Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To List and Trade Shares of the Global X Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, 82439-82441 [2023-25882]
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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Notices
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on November 15,
2023, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express, Priority Mail &
USPS Ground Advantage® Contract 13
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–52, CP2024–53.
SUPPLEMENTARY INFORMATION:
Sean C. Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2023–25891 Filed 11–22–23; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Product Change—Priority Mail and
USPS Ground Advantage® Negotiated
Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice:
November 24, 2023.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service ® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on November 16,
2023, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & USPS Ground
Advantage® Contract 107 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–53, CP2024–54.
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2023–25889 Filed 11–22–23; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
ddrumheller on DSK120RN23PROD with NOTICES1
Product Change—Priority Mail and
USPS Ground Advantage® Negotiated
Service Agreement
Postal ServiceTM.
Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
SUMMARY:
VerDate Sep<11>2014
21:46 Nov 22, 2023
Date of required notice:
November 24, 2023.
Jkt 262001
SECURITIES AND EXCHANGE
COMMISSION
DATES:
[Release No. 34–98981; File No. SR–
CboeBZX–2023–058]
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on November 16,
2023, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & USPS Ground
Advantage® Contract 106 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–53, CP2024–54.
SUPPLEMENTARY INFORMATION:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2023–25888 Filed 11–22–23; 8:45 am]
BILLING CODE 7710–12–P
SUMMARY:
ACTION:
Agreements in the Mail Classification
Schedule’s Competitive Products List.
82439
POSTAL SERVICE
Product Change—Priority Mail
Express, Priority Mail, and USPS
Ground Advantage® Negotiated
Service Agreement
AGENCY:
ACTION:
Postal ServiceTM.
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
Date of required notice:
November 24, 2023.
DATES:
FOR FURTHER INFORMATION CONTACT:
Sean C. Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on November 17,
2023, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express, Priority Mail &
USPS Ground Advantage® Contract 21
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–63, CP2024–64.
SUPPLEMENTARY INFORMATION:
Sean C. Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2023–25899 Filed 11–22–23; 8:45 am]
BILLING CODE 7710–12–P
PO 00000
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Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change To List and Trade Shares
of the Global X Bitcoin Trust Under
BZX Rule 14.11(e)(4), CommodityBased Trust Shares
November 17, 2023.
On August 4, 2023, Cboe BZX
Exchange, Inc. (‘‘BZX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Global X Bitcoin Trust
(‘‘Trust’’) under BZX Rule 14.11(e)(4),
Commodity-Based Trust Shares. The
proposed rule change was published for
comment in the Federal Register on
August 23, 2023.3
On September 26, 2023, pursuant to
Section 19(b)(2) of the Act,4 the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 This order
institutes proceedings under Section
19(b)(2)(B) of the Act 6 to determine
whether to approve or disapprove the
proposed rule change.
I. Summary of the Proposal
As described in more detail in the
Notice,7 the Exchange proposes to list
and trade the Shares of the Trust under
BZX Rule 14.11(e)(4), which governs the
listing and trading of Commodity-Based
Trust Shares on the Exchange.
The investment objective of the Trust
is to reflect the performance of the price
of bitcoin less the expenses of the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 98156
(Aug. 17, 2023), 88 FR 57490 (‘‘Notice’’). Comments
on the proposed rule change are available at:
https://www.sec.gov/comments/sr-cboebzx-2023058/srcboebzx2023058.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 98531,
88 FR 67829 (Oct. 2, 2023). The Commission
designated November 21, 2023, as the date by
which the Commission shall approve or disapprove,
or institute proceedings to determine whether to
disapprove, the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
7 See Notice, supra note 3.
2 17
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82440
Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Notices
Trust’s operations.8 The Trust’s assets
will consist of bitcoin held by the
Trust’s custodian on behalf of the
Trust.9 The Trust will value its Shares
daily based on the value of bitcoin as
reflected by the CoinDesk Bitcoin Price
Index (XBX) (‘‘Index’’).10 The
administrator of the Trust will
determine the net asset value (‘‘NAV’’)
of the Trust on each day that the
Exchange is open for regular trading, as
soon as practicable after 4:00 p.m. ET.11
In determining the Trust’s NAV, the
administrator will calculate the price of
the bitcoin held by the Trust as reflected
by the Index as of 4:00 p.m. ET.12 When
the Trust sells or redeems its Shares, it
will do so in ‘‘in-kind’’ transactions
with authorized participants in large
blocks of Shares.13
II. Proceedings To Determine Whether
To Approve or Disapprove SR–
CboeBZX–2023–058 and Grounds for
Disapproval Under Consideration
ddrumheller on DSK120RN23PROD with NOTICES1
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 14 to determine
whether the proposed rule change
should be approved or disapproved.
Institution of proceedings is appropriate
at this time in view of the legal and
policy issues raised by the proposed
rule change, as discussed below.
Institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved. Rather, as
described below, the Commission seeks
and encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Act,15 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for
additional analysis of the proposed rule
change’s consistency with Section
6(b)(5) of the Act, which requires,
among other things, that the rules of a
national securities exchange be
‘‘designed to prevent fraudulent and
manipulative acts and practices’’ and
8 See id. at 57499. Global X Digital Assets
(‘‘Sponsor’’) is the sponsor of the Trust. See id. at
57490.
9 See id. at 57499. The Trust generally does not
intend to hold cash or cash equivalents; however,
there may be situations where the Trust would
unexpectedly hold cash or cash equivalents on a
temporary basis. See id.
10 See id.
11 See id. at 57500.
12 See id. at 57499–00.
13 See id. at 57499.
14 15 U.S.C. 78s(b)(2)(B).
15 Id.
VerDate Sep<11>2014
21:46 Nov 22, 2023
Jkt 262001
‘‘to protect investors and the public
interest.’’ 16
The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in the
Notice, in addition to any other
comments they may wish to submit
about the proposed rule change. In
particular, the Commission seeks
comment on the following questions
and asks commenters to submit data
where appropriate to support their
views:
1. What are commenters’ views on
whether the proposed Trust and Shares
would be susceptible to manipulation?
What are commenters’ views generally
on whether the Exchange’s proposal is
designed to prevent fraudulent and
manipulative acts and practices? What
are commenters’ views generally with
respect to the liquidity and transparency
of the bitcoin markets and the bitcoin
markets’ susceptibility to manipulation?
2. Based on data and analysis
provided and the academic research
cited by the Exchange,17 do commenters
agree with the Exchange that the
Chicago Mercantile Exchange (‘‘CME’’),
on which CME bitcoin futures trade,
represents a regulated market of
significant size related to spot bitcoin? 18
What are commenters’ views on
whether there is a reasonable likelihood
that a person attempting to manipulate
the Shares would also have to trade on
the CME to manipulate the Shares? 19 Do
commenters agree with the Exchange
that trading in the Shares would not be
the predominant influence on prices in
the CME bitcoin futures market? 20
3. The Exchange states that bitcoin is
resistant to price manipulation and that
other means to prevent fraudulent and
manipulative acts and practices ‘‘exist
to justify dispensing with the requisite
surveillance sharing agreement’’ with a
regulated market of significant size
related to spot bitcoin.21 In support, the
Exchange states, among other things,
that the geographically diverse and
continuous nature of bitcoin trading
make it difficult and prohibitively costly
to manipulate the price of bitcoin, and
that the fragmentation across bitcoin
platforms, the relatively slow speed of
transactions, and the capital necessary
to maintain a significant presence on
each trading platform make
manipulation of bitcoin prices through
continuous trading activity
16 15
U.S.C. 78f(b)(5).
Notice, 88 FR at 57495–98.
18 See id. at 57491.
19 See id. at 57498.
20 See id.
21 See id. at 57497 n.49.
17 See
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
challenging.22 The Exchange also states
that offering only in-kind creations and
redemptions provides ‘‘unique
protections against potential attempts to
manipulate the price of the Shares’’ and
that the price the Sponsor uses to value
the Trust’s bitcoin ‘‘is not particularly
important.’’ 23 Do commenters agree
with the Exchange’s statements
regarding the bitcoin market’s resistance
to price manipulation?
4. The Exchange also states that it will
execute a surveillance-sharing
agreement with Coinbase, Inc.
(‘‘Coinbase’’) that is intended to
supplement the Exchange’s market
surveillance program.24 According to
the Exchange, the agreement is
‘‘expected to have the hallmarks of a
surveillance-sharing agreement between
two members of the [Intermarket
Surveillance Group], which would give
the Exchange supplemental access to
data regarding spot [b]itcoin trades on
Coinbase where the Exchange
determines it is necessary as part of its
surveillance program for the
Commodity-Based Trust Shares.’’ 25
Based on the description of the
surveillance-sharing agreement as
provided by the Exchange, what are
commenters’ views of such an
agreement if finalized and executed? Do
commenters agree with the Exchange
that such an agreement with Coinbase
would be ‘‘helpful in detecting,
investigating, and deterring fraud and
market manipulation in the CommodityBased Trust Shares’’? 26
5. Some sponsors of proposed spot
bitcoin exchange-traded products have
also provided data regarding the
correlation between certain bitcoin spot
markets and the CME bitcoin futures
market.27 What are commenters’ views
on the correlation between the bitcoin
spot market and the CME bitcoin futures
22 See
id.
id. at 57498.
24 See id.
25 See id. The Exchange states that ‘‘[t]his means
that the Exchange expects to receive market data for
orders and trades from Coinbase, which it will
utilize in surveillance of the trading of CommodityBased Trust Shares.’’ Id.
26 See id.
27 See, e.g., Notice of Filing of Amendment No.
3 to, and Order Instituting Proceedings to
Determine Whether to Approve or Disapprove, 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,
Securities Exchange Act Release No. 98112 (Aug.
11, 2023), 88 FR 55743 (Aug. 16, 2023) (including
data from sponsor 21Shares US LLC that purports
to show correlations of returns across the two-year
period from January 20, 2021, to February 1, 2023,
of no less than 92% among certain spot bitcoin
platforms and between the CME bitcoin futures
market and such spot bitcoin platforms on an
hourly basis, and no less than 78% on a minutely
basis).
23 See
E:\FR\FM\24NON1.SGM
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Federal Register / Vol. 88, No. 225 / Friday, November 24, 2023 / Notices
market? What are commenters’ views on
the extent to which that correlation
provides evidence that the CME bitcoin
futures market is ‘‘significant’’ related to
spot bitcoin?
III. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the Act,
and the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
opportunity to make an oral
presentation.28
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposed rule change should be
approved or disapproved by December
15, 2023. Any person who wishes to file
a rebuttal to any other person’s
submission must file that rebuttal by
December 29, 2023.
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–CboeBZX–2023–058 on the
subject line.
ddrumheller on DSK120RN23PROD with NOTICES1
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–2023–058. This
file number should be included on the
subject line if email is used. To help the
28 Section 19(b)(2) of the Act, as amended by the
Securities Acts Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Acts Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
VerDate Sep<11>2014
21:46 Nov 22, 2023
Jkt 262001
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–2023–058 and should be
submitted on or before December 15,
2023. Rebuttal comments should be
submitted by December 29, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–25882 Filed 11–22–23; 8:45 am]
82441
proposed rule change SR–OCC–2023–
003 pursuant to Section 19(b) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4 2
thereunder. The proposed rule change
would amend certain provisions in
OCC’s Rules relating to each Clearing
Member’s obligation to address a
‘‘Security Incident’’ (i.e., the occurrence
of a cyber-related disruption or
intrusion of a Clearing Member’s
systems that is reasonably likely to pose
an imminent risk or threat to OCC’s
operations) of that Clearing Member.
The proposed rule change was
published for public comment in the
Federal Register on April 5, 2023.3 The
Commission has received comments
regarding the proposed rule change.4
On May 18, 2023, pursuant to the
Section 19(b)(2) of the Exchange Act,5
the Commission designated a longer
period within which to approve,
disapprove, or institute proceedings to
determine whether to approve the
proposed rule change.6 On May 24,
2023, OCC filed Partial Amendment No.
1 to the Notice of Filing.7 For the
reasons discussed below, the
Commission is approving the proposed
rule change, as modified by Partial
Amendment No. 1 (hereinafter,
‘‘proposed rule change’’).
II. Background
Currently, the only OCC Rule
governing a Clearing Member’s
cybersecurity obligations to OCC is Rule
219, titled ‘‘Cybersecurity
Confirmation.’’ 8 It requires Clearing
Members and applicants for clearing
membership to submit to OCC a form
called the ‘‘Cybersecurity Confirmation’’
at least every two years or as part of its
application materials. Through the form,
BILLING CODE 8011–01–P
1 15
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98979; File No. SR–OCC–
2023–003]
Self-Regulatory Organizations; The
Options Clearing Corporation; Order
Granting Approval of Proposed Rule
Change, as Modified by Partial
Amendment No. 1, Concerning
Clearing Member Cybersecurity
Obligations
November 17, 2023.
I. Introduction
On March 21, 2023, the Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
29 17
PO 00000
CFR 200.30–3(a)(57).
Frm 00129
Fmt 4703
Sfmt 4703
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 97225
(Mar. 30, 2023), 88 FR 20195 (Apr. 5, 2023) (File
No. SR–OCC–2023–003) (‘‘Notice of Filing’’).
4 Comments on the proposed rule change are
available at https://www.sec.gov/comments/sr-occ2023-003/srocc2023003.htm.
5 15 U.S.C. 78s(b)(2).
6 See Securities Exchange Act Release No. 97525
(May 18, 2023), 88 FR 33655 (May 24, 2023) (File
No. SR–OCC–2023–003).
7 See Securities Exchange Act Release No. 97602
(May 26, 2023), 88 FR 36351 (June 2, 2023) (File
No. SR–OCC–2023–003) (‘‘Notice of Partial
Amendment’’). OCC submitted Partial Amendment
No. 1 in response to comments regarding the
proposed definition of ‘‘Security Incident’’ for
purposes of proposed Rule 213(d), the notification
requirements and procedure in the event of a
Security Incident, factors considered when
determining whether to disconnect or reduce a
clearing member’s access, and clarification related
to reconnection.
8 Capitalized terms used but not defined herein
have the meanings specified in OCC’s Rules and ByLaws, available at https://www.theocc.com/about/
publications/bylaws.jsp.
2 17
E:\FR\FM\24NON1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Notices]
[Pages 82439-82441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25882]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98981; File No. SR-CboeBZX-2023-058]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To List and Trade Shares of the Global X Bitcoin
Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares
November 17, 2023.
On August 4, 2023, Cboe BZX Exchange, Inc. (``BZX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
Global X Bitcoin Trust (``Trust'') under BZX Rule 14.11(e)(4),
Commodity-Based Trust Shares. The proposed rule change was published
for comment in the Federal Register on August 23, 2023.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 98156 (Aug. 17,
2023), 88 FR 57490 (``Notice''). Comments on the proposed rule
change are available at: https://www.sec.gov/comments/sr-cboebzx-2023-058/srcboebzx2023058.htm.
---------------------------------------------------------------------------
On September 26, 2023, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ This order institutes proceedings under Section 19(b)(2)(B)
of the Act \6\ to determine whether to approve or disapprove the
proposed rule change.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 98531, 88 FR 67829
(Oct. 2, 2023). The Commission designated November 21, 2023, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. Summary of the Proposal
As described in more detail in the Notice,\7\ the Exchange proposes
to list and trade the Shares of the Trust under BZX Rule 14.11(e)(4),
which governs the listing and trading of Commodity-Based Trust Shares
on the Exchange.
---------------------------------------------------------------------------
\7\ See Notice, supra note 3.
---------------------------------------------------------------------------
The investment objective of the Trust is to reflect the performance
of the price of bitcoin less the expenses of the
[[Page 82440]]
Trust's operations.\8\ The Trust's assets will consist of bitcoin held
by the Trust's custodian on behalf of the Trust.\9\ The Trust will
value its Shares daily based on the value of bitcoin as reflected by
the CoinDesk Bitcoin Price Index (XBX) (``Index'').\10\ The
administrator of the Trust will determine the net asset value (``NAV'')
of the Trust on each day that the Exchange is open for regular trading,
as soon as practicable after 4:00 p.m. ET.\11\ In determining the
Trust's NAV, the administrator will calculate the price of the bitcoin
held by the Trust as reflected by the Index as of 4:00 p.m. ET.\12\
When the Trust sells or redeems its Shares, it will do so in ``in-
kind'' transactions with authorized participants in large blocks of
Shares.\13\
---------------------------------------------------------------------------
\8\ See id. at 57499. Global X Digital Assets (``Sponsor'') is
the sponsor of the Trust. See id. at 57490.
\9\ See id. at 57499. The Trust generally does not intend to
hold cash or cash equivalents; however, there may be situations
where the Trust would unexpectedly hold cash or cash equivalents on
a temporary basis. See id.
\10\ See id.
\11\ See id. at 57500.
\12\ See id. at 57499-00.
\13\ See id. at 57499.
---------------------------------------------------------------------------
II. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2023-058 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \14\ to determine whether the proposed rule
change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change, as discussed below. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described below, the Commission seeks and encourages interested persons
to provide comments on the proposed rule change.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\15\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \16\
---------------------------------------------------------------------------
\15\ Id.
\16\ 15 U.S.C. 78f(b)(5).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on the following questions and asks commenters to submit
data where appropriate to support their views:
1. What are commenters' views on whether the proposed Trust and
Shares would be susceptible to manipulation? What are commenters' views
generally on whether the Exchange's proposal is designed to prevent
fraudulent and manipulative acts and practices? What are commenters'
views generally with respect to the liquidity and transparency of the
bitcoin markets and the bitcoin markets' susceptibility to
manipulation?
2. Based on data and analysis provided and the academic research
cited by the Exchange,\17\ do commenters agree with the Exchange that
the Chicago Mercantile Exchange (``CME''), on which CME bitcoin futures
trade, represents a regulated market of significant size related to
spot bitcoin? \18\ What are commenters' views on whether there is a
reasonable likelihood that a person attempting to manipulate the Shares
would also have to trade on the CME to manipulate the Shares? \19\ Do
commenters agree with the Exchange that trading in the Shares would not
be the predominant influence on prices in the CME bitcoin futures
market? \20\
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\17\ See Notice, 88 FR at 57495-98.
\18\ See id. at 57491.
\19\ See id. at 57498.
\20\ See id.
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3. The Exchange states that bitcoin is resistant to price
manipulation and that other means to prevent fraudulent and
manipulative acts and practices ``exist to justify dispensing with the
requisite surveillance sharing agreement'' with a regulated market of
significant size related to spot bitcoin.\21\ In support, the Exchange
states, among other things, that the geographically diverse and
continuous nature of bitcoin trading make it difficult and
prohibitively costly to manipulate the price of bitcoin, and that the
fragmentation across bitcoin platforms, the relatively slow speed of
transactions, and the capital necessary to maintain a significant
presence on each trading platform make manipulation of bitcoin prices
through continuous trading activity challenging.\22\ The Exchange also
states that offering only in-kind creations and redemptions provides
``unique protections against potential attempts to manipulate the price
of the Shares'' and that the price the Sponsor uses to value the
Trust's bitcoin ``is not particularly important.'' \23\ Do commenters
agree with the Exchange's statements regarding the bitcoin market's
resistance to price manipulation?
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\21\ See id. at 57497 n.49.
\22\ See id.
\23\ See id. at 57498.
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4. The Exchange also states that it will execute a surveillance-
sharing agreement with Coinbase, Inc. (``Coinbase'') that is intended
to supplement the Exchange's market surveillance program.\24\ According
to the Exchange, the agreement is ``expected to have the hallmarks of a
surveillance-sharing agreement between two members of the [Intermarket
Surveillance Group], which would give the Exchange supplemental access
to data regarding spot [b]itcoin trades on Coinbase where the Exchange
determines it is necessary as part of its surveillance program for the
Commodity-Based Trust Shares.'' \25\ Based on the description of the
surveillance-sharing agreement as provided by the Exchange, what are
commenters' views of such an agreement if finalized and executed? Do
commenters agree with the Exchange that such an agreement with Coinbase
would be ``helpful in detecting, investigating, and deterring fraud and
market manipulation in the Commodity-Based Trust Shares''? \26\
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\24\ See id.
\25\ See id. The Exchange states that ``[t]his means that the
Exchange expects to receive market data for orders and trades from
Coinbase, which it will utilize in surveillance of the trading of
Commodity-Based Trust Shares.'' Id.
\26\ See id.
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5. Some sponsors of proposed spot bitcoin exchange-traded products
have also provided data regarding the correlation between certain
bitcoin spot markets and the CME bitcoin futures market.\27\ What are
commenters' views on the correlation between the bitcoin spot market
and the CME bitcoin futures
[[Page 82441]]
market? What are commenters' views on the extent to which that
correlation provides evidence that the CME bitcoin futures market is
``significant'' related to spot bitcoin?
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\27\ See, e.g., Notice of Filing of Amendment No. 3 to, and
Order Instituting Proceedings to Determine Whether to Approve or
Disapprove, 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, Securities Exchange Act Release No. 98112 (Aug. 11,
2023), 88 FR 55743 (Aug. 16, 2023) (including data from sponsor
21Shares US LLC that purports to show correlations of returns across
the two-year period from January 20, 2021, to February 1, 2023, of
no less than 92% among certain spot bitcoin platforms and between
the CME bitcoin futures market and such spot bitcoin platforms on an
hourly basis, and no less than 78% on a minutely basis).
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III. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\28\
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\28\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by December 15, 2023. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
December 29, 2023.
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-2023-058 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-2023-058. 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-2023-058 and should
be submitted on or before December 15, 2023. Rebuttal comments should
be submitted by December 29, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25882 Filed 11-22-23; 8:45 am]
BILLING CODE 8011-01-P
