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[Federal Register Volume 89, Number 231 (Monday, December 2, 2024)]
[Notices]
[Pages 95253-95255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28104]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101734; File No. SR-Phlx-2024-64]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 9, 
Section 13, Position Limits, and Options 8, Section 34, FLEX Trading, 
Regarding Options on the Fidelity Wise Origin Bitcoin Fund, the 
ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), the 
Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin ETF

November 25, 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, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Options 9, Section 13, Position 
Limits, and Options 8, Section 34, FLEX Trading.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, 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 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: (1) amend Options 9, Section 13, Position 
Limits, to limit the position limits for options on the Fidelity Wise 
Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin 
Trust (BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise 
Bitcoin ETF (collectively ``Bitcoin Trusts''); and (2) except FLEX 
options on the Bitcoin Trusts from trading as a FLEX option contract.
Options 9, Section 13
    Recently, Cboe Exchange, Inc. (``Cboe'') received approvals to list 
options on the Fidelity Wise Origin Bitcoin Fund, and the ARK21Shares 
Bitcoin ETF.\3\ Also, recently, NYSE American LLC (``NYSE American'') 
received approvals to list options on the Fidelity Wise Origin Bitcoin 
Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), 
the Grayscale Bitcoin Mini Trust BTC, and

[[Page 95254]]

the Bitwise Bitcoin ETF.\4\ Nasdaq ISE, LLC (``ISE'') filed a rule 
change to also list and trade options on the Bitcoin Trusts.\5\ Phlx's 
Options 4 Rules were amended by the ISE rule change as those Rules are 
incorporated by reference to ISE's Options 4 Rules, so Phlx has the 
ability to list the options on the Bitcoin Trusts. The Cboe Approval 
Order and the NYSE American Approval Order stated that the position and 
exercise limits for each of the Bitcoin Trusts shall be 25,000 
contracts. At this time, the Exchange proposes to amend Phlx Option 9, 
Section 13 to similarly note that options on the Fidelity Wise Origin 
Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust 
(BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin 
ETF shall have position limits of 25,000 contracts to mirror the Cboe 
Approval Order and the NYSE American Approval Order, respectively. Phlx 
Options 9, Section 15(a) provides that the exercise limits shall be 
determined in the manner described in Options 9, Section 13, therefore 
the exercise limits would also be 25,000 contracts for each of the 
Bitcoin Trusts.
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    \3\ See 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) (``Cboe Approval Order'').
    \4\ See Securities Exchange Act Release No. 101386 (October 18, 
2024), 89 FR 84960 (October 24, 2024) (SR-NYSEAMER-2024-49) (Notice 
of Filing of Amendment No. 3 and Order Granting Accelerated Approval 
of a Proposed Rule Change, as Modified by Amendment No. 3, To Permit 
the Listing and Trading of Options on Bitcoin Exchange-Traded Funds) 
(``NYSE American Approval Order'').
    \5\ See SR-ISE-2024-54.
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Options 8, Section 34
    Today, all options series listed on Phlx may trade as a FLEX Order 
on Phlx's trading floor.\6\ At this time, the Exchange proposes to note 
within Options 8, Section 34(a) that it will not authorize for trading 
a FLEX option on each of the Bitcoin Trusts. The Exchange proposes this 
amendment in light of the position and exercise limits of 25,000 
contracts that were set for the Fidelity Wise Origin Bitcoin Fund, the 
ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), the 
Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin ETF in the 
Cboe Approval Order and the NYSE American Approval Order, respectively. 
If the Exchange were to permit trading in a FLEX option for any of the 
Bitcoin Trusts, it would establish different position and exercise 
limits than those set forth in the Cboe Approval Order and the NYSE 
American Approval Order, respectively.
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    \6\ Phlx Options 8, Section 34 rule text was previously amended 
by two rule changes which are effective, but not yet operative. 
These two prior rule changes will be implemented at the same time as 
the rule changes proposed herein. See Securities Exchange Act 
Release Nos. 97658 (June 7, 2023), 88 FR 38562 (June 13, 2023) (SR-
Phlx-2023-22); and 100321 (June 12, 2024), 89 FR 51580 (June 18, 
2024) (SR-Phlx-2024-24). Phlx further delayed the implementation so 
that it could implement SR-Phlx-2023-22 while also completing an OCC 
industry rule change prior.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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.
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    \7\ 15 U.S.C. 78f(b)
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange's proposal to amend Options 9, Section 13, Position 
Limits, to provide that the position and exercise limits for each of 
the Bitcoin Trusts shall be 25,000 contracts is consistent with the Act 
as it will conform Phlx's options position and exercise limits with 
ISE's options position and exercise limits for the Bitcoin Trusts in 
order that there would be the same position and exercise limits on Phlx 
and ISE.\9\ Phlx Options 9, Section 15(a) provides that the exercise 
limits shall be determined in the manner described in Options 9, 
Section 13, therefore the exercise limits would also be 25,000 
contracts and also consistent with ISE's options position and exercise 
limits for the Bitcoin Trusts.
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    \9\ The Exchange believes that other exchanges will adopt 
position and exercise limits of 25,000 contracts for each of the 
Bitcoin Trusts. All Nasdaq affiliated markets are filing to adopt a 
25,000 contract position and exercise limit for options on the 
Bitcoin Trusts.
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    The Exchange's proposal to amend Options 8, Section 34 to note that 
it will not authorize for trading a FLEX option on each of the Bitcoin 
Trusts is consistent with the spirit of the Cboe Approval Order and the 
NYSE American Approval Order, respectively, that limited the position 
and exercise limits for the Bitcoin Trusts to 25,000 contracts. The 
proposal will protect investors and the general public because without 
this prohibition, trading a FLEX option on the Bitcoin Trusts would 
otherwise establish different position and exercise limits than those 
set by Cboe Approval Order and the NYSE American Approval Order, 
respectively.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.
    Amending Options 9, Section 13 to provide that the position and 
exercise limits for options on each of the Bitcoin Trusts shall be 
25,000 contracts does not impose an undue burden on competition as the 
position and exercise limits will apply to all trading for options on 
the Bitcoin Trusts trading on the Exchange as well as those trading on 
other exchanges that file a similar proposal.\10\
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    \10\ All Nasdaq affiliated markets are filing to adopt a 25,000 
contract position and exercise limit for options on the Bitcoin 
Trusts.
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    The Exchange's proposal to note that it will not authorize for 
trading a FLEX option on any of the Bitcoin Trusts does not impose an 
undue burden on competition as no Phlx member will be able to transact 
a FLEX option on any of Bitcoin Trusts

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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 \13\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ 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),\16\ the 
Commission may designate a shorter time if such action

[[Page 95255]]

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 Fidelity Wise Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF, 
the Grayscale Bitcoin Trust (BTC), the Grayscale Bitcoin Mini Trust 
BTC, and the Bitwise Bitcoin ETF.\17\ As noted above, Phlx's Options 4 
Rules were amended by an ISE rule change \18\ as those Rules are 
incorporated by reference to ISE's Options 4 Rules, so Phlx has the 
ability to list the options on the Bitcoin Trusts. This proposal 
establishes position and exercise limits for options on the Bitcoin 
Trusts. The Commission believes that waiver of the operative delay 
could benefit investors by assuring that trading in Bitcoin Trust 
options are subject to the same position and exercise limits in place 
on other exchanges. 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.\19\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ See 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). See also Securities Exchange Act Release No. 
101386 (October 18, 2024), 89 FR 84960 (October 24, 2024) (SR-
NYSEAMER-2024-49) (Notice of Filing of Amendment No. 3 and Order 
Granting Accelerated Approval of a Proposed Rule Change, as Modified 
by Amendment No. 3, To Permit the Listing and Trading of Options on 
Bitcoin Exchange-Traded Funds).
    \18\ See SR-ISE-2024-54.
    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-Phlx-2024-64 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-Phlx-2024-64. 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-Phlx-2024-64 and should be 
submitted on or before December 23, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12), (59).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-28104 Filed 11-29-24; 8:45 am]
BILLING CODE 8011-01-P
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