Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for Underlying Securities, 5079-5083 [2024-01390]

Download as PDF Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES 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. submissions should refer to file number SR–CBOE–2024–005 and should be submitted on or before February 15, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Sherry R. Haywood, Assistant Secretary. 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: [FR Doc. 2024–01388 Filed 1–24–24; 8:45 am] 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– CBOE–2024–005 on the subject line. Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for Underlying Securities 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–CBOE–2024–005. 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 VerDate Sep<11>2014 17:22 Jan 24, 2024 Jkt 262001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99397; File No. SR–MIAX– 2024–03] January 19, 2024. Pursuant to the provisions of 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 12, 2024, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Exchange Rule 402, Criteria for Underlying Securities. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxglobal.com/markets/ us-options/miax-options/rule-filings at MIAX’s principal office, 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 29 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00189 Fmt 4703 Sfmt 4703 5079 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 Exchange Rule 402, Criteria for Underlying Securities,3 to allow the Exchange to list and trade options on Exchange-Traded Fund Shares (‘‘ETFs’’) that represent interests in a trust that holds bitcoin (‘‘Bitcoin ETPs’’), designating them as ETFs deemed appropriate for options trading on the Exchange.4 Current Exchange Rule 402(i)(4) provides that, subject to certain other criteria set forth in that Rule, securities deemed appropriate for options trading include ETFs that represent certain types of interests,5 including interests in 3 The Exchange notes that its affiliate exchange, MIAX Pearl, has submitted a substantively identical proposal. 4 The Exchange notes that all the rules of Chapter IV of the MIAX Options Exchange, including Rule 402, are incorporated by reference to MIAX Emerald. 5 See Exchange Rule 402(i), which permits options trading on ETFS that: (1) represent interests in registered investment companies (or series thereof) organized as open-end management investment companies, unit investment trusts or similar entities that hold portfolios of securities and/or financial instruments (‘‘Funds’’), including, but not limited to, stock index futures contracts, options on futures, options on securities and indices, equity caps, collars and floors, swap agreements, forward contracts, repurchase agreements and reverse repurchase agreements (the ‘‘Financial Instruments’’), and money market instruments, including, but not limited to, U.S. government securities and repurchase agreements (the ‘‘Money Market Instruments’’) comprising or otherwise based on or representing investments in broad-based indexes or portfolios of securities and/ or Financial Instruments and Money Market Instruments (or that hold securities in one or more other registered investment companies that themselves hold such portfolios of securities and/ or Financial Instruments and Money Market Instruments); (2) represent interests in a trust or similar entity that holds a specified non-U.S. currency or currencies deposited with the trust which when aggregated in some specified minimum number may be surrendered to the trust or similar entity 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’’); (3) represent commodity pool interests principally engaged, directly or indirectly, in holding and/or managing portfolios or baskets of securities, commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/or options on physical commodities and/or non-U.S. currency (‘‘Commodity Pool ETFs’’); (4) are issued by the SPDR® Gold Trust or the iShares COMEX Gold Trust or the iShares Silver Continued E:\FR\FM\25JAN1.SGM 25JAN1 5080 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES certain specific trusts that hold financial instruments, money market instruments, or precious metals (which are deemed commodities). Bitcoin ETPs are bitcoin-backed commodity ETPs structured as trusts.6 Similar to any ETFs currently deemed appropriate for options trading under Exchange Rule 402, the investment objective of a Bitcoin ETP trust is for its shares to reflect the performance of bitcoin (less the expenses of the trust’s operations), offering investors an opportunity to gain exposure to bitcoin without the complexities of bitcoin delivery. As is the case for ETFs currently deemed appropriate for options trading, a Bitcoin ETP’s shares represent units of fractional undivided beneficial interest in the trust, the assets of which consist principally of bitcoin and are designed to track bitcoin or the performance of the price of bitcoin and offer access to the bitcoin market.7 Bitcoin ETPs provide investors with cost efficient alternatives that allow a level of participation in the bitcoin market through the securities market. The primary substantive difference between Bitcoin ETPs and ETFs currently deemed appropriate for options trading are that ETFs may hold securities, certain financial instruments, and specified precious metals (which are commodities), while Bitcoin ETPs hold bitcoin (which is also deemed a commodity). The Exchange’s initial listing standards for ETFs on which options may be listed and traded on the Exchange will apply to the Bitcoin ETPs. The Exchange expects Bitcoin ETPs to satisfy the initial listing Trust or the ETFS Silver Trust or the ETFS Gold Trust or the ETFS Palladium Trust or the ETFS Platinum Trust or the Sprott Physical Gold Trust; or (5) represent an interest in a registered investment company (‘‘Investment Company’’) organized as an open-end management company or similar entity, that invests in a portfolio of securities selected by the Investment Company’s investment adviser consistent with the Investment Company’s investment objectives and policies, which is issued in a specified aggregate minimum number in return for a deposit of a specified portfolio of securities and/or a cash amount with a value equal to the next determined net asset value (‘‘NAV’’), and when aggregated in the same specified minimum number, may be redeemed at a holder’s request, which holder will be paid a specified portfolio of securities and/or cash with a value equal to the next determined NAV (‘‘Managed Fund Share’’); provided that all of the conditions listed in (5)(i) and 5(ii) are met. 6 The Exchange notes several filings to list and trade ETFs that hold bitcoin as NMS stocks (and registration statements for those Units) are currently pending with the Securities and Exchange Commission (the ‘‘Commission’’). Pursuant to the Exchange’s Rules, the Exchange would only have authority to list and trade ETFs that are trading as NMS stocks. 7 The trust may include minimal cash. VerDate Sep<11>2014 17:22 Jan 24, 2024 Jkt 262001 standards as set forth in Exchange Rule 402(a) and Exchange Rule 402(i). Pursuant to Exchange Rule 402(a), a security (which includes ETFs) on which options may be listed and traded on the Exchange must be duly registered (with the Commission) and be an NMS stock (as defined in Rule 600 of Regulation NMS under the Act,) and be characterized by a substantial number of outstanding shares that are widely held and actively traded.8 Exchange Rule 402(i) requires that ETFs must either (1) meet the criteria and standards set forth in Exchange Rule 402(a) or Exchange Rule 402(b), or (2) be available for creation or redemption each business day from or through the issuer in cash or in kind at a price related to net asset value, and the issuer must be obligated to issue ETFs in a specified aggregate number even if some or all of the investment assets required to be deposited have not been received by the issuer, subject to the condition that the person obligated to deposit the investments has undertaken to deliver the investment assets as soon as possible and such undertaking is secured by the delivery and maintenance of collateral consisting of cash or cash equivalents satisfactory to the issuer, as provided in the respective prospectus. The Exchange expects that Bitcoin ETPs would satisfy Exchange Rule 402(i)(5)(i)(B).9 Options on Bitcoin ETPs will also be subject to the Exchange’s continued listing standards set forth in Exchange Rule 403(g), for ETFs deemed appropriate for options trading pursuant to Exchange Rule 402(i). Specifically, Exchange Rule 403(g) provides that ETFs that were initially approved for options trading pursuant to Exchange Rule 402(i) shall be deemed not 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 that such ETFs, if the ETFs are delisted 8 As noted above, there are currently no Bitcoin ETPs trading as NMS stocks on a national securities exchange; however, registration statements and rule filings to list and trade several Bitcoin ETPs are currently pending with the Commission. See Securities Exchange Act Release No. 99306 (January 10, 2024) (citing all the proposed rule changes to list and trade Bitcoin ETPs on U.S. securities exchanges). The Exchange represents it would not list options on a Bitcoin ETP unless it satisfied the criteria in Exchange Rule 402(a) the proposed listing criteria, and any other applicable listing criteria. 9 See, e.g., Form S–1 Registration Statement filed on November 29, 2023 (Registration No. 333– 275781) (pending registration statement for shares of the Pando Asset Spot Bitcoin Trust); and Form S–1 Registration Statement filed on September 12, 2023 (Registration No. 333–274474) (pending registration statement for shares of the Franklin Bitcoin ETF). PO 00000 Frm 00190 Fmt 4703 Sfmt 4703 from trading pursuant to Exchange Rule 403(b)(4), are halted or suspended from trading in their primary market. Additionally, options on ETFs may be subject to the suspension of opening transactions in any of the following circumstances: (1) in the case of options covering ETFs approved for trading under Exchange Rule 402(i)(5)(i)(A), in accordance with the terms of paragraphs (b)(1), (2), and (3) of Exchange Rule 403; (2) in the case of options covering ETFs approved for trading under Exchange Rule 402(i)(5)(i)(B), following the initial twelve-month period beginning upon the commencement of trading in the ETFs on a national securities exchange and are defined as an NMS stock [sic], there are fewer than 50 record and/or beneficial holders of such ETFs for 30 or more consecutive trading days; (3) the value of the index or portfolio of securities, non-U.S. currency, or 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 and money market instruments on which the Units are based is no longer calculated or available; or (4) such other event shall occur or condition exist that in the opinion of the Exchange makes further dealing in such options on the Exchange inadvisable. Options on a Bitcoin ETP will be physically settled contracts with American-style exercise.10 Consistent with current Exchange Rule 404, which governs the opening of options series on a specific underlying security (including ETFs), the Exchange will open at least one expiration month for options on each Bitcoin ETP 11 at the 10 See Exchange Rule 401, which provides that the rights and obligations of holders and writers are set forth in the Rules of the Options Clearing Corporation (‘‘OCC’’); 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 Exchange Rule 404(b). The monthly expirations are subject to certain listing criteria for underlying securities described within Exchange Rule 404 and its Interpretations and Policies. 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 Exchange Rule 404(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 E:\FR\FM\25JAN1.SGM 25JAN1 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES commencement of trading on the Exchange and may also list series of options on a Bitcoin ETP for trading on a weekly,12 monthly,13 or quarterly 14 basis. The Exchange may also list longterm equity option series (‘‘LEAPS’’) that expire from 12 to 180 months from the time they are listed.15 Pursuant to Exchange Rule 404, Interpretation and Policy .06, which governs strike prices of series of options on Trust Issued Receipts, the interval of strikes prices for series of options Bitcoin ETPs 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 and the $2.50 Strike Price Program.19 Pursuant to Exchange Rule 510, where the price of a series of a Bitcoin ETP 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 $0.10.20 Any and all new series of Bitcoin ETP options that the Exchange lists will be consistent and comply with the expirations, strike prices, and minimum increments set forth in Rules 404 and 510, as applicable. Bitcoin ETP options will trade in the same manner as any other ETF options on the Exchange. The Exchange Rules that currently apply to the listing and trading of all ETFs options on the Exchange, including, for example, Exchange Rules that govern listing criteria, expiration and exercise prices, minimum increments, position and exercise limits, margin requirements, customer accounts and trading halt procedures will apply to the listing and trading of Bitcoin ETPs on the Exchange in the same manner as they apply to from the initial exercise price or prices. Pursuant to Exchange Rule 404(e), 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 Exchange Rule 404, Interpretations and Policies .02. 13 See Exchange Rule 404, Interpretations and Policies .13. 14 See Exchange Rule 404, Interpretations and Policies .03. 15 See Exchange Rule 404(d). 16 See Exchange Rule 404, Interpretation and Policy .06. 17 See Exchange Rule 404, Interpretation and Policy .01. 18 See Exchange Rule 404, Interpretation and Policy .04. 19 See Exchange Rule 404(f). 20 See Exchange Rule 510. VerDate Sep<11>2014 17:22 Jan 24, 2024 Jkt 262001 other options on all other ETFs that are listed and traded on the Exchange, including the precious-metal backed commodity ETFs already deemed appropriate for options trading on the Exchange pursuant to current Exchange Rule 402(i)(4). Position and exercise limits for options on ETFs, including options on Bitcoin ETPs, are determined pursuant to Exchange Rules 307 and 309, respectively. Position and exercise limits for ETFs options vary according to the number of outstanding shares and the trading volumes of the Underlying Security 21 over the past six months, where the largest in capitalization and the most frequently traded ETFs have an option position and exercise limit of 250,000 contracts (with adjustments for splits, re-capitalizations, etc.) on the same side of the market; and smaller capitalization Units have position and exercise limits of 200,000, 75,000, 50,000 or 25,000 contracts (with adjustments for splits, re-capitalizations, etc.) on the same side of the market.22 The Exchange further notes that Exchange Rule 1502, which governs margin requirements applicable to trading on the Exchange, will also apply to the trading of Bitcoin ETP options. The Exchange represents that the same surveillance procedures applicable to all other options on ETFs currently listed and traded on the Exchange will apply to options on Bitcoin ETPs, and that it has the necessary systems capacity to support the new option series. The Exchange believes that its existing surveillance and reporting safeguards are designed to deter and detect possible manipulative behavior which might potentially arise from listing and trading ETFs options, including precious metal-commodity backed ETFs options, as proposed. Also, the Exchange may obtain information from CME Group Inc.’s designated contract markets that are members of the Intermarket Surveillance Group related to any financial instrument that is based, in whole or in part, upon an interest in or performance of bitcoin, as applicable. The Exchange has also analyzed its capacity and represents that it believes the Exchange and OPRA have the necessary systems capacity to handle 21 The term ‘‘underlying security’’ in respect of an option contract means the security which the Clearing Corporation shall be obligated to sell (in the case of a call option contract) or purchase (in the case of a put option contract) upon the valid exercise of the option contract. See Exchange Rule 100. 22 As Bitcoin ETPs do not currently trade, options on Bitcoin ETPs would be subject to the 25,000 option contract limit. PO 00000 Frm 00191 Fmt 4703 Sfmt 4703 5081 the additional traffic associated with the listing of new series that may result from the introduction of options on Bitcoin ETPs up to the number of expirations currently permissible under the Rules. Because the proposal is limited to ETFs on a single commodity, the Exchange believes any additional traffic that may be generated from the introduction of Bitcoin ETP options will be manageable. The Exchange believes that offering options on Bitcoin ETPs will benefit investors by providing them with an additional, relatively lower cost investing tool to gain exposure to the price of bitcoin and [sic] hedging vehicle to meet their investment needs in connection with bitcoin-related products and positions. The Exchange expects investors will transact in options on Bitcoin ETPs in the unregulated over-the-counter (‘‘OTC’’) options market (if the Commission approves Bitcoin ETPs for exchangetrading),23 but may prefer to trade such options in a listed environment to receive the benefits of trading listing options, including (1) enhanced efficiency in initiating and closing out position; (2) increased market transparency; and (3) heightened contraparty creditworthiness due to the role of OCC as issuer and guarantor of all listed options. The Exchange believes that listing Bitcoin ETP 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 ETFs that hold financial instruments, money market instruments, or precious metal commodities on which the Exchange may already list and trade options are trusts structured in substantially the same manner as Bitcoin ETPs 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 ETFs options, including ETFs that hold commodities (i.e., precious metals) that it currently lists and trades on the Exchange. 2. Statutory Basis The Exchange believes 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 23 The Exchange understands from customers that investors have historically transacted in options on ETFs in the OTC options market if such options were not available for trading in a listed environment. E:\FR\FM\25JAN1.SGM 25JAN1 khammond on DSKJM1Z7X2PROD with NOTICES 5082 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices Section 6(b) of the Act.24 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 25 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. In particular, the Exchange believes that the proposal to list and trade options on Bitcoin ETPs will remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, protect investors because offering options on Bitcoin ETPs will provide investors with an opportunity to realize the benefits of utilizing options on a bitcoin-based ETP, including cost efficiencies and increased hedging strategies. The Exchange believes that offering Bitcoin ETP options will benefit investors by providing them with a relatively lowercost risk management tool, which will allow them to manage their positions and associated risk in their portfolios more easily in connection with exposure to the price of bitcoin and with bitcoin-related products and positions. Additionally, the Exchange’s offering of Bitcoin ETP 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 options on other commodity-based ETFs,26 which, as described above, are trusts structured in substantially the same manner as Bitcoin ETPs and essentially offer the same objectives and benefits to investors, just with respect to a different commodity (i.e., bitcoin rather than precious metals) and for which the Exchange has not identified any issues with the continued listing and trading of commodity-backed ETFs options it currently lists for trading. The Exchange also believes the proposed rule change will remove 24 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 26 See Exchange Rule 402(i)(4). impediments to and perfect the mechanism of a free and open market and a national market system, because it is consistent with current Exchange Rules, previously filed with the Commission. Options on Bitcoin ETPs must satisfy the initial listing standards and continued listing standards currently in the Exchange Rules, applicable to options on all ETFs, including ETFs that hold other commodities already deemed appropriate for options trading on the Exchange. Bitcoin ETP options will trade in the same manner as any other ETFs options—the same Exchange Rules that currently govern the listing and trading of all ETFs options, including permissible expirations, strike prices and minimum increments, and applicable position and exercise limits and margin requirements, will govern the listing and trading of options on Bitcoin ETPs in the same manner. The Exchange represents that it has the necessary systems capacity to support the new ETF option series. 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 ETF options, including Bitcoin ETP 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 Bitcoin ETPs would need to satisfy the initial listing standards set forth in the Exchange Rules in the same manner as any other ETFs before the Exchange could list options on them. Additionally, Bitcoin ETP options will be equally available to all market participants who wish to trade such options. The Exchange Rules currently applicable to the listing and trading of options on ETFs on the Exchange will apply in the same manner to the listing and trading of all options on Bitcoin ETPs. Also, and as stated above, the Exchange already lists options on other commodity-based ETFs.27 The Exchange does not believe that the proposal to list and trade options on Bitcoin ETPs will impose any burden on intermarket competition that is not necessary or appropriate in furtherance 25 15 VerDate Sep<11>2014 17:22 Jan 24, 2024 27 Id. Jkt 262001 PO 00000 Frm 00192 Fmt 4703 Sfmt 4703 of the purposes of the Act. To the extent that the advent of Bitcoin ETP 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 Bitcoin ETPs. Additionally, the Exchange notes that listing and trading Bitcoin ETP 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. The Exchange believes that the proposed rule change may relieve any burden on, or otherwise promote, competition as it is designed to increase competition for order flow on the Exchange in a manner that is beneficial to investors by providing them with a lower-cost option to hedge their investment portfolios. The Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues that offer similar products. Ultimately, the Exchange believes that offering Bitcoin ETP options for trading on the Exchange will promote competition by providing investors with an additional, relatively low-cost means to hedge their portfolios and meet their investment needs in connection with bitcoin prices and bitcoin-related products and positions on a listed options exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. 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. E:\FR\FM\25JAN1.SGM 25JAN1 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 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: [FR Doc. 2024–01390 Filed 1–24–24; 8:45 am] BILLING CODE 8011–01–P Electronic Comments SMALL BUSINESS ADMINISTRATION • 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– MIAX–2024–03 on the subject line. License No. 09/09–0471] Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. khammond on DSKJM1Z7X2PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Sherry R. Haywood, Assistant Secretary. All submissions should refer to file number SR–MIAX–2024–03. 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–MIAX–2024–03 and should be submitted on or before February 15, 2024. Pivotal Capital Fund, LP; Surrender of License of Small Business Investment Company Pursuant to the authority granted to the United States Small Business Administration under Section 309 of the Small Business Investment Act of 1958, as amended, and 13 CFR 107.1900 of the Code of Federal Regulations to function as a small business investment company under the Small Business Investment Company license number 09/09–0471 issued to Pivotal Capital Fund, LP, said license is hereby declared null and void. Bailey Devries, Associate Administrator, Office of Investment and Innovation, United States Small Business Administration. [FR Doc. 2024–01456 Filed 1–24–24; 8:45 am] BILLING CODE P SOCIAL SECURITY ADMINISTRATION [Docket No. SSA–2023–0048] Request for Information on Social Security Scientific Integrity Policy AGENCY: ACTION: 17:22 Jan 24, 2024 Jkt 262001 Request for Information. The SSA is soliciting comments and suggestions from the public on the DRAFT Scientific Integrity Policy of the Social Security Administration (DRAFT SSA Scientific Integrity Policy). The DRAFT SSA Scientific Integrity Policy codifies expectations to preserve scientific integrity throughout SSA scientific activities, establishes key roles and responsibilities for those who will lead the agency’s scientific integrity program, and, as appropriate, establishes relevant reporting and evaluation mechanisms. DATES: To ensure that your comments are considered, we must receive them no later than February 26, 2024. ADDRESSES: You may submit comments by any one of three methods—internet, fax, or mail. Do not submit the same SUMMARY: 28 17 VerDate Sep<11>2014 Social Security Administration (SSA). PO 00000 CFR 200.30–3(a)(12). Frm 00193 Fmt 4703 Sfmt 4703 5083 comments multiple times or by more than one method. Regardless of which method you choose, please state that your comments refer to Docket No. SSA–2023–0048 so that we may associate your comments with the correct docket. Caution: You should be careful to include in your comments only information that you wish to make publicly available. We strongly urge you not to include in your comments any personal information, such as Social Security numbers or medical information. 1. Internet: We strongly recommend that you submit your comments via the internet. Please visit the Federal eRulemaking portal at www.regulations.gov. Use the ‘‘Search’’ function to find docket number SSA– 2023–0048. The system will issue a tracking number to confirm your submission. You will not be able to view your comment immediately because we must post each comment manually. It may take up to a week for your comment to be viewable. 2. Fax: Fax comments to 1(833) 410– 1631. 3. Mail: Mail your comments to the Office of Legislation and Congressional Affairs, Regulations and Reports Clearance, Social Security Administration, 6401 Security Boulevard, 3rd Floor (East) Altmeyer Building, Mail Stop 3253, Baltimore, Maryland 21235–6401. Comments are available for public viewing on the Federal eRulemaking portal at www.regulations.gov or in person, during regular business hours, by arranging with the contact person identified below. FOR FURTHER INFORMATION CONTACT: Robert Weathers, Office of Retirement and Disability Policy, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235– 6401, (410) 615–6965, email: robert.weathers@ssa.gov. For information on eligibility or filing for benefits, call our national toll-free number, 1–800–325–0778, or visit our internet site, Social Security Online, at www.socialsecurity.gov. SUPPLEMENTARY INFORMATION: SSA has developed a DRAFT SSA Scientific Integrity Policy to help ensure science and scientific activities are proposed, conducted, reviewed, managed, communicated, and used in ways that preserve accuracy and objectivity. The policy aligns with Federal Government scientific integrity efforts described in the 2021 Presidential Memorandum on Restoring Trust in Government Through Scientific Integrity and Evidence-Based E:\FR\FM\25JAN1.SGM 25JAN1

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[Federal Register Volume 89, Number 17 (Thursday, January 25, 2024)]
[Notices]
[Pages 5079-5083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01390]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99397; File No. SR-MIAX-2024-03]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing of a Proposed Rule Change To Amend 
Exchange Rule 402, Criteria for Underlying Securities

January 19, 2024.
    Pursuant to the provisions of 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 12, 2024, Miami International 
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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 is filing a proposal to amend Exchange Rule 402, 
Criteria for Underlying Securities.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings at MIAX's principal office, 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 Exchange Rule 402, Criteria for 
Underlying Securities,\3\ to allow the Exchange to list and trade 
options on Exchange-Traded Fund Shares (``ETFs'') that represent 
interests in a trust that holds bitcoin (``Bitcoin ETPs''), designating 
them as ETFs deemed appropriate for options trading on the Exchange.\4\
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    \3\ The Exchange notes that its affiliate exchange, MIAX Pearl, 
has submitted a substantively identical proposal.
    \4\ The Exchange notes that all the rules of Chapter IV of the 
MIAX Options Exchange, including Rule 402, are incorporated by 
reference to MIAX Emerald.
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    Current Exchange Rule 402(i)(4) provides that, subject to certain 
other criteria set forth in that Rule, securities deemed appropriate 
for options trading include ETFs that represent certain types of 
interests,\5\ including interests in

[[Page 5080]]

certain specific trusts that hold financial instruments, money market 
instruments, or precious metals (which are deemed commodities).
---------------------------------------------------------------------------

    \5\ See Exchange Rule 402(i), which permits options trading on 
ETFS that: (1) represent interests in registered investment 
companies (or series thereof) organized as open-end management 
investment companies, unit investment trusts or similar entities 
that hold portfolios of securities and/or financial instruments 
(``Funds''), including, but not limited to, stock index futures 
contracts, options on futures, options on securities and indices, 
equity caps, collars and floors, swap agreements, forward contracts, 
repurchase agreements and reverse repurchase agreements (the 
``Financial Instruments''), and money market instruments, including, 
but not limited to, U.S. government securities and repurchase 
agreements (the ``Money Market Instruments'') comprising or 
otherwise based on or representing investments in broad-based 
indexes or portfolios of securities and/or Financial Instruments and 
Money Market Instruments (or that hold securities in one or more 
other registered investment companies that themselves hold such 
portfolios of securities and/or Financial Instruments and Money 
Market Instruments); (2) represent interests in a trust or similar 
entity that holds a specified non-U.S. currency or currencies 
deposited with the trust which when aggregated in some specified 
minimum number may be surrendered to the trust or similar entity 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''); (3) 
represent commodity pool interests principally engaged, directly or 
indirectly, in holding and/or managing portfolios or baskets of 
securities, commodity futures contracts, options on commodity 
futures contracts, swaps, forward contracts and/or options on 
physical commodities and/or non-U.S. currency (``Commodity Pool 
ETFs''); (4) are issued by the SPDR[supreg] Gold Trust or the 
iShares COMEX Gold Trust or the iShares Silver Trust or the ETFS 
Silver Trust or the ETFS Gold Trust or the ETFS Palladium Trust or 
the ETFS Platinum Trust or the Sprott Physical Gold Trust; or (5) 
represent an interest in a registered investment company 
(``Investment Company'') organized as an open-end management company 
or similar entity, that invests in a portfolio of securities 
selected by the Investment Company's investment adviser consistent 
with the Investment Company's investment objectives and policies, 
which is issued in a specified aggregate minimum number in return 
for a deposit of a specified portfolio of securities and/or a cash 
amount with a value equal to the next determined net asset value 
(``NAV''), and when aggregated in the same specified minimum number, 
may be redeemed at a holder's request, which holder will be paid a 
specified portfolio of securities and/or cash with a value equal to 
the next determined NAV (``Managed Fund Share''); provided that all 
of the conditions listed in (5)(i) and 5(ii) are met.
---------------------------------------------------------------------------

    Bitcoin ETPs are bitcoin-backed commodity ETPs structured as 
trusts.\6\ Similar to any ETFs currently deemed appropriate for options 
trading under Exchange Rule 402, the investment objective of a Bitcoin 
ETP trust is for its shares to reflect the performance of bitcoin (less 
the expenses of the trust's operations), offering investors an 
opportunity to gain exposure to bitcoin without the complexities of 
bitcoin delivery. As is the case for ETFs currently deemed appropriate 
for options trading, a Bitcoin ETP's shares represent units of 
fractional undivided beneficial interest in the trust, the assets of 
which consist principally of bitcoin and are designed to track bitcoin 
or the performance of the price of bitcoin and offer access to the 
bitcoin market.\7\ Bitcoin ETPs provide investors with cost efficient 
alternatives that allow a level of participation in the bitcoin market 
through the securities market. The primary substantive difference 
between Bitcoin ETPs and ETFs currently deemed appropriate for options 
trading are that ETFs may hold securities, certain financial 
instruments, and specified precious metals (which are commodities), 
while Bitcoin ETPs hold bitcoin (which is also deemed a commodity).
---------------------------------------------------------------------------

    \6\ The Exchange notes several filings to list and trade ETFs 
that hold bitcoin as NMS stocks (and registration statements for 
those Units) are currently pending with the Securities and Exchange 
Commission (the ``Commission''). Pursuant to the Exchange's Rules, 
the Exchange would only have authority to list and trade ETFs that 
are trading as NMS stocks.
    \7\ The trust may include minimal cash.
---------------------------------------------------------------------------

    The Exchange's initial listing standards for ETFs on which options 
may be listed and traded on the Exchange will apply to the Bitcoin 
ETPs. The Exchange expects Bitcoin ETPs to satisfy the initial listing 
standards as set forth in Exchange Rule 402(a) and Exchange Rule 
402(i). Pursuant to Exchange Rule 402(a), a security (which includes 
ETFs) on which options may be listed and traded on the Exchange must be 
duly registered (with the Commission) and be an NMS stock (as defined 
in Rule 600 of Regulation NMS under the Act,) and be characterized by a 
substantial number of outstanding shares that are widely held and 
actively traded.\8\ Exchange Rule 402(i) requires that ETFs must either 
(1) meet the criteria and standards set forth in Exchange Rule 402(a) 
or Exchange Rule 402(b), or (2) be available for creation or redemption 
each business day from or through the issuer in cash or in kind at a 
price related to net asset value, and the issuer must be obligated to 
issue ETFs in a specified aggregate number even if some or all of the 
investment assets required to be deposited have not been received by 
the issuer, subject to the condition that the person obligated to 
deposit the investments has undertaken to deliver the investment assets 
as soon as possible and such undertaking is secured by the delivery and 
maintenance of collateral consisting of cash or cash equivalents 
satisfactory to the issuer, as provided in the respective prospectus. 
The Exchange expects that Bitcoin ETPs would satisfy Exchange Rule 
402(i)(5)(i)(B).\9\
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    \8\ As noted above, there are currently no Bitcoin ETPs trading 
as NMS stocks on a national securities exchange; however, 
registration statements and rule filings to list and trade several 
Bitcoin ETPs are currently pending with the Commission. See 
Securities Exchange Act Release No. 99306 (January 10, 2024) (citing 
all the proposed rule changes to list and trade Bitcoin ETPs on U.S. 
securities exchanges). The Exchange represents it would not list 
options on a Bitcoin ETP unless it satisfied the criteria in 
Exchange Rule 402(a) the proposed listing criteria, and any other 
applicable listing criteria.
    \9\ See, e.g., Form S-1 Registration Statement filed on November 
29, 2023 (Registration No. 333-275781) (pending registration 
statement for shares of the Pando Asset Spot Bitcoin Trust); and 
Form S-1 Registration Statement filed on September 12, 2023 
(Registration No. 333-274474) (pending registration statement for 
shares of the Franklin Bitcoin ETF).
---------------------------------------------------------------------------

    Options on Bitcoin ETPs will also be subject to the Exchange's 
continued listing standards set forth in Exchange Rule 403(g), for ETFs 
deemed appropriate for options trading pursuant to Exchange Rule 
402(i). Specifically, Exchange Rule 403(g) provides that ETFs that were 
initially approved for options trading pursuant to Exchange Rule 402(i) 
shall be deemed not 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 that such ETFs, if the ETFs are 
delisted from trading pursuant to Exchange Rule 403(b)(4), are halted 
or suspended from trading in their primary market. Additionally, 
options on ETFs may be subject to the suspension of opening 
transactions in any of the following circumstances: (1) in the case of 
options covering ETFs approved for trading under Exchange Rule 
402(i)(5)(i)(A), in accordance with the terms of paragraphs (b)(1), 
(2), and (3) of Exchange Rule 403; (2) in the case of options covering 
ETFs approved for trading under Exchange Rule 402(i)(5)(i)(B), 
following the initial twelve-month period beginning upon the 
commencement of trading in the ETFs on a national securities exchange 
and are defined as an NMS stock [sic], there are fewer than 50 record 
and/or beneficial holders of such ETFs for 30 or more consecutive 
trading days; (3) the value of the index or portfolio of securities, 
non-U.S. currency, or 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 and money market instruments on which the Units 
are based is no longer calculated or available; or (4) such other event 
shall occur or condition exist that in the opinion of the Exchange 
makes further dealing in such options on the Exchange inadvisable.
    Options on a Bitcoin ETP will be physically settled contracts with 
American-style exercise.\10\ Consistent with current Exchange Rule 404, 
which governs the opening of options series on a specific underlying 
security (including ETFs), the Exchange will open at least one 
expiration month for options on each Bitcoin ETP \11\ at the

[[Page 5081]]

commencement of trading on the Exchange and may also list series of 
options on a Bitcoin ETP 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 180 months from the 
time they are listed.\15\
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    \10\ See Exchange Rule 401, which provides that the rights and 
obligations of holders and writers are set forth in the Rules of the 
Options Clearing Corporation (``OCC''); 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 Exchange Rule 404(b). The monthly expirations are 
subject to certain listing criteria for underlying securities 
described within Exchange Rule 404 and its Interpretations and 
Policies. 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 Exchange Rule 404(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. Pursuant to 
Exchange Rule 404(e), 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 Exchange Rule 404, Interpretations and Policies .02.
    \13\ See Exchange Rule 404, Interpretations and Policies .13.
    \14\ See Exchange Rule 404, Interpretations and Policies .03.
    \15\ See Exchange Rule 404(d).
---------------------------------------------------------------------------

    Pursuant to Exchange Rule 404, Interpretation and Policy .06, which 
governs strike prices of series of options on Trust Issued Receipts, 
the interval of strikes prices for series of options Bitcoin ETPs 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\ and the $2.50 
Strike Price Program.\19\ Pursuant to Exchange Rule 510, where the 
price of a series of a Bitcoin ETP 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.\20\ Any and all new series 
of Bitcoin ETP options that the Exchange lists will be consistent and 
comply with the expirations, strike prices, and minimum increments set 
forth in Rules 404 and 510, as applicable.
---------------------------------------------------------------------------

    \16\ See Exchange Rule 404, Interpretation and Policy .06.
    \17\ See Exchange Rule 404, Interpretation and Policy .01.
    \18\ See Exchange Rule 404, Interpretation and Policy .04.
    \19\ See Exchange Rule 404(f).
    \20\ See Exchange Rule 510.
---------------------------------------------------------------------------

    Bitcoin ETP options will trade in the same manner as any other ETF 
options on the Exchange. The Exchange Rules that currently apply to the 
listing and trading of all ETFs options on the Exchange, including, for 
example, Exchange Rules that govern listing criteria, expiration and 
exercise prices, minimum increments, position and exercise limits, 
margin requirements, customer accounts and trading halt procedures will 
apply to the listing and trading of Bitcoin ETPs on the Exchange in the 
same manner as they apply to other options on all other ETFs that are 
listed and traded on the Exchange, including the precious-metal backed 
commodity ETFs already deemed appropriate for options trading on the 
Exchange pursuant to current Exchange Rule 402(i)(4).
    Position and exercise limits for options on ETFs, including options 
on Bitcoin ETPs, are determined pursuant to Exchange Rules 307 and 309, 
respectively. Position and exercise limits for ETFs options vary 
according to the number of outstanding shares and the trading volumes 
of the Underlying Security \21\ over the past six months, where the 
largest in capitalization and the most frequently traded ETFs have an 
option position and exercise limit of 250,000 contracts (with 
adjustments for splits, re-capitalizations, etc.) on the same side of 
the market; and smaller capitalization Units have position and exercise 
limits of 200,000, 75,000, 50,000 or 25,000 contracts (with adjustments 
for splits, re-capitalizations, etc.) on the same side of the 
market.\22\ The Exchange further notes that Exchange Rule 1502, which 
governs margin requirements applicable to trading on the Exchange, will 
also apply to the trading of Bitcoin ETP options.
---------------------------------------------------------------------------

    \21\ The term ``underlying security'' in respect of an option 
contract means the security which the Clearing Corporation shall be 
obligated to sell (in the case of a call option contract) or 
purchase (in the case of a put option contract) upon the valid 
exercise of the option contract. See Exchange Rule 100.
    \22\ As Bitcoin ETPs do not currently trade, options on Bitcoin 
ETPs would be subject to the 25,000 option contract limit.
---------------------------------------------------------------------------

    The Exchange represents that the same surveillance procedures 
applicable to all other options on ETFs currently listed and traded on 
the Exchange will apply to options on Bitcoin ETPs, and that it has the 
necessary systems capacity to support the new option series. The 
Exchange believes that its existing surveillance and reporting 
safeguards are designed to deter and detect possible manipulative 
behavior which might potentially arise from listing and trading ETFs 
options, including precious metal-commodity backed ETFs options, as 
proposed. Also, the Exchange may obtain information from CME Group 
Inc.'s designated contract markets that are members of the Intermarket 
Surveillance Group related to any financial instrument that is based, 
in whole or in part, upon an interest in or performance of bitcoin, as 
applicable.
    The Exchange has also analyzed its capacity and represents that it 
believes the Exchange and OPRA have the necessary systems capacity to 
handle the additional traffic associated with the listing of new series 
that may result from the introduction of options on Bitcoin ETPs up to 
the number of expirations currently permissible under the Rules. 
Because the proposal is limited to ETFs on a single commodity, the 
Exchange believes any additional traffic that may be generated from the 
introduction of Bitcoin ETP options will be manageable.
    The Exchange believes that offering options on Bitcoin ETPs will 
benefit investors by providing them with an additional, relatively 
lower cost investing tool to gain exposure to the price of bitcoin and 
[sic] hedging vehicle to meet their investment needs in connection with 
bitcoin-related products and positions. The Exchange expects investors 
will transact in options on Bitcoin ETPs in the unregulated over-the-
counter (``OTC'') options market (if the Commission approves Bitcoin 
ETPs for exchange-trading),\23\ but may prefer to trade such options in 
a listed environment to receive the benefits of trading listing 
options, including (1) enhanced efficiency in initiating and closing 
out position; (2) increased market transparency; and (3) heightened 
contra-party creditworthiness due to the role of OCC as issuer and 
guarantor of all listed options. The Exchange believes that listing 
Bitcoin ETP 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 ETFs that hold financial instruments, money market instruments, or 
precious metal commodities on which the Exchange may already list and 
trade options are trusts structured in substantially the same manner as 
Bitcoin ETPs 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 ETFs options, including ETFs that hold commodities 
(i.e., precious metals) that it currently lists and trades on the 
Exchange.
---------------------------------------------------------------------------

    \23\ The Exchange understands from customers that investors have 
historically transacted in options on ETFs in the OTC options market 
if such options were not available for trading in a listed 
environment.
---------------------------------------------------------------------------

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

[[Page 5082]]

Section 6(b) of the Act.\24\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \25\ 
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.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposal to list and 
trade options on Bitcoin ETPs will remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, protect investors because offering options on Bitcoin 
ETPs will provide investors with an opportunity to realize the benefits 
of utilizing options on a bitcoin-based ETP, including cost 
efficiencies and increased hedging strategies. The Exchange believes 
that offering Bitcoin ETP options will benefit investors by providing 
them with a relatively lower-cost risk management tool, which will 
allow them to manage their positions and associated risk in their 
portfolios more easily in connection with exposure to the price of 
bitcoin and with bitcoin-related products and positions. Additionally, 
the Exchange's offering of Bitcoin ETP 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 
options on other commodity-based ETFs,\26\ which, as described above, 
are trusts structured in substantially the same manner as Bitcoin ETPs 
and essentially offer the same objectives and benefits to investors, 
just with respect to a different commodity (i.e., bitcoin rather than 
precious metals) and for which the Exchange has not identified any 
issues with the continued listing and trading of commodity-backed ETFs 
options it currently lists for trading.
---------------------------------------------------------------------------

    \26\ See Exchange Rule 402(i)(4).
---------------------------------------------------------------------------

    The Exchange also believes the proposed rule change will remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, because it is consistent with current 
Exchange Rules, previously filed with the Commission. Options on 
Bitcoin ETPs must satisfy the initial listing standards and continued 
listing standards currently in the Exchange Rules, applicable to 
options on all ETFs, including ETFs that hold other commodities already 
deemed appropriate for options trading on the Exchange. Bitcoin ETP 
options will trade in the same manner as any other ETFs options--the 
same Exchange Rules that currently govern the listing and trading of 
all ETFs options, including permissible expirations, strike prices and 
minimum increments, and applicable position and exercise limits and 
margin requirements, will govern the listing and trading of options on 
Bitcoin ETPs in the same manner.
    The Exchange represents that it has the necessary systems capacity 
to support the new ETF option series. 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 ETF options, including Bitcoin ETP 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 Bitcoin ETPs would need to 
satisfy the initial listing standards set forth in the Exchange Rules 
in the same manner as any other ETFs before the Exchange could list 
options on them. Additionally, Bitcoin ETP options will be equally 
available to all market participants who wish to trade such options. 
The Exchange Rules currently applicable to the listing and trading of 
options on ETFs on the Exchange will apply in the same manner to the 
listing and trading of all options on Bitcoin ETPs. Also, and as stated 
above, the Exchange already lists options on other commodity-based 
ETFs.\27\
---------------------------------------------------------------------------

    \27\ Id.
---------------------------------------------------------------------------

    The Exchange does not believe that the proposal to list and trade 
options on Bitcoin ETPs will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. To the extent that the advent of Bitcoin ETP 
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 Bitcoin ETPs. Additionally, the Exchange notes that listing and 
trading Bitcoin ETP 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. The Exchange believes that the proposed rule change may relieve 
any burden on, or otherwise promote, competition as it is designed to 
increase competition for order flow on the Exchange in a manner that is 
beneficial to investors by providing them with a lower-cost option to 
hedge their investment portfolios. The Exchange notes that it operates 
in a highly competitive market in which market participants can readily 
direct order flow to competing venues that offer similar products. 
Ultimately, the Exchange believes that offering Bitcoin ETP options for 
trading on the Exchange will promote competition by providing investors 
with an additional, relatively low-cost means to hedge their portfolios 
and meet their investment needs in connection with bitcoin prices and 
bitcoin-related products and positions on a listed options exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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.

[[Page 5083]]

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-MIAX-2024-03 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-MIAX-2024-03. 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-MIAX-2024-03 and should be 
submitted on or before February 15, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01390 Filed 1-24-24; 8:45 am]
BILLING CODE 8011-01-P
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