95284 Federal Register / Vol. 89, No. 231 / Monday, December 2, 2024 / Notices 

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; 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) (‘‘Bitcoin ETP 

Approval Order’’). 

4See Securities Exchange Act Release Nos. 

101128 (September 20, 2024), 89 FR 78942 

(September 26, 2024) (SR–ISE–2024–03) (‘‘ISE 

Approval’’); and 101386 (October 18, 2024), 89 FR 

84960 (October 24, 2024) (SR–NYSEAMER–2024– 

49) (‘‘NYSE American Approval’’). 

5See Rule 19.3(i) which permits options trading 

on Fund Shares that (1) represent interests in 

registered investment companies (or series thereof) 

organized as open-end management investment 

companies, unit investment trusts or similar 

entities, and that hold portfolios of securities 

comprising or otherwise based on or representing 

investments in indexes or portfolios of securities (or 

that hold securities in one or more other registered 

investment companies that themselves hold such 

portfolios of securities) (‘‘Funds’’) and/or financial 

instruments including, but not limited to, stock 

index futures contracts, options on futures, options 

on securities and indexes, equity caps, collars and 

floors, swap agreements, forward contracts, 

repurchase agreements and reverse 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’’) constituting or otherwise based on or 

representing an investment in an index or portfolio 

of securities and/or Financial Instruments and 

Money Market Instruments, or (2) 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 477 contracts and/or 

options on physical commodities and/or non-U.S. 

currency (‘‘Commodity Pool ETFs’’) or (3) represent 

interests in a trust or similar entity that holds a 

specified non-U.S. currency or currencies 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 (4) represent 

interests in the SPDR Gold Trust or are issued by 

the iShares COMEX Gold Trust, iShares Silver 

Trust, the Fidelity Wise Origin Bitcoin Fund (the 

‘‘Fidelity Fund’’), or the ARK 21Shares Bitcoin ETF 

(the ‘‘Ark 21 Fund’’). 

6Rule 19.3(a) and (b) sets forth the criteria that 

underlying securities must satisfy for option 

contracts on those underlying securities to be 

eligible for listing and trading on the Exchange. 

https://www.sec.gov/edgar/searchedgar/ 

legacy/companysearch.html. You may 

also call the SEC’s Public Reference 

Room at (202) 551–8090. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28195 Filed 11–29–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101741; File No. SR– 

CboeEDGX–2024–078] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend 

Exchange Rule 19.3 

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, Cboe EDGX Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGX 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 

Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX Options’’) 

proposes to amend Rule 19.3. The text 

of the proposed rule change is provided 

in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 19.3 regarding the criteria for 

underlying securities. Specifically, the 

Exchange proposes to amend Rule 

19.3(i)(4) to allow the Exchange to list 

and trade options on shares or other 

securities (‘‘Fund Shares’’) that are 

principally traded on a national 

securities exchange and are defined as 

an ‘‘NMS stock’’ under Rule 600 of 

Regulation NMS and that represent 

interests the iShares Bitcoin Trust (the 

‘‘iShares Fund’’), the Grayscale Bitcoin 

Trust (the ‘‘Grayscale Fund’’), the 

Grayscale Bitcoin Mini Trust (the 

‘‘Grayscale Mini Fund’’), or the Bitwise 

Bitcoin ETF (the ‘‘Bitwise Fund’’ and, 

together with the iShares Fund, the 

Grayscale Fund, and the Grayscale Mini 

Fund, the ‘‘Bitcoin Funds’’).3 This is a 

competitive filing based on similar 

proposals submitted by Nasdaq ISE, LLC 

(‘‘ISE’’) (with respect to the iShares 

Fund) and NYSE American, LLC 

(‘‘NYSE American’’) (with respect to the 

Grayscale Fund, the Grayscale Mini 

Fund, and the Bitwise Fund), which 

were recently approved by the 

Securities and Exchange Commission 

(the ‘‘Commission’’).4 Current Rule 

19.3(i) provides that, subject to certain 

other criteria set forth in that Rule, 

securities deemed appropriate for 

options trading include Fund Shares 

that represent certain types of interests,5

including interests in certain specific 

trusts that hold financial instruments, 

money market instruments, precious 

metals (which are deemed 

commodities), or Bitcoin (which is 

deemed a commodity. In addition, Rule 

19.3(i)(1) requires that Fund Shares 

meet the criteria and standards set forth 

in Rule 19.3(a) and (b) 6 or (2) 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 Fund Shares 

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. 

The Bitcoin Funds are Bitcoin-backed 

commodity exchange-traded funds 

(‘‘ETFs’’) structured as trusts. Similar to 

any Fund Share currently deemed 

appropriate for options trading under 


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7The trust may include minimal cash. 

8See Rule 19.3(i); and SR–CboeEDGX–2024–077. 

9Rule 19.3(a) and (b) sets forth the criteria an 

underlying security must meet for the Exchange to 

be able to list options on the underlying. 

10See Rule 19.2, which provides that the rights 

and obligations of holders and writers are set forth 

in the Rules of the Options Clearing Corporation 

(‘‘OCC’’); and Equity Options Product 

Specifications January 3, 2024), available at Equity 

Options Specifications (cboe.com); see also OCC 

Rules, Chapters 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). 

11See Rule 19.6(b). The monthly expirations are 

subject to certain listing criteria for underlying 

securities described within Rule 19.3. Monthly 

listings expire the third Friday of the month. The 

term ‘‘expiration date’’ (unless separately defined 

elsewhere in the OCC By-Laws), when used in 

respect of an option contract (subject to certain 

exceptions), means the third Friday of the 

expiration month of such option contract, or if such 

Friday is a day on which the exchange on which 

such option is listed is not open for business, the 

preceding day on which such exchange is open for 

business. See OCC By-Laws Article I, Section 1. 

Pursuant to Rule 19.6(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. 

12See Rule 19.6, Interpretation and Policy .05. 

13See Rule 19.6, Interpretation and Policy .08. 

14See Rule 19.6, Interpretation and Policy .04. 

15See Rule 19.8. 

16The Exchange notes that for options listed 

pursuant to the Short Term Option Series Program, 

the Monthly Options Series Program, and the 

Quarterly Options Series Program, Rule 19.6, 

Interpretations and Policies .05, .08, and .04 

specifically sets forth intervals between strike 

prices on Quarterly Options Series, Short Term 

Option Series, and Monthly Options Series, 

respectively. 

17See Rule 19.6, Interpretation and Policy .02. 

18See Rule 19.6, Interpretation and Policy .06. 

Rule 19.3(i), the investment objective of 

each Bitcoin Fund 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. As is 

the case for Fund Shares currently 

deemed appropriate for options trading, 

a 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.7 The 

Bitcoin Funds provide investors with 

cost-efficient alternatives that allow a 

level of participation in the Bitcoin 

market through the securities market. 

The primary substantive difference 

between Bitcoin Funds and Fund Shares 

currently deemed appropriate for 

options trading are that Fund Shares 

may hold securities, certain financial 

instruments, and specified precious 

metals (which are deemed 

commodities), while Bitcoin Funds hold 

Bitcoin (which is also deemed a 

commodity). The Bitcoin Funds are 

similar to the Fidelity Fund and the Ark 

21 Fund, which are already eligible for 

options trading on the Exchange.8

The Exchange’s initial listing 

standards for Fund Shares on which 

options may be listed and traded on the 

Exchange will apply to the Bitcoin 

Funds. Pursuant to Rule 19.3(a), a 

security (which includes a Fund Share) 

on which options may be listed and 

traded on the Exchange must be 

registered with the Securities and 

Exchange Commission (the 

‘‘Commission’’) and be an ‘‘NMS stock’’ 

as defined in Rule 600 of Regulation 

NMS under the Securities Exchange Act 

of 1934, as amended (the ‘‘Act’’); and 

the security shall be characterized by a 

substantial number of outstanding 

shares that are widely held and actively 

traded. Rule 19.3(i)(1) requires that 

Fund Shares either (1) meet the criteria 

and standards set forth in Rule 19.3(a) 

and (b),9 or (2) are available for creation 

or redemption each business day in cash 

or in kind from the investment 

company, commodity pool or other 

entity at a price related to net asset 

value, and the investment company, 

commodity pool or other entity is 

obligated to provide that Fund Shares 

may be created even if some or all of the 

securities and/or cash required to be 

deposited have not been received by the 

Fund, the unit investment trust or the 

management investment company, 

provided the authorized creation 

participant has undertaken to deliver 

the securities and/or cash 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 Fund, all as described in the Fund’s 

or unit trust’s prospectus. Each Bitcoin 

Fund satisfies Rule 19.3(i)(1)(B) as each 

is subject to this creation and 

redemption process. 

Options on the Bitcoin Funds will be 

subject to the Exchange’s continued 

listing standards set forth in Rule 19.4(g) 

for Fund Shares deemed appropriate for 

options trading pursuant to Rule 19.3(i). 

Specifically, 19.4(g) provides that Fund 

Shares that were initially approved for 

options trading pursuant to Rule 19.3 

will not be deemed to meet the 

requirements for continued approval, 

and the Exchange shall not open for 

trading any additional series of option 

contracts of the class covering such 

Fund Shares if the security ceases to be 

an NMS stock (see Rule 19.4(b)(4)). 

Additionally, the Exchange will not 

open for trading any additional series of 

option contracts of the class covering 

Fund Shares in any of the following 

circumstances: (1) in the case of options 

covering Fund Shares approved for 

trading under Rule 19.3(i)(4)(A), in 

accordance with the terms of Rule 

19.4(b)(1), (2) and (3); (2) in the case of 

options covering Fund Shares approved 

pursuant to Rule 19.3(i)(4)(B), following 

the initial 12-month period beginning 

upon the commencement of trading in 

the Fund Shares on a national securities 

exchange and are defined as NMS stock 

under Rule 600 of Regulation NMS, 

there were fewer than 50 record and/or 

beneficial holders of such Fund Shares 

for 30 consecutive days; (3) the value of 

the index, non-U.S. currency, portfolio 

of commodities including commodity 

futures contracts, options on commodity 

futures contracts, swaps, forward 

contracts and/or options on physical 

commodities and/or Financial 

Instruments or Money Market 

Instruments, or portfolio of securities on 

which the Fund Shares are based 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 in such 

options on the Exchange inadvisable. 

Options on each Bitcoin Fund will be 

physically settled contracts with 

American-style exercise.10 Consistent 

with current Rule 19.6, which governs 

the opening of options series on a 

specific underlying security (including 

Fund Shares), the Exchange will open at 

least one expiration month for options 

on each Bitcoin Fund 11 at the 

commencement of trading on the 

Exchange and may also list series of 

options on a Bitcoin Fund for trading on 

a weekly,12 monthly,13 or quarterly 14

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

that expire from 12 to 39 months from 

the time they are listed.15

Pursuant to Rule 19.6, Interpretation 

and Policy .01, which governs strike 

prices of series of options on Fund 

Shares, the interval of strikes prices for 

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 $200.16 Additionally, 

the Exchange may list series of options 

pursuant to the $1 Strike Price Interval 

Program,17 the $0.50 Strike Program,18


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19See Rule 19.6, Interpretation and Policy .03. 

20See Rule 19.6(d)(5). 

21 If options on a Bitcoin Fund are eligible to 

participate in the Penny Interval Program, the 

minimum increment will be $0.01 for series with 

a price below $3.00 and $0.05 for series with a price 

at or above $3.00. See 21.5(d) (which describes the 

requirements for the Penny Interval Program). 

22Rule 18.7(a)(1) provides that no Options 

Member shall make, for any account in which it has 

any interest or for the account of any Customer, an 

opening transaction on any exchange if the Options 

Member has reason to believe that as a result of 

such transaction the Options Member or its 

Customer would, acting alone or in concert with 

others, directly or indirectly, exceed the applicable 

position limit fixed by Cboe Exchange, Inc. (‘‘Cboe 

Options’’). Cboe Options Rule 8.30, Interpretation 

and Policy .10 establishes a position limit for the 

Bitcoin Fund options of 25,000. See SR–CBOE– 

2024–051. 

23See ISE Approval; and Letter from Angela 

Dunn, Nasdaq ISE, LLC, to Vanessa Countryman, 

Secretary, Commission, dated August 21, 2024) 

(‘‘ISE Letter’’). 

24See NYSE American Approval. 

25The computations are based on OCC data from 

August 6, 2024. Data displaying zero values in 

market capitalization or ADV were removed. 

26The iShares Fund has one asset and therefore 

is not comparable to a broad based ETF where there 

are typically multiple components. 

27See ISE Letter at 10. 

28 ISE acquired this figure as of August 13, 2024. 

See https://www.ishares.com/us/products/333011/ 

ishares-bitcoin-trust. The global supply of Bitcoin 

grows each day Bitcoin are minted. 

29See ISE Letter at 10. 

30See, e.g., iShares® iBoxx® $ High Yield 

Corporate Bond ETF (‘‘HYG’’) with a market 

capitalization of 13,859,235,000 billion as of 

November 4, 2024. See https://www.ishares.com/ 

us/products/239565/ishares-iboxx-high-yieldcorporate-bond-etf. The Exchange notes that HYG 

has a position limit of 500,000 contracts. 

31See ISE Letter at 10. 

32 Id. 

33See 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. 

the $2.50 Strike Price Program,19 and 

the $5 Strike Program.20 Pursuant to 

Rule 21.5, 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 $0.10.21

Any and all new series of Bitcoin Fund 

options that the Exchange lists will be 

consistent and comply with the 

expirations, strike prices, and minimum 

increments set forth in Rules 19.6 and 

21.5, as applicable. 

Bitcoin Fund options will trade in the 

same manner as any other Fund Share 

options on the Exchange. The Exchange 

Rules that currently apply to the listing 

and trading of all Fund Share options on 

the Exchange, including, for example, 

Rules that govern listing criteria, 

expirations, exercise prices, minimum 

increments, margin requirements, 

customer accounts, and trading halt 

procedures will apply to the listing and 

trading of Bitcoin Funds options on the 

Exchange in the same manner as they 

apply to other options on all other Fund 

Shares that are listed and traded on the 

Exchange, including the precious-metal 

backed commodity Fund Shares and the 

Fidelity and Ark 21 Funds already 

deemed appropriate for options trading 

on the Exchange pursuant to current 

already deemed appropriate for options 

trading on the Exchange pursuant to 

current Rule 19.3(i). 

Pursuant to Rules 18.7 and 18.9, the 

position and exercise limits, 

respectively, for each Bitcoin Fund 

option will be 25,000 same side option 

contracts.22 In considering the 

appropriate position and exercise limits 

for the Bitcoin Funds, the Exchange 

reviewed the data presented by ISE in 

its filing (specifically in Exhibit 3 of the 

filing) with respect to the iShares 

Fund 23 and by NYSE American in its 

filing with respect to the Grayscale 

Fund, the Grayscale Mini Fund, and the 

Bitwise Fund.24

With respect to the iShares Fund, in 

its filing, ISE considered the iShares 

Fund market capitalization and average 

daily volume (‘‘ADV’’) against those of 

other underlying securities, as well as 

the proposed position limit in relation 

to other options. In measuring the 

iShares Fund against other securities, 

ISE aggregated market capitalization and 

volume data for securities that have 

defined position limits utilizing data 

from The Options Clearing Corporations 

(‘‘OCC’’).25 This pool of data took into 

consideration 3,984 options on single 

stock securities, excluding broad based 

ETFs.26 Next, ISE aggregated the data 

based on market capitalization and ADV 

and grouped option symbols by position 

limit utilizing statistical thresholds for 

ADV and market capitalization that 

were one standard deviation above the 

mean for each position limit category 

(i.e., 25,000, 50,000 to 65,000, 75,000, 

100,000 to less than 250,000, 250,000 to 

400,000, 450,000 to 1,000,000, and 

greater than or equal to 1,000,000) 

(sic).27 Rule 8.30 sets out position limits 

for various contracts. For example, on 

the Exchange, like ISE, a 25,000 contract 

position limit applies to options with an 

underlying security that does not meet 

the requirements for a higher options 

contract position limit. ISE performed 

an exercise to demonstrate the iShares 

Fund position limit relative to other 

options symbols in terms of market 

capitalization and ADV. For reference 

the market capitalization for the iShares 

Fund was 19,789,068 billion 28 with an 

ADV, for the preceding three months 

prior to August 7, 2024, of greater than 

26 million shares.29 By comparison, 

other options symbols with similar 

market capitalization and ADV have a 

position limit in excess of 400,000.30

Therefore, the proposed 25,000 same 

side position limit for options on the 

iShares Fund is extremely conservative 

relative to these options symbols which 

are a full standard deviation above the 

mean in comparison. 

Second, ISE reviewed the iShares 

Fund’s data relative to the market 

capitalization of the entire Bitcoin 

market in terms of exercise risk and 

availability of deliverables. Utilizing 

data as of August 3, 2024, there were 

19,737,193 Bitcoins in circulation.31 ISE 

took a price of $57,000 that equates to 

a market capitalization of greater than 

1.125 trillion U.S. dollars, and applied 

that to a position limit of 400,000 for 

options on the iShares Fund.32 If a 

position limit of 400,000 options were 

considered (the position limit that 

would be typically assigned based upon 

data) the exercisable risk would 

represent only 6.6% of the outstanding 

shares of the iShares Fund. The 25,000 

position limit being sought only 

represents 0.4% of the outstanding 

shares of the iShares Fund. Since the 

iShares Fund has a creation and 

redemption process managed through 

the issuer, additionally it can be 

compared the position limit sought to 

the total market capitalization of the 

entire Bitcoin market. In this case, the 

exercisable risk for options on the 

iShares Fund would be less than 0.01% 

of the market capitalization of all 

outstanding Bitcoin. Assuming a 

scenario where all options on the 

iShares Fund’s shares were exercised 

given the proposed 25,000 per same side 

position limit, this would have a 

virtually unnoticed impact on the entire 

Bitcoin market. This analysis 

demonstrates that the proposed 25,000 

per same side position limit is also 

extremely conservative and more than 

appropriate for options on the iShares 

Fund. 

Third, ISE reviewed the proposed 

position limit by comparing it to 

position limits for derivative products 

regulated by the Commodity Futures 

Trading Commission (‘‘CFTC’’). While 

the CFTC, through the relevant 

Designated Contract Markets, only 

regulates options positions based upon 

delta equivalents (creating a less 

stringent standard), ISE examined 

equivalent bitcoin futures position 

limits. In particular, ISE looked at the 

CME Bitcoin futures contract that has a 

position limit of 2,000 futures.33 On 

August 7, 2024, CME Bitcoin futures 


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34See https://finance.yahoo.com/quote/

BTC%3DF/history/?guccounter=1&guce_

referrer=aHR0cHM6Ly93d3cuZ29v

Z2xlLmNvbS8&guce_referrer_

sig=AQAAAM7ngaS6ZQS9c2Wzx7JW2IUe-_-_

1FnLyr8T-Qw4jjkleHyCENfSMIEp

PPt2hCzPDEryTVyB78NIwxkwFB5Fuw-jAYiuSmYJHBriWbV6dYn91VQfzQNt3p0I2RkYLD3H

hzXPwu4AP5as-_WzHNpEBon4

sk5sUZXgkapMrZR--CS. 

35See ISE Letter at 11. 

36See CME Rulebook Chapter 5, Position Limit, 

Position Accountability and Reportable Level Table 

in the Interpretations & Special Notices. 

37 Id. 

38See https://www.ishares.com/us/products/ 

333011/ishares-bitcoin-trust. 

39This figure was acquired as of August 13, 2024. 

See https://www.ishares.com/us/products/333011/ 

ishares-bitcoin-trust. The global supply of Bitcoin 

grows each day Bitcoin are minted. 

40As of August 13, 2024, GLD had 294,000,000 

shares outstanding and SLV had 510,200,000 shares 

outstanding. See https://www.ssga.com/us/en/ 

intermediary/etfs/funds/spdr-gold-shares-gld and 

https://www.ishares.com/us/products/239855/ 

ishares-silver-trust-fund. 

41Rule 8.30, Interpretation and Policy .02(e) 

states that to be eligible for the 250,000 option 

contract limit, either the most recent six-month 

trading volume of the underlying security must 

have totaled at least 100,000,000 shares; or the most 

recent six-month trading volume of the underlying 

security must have totaled at least 75,000,000 

shares and the underlying security must have at 

least 300,000,000 currently outstanding. 

42See FactSet, 9/30/2024, https://

www.factset.com/data-attribution. Bitwise Fund 

shares began trading on July 31, 2024, and therefore 

the data in the above table has only two months of 

trading data available. 

43See https://www.theocc.com/Market-Data/ 

Market-Data-Reports/Series-and-Trading-Data/ 

Series-Search (including the following symbols that 

have a position limit of 250,000: GLD, IAU, SLV, 

SIVR, SGOL). 

settled at $55,000.34 Taking the position 

limit of 2,000 futures at a $5 multiplier 

equates to $550 million of notional 

value for Bitcoin futures. By way of 

comparison, on August 7, 2024, the 

iShares Fund settled at $31.19 per share, 

which would equate to 17,633,857 

shares of the iShares Fund 35 if the CME 

notional position limit were utilized. 

Since substantial portions of any 

distributed options portfolio are likely 

to be out of the money on expiration, an 

options position limit equivalent to the 

CME position limit for Bitcoin futures 

(considering that all options deltas are 

<=1.00) should be a bit higher than the 

CME implied 176,338 limit. 

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).36 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.37 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 iShares 

Fund options. 

In analyzing the proposed position 

limit for options on the iShares Fund, 

ISE also considered the supply of 

Bitcoin. Specifically, ISE examined the 

number of market participants with 

position limits that would need to 

exercise in unison to put the underlying 

asset under stress. In the case of options 

on the iShares Fund, the proposed 

25,000 same side position limit 

effectively restricts a market participant 

from holding positions that could be 

exercised in excess of 2,500,000 shares 

of the iShares Fund. Utilizing data from 

August 12, 2024, the iShares Fund had 

611,040,000 shares outstanding, 

therefore 244 market participants would 

have to simultaneously exercise 

position limits in order to create a 

scenario that may put the underlying 

asset (iShares Fund) under stress.38 The 

Exchange notes that historically, from 

observation only, it appears that no 

more than five market participants 

holding position limits in any security 

have exercised in unison in any option. 

As unlikely an occurrence as all market 

participants exercising their position 

limits in unison would be, if it were to 

occur, it should be noted that even such 

an occurrence would not likely put the 

iShares Fund under stress as economic 

incentives, would induce the creation of 

more shares through the ETF creation 

and redemption process. 

By way of example, given that the 

current global supply of Bitcoin, the 

underlying asset of the iShares Fund, is 

19,789,068 39 and that each Bitcoin can 

currently be redeemed for 1,755 shares 

of the iShares Fund, another 

34,729,814,340 shares of the iShares 

Fund could be created. To exhaust this 

supply of the iShares Fund, 13,891 

market participants would have to 

simultaneously exercise their position 

limit. Comparing the iShares Fund to 

the SPDR Gold Shares (‘‘GLD’’) ETF or 

the iShares Silver Trust (‘‘SLV’’) ETF, 

which have position limits of 250,000 or 

ten times the proposed position limit for 

the iShares Fund as well as lower shares 

outstanding in both products,40 it is 

unjustified to mandate a different level 

of stringency with respect to a position 

limit for options on the iShares Fund. 

With respect to the Grayscale Fund, 

the Grayscale Mini Fund, and the 

Bitwise Fund, the Exchange reviewed 

the data presented by NYSE American 

in its filing. NYSE American aggregated 

market capitalization, volume, and 

shares outstanding data of the Bitcoin 

Funds and compared that data to those 

of other ETFs, and compared the 

proposed position limit of the Bitcoin 

Funds to the position limits of the 

options overlying those other ETFs. The 

Exchange reviewed NYSE American’s 

data that demonstrated that each of 

these three Bitcoin Funds would easily 

qualify for the 250,000-contract position 

limit available to other ETFs and ETPs 

pursuant to the criterion in Rule 8.30, 

Interpretation and Policy .02, which 

requires the most recent six-month 

trading volume of the underlying 

security to be at least 100,000,000 

shares.41

Bitcoin Fund 

Total volume 

(shares) 

(as of 

September 30, 

2024) 

Grayscale Fund .................... 723,758,100 

Grayscale Mini Fund ............ 335,492,930 

Bitwise Fund ......................... 263,965,870 

Based on this trading volume,42 each 

Bitcoin Fund exceeded the requisite 

100,000,000 shares necessary to qualify 

for the 250,000-contract position and 

exercise limits. By comparison, the 

underlying of other options with sixmonth trading volume less than the 

volumes in the table above are eligible 

for position and exercise limits of at 

least 250,000.43


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44See https://www.blockchain.com/explorer/ 

charts/total-bitcoins. 

Second, with respect to the 

outstanding shares of these three Bitcoin 

Funds, the Exchange reviewed NYSE 

American’s data regarding the 

outstanding shares of each of these 

Bitcoin Funds. NYSE American 

performed an exercise to demonstrate 

that if a market participant held the 

maximum number of contracts possible 

pursuant to the proposed position and 

exercise limits (25,000 contracts), the 

equivalent shares represented by the 

proposed position and exercise limits 

(2,500,000 shares) would represent the 

following approximate percentage of 

outstanding shares as of August 30, 

2024: 

Bitcoin Fund 

Proposed 

position/ 

exercise 

limits in 

equivalent 

shares 

Outstanding 

shares 

Percentage of 

outstanding 

shares 

Grayscale Fund ........................................................................................................................... 2,500,000 284,570,100 0.9 

Grayscale Mini Fund .................................................................................................................... 2,500,000 366,950,100 0.7 

Bitwise Fund ................................................................................................................................ 2,500,000 68,690,000 3.6 

As this table demonstrates, 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. For 

example, 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 its 

options). NYSE American used the 

number of shares outstanding for each 

Bitcoin Fund as of August 30, 2024, and 

calculated the approximate number of 

market participants that could hold the 

maximum of 25,000 same side positions 

in each Bitcoin Fund that would equate 

to the number of shares outstanding of 

that Bitcoin Fund: 

Bitcoin Fund Outstanding 

shares 

Number of 

market 

participants 

with 25,000 

same side 

positions 

Grayscale Fund ....................................................................................................................................................... 284,570,100 114 

Grayscale Mini Fund ................................................................................................................................................ 366,950,100 147 

Bitwise Fund ............................................................................................................................................................ 68,690,000 27 

This means if 114 market participants 

had 25,000 same side positions in 

options on the Grayscale Fund, 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, this 

means if 147 market participants had 

25,000 same side positions in options 

on the Grayscale Mini Fund, each of 

them would have to simultaneously 

exercise all of those options to create a 

scenario that may put the underlying 

security under stress. Finally, this 

means if 27 market participants had 

25,000 same side positions in options 

on the Bitwise Fund, 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 this to occur; 

however, even if such event did occur, 

the Exchange would not expect any of 

the 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. 

NYSE American also performed an 

exercise to compare the size of the 

proposed position limit to the market 

capitalization of the Bitcoin market 

given that the issuer of each of these 

three Bitcoin Funds may create and 

redeem shares that represent an interest 

in Bitcoin. NYSE American took the 

global supply of Bitcoin, which was 

19,747,066, and the price of one Bitcoin, 

which was approximately $59,108.23, as 

of August 30, 2024, which equates to a 

market capitalization of approximately 

$1.167 trillion.44 Consider the proposed 

position and exercise limit of 25,000 

option contracts for each Bitcoin Fund 

option. A position and exercise limit of 


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45See id. 

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 Grayscale Fund, the 

Grayscale Mini Fund, or the Bitwise 

Fund, as applicable (if that market 

participant exercised all its options). 

NYSE American considered the share 

price of each Bitcoin Fund on August 

30, 2024 and calculated the value of 

2,500,000 shares of the Bitcoin Fund at 

that price, and the approximate 

percentage of that value of the size of 

the Bitcoin market: 

Bitcoin Fund Share price 

($) 

Value of 

2,500,000 

shares 

Percentage of 

Bitcoin market 

Grayscale Fund ............................................................................................................................................................. 46.75 116,875,000 0.010 

Grayscale Mini Fund ..................................................................................................................................................... 5.20 13,000,000 0.001 

Bitwise Fund .................................................................................................................................................................. 31.95 79,875,000 0.007 

Therefore, if a market participant with 

the maximum 25,000 same side 

contracts in options on the Grayscale 

Fund, the Grayscale Mini Fund, or the 

Bitwise Fund exercised all positions at 

one time, such an event would have no 

practical impact on the Bitcoin market. 

The Exchange also reviewed NYSE 

American’s data regarding the market 

capitalization of each of these three 

Bitcoin Funds relative to the market 

capitalization of the entire Bitcoin 

market, as of August 30, 2024: 45

Bitcoin/shares 

outstanding 

Market value 

($) 

% of total 

Bitcoin market 

Total Bitcoin Market ..................................................................... 19,747,066 1,167,214,096,788 100 

Grayscale Fund ........................................................................... 284,570,100 13,443,091,524 1.15 

Grayscale Mini Fund .................................................................... 366,950,100 1,930,157,526 0.17 

Bitwise Fund ................................................................................ 68,690,000 2,221,640,670 0.19 

As this data gathered by NYSE 

American demonstrates, none of these 

three Bitcoin Funds represent more than 

1.2% of the global supply of Bitcoin 

(19,747,066). Based on the $46.75 price 

of a Grayscale Fund share on August 30, 

2024, a market participant could have 

redeemed one Bitcoin for approximately 

1,264 Grayscale Fund shares. Another 

24,967,146,455 Grayscale Fund shares 

could be created before the supply of 

Bitcoin was exhausted. As a result, 

9,987 market participants would have to 

simultaneously exercise 25,000 same 

side positions in Grayscale Fund 

options receive shares of the Grayscale 

Fund holding the entire global supply of 

Bitcoin. Similarly, based on the $5.20 

price of a Grayscale Mini Fund share on 

August 30, 2024, a market participant 

could have redeemed one Bitcoin for 

approximately 11,367 Grayscale Mini 

Fund shares. Another 224,464,249,382 

Grayscale Mini Fund shares could be 

created before the supply of Bitcoin was 

exhausted. As a result, 89,786 market 

participants would have to 

simultaneously exercise 25,000 same 

side positions in Grayscale Mini Fund 

options to receive shares of Grayscale 

Mini Fund holding the entire global 

supply of Bitcoin. Similarly, based on 

the $31.95 price of a Bitwise Fund share 

on August 30, 2024, a market 

participant could have redeemed one 

Bitcoin for approximately 1,850 Bitwise 

Fund shares. Another 36,532,522,591 

Bitwise Fund shares could be created 

before the supply of Bitcoin was 

exhausted. As a result, 14,613 market 

participants would have to 

simultaneously exercise 25,000 same 

side positions in Bitwise Fund options 

to receive shares of Bitwise Fund 

holding the entire global supply of 

Bitcoin. 

As ISE did with respect to the iShares 

Fund, NYSE American compared the 

proposed position limits to the position 

limit of CME Bitcoin futures, which as 

noted above is 2,000 futures. 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. 

The following table shows the share 

price of each Bitcoin Fund on August 

28, 2024, and the approximate number 

of option contracts that equates to that 

notional value: 

Bitcoin Fund Share price 

($) 

Number of 

option 

contracts 

Grayscale Fund ....................................................................................................................................................... 46.94 125,585 

Grayscale Mini Fund ................................................................................................................................................ 5.23 1,127,151 

Bitwise Fund ............................................................................................................................................................ 32.08 183,759 

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. As noted above, the fact that 

many options ultimately expire out-ofthe-money 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, again, unlike 

options contracts, CME position limits 

are calculated on a net futuresequivalent basis by contract and include 

contracts that aggregate into one or more 

base contracts according to an 


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46See CME Rulebook Chapter 5, Position Limit, 

Position Accountability and Reportable Level Table 

in the Interpretations & Special Notices. 

47 Id. 

48See https://www.blockchain.com/explorer/ 

assets/btc (citing 21 million as the ‘‘total supply’’ 

of bitcoin). 

49A supply consideration would likely be 

valuable for an option symbol that had far less 

liquidity than the Trust. 

50See https://companiesmarketcap.com/usa/ 

largest-companies-in-the-usa-by-market-cap/. 

51The 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’’). The Exchange notes when the 

Commission approved this filing, the position 

limits in Rule 8.30 were the same as they are today. 

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. 

52For 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. 

53See Securities Exchange Act Release No. 39489 

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

(SR–CBOE–1997–11). 

54See id. 

55See iShares Fund Form S–1 Registration 

Statement, at p. 25, bit20230608_s1.htm; Grayscale 

Fund Form S–1 Registration Statement, at p. 17, 

https://www.sec.gov/Archives/edgar/data/1588489/ 

000119312517013693/d157414ds1.htm; Grayscale 

Mini Fund, Form S–1 Registration Statement, at p. 

21, https://www.sec.gov/Archives/edgar/data/ 

2015034/000119312524065444/d785023ds1.htm; 

and Bitwise Amendment No 2. to S–1, at p. 47, 

https://www.sec.gov/Archives/edgar/data/1763415/ 

000199937123000735/bitwise-s1a_120423.htm. 

aggregation ratio(s).46 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.47 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 Grayscale 

Fund, Grayscale Mini Fund, and Bitwise 

Fund options. 

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.48 The Exchange 

notes that Bitcoin is a viable economic 

alternative to traditional assets. The 

price of goods denominated by Bitcoin 

has actually declined. This dynamic not 

only makes a fixed supply desirable, but 

a necessary condition of the value 

added by this asset in the broader 

economy. 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. Given the 

significant unlikelihood of any of events 

described above 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. 

Importantly, because the supply of 

Bitcoin is much larger than the available 

supply of most securities and the 

proposed 25,000 contract position limit 

is so conservative, the Exchange 

believes that evaluating the available 

supply of Bitcoin in establishing a 

position limit for options on each of the 

Bitcoin Funds would demonstrate that 

the proposed limit is safe for investors 

and the market.49 Each Bitcoin Fund 

represents less than 2% of the entire 

Bitcoin supply. When comparing the 

market capitalization of bitcoin against 

the largest securities, Bitcoin would 

rank 7th among those securities.50

Further, the Exchange believes that its 

proposal to list options on the Bitcoin 

Funds each with a position limit of 

25,000 on the same side is a 

conservative position limit that does not 

lend itself to manipulation in the market 

given the ample market capitalization 

and liquidity in each Bitcoin Fund. If 

we look to the liquidity statistics of 

similar instruments and their 

concomitant position limits, we are able 

to extrapolate a reasonable standard for 

arriving at a position limit for a new 

product. In this case we can look to 

GLD, SLV, and the ProShares Bitcoin 

Strategy ETF. These products have 

volume statistics and ‘‘float’’ statistics, 

which gauge liquidity, which are in 

line, yet slightly lower than the Bitcoin 

Funds. All three of these reference 

products have position limits of 250,000 

contracts. These reference products are 

remarkably similar in nature to the 

Bitcoin Funds; they are exchange-traded 

products (‘‘ETPs’’) holding one asset in 

a trust. 

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.51 Position and exercise limits are 

not a tool that should be used to address 

a potential limited supply of the 

underlying 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.52 ‘‘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.’’ 53 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.’’ 54

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 2140.55 Each Registration 

Statement permits an unlimited number 

of shares of the applicable Bitcoin Fund 

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 


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56See Bitcoin ETP Approval Order. 

57The surveillance program includes surveillance 

patterns for price and volume movements as well 

as patterns for potential manipulation (e.g., 

spoofing and marking the close). 

58Cboe BYX Exchange, Inc., Cboe BZX Exchange, 

Inc., and Cboe EDGA Exchange, Inc. are affiliated 

markets of the Exchange. 

59Section 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. 

60See Bitcoin ETP Approval Order. 

61See Bitcoin ETP Approval Order, 89 FR at 

3010–11. 

62See 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; 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) (‘‘Bitcoin ETP Approval 

Order’’). 

63The Exchange understands from customers that 

investors have historically transacted in options on 

Fund Shares in the OTC options market if such 

options were not available for trading in a listed 

environment. 

of Bitcoin.56 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 

positions limits are more than sufficient 

to protect investors and the market. 

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 and ADV. 

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 

products.57 The Exchange’s market 

surveillance staff would have access to 

the surveillances conducted by Cboe 

BYX Exchange, Inc., Cboe BZX 

Exchange, Inc., and Cboe EDGA 

Exchange, Inc., in addition to the 

Exchange’s equity market,58 with 

respect to the Bitcoin Funds and would 

review activity in the underlying 

Bitcoin Funds when conducting 

surveillances for market abuse or 

manipulation in the options on the 

Bitcoin Funds. 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. In 

addition to obtaining information from 

its affiliated markets, the Exchange 

would be able to obtain information 

regarding trading in shares of the 

Bitcoin Funds from their primary listing 

markets and from other markets that 

trades shares of the Bitcoin Funds 

through ISG. 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.59

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.60 The Exchange 

states that, 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].’’ 61 In light of 

surveillance measures related to both 

options and futures as well as the 

underlying Bitcoin Funds,62 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,63 but may prefer to 

trade such options in a listed 

environment to receive the benefits of 

trading listing options, including (1) 


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64 15 U.S.C. 78f(b). 

65 15 U.S.C. 78f(b)(5). 

66 Id. 

67See Securities Exchange Act Release No. 39489 

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

(SR–CBOE–1997–11). 

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 the Exchange through 

increased order flow. The Fund Shares 

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 

Fund Share options, including Fund 

Shares that hold commodities (i.e., 

precious metals) that it currently lists 

and trades on the Exchange. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.64 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 65 requirements that the rules of 

an exchange be 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 regulating, clearing, settling, 

processing information with respect to, 

and 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 66 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, the Exchange believes 

that the proposal to list and trade 

options on the Bitcoin Funds will 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, protect investors because 

offering options on the Bitcoin Funds 

will provide investors with an 

opportunity to realize the benefits of 

utilizing options on a Bitcoin Fund, 

including cost efficiencies and 

increased hedging strategies. The 

Exchange believes that offering options 

on a competitively priced ETF based on 

spot Bitcoin will benefit investors by 

providing them with an additional, 

relatively lower-cost risk management 

tool, allowing them to manage, more 

easily, their positions and associated 

risks in their portfolios in connection 

with exposure to spot Bitcoin. Today, 

the Exchange lists options on other 

commodity (including Bitcoin) ETFs 

structured as a trust, which essentially 

offer the same objectives and benefits to 

investors, and for which the Exchange 

has not identified any issues with the 

continued listing and trading of options 

on those ETFs. 

The Exchange also believes the 

proposal to permit options on the 

Bitcoin Funds will remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system, because options on the Bitcoin 

Funds will comply with current 

Exchange Rules. Options on the Bitcoin 

Funds must satisfy the initial listing 

standards and continued listing 

standards currently in the Rules, 

applicable to options on all ETFs, 

including options on other commodity 

ETFs already deemed appropriate for 

options trading on the Exchange 

pursuant to Rule 19.3(i). Additionally, 

as demonstrated above, the Bitcoin 

Funds are characterized by a substantial 

number of shares that are widely held 

and actively traded. Further, Rules that 

currently govern the listing and trading 

of options on ETFs, including 

permissible expirations, strike prices, 

minimum increments, position and 

exercise limits (as proposed herein), and 

margin requirements, will govern the 

listing and trading of options on the 

Bitcoin Funds. 

The proposed position and exercise 

limits for options on each of 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 Bitcoin Fund’s market 

capitalization, ADV, and high number of 

outstanding shares. The proposed 

position limit, and exercise limit, is 

consistent with the Act as it addresses 

concerns related to manipulation and 

protection of investors because, as 

demonstrated above, the position limit 

(and exercise limit) is extremely 

conservative and more than appropriate 

given the Bitcoin Funds are actively 

traded. In support of the proposed 

position and exercise limits for options 

on the Bitcoin Funds are 25,000 

contracts, the Exchange is citing the in 

depth analysis each of ISE and NYSE 

American did in their respective filings. 

As noted above, in the ISE and NYSE 

American Approvals, each of ISE and 

NYSE American considered the: (1) 

applicable Bitcoin Fund’s market 

capitalization and ADV, and proposed 

position limit in relation to other 

securities; (2) market capitalization of 

the entire Bitcoin market in terms of 

exercise risk and availability of 

deliverables; (3) proposed position limit 

by comparing it to position limits for 

derivative products regulated by the 

CFTC; and (4) supply of Bitcoin. Based 

on the Exchange’s review of these 

analyses, the Exchange believes that the 

setting position and exercise limits for 

options on each of the Bitcoin Funds is 

25,000 contracts is more than 

appropriate. 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.67

The Exchange represents that it has 

the necessary systems capacity to 

support the new Bitcoin Fund options. 

As discussed above, 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 Fund Share options, 

including Bitcoin Fund options. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 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 the Bitcoin Fund options will be 

equally available to all market 

participants who wish to trade such 

options and will trade generally in the 

same manner as other options. The 

Rules that currently apply to the listing 


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68See Rule 19.3(i)(4). 

69See ISE Approval and NYSE American 

Approval. 

70 15 U.S.C. 78s(b)(3)(A). 

71 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. 

72 17 CFR 240.19b–4(f)(6)(iii). 

73See supra note 4. 

74For 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). 

and trading of all Fund Share options on 

the Exchange, including, for example, 

Rules that govern listing criteria, 

expirations, exercise prices, minimum 

increments, margin requirements, 

customer accounts, and trading halt 

procedures will apply to the listing and 

trading of Bitcoin Funds options on the 

Exchange in the same manner as they 

apply to other options on all other Fund 

Shares that are listed and traded on the 

Exchange. Also, and as stated above, the 

Exchange already lists options on other 

commodity-based Fund Shares 

(including Bitcoin-based).68 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 Fund Share for the 

Exchange to continue listing options on 

them. 

The Exchange does not believe that 

the proposal to list and trade options on 

Bitcoin Funds will impose any burden 

on intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. To the extent 

that the advent of Bitcoin Fund options 

trading on the Exchange may make the 

Exchange a more attractive marketplace 

to market participants at other 

exchanges, such market participants are 

free to elect to become market 

participants on the Exchange. The 

Commission recently approved rule 

filings of other exchanges to permit the 

listing and trading of options on the 

Bitcoin Funds.69 The Exchange notes 

that listing and trading Bitcoin Fund 

options on the Exchange will subject 

such options to transparent exchangebased rules as well as price discovery 

and liquidity, as opposed to 

alternatively trading such options in the 

OTC market. 

The Exchange believes that the 

proposed rule change may relieve any 

burden on, or otherwise promote, 

competition, as it is designed to increase 

competition for order flow on the 

Exchange in a manner that is beneficial 

to investors by providing them with a 

lower-cost option to hedge their 

investment portfolios. The Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to competing venues that offer 

similar products. Ultimately, the 

Exchange believes that offering Bitcoin 

Fund options for trading on the 

Exchange will promote competition by 

providing investors with an additional, 

relatively low-cost means to hedge their 

portfolios and meet their investment 

needs in connection with Bitcoin prices 

and Bitcoin-related products and 

positions on a listed options exchange. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

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 70 and Rule 19b– 

4(f)(6) thereunder.71

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) 72 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 

Bitcoin Funds.73 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.74

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– 

CboeEDGX–2024–078 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–CboeEDGX–2024–078. 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, 


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75 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3 The Exchange initially submitted the proposed 

rule change on August 30, 2024 and was effective 

September 3, 2024 (SR–CboeBZX–2024–082). On 

September 13, 2024, the Exchange withdrew that 

filing and submitted SR–CboeBZX–2024–088. On 

November 12, 2024, the Exchange withdrew that 

filing and submitted this filing. 

4See Exchange Rule 21.1 (l)(2), definition of 

‘‘logical port.’’ Logical ports include FIX and BOE 

ports (used for order entry), drop logical port 

(which grants users the ability to receive and/or 

send drop copies) and ports that are used for receipt 

of certain market data feeds. 

5The term ‘‘Logical Ports’’ used herein shall refer 

to FIX and BOE ports (used for order entry). See 

Cboe BZX Options Fee Schedule, Options Logical 

Port Fees, ‘‘Logical Ports’’ (which exclude Purge 

Port, Multicast PITCH Spin Server Port or GRP 

Port). 

6Purge Ports provide users the ability to cancel 

a subset (or all) of open orders across Executing 

Firm ID(s) (‘‘EFID(s)’’), Underlying symbol(s), or 

CustomGroupID(s), across multiple logical ports/ 

sessions. See Securities Exchange Act Release 

79956 (February 3, 2017), 82 FR 10102 (February 9, 

2017) (SR–BatsBZX–2017–05). See also https://

cdn.cboe.com/resources/membership/US_Options_

BOE_Specification.pdf and https://cdn.cboe.com/ 

resources/membership/US_Options_FIX_

Specification.pdf. 

7See Exchange Rule 21.1 (l)(3), definition of 

‘‘bulk port.’’ Bulk Ports provide users with the 

ability to submit and update multiple quote bids 

and offers in one message through logical ports 

enabled for bulk-quoting. 

8A matching engine is a part of the Exchange’s 

System that processes options quotes and trades on 

a symbol-by-symbol basis. Some matching engines 

will process option classes with multiple root 

symbols, and other matching engines will be 

dedicated to one single option root symbol (for 

example, options on SPY will be processed by one 

single matching engine that is dedicated only to 

SPY). A particular root symbol may only be 

assigned to a single designated matching engine. A 

particular root symbol may not be assigned to 

multiple matching engines. 

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–CboeEDGX–2024–078 and should be 

submitted on or before December 23, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.75

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–28111 Filed 11–29–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101742; File No. SR– 

CboeBZX–2024–113] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Adopt Fees 

for New Logical Ports in Connection 

With a New Connectivity Offering on 

Its Equity Options Platform 

November 25, 2024. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on November 

12, 2024, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

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 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) proposes to 

adopt fees for new logical ports in 

connection with a new connectivity 

offering on its equity options platform. 

The text of the proposed rule change is 

provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/BZX/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

fee schedule to adopt fees for Unitized 

Logical Ports, a new connectivity 

offering for its equity options platform 

(‘‘BZX Options’’) and adopt new 

Average Daily Quote and Average Daily 

Order fees.3

Unitized Port Fees 

By way of background, Exchange 

Members may interface with the 

Exchange’s Trading System by utilizing 

either the Financial Information 

Exchange (‘‘FIX’’) protocol or the Binary 

Order Entry (‘‘BOE’’) protocol. The 

Exchange further offers a variety of 

logical ports,4 which provide users of 

these ports with the ability within the 

Exchange’s System to accomplish a 

specific function through a connection, 

such as order entry, data receipt or 

access to information. For example, 

such ports include Logical Ports,5 Purge 

Ports,6 and Ports with Bulk Quoting 

Capabilities 7 (‘‘Bulk Ports’’). By way of 

further background, each of these ports 

corresponds to a single running order 

handler. Each order handler processes 

the messages it receives from these ports 

from the connected Members. This 

processing includes determining 

whether the message contains the 

required information to enter the 

System, whether the message 

parameters satisfy port-level (i.e., pretrade) risk controls, and where to send 

that message within the System (i.e., to 

which matching engine 8). Once an 

order handler completes the processing 

of a message, it sends that message to 

the appropriate matching engine. 

Historically, all order handlers 

connect to all matching engines. That is, 

under the BOEv2 and FIX protocols, 

Members were able to access all 

symbols from a single logical port since 

each port corresponds to a single order 

handler that conveniently connects to 

all matching engines (‘‘convenience 

layer’’). Although the Exchange 

configures the software and hardware 

for its order handlers in the same 

manner, there can be a natural variance 

in the amount of time it takes individual 

order handlers to process messages of 

the same type under this architecture. 

Factors that contribute to this 

differentiation in processing times 

include the availability of shared 

resources (such as memory), which is 

impacted by (among other things) thencurrent message rates, the number of 

active symbols (i.e., classes), and recent 

messages for a symbol. This natural 

differentiation in processing times 

inherently may cause some messages to 


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