Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of Proposed Rule Change To Amend Options 4, Section 3, Criteria for Underlying Securities, 10740-10744 [2025-03074]

Download as PDF 10740 Federal Register / Vol. 90, No. 37 / Wednesday, February 26, 2025 / Notices should be received by the Commission by 5:30 p.m. on March 14, 2025, and should be accompanied by proof of service on the Applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0– 5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission’s Secretary. The Commission: Secretarys-Office@sec.gov. Applicants: Monique Austin, HarbourVest Private Investments Fund, maustin@ harbourvest.com, Daniel Chisholm, HarbourVest Private Investments Fund, dchisholm@harbourvest.com, and HarbourVest Private Investments Fund, legal@harbourvest.com, with copies to Rajib Chanda, Esq., Simpson Thacher & Bartlett LLP, rajib.chanda@stblaw.com, Ryan P. Brizek, Esq., Simpson Thacher & Bartlett LLP, ryan.brizek@stblaw.com, and Matthew C. Micklavzina, Esq., Simpson Thacher & Bartlett LLP, matthew.micklavzina@stblaw.com. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Trace W. Rakestraw, Senior Special Counsel, at (202) 551–6825 (Division of Investment Management, Chief Counsel’s Office). For Applicants’ representations, legal analysis, and conditions, please refer to Applicants’ application, dated January 10, 2025, which may be obtained via the Commission’s website by searching for the file number at the top of this document, or for an Applicant using the Company name search field on the SEC’s EDGAR system. The SEC’s EDGAR system may be searched at https://www.sec.gov/edgar/searchedgar/ companysearch. You may also call the SEC’s Office of Investor Education and Advocacy at (202) 551–8090. SUPPLEMENTARY INFORMATION: khammond on DSK9W7S144PROD with NOTICES For the Commission, by the Division of Investment Management, under delegated authority. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2025–03121 Filed 2–25–25; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–102465; File No. SR–ISE– 2025–08] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of Proposed Rule Change To Amend Options 4, Section 3, Criteria for Underlying Securities February 20, 2025. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 7, 2025, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. 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 proposes to amend Options 4, Section 3, Criteria for Underlying Securities to permit options on Commodity-Based Trust Shares. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/ise/rulefilings, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its listing rules at ISE Options 4, Section 3, Criteria for Underlying Securities. 1 15 2 17 VerDate Sep<11>2014 18:26 Feb 25, 2025 Jkt 265001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00031 Fmt 4703 Sfmt 4703 Specifically, the Exchange proposes to amend the criteria for listing options on Exchange-Traded Fund Shares (‘‘ETFs’’) at Options 4, Section 3(h). The Exchange proposes to allow the listing and trading of options on units that represent interests in a trust that in a Commodity-Based Trust. A Commodity-Based Trust is defined at The Nasdaq Stock Market LLC Rule 5711(d)(iv), NYSE Arca, Inc. Rule 8.201(c), and Cboe BZX Exchange, Inc. 14.11(e)(4) as a security that is issued by a trust that holds (i) a specified commodity deposited with the Trust, or (ii) a specified commodity and, in addition to such specified commodity, cash; (b) that is issued by such Trust in a specified aggregate minimum number in return for a deposit of a quantity of the underlying commodity and/or cash; and (c) that, when aggregated in the same specified minimum number, may be redeemed at a holder’s request by such Trust which will deliver to the redeeming holder the quantity of the underlying commodity and/or cash (‘‘Commodity-Based Trust Share’’). At this time the Exchange proposes to amend its listing criteria at Options 4, Section 3(h)(iv) to provide that (h) Securities deemed appropriate for options trading shall include shares or other securities (‘‘Exchange-Traded Fund Shares’’) that are traded on a national securities exchange and are defined as an ‘‘NMS’’ stock under Rule 600 of Regulation NMS, and that . . . or (iv) represent interests in (a) a security issued by a trust that holds (1) a specified commodity deposited with the trust, or (2) a specified commodity and, in addition to such specified commodity, cash; (b) that is issued by such trust in a specified aggregate minimum number in return for a deposit of a quantity of the underlying commodity and/or cash; and (c) that, when aggregated in the same specified minimum number, may be redeemed at a holder’s request by such trust which will deliver to the redeeming holder the quantity of the underlying commodity and/or cash (‘‘Commodity-Based Trust Share’’). ISE proposes to insert this rule text and remove references to the SPDR® Gold Trust, the iShares COMEX Gold Trust, the iShares Silver Trust, the Aberdeen Standard Physical Gold Trust, the iShares Bitcoin Trust, the Fidelity Wise Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), the Grayscale Bitcoin Mini Trust BTC, and the Bitwise Bitcoin ETF which are all Commodity-Based Trust Shares. As a result of this amendment, the listing criteria would permit any ExchangeTraded Fund that is approved to list on the primary market as a CommodityBased Trust Share to qualify for the listing of options on that Commodity- E:\FR\FM\26FEN1.SGM 26FEN1 Federal Register / Vol. 90, No. 37 / Wednesday, February 26, 2025 / Notices khammond on DSK9W7S144PROD with NOTICES Based Trust Share, provided other listing criteria have been met. The Exchange’s initial listing standards as set forth in Options 4, Section 3(a), on which options may be listed and traded on the Exchange, will continue to apply in addition to Options 3, Section 3(h). Pursuant to Options 4, Section 3(a), a security (which includes an ETF) on which options may be listed and traded on the Exchange must be a security registered (with the Commission) and be an NMS stock (as defined in Rule 600 of Regulation NMS under the Act, and the security shall be characterized by a substantial number of outstanding shares that are widely held and actively traded. Options 4, Section 3(h)(1) requires that ETFs must either meet the criteria and guidelines set forth in Options 4, Section 3(a) and (b) 3 or the ETFs are available for creation or redemption each business day from or through the issuing trust, investment company, commodity pool or other entity in cash or in kind at a price related to net asset value, and the issuer is obligated to issue ETFs in a specified aggregate number even if some or all of the investment assets and/or cash required to be deposited have not been received by the issuer, subject to the condition that the person obligated to deposit the investment assets has undertaken to deliver them 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 of the ETFs, all as described in the ETFs’ prospectus. Additionally, a Commodity-Based Trust Share will also be subject to the Exchange’s continued listing standards for options on ETFs set forth in Options 4, Section 4(g) for ETFs deemed appropriate for options trading pursuant to Options 4, Section 3(h). Specifically, options approved for trading pursuant to Options 4, Section 3(h) will not be deemed to meet the requirements for continued approval, and the Exchange shall not open for trading any additional series of option contracts of the class covering such ETFs if the ETFs are delisted from trading as provided in subparagraph (b)(5) of Options 4, Section 4 4 or the ETFs are halted or 3 Options 4, Section 3(h)(1) provides criteria and guidelines when evaluating potential underlying securities for the listing of options. 4 Options 4, Section 4(b)(5) provides, if an underlying security is approved for options listing and trading under the provisions of Options 4, Section 3(c), the trading volume of the Original Security (as therein defined) prior to but not after the commencement of trading in the Restructure Security (as therein defined), including ‘whenissued’ trading, may be taken into account in VerDate Sep<11>2014 18:26 Feb 25, 2025 Jkt 265001 suspended from trading on their primary market.5 Additionally, options on ETFs may be subject to the suspension of opening transactions in any series of options of the class covering ETFs in any of the following circumstances: (1) in the case of options covering Exchange-Traded Fund Shares approved pursuant to Options 4, Section 3(h)(A)(i), in accordance with the terms of subparagraphs (b)(1), (2), (3) and (4) of Options 4, Section 4; 6 (2) in the case of options covering Fund Shares approved pursuant to Options 4, Section 3(h)(A)(ii),7 following the initial twelve-month period beginning upon the commencement of trading in the ExchangeTraded Fund Shares on a national securities exchange and are defined as an ‘‘NMS stock’’ under Rule 600 of Regulation NMS, there were fewer than 50 record and/or beneficial holders of such Exchange-Traded Fund Shares for 30 or more consecutive trading days; (3) the value of the index or portfolio of securities or non-U.S. currency, portfolio of commodities including commodity futures contracts, options on commodity futures contracts, swaps, forward contracts, options on physical commodities and/or Financial Instruments and Money Market Instruments, on which the Exchange-Traded Fund Shares are based is no longer calculated or available; or (4) such other event occurs or condition exists that in the opinion of the Exchange makes further dealing in such options on the Exchange inadvisable. Consistent with current Options 4, Section 5, which governs the opening of options series on a specific underlying security (including ETFs), the Exchange would open at least one expiration month 8 for options on a Commoditydetermining whether the trading volume requirement of (3) of this paragraph (b) is satisfied. 5 See Options 4, Section 4(g). 6 Options 4, Section 4(b)(5)(1) through (4) provides, if: (1) there are fewer than 6,300,000 shares of the underlying security held by persons other than those who are required to report their security holdings under Section 16(a) of the Act, (2) there are fewer than 1,600 holders of the underlying security, (3) the trading volume (in all markets in which the underlying security is traded) has been less than 1,800,000 shares in the preceding twelve (12) months, or (4) the underlying security ceases to be an ‘NMS stock’ as defined in Rule 600 of Regulation NMS under the Exchange Act. Options 4, Section 3(h)(i) refers to Financial Instruments and Money Market Instruments. In addition, the Exchange proposes to amend the citation to ‘‘Options 4, Section 3(h)(A)(i)’’ herein to ‘‘Options 4, Section 3(h)(i).’’ 7 Options 4, Section 3(h)(ii) refers to Currency Trust Shares. In addition, the Exchange proposes to amend the citation to ‘‘Options 4, Section 3(h)(A)(ii)’’ herein to ‘‘Options 4, Section 3(h)(ii).’’ 8 See Options 4, Section 5(b). At the commencement of trading on the Exchange of a particular class of options, the Exchange will open a minimum of one (1) series of options in that class. The exercise price of that series will be fixed at a price per share, relative to the underlying stock price in the primary market at about the time that PO 00000 Frm 00032 Fmt 4703 Sfmt 4703 10741 Based Trust Share and may also list series of options on Commodity-Based Trust Share for trading on a weekly 9 or quarterly 10 basis. The Exchange may also list long-term equity option series (‘‘LEAPS’’) that expire from twelve to thirty-nine months from the time they are listed.11 Pursuant to Options 4, Section 5(d), which governs strike prices of series of options on ETFs, the interval between strike prices of series of options on a Commodity-Based Trust Share would be $1 or greater when the strike price is $200 or less and $5 or greater when the strike price is greater than $200.12 Additionally, the Exchange may list series of options pursuant to the $1 Strike Price Interval Program,13 the $0.50 Strike Program,14 the $2.50 Strike Price Program,15 and the $5 Strike Program.16 Pursuant to Options 3, Section 3, where the price of a series of options on a Commodity-Based Trust class of options is first opened for trading on the Exchange. The monthly expirations are subject to certain listing criteria for underlying securities described within Options 4, Section 5. 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 Options 4, Section 5(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. The opening of a new series of options shall not affect the series of options of the same class previously opened. 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 the business day of expiration, or, in the case of an option contract expiring on a day that is not a business day, on the second business day prior to expiration. 9 See Supplementary .03 to Options 4, Section 5. 10 See Supplementary .04 to Options 4, Section 5. 11 See Options 4, Section 8. 12 See Options 4, Section 5(h). The Exchange notes that for options listed pursuant to the Short Term Option Series Program, the Quarterly Options Series Program, and the Monthly Options Series Program, Supplementary Material .03, .04 and .08 to Options 4, Section 5 specifically sets forth intervals between strike prices on Short Term Option Series, Quarterly Options Series, and Monthly Options Series, respectively. 13 See Supplementary Material .01 to Options 4, Section 5. 14 See Supplementary Material .05 to Options 4, Section 5. 15 See Supplementary Material .02 to Options 4, Section 5. 16 See Supplementary Material .06 to Options 4, Section 5. E:\FR\FM\26FEN1.SGM 26FEN1 khammond on DSK9W7S144PROD with NOTICES 10742 Federal Register / Vol. 90, No. 37 / Wednesday, February 26, 2025 / Notices Share 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 $0.10.17 Any and all new series of options on a CommodityBased Trust Share that the Exchange lists would be consistent and comply with the expirations, strike prices, and minimum increments set forth in Options 4, Section 5 and Options 3, Section 3, as applicable. Options on a Commodity-Based Trust Share will trade in the same manner as options on other ETFs on the Exchange. The Exchange Rules that currently 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 requirements, customer accounts and trading halt procedures would apply to the listing and trading of options on a Commodity-Based Trust Share 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. Position and exercise limits for options on a Commodity-Based Trust Share would be determined pursuant to Options 9, Sections 13 and 15, respectively. Position and exercise limits for ETFs 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, re-capitalizations, etc.) on the same side of the market. Further, Options 6C, Section 3, 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 options on a CommodityBased Trust Share. 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 a Commodity-Based Trust Share, and that 17 If options on a Commodity-Based Trust Share are eligible to participate in the Penny Interval Program, the minimum increment would be $0.01 for series with a price below $3.00 and $0.05 for series with a price at or above $3.00. See Supplementary Material .01 to Options 3, Section 3 (which describes the requirements for the Penny Interval Program). VerDate Sep<11>2014 18:26 Feb 25, 2025 Jkt 265001 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 options on ETFs, including any options on a Commodity-Based Trust Share. Also, the Exchange may obtain information from CME Group Inc.’s designated contract markets that are members of the Intermarket Surveillance Group (‘‘ISG’’) related to a financial instrument that is based, in whole or in part, upon an interest in or performance of a commodity, as applicable. The Exchange has also analyzed its capacity and represents that it believes the Exchange and the Options Price Reporting Authority or ‘‘OPRA’’ have the necessary systems capacity to handle the additional traffic associated with the listing of new series of ETFs, including options on a CommodityBased Trust Share, up to the number of expirations currently permissible under the Exchange Rules. 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 options on a Commodity-Based Trust Share 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 ETF 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 that its proposal is consistent with Section 6(b) of the Act,18 in general, and furthers the objectives of Section 6(b)(5) of the Act,19 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes the proposed rule change is consistent with 18 15 19 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00033 Fmt 4703 the Section (6)(b)(5) 20 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In particular, the Exchange believes that the proposal to amend the listing criteria at Options 4, Section 3(h), with respect to ETFs, to permit the listing and trading of any option on a Commodity-Based Trust Share, without the need for additional approvals, 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 it would allow the Exchange to immediately list and trade options on any Commodity-Based Trust Share, provided the initial listing criteria has been met, without any additional approvals from the Commission. Commodity-Based Trust Shares are securities approved for trading with the Commission. The Exchange believes that with this proposal it will be able to offer options on a Commodity-Based Trust Share soon after the listing of such underlying security in the primary market, provided the initial listing criteria has been met, thereby availing market participants of the opportunity to hedge their positions in the ETF in a timely manner. This proposal would permit options on Commodity-Based Trust Shares to be listed on the Exchange in the same manner as all other securities that are subject to the current listing criteria in Options 4, Section 3. The Exchange notes that the majority of ETFs are able to list and trade options once the initial listing criteria have been met without the need for additional approvals. The proposed rule change would allow options on a Commodity-Based Trust Share to likewise list and trade options once the initial listing criteria have been met without the need for additional approvals. Offering options on Commodity-Based Trust Shares provides investors with the ability to hedge exposure to the underlying security similar to options on any other securities. Options on Commodity-Based Trust Shares benefits investors, similar to the listing of any other option on an ETF, by providing investors with a relatively lower-cost risk management tool, to manage their positions and associated risk in their portfolios more easily in connection with exposure to the price of a commodity. Additionally, options on a Commodity-Based Trust Share provide investors with the ability to transact in such options in a listed market environment as opposed to in the 20 15 Sfmt 4703 E:\FR\FM\26FEN1.SGM U.S.C. 78(f)(b)(5). 26FEN1 Federal Register / Vol. 90, No. 37 / Wednesday, February 26, 2025 / Notices khammond on DSK9W7S144PROD with NOTICES unregulated OTC options market, which increases market transparency and enhances 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,21 which, as described above, are trusts structured as Commodity-Based Trust Shares. The Exchange has not identified any issues with the continued listing and trading of options on Commodity-Based Trust Shares it currently lists for trading. 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 a CommodityBased Trust Share 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. Options on a CommodityBased Trust Share would trade in the same manner as any other ETF options—the same Exchange Rules that currently govern the listing and trading of all ETF 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 a Commodity-Based Trust Share in the same manner. The Exchange represents that it has the necessary systems capacity to support the listing and trading of options on Commodity-Based Trust Shares as the Exchange lists these products today, expect that it requires additional approvals prior to listing. 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 of these ETF 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 proposal to amend the listing criteria at Options 4, Section 3(h), with respect to ETFs, to permit the listing 21 See Options 4, Section 3(h)(iv). VerDate Sep<11>2014 18:26 Feb 25, 2025 Jkt 265001 and trading of any option on a Commodity-Based Trust Share, without the need for additional approvals, will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act, as options on Commodity-Based Trust Shares would need to satisfy the initial listing standards set forth in the Exchange Rules in the same manner as any other ETF before the Exchange could list options on them. Additionally, options on Commodity-Based Trust Shares 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 Commodity-Based Trust Shares. Additionally, the Exchange notes that listing and trading options on a Commodity-Based Trust Share 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 in a timely manner. The Exchange does not believe that the proposal to amend the listing criteria at Options 4, Section 3(h), with respect to ETFs, to permit the listing and trading of any option on a Commodity-Based Trust Share, without the need for additional approvals, will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Other options exchanges are free to amend their listing rules, as applicable, to permit them to list and trade options on a CommodityBased Trust Share. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or 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 (i) as the Commission may designate up to PO 00000 Frm 00034 Fmt 4703 Sfmt 4703 10743 90 days of such date 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 shall: (a) by order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– ISE–2025–08 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–ISE–2025–08. 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 E:\FR\FM\26FEN1.SGM 26FEN1 10744 Federal Register / Vol. 90, No. 37 / Wednesday, February 26, 2025 / Notices submissions should refer to file number SR–ISE–2025–08 and should be submitted on or before March 19, 2025. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2025–03074 Filed 2–25–25; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–135, OMB Control No. 3235–0175] khammond on DSK9W7S144PROD with NOTICES Submission for OMB Review; Comment Request; Extension: Form N–8A Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (the ‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for extension of the previously approved collection of information discussed below. The Investment Company Act of 1940 (‘‘Investment Company Act’’) (15 U.S.C. 80a–1 et seq.) requires investment companies to register with the Commission before they conduct any business in interstate commerce. Section 8(a) of the Investment Company Act provides that an investment company shall be deemed to be registered upon receipt by the Commission of a notification of registration in such form as the Commission prescribes. Form N–8A (17 CFR 274.10) is the form for notification of registration that the Commission has adopted under section 8(a). The purpose of such notification of registration provided on Form N–8A is to notify the Commission of the existence of investment companies required to be registered under the Investment Company Act and to enable the Commission to administer the provisions of the Investment Company Act with respect to those companies. After an investment company has filed its notification of registration under section 8(a), the company is then subject to the provisions of the Investment Company Act which govern certain aspects of its organization and activities, 22 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:26 Feb 25, 2025 Jkt 265001 such as the composition of its board of directors and the issuance of senior securities. Form N–8A requires an investment company to provide its name, state of organization, form of organization, classification, the name and address of each investment adviser of the investment company, the current value of its total assets, and certain other information readily available to the investment company. If the investment company is filing a registration statement as required by Section 8(b) of the Investment Company Act concurrently with its notification of registration, Form N–8A requires only that the registrant file the cover page (giving its name, address, and agent for service of process) and sign the form in order to effect registration. Based on recent filings of notifications of registration on Form N–8A, we estimate that about 99 investment companies file such notifications each year. An investment company must only file a notification of registration on Form N–8A once. The currently approved average hour burden per investment company of preparing and filing a notification of registration on Form N–8A is one hour. Based on the Commission staff’s experience with the requirements of Form N–8A and with disclosure documents generally—and considering that investment companies that are filing notifications of registration on Form N–8A simultaneously with the registration statement under the Investment Company Act are only required by Form N–8A to file a signed cover page—we continue to believe that this estimate is appropriate. Therefore, we estimate that the total annual hour burden to prepare and file notifications of registration on Form N–8A is 99 hours. The currently approved cost burden of Form N–8A is $496. We are updating the estimated costs burden to $562 to account for the effects of inflation. Therefore, we estimate that the total annual cost burden associated with preparing and filing notifications of registration on Form N–8A is about $55,638. Estimates of average burden hours and costs are made solely for the purposes of the Paperwork Reduction Act, and are not derived from a comprehensive or even representative survey or study of the costs of Commission rules and forms. Compliance with the collection of information requirements of Form N–8A is mandatory. Responses to the collection of information will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of PO 00000 Frm 00035 Fmt 4703 Sfmt 4703 information unless it displays a currently valid OMB control number. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB Control Number. Written comments are invited on: (a) whether this collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate of the burden imposed by the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. The public may view and comment on this information collection request at: https://www.reginfo.gov/public/do/ PRAViewICR?ref_nbr=202411-3235-008 or send an email comment to MBX.OMB.OIRA.SEC_desk_officer@ omb.eop.gov within 30 days of the day after publication of this notice by March 31, 2025. Dated: February 20, 2025. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2025–03078 Filed 2–25–25; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–102460; File No. SR– CboeBZX–2025–028] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Adopt Fees for Cboe Timestamping Service Reports February 20, 2025. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 13, 2025, Cboe BZX Exchange, Inc. (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Item I below, which Item has been substantially prepared by the Exchange. The Exchange has designated this proposal for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 2 17 E:\FR\FM\26FEN1.SGM 26FEN1

Agencies

[Federal Register Volume 90, Number 37 (Wednesday, February 26, 2025)]
[Notices]
[Pages 10740-10744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-03074]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102465; File No. SR-ISE-2025-08]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
of Proposed Rule Change To Amend Options 4, Section 3, Criteria for 
Underlying Securities

February 20, 2025.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 7, 2025, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III, below, which 
Items have been prepared by the Exchange. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Options 4, Section 3, Criteria for 
Underlying Securities to permit options on Commodity-Based Trust 
Shares.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/ise/rulefilings, 
at the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its listing rules at ISE Options 4, 
Section 3, Criteria for Underlying Securities. Specifically, the 
Exchange proposes to amend the criteria for listing options on 
Exchange-Traded Fund Shares (``ETFs'') at Options 4, Section 3(h).
    The Exchange proposes to allow the listing and trading of options 
on units that represent interests in a trust that in a Commodity-Based 
Trust. A Commodity-Based Trust is defined at The Nasdaq Stock Market 
LLC Rule 5711(d)(iv), NYSE Arca, Inc. Rule 8.201(c), and Cboe BZX 
Exchange, Inc. 14.11(e)(4) as a security that is issued by a trust that 
holds (i) a specified commodity deposited with the Trust, or (ii) a 
specified commodity and, in addition to such specified commodity, cash; 
(b) that is issued by such Trust in a specified aggregate minimum 
number in return for a deposit of a quantity of the underlying 
commodity and/or cash; and (c) that, when aggregated in the same 
specified minimum number, may be redeemed at a holder's request by such 
Trust which will deliver to the redeeming holder the quantity of the 
underlying commodity and/or cash (``Commodity-Based Trust Share'').
    At this time the Exchange proposes to amend its listing criteria at 
Options 4, Section 3(h)(iv) to provide that

    (h) Securities deemed appropriate for options trading shall 
include shares or other securities (``Exchange-Traded Fund Shares'') 
that are traded on a national securities exchange and are defined as 
an ``NMS'' stock under Rule 600 of Regulation NMS, and that . . . or 
(iv) represent interests in (a) a security issued by a trust that 
holds (1) a specified commodity deposited with the trust, or (2) a 
specified commodity and, in addition to such specified commodity, 
cash; (b) that is issued by such trust in a specified aggregate 
minimum number in return for a deposit of a quantity of the 
underlying commodity and/or cash; and (c) that, when aggregated in 
the same specified minimum number, may be redeemed at a holder's 
request by such trust which will deliver to the redeeming holder the 
quantity of the underlying commodity and/or cash (``Commodity-Based 
Trust Share'').

    ISE proposes to insert this rule text and remove references to the 
SPDR[supreg] Gold Trust, the iShares COMEX Gold Trust, the iShares 
Silver Trust, the Aberdeen Standard Physical Gold Trust, the iShares 
Bitcoin Trust, the Fidelity Wise Origin Bitcoin Fund, the ARK21Shares 
Bitcoin ETF, the Grayscale Bitcoin Trust (BTC), the Grayscale Bitcoin 
Mini Trust BTC, and the Bitwise Bitcoin ETF which are all Commodity-
Based Trust Shares. As a result of this amendment, the listing criteria 
would permit any Exchange-Traded Fund that is approved to list on the 
primary market as a Commodity-Based Trust Share to qualify for the 
listing of options on that Commodity-

[[Page 10741]]

Based Trust Share, provided other listing criteria have been met.
    The Exchange's initial listing standards as set forth in Options 4, 
Section 3(a), on which options may be listed and traded on the 
Exchange, will continue to apply in addition to Options 3, Section 
3(h). Pursuant to Options 4, Section 3(a), a security (which includes 
an ETF) on which options may be listed and traded on the Exchange must 
be a security registered (with the Commission) and be an NMS stock (as 
defined in Rule 600 of Regulation NMS under the Act, and the security 
shall be characterized by a substantial number of outstanding shares 
that are widely held and actively traded.
    Options 4, Section 3(h)(1) requires that ETFs must either meet the 
criteria and guidelines set forth in Options 4, Section 3(a) and (b) 
\3\ or the ETFs are available for creation or redemption each business 
day from or through the issuing trust, investment company, commodity 
pool or other entity in cash or in kind at a price related to net asset 
value, and the issuer is obligated to issue ETFs in a specified 
aggregate number even if some or all of the investment assets and/or 
cash required to be deposited have not been received by the issuer, 
subject to the condition that the person obligated to deposit the 
investment assets has undertaken to deliver them 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 of the ETFs, all as described in the ETFs' prospectus.
---------------------------------------------------------------------------

    \3\ Options 4, Section 3(h)(1) provides criteria and guidelines 
when evaluating potential underlying securities for the listing of 
options.
---------------------------------------------------------------------------

    Additionally, a Commodity-Based Trust Share will also be subject to 
the Exchange's continued listing standards for options on ETFs set 
forth in Options 4, Section 4(g) for ETFs deemed appropriate for 
options trading pursuant to Options 4, Section 3(h). Specifically, 
options approved for trading pursuant to Options 4, Section 3(h) will 
not be deemed to meet the requirements for continued approval, and the 
Exchange shall not open for trading any additional series of option 
contracts of the class covering such ETFs if the ETFs are delisted from 
trading as provided in subparagraph (b)(5) of Options 4, Section 4 \4\ 
or the ETFs are halted or suspended from trading on their primary 
market.\5\ Additionally, options on ETFs may be subject to the 
suspension of opening transactions in any series of options of the 
class covering ETFs in any of the following circumstances:
---------------------------------------------------------------------------

    \4\ Options 4, Section 4(b)(5) provides, if an underlying 
security is approved for options listing and trading under the 
provisions of Options 4, Section 3(c), the trading volume of the 
Original Security (as therein defined) prior to but not after the 
commencement of trading in the Restructure Security (as therein 
defined), including `when-issued' trading, may be taken into account 
in determining whether the trading volume requirement of (3) of this 
paragraph (b) is satisfied.
    \5\ See Options 4, Section 4(g).

    (1) in the case of options covering Exchange-Traded Fund Shares 
approved pursuant to Options 4, Section 3(h)(A)(i), in accordance 
with the terms of subparagraphs (b)(1), (2), (3) and (4) of Options 
4, Section 4; \6\
---------------------------------------------------------------------------

    \6\ Options 4, Section 4(b)(5)(1) through (4) provides, if: (1) 
there are fewer than 6,300,000 shares of the underlying security 
held by persons other than those who are required to report their 
security holdings under Section 16(a) of the Act, (2) there are 
fewer than 1,600 holders of the underlying security, (3) the trading 
volume (in all markets in which the underlying security is traded) 
has been less than 1,800,000 shares in the preceding twelve (12) 
months, or (4) the underlying security ceases to be an `NMS stock' 
as defined in Rule 600 of Regulation NMS under the Exchange Act. 
Options 4, Section 3(h)(i) refers to Financial Instruments and Money 
Market Instruments. In addition, the Exchange proposes to amend the 
citation to ``Options 4, Section 3(h)(A)(i)'' herein to ``Options 4, 
Section 3(h)(i).''
---------------------------------------------------------------------------

    (2) in the case of options covering Fund Shares approved 
pursuant to Options 4, Section 3(h)(A)(ii),\7\ following the initial 
twelve-month period beginning upon the commencement of trading in 
the Exchange-Traded Fund Shares on a national securities exchange 
and are defined as an ``NMS stock'' under Rule 600 of Regulation 
NMS, there were fewer than 50 record and/or beneficial holders of 
such Exchange-Traded Fund Shares for 30 or more consecutive trading 
days;
---------------------------------------------------------------------------

    \7\ Options 4, Section 3(h)(ii) refers to Currency Trust Shares. 
In addition, the Exchange proposes to amend the citation to 
``Options 4, Section 3(h)(A)(ii)'' herein to ``Options 4, Section 
3(h)(ii).''
---------------------------------------------------------------------------

    (3) the value of the index or portfolio of securities or non-
U.S. currency, portfolio of commodities including commodity futures 
contracts, options on commodity futures contracts, swaps, forward 
contracts, options on physical commodities and/or Financial 
Instruments and Money Market Instruments, on which the Exchange-
Traded Fund Shares are based is no longer calculated or available; 
or
    (4) such other event occurs or condition exists that in the 
opinion of the Exchange makes further dealing in such options on the 
Exchange inadvisable.

    Consistent with current Options 4, Section 5, which governs the 
opening of options series on a specific underlying security (including 
ETFs), the Exchange would open at least one expiration month \8\ for 
options on a Commodity-Based Trust Share and may also list series of 
options on Commodity-Based Trust Share for trading on a weekly \9\ or 
quarterly \10\ basis. The Exchange may also list long-term equity 
option series (``LEAPS'') that expire from twelve to thirty-nine months 
from the time they are listed.\11\
---------------------------------------------------------------------------

    \8\ See Options 4, Section 5(b). At the commencement of trading 
on the Exchange of a particular class of options, the Exchange will 
open a minimum of one (1) series of options in that class. The 
exercise price of that series will be fixed at a price per share, 
relative to the underlying stock price in the primary market at 
about the time that class of options is first opened for trading on 
the Exchange. The monthly expirations are subject to certain listing 
criteria for underlying securities described within Options 4, 
Section 5. 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 Options 
4, Section 5(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. The opening 
of a new series of options shall not affect the series of options of 
the same class previously opened. 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 the business day of expiration, or, in the 
case of an option contract expiring on a day that is not a business 
day, on the second business day prior to expiration.
    \9\ See Supplementary .03 to Options 4, Section 5.
    \10\ See Supplementary .04 to Options 4, Section 5.
    \11\ See Options 4, Section 8.
---------------------------------------------------------------------------

    Pursuant to Options 4, Section 5(d), which governs strike prices of 
series of options on ETFs, the interval between strike prices of series 
of options on a Commodity-Based Trust Share would be $1 or greater when 
the strike price is $200 or less and $5 or greater when the strike 
price is greater than $200.\12\ Additionally, the Exchange may list 
series of options pursuant to the $1 Strike Price Interval Program,\13\ 
the $0.50 Strike Program,\14\ the $2.50 Strike Price Program,\15\ and 
the $5 Strike Program.\16\ Pursuant to Options 3, Section 3, where the 
price of a series of options on a Commodity-Based Trust

[[Page 10742]]

Share 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.\17\ Any and all new series of options on a Commodity-Based Trust 
Share that the Exchange lists would be consistent and comply with the 
expirations, strike prices, and minimum increments set forth in Options 
4, Section 5 and Options 3, Section 3, as applicable.
---------------------------------------------------------------------------

    \12\ See Options 4, Section 5(h). The Exchange notes that for 
options listed pursuant to the Short Term Option Series Program, the 
Quarterly Options Series Program, and the Monthly Options Series 
Program, Supplementary Material .03, .04 and .08 to Options 4, 
Section 5 specifically sets forth intervals between strike prices on 
Short Term Option Series, Quarterly Options Series, and Monthly 
Options Series, respectively.
    \13\ See Supplementary Material .01 to Options 4, Section 5.
    \14\ See Supplementary Material .05 to Options 4, Section 5.
    \15\ See Supplementary Material .02 to Options 4, Section 5.
    \16\ See Supplementary Material .06 to Options 4, Section 5.
    \17\ If options on a Commodity-Based Trust Share are eligible to 
participate in the Penny Interval Program, the minimum increment 
would be $0.01 for series with a price below $3.00 and $0.05 for 
series with a price at or above $3.00. See Supplementary Material 
.01 to Options 3, Section 3 (which describes the requirements for 
the Penny Interval Program).
---------------------------------------------------------------------------

    Options on a Commodity-Based Trust Share will trade in the same 
manner as options on other ETFs on the Exchange. The Exchange Rules 
that currently 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 requirements, customer accounts and trading 
halt procedures would apply to the listing and trading of options on a 
Commodity-Based Trust Share 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.
    Position and exercise limits for options on a Commodity-Based Trust 
Share would be determined pursuant to Options 9, Sections 13 and 15, 
respectively. Position and exercise limits for ETFs 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, re-capitalizations, etc.) on the same side of the market. 
Further, Options 6C, Section 3, 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 options on a 
Commodity-Based Trust Share.
    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 a Commodity-Based Trust 
Share, 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 options on ETFs, including any options on a Commodity-Based 
Trust Share. Also, the Exchange may obtain information from CME Group 
Inc.'s designated contract markets that are members of the Intermarket 
Surveillance Group (``ISG'') related to a financial instrument that is 
based, in whole or in part, upon an interest in or performance of a 
commodity, as applicable.
    The Exchange has also analyzed its capacity and represents that it 
believes the Exchange and the Options Price Reporting Authority or 
``OPRA'' have the necessary systems capacity to handle the additional 
traffic associated with the listing of new series of ETFs, including 
options on a Commodity-Based Trust Share, up to the number of 
expirations currently permissible under the Exchange Rules.
    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 options on a Commodity-Based Trust Share 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 ETF 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 that its proposal is consistent with Section 
6(b) of the Act,\18\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\19\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. Additionally, the Exchange 
believes the proposed rule change is consistent with the Section 
(6)(b)(5) \20\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
    \20\ 15 U.S.C. 78(f)(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposal to amend the 
listing criteria at Options 4, Section 3(h), with respect to ETFs, to 
permit the listing and trading of any option on a Commodity-Based Trust 
Share, without the need for additional approvals, 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 it 
would allow the Exchange to immediately list and trade options on any 
Commodity-Based Trust Share, provided the initial listing criteria has 
been met, without any additional approvals from the Commission. 
Commodity-Based Trust Shares are securities approved for trading with 
the Commission. The Exchange believes that with this proposal it will 
be able to offer options on a Commodity-Based Trust Share soon after 
the listing of such underlying security in the primary market, provided 
the initial listing criteria has been met, thereby availing market 
participants of the opportunity to hedge their positions in the ETF in 
a timely manner. This proposal would permit options on Commodity-Based 
Trust Shares to be listed on the Exchange in the same manner as all 
other securities that are subject to the current listing criteria in 
Options 4, Section 3. The Exchange notes that the majority of ETFs are 
able to list and trade options once the initial listing criteria have 
been met without the need for additional approvals. The proposed rule 
change would allow options on a Commodity-Based Trust Share to likewise 
list and trade options once the initial listing criteria have been met 
without the need for additional approvals.
    Offering options on Commodity-Based Trust Shares provides investors 
with the ability to hedge exposure to the underlying security similar 
to options on any other securities. Options on Commodity-Based Trust 
Shares benefits investors, similar to the listing of any other option 
on an ETF, by providing investors with a relatively lower-cost risk 
management tool, to manage their positions and associated risk in their 
portfolios more easily in connection with exposure to the price of a 
commodity. Additionally, options on a Commodity-Based Trust Share 
provide investors with the ability to transact in such options in a 
listed market environment as opposed to in the

[[Page 10743]]

unregulated OTC options market, which increases market transparency and 
enhances 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,\21\ which, as described above, are trusts structured as 
Commodity-Based Trust Shares. The Exchange has not identified any 
issues with the continued listing and trading of options on Commodity-
Based Trust Shares it currently lists for trading.
---------------------------------------------------------------------------

    \21\ See Options 4, Section 3(h)(iv).
---------------------------------------------------------------------------

    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 a 
Commodity-Based Trust Share 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. Options on a Commodity-Based Trust Share would trade in the 
same manner as any other ETF options--the same Exchange Rules that 
currently govern the listing and trading of all ETF 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 a Commodity-Based Trust 
Share in the same manner.
    The Exchange represents that it has the necessary systems capacity 
to support the listing and trading of options on Commodity-Based Trust 
Shares as the Exchange lists these products today, expect that it 
requires additional approvals prior to listing. 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 of these ETF 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 proposal to amend the 
listing criteria at Options 4, Section 3(h), with respect to ETFs, to 
permit the listing and trading of any option on a Commodity-Based Trust 
Share, without the need for additional approvals, will impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act, as options on Commodity-
Based Trust Shares would need to satisfy the initial listing standards 
set forth in the Exchange Rules in the same manner as any other ETF 
before the Exchange could list options on them. Additionally, options 
on Commodity-Based Trust Shares 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 Commodity-Based Trust Shares.
    Additionally, the Exchange notes that listing and trading options 
on a Commodity-Based Trust Share 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 in a timely manner.
    The Exchange does not believe that the proposal to amend the 
listing criteria at Options 4, Section 3(h), with respect to ETFs, to 
permit the listing and trading of any option on a Commodity-Based Trust 
Share, without the need for additional approvals, will impose any 
burden on intermarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Other options exchanges are 
free to amend their listing rules, as applicable, to permit them to 
list and trade options on a Commodity-Based Trust Share.

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

    No written comments were either solicited or 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 (i) as the Commission may 
designate up to 90 days of such date 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 shall: (a) by order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-ISE-2025-08 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-ISE-2025-08. 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

[[Page 10744]]

submissions should refer to file number SR-ISE-2025-08 and should be 
submitted on or before March 19, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-03074 Filed 2-25-25; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.