```

[Federal Register Volume 90, Number 29 (Thursday, February 13, 2025)]
[Notices]
[Pages 9560-9567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02556]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102373; File No. SR-CboeBZX-2025-008]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change, as Modified by Amendment No. 1, To 
List Options on the Fidelity Ethereum Fund

February 7, 2025.
    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 January 24, 2025, Cboe BZX Exchange, Inc. (``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items 
have been prepared by the Exchange. On February 3, 2025, the Exchange 
submitted Amendment No. 1 to the proposed rule change. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list options on the Fidelity Ethereum 
Fund. 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 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 
in the Fidelity Ethereum Fund (the ``Fidelity Fund'').\3\ 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,\4\ including 
interests in certain specific trusts that hold financial instruments, 
money market instruments, or precious metals (which are deemed 
commodities).
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    \3\ See Securities Exchange Act Release No. 100224 (May 23, 
2024), 89 FR 46937 (May 30, 2024) (SR-NYSEArca-2023-70; SR-NYSEArca-
2024-31; SR-NASDAQ-2023-045; SR-CboeBZX-2023-069; SR-CboeBZX-2023-
070; SR-CboeBZX-2023-087; SR-CboeBZX-2023-095; and SRCboeBZX-2024-
018) (Order Granting Accelerated Approval of Proposed Rule Changes, 
as Modified by Amendments Thereto, to List and Trade Shares of 
Ether-Based Exchange-Traded Products) (``Ethereum ETP Approval 
Order'').
    \4\ See 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 or iShares 
Silver Trust.
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    The Fidelity Fund is an Ethereum-backed commodity ETF structured as 
a trust. Similar to any Fund Share currently deemed appropriate for 
options trading under Rule 19.3(i), the investment objective of the 
Fidelity Fund is for its shares to reflect the performance of Ethereum 
(less the expenses of the trust's operations), offering investors an 
opportunity to gain exposure to Ethereum without the complexities of 
Ethereum delivery. As is the case for Fund Shares currently deemed 
appropriate for options trading, the Fidelity Fund's shares represent 
units of fractional undivided beneficial interest in the trust, the 
assets of which consist principally of Ethereum and are designed to 
track Ethereum or the performance of the price of Ethereum and offer 
access to the Ethereum market.\5\ The Fidelity Fund provides investors 
with cost-efficient alternatives that allow a level of participation in 
the Ethereum market through the securities market. The primary 
substantive difference between the Fidelity Fund and Fund Shares 
currently deemed appropriate for options trading are that Fund Shares 
may hold securities, certain financial instruments, specified precious 
metals (which are deemed commodities), and Bitcoin (which is also 
deemed a commodity), while the Fidelity Fund holds Ethereum (which is 
also deemed a commodity).
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    \5\ The trust may include minimal cash.
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    The Exchange believes the Fidelity Fund satisfies the Exchange's 
initial listing standards for Fund Shares on which the Exchange may 
list options. Specifically, the Fidelity Fund satisfies the initial 
listing standards set forth in Rule 19.3(i), as is the case for other 
Fund Shares on which the Exchange lists options (including trusts that 
hold commodities). 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),\6\ 
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

[[Page 9561]]

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. The 
Fidelity Fund satisfies Rule 19.3(i)(1)(B) as each is subject to this 
creation and redemption process.
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    \6\ Rule 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.
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    While not required by the Rules for purposes of options listings, 
the Exchange believes the Fidelity Fund satisfies the criteria and 
guidelines set forth in Rule 19.3(a) and (b). 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 (``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 be characterized by a substantial number 
of outstanding shares that are widely held and actively traded.\7\ The 
Fidelity Fund is an NMS Stock as defined in Rule 600 of Regulation NMS 
under the Act.\8\ The Exchange believes the Fidelity Fund is 
characterized by a substantial number of outstanding shares that are 
widely held and actively traded.
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    \7\ The criteria and guidelines for a security to be considered 
widely held and actively traded are set forth in Rule 19.3(b), 
subject to exceptions.
    \8\ An ``NMS stock'' means any NMS security other than an 
option, and an ``NMS security'' means any security or class of 
securities for which transaction reports are collected, processed, 
and made available pursuant to an effective transaction reporting 
plan (or an effective national market system plan for reporting 
transaction in listed options). See 17 CFR 242.600(b)(64) 
(definition of ``NMS security'') and (65) (definition of ``NMS 
stock'').
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    As of December 23, 2024, the Fidelity Fund had 41,700,000 shares 
outstanding, which is nearly six times more than the minimum number of 
shares of a corporate stock (i.e., 7,000,000 shares) that the Exchange 
generally requires to list options on that stock pursuant to Rule 
19.3(b)(1). The Exchange believes this demonstrates that the Fidelity 
Fund is characterized by a substantial number of outstanding shares.
    Further, as of November 26, 2024, there were 38,170 beneficial 
holders of shares of the Fidelity Fund, which is significantly more 
than 2,000 beneficial holders (approximately 19 times more), 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 
19.3(b). Therefore, the Exchange believes the shares of the Fidelity 
Fund are widely held.\9\
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    \9\ The Exchange continues to believe assets under management 
(``AUM''), rather than shares outstanding and number of holders, is 
a better measure of investable capacity of ETFs and a more 
appropriate figure for determining position and exercise limits of 
ETFs and looks forward to further discussions with the Commission 
staff on this topic.
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    The Exchange also believes the shares of the Fidelity Fund are 
actively traded. As of December 23, 2024, the total trading volume (by 
shares) and the approximate average daily volume (``ADV'') (in shares 
and notional) from July 23, 2024 (the date on which shares of the 
Fidelity Fund began trading) to December 23, 2024 for the Fidelity Fund 
was as follows:

------------------------------------------------------------------------
Trading volume (shares)        ADV (shares)          ADV (notional $)
------------------------------------------------------------------------
         115,589,047                1,070,269              33,864,193
------------------------------------------------------------------------

    As demonstrated above, despite the fact that the Fidelity Fund has 
been trading for approximately five months as of December 23, 2024, its 
total trading volume as of that date was substantially higher than 
2,400,000 shares (more than 48 times that amount), which is the minimum 
12-month volume the Exchange generally requires for a corporate stock 
in order to list options on that security as set forth in Rule 19.3(b). 
Additionally, as of December 23, 2024, the trading volume for the 
Fidelity Fund was in the top 5% of all ETFs that are currently trading. 
The Exchange believes this data demonstrates the Fidelity Fund is 
characterized as having shares that are actively traded.
    Options on the Fidelity Fund 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 the Fidelity 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

[[Page 9562]]

on the Fidelity Fund \11\ at the commencement of trading on the 
Exchange and may also list series of options on the Fidelity Fund for 
trading on a weekly,\12\ monthly,\13\ or quarterly \14\ basis. The 
Exchange may also list long-term equity option series (``LEAPS'') that 
expire from 12 to 39 months from the time they are listed.\15\
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    \10\ See 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).
    \11\ See 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.
    \12\ See Rule 19.6, Interpretation and Policy .05.
    \13\ See Rule 19.6, Interpretation and Policy .08.
    \14\ See Rule 19.6, Interpretation and Policy .04.
    \15\ See Rule 19.8.
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    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 the Fidelity Fund 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\ 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 Fidelity 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 Fidelity 
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.
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    \16\ The 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.
    \17\ See Rule 19.6, Interpretation and Policy .02.
    \18\ See Rule 19.6, Interpretation and Policy .06.
    \19\ See Rule 19.6, Interpretation and Policy .03.
    \20\ See 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).
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    Pursuant to Rules 18.7 and 18.9, the position and exercise limits, 
respectively, for Fidelity Fund options will be 25,000 same side option 
contracts.\22\
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    \22\ Rule 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 
currently has a nearly identical rule filing pending with the 
Commission to amend Cboe Options Rule 8.30, Interpretation and 
Policy .10 (and Cboe Options Rule 8.42) to establish a position and 
exercise limit for Fidelity Fund options of 25,000. See Securities 
Exchange Act Release No. 100862 (August 28, 2024), 89 FR 72146 
(September 4, 2024) (SR-CBOE-2024-036) (``Cboe Fidelity Fund 
Proposal''). If the Commission approves the Cboe Fidelity Fund 
Proposal, the position and exercise limits in that filing would then 
apply to the Exchange.
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    The Exchange believes these proposed position and exercise limits 
are reasonable and appropriate considering, among other things, the ADV 
(since trading of the Fidelity Fund began on July 23, 2024) and 
outstanding shares of the Fidelity Fund (which as discussed above 
demonstrate that the Fidelity Fund is widely held and actively traded 
and thus justify these conservatively proposed position limits), as set 
forth below, along with market capitalization (as of December 23, 
2024):

------------------------------------------------------------------------
                                                   Market capitalization
      ADV (shares)          Outstanding shares              ($)
------------------------------------------------------------------------
           1,070,269               41,700,000           1,433,229,000
------------------------------------------------------------------------

    The Exchange then compared the number of outstanding shares of the 
Fidelity Fund to those of other ETFs. The approximate average position 
(and exercise limit) of ETF options with similar outstanding shares (as 
of December 31, 2024) was approximately 102,703 contracts, which is 
significantly higher (approximately 4 times) than the proposed position 
and exercise limit of 25,000 contracts for Fidelity Fund options.\23\ 
As discussed above, shares of the Fidelity Fund are actively held and 
widely traded: (1) the Fidelity Fund (as of December 23, 2024) had 
significantly more than 7,000,000 shares outstanding, which is the 
minimum number of shares of a corporate stock that the Exchange 
generally requires to list options on that stock pursuant to Rule 
19.3(b)(1); (2) the Fidelity Fund (as of November 26, 2024) had 
significantly more than 2,000 beneficial holders, which is the minimum 
number of holders the Exchange generally requires for corporate stock 
in order to list options on that stock pursuant to Rule 19.3(b)(2); and 
(3) the Fidelity Fund had a trading volume in the approximately five-
month time period since it began trading substantially higher than 
2,400,000 shares, which is the minimum 12-month volume the Exchange 
generally requires for a security in order to list options on that 
security as set forth in Rule 19.3(b)(4).
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    \23\ The position limits for those ETF options for which the 
underlying ETFs had similar outstanding shares were all 50,000 or 
above, and nearly half of them had position limits of 200,000 or 
250,000 contracts.
---------------------------------------------------------------------------

    With respect to outstanding shares, if a market participant held 
the maximum number of positions possible pursuant to the proposed 
position and exercise limits, the equivalent shares represented by the 
proposed position/exercise limit would represent approximately 6.0% of 
the 41,700,000 current outstanding shares of the Fidelity Fund. 
Therefore, if a market participant held the maximum permissible options 
positions in Fidelity 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 Fidelity Fund.
    Cboe Options Rule 8.30, Interpretation and Policy .02 (which 
governs position limits on the Exchange pursuant to Rule 18.7), 
provides two methods of qualifying for a position limit tier above 
25,000 option contracts. The first method is based on six-month trading 
volume in the underlying security, and the second method is based on 
slightly lower six-month trading volume and number of shares

[[Page 9563]]

outstanding in the underlying security. An underlying stock or ETF that 
qualifies for method two based on trading volume and number of shares 
outstanding would be required to have the minimum number of outstanding 
shares as shown in middle column of the table below.
    The table, which provides the equivalent shares of the position 
limits applicable to equity options, including ETFs, further represents 
the percentages of the minimum number of outstanding shares that an 
underlying stock or ETF must have to qualify for that position limit 
(under the second method described above).

------------------------------------------------------------------------
Position/exercise limit    Minimum outstanding         Percentage of
 (in equivalent shares)           shares          outstanding shares (%)
------------------------------------------------------------------------
           2,500,000                6,300,000                     40.0
           5,000,000               40,000,000                     12.5
           7,500,000              120,000,000                      6.3
          20,000,000              240,000,000                      8.3
          25,000,000              300,000,000                      8.3
------------------------------------------------------------------------

    The equivalent shares represented by the proposed position and 
exercise limits for the Fidelity Fund as a percentage of outstanding 
shares of the Fidelity Fund is significantly lower than the percentage 
for the lowest possible position limit for equity options of 25,000, 
which is the position limit the Exchange is proposing for Fidelity Fund 
options.\24\
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    \24\ As these percentages are based on the minimum number of 
outstanding shares an underlying security must have to qualify for 
the applicable position limit, these are the highest possible 
percentages that would apply to any option subject to that position 
and exercise limit. 6,300,000 is the minimum number of outstanding 
shares an underlying security must have for the Exchange to continue 
to list options on that security, so this would be the smallest 
number of outstanding shares permissible for any corporate option 
that would have a position limit of 25,000 contract. See Rule 
19.4(b)(1). This rule applies to corporate stock options but not ETF 
options, which currently have no requirement regarding outstanding 
shares of the underlying ETF for the Exchange to continue listing 
options on that ETF. Therefore, there may be ETF options trading for 
which the 25,000 contract position limits represents an even larger 
percentage of outstanding shares of the underlying ETF than set 
forth above.
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    Further, the proposed position and exercise limit for Fidelity Fund 
options is equal to the lowest position and exercise limits available 
in the options industry for equity options, are extremely conservative 
and more than appropriate given the market capitalization, average 
daily volume, and high number of outstanding shares of the Fidelity 
Fund. The proposed position and exercise limit for the Fidelity Fund is 
also equal to the position and exercise limits for ETFs that hold 
Bitcoin, as recently approved by the Commission.\25\
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    \25\ See Securities Exchange Act Release No. 101387 (October 18, 
2024), 89 FR 84948 (October 24, 2024) (SR-CBOE-2024-035) (``Bitcoin 
ETF Option Approval''); see also Cboe Options Rules 8.30, 
Interpretation and Policy .10 and 8.42 (which applies to the 
Exchange pursuant to Rule 18.7 and 18.9).
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    All of the above information demonstrates that the proposed 
position and exercise limits for Fidelity Fund options are more than 
reasonable and appropriate. The trading volume, ADV, and outstanding 
shares of the Fidelity Fund demonstrate that its shares are actively 
traded and widely held, and proposed position and exercise limit is 
well below those of options on other ETFs with similar market 
characteristics. The proposed position and exercise limit would be the 
lowest position and exercise limit available for equity options in the 
industry, are extremely conservative, and are more than appropriate 
given the Fidelity Fund's market capitalization, ADV, and high number 
of outstanding shares.
    Fidelity 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 Fidelity Fund 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 already deemed appropriate for 
options trading on the Exchange pursuant to current Rule 19.3(i).
    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 Fidelity Fund that it applies to the 
Exchange's other options products.\26\ The Exchange's market 
surveillance staff would have access to the surveillances conducted by 
the Exchange with respect to the Fidelity Fund and would review 
activity in the Fidelity Fund when conducting surveillances for market 
abuse or manipulation in the options on the Fidelity Fund. 
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 the Exchange's equities, the 
Exchange would be able to obtain information regarding trading of 
shares of the Fidelity Fund through ISG.
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    \26\ The surveillance program includes surveillance patterns for 
price and volume movements as well as patterns for potential 
manipulation (e.g., spoofing and marking the close).
---------------------------------------------------------------------------

    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.\27\ The underlying shares of spot Ethereum exchange-
traded products (``ETPs''), including the Fidelity Fund, are also 
subject to safeguards related to addressing market abuse and 
manipulation. As the

[[Page 9564]]

Commission stated in its order approving proposals of several exchanges 
to list and trade shares of spot Ethereum-based ETPs, ``[e]ach Exchange 
has a comprehensive surveillance-sharing agreement with the [Chicago 
Mercantile Exchange (``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.'' \28\ The Exchange states that, given the consistently high 
correlation between the CME Ethereum futures market and the spot 
Ethereum 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 [Ethereum ETPs].'' \29\ In 
light of surveillance measures related to both options and futures as 
well as the Fidelity Fund,\30\ 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 Fidelity Fund. Further, the 
Exchange will implement any new surveillance procedures it deems 
necessary to effectively monitor the trading of options on the Fidelity 
Fund.
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    \27\ Section 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.
    \28\ See Ethereum ETP Approval Order, 89 FR at 46938.
    \29\ See Ethereum ETP Approval Order, 89 FR at 46939.
    \30\ See Amendment No. 2 to SR-CboeBZX-2023-095, Proposed Rule 
Change To List and Trade Shares of the Fidelity Ethereum Fund Under 
BZX Rule 14.11(e)(4), Commodity-Based Trust Shares (filed May 21, 
2024); see also Ethereum ETP Approval Order.
---------------------------------------------------------------------------

    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 the Fidelity Fund 
up to the number of expirations currently permissible under the Rules. 
Because the proposal is limited to one class, the Exchange believes any 
additional traffic that may be generated from the introduction of 
Fidelity Fund options will be manageable.
    The Exchange believes that offering options on the Fidelity Fund 
will benefit investors by providing them with an additional, relatively 
lower cost investing tool to gain exposure to the price of Ethereum and 
hedging vehicle to meet their investment needs in connection with 
Ethereum-related products and positions. The Exchange expects investors 
will transact in options on the Fidelity Fund in the unregulated over-
the-counter (``OTC'') options market,\31\ but may prefer to trade such 
options in a listed environment to receive the benefits of trading 
listed options, including (1) enhanced efficiency in initiating and 
closing out positions; (2) increased market transparency; and (3) 
heightened contra-party creditworthiness due to the role of OCC as 
issuer and guarantor of all listed options. The Exchange believes that 
listing Fidelity 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 the Fidelity Fund 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. 
The Exchange notes that quotation and last sale information for shares 
of the Fidelity Fund are available from the CTA high-speed lines, as 
well as from the Exchange's equities market (on which the shares are 
primarily listed). Quotation and last sale information for options on 
the Fidelity Fund will be available from OPRA and market data vendors.
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    \31\ The Exchange understands from customers that investors have 
historically transacted in options on Units in the OTC options 
market if such options were not available for trading in a listed 
environment.
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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.\32\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \33\ 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) \34\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ Id.
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    In particular, the Exchange believes that the proposal to list and 
trade options on the Fidelity Fund 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 Fidelity Fund will provide investors with an opportunity to realize 
the benefits of utilizing options on the Fidelity Fund, including cost 
efficiencies and increased hedging strategies. The Exchange believes 
that offering Fidelity 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 
Ethereum and with Ethereum-related products and positions. 
Additionally, the Exchange's offering of Fidelity 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 the Exchange through increased 
order flow to the benefit of all investors. The Exchange also notes 
that it already lists (or has the authority to list) options on other 
commodity-based Fund Shares,\35\ which, as described above, are trusts 
structured in substantially the same manner as the Fidelity Fund and 
essentially offer the same objectives and benefits to investors, just 
with respect to a different commodity (i.e., Ethereum rather than 
Bitcoin or precious metals) and for which the Exchange has not 
identified any issues with the continued listing and trading of 
commodity-backed Fund Share options it currently lists for trading.
---------------------------------------------------------------------------

    \35\ See Rule 19.3(i)(4).
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    The Exchange also believes the proposed rule change will remove

[[Page 9565]]

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 the 
Fidelity Fund satisfy the initial listing standards and continued 
listing standards currently in the Exchange Rules applicable to options 
on all Fund Shares, including Fund Shares that hold other commodities 
already deemed appropriate for options trading on the Exchange. 
Additionally, as demonstrated above, the Fidelity Fund is characterized 
by a substantial number of shares that are widely held and actively 
traded. Fidelity Fund options will trade in the same manner as any 
other Fund Share options--the same Exchange Rules that currently govern 
the listing and trading of all Fund Share options, including 
permissible expirations, strike prices and minimum increments, and 
applicable margin requirements, will govern the listing and trading of 
options on the Fidelity Fund in the same manner.
    The Exchange believes the proposed position and exercise limits are 
designed to prevent fraudulent and manipulative acts and practices and 
promote just and equitable principles of trade, as they are designed to 
address potential manipulative schemes and adverse market impacts 
surrounding the use of options, such as disrupting the market in the 
security underlying the options. The proposed position and exercise 
limits in this are 25,000 contracts, which is currently the lowest 
limit applicable to any equity options (including ETF options) and the 
position and exercise limits that apply to comparable ETFs that hold 
Bitcoin.\36\ The Exchange believes the proposed position and exercise 
limits are extremely conservative for Fidelity Fund options given the 
trading volume and outstanding shares for the Fidelity Fund. The 
information above demonstrates that the average position and exercise 
limits of options on ETFs with comparable outstanding shares and 
trading volume to those of the Fidelity Fund are significantly higher 
than the proposed position and exercise limits for Fidelity Fund 
options. Therefore, the proposed position and exercise limits for 
Fidelity Fund options are conservative relative to options on ETFs with 
comparable market characteristics.
---------------------------------------------------------------------------

    \36\ See Cboe Options Rule 8.30.
---------------------------------------------------------------------------

    Further, given that the issuer of the Fidelity Fund may create and 
redeem shares that represent an interest in Ethereum, the Exchange 
believes it is relevant to compare the size of a position limit to the 
market capitalization of the Ethereum market. As of December 23, 2024, 
the global supply of Ethereum was approximately 120,000,000 coins, and 
the price of one Ethereum coin was approximately $3,494.25,\37\ which 
equates to a market capitalization of approximately $419.31 billion. 
Consider the proposed position and exercise limit of 25,000 option 
contracts for the Fidelity Fund option. A position and exercise limit 
of 25,000 same side contracts effectively restricts a market 
participant from holding positions that could result in the receipt of 
no more than 2,500,000 of Fidelity Fund shares (if that market 
participant exercised all its options). Using a share price of $34.37 
on December 23, 2024, the value of 2,500,000 shares of the Fidelity 
Fund at that price is $85,925,000, and the approximate percentage of 
that value of the size of the Ethereum market is 0.02%. Therefore, if a 
market participant with the maximum 25,000 same side contracts in 
Fidelity Fund options exercised all positions at one time, such an 
event would have no practical impact on the Ethereum market.
---------------------------------------------------------------------------

    \37\ See Ethereum Price (ETH), Market Cap, Price Today & Chart 
History--Blockworks.
---------------------------------------------------------------------------

    The Exchange also believes the proposed position and exercise 
limits are appropriate given position limits for Ethereum futures. For 
example, the Chicago Mercantile Exchange (``CME'') imposes a position 
limit of 8,000 futures (for the initial spot month) on its Ethereum 
futures contract.\38\ On December 23, 2024, CME Dec 24 Ethereum Futures 
settled at approximately $3,418.00. A position of 8,000 CME Ethereum 
futures, therefore, would have a notional value of $1,367,200,000. A 
position of approximately 397,789 option contracts would equate to that 
notional value.\39\ This approximate number of option contracts for the 
Fidelity Fund that equate to the notional value of CME Ethereum futures 
is significantly higher than the proposed limit of 25,000 options 
contract for the Fidelity Fund option. The fact that many options 
ultimately expire out-of-the-money and thus are not exercised for 
shares of the underlying, while the delta of a Ethereum Future is 1, 
further demonstrates how conservative the proposed limit of 25,000 
options contracts are for the Fidelity Fund options.
---------------------------------------------------------------------------

    \38\ See CME Rulebook Chapter 349 (description of CME Ether 
Futures) and Chapter 5, Position Limit, Position Accountability and 
Reportable Level Table in the Interpretations & Special Notices. 
Each CME Ethereum futures contract is valued at 50 Ethereum as 
defined by the CME CF Ether Reference Rate (``BRR''). See CME Rule 
35001.
    \39\ The notional value of the futures is calculated as follows: 
8,000 futures x 50 (the futures multiplier) x $3,418 (the price of 
one future) = $1,367,200,000. The number of option contracts that 
equates to that notional value is calculated as follows: 
$1,367,200,000/notional value of one option contract ($34.37 (share 
price of Fidelity Fund) x 100 (option multiplier)) = 397,789 option 
contracts.
---------------------------------------------------------------------------

    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).\40\ 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.\41\ 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 Ethereum, 
the Exchange believes that that the proposed same side position limits 
are more than appropriate for Fidelity Fund options.
---------------------------------------------------------------------------

    \40\ See CME Rulebook Chapter 5, Position Limit, Position 
Accountability and Reportable Level Table in the Interpretations & 
Special Notices.
    \41\ Id.
---------------------------------------------------------------------------

    The Exchange believes the proposed position and exercise limits 
will have no material impact to the supply of Ethereum. For example, 
consider again the proposed position limit of 25,000 option contracts 
for the Fidelity Fund option. As noted above, a position limit of 
25,000 same side contracts effectively restricts a market participant 
from holding positions that could result in the receipt of no more than 
2,500,000 shares of the Fidelity Fund (if that market participant 
exercised all its options). As of December 23, 2024, the Fidelity Fund 
had 41,700,000 shares outstanding. This means that the approximate 
number of market participants that could hold the maximum of 25,000 
same side positions in the Fidelity Fund that would equate

[[Page 9566]]

to the number of shares outstanding of that Fund is 16.
    This means if 16 market participants had 25,000 same side positions 
in Fidelity Fund options, each of them would have to simultaneously 
exercise all of those options to create a scenario that may put the 
underlying security under stress. The Exchange believes it is highly 
unlikely for such an event to occur; however, even if either such event 
did occur, the Exchange would not expect the Fidelity Fund to be under 
stress because such an event would merely induce the creation of more 
shares through the trust's creation and redemption process.
    As of December 23, 2024, the global supply of Ethereum was 
approximately 120,000,000, and the price of one Ethereum coin was 
approximately $3,418.00,\42\ which equates to a market capitalization 
of approximately $419.31 billion. Based on the $34.37 price of a 
Fidelity Fund share on December 23, 2024, a market participant could 
have redeemed one Ethereum for approximately 99 Fidelity Fund shares. 
Another 11,880,000,000 Fidelity Fund shares could be created before the 
then-circulating global supply of Ethereum was exhausted. As a result, 
4,752 market participants would have to simultaneously exercise 25,000 
same side positions in Fidelity Fund options to receive shares of the 
Fidelity Fund holding the entire global supply of Ethereum. Unlike the 
Fidelity Fund, the number of shares that corporations may issue is 
limited. However, like corporations, which authorize additional shares, 
repurchase shares, or split their shares, the Fidelity Fund may create, 
redeem, or split shares in response to demand. Additionally, the supply 
of Ethereum is unlimited.\43\ The current supply of Ethereum is larger 
than the available supply of most securities.\44\ Given the significant 
unlikelihood of any of these events ever occurring, the Exchange does 
not believe options on the Fidelity Fund 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 Ethereum.
---------------------------------------------------------------------------

    \42\ See Ethereum Price (ETH), Market Cap, Price Today & Chart 
History--Blockworks.
    \43\ See Ethereum Price (ETH), Market Cap, Price Today & Chart 
History--Blockworks; see also Amendment No. 5 to Form S-1 
Registration Statement No. 333-278249, Fidelity Fund, filed July 17, 
2024, at 17 (noting that approximately 1,700 Ethereum are issued per 
day, subject to various factors); and Amendment No. 3 to Form S-1 
Registration Statement No. 333-257474, ARK 21 Fund, filed May 10, 
2024, at 15-16 (noting that approximately 1,700 Ethereum are issued 
per day, subject to various factors).
    \44\ The market capitalization of Ethereum would rank in the top 
25 among securities. See https://companiesmarketcap.com/usa/largest-companies-in-the-usa-by-market-cap/.
---------------------------------------------------------------------------

    The Exchange believes the available supply of Ethereum is not 
relevant to the determination of position and exercise limits for 
options overlying the Fidelity Fund.\45\ Position and exercise limits 
are not a tool that should be used to address a potential limited 
supply of the underlying of the instrument underlying the option (in 
this case, the Ethereum being held within the Fidelity Fund). 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.\46\ ``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.'' \47\ 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.'' \48\
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    \45\ The 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, other than recently with respect 
to ETFs that hold Bitcoin. 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''); compare to Bitcoin ETF Option Approval. The Exchange 
notes when the Commission approved the filing to list options on an 
ETF holding gold, filing, the position limits in Cboe Options 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 Fidelity Fund options.
    \46\ For 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.
    \47\ See Securities Exchange Act Release No. 39489 (December 24, 
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
    \48\ See id.
---------------------------------------------------------------------------

    The Exchange notes that a Registration Statement on Form S-1 was 
filed with the Commission for the Fidelity Fund, which described the 
supply of Ethereum and the potential limits to that supply.\49\ The 
Registration Statement permits an unlimited number of shares of the 
Fidelity Fund to be created. Further, the Commission approved the 
listing and trading of shares of the Fidelity Fund, which approval did 
not comment on the sufficient supply of Ethereum or address whether 
there was a risk that permitting an unlimited number of shares for the 
Fidelity Fund would impact the supply of Ethereum.\50\ Therefore, the 
Exchange believes the Commission had ample time and opportunity to 
consider whether the supply of Ethereum was sufficient to permit the 
creation of unlimited Fidelity 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 Ethereum supply, the proposed positions limit is more than 
sufficient to protect investors and the market.
---------------------------------------------------------------------------

    \49\ See Amendment No. 5 to Form S-1 Registration Statement No. 
333-278249, Fidelity Fund, filed July 17, 2024, at 17.
    \50\ See Ethereum ETP Approval Order.
---------------------------------------------------------------------------

    Based on the above information demonstrating, among other things, 
that the Fidelity Fund is characterized by a substantial number of 
outstanding shares that are actively traded and widely held, the 
Exchange believes the proposed position and exercise limits are 
extremely conservative compared to those of ETF options with similar 
market characteristics. The proposed position and exercise limits 
reasonably and appropriately balance the liquidity provisioning in the 
market against the prevention of manipulation. The Exchange believes 
these proposed limits are effectively designed to prevent an individual 
customer or entity from establishing options positions that could be 
used to manipulate the market of the underlying as well as the Ethereum 
market.\51\
---------------------------------------------------------------------------

    \51\ See Securities Exchange Act Release No. 39489 (December 24, 
1997), 63 FR 276 (January 5, 1998) (SR-CBOE-1997-11).
---------------------------------------------------------------------------

    The Exchange represents that it has the necessary systems capacity 
to support the new Fidelity Fund options.

[[Page 9567]]

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 Fidelity 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 options on the Fidelity Fund 
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 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 
Fidelity Fund 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 Commission has approved 
the trading of options on other commodity-based Fund Shares.\52\ 
Further, the Fidelity Fund 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.
---------------------------------------------------------------------------

    \52\ See Rule 19.3(i)(4).
---------------------------------------------------------------------------

    The Exchange does not believe that the proposal to list and trade 
options on the Fidelity Fund 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 Fidelity 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. Additionally, other options exchanges are free to amend their 
listing rules, as applicable, to permit them to list and trade options 
on the Fidelity Fund.\53\ The Exchange notes that listing and trading 
Fidelity Fund options on the Exchange 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.
---------------------------------------------------------------------------

    \53\ As noted above, at least one other options exchange has 
already proposed to amend its rules to list and trade options on the 
Fidelity Fund. See Cboe Fidelity Fund Proposal.
---------------------------------------------------------------------------

    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 Fidelity 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 Ethereum 
prices and Ethereum-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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2025-008 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-CboeBZX-2025-008. 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-CboeBZX-2025-008 and should 
be submitted on or before March 6, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\54\
---------------------------------------------------------------------------

    \54\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-02556 Filed 2-12-25; 8:45 am]
BILLING CODE 8011-01-P
```