Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of Proposed Change, as Modified by Amendment No. 2 To Amend Rule 915 To Permit the Listing and Trading of Options on the Bitwise Bitcoin ETF, the Grayscale Bitcoin Trust, and Any Trust That Holds Bitcoin, 14911-14915 [2024-04169]
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Federal Register / Vol. 89, No. 41 / Thursday, February 29, 2024 / Notices
the fees charged for services currently
offered by the Exchange.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
IV. Solicitation of Comments
B. Self-Regulatory Organization’s
Statement on Burden on Competition
• 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–
NYSE–2024–07 on the subject line.
In accordance with Section 6(b)(8) of
the Act,9 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Instead, as
discussed above, the proposal relates
solely to elimination of an obsolete
crossing session fees and, as such,
would not have any impact on intra- or
inter-market competition because the
proposed change is solely designed to
accurately reflect the services that the
Exchange currently offers, thereby
adding clarity to the Price List.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 10 of the Act and
subparagraph (f)(2) of Rule 19b–4 11
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 12 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
9 15
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(2).
12 15 U.S.C. 78s(b)(2)(B).
10 15
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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
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–NYSE–2024–07. 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–NYSE–2024–07 and should be
submitted on or before March 21, 2024.
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14911
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–04168 Filed 2–28–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99593; File No. SR–
NYSEAMER–2024–10]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing of
Proposed Change, as Modified by
Amendment No. 2 To Amend Rule 915
To Permit the Listing and Trading of
Options on the Bitwise Bitcoin ETF,
the Grayscale Bitcoin Trust, and Any
Trust That Holds Bitcoin
February 23, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on February
9, 2024, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change, which filing was
partially amended by Amendment No. 2
thereto on February 15, 2024, as
described in Items I, II, and III below,
which Items have been prepared by the
self-regulatory organization.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment No.
2, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 915 to permit the listing and
trading of options on the Bitwise Bitcoin
ETF, the Grayscale Bitcoin Trust (BTC),
and any trust that holds bitcoin. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 The Exchange filed Amendment No. 1 on
February 15, 2024 to add specificity regarding how
the options on Bitcoin ETPs are settled. On
February 15, 2024, the Exchange withdrew
Amendment No. 1 and filed Amendment No. 2 to
correct a pagination error.
1 15
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Federal Register / Vol. 89, No. 41 / Thursday, February 29, 2024 / Notices
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
self-regulatory organization 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 those 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 parts of such
statements.
Commentary .06 to Rule 915
(hereinafter ‘‘Commentary .06’’)
provides that, subject to certain other
criteria set forth in Rule 915, securities
deemed appropriate for options trading
include ETFs that represent certain
types of interests,7 including interests in
certain specific trusts that hold financial
instruments, money market instruments,
or precious metals (which are deemed
commodities).
Bitcoin ETPs, including the Bitwise
Bitcoin ETF (‘‘BITC’’) and the Grayscale
Bitcoin Trust (‘‘GBTC’’), are bitcoinbacked commodity ETPs structured as
trusts.8 Similar to any ETFs currently
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
7 See Commentary .06, which permits options
trading on ETFs that are traded on a national
securities exchange and are defined as an ‘‘NMS
stock’’ in Rule 600(b)(55) of Regulation NMS, that
represent interests in registered investment
companies (or series thereof) organized as open-end
management investment companies, unit
investment trusts or similar entities that hold
portfolios of securities and/or financial instruments
including, but not limited to, stock index futures
contracts, options on futures, options on securities
and indexes, equity caps, collars and floors, swap
agreements, forward contracts, repurchase
agreements and reverse purchase 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
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); interests in a trust
or similar entity that holds a specified non-U.S.
currency deposited with the trust or similar entity
when aggregated in some specified minimum
number may be surrendered to the trust by the
beneficial owner to receive the specified non-U.S.
currency and pays the beneficial owner interest and
other distributions on deposited non-U.S. currency,
if any, declared and paid by the trust (‘‘Currency
Trust Shares’’); 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
Units’’); or represents an interest in a registered
investment company (‘‘Investment Company’’)
organized as an open-end management investment
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 Rules 915 and 916 are met.
8 See supra note 4 (regarding order approving rule
changes to list and trade shares of ‘‘Bitcoin-Based
Commodity-Based Trust Shares’’ pursuant to Rule
8.201–E(c)(1) (Commodity-Based Trust Shares),
including BITC and GBTC. For a complete
description of the BITC and the GBTC, see SR–
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1. Purpose
The Exchange proposes to amend
Rule 915 (Criteria for Underlying
Securities), Commentary .10, to allow
the Exchange to list and trade options
on the Bitwise Bitcoin ETF (‘‘BITC’’),
the Grayscale Bitcoin Trust (BTC)
(‘‘GBTC’’), and any trust that holds only
bitcoin and cash (collectively, ‘‘Bitcoin
ETPs’’).5 The Exchange notes that other
options exchanges have filed similar
rule proposals that are currently
pending with the Commission to allow
the listing and trading of options on
trusts that hold bitcoin.6
5 See proposed Commentary .10 to Rule 915. The
Commission recently approved rule changes to list
and trade shares of ‘‘Bitcoin-Based CommodityBased Trust Shares’’ pursuant to Rule 8.201–E(c)(1)
(Commodity-Based Trust Shares), including the
Bitwise Bitcoin ETF, the Grayscale Bitcoin Trust
(BTC). See Securities Exchange Act Release No.
99306 (January 10, 2024) (Order Granting
Accelerated Approval of Proposed Rule Changes, as
Modified by Amendments Thereto, to List and
Trade Bitcoin-Based Commodity-Based Trust
Shares and Trust Units), 89 FR 3008 (January 17,
2024) (SR–NYSEARCA–2023–44; SR–NYSEARCA–
2021–90).
6 See, e.g., Securities Exchange Act Release No.
99396 (January 19, 2024), 89 FR 5047 (January 24,
2024) (SR–ISE–2024–03) (proposal to amend, on an
accelerated basis, Nasdaq ISE’s initial listing rule to
allow the listing and trading of options on the
iShares Bitcoin Trust on Nasdaq ISE); and
Securities Exchange Act Release No. 99397 (January
12, 2024), 89 FR 5079 (January 19, 2024) (SR–
MIAX–2024–03) (proposal to amend, on an
accelerated basis, MIAX’s initial listing rule to
allow the listing and trading of options on ETFs that
represent interests in a trust that holds bitcoin,
designating them as ETFs deemed appropriate for
options trading on MIAX). See also Securities
Exchange Act Release No. 99398 (January 19, 2024),
89 FR 5029 (January 25, 2024) (SR–NYSEARCA–
2024–06) (proposal to amend, on an accelerated
basis, NYSE Arca’s initial listing rule to allow the
listing and trading of options on Commodity-Based
Trust Shares, which generic listing standard would,
if approved, permit options on Commodity ETFs
backed by bitcoin). Pursuant to the Exchange’s
Rules, the Exchange would only have authority to
list and trade options on ETFs if the underlying
securities are trading as NMS stocks.
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deemed appropriate for options trading
under Rule 915, 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.9
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).10 The Exchange believes
that offering options on Bitcoin ETPs,
including to BITC and GBTC, will
benefit investors by providing them
with an additional, relatively lower cost
investing tool to gain exposure to spot
Bitcoin as well as a hedging vehicle to
meet their investment needs in
connection with Bitcoin products and
positions.
Bitcoin ETPs will trade in the same
manner as options on other ETFs
(including commodities ETFs) on the
Exchange.11 In particular, and as
detailed below, Exchange rules that
apply to the listing and trading of all
options on ETFs on the Exchange,
including, for example, rules that
govern listing criteria, expirations,
exercise prices, minimum increments,
position and exercise limits, margin
NYSEARCA–2023–44 and SR–NYSEARCA–2021–
90, respectively.
9 The trust may include minimal cash. See e.g.,
Securities Exchange Act Release No. 99306 (January
8, 2024), 89 FR 2297, 2298 (January 12, 2024) (SR–
NYSEARCA–2023–44) (providing that, for BITC, the
‘‘only assets will be bitcoin and cash’’).
10 Similar to other commodity ETFs in which
options may be listed on the Exchange pursuant to
Rule 915, Commentary .10 (e.g., SPDR Gold Trust,
the iShares COMEX Gold Trust, the iShares Silver
Trust, the ETFS Gold Trust, the ETFS Silver Trust,
the ETFS Palladium Trust, or the ETFS Platinum
Trust), both GBTC and BITC are trusts that
essentially offer analogous objectives and benefits
to investors.
11 As with any ETF that trades on the Exchange,
the Exchange would not list and trade options on
Bitcoin ETPs, including the Bitwise Bitcoin ETF
and the Grayscale Bitcoin Trust (BTC), unless such
instruments satisfied all applicable criteria in Rules
915 and 916, as applicable.
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requirements, customer accounts and
trading halt procedures, will likewise
apply to the listing and trading of
options on Bitcoin ETPs on the
Exchange.
The Exchange’s initial listing
standards for ETFs on which options
may be listed and traded on the
Exchange will apply to Bitcoin ETPs.
The Exchange expects Bitcoin ETPs to
satisfy the initial listing standards as set
forth in Rule 915(a) (generally) and
Commentary .06 (which applies to ETFs
specifically). Pursuant to Rule 915(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. In addition,
Commentary .06 requires that ETFs
must either (1) meet the criteria and
standards set forth in Commentary .01
to Rule 915,12 or (2) the ETFs are
available for creation and redemption
each business day as set forth in
Commentary .06(a)(ii).
Options on Bitcoin ETPs will also be
subject to the Exchange’s continued
listing standards set forth in
Commentary .07 to Rule 916 which
provides that options on ETFs may be
subject to the suspension of opening
transactions as follows: (1) the ETFs no
longer meets the terms of Commentary
.01 to Rule 916; (2) following the initial
twelve-month period beginning upon
the commencement of trading of the
ETFs, there are fewer than 50 record
and/or beneficial holders of the ETFs for
30 or more consecutive trading days; (3)
the value of the underlying commodity
is no longer calculated or available; or
(4) such other event occurs or condition
exists that in the opinion of the
Exchange makes further dealing on the
Exchange inadvisable. Additionally,
ETFs will be deemed to not meet the
requirements for continued approval,
and the Exchange will not open for
trading any additional series of option
12 See Commentary .01 to Rule 915, which sets
forth minimum requirements for the underlying
security which include, but are not limited to,
7,000,000 underlying shares, 2,000 shareholders,
and trading volume of 2,400,000 shares over the
preceding twelve months. Additionally, the rule
requires that the market price per share of the
underlying security must be at least $7.50 for the
majority of business days during the three calendar
months preceding the date of selection of an option
class. For underlying securities that are deemed
Covered Securities, as defined under Section
18(b)(1)(A) of the Securities Act of 1933, the closing
market price of the underlying security must be at
least $3.00 per share for the previous three
consecutive business days prior to the date of
selection of an option class.
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contracts covering the ETF if such
security ceases to be an ‘‘NMS stock’’ as
provided for Commentary .01(5) to Rule
915 or the ETF is halted from trading on
its primary market.13
Options on Bitcoin ETPs listed
pursuant to proposed Commentary .10
to Rule 915 would be physically 14
settled contracts with American-style
exercise 15 and would be included
within the definition of securities as
such terms are used in the Exchange’s
rules and, as such, would be subject to
Exchange rules and procedures that
currently govern the trading of
securities on the Exchange, including
Exchange rules governing the trading of
equity options. Furthermore, the
Exchange’s rules pertaining to position
and exercise limits or margin shall
apply to options on Bitcoin ETPs.
Specifically, consistent with Rule 903,
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 Bitcoin ETPs and may also
list series of options on Bitcoin ETPs for
trading on a weekly 16 or quarterly 17
basis. The Exchange may also list longterm equity option series (‘‘LEAPS’’) 18
that expire from twelve to thirty-nine
months from the time they are listed.
Pursuant to Rule 903, Commentary
.05(a), which governs strike prices of
series of options on ETFs, the interval
between strike prices of series of options
on ETFs approved for options trading
(per Commentary .06) will be fixed at a
13 See Commentary .07 to Rule 916. For
avoidance of doubt and consistent with this
proposal, the Exchange proposes to amend Rule 916
to include in Bitcoin in ETPs in the list of ETFs
subject to the continued listing standards. See
proposed Commentary .11 to Rule 916 (proving that
‘‘[f]or purposes of Commentary .07 of this Rule 916,
shares of the SPDR® Gold Trust (symbol: GLD),
iShares COMEX Gold Trust (symbol: IAU), the
iShares Silver Trust (symbol: SLV), and the ETFS
Silver Trust (symbol: SIVR), the ETFS Gold Trust
(symbol: SGOL), the ETFS Palladium Trust (symbol:
PALL), the ETFS Platinum Trust (symbol: PPLT),
the Bitwise Bitcoin ETF (symbol: BITC), the
Grayscale Bitcoin Trust (BTC) (symbol: GBTC), and
any trust that holds bitcoin, are deemed to be
‘‘Exchange-Traded Fund Shares’’) (emphasis
added).
14 See Amendment No 2.
15 See Rule 902 (Rights and Obligations of
Holders and Writers), which provides that the rights
and obligations of holders and writers of option
contracts of any class of options dealt in on the
Exchange shall be as set forth in the Rules of the
Clearing Corporation. See also OCC Rules, Chapter
VIII, which governs exercise and assignment, and
Chapter IX, which governs the discharge of delivery
and payment obligations arising out of the exercise
of physically settled stock option contracts. OCC
Rules can be located at: https://www.theocc.com/
getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/
occrules.pdf.
16 See Rule 903(h).
17 See Rule 903, Commentary .09.
18 See Rule 903, Commentary .03.
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14913
price per share which is reasonably
close to the price per share at which the
underlying security is traded in the
primary market at or about the same
time such series of options is first open
for trading on the Exchange, or at such
intervals as may have been established
on another options exchange prior to the
initiation of trading on the Exchange.
With respect to the Short Term Options
Series or Weekly Program, during the
month prior to expiration of an option
class that is selected for the Short Term
Option Series Program, the strike price
intervals for the related non-Short Term
Option (‘‘Related non-Short Term
Option’’) shall be the same as the strike
price intervals for the Short Term
Option.19 Specifically, the Exchange
may open for trading Short Term Option
Series at strike price intervals of (i)
$0.50 or greater where the strike price
is less than $100, and $1 or greater
where the strike price is between $100
and $150 for all option classes that
participate in the Short Term Options
Series Program; (ii) $0.50 for option
classes that trade in one dollar
increments and are in the Short Term
Option Series Program; or (iii) $2.50 or
greater where the strike price is above
$150.20 Additionally, the Exchange may
list series of options pursuant to the $1
Strike Price Interval Program,21 the
$0.50 Strike Program,22 the $2.50 Strike
Price Program,23 and the $5 Strike
Program.24 Rule 960NY governs the
minimum increment for bids and offers
for both equity and index options.
Pursuant to Rule 960NY, where the
price of a series of options in Bitcoin
ETPs 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 25 consistent
with the minimum increments for
options on other ETFs listed on the
Exchange. Any and all new series of
options on Bitcoin ETPs that the
Exchange lists will be consistent and
comply with the expirations, strike
prices, and minimum increments set
forth in Rules 915, 903, and 970NY, as
applicable.
Position and exercise limits for
options on ETFs, including options on
Bitcoin ETPs, are determined pursuant
to Rules 904 and 905, respectively.
Position and exercise limits for ETFs
19 See
Rule 903, Commentary .10(d).
20 Id.
21 See
Rule 903, Commentary .06.
Rule 903, Commentary .13.
23 See Rule 903, Commentary .07(a).
24 See Rule 903, Commentary .12.
25 Options that are eligible to participate in the
Penny Interval Program have a minimum increment
of $0.01 below $3.00 and $0.50 above $3.00. See
Rule 970NY(a)(3).
22 See
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Federal Register / Vol. 89, No. 41 / Thursday, February 29, 2024 / Notices
options vary according to the number of
outstanding shares and the trading
volumes of the underlying ETF 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, recapitalizations, etc.) on the same side of
the market; and smaller capitalization
ETFs have position and exercise limits
of 200,000, 75,000, 50,000 or 25,000
contracts (with adjustments for splits,
recapitalizations, etc.) on the same side
of the market. Further, Rule 462, which
governs margin requirements applicable
to the trading of all options on the
Exchange including options on ETFs,
will also apply to the trading of Bitcoin
ETP options.
*
*
*
*
*
The Exchange notes that options on
Bitcoin ETPs would not be available for
trading until The Options Clearing
Corporation (‘‘OCC’’) represents to the
Exchange that it is fully able to clear
and settle such options. The Exchange
has also analyzed its capacity and
represents that it and The Options Price
Reporting Authority (‘‘OPRA’’) have the
necessary systems capacity to handle
the additional traffic associated with the
listing of options on Bitcoin ETPs. The
Exchange believes any additional traffic
that would be generated from the
trading of options on Bitcoin ETPs
would be manageable. The Exchange
represents that Exchange members will
not have a capacity issue as a result of
this proposed rule change.
The Exchange represents that the
same surveillance procedures applicable
to all other options on other ETFs
currently listed and traded on the
Exchange will apply to options on
Bitcoin ETPs. The Exchange’s existing
surveillance and reporting safeguards
are designed to deter and detect possible
manipulative behavior which might
arise from listing and trading options on
ETFs, including the options on Bitcoin
ETPs. The Exchange believes that its
surveillance procedures are adequate to
properly monitor the trading of options
on Bitcoin ETPs in all trading sessions
and to deter and detect violations of
Exchange rules. In addition, the
Exchange will implement any new
surveillance procedures it deems
necessary to effectively monitor the
trading of options on Bitcoin ETPs.
Also, the Exchange may obtain trading
information via the Intermarket
Surveillance Group (‘‘ISG’’) from other
exchanges who are members of the ISG,
or from other exchanges with which the
Exchange has entered into a
comprehensive surveillance sharing
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16:39 Feb 28, 2024
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agreement (‘‘CSSA’’). The Exchange will
enter into new CSSAs with other
exchanges as necessary to effectively
monitor the trading of options on
Bitcoin ETPs. The Exchange represents
that these procedures will be adequate
to properly monitor Exchange trading of
options on Bitcoin ETPs and to deter
and detect violations of Exchange rules.
Finally, quotation and last sale
information for ETFs is available via the
Consolidated Tape Association (‘‘CTA’’)
high speed line. Quotation and last sale
information for such securities is also
available from the exchange on which
such securities are listed. Quotation and
last sale information for options on
Bitcoin ETPs will be available via OPRA
and major market data vendors.
2. Statutory Basis
The Exchange believes that its
proposed rule change is consistent with
Section 6(b) of the Act 26 in general and
furthers the objectives of Section 6(b)(5)
of the Act 27 in particular, in that it is
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system.
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 a greater
opportunity to realize the benefits of
utilizing options on an ETF based on
spot bitcoin, including cost efficiencies
and increased hedging strategies. The
Exchange believes that offering options
on a competitively priced ETF based on
spot bitcoin will benefit investors by
providing them with an additional,
relatively lower cost risk management
tool allowing them to manage, more
easily, their positions, and associated
risks, in their portfolios in connection
with exposure to spot bitcoin. Today,
the Exchange lists options on other
commodity ETFs structured as a trust,
which essentially offer analogous
objectives and benefits to investors, and
for which the Exchange has not
identified any issues with the continued
listing and trading of options on those
ETFs.
The Exchange also believes the
proposal to permit options on Bitcoin
ETPs will remove impediments to and
perfect the mechanism of a free and
open market and a national market
26 15
27 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00115
Fmt 4703
Sfmt 4703
system, because options on Bitcoin
ETPs will comply with current
Exchange rules as discussed herein.
Specifically, 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 options on other commodity
ETFs already deemed appropriate for
options trading on the Exchange
pursuant to Rule 915, Commentary .10.
Further, Exchange rules that currently
govern the listing and trading of options
on ETFs, including permissible
expirations, strike prices, minimum
increments, position and exercise limits,
and margin requirements, will govern
the listing and trading of options on
Bitcoin ETPs.
The Exchange represents that it has
the necessary systems capacity to
support any additional traffic that may
be generated by the trading of options
on Bitcoin ETPs. In addition, the
Exchange represents that its existing
surveillance procedures are adequate to
properly monitor the trading of options
on Bitcoin ETPs in all trading sessions
and to deter and detect violations of
Exchange rules. The Exchange further
represents that it will implement new
surveillance procedures, as necessary, to
effectively monitor the trading of
options on Bitcoin ETPs. Finally, the
Commission has previously approved
the listing and trading of options on
other commodity ETFs structured as a
trust, such as SPDR Gold Trust,28 the
iShares COMEX Gold Trust,29 the
iShares Silver Trust,30 the ETFS Gold
Trust,31 and the ETFS Silver Trust.32
28 See Securities Exchange Act Release No. 57897
(May 30, 2008), 73 FR 32061 (June 5, 2008) (SR–
Amex–2008–15; SR–CBOE–2005–11; SR–ISE–2008–
12; SR–NYSEArca–2008–52; and SR–Phlx–2008–
17) (Order Granting Approval of a Proposed Rule
Change, as Modified, and Notice of Filing and
Order Granting Accelerated Approval of Proposed
Rule Changes, as Modified, Relating to Listing and
Trading Options on the SPDR Gold Trust).
29 See Securities Exchange Act Release No. 59055
(December 4, 2008), 73 FR 75148 (December 10,
2008) (SR–Amex–2008–68; SR–BSE–2008–51; SR–
CBOE–2008–72; SR–ISE–2008–58; SR–NYSEArca–
2008–66; and SR–Phlx–2008–58) (Notice of Filing
and Order Granting Accelerated Approval of
Proposed Rule Changes Relating to the Listing and
Trading Options on Shares of the iShares COMEX
Gold Trust and the iShares Silver Trust).
30 Id.
31 See Securities Exchange Act Release No. 61483
(February 3, 2010), 75 FR 6753 (February 10, 2010)
(SR–CBOE–2010–007; SR–ISE–2009–106; SR–
NYSEAmex–2009–86; and SR–NYSEArca–2009–
110) (Order Granting Approval of Proposed Rule
Changes and Notice of Filing and Order Granting
Accelerated Approval of a Proposed Rule Change
Relating to Listing and Trading Options on the
ETFS Gold Trust and the ETFS Silver Trust).
32 Id.
E:\FR\FM\29FEN1.SGM
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khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 41 / Thursday, February 29, 2024 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
prices and bitcoin related products and
positions.
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.
Intramarket Competition: The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
as options on Bitcoin ETPs will be
subject to initial listing standards and
continued listing standards the same as
other options on ETFs listed on the
Exchange. Further, options on Bitcoin
ETPs will be subject to Exchange rules
that currently govern the listing and
trading of options on ETFs, including
permissible expirations, strike prices,
minimum increments, position and
exercise limits, and margin
requirements. Moreover, options on
Bitcoin ETPs will be equally available to
all market participants who wish to
trade such options. Finally, and as
stated above, the Exchange already lists
options on other commodity ETFs
structured as a trust.
Intermarket Competition: The
Exchange does not believe the proposal
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
permitting options on Bitcoin ETPs to
trade on the Exchange may make the
Exchange a more attractive marketplace
to market participants, 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. 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 options
on Bitcoin ETPs 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 spot bitcoin
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
VerDate Sep<11>2014
16:39 Feb 28, 2024
Jkt 262001
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 self-regulatory organization
consents, the Commission will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEAMER–2024–10 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–NYSEAMER–2024–10. 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
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
14915
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–NYSEAMER–2024–10 and should
be submitted on or before March 21,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–04169 Filed 2–28–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99591; File No. SR–NYSE–
2024–08]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Content of the NYSE Best Quote &
Trades Data Feed
February 23, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on February
14, 2024, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
33 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
E:\FR\FM\29FEN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 41 (Thursday, February 29, 2024)]
[Notices]
[Pages 14911-14915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04169]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99593; File No. SR-NYSEAMER-2024-10]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing of Proposed Change, as Modified by Amendment No. 2 To Amend Rule
915 To Permit the Listing and Trading of Options on the Bitwise Bitcoin
ETF, the Grayscale Bitcoin Trust, and Any Trust That Holds Bitcoin
February 23, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on February 9, 2024, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change, which filing was partially
amended by Amendment No. 2 thereto on February 15, 2024, as described
in Items I, II, and III below, which Items have been prepared by the
self-regulatory organization.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as modified by
Amendment No. 2, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ The Exchange filed Amendment No. 1 on February 15, 2024 to
add specificity regarding how the options on Bitcoin ETPs are
settled. On February 15, 2024, the Exchange withdrew Amendment No. 1
and filed Amendment No. 2 to correct a pagination error.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 915 to permit the listing and
trading of options on the Bitwise Bitcoin ETF, the Grayscale Bitcoin
Trust (BTC), and any trust that holds bitcoin. The proposed rule change
is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
[[Page 14912]]
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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 915 (Criteria for Underlying
Securities), Commentary .10, to allow the Exchange to list and trade
options on the Bitwise Bitcoin ETF (``BITC''), the Grayscale Bitcoin
Trust (BTC) (``GBTC''), and any trust that holds only bitcoin and cash
(collectively, ``Bitcoin ETPs'').\5\ The Exchange notes that other
options exchanges have filed similar rule proposals that are currently
pending with the Commission to allow the listing and trading of options
on trusts that hold bitcoin.\6\
---------------------------------------------------------------------------
\5\ See proposed Commentary .10 to Rule 915. The Commission
recently approved rule changes to list and trade shares of
``Bitcoin-Based Commodity-Based Trust Shares'' pursuant to Rule
8.201-E(c)(1) (Commodity-Based Trust Shares), including the Bitwise
Bitcoin ETF, the Grayscale Bitcoin Trust (BTC). See Securities
Exchange Act Release No. 99306 (January 10, 2024) (Order Granting
Accelerated Approval of Proposed Rule Changes, as Modified by
Amendments Thereto, to List and Trade Bitcoin-Based Commodity-Based
Trust Shares and Trust Units), 89 FR 3008 (January 17, 2024) (SR-
NYSEARCA-2023-44; SR-NYSEARCA-2021-90).
\6\ See, e.g., Securities Exchange Act Release No. 99396
(January 19, 2024), 89 FR 5047 (January 24, 2024) (SR-ISE-2024-03)
(proposal to amend, on an accelerated basis, Nasdaq ISE's initial
listing rule to allow the listing and trading of options on the
iShares Bitcoin Trust on Nasdaq ISE); and Securities Exchange Act
Release No. 99397 (January 12, 2024), 89 FR 5079 (January 19, 2024)
(SR-MIAX-2024-03) (proposal to amend, on an accelerated basis,
MIAX's initial listing rule to allow the listing and trading of
options on ETFs that represent interests in a trust that holds
bitcoin, designating them as ETFs deemed appropriate for options
trading on MIAX). See also Securities Exchange Act Release No. 99398
(January 19, 2024), 89 FR 5029 (January 25, 2024) (SR-NYSEARCA-2024-
06) (proposal to amend, on an accelerated basis, NYSE Arca's initial
listing rule to allow the listing and trading of options on
Commodity-Based Trust Shares, which generic listing standard would,
if approved, permit options on Commodity ETFs backed by bitcoin).
Pursuant to the Exchange's Rules, the Exchange would only have
authority to list and trade options on ETFs if the underlying
securities are trading as NMS stocks.
---------------------------------------------------------------------------
Commentary .06 to Rule 915 (hereinafter ``Commentary .06'')
provides that, subject to certain other criteria set forth in Rule 915,
securities deemed appropriate for options trading include ETFs that
represent certain types of interests,\7\ including interests in certain
specific trusts that hold financial instruments, money market
instruments, or precious metals (which are deemed commodities).
---------------------------------------------------------------------------
\7\ See Commentary .06, which permits options trading on ETFs
that are traded on a national securities exchange and are defined as
an ``NMS stock'' in Rule 600(b)(55) of Regulation NMS, that
represent interests in registered investment companies (or series
thereof) organized as open-end management investment companies, unit
investment trusts or similar entities that hold portfolios of
securities and/or financial instruments including, but not limited
to, stock index futures contracts, options on futures, options on
securities and indexes, equity caps, collars and floors, swap
agreements, forward contracts, repurchase agreements and reverse
purchase 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 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); interests in a trust or similar entity
that holds a specified non-U.S. currency deposited with the trust or
similar entity when aggregated in some specified minimum number may
be surrendered to the trust by the beneficial owner to receive the
specified non-U.S. currency and pays the beneficial owner interest
and other distributions on deposited non-U.S. currency, if any,
declared and paid by the trust (``Currency Trust Shares'');
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
Units''); or represents an interest in a registered investment
company (``Investment Company'') organized as an open-end management
investment 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 Rules 915 and 916 are met.
---------------------------------------------------------------------------
Bitcoin ETPs, including the Bitwise Bitcoin ETF (``BITC'') and the
Grayscale Bitcoin Trust (``GBTC''), are bitcoin-backed commodity ETPs
structured as trusts.\8\ Similar to any ETFs currently deemed
appropriate for options trading under Rule 915, 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.\9\
---------------------------------------------------------------------------
\8\ See supra note 4 (regarding order approving rule changes to
list and trade shares of ``Bitcoin-Based Commodity-Based Trust
Shares'' pursuant to Rule 8.201-E(c)(1) (Commodity-Based Trust
Shares), including BITC and GBTC. For a complete description of the
BITC and the GBTC, see SR-NYSEARCA-2023-44 and SR-NYSEARCA-2021-90,
respectively.
\9\ The trust may include minimal cash. See e.g., Securities
Exchange Act Release No. 99306 (January 8, 2024), 89 FR 2297, 2298
(January 12, 2024) (SR-NYSEARCA-2023-44) (providing that, for BITC,
the ``only assets will be bitcoin and cash'').
---------------------------------------------------------------------------
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).\10\ The Exchange believes
that offering options on Bitcoin ETPs, including to BITC and GBTC, will
benefit investors by providing them with an additional, relatively
lower cost investing tool to gain exposure to spot Bitcoin as well as a
hedging vehicle to meet their investment needs in connection with
Bitcoin products and positions.
---------------------------------------------------------------------------
\10\ Similar to other commodity ETFs in which options may be
listed on the Exchange pursuant to Rule 915, Commentary .10 (e.g.,
SPDR Gold Trust, the iShares COMEX Gold Trust, the iShares Silver
Trust, the ETFS Gold Trust, the ETFS Silver Trust, the ETFS
Palladium Trust, or the ETFS Platinum Trust), both GBTC and BITC are
trusts that essentially offer analogous objectives and benefits to
investors.
---------------------------------------------------------------------------
Bitcoin ETPs will trade in the same manner as options on other ETFs
(including commodities ETFs) on the Exchange.\11\ In particular, and as
detailed below, Exchange rules that apply to the listing and trading of
all options on ETFs on the Exchange, including, for example, rules that
govern listing criteria, expirations, exercise prices, minimum
increments, position and exercise limits, margin
[[Page 14913]]
requirements, customer accounts and trading halt procedures, will
likewise apply to the listing and trading of options on Bitcoin ETPs on
the Exchange.
---------------------------------------------------------------------------
\11\ As with any ETF that trades on the Exchange, the Exchange
would not list and trade options on Bitcoin ETPs, including the
Bitwise Bitcoin ETF and the Grayscale Bitcoin Trust (BTC), unless
such instruments satisfied all applicable criteria in Rules 915 and
916, as applicable.
---------------------------------------------------------------------------
The Exchange's initial listing standards for ETFs on which options
may be listed and traded on the Exchange will apply to Bitcoin ETPs.
The Exchange expects Bitcoin ETPs to satisfy the initial listing
standards as set forth in Rule 915(a) (generally) and Commentary .06
(which applies to ETFs specifically). Pursuant to Rule 915(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. In addition,
Commentary .06 requires that ETFs must either (1) meet the criteria and
standards set forth in Commentary .01 to Rule 915,\12\ or (2) the ETFs
are available for creation and redemption each business day as set
forth in Commentary .06(a)(ii).
---------------------------------------------------------------------------
\12\ See Commentary .01 to Rule 915, which sets forth minimum
requirements for the underlying security which include, but are not
limited to, 7,000,000 underlying shares, 2,000 shareholders, and
trading volume of 2,400,000 shares over the preceding twelve months.
Additionally, the rule requires that the market price per share of
the underlying security must be at least $7.50 for the majority of
business days during the three calendar months preceding the date of
selection of an option class. For underlying securities that are
deemed Covered Securities, as defined under Section 18(b)(1)(A) of
the Securities Act of 1933, the closing market price of the
underlying security must be at least $3.00 per share for the
previous three consecutive business days prior to the date of
selection of an option class.
---------------------------------------------------------------------------
Options on Bitcoin ETPs will also be subject to the Exchange's
continued listing standards set forth in Commentary .07 to Rule 916
which provides that options on ETFs may be subject to the suspension of
opening transactions as follows: (1) the ETFs no longer meets the terms
of Commentary .01 to Rule 916; (2) following the initial twelve-month
period beginning upon the commencement of trading of the ETFs, there
are fewer than 50 record and/or beneficial holders of the ETFs for 30
or more consecutive trading days; (3) the value of the underlying
commodity is no longer calculated or available; or (4) such other event
occurs or condition exists that in the opinion of the Exchange makes
further dealing on the Exchange inadvisable. Additionally, ETFs will be
deemed to not meet the requirements for continued approval, and the
Exchange will not open for trading any additional series of option
contracts covering the ETF if such security ceases to be an ``NMS
stock'' as provided for Commentary .01(5) to Rule 915 or the ETF is
halted from trading on its primary market.\13\
---------------------------------------------------------------------------
\13\ See Commentary .07 to Rule 916. For avoidance of doubt and
consistent with this proposal, the Exchange proposes to amend Rule
916 to include in Bitcoin in ETPs in the list of ETFs subject to the
continued listing standards. See proposed Commentary .11 to Rule 916
(proving that ``[f]or purposes of Commentary .07 of this Rule 916,
shares of the SPDR[supreg] Gold Trust (symbol: GLD), iShares COMEX
Gold Trust (symbol: IAU), the iShares Silver Trust (symbol: SLV),
and the ETFS Silver Trust (symbol: SIVR), the ETFS Gold Trust
(symbol: SGOL), the ETFS Palladium Trust (symbol: PALL), the ETFS
Platinum Trust (symbol: PPLT), the Bitwise Bitcoin ETF (symbol:
BITC), the Grayscale Bitcoin Trust (BTC) (symbol: GBTC), and any
trust that holds bitcoin, are deemed to be ``Exchange-Traded Fund
Shares'') (emphasis added).
---------------------------------------------------------------------------
Options on Bitcoin ETPs listed pursuant to proposed Commentary .10
to Rule 915 would be physically \14\ settled contracts with American-
style exercise \15\ and would be included within the definition of
securities as such terms are used in the Exchange's rules and, as such,
would be subject to Exchange rules and procedures that currently govern
the trading of securities on the Exchange, including Exchange rules
governing the trading of equity options. Furthermore, the Exchange's
rules pertaining to position and exercise limits or margin shall apply
to options on Bitcoin ETPs.
---------------------------------------------------------------------------
\14\ See Amendment No 2.
\15\ See Rule 902 (Rights and Obligations of Holders and
Writers), which provides that the rights and obligations of holders
and writers of option contracts of any class of options dealt in on
the Exchange shall be as set forth in the Rules of the Clearing
Corporation. See also OCC Rules, Chapter VIII, which governs
exercise and assignment, and Chapter IX, which governs the discharge
of delivery and payment obligations arising out of the exercise of
physically settled stock option contracts. OCC Rules can be located
at: https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occrules.pdf.
---------------------------------------------------------------------------
Specifically, consistent with Rule 903, 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
Bitcoin ETPs and may also list series of options on Bitcoin ETPs for
trading on a weekly \16\ or quarterly \17\ basis. The Exchange may also
list long-term equity option series (``LEAPS'') \18\ that expire from
twelve to thirty-nine months from the time they are listed.
---------------------------------------------------------------------------
\16\ See Rule 903(h).
\17\ See Rule 903, Commentary .09.
\18\ See Rule 903, Commentary .03.
---------------------------------------------------------------------------
Pursuant to Rule 903, Commentary .05(a), which governs strike
prices of series of options on ETFs, the interval between strike prices
of series of options on ETFs approved for options trading (per
Commentary .06) will be fixed at a price per share which is reasonably
close to the price per share at which the underlying security is traded
in the primary market at or about the same time such series of options
is first open for trading on the Exchange, or at such intervals as may
have been established on another options exchange prior to the
initiation of trading on the Exchange. With respect to the Short Term
Options Series or Weekly Program, during the month prior to expiration
of an option class that is selected for the Short Term Option Series
Program, the strike price intervals for the related non-Short Term
Option (``Related non-Short Term Option'') shall be the same as the
strike price intervals for the Short Term Option.\19\ Specifically, the
Exchange may open for trading Short Term Option Series at strike price
intervals of (i) $0.50 or greater where the strike price is less than
$100, and $1 or greater where the strike price is between $100 and $150
for all option classes that participate in the Short Term Options
Series Program; (ii) $0.50 for option classes that trade in one dollar
increments and are in the Short Term Option Series Program; or (iii)
$2.50 or greater where the strike price is above $150.\20\
Additionally, the Exchange may list series of options pursuant to the
$1 Strike Price Interval Program,\21\ the $0.50 Strike Program,\22\ the
$2.50 Strike Price Program,\23\ and the $5 Strike Program.\24\ Rule
960NY governs the minimum increment for bids and offers for both equity
and index options. Pursuant to Rule 960NY, where the price of a series
of options in Bitcoin ETPs 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 \25\ consistent with the minimum increments for
options on other ETFs listed on the Exchange. Any and all new series of
options on Bitcoin ETPs that the Exchange lists will be consistent and
comply with the expirations, strike prices, and minimum increments set
forth in Rules 915, 903, and 970NY, as applicable.
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\19\ See Rule 903, Commentary .10(d).
\20\ Id.
\21\ See Rule 903, Commentary .06.
\22\ See Rule 903, Commentary .13.
\23\ See Rule 903, Commentary .07(a).
\24\ See Rule 903, Commentary .12.
\25\ Options that are eligible to participate in the Penny
Interval Program have a minimum increment of $0.01 below $3.00 and
$0.50 above $3.00. See Rule 970NY(a)(3).
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Position and exercise limits for options on ETFs, including options
on Bitcoin ETPs, are determined pursuant to Rules 904 and 905,
respectively. Position and exercise limits for ETFs
[[Page 14914]]
options vary according to the number of outstanding shares and the
trading volumes of the underlying ETF 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 ETFs have position and exercise
limits of 200,000, 75,000, 50,000 or 25,000 contracts (with adjustments
for splits, recapitalizations, etc.) on the same side of the market.
Further, Rule 462, which governs margin requirements applicable to the
trading of all options on the Exchange including options on ETFs, will
also apply to the trading of Bitcoin ETP options.
* * * * *
The Exchange notes that options on Bitcoin ETPs would not be
available for trading until The Options Clearing Corporation (``OCC'')
represents to the Exchange that it is fully able to clear and settle
such options. The Exchange has also analyzed its capacity and
represents that it and The Options Price Reporting Authority (``OPRA'')
have the necessary systems capacity to handle the additional traffic
associated with the listing of options on Bitcoin ETPs. The Exchange
believes any additional traffic that would be generated from the
trading of options on Bitcoin ETPs would be manageable. The Exchange
represents that Exchange members will not have a capacity issue as a
result of this proposed rule change.
The Exchange represents that the same surveillance procedures
applicable to all other options on other ETFs currently listed and
traded on the Exchange will apply to options on Bitcoin ETPs. The
Exchange's existing surveillance and reporting safeguards are designed
to deter and detect possible manipulative behavior which might arise
from listing and trading options on ETFs, including the options on
Bitcoin ETPs. The Exchange believes that its surveillance procedures
are adequate to properly monitor the trading of options on Bitcoin ETPs
in all trading sessions and to deter and detect violations of Exchange
rules. In addition, the Exchange will implement any new surveillance
procedures it deems necessary to effectively monitor the trading of
options on Bitcoin ETPs. Also, the Exchange may obtain trading
information via the Intermarket Surveillance Group (``ISG'') from other
exchanges who are members of the ISG, or from other exchanges with
which the Exchange has entered into a comprehensive surveillance
sharing agreement (``CSSA''). The Exchange will enter into new CSSAs
with other exchanges as necessary to effectively monitor the trading of
options on Bitcoin ETPs. The Exchange represents that these procedures
will be adequate to properly monitor Exchange trading of options on
Bitcoin ETPs and to deter and detect violations of Exchange rules.
Finally, quotation and last sale information for ETFs is available
via the Consolidated Tape Association (``CTA'') high speed line.
Quotation and last sale information for such securities is also
available from the exchange on which such securities are listed.
Quotation and last sale information for options on Bitcoin ETPs will be
available via OPRA and major market data vendors.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \26\ in general and furthers the
objectives of Section 6(b)(5) of the Act \27\ in particular, in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system.
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\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
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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 a greater opportunity to realize the
benefits of utilizing options on an ETF based on spot bitcoin,
including cost efficiencies and increased hedging strategies. The
Exchange believes that offering options on a competitively priced ETF
based on spot bitcoin will benefit investors by providing them with an
additional, relatively lower cost risk management tool allowing them to
manage, more easily, their positions, and associated risks, in their
portfolios in connection with exposure to spot bitcoin. Today, the
Exchange lists options on other commodity ETFs structured as a trust,
which essentially offer analogous objectives and benefits to investors,
and for which the Exchange has not identified any issues with the
continued listing and trading of options on those ETFs.
The Exchange also believes the proposal to permit options on
Bitcoin ETPs will remove impediments to and perfect the mechanism of a
free and open market and a national market system, because options on
Bitcoin ETPs will comply with current Exchange rules as discussed
herein. Specifically, 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 options on
other commodity ETFs already deemed appropriate for options trading on
the Exchange pursuant to Rule 915, Commentary .10. Further, Exchange
rules that currently govern the listing and trading of options on ETFs,
including permissible expirations, strike prices, minimum increments,
position and exercise limits, and margin requirements, will govern the
listing and trading of options on Bitcoin ETPs.
The Exchange represents that it has the necessary systems capacity
to support any additional traffic that may be generated by the trading
of options on Bitcoin ETPs. In addition, the Exchange represents that
its existing surveillance procedures are adequate to properly monitor
the trading of options on Bitcoin ETPs in all trading sessions and to
deter and detect violations of Exchange rules. The Exchange further
represents that it will implement new surveillance procedures, as
necessary, to effectively monitor the trading of options on Bitcoin
ETPs. Finally, the Commission has previously approved the listing and
trading of options on other commodity ETFs structured as a trust, such
as SPDR Gold Trust,\28\ the iShares COMEX Gold Trust,\29\ the iShares
Silver Trust,\30\ the ETFS Gold Trust,\31\ and the ETFS Silver
Trust.\32\
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\28\ See Securities Exchange Act Release No. 57897 (May 30,
2008), 73 FR 32061 (June 5, 2008) (SR-Amex-2008-15; SR-CBOE-2005-11;
SR-ISE-2008-12; SR-NYSEArca-2008-52; and SR-Phlx-2008-17) (Order
Granting Approval of a Proposed Rule Change, as Modified, and Notice
of Filing and Order Granting Accelerated Approval of Proposed Rule
Changes, as Modified, Relating to Listing and Trading Options on the
SPDR Gold Trust).
\29\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 75148 (December 10, 2008) (SR-Amex-2008-68; SR-BSE-
2008-51; SR-CBOE-2008-72; SR-ISE-2008-58; SR-NYSEArca-2008-66; and
SR-Phlx-2008-58) (Notice of Filing and Order Granting Accelerated
Approval of Proposed Rule Changes Relating to the Listing and
Trading Options on Shares of the iShares COMEX Gold Trust and the
iShares Silver Trust).
\30\ Id.
\31\ See Securities Exchange Act Release No. 61483 (February 3,
2010), 75 FR 6753 (February 10, 2010) (SR-CBOE-2010-007; SR-ISE-
2009-106; SR-NYSEAmex-2009-86; and SR-NYSEArca-2009-110) (Order
Granting Approval of Proposed Rule Changes and Notice of Filing and
Order Granting Accelerated Approval of a Proposed Rule Change
Relating to Listing and Trading Options on the ETFS Gold Trust and
the ETFS Silver Trust).
\32\ Id.
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[[Page 14915]]
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.
Intramarket Competition: The Exchange does not believe that the
proposed rule change will impose any burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act as options on Bitcoin ETPs will be subject to initial listing
standards and continued listing standards the same as other options on
ETFs listed on the Exchange. Further, options on Bitcoin ETPs will be
subject to Exchange rules that currently govern the listing and trading
of options on ETFs, including permissible expirations, strike prices,
minimum increments, position and exercise limits, and margin
requirements. Moreover, options on Bitcoin ETPs will be equally
available to all market participants who wish to trade such options.
Finally, and as stated above, the Exchange already lists options on
other commodity ETFs structured as a trust.
Intermarket Competition: The Exchange does not believe the proposal
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 permitting options on Bitcoin ETPs to trade on the Exchange may
make the Exchange a more attractive marketplace to market participants,
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. 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 options on Bitcoin ETPs 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 spot bitcoin prices and bitcoin
related products and positions.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSEAMER-2024-10 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-NYSEAMER-2024-10. 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-NYSEAMER-2024-10 and should
be submitted on or before March 21, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-04169 Filed 2-28-24; 8:45 am]
BILLING CODE 8011-01-P
