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[Federal Register Volume 89, Number 232 (Tuesday, December 3, 2024)]
[Notices]
[Pages 95851-95852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28259]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101765; File No. SR-ISE-2024-55]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend FLEX 
Options Listing

November 26, 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 25, 2024, Nasdaq ISE LLC (``ISE'' 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 [sic] to amend Options 3A, Section 3, FLEX Options 
Listings.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/ise/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 amend Options 3A, Section 3, FLEX Options 
Listings, to reflect the addition of the listing of options on: (1) the 
Fidelity Wise Origin Bitcoin Fund; (2) the ARK21Shares Bitcoin ETF; (3) 
the Grayscale Bitcoin Trust (BTC); (4) the Grayscale Bitcoin Mini Trust 
BTC; (5) and the Bitwise Bitcoin ETF (collectively ``Bitcoin Trusts''). 
Specifically, ISE proposes to except FLEX Options on the Bitcoin Trusts 
from trading as a [sic] FLEX Options contracts. ISE separately filed a 
rule proposal to list and trade the options on the Bitcoin Trusts.\3\
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    \3\ See SR-ISE-2024-054 (not yet noticed).
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    ISE recently received approval to list and trade Flexible Exchange 
Options (``FLEX Options'') on the Exchange's electronic market.\4\ At 
this time, the Exchange proposes to amend Options 3A, Section 3, FLEX 
Options Listings, to specify that ISE will not authorize for trading a 
FLEX Option on each of the Bitcoin Trusts. For clarity, this exclusion 
will apply to both physically-settled and cash-settled FLEX ETF 
options, such that options on the Bitcoin Trusts will be excluded from 
being eligible to trade as a physically-settled or a cash-settled FLEX 
ETF option. Options 3A, Section 3 currently provides that the Exchange 
will not authorize FLEX Options on shares of the iShares Bitcoin Trust 
ETF.\5\ 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 \6\ and the NYSE 
American Approval Order,\7\ respectively. If the Exchange determines to 
allow FLEX Options on the Bitcoin Trusts at a later date, it will do so 
by submitting a 19b-4 rule change with the Commission.
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    \4\ See Securities Exchange Act Release No. 101720 (November 22, 
2024), (SR-ISE-2024-12) (not yet noticed). This rule change is 
approved, but not yet implemented.
    \5\ Id.
    \6\ 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'').
    \7\ 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'').
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange's proposal to amend Options 3A, Section 3, FLEX 
Options Listings, 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 \10\ and the NYSE American Approval Order,\11\ 
respectively, that limited the position and exercise limits for each of 
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 the 
aforementioned approval orders. For clarity, this exclusion will apply 
to both physically-settled and cash-settled FLEX ETF options, such that 
options on the Bitcoin Trusts will be excluded from

[[Page 95852]]

being eligible to trade as a physically-settled or a cash-settled FLEX 
ETF option.
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    \10\ See supra note 5.
    \11\ See supra note 6.
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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.
    The Exchange's proposal to amend Options 3A, Section 3 to specify 
that it will not authorize for trading a FLEX Option on any of the 
Bitcoin Trusts does not impose an intra-market burden on competition as 
no ISE Member will be able to transact a FLEX Option on any of Bitcoin 
Trusts.
    The proposal does not impose inter-market burden on competition 
because other exchanges have not authorized FLEX Options on the Bitcoin 
Trusts.\12\
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    \12\ See e.g. Cboe Rule 4.20 and NYSE American Rule 903G(a)(1).
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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

    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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \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 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) \15\ 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 asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
the not authorizing FLEX options on the Bitcoin Trusts will maintain 
the 25,000-contract position and exercise limits established for 
options on the Bitcoin Trusts in the Cboe Approval Order and the NYSE 
American Approval Order because FLEX options would be subject to 
different position and exercise limits.\16\ The Exchange states that 
the exclusion will apply to both physically-settled and cash-settled 
FLEX ETF options, such that options on the Bitcoin Trusts will be 
excluded from being eligible to trade as a physically-settled or a 
cash-settled FLEX ETF option. As discussed above, the rules of other 
option exchanges currently prohibit the listing of FLEX options on the 
Bitcoin Trusts.\17\ The proposal will align the Exchange's rules with 
the rules of these exchanges and will ensure that all options listed on 
the Bitcoin Trusts are subject to position and exercise limits of 
25,000 contracts. The proposal does not raise new or novel regulatory 
issues. 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.\18\
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra notes 6 and 7.
    \17\ See supra note 12.
    \18\ 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 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 [email protected]. Please include 
file number SR-ISE-2024-55 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-ISE-2024-55. 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-ISE-2024-55 and should be 
submitted on or before December 24, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-28259 Filed 12-2-24; 8:45 am]
BILLING CODE 8011-01-P
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