95834 Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 

8 15 U.S.C. 78s(d)(1); 17 CFR 240.19d–1(c)(2). 

9 17 CFR 200.30–3(a)(44). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 99306 

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

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

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

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

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

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

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

Granting Accelerated Approval of Proposed Rule 

Changes, as Modified by Amendments Thereto, to 

List and Trade Bitcoin-Based Commodity-Based 

Trust Shares and Trust Units) (‘‘Bitcoin ETP 

Approval Order’’). 

4See proposed Rule 5020(h). 

5See Securities Exchange Act Release No. 101387 

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

(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) (SR–CBOE– 

2024–035, as amended) (‘‘CBOE Approval Order’’). 

6See Rule 5020(h), which permits options trading 

on ETFs that are traded on a national securities 

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

Rule 600 of Regulation NMS and that (i) 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 indices, equity 

caps, collars and floors, swap agreements, forward 

contracts, repurchase agreements and reverse 

repurchase agreements (the ‘‘Financial 

Instruments’’) and money market instruments, 

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

securities and repurchase agreements (the ‘‘Money 

Market Instruments’’) comprising or otherwise 

based on or representing investments in broadbased 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); or (ii) represent interests in a trust 

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 or 

currencies and pays the beneficial owner interest 

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

currency or currencies, if any, declared and paid by 

the trust (‘‘Currency Trust Shares’’); or (iii) 

represent commodity pool interests principally 

engaged, directly or indirectly, in holding and/or 

managing portfolios or baskets of securities, 

commodity futures contracts, options on 

commodity futures contracts, swaps, forward 

contracts and/or options on physical commodities 

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

ETFs’’) or (iv) represent interests in the SPDR® Gold 

Trust, the iShares COMEX Gold Trust, the iShares 

Silver Trust, the abrdn Gold ETF Trust, the abrdn 

Silver ETF Trust, the abrdn Palladium ETF Trust, 

the abrdn Platinum ETF Trust, the Sprott Physical 

Gold Trust, the iShares Bitcoin Trust, the Grayscale 

Bitcoin Trust, the Grayscale Bitcoin Mini Trust or 

the Bitwise Bitcoin ETF; provided that all of the 

conditions in Rules 5020(h)(1) and (2) are met. 

to File No. 4–845 and should be 

submitted on or before December 24, 

2024. 

II. Date of Effectiveness of Proposed 

Minor Rule Violation Plan and Timing 

for Commission Action 

Pursuant to Section 19(d)(1) of the Act 

and Rule 19d–1(c)(2) thereunder,8 after 

December 24, 2024, the Commission 

may, by order, declare the Exchange’s 

proposed MRVP effective if the plan is 

consistent with the public interest, the 

protection of investors, or otherwise in 

furtherance of the purposes of the Act. 

The Commission in its order may 

restrict the categories of violations to be 

designated as minor rule violations and 

may impose any other terms or 

conditions to the proposed MRVP, File 

No. 4–845, and to the period of its 

effectiveness, which the Commission 

deems necessary or appropriate in the 

public interest, for the protection of 

investors or otherwise in furtherance of 

the purposes of the Act. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28255 Filed 12–2–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101773; File No. SR–BOX– 

2024–29] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rules 3120 

(Position Limits) and 5020 (Criteria for 

Underlying Securities) To Permit 

Options Trading on Bitcoin Funds 

November 27, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on November 

25, 2024, BOX Exchange LLC 

(‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

proposes to amend Rules 3120 (Position 

Limits), 5020 (Criteria for Underlying 

Securities), and 5055 (FLEX Equity 

Options). The text of the proposed rule 

change is available from the principal 

office of the Exchange, at the 

Commission’s Public Reference Room 

and also on the Exchange’s internet 

website at https://rules.

boxexchange.com/rulefilings. 

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 

Rules 3120 (Position Limits) and 5020 

(Criteria for Underlying Securities) to 

permit options trading on the Fidelity 

Wise Origin Bitcoin Fund (the ‘‘Fidelity 

Fund’’) and the ARK 21Shares Bitcoin 

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

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

Additionally, the Exchange proposes to 

amend Rule 5055 (FLEX Equity 

Options). Specifically, the Exchange 

proposes to amend Rule 5020(h) to 

allow the Exchange to list and trade 

options on the Bitcoin Funds.4 This is 

a competitive filing that is based on a 

proposal recently submitted by Cboe 

Exchange, Inc. (‘‘CBOE’’) and approved 

by the Commission.5

As discussed herein and as provided 

in the CBOE Approval Order, 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 

options would enhance the 

transparency and efficiency of markets 

in these and correlated products. Rule 

5020(h) provides that, subject to certain 

other criteria set forth in the Rule, 

securities deemed appropriate for 

options trading include ExchangeTraded Fund Shares (or ETFs), that 

represent certain types of interests 6 and 

exchange-traded products (‘‘ETPs’’) 


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7See Rule 5020(h) (permitting the listing and 

trading of options on certain ETPs backed by 

precious metals). 

8See proposed Rule 5020(h). 

9The trust may include minimal cash. 

10Rule 5020(a) provides for guidelines to be used 

by the Exchange when evaluating potential 

underlying securities for Exchange option 

transactions. 

11Rule 5020(h)(1) 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. 

12The criteria and guidelines for a security to be 

considered widely held and actively traded are set 

forth in Rule 5020(b), subject to exceptions. 

13An ‘‘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’’). 

14See Rule 5030(h). 

15See Rule 5010 (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. 

16See Rule 5050(b). The standard expirations are 

subject to certain listing criteria for underlying 

securities described within Rule 5020. Standard 

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 5050(c), additional series of 

options of the same class may be opened for trading 

on the Exchange when the Exchange deems it 

necessary to maintain an orderly market, to meet 

customer demand or when the market price of the 

underlying stock moves more than five strike prices 

from the initial exercise price or prices. New series 

of options on an individual stock may be added 

until the beginning of the month in which the 

options contract will expire. Due to unusual market 

conditions, the Exchange, in its discretion, may add 

a new series of options on an individual stock until 

the close of trading on the business day prior to 

expiration. 

17See IM–5050–6. 

18See IM–5050–13. 

structured as trusts that hold precious 

metals (which are deemed 

commodities).7 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.8 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.9 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 5020(a).10

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 5020(h).11 First, each of the 

Bitcoin Funds satisfy the criteria and 

guidelines set forth in Rule 5020(a). 

Pursuant to Rule 5020(a), 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.12 Each of the 

Bitcoin Funds is an NMS Stock as 

defined in Rule 600 of Regulation NMS 

under the Act.13

As provided in the CBOE Approval 

Order, each Bitcoin Fund is 

characterized by a substantial number of 

outstanding shares that are widely held 

and actively traded. Specifically, as 

shown in the CBOE Approval Order, 

each of the Bitcoin Funds had 

significantly more than 7,000,000 shares 

outstanding (approximately 29 and 6.5 

times that amount, respectively), which 

is the minimum number of shares of a 

corporate stock that the Exchange 

generally requires to list options on that 

stock pursuant to Rule 5020(b). The 

Exchange believes this demonstrates 

that each Bitcoin Fund is characterized 

by a substantial number of outstanding 

shares. 

Further, as provided in the CBOE 

Approval Order, each Bitcoin Fund has 

significantly more than 2,000 beneficial 

holders (approximately 140 and 35 

times more, respectively), which is the 

minimum number of holders the 

Exchange generally requires for 

corporate stock in order to list options 

on that stock pursuant to Rule 

5020(b)(2). Therefore, the Exchange 

believes the shares of each Bitcoin Fund 

are widely held. 

The Exchange also believes the shares 

of each Bitcoin Fund are actively traded. 

As provided in the CBOE Approval 

Order, 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 (between roughly 464 and 124 

times that amount), which is the 

minimum 12-month volume the 

Exchange generally requires for a 

security in order to list options on that 

security as set forth in Rule 5020(b). 

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 5030(h). 

Pursuant to Rule 5030(b), 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’’ as 

provided for in Rule 5030(a) or the fund 

is halted from trading on its primary 

market.14 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 5030(b); 

(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 BOX 

inadvisable. 

Options on each Bitcoin Fund will be 

physically settled contracts with 

American-style exercise.15 Consistent 

with Rule 5050, which governs the 

opening of options series on a specific 

underlying security (including ETFs and 

ETPs), BOX will open at least one 

expiration month for options on each 

Bitcoin Fund 16 at the commencement of 

trading on the Exchange and may also 

list series of options on Bitcoin Funds 

for trading on a weekly,17 monthly,18 or 


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19See IM–5050–4. 

20See Rule 5070. 

21The 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, IM–5050–6, IM– 

5050–13, and IM–5050–4, specifically set forth 

intervals between strike prices on Quarterly 

Options Series, Short Term Option Series, and 

Monthly Options Series, respectively. 

22See IM–5050–2. 

23See IM–5050–5. 

24See IM–5050–3. 

25 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 

$0.05 above $3.00 would apply. See Rule 

7050(a)(3). See also Rule 7260 (which describes the 

requirements for the Penny Interval Program). 

26See Rule 5055(e)(2)(i). 

27The Exchange would be required to submit a 

separate rule filing to permit the Exchange to 

authorize for trading FLEX Equity Options on the 

Bitcoin Funds (which filing may propose changes 

to existing FLEX Equity Option position limits for 

such options if appropriate). 

28See proposed Rule 5055(e)(2)(i). 

29As these percentages are based on the 

minimum number of outstanding shares an 

underlying security must have to qualify for the 

applicable position limit, these are the highest 

possible percentages that would apply to any option 

subject to that position and exercise limit. 

quarterly 19 basis. BOX may also list 

long-term equity option series 

(‘‘LEAPS’’) that expire from twelve to 

one-hundred eighty months from the 

time they are listed.20 Pursuant to IM– 

5050–1(b), 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 $200.21 Additionally, BOX may list 

series of options pursuant to the $1 

Strike Price Interval Program,22 the 

$0.50 Strike Program,23 and the $2.50 

Strike Price Program.24 Pursuant to Rule 

7050, 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 $0.10.25

Any and all new series of Bitcoin Fund 

options that BOX lists will be consistent 

and comply with the expirations, strike 

prices, and minimum increments set 

forth in Rules 5050 and 7050, as 

applicable. Further, the Exchange notes 

that Rule Series 10100, which governs 

margin requirements applicable to the 

trading of all options on BOX, including 

options on ETFs and ETPs, will also 

apply to the trading of Bitcoin Fund 

options. Other examples of the 

Exchange Rules that currently apply to 

all options traded on BOX, include 

Rules that govern listing criteria, 

customer accounts, and trading halt 

procedures. 

Rule 5055(e)(2)(i) permits the 

Exchange to authorize for trading a 

FLEX Equity Option class on any equity 

security if it may authorize for trading 

a Non-FLEX Equity Option class on that 

equity security pursuant to Rule 5020.26

At this time, the Exchange is not 

proposing to permit Bitcoin Fund 

options to trade as FLEX Equity 

Options.27 The Exchange therefore 

proposes to modify Rule 5055(e)(2)(i) to 

specify this exception, which will add 

clarity and transparency to Exchange 

Rules.28

Position and Exercise Limits 

CBOE’s Approval Order stated that 

the position and exercise limits for 

Bitcoin Funds shall be 25,000 contracts. 

At this time, the Exchange proposes to 

amend IM–3120–2 to similarly note that 

Bitcoin Fund options position limits 

shall be 25,000 contracts to mirror 

CBOE’s Approval Order. Rule 3140 

provides that the exercise limits shall be 

determined in the manner described in 

Rule 3120, therefore the exercise limits 

would also be 25,000 contracts. 

As provided in the CBOE Approval 

Order, these proposed position and 

exercise limits were determined 

considering, among other things, the 

approximate six-month average daily 

volume (‘‘ADV’’) and outstanding shares 

of each underlying Bitcoin Fund (which 

as discussed above demonstrate that 

each Bitcoin Fund is widely held and 

actively traded and thus justify these 

conservatively proposed position 

limits). 

As provided in the CBOE Approval 

Order, comparing current position and 

exercise limits of options on ETFs with 

outstanding shares comparable to those 

of each Bitcoin Fund, demonstrates the 

proposed limit to be significantly lower 

(between two and ten times lower) than 

the average limits of the options on the 

other ETFs. As discussed above, the 

Bitcoin Funds are actively held and 

widely traded: (1) each Bitcoin Fund (as 

of August 7, 2024) had significantly 

more than 7,000,000 shares outstanding, 

which is the minimum number of shares 

of a corporate stock that the Exchange 

generally requires to list options on that 

stock pursuant to Rule 5020(b)(1); (2) 

each Bitcoin Fund (as of the dates listed 

above) had significantly more than 

2,000 beneficial holders, which is the 

minimum number of holders the 

Exchange generally requires for 

corporate stock in order to list options 

on that stock pursuant to Rule 

5020(b)(2); and (3) each Bitcoin Fund 

had a six-month trading volume 

substantially higher than 2,400,000 

shares, which is the minimum 12-month 

volume the Exchange generally requires 

for a security in order to list options on 

that security as set forth in Rule 

5020(b)(4). 

As provided in the CBOE Approval 

Order, if a market participant held the 

maximum permissible options positions 

in one of the Bitcoin Fund options and 

exercised all of them at the same time, 

that market participant would control a 

small percentage of the outstanding 

shares of the underlying Bitcoin Fund. 

Rule 3120(d) provides two methods of 

qualifying for a position limit tier above 

25,000 option contracts. The first 

method is based on six-month trading 

volume in the underlying security, and 

the second method is based on slightly 

lower six-month trading volume and 

number of shares outstanding in the 

underlying security. As provided in the 

CBOE Approval Order, the equivalent 

shares represented by the proposed 

position and exercise limits for each 

Bitcoin Fund as a percentage of 

outstanding shares of the underlying 

Bitcoin Fund is significantly lower than 

the percentage for the lowest possible 

position limit for equity options of 

25,000 (under 6% compared to 40%) 

and is lower than that percentage for 

each current position limit bucket.29

Further, the proposed position and 

exercise limits for each Bitcoin Fund 

option are significantly below the limits 

that would otherwise apply pursuant to 

current Rule 3120. These position and 

exercise limits are the lowest position 

and exercise limits available in the 

options industry, are extremely 

conservative and more than appropriate 

given the market capitalization, average 

daily volume, and high number of 

outstanding shares of the Bitcoin Funds. 

All of the above information 

demonstrates that the proposed position 

and exercise limits for the Bitcoin Fund 

options are more than reasonable and 

appropriate. The trading volume, ADV, 

and outstanding shares of each Bitcoin 

Fund demonstrate that these funds are 

actively traded and widely held, and 

proposed position and exercise limits 

are well below those of other ETFs with 

similar market characteristics. The 

proposed position and exercise limits 

are the lowest position and exercise 

limits available for equity options in the 

industry, are extremely conservative, 

and are more than appropriate given 

each Bitcoin Fund’s market 

capitalization, ADV, and high number of 

outstanding shares. 

Today, the Exchange has an adequate 

surveillance program in place for 

options. The Exchange intends to apply 

those same program procedures to 

options on the Bitcoin Funds that it 

applies to the Exchange’s other options 


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30The surveillance program includes surveillance 

patterns for price and volume movements as well 

as patterns for potential manipulation (e.g., 

spoofing and marking the close). 31Section 19(g)(1) of the Act, among other things, 

requires every self-regulatory organization (‘‘SRO’’) 

registered as a national securities exchange or 

national securities association to comply with the 

Act, the rules and regulations thereunder, and the 

SRO’s own rules, and, absent reasonable 

justification or excuse, enforce compliance by its 

members and persons associated with its members. 

See 15 U.S.C. 78q(d)(1) and 17 CFR 240.17d–2. 

Section 17(d)(1) of the Act allows the Commission 

to relieve an SRO of certain responsibilities with 

respect to members of the SRO who are also 

members of another SRO (‘‘common members’’). 

Specifically, Section 17(d)(1) allows the 

Commission to relieve an SRO of its responsibilities 

to: (i) receive regulatory reports from such 

members; (ii) examine such members for 

compliance with the Act and the rules and 

regulations thereunder, and the rules of the SRO; 

or (iii) carry out other specified regulatory 

responsibilities with respect to such members. 

32See Bitcoin ETP Approval Order. 

33See Bitcoin ETP Approval Order, 89 FR 3010– 

11. 

34See Securities Exchange Act Release Nos. 

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

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

(Notice of Filing of Amendment No. 3 to a Proposed 

Rule Change to List and Trade Shares of the Fidelity 

Wise Origin Bitcoin Fund Under BZX Rule 

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

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

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

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

Rule Change To List and Trade Shares of the ARK 

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

Commodity-Based Trust Shares). See also Securities 

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

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

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

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

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

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

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

SR–CboeBZX–2023–072) (Order Granting 

Accelerated Approval of Proposed Rule Changes, as 

Modified by Amendments Thereto, to List and 

Trade Bitcoin-Based Commodity-Based Trust 

Shares and Trust Units) (‘‘Bitcoin ETP Approval 

Order’’). 

35The 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. 

36 15 U.S.C. 78f(b). 

37 15 U.S.C. 78f(b)(5). 

products.30 Additionally, the Exchange 

is a member of the Intermarket 

Surveillance Group (‘‘ISG’’) under the 

Intermarket Surveillance Group 

Agreement. The Exchange would be 

able to obtain information regarding 

trading in shares of the Bitcoin Funds 

from Cboe BZX Exchange, Inc. (‘‘BZX’’) 

and other markets that trade shares of 

the Bitcoin Funds through ISG. ISG 

members work together to coordinate 

surveillance and investigative 

information sharing in the stock, 

options, and futures markets. In 

addition, the Exchange has a Regulatory 

Services Agreement with the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’) for certain market 

surveillance, investigation and 

examinations functions. Pursuant to a 

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

exchanges allocate amongst themselves 

and FINRA responsibilities to conduct 

certain options-related market 

surveillance that are common to rules of 

all options exchanges.31

The underlying shares of spot bitcoin 

exchange-traded products (‘‘ETPs’’), 

including the Bitcoin Funds, are also 

subject to safeguards related to 

addressing market abuse and 

manipulation. As the Commission 

stated in its order approving proposals 

of several exchanges to list and trade 

shares of spot bitcoin-based ETPs, 

‘‘[e]ach Exchange has a comprehensive 

surveillance-sharing agreement with the 

CME via their common membership in 

the Intermarket Surveillance Group. 

This facilitates the sharing of 

information that is available to the CME 

through its surveillance of its markets, 

including its surveillance of the CME 

bitcoin futures market.32 Given the 

consistently high correlation between 

the CME Bitcoin futures market and the 

spot bitcoin market, as confirmed by the 

Commission through robust correlation 

analysis, the Commission was able to 

conclude that such surveillance sharing 

agreements could reasonably be 

‘‘expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices in the specific context of the 

[Bitcoin ETPs].’’ 33 In light of 

surveillance measures related to both 

options and futures as well as the 

underlying Bitcoin Funds,34 the 

Exchange believes that existing 

surveillance procedures are designed to 

deter and detect possible manipulative 

behavior which might potentially arise 

from listing and trading the proposed 

options on the Bitcoin Funds. Further, 

the Exchange will implement any new 

surveillance procedures it deems 

necessary to effectively monitor the 

trading of options on Bitcoin ETPs. 

The Exchange has also analyzed its 

capacity and represents that it believes 

the Exchange and OPRA have the 

necessary systems capacity to handle 

the additional traffic associated with the 

listing of new series that may result 

from the introduction of options on 

Bitcoin Funds up to the number of 

expirations currently permissible under 

the Rules. Because the proposal is 

limited to two classes, the Exchange 

believes any additional traffic that may 

be generated from the introduction of 

Bitcoin Fund options will be 

manageable. 

The Exchange believes that offering 

options on Bitcoin Funds will benefit 

investors by providing them with an 

additional, relatively lower cost 

investing tool to gain exposure to the 

price of Bitcoin and hedging vehicle to 

meet their investment needs in 

connection with Bitcoin-related 

products and positions. The Exchange 

expects investors will transact in 

options on Bitcoin Funds in the 

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

options market,35 but may prefer to 

trade such options in a listed 

environment to receive the benefits of 

trading listing options, including (1) 

enhanced efficiency in initiating and 

closing out positions; (2) increased 

market transparency; and (3) heightened 

contra-party creditworthiness due to the 

role of OCC as issuer and guarantor of 

all listed options. The Exchange 

believes that listing Bitcoin Fund 

options may cause investors to bring 

this liquidity to the Exchange, would 

increase market transparency and 

enhance the process of price discovery 

conducted on BOX through increased 

order flow. The ETFs that hold financial 

instruments, money market instruments, 

or precious metal commodities on 

which the Exchange may already list 

and trade options are trusts structured 

in substantially the same manner as 

Bitcoin Funds and essentially offer the 

same objectives and benefits to 

investors, just with respect to different 

assets. The Exchange notes that it has 

not identified any issues with the 

continued listing and trading of any ETF 

options, including ETFs that hold 

commodities (i.e., precious metals) that 

it currently lists and trades on the 

Exchange. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),36 in general, and Section 6(b)(5) 

of the Act,37 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general to protect investors and the 

public interest. 

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 


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95838 Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 

38See Rule 5020(h). 

39See Blockchain.com | Charts—Total Circulating 

Bitcoin. 

40See CME Rulebook Chapter 350 (description of 

CME Bitcoin Futures) and Chapter 5, Position 

Limit, Position Accountability and Reportable Level 

Table in the Interpretations & Special Notices. Each 

CME Bitcoin futures contract is valued at five 

Bitcoins as defined by the CME CF Bitcoin 

Reference Rate (‘‘BRR’’). See CME Rule 35001. 41See CME Rulebook Chapter 5, Position Limit, 

Position Accountability and Reportable Level Table 

in the Interpretations & Special Notices. 42 Id. 

will provide investors with an 

opportunity to realize the benefits of 

utilizing options on a Bitcoin Fund, 

including cost efficiencies and 

increased hedging strategies. The 

Exchange believes that offering Bitcoin 

Fund options will benefit investors by 

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

allow them to manage their positions 

and associated risk in their portfolios 

more easily in connection with 

exposure to the price of Bitcoin and 

with Bitcoin-related products and 

positions. Additionally, the Exchange’s 

offering of Bitcoin Fund options will 

provide investors with the ability to 

transact in such options in a listed 

market environment as opposed to in 

the unregulated OTC options market, 

which would increase market 

transparency and enhance the process of 

price discovery conducted on BOX 

through increased order flow to the 

benefit of all investors. The Exchange 

also notes that BOX already lists options 

on other commodity-based ETPs,38

which, as described above, are trusts 

structured in substantially the same 

manner as Bitcoin Funds and essentially 

offer the same objectives and benefits to 

investors, just with respect to a different 

commodity (i.e., Bitcoin rather than 

precious metals) and for which the 

Exchange has not identified any issues 

with the continued listing and trading of 

commodity-backed 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 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 BOX. 

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, customer accounts, trading 

halt procedures, and margin 

requirements, will govern the listing 

and trading of options on Bitcoin Funds 

in the same manner. 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 address 

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 CBOE Approval 

Order demonstrates that the average 

position and exercise limits of options 

on ETFs with comparable outstanding 

shares and trading volume to those of 

the Bitcoin Funds are significantly 

higher than the proposed position and 

exercise limits for Bitcoin Fund options. 

Therefore, the proposed position and 

exercise limits for the Bitcoin Fund 

options are conservative relative to 

options on ETFs with comparable 

market characteristics. 

Further, given that the issuer of each 

Bitcoin Fund may create and redeem 

shares that represent an interest in 

Bitcoin, the Exchange believes it is 

relevant to compare the size of a 

position limit to the market 

capitalization of the Bitcoin market. As 

of August 27, 2024, the global supply of 

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

one Bitcoin was approximately 

$59,466.82,39 which equates to a market 

capitalization of approximately $1.165 

trillion. Consider the proposed position 

and exercise limit of 25,000 option 

contracts for each Bitcoin Fund option. 

A position and exercise limit of 25,000 

same side contracts effectively restricts 

a market participant from holding 

positions that could result in the receipt 

of no more than 2,500,000 of Fidelity 

Fund shares or ARK 21 Fund shares, as 

applicable (if that market participant 

exercised all its options. As provided in 

the CBOE Approval Order, if a market 

participant with the maximum 25,000 

same side contracts in either Fidelity 

Fund options or ARK 21 Fund options 

exercised all positions at one time, such 

an event would have no practical 

impact on the Bitcoin market. 

The Exchange also believes the 

proposed limits are appropriate given 

position limits for Bitcoin futures. For 

example, the Chicago Mercantile 

Exchange (‘‘CME’’) imposes a position 

limit of 2,000 futures (for the initial spot 

month) on its Bitcoin futures contract.40

On August 28, 2024, CME Aug 24 

Bitcoin Futures settled at $58,950. A 

position of 2,000 CME Bitcoin futures, 

therefore, would have a notional value 

of $589,500,000. As provided in the 

CBOE Approval Order, the approximate 

number of option contracts for each 

Bitcoin Fund that equate to the notional 

value of CME Bitcoin futures is 

significantly higher than the proposed 

limit of 25,000 options contract for each 

Bitcoin Fund option. The fact that many 

options ultimately expire out-of-themoney and thus are not exercised for 

shares of the underlying, while the delta 

of a Bitcoin Future is 1, further 

demonstrates how conservative the 

proposed limits of 25,000 options 

contracts are for the Bitcoin Fund 

options. 

The Exchange notes, unlike options 

contracts, CME position limits are 

calculated on a net futures-equivalent 

basis by contract and include contracts 

that aggregate into one or more base 

contracts according to an aggregation 

ratio(s).41 Therefore, if a portfolio 

includes positions in options on futures, 

CME would aggregate those positions 

into the underlying futures contracts in 

accordance with a table published by 

CME on a delta equivalent value for the 

relevant spot month, subsequent spot 

month, single month and all month 

position limits.42 If a position exceeds 

position limits because of an option 

assignment, CME permits market 

participants to liquidate the excess 

position within one business day 

without being considered in violation of 

its rules. Additionally, if at the close of 

trading, a position that includes options 

exceeds position limits for futures 

contracts, when evaluated using the 

delta factors as of that day’s close of 

trading but does not exceed the limits 

when evaluated using the previous 

day’s delta factors, then the position 

shall not constitute a position limit 

violation. Considering CME’s position 

limits on futures for Bitcoin, the 

Exchange believes that that the 

proposed same side position limits are 

more than appropriate for the Bitcoin 

Fund options. 

As provided in the CBOE Approval 

Order, the proposed position and 


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Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 95839 

43See Blockchain.com | Charts—Total Circulating 

Bitcoin (which also shows the price of one Bitcoin 

equal to $55,033.47). 

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

1 Registration Statement No. 333–254652, Fidelity 

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

Amendment No. 8 to Form S–1 Registration 

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

January 9, 2024, at 15. 

45The market capitalization of Bitcoin would 

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

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

46This would be even more unlikely with respect 

to the Bitcoin Funds for which the Exchange 

proposes lower position limits. 

47The Exchange is unaware of any proposed rule 

change related to position and exercise limits for 

any equity option (including commodity ETF 

options) for which the Commission required 

consideration of whether the available supply of an 

underlying (whether it be a corporate stock or an 

ETF) or the contents of an ETF (commodity or 

otherwise) should be considered when an exchange 

proposed to establish those limits. See, e.g., 

Securities Exchange Act Release No. 57894 (May 

30, 2008), 73 FR 32061 (June 5, 2008) (SR–CBOE– 

2005–11) (approval order in which the Commission 

stated that the ‘‘listing and trading of Gold Trust 

Options will be subject to the exchanges’ rules 

pertaining to position and exercise limits and 

margin’’). For reference, the current position and 

exercise limits for options on SPDR Gold Shares 

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

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

proposed position and exercise limit for the Bitcoin 

Fund options. 

48For example, suppose an option has a position 

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

of 10 investors trading that option. If all 10 

investors max out their positions, that would result 

in 250,000 option contracts outstanding at that 

time. However, suppose 10 more investors decide 

to begin trading that option and also max out their 

positions. This would result in 500,000 option 

contracts outstanding at that time. An increase in 

the number of investors could cause an increase in 

outstanding options even if position limits remain 

unchanged. 

49See Securities Exchange Act Release No. 39489 

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

(SR–CBOE–1997–11). 

50See id. 

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

1 Registration Statement No. 333–254652, Fidelity 

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

Amendment No. 8 to Form S–1 Registration 

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

January 9, 2024, at 15. 

52See Bitcoin ETP Approval Order. 

exercise limits in this proposal will 

have no material impact to the supply 

of Bitcoin. For example, consider again 

the proposed position limit of 25,000 

option contracts for each Bitcoin Fund 

option. As noted above, a position limit 

of 25,000 same side contracts effectively 

restricts a market participant from 

holding positions that could result in 

the receipt of no more than 2,500,000 

shares of the applicable Bitcoin Fund (if 

that market participant exercised all of 

its options). 

As provided in the CBOE Approval 

Order, if 80 market participants had 

25,000 same side positions in Fidelity 

Fund options, each of them would have 

to simultaneously exercise all of those 

options to create a scenario that may put 

the underlying security under stress. 

Similarly, if 18 market participants had 

25,000 same side positions in ARK 21 

Fund options, each of them would have 

to simultaneously exercise all of those 

options to create a scenario that may put 

the underlying security under stress. 

The Exchange believes it is highly 

unlikely for either such event to occur; 

however, even if either such event did 

occur, the Exchange would not expect 

either Bitcoin Fund to be under stress 

because such an event would merely 

induce the creation of more shares 

through the trust’s creation and 

redemption process. 

As of August 7, 2024, the global 

supply of Bitcoin was approximately 

19,736,528.43 Based on the $47.88 price 

of a Fidelity Fund share on August 7, 

2024, a market participant could have 

redeemed one Bitcoin for approximately 

1,149 Fidelity Fund shares. Another 

22,677,270,672 Fidelity Fund shares 

could be created before the supply of 

Bitcoin was exhausted. As a result, 

9,070 market participants would have to 

simultaneously exercise 25,000 same 

side positions in Fidelity Fund options 

to receive shares of the Fidelity Fund 

holding the entire global supply of 

Bitcoin. Similarly, based on the $54.68 

price of an ARK 21 Fund share on 

August 7, 2024, a market participant 

could have redeemed one Bitcoin for 

approximately 1,006 ARK 21 Fund 

Shares. Another 19,854,947,168 ARK 21 

Fund shares could be created before the 

supply of Bitcoin were exhausted. As a 

result, 7,941 market participants would 

have to simultaneously exercise 25,000 

same side positions in ARK 21 Fund 

options to receive shares of the ARK 21 

Fund holding the entire global supply of 

Bitcoin. Unlike the Bitcoin Funds, the 

number of shares that corporations may 

issue is limited. However, like 

corporations, which authorize 

additional shares, repurchase shares, or 

split their shares, the Bitcoin Funds may 

create, redeem, or split shares in 

response to demand. While the supply 

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

believed that it will take more than 100 

years to fully mine the remaining 

Bitcoin.44 The supply of Bitcoin is larger 

than the available supply of most 

securities.45 Given the significant 

unlikelihood of any of these events ever 

occurring, the Exchange does not 

believe options on the Bitcoin Funds 

should be subject to position and 

exercise limits even lower than those 

proposed (which are already equal to 

the lowest available limit for equity 

options in the industry) to protect the 

supply of Bitcoin.46

The Exchange believes the available 

supply of Bitcoin is not relevant to the 

determination of position and exercise 

limits for options overlying the Bitcoin 

Funds.47 Position and exercise limits are 

not a tool that should be used to address 

a potential limited supply of an 

underlying. Position and exercise limits 

do not limit the total number of options 

that may be held, but rather they limit 

the number of positions a single 

customer may hold or exercise at one 

time.48 ‘‘Since the inception of 

standardized options trading, the 

options exchanges have had rules 

imposing limits on the aggregate 

number of options contracts that a 

member or customer could hold or 

exercise.’’ 49 Position and exercise limit 

rules are intended ‘‘to prevent the 

establishment of options positions that 

can be used or might create incentives 

to manipulate or disrupt the underlying 

market so as to benefit the options 

position. In particular, position and 

exercise limits are designed to minimize 

the potential for mini-manipulations 

and for corners or squeezes of the 

underlying market. In addition, such 

limits serve to reduce the possibility for 

disruption of the options market itself, 

especially in illiquid options classes.’’ 50

The Exchange notes that a 

Registration Statement on Form S–1 was 

filed with the Commission for each 

Bitcoin Fund, each of which described 

the supply of Bitcoin as being limited to 

21,000,000 (of which approximately 

90% had already been mined), and that 

the limit would be reached around the 

year 2140.51 Each Registration 

Statement permits an unlimited number 

of shares of the applicable Bitcoin ETF 

to be created. Further, the Commission 

approved proposed rule changes that 

permitted the listing and trading of 

shares of each Bitcoin Fund, which 

approval did not comment on the 

sufficient supply of Bitcoin or address 

whether there was a risk that permitting 

an unlimited number of shares for a 

Bitcoin Fund would impact the supply 

of Bitcoin.52 Therefore, the Exchange 

believes the Commission had ample 

time and opportunity to consider 

whether the supply of Bitcoin was 

sufficient to permit the creation of 

unlimited Bitcoin Fund shares, and 

does not believe considering this supply 

with respect to the establishment of 

position and exercise limits is 

appropriate given its lack of relevance to 

the purpose of position and exercise 

limits. However, given the significant 

size of the Bitcoin supply, the proposed 


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95840 Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 

53See Securities Exchange Act Release No. 39489 

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

(SR–CBOE–1997–11). 

54The Exchange would be required to submit a 

separate rule filing to permit the Exchange to 

authorize for trading FLEX Equity Options on the 

Bitcoin Funds (which filing may propose changes 

to existing FLEX Equity Option position limits for 

such options if appropriate). 

55See Securities Exchange Act Release No. 99306 

(January 10, 2024), 89 FR 3008, 3009 (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 BitcoinBased Commodity-Based Trust Shares and Trust 

Units). 

56See Bitcoin ETP Order, 89 FR at 3010–11. 

57See Rules 4020(b), (e) and 4100. 

58See Rule 4040. 

59See supra note 5. 

60 Id. 

61See Rule 5020(h). 

position limits are more than sufficient 

to protect investors and the market. 

Based on the above information 

demonstrating, among other things, that 

each Bitcoin Fund is characterized by a 

substantial number of outstanding 

shares that are actively traded and 

widely held, the Exchange believes the 

proposed position and exercise limits 

are extremely conservative compared to 

those of ETF options with similar 

market characteristics. The proposed 

position and exercise limits reasonably 

and appropriately balance the liquidity 

provisioning in the market against the 

prevention of manipulation. The 

Exchange believes these proposed limits 

are effectively designed to prevent an 

individual customer or entity from 

establishing options positions that could 

be used to manipulate the market of the 

underlying as well as the Bitcoin 

market.53

The Exchange believes the proposed 

rule change to exclude the Bitcoin 

Funds from being eligible for trading as 

FLEX Equity Options is consistent with 

the Act, because without this 

prohibition, trading a FLEX Equity 

Option in the Bitcoin Funds would 

otherwise establish different position 

and exercise limits than those proposed 

herein.54

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 and to deter and 

detect violations of Exchange rules. 

Additionally, the Exchange is a member 

of the ISG under the Intermarket 

Surveillance Group Agreement. The 

Exchange would be able to obtain 

information regarding trading in shares 

of the Bitcoin Funds from BZX and 

other markets that trade shares of the 

Bitcoin Funds through ISG. ISG 

members work together to coordinate 

surveillance and investigative 

information sharing in the stock, 

options, and futures markets. In 

addition, the Exchange has a Regulatory 

Services Agreement with FINRA and, as 

noted herein, 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.’’ 55 Given the 

consistently high correlation between 

the CME bitcoin futures market and the 

spot bitcoin market, as confirmed by the 

Commission through robust correlation 

analysis, the Commission was able to 

conclude that such surveillance sharing 

agreements could reasonably be 

‘‘expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices in the specific context of the 

[Bitcoin ETPs].’’ 56 The Exchange 

believes that existing surveillance 

procedures are designed to deter and 

detect possible manipulative behavior 

which might potentially arise from 

listing and trading the proposed options 

on the Bitcoin Funds. Further, the 

Exchange will implement any new 

surveillance procedures it deems 

necessary to effectively monitor the 

trading of options on Bitcoin ETPs. 

Finally, the Exchange notes that this 

proposal 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 applicable Exchange rules will 

require that customers receive 

appropriate disclosure before trading 

options in Bitcoin Funds 57 and will 

require that brokers opening accounts 

and recommending options transactions 

comply with relevant customer 

suitability standards.58 The Exchange 

notes the proposed rule change is 

substantively the same as a rule change 

proposed by CBOE which the 

Commission recently approved.59

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. In this regard 

and as indicated above, the Exchange 

notes that the rule change is being 

proposed as a competitive response to a 

filing submitted by CBOE that was 

recently approved by the Commission.60

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 Bitcoin Funds would need to satisfy 

the initial listing standards set forth in 

the Exchange Rules in the same manner 

as any other ETF before the Exchange 

could list options on them. 

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 BOX will apply in 

the same manner to the listing and 

trading of all options on Bitcoin Funds, 

including, for example, Rules that 

govern expirations, exercise prices, 

minimum increments, margin 

requirements, customer accounts, and 

trading halt procedures. Also, and as 

stated above, the Exchange already lists 

options on other commodity-based 

ETPs.61 Further, the Bitcoin Funds 

would need to satisfy the maintenance 

listing standards set forth in the 

Exchange Rules in the same manner as 

any other ETF for the Exchange to 

continue listing options on them. 


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62See supra note 5. 

63 15 U.S.C. 78s(b)(3)(A). 

64 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. 

65 17 CFR 240.19b–4(f)(6)(iii). 

66See supra note 5. 

67For 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). 

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 BOX may make BOX a more 

attractive marketplace to market 

participants at other exchanges, such 

market participants are free to elect to 

become market participants on BOX. As 

noted herein, this is a competitive filing 

as the Commission recently approved 

the listing and trading of the Bitcoin 

Funds on another options exchange.62

Additionally, other options exchanges 

are free to amend their listing rules, as 

applicable, to permit them to list and 

trade options on Bitcoin Funds. The 

Exchange notes that listing and trading 

Bitcoin Fund options on BOX 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 BOX 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 BOX 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 BOX 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. 

Finally, the proposed rule change to 

exclude Bitcoin Fund options from 

being eligible for trading as FLEX Equity 

Options does not impose an undue 

burden on competition as no BOX 

Participant will be able to transact a 

FLEX Equity Option on the Bitcoin 

Funds. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 63 and Rule 19b– 

4(f)(6) thereunder.64

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) 65 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 Commission previously 

approved the listing of options on the 

shares of the Bitcoin Funds.66 The 

Exchange has provided information 

regarding the underlying Bitcoin Funds, 

including, among other things, 

information regarding trading volume, 

the number of beneficial holders, and 

the market capitalization of the Bitcoin 

Funds. The proposal also establishes 

position and exercise limits for options 

on the Bitcoin Funds and provides 

information regarding the surveillance 

procedures that will apply to options on 

the Bitcoin Funds. The Commission 

believes that waiver of the operative 

delay could benefit investors by 

providing an additional venue for 

trading Bitcoin Fund options. Therefore, 

the Commission believes that waiver of 

the 30-day operative delay is consistent 

with the protection of investors and the 

public interest. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change operative upon 

filing.67

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number 

SR–BOX–2024–29 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–BOX–2024–29. 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 


lotter on DSK11XQN23PROD with NOTICES1
95842 Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 

68 17 CFR 200.30–3(a)(12), (59). 

submissions should refer to file number 

SR–BOX–2024–29 and should be 

submitted on or before December 24, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.68

Stephanie J. Fouse, 

Assistant Secretary. 

[FR Doc. 2024–28341 Filed 12–2–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–136, OMB Control No. 

3235–0157] 

Submission for OMB Review; 

Comment Request; Extension: Form 

N–8F 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Form N–8F (17 CFR 274.218) is the 

form prescribed for use by registered 

investment companies in certain 

circumstances to request orders of the 

Commission declaring that the 

registration of that investment company 

cease to be in effect. The form requests 

information about: (i) the investment 

company’s identity, (ii) the investment 

company’s distributions, (iii) the 

investment company’s assets and 

liabilities, (iv) the events leading to the 

request to deregister, and (v) the 

conclusion of the investment company’s 

business. The information is needed by 

the Commission to determine whether 

an order of deregistration is appropriate. 

The Form takes approximately 5.2 

hours on average to complete. It is 

estimated that approximately 101 

investment companies file Form N–8F 

annually, so the total annual burden for 

the form is estimated to be 

approximately 525 hours. The estimate 

of average burden hours is made solely 

for the purposes of the Paperwork 

Reduction Act and is not derived from 

a comprehensive or even a 

representative survey or study. 

Commission staff continues to believe 

that there is no cost burden for 

completing and filing Form N–8F. 

The collection of information on Form 

N–8F is not mandatory. The information 

provided on Form N–8F is not kept 

confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently-valid OMB control number. 

The 30-day public comment period 

for this information collection request 

opens on December 4, 2024 and closes 

on January 3, 2025. The public may 

view the full information request and 

submit comments at https://

www.reginfo.gov/public/do/

PRAViewICR?ref_nbr=202408-3235-028 

or email comments to 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov. 

Dated: November 26, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28260 Filed 12–2–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–261, OMB Control No. 

3235–0274] 

Proposed Collection; Comment 

Request; Extension: Rule 17Ad–11 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the existing collection of information 

provided for in Rule 17Ad–11 (17 CFR 

240.17Ad–11), under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et 

seq.). The Commission plans to submit 

this existing collection of information to 

the Office of Management and Budget 

(‘‘OMB’’) for extension and approval. 

Rule 17Ad–11 requires every 

registered recordkeeping transfer agent 

to report certain information to issuers 

and its appropriate regulatory agency in 

the event that the aggregate market 

value of an ‘‘aged record difference’’ 

exceeds certain thresholds. A ‘‘record 

difference’’ occurs when the number of 

shares or principal dollar amount of 

securities in an issuer’s records do not 

equal those in the master securityholder 

file as indicated, for instance, on 

certificates presented to the transfer 

agent for purchase, redemption, or 

transfer. An ‘‘aged record difference’’ is 

a record difference that has existed for 

more than 30 calendar days. In addition, 

the rule requires every registered 

recordkeeping transfer agent to report 

certain information to issuers and its 

appropriate regulatory agency 

concerning buy-ins of all issues for 

which it acts as recordkeeping transfer 

agent. Further, the rule requires every 

registered recordkeeping transfer agent 

to report to its appropriate regulatory 

agency when it has failed to post 

certificate detail to the master 

securityholder file within five business 

days of the time required by Rule 17Ad– 

10 (17 CFR 240.17Ad–10). Transfer 

agents must also maintain a copy of any 

report required under Rule 17Ad–11 for 

a period of not less than three years 

following the date of the report, the first 

year in an easily accessible place. 

Because the information required by 

Rule 17Ad–11 is already available to 

transfer agents, any collection burden 

for small transfer agents is minimal. 

Based on a review of the number of Rule 

17Ad–11 reports the Commission, the 

Comptroller of the Currency, the Board 

of Governors of the Federal Reserve 

System, and the Federal Deposit 

Insurance Corporation (collectively, the 

‘‘appropriate regulatory agencies’’) 

received since 2019, the Commission 

staff estimates that 8 respondents will 

file a total of approximately 1 report 

annually. The Commission staff 

estimates that, on average, each report 

can be completed in 30 minutes. 

Therefore, the total annual time burden 

for the entire transfer agent industry is 

approximately .5 hours (0.5 hours × 1 

report). Assuming an average hourly 

rate of $78 for a compliance staff 

employee at a transfer agent, the average 

total internal cost of compliance for 

each report is $39. The total annual 

internal cost of compliance for the 

estimated 8 respondents is thus 

approximately $39 ($39 per report × 1 

report). 

The retention period for the 

recordkeeping requirement under Rule 

17Ad–11 is not less than three years 

following the date of a report prepared 

pursuant to the rule. The recordkeeping 

requirement under Rule 17Ad–11 is 

mandatory to assist the Commission and 

other regulatory agencies in monitoring 

transfer agents who are not performing 

their functions promptly and accurately. 

This rule does not involve the collection 

of confidential information. 

Written comments are invited on: (a) 

whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 


lotter on DSK11XQN23PROD with NOTICES1