Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Notices 95339 

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

2 17 CFR 240.19b–4. 

3See proposed Rule 5020(h). On January 11, 

2024, GBTC and BITB began trading on NYSE Arca, 

Inc. (‘‘NYSE Arca’’), after the Commission approved 

rule changes to list and trade shares of ‘‘BitcoinBased Commodity-Based Trust Shares’’ pursuant to 

Rule 8.201–E(c)(1) (Commodity-Based Trust 

Shares), including GBTC and BITB. See Securities 

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

(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), 89 

FR 3008 (January 17, 2024) (SR–NYSEARCA–2023– 

44; SR–NYSEARCA–2021–90). On July 13, 2024, 

after receiving approval of the Commission, BTC 

began trading on NYSE Arca. See Securities 

Exchange Act Release No. 100610 (July 26, 2024) 

(Order Granting Approval of Proposed Rule 

Changes, as Modified by Amendment No. 1, to List 

and Trade Share of BTC pursuant to NYSE Arca 

Rule 8.201–E (Commodity-Based Trust Shares)), 89 

FR 62821 (August 1, 2024) (SR–NYSEARCA–2023– 

45). 

4See Securities Exchange Act Release No. 101386 

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

(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) (SR–NYSEAMER– 

2024–49, as amended) (‘‘NYSE American Approval 

Order’’). 

5See 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 or the iShares Bitcoin Trust; provided 

that all of the conditions in Rules 5020(h)(1) and 

(2) are met. 

displays a currently valid OMB control 

number. 

The 30-day public comment period 

for this information collection request 

opens on December 3, 2024 and closes 

on January 2, 2025. The public may 

view the full information request and 

submit comments at https://

www.reginfo.gov/public/do/ 

PRAViewICR?ref_nbr=202408-3235-029 

or email comments to 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov. 

Dated: November 26, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28221 Filed 11–29–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101739; File No. SR–BOX– 

2024–28] 

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 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, BOX Exchange LLC 

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

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rules 3120 (Position Limits), 5020 

(Criteria for Underlying Securities) to 

permit options trading on Bitcoin 

Funds. Additionally, the Exchange 

proposes to amend Rule 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.box

exchange.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 Grayscale 

Bitcoin Trust (BTC) (the ‘‘Grayscale 

Fund’’ or ‘‘GBTC’’), the Grayscale 

Bitcoin Mini Trust BTC (the ‘‘Grayscale 

Mini Fund’’ or ‘‘BTC’’), and the Bitwise 

Bitcoin ETF (the ‘‘Bitwise Fund’’ or 

‘‘BITB’’ and, collectively, the ‘‘Bitcoin 

Funds’’ or ‘‘Funds) on BOX. 

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 following exchangetraded products: the Grayscale Fund, 

the Grayscale Mini Fund, and the 

Bitwise Fund.3 This is a competitive 

filing that is based on a proposal 

recently submitted by NYSE American 

LLC (‘‘NYSE American’’) and approved 

by the Commission.4

As discussed herein and as provided 

in the NYSE American 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 5 and 

exchange-traded products (‘‘ETPs’’) 

structured as trusts that hold precious 

metals (which are deemed 


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6See Rule 5020(h) (permitting the listing and 

trading of options on certain ETPs backed by 

precious metals.) 

7See proposed Rule 5020(h). 

8The trust may include minimal cash. 

9Rule 5020(a) provides for guidelines to be used 

by the Exchange when evaluating potential 

underlying securities for Exchange option 

transactions. 

10Rule 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. 

11The criteria and guidelines for a security to be 

considered widely held and actively traded are set 

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

12An ‘‘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 transactions in listed 

options). See 17 CFR 242.600(b)(64) (definition of 

‘‘NMS security’’) and (65) (definition of ‘‘NMS 

stock’’). 

13See Rule 5030(h). 14See 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. 

15See 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. 

commodities).6 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.7 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.8 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).9 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).10 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.11 Each of the 

Bitcoin Funds is an NMS Stock as 

defined in Rule 600 of Regulation NMS 

under the Act.12

As provided in the NYSE American 

Approval Order, the Exchange believes 

each Bitcoin Fund is characterized by a 

substantial number of outstanding 

shares that are widely held and actively 

traded. Specifically, as shown in the 

NYSE American Approval Order, each 

of the Bitcoin Funds had significantly 

more than 7,000,000 shares outstanding, 

which is the minimum number of shares 

of a corporate stock that the Exchange 

generally requires to list options on that 

stock pursuant to 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 NYSE 

American Approval, each Bitcoin Fund 

has significantly more than 2,000 

beneficial holders (approximately 232, 

7, and 38 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. 

In addition, as provided in the NYSE 

American Approval Order, the 

Exchange believes the shares of each 

Bitcoin Fund are actively traded. 

Specifically, 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 165 and 700 

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). The 

Exchange believes this data 

demonstrates each Bitcoin Fund is 

characterized by a substantial number of 

outstanding shares that are actively 

traded. 

In addition to satisfying the 

Exchange’s initial listing standards, 

options on Bitcoin Funds will be subject 

to the Exchange’s continued listing 

standards as set forth in Rule 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.13 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.14 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 15 at the 

commencement of trading on the 

Exchange and may also list series of 

options on Bitcoin Funds for trading on 


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16See IM–5050–6. 

17See IM–5050–13. 

18See IM–5050–4. 

19See Rule 5070. 

20The 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. 

21See BOX IM–5050–2. 

22See BOX IM–5050–5. 

23See BOX IM–5050–3. 

24 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). 

25See Rule 5055(e)(2)(i). 

26The 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). 27See proposed Rule 5055(e)(2)(i). 

28Section 19(g)(1) of the Act, among other things, 

requires every SRO registered as a national 

securities exchange or national securities 

association to comply with the Act, the rules and 

regulations thereunder, and the SRO’s own rules, 

and, absent reasonable justification or excuse, 

enforce compliance by its members and persons 

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

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

of the Act allows the Commission to relieve an SRO 

of certain responsibilities with respect to members 

of the SRO who are also members of another SRO. 

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

Commission to relieve an SRO of its responsibilities 

to: (i) receive regulatory reports from such 

members; (ii) examine such members for 

compliance with the Act and the rules and 

regulations thereunder, and the rules of the SRO; 

or (iii) carry out other specified regulatory 

responsibilities with respect to such members. 

29See 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; SR– 

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

(Order Granting Accelerated Approval of Proposed 

Rule Changes, as Modified by Amendments 

Thereto, to List and Trade Bitcoin-Based 

Commodity-Based Trust Shares and Trust Units). 

a weekly,16 monthly,17 or quarterly 18

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.19 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 $200.20 Additionally, BOX may list 

series of options pursuant to the $1 

Strike Price Interval Program,21 the 

$0.50 Strike Program,22 and the $2.50 

Strike Price Program.23 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 $0.10.24

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. 

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 5020.25

At this time, the Exchange is not 

proposing to permit Bitcoin Fund 

options to trade as FLEX Equity 

Options.26 The Exchange therefore 

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

specify this exception, which will add 

clarity and transparency to Exchange 

Rules.27

Position and Exercise Limits 

NYSE American’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 NYSE American’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. 

The Exchange has also analyzed its 

capacity and represents that it and The 

Options Price Reporting Authority 

(‘‘OPRA’’) have the necessary systems 

capacity to handle the additional traffic 

associated with the listing of options on 

Bitcoin Funds. The Exchange believes 

any additional traffic that would be 

generated from the trading of options on 

Bitcoin Funds would be manageable. 

The Exchange represents that 

Participants will not have a capacity 

issue as a result of this proposed rule 

change. 

The Exchange represents that the 

same surveillance procedures applicable 

to all other options currently listed and 

traded on BOX will apply to options on 

Bitcoin Funds, and that BOX has the 

necessary systems capacity to support 

the new option series. The Exchange’s 

existing surveillance and reporting 

safeguards are designed to deter and 

detect possible manipulative behavior 

which might arise from listing and 

trading options on ETFs and ETPs, such 

as (existing) precious metal-commodity 

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 Intermarket Surveillance Group 

(‘‘ISG’’) under the Intermarket 

Surveillance Group Agreement. ISG 

members work together to coordinate 

surveillance and investigative 

information sharing in the stock, 

options, and futures markets. The 

Exchange would be able to obtain 

information regarding trading in shares 

of the Bitcoin Funds from NYSE Arca, 

Inc. (‘‘Arca’’) and other markets that 

trade shares of the Bitcoin Funds 

through ISG. In addition, the Exchange 

has a Regulatory Services Agreement 

with the Financial Industry Regulatory 

Authority (‘‘FINRA’’). Pursuant to a 

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

exchanges allocate regulatory 

responsibilities to FINRA to conduct 

certain options-related market 

surveillances.28 Further, the Exchange 

will implement any new surveillance 

procedures it deems necessary to 

effectively monitor the trading of 

options on the Bitcoin Funds. 

The underlying shares of spot bitcoin 

ETPs, including the Bitcoin Funds, are 

also subject to safeguards related to 

addressing market abuse and 

manipulation. As the Commission 

stated in its order approving proposals 

of several exchanges to list and trade 

shares of spot bitcoin-based exchangetraded products (‘‘Bitcoin ETP Order’’): 

Each Exchange has a comprehensive 

surveillance-sharing agreement with the 

CME via their common membership in 

the Intermarket Surveillance Group. 

This facilitates the sharing of 

information that is available to the CME 

through its surveillance of its markets, 

including its surveillance of the CME 

bitcoin futures market.29 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 


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30See Bitcoin ETP Order, 89 FR at 3010–11. 

31See Amendment No. 2 to Proposed Rule 

Change to List and Trade Shares of the Grayscale 

Bitcoin Trust (BTC) under NYSE Arca Rule 8.201– 

E (Commodity-Based Trust Shares) (SR– 

NYSEARCA–2021–90), filed Jan. 5, 2024, available 

at https://www.sec.gov/comments/sr-nysearca-2021- 

90/srnysearca202190-358659-884182.pdf; 

Amendment No. 2 to Proposed Rule Change to List 

and Trade Shares of the Bitwise Bitcoin ETF under 

NYSE Arca Rule 8.201–E (Commodity-Based Trust 

Shares) (SR–NYSEARCA–2023–44), filed Jan. 5, 

2024, available at https://www.sec.gov/comments/ 

sr-nysearca-2023-44/srnysearca202344-358800- 

884322.pdf; and Notice of Filing of Proposed Rule 

Change, as Modified by Amendment No. 1, To List 

and Trade Shares of the Grayscale Bitcoin Mini 

Trust Under NYSE Arca Rule 8.201–E, CommodityBased Trust Shares, Securities Exchange Act 

Release No. 100290 (June 6, 2024), 89 FR 49931 

(June 12, 2024) (SR–NYSEARCA–2024–45). 

32See Rules 4020(b), (e) and 4100. 

33See Rule 4040. 

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

35 15 U.S.C. 78f(b)(5). 

36See Rule 5020(h). 

37The 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). 

[Bitcoin ETPs].’’ 30 In light of 

surveillance measures related to both 

options and futures as well as the 

underlying Bitcoin Funds,31 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. 

The Exchange notes quotation and 

last sale information for ETFs is 

available via the Consolidated Tape 

Association (‘‘CTA’’) high speed line. 

Quotation and last sale information for 

such securities is also available from the 

exchange on which such securities are 

listed. Quotation and last sale 

information for options on Bitcoin 

Funds will be available via OPRA and 

major market data vendors. The 

Exchange believes that offering options 

on 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 believes that listing 

Bitcoin Fund options may cause 

investors to bring this liquidity to BOX, 

which would increase market 

transparency and enhance the process of 

price discovery conducted on BOX 

through increased order flow. 

Finally, the Exchange notes that 

applicable Exchange rules will require 

that customers receive appropriate 

disclosure before trading options in 

Bitcoin Funds.32 Further, brokers 

opening accounts and recommending 

options transactions must comply with 

relevant customer suitability 

standards.33

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’’),34 in general, and Section 6(b)(5) 

of the Act,35 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 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 Bitcoin Funds will 

provide investors with an opportunity 

to realize the benefits of utilizing 

options on a Bitcoin Fund, including 

cost efficiencies and increased hedging 

strategies. The Exchange believes that 

offering Bitcoin Fund options will 

benefit investors by providing them 

with a relatively lower-cost risk 

management tool, which will allow 

them to manage their positions and 

associated risk in their portfolios more 

easily in connection with exposure to 

the price of Bitcoin and with Bitcoinrelated 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,36 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, and margin requirements, 

will govern the listing and trading of 

options on Bitcoin Funds in the same 

manner. 

The Exchange believes the proposed 

rule change to exclude the Bitcoin 

Funds from being eligible for trading as 

FLEX 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.37 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 Exchange also believes the 

proposed rule change to Rule 5055(e), to 

make clear that options on the Bitcoin 

Funds are not eligible for FLEX trading, 

will remove impediments to and perfect 

the mechanism of a free and open 

market and a national market system 

because it adds clarity and transparency 

to Exchange Rules making them easier 

to navigate and understand to the 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Notices 95343 

38See 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; SR– 

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

(Order Granting Accelerated Approval of Proposed 

Rule Changes, as Modified by Amendments 

Thereto, to List and Trade Bitcoin-Based 

Commodity-Based Trust Shares and Trust Units). 

39See Bitcoin ETP Order, 89 FR at 3010–11. 

40See Amendment No. 2 to Proposed Rule 

Change to List and Trade Shares of the Grayscale 

Bitcoin Trust (BTC) under NYSE Arca Rule 8.201– 

E (Commodity-Based Trust Shares) (SR– 

NYSEARCA–2021–90), filed Jan. 5, 2024, available 

at https://www.sec.gov/comments/sr-nysearca-2021- 

90/srnysearca202190-358659-884182.pdf; 

Amendment No. 2 to Proposed Rule Change to List 

and Trade Shares of the Bitwise Bitcoin ETF under 

NYSE Arca Rule 8.201–E (Commodity-Based Trust 

Shares) (SR–NYSEARCA–2023–44), filed Jan. 5, 

2024, available at https://www.sec.gov/comments/ 

sr-nysearca-2023-44/srnysearca202344-358800- 

884322.pdf; and Notice of Filing of Proposed Rule 

Change, as Modified by Amendment No. 1, To List 

and Trade Shares of the Grayscale Bitcoin Mini 

Trust Under NYSE Arca Rule 8.201–E, CommodityBased Trust Shares, Securities Exchange Act 

Release No. 100290 (June 6, 2024), 89 FR 49931 

(June 12, 2024) (SR–NYSEARCA–2024–45). 

41See Rules 4020(b), (e) and 4100. 

42See Rule 4040. 

43See supra note 4. 

44See supra note 4. 45See Rule 5020(h). 46See supra note 4. 

benefit of investors and the public 

interest. The Exchange represents that 

BOX 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 metal-commodity 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. ISG 

members work together to coordinate 

surveillance and investigative 

information sharing in the stock, 

options, and futures markets. The 

Exchange would be able to obtain 

information regarding trading in shares 

of the Bitcoin Funds from Arca and 

other markets that trade shares of the 

Bitcoin Funds through ISG. 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.38 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].’’ 39 In light of 

surveillance measures related to both 

options and futures as well as the 

underlying Bitcoin Funds,40 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 41 and will 

require that brokers opening accounts 

and recommending options transactions 

comply with relevant customer 

suitability standards.42 The Exchange 

notes the proposed rule change is 

substantively the same as a rule change 

proposed by NYSE American which the 

Commission recently approved.43

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 NYSE American that 

was recently approved by the 

Commission.44

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. 

Also, and as stated above, the Exchange 

already lists options on other 

commodity-based ETPs.45

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.46

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, 


ddrumheller on DSK120RN23PROD with NOTICES1
95344 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Notices 

47 15 U.S.C. 78s(b)(3)(A). 

48 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. 

49 17 CFR 240.19b–4(f)(6)(iii). 

50See supra note 4. 

51For 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). 52 17 CFR 200.30–3(a)(12), (59). 

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 47 and Rule 19b– 

4(f)(6) thereunder.48

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) 49 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission previously 

approved the listing of options on the 

shares of the Bitcoin Funds.50 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.51

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–2024–28 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–2024–28. 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–BOX–2024–28 and should be 

submitted on or before December 23, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.52

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–28109 Filed 11–29–24; 8:45 am] 

BILLING CODE 8011–01–P 


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