a debit when computing 

reserve requirements with respect to 

customers and proprietary accounts of 

broker-dealers (‘‘PAB’’), subject to 

certain conditions.3 In particular, the 

amendments added Item 15 to the 

customer and PAB reserve computations 

on which to record the value of the 

debit and prescribed conditions—set 

forth in Note H to Item 15—for 

including the debit in the formulas.4

Each of the conditions in Note H needs 

to be met for a broker-dealer to include 

a debit equal to the amount of customer 

or PAB account holder margin required 

and on deposit at the U.S. Treasury 

securities CCA.5

Certain of the conditions in Note H 

require the broker-dealer to take a 

number of steps with respect to the 

customer and PAB account holder 

margin in its custody.6 Other conditions 

provide that the U.S. Treasury securities 

CCA that will receive the customer or 

PAB account holder margin from the 

broker-dealer must have adopted rules— 

approved by the Commission—that 

require it to take certain steps with 

respect to calculating margin 

requirements and handling customer 

and PAB account holder margin 

received from the broker-dealer.7 The 

requirements of Note H are designed to 

permit the inclusion of the debit in the 

customer and PAB reserve computations 


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