Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 4.3 To Permit the Listing of Options on Commodity-Based Trust Shares, 12865-12869 [2025-04502]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 90, Number 52 (Wednesday, March 19, 2025)]
[Notices]
[Pages 12865-12869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-04502]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102647; File No. SR-CBOE-2025-014]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend Rule 4.3 To Permit the 
Listing of Options on Commodity-Based Trust Shares

March 13, 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 March 5, 2025, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend Rule 4.3 to permit the listing of options on Commodity-Based 
Trust Shares. The text of the proposed rule change is provided in 
Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rules 4.3 regarding the criteria for 
underlying securities. Specifically, the Exchange proposes to amend 
Rule 4.3, Interpretation and Policy .06(a)(4) to allow the Exchange to 
list and trade options on Units \3\ that represent interests in 
Commodity-Based Trusts. This is a competitive filing substantively 
identical to proposals submitted by other options exchanges that are 
currently pending with the Securities and Exchange Commission (the 
``Commission'').\4\
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    \3\ Rule 1.1 defines a ``Unit'' (which may also be referred to 
as an exchange-traded fund (``ETF'')) as a share or other security 
traded on a national securities exchange and defined as an NMS stock 
as set forth in Rule 4.3.
    \4\ See Securities Exchange Act Release No. 102465 (February 20, 
2025) (SR-ISE-2025-08); SR-NYSEArca-2025-16 (February 24, 2025); and 
SR-NYSEAmerican-2025-07 (February 24, 2025).
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    A Commodity-Based Trust is defined in Cboe BZX Exchange, Inc. 
14.11(e)(4), NYSE Arca, Inc. Rule 8.201(c)(1), and The Nasdaq Stock 
Market LLC Rule 5711(d)(iv) as a security (a) that is issued by a trust 
(``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. The Exchange proposes to amend 
Rule 4.3, Interpretation and Policy .06 to provide that securities 
deemed appropriate for options trading include Units that represent 
interests in a security (A) 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''). The proposed 
rule change removes from that rule provision references to the SPDR 
Gold Trust, the iShares COMEX Gold Trust, the iShares Silver Trust, the 
Aberdeen Standard Physical Silver Trust, the Aberdeen Standard Physical 
Gold Trust, the Aberdeen Standard Physical Palladium Trust, the 
Aberdeen Standard Physical Platinum Trust, the Sprott Physical Gold 
Trust, the Goldman Sachs Physical Gold ETF, the Fidelity Wise Origin 
Bitcoin Fund, the ARK 21Shares Bitcoin ETF, the iShares Bitcoin Trust, 
the Grayscale Bitcoin Trust, the Grayscale Bitcoin Mini Trust, or the 
Bitwise Bitcoin ETF, which are all Commodity-Based Trust Shares, thus 
making references to those trusts no

[[Page 12866]]

longer necessary. As a result of this proposed rule change, the 
Exchange's listing criteria would allow any ETF approved to list on a 
primary equities market as a Commodity-Based Trust Share to qualify as 
an underlying for options traded on the Exchange, provided other 
listing criteria have been met.\5\
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    \5\ The Exchange believes this proposal is consistent with the 
Options Clearing Corporation (``OCC'') recent amendment of ``Fund 
Share'' (which covers ETFs), as defined in OCC's By-Laws (including 
the Interpretation and Policy), to remove references to specific 
precious metal commodity-based ETFs as ``no longer relevant or 
necessary.'' See Securities Exchange Act Release No. 102018 
(December 20, 2024), 89 FR 106660 (December 30, 2024) (SR-OCC-2024-
018). The impetus for this rule change was the staff advisory issued 
by the Commodity Futures Trading Commission (``CFTC'') that deemed 
it ```substantially likely' that spot commodity ETF shares would be 
held to be securities'' which, in turn, resulted in the OCC's 
determination that ``it no longer needs to seek product-by-product 
exemptive relief from the CFTC to clear spot commodity-based ETF 
products, including precious metals commodity-based ETFs.'' See id. 
at 106661; see also CFTC Staff Advisory Relating to the Clearing of 
Options on Spot Commodity Exchange Traded Funds (ETFs), Letter No. 
24-16 (Nov. 15, 2024), available at https://www.cftc.gov/csl/24-16/ 
download.
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    The Exchange's initial listing standards for Units on which options 
may be listed and traded on the Exchange will apply to Commodity-Based 
Trust Shares. Pursuant to Rule 4.3(a), a security (which includes a 
Unit) 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 Securities Exchange Act of 
1934, as amended (the ``Act'')), and be characterized by a substantial 
number of outstanding shares that are widely held and actively traded. 
Pursuant to Rule 4.3, Interpretation and Policy .06, requires that 
Units must either (1) meet the criteria and standards set forth in Rule 
4.3, Interpretation and Policy .01(a),\6\ or (2) be available for 
creation or redemption each business day from or through the issuer in 
cash or in kind at a price related to net asset value, and the issuer 
must be obligated to issue Units in a specified aggregate number even 
if some or all of the investment assets required to be deposited have 
not been received by the issuer, subject to the condition that the 
person obligated to deposit the investments has undertaken to deliver 
the investment assets as soon as possible and such undertaking is 
secured by the delivery and maintenance of collateral consisting of 
cash or cash equivalents satisfactory to the issuer, as provided in the 
respective prospectus.
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    \6\ Rule 4.3, Interpretation and Policy .01 provides for 
guidelines to be followed by the Exchange when evaluating potential 
underlying securities for Exchange option transactions.
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    Additionally, Commodity-Based Trust Shares will also be subject to 
the Exchange's set forth in Rule 4.4, Interpretation and Policy .06 for 
Units deemed appropriate for options trading pursuant to Rule 4.3, 
Interpretation and Policy .06. Rule 4.4, Interpretation and Policy .06 
provides that Units that were initially approved for options trading 
pursuant to Rule 4.3, Interpretation and Policy .06 shall be deemed not 
to meet the requirements for continued approval, and the Exchange shall 
not open for trading any additional series of option contracts of the 
class covering that such Units, if the Units cease to be an NMS stock 
or the Units are halted from trading in their primary market. 
Additionally, options on Units may be subject to the suspension of 
opening transactions in any of the following circumstances: (1) in the 
case of options covering Units approved for trading under Rule 4.3, 
Interpretation and Policy .06(b)(1), in accordance with the terms of 
paragraphs (a), (b), and (c) of Rule 4.4, Interpretation and Policy 
.01; (2) in the case of options covering Units approved for trading 
under Rule 4.3 Interpretation and Policy .06(b)(2) (as is the case for 
Commodity-Based Trust Shares), following the initial twelve-month 
period beginning upon the commencement of trading in the Units on a 
national securities exchange and are defined as an NMS stock, there are 
fewer than 50 record and/or beneficial holders of such Units for 30 or 
more consecutive trading days; (3) the value of the index or portfolio 
of securities, non-U.S. currency, or portfolio of commodities including 
commodity futures contracts, options on commodity futures contracts, 
swaps, forward contracts and/or options on physical commodities and/or 
financial instruments and money market instruments on which the Units 
are based is no longer calculated or available; or (4) such other event 
shall occur or condition exist that in the opinion of the Exchange 
makes further dealing in such options on the Exchange inadvisable. The 
Exchange notes that ETFs that hold financial instruments, money market 
instruments, precious metal commodities, or cryptocurrencies that are 
deemed commodities on which the Exchange may already list and trade 
options pursuant to Rule 4.3, Interpretation and Policy .06 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 (e.g., precious metals, cryptocurrencies) that it currently 
lists and trades on the Exchange.
    Options on a Commodity-Based Fund Share will be physically settled 
contracts with American-style exercise.\7\ Consistent with current Rule 
4.5, which governs the opening of options series on a specific 
underlying security (including Units), the Exchange will open at least 
one expiration month for options on a Commodity-Based Fund Share \8\ at 
the commencement of trading on the Exchange and may also list series of 
options on a Commodity-Based Fund Share for trading on a weekly,\9\ 
monthly,\10\ or quarterly \11\ basis. The Exchange may also list long-
term equity option series (``LEAPS'') that expire from 12 to 180 months 
from the time they are listed.\12\
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    \7\ See Rule 4.2, which provides that the rights and obligations 
of holders and writers are set forth in the Rules of the Options 
Clearing Corporation (``OCC''); and Equity Options Product 
Specifications January 3, 2024), available at Equity Options 
Specifications (cboe.com); see also OCC Rules, Chapters VIII (which 
governs exercise and assignment) and Chapter IX (which governs the 
discharge of delivery and payment obligations arising out of the 
exercise of physically settled stock option contracts).
    \8\ See Rule 4.5(b). The monthly expirations are subject to 
certain listing criteria for underlying securities described within 
Rule 4.3. Monthly listings expire the third Friday of the month. The 
term ``expiration date'' (unless separately defined elsewhere in the 
OCC By-Laws), when used in respect of an option contract (subject to 
certain exceptions), means the third Friday of the expiration month 
of such option contract, or if such Friday is a day on which the 
exchange on which such option is listed is not open for business, 
the preceding day on which such exchange is open for business. See 
OCC By-Laws Article I, Section 1. Pursuant to Rule 4.5(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. New series of 
options on an individual stock may be added until the beginning of 
the month in which the options contract will expire. Due to unusual 
market conditions, the Exchange, in its discretion, may add a new 
series of options on an individual stock until the close of trading 
on the business day prior to expiration.
    \9\ See Rule 4.5(d).
    \10\ See Rule 4.5(g).
    \11\ See Rule 4.5(e).
    \12\ See Rule 4.5(f).
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    Pursuant to Rule 4.5, Interpretation and Policy .07, which governs 
strike prices of series of options on Units, the interval of strikes 
prices for series of options on Commodity-Based Fund Shares will be $1 
or greater when the strike price is $200 or less and $5 or greater 
where the strike price is over

[[Page 12867]]

$200.\13\ Additionally, the Exchange may list series of options 
pursuant to the $1 Strike Price Interval Program,\14\ the $0.50 Strike 
Program,\15\ the $2.50 Strike Price Program,\16\ and the $5 Strike 
Program.\17\ Pursuant to Rule 5.4, where the price of a series of a 
Commodity-Based Fund Share option is less than $3.00, the minimum 
increment will be $0.05, and where the price is $3.00 or higher, the 
minimum increment will be $0.10.\18\ Any and all new series of 
Commodity-Based Fund Share options that the Exchange lists will be 
consistent and comply with the expirations, strike prices, and minimum 
increments set forth in Rules 4.5 and 5.4, as applicable.
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    \13\ The Exchange notes that for options listed pursuant to the 
Short Term Option Series Program, the Monthly Options Series 
Program, and the Quarterly Options Series Program, Rules 4.5(d), 
(e), and (g) specifically sets forth intervals between strike prices 
on Quarterly Options Series, Short Term Option Series, and Monthly 
Options Series, respectively.
    \14\ See Rule 4.5, Interpretation and Policy .01(a).
    \15\ See Rule 4.5, Interpretation and Policy .01(b).
    \16\ See Rule 4.5, Interpretation and Policy .04.
    \17\ See Rule 4.5, Interpretation and Policy .01(f).
    \18\ If options on a Commodity-Based Fund Share are eligible to 
participate in the Penny Interval Program, the minimum increment 
will be $0.01 for series with a price below $3.00 and $0.05 for 
series with a price at or above $3.00. See 5.4(d) (which describes 
the requirements for the Penny Interval Program).
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    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 Unit options 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 will apply to the listing and trading of 
options on Commodity-Based Trust Shares on the Exchange in the same 
manner as they apply to other options on all other Units that are 
listed and traded on the Exchange.
    Position and exercise limits for options, including options on a 
Commodity-Based Trust Share are determined pursuant to Rules 8.30 and 
8.42, respectively. Position and exercise limits for options on ETFs 
vary according to the number of outstanding shares and the trading 
volumes of the underlying security over the past six months, where the 
largest in capitalization and the most frequently traded funds 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 funds 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.\19\ Further, the Exchange notes that Rule 10.3, 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.
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    \19\ See Rule 8.30, Interpretation and Policy .02.
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    The Exchange represents it has an adequate surveillance program in 
place for options and intends to apply those same program procedures to 
options on Commodity-Based Fund Shares that it applies to the 
Exchange's other options products.\20\ The Exchange believes that 
existing surveillance procedures are designed to deter and detect 
possible manipulative behavior which might potentially arise from 
listing and trading the proposed options on Commodity-Based Trust 
Shares. Additionally, the Exchange is a member of the Intermarket 
Surveillance Group (``ISG'') under the Intermarket Surveillance Group 
Agreement. ISG members work together to coordinate surveillance and 
investigative information sharing in the stock, options, and futures 
markets. In addition, the Exchange has a Regulatory Services Agreement 
with the Financial Industry Regulatory Authority (``FINRA'') for 
certain market surveillance, investigation and examinations functions. 
Pursuant to a multi-party 17d-2 joint plan, all options exchanges 
allocate amongst themselves and FINRA responsibilities to conduct 
certain options-related market surveillance that are common to rules of 
all options exchanges.\21\ Further, the Exchange will implement any new 
surveillance procedures it deems necessary to effectively monitor the 
trading of options on Commodity-Based Fund Shares.
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    \20\ The surveillance program includes surveillance patterns for 
price and volume movements as well as patterns for potential 
manipulation (e.g., spoofing and marking the close).
    \21\ Section 19(g)(1) of the Act, among other things, requires 
every self-regulatory organization (``SRO'') registered as a 
national securities exchange or national securities association to 
comply with the Act, the rules and regulations thereunder, and the 
SRO's own rules, and, absent reasonable justification or excuse, 
enforce compliance by its members and persons associated with its 
members. See 15 U.S.C. 78q(d)(1) and 17 CFR 240.17d-2. Section 
17(d)(1) of the Act allows the Commission to relieve an SRO of 
certain responsibilities with respect to members of the SRO who are 
also members of another SRO (``common members''). Specifically, 
Section 17(d)(1) allows the Commission to relieve an SRO of its 
responsibilities to: (i) receive regulatory reports from such 
members; (ii) examine such members for compliance with the Act and 
the rules and regulations thereunder, and the rules of the SRO; or 
(iii) carry out other specified regulatory responsibilities with 
respect to such members.
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    The Exchange has also analyzed its capacity and represents that it 
believes the Exchange and the Options Price Reporting Authority 
(``OPRA'') have the necessary systems capacity to handle the additional 
traffic associated with the listing of new series of ETFs, including on 
Commodity-Based Trust Shares, up to the number of expirations currently 
permissible under the Rules. The Exchange believes any additional 
traffic generated from the trading of options on Commodity-Based Trust 
Shares would be manageable. The Exchange represents that Exchange 
members will not have a capacity issue as a result of this proposed 
rule change.
    Further, quotation and last sale information for Commodity-Based 
Trust Shares 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 
Commodity-Based Fund Shares will be available via OPRA \22\ and major 
market data vendors.
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    \22\ Last sale reports and quotations are the core of the 
information that OPRA disseminates. OPRA also disseminates certain 
other types of information with respect to the trading of options on 
the markets of the OPRA participants, such as the number of options 
contracts traded, open interest and end of day summaries. OPRA also 
disseminates certain kinds of administrative messages.
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    The Exchange notes that the Commission has previously approved 
generic listing standards pursuant to Rule 19b-4(e) of the Act \23\ for 
ETFs based on indexes that consist of stocks listed on U.S. 
exchanges.\24\ In addition, the Commission has previously approved 
proposals for the listing and trading of options on ETFs based on 
international indexes as well as global indexes (e.g., based on non-
U.S. and U.S. component stocks).\25\
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    \23\ 17 CFR 240.19b-4(e).
    \24\ See Securities Exchange Act Release No. 54739 (November 9, 
2006), 71 FR 66993 (November 17, 2006) (SR-AMEX-2006-78) (approval 
order relating to generic listing standards for ETFs based on 
international or global indexes).
    \25\ See, e.g., Securities Exchange Act Release Nos. 56778 
(November 9, 2007), 72 FR 65113 (November 19, 2007) (SR-AMEX-2007-
100) (approval order to list and trade options on iShares MSCI 
Mexico Index Fund); and 55648 (April 19, 2007), 72 FR 20902 (April 
26, 2007) (SR-AMEX-2007-09) (approval order to list and trade 
options on Vanguard Emerging Markets ETF); see also Securities 
Exchange Act Release Nos. 50189 (August 12, 2004), 69 FR 51723 
(August 20, 2004) (SR-AMEX-2001-05) (approving the listing and 
trading of certain Vanguard International Equity Index Funds); and 
44700 (August 14, 2001), 66 FR 43927 (August 21, 2001) (SR-2001-34) 
(approving the listing and trading of series of the iShares Trust 
based on foreign stock indexes).
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    In approving Commodity-Based Trust Shares for equities exchange 
trading, the

[[Page 12868]]

Commission thoroughly considered the structure of the Commodity-Based 
Trust Shares, their usefulness to investors and to the markets, and 
self-regulatory organization rules that govern their trading. The 
Exchange believes that allowing the listing of options overlying 
Commodity-Based Trust Shares that are listed pursuant to Commission 
approval on equities exchanges and applying Rule 19b-4(e) \26\ should 
fulfill the intended objective of that rule by allowing options on 
those Commodity-Based Trust Shares that have satisfied the generic 
listing standards to commence trading, without the need for the public 
comment period and Commission approval. The proposed rule change has 
the potential to significantly reduce the time and costs associated 
with bringing options on Commodity-Based Trust Shares to market, 
thereby reducing the burden on issuers and other market participants, 
while also promoting competition among options exchanges, to the 
benefit of the investing public. The failure of a particular Commodity-
Based Trust Share to comply with the generic listing standards under 
Rule 19b-4(e) \27\ would not, however, preclude the Exchange from 
submitting a separate filing pursuant to Section 19(b)(2) \28\ 
requesting Commission approval to list and trade options on a 
particular Commodity-Based Trust Share.
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    \26\ 17 CFR 240.19b-4(e).
    \27\ Id.
    \28\ 15 U.S.C. 78s(b)(2).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\29\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \30\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \31\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \29\ 15 U.S.C. 78f(b).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ Id.
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    In particular, the Exchange believes the proposal will remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it would allow the Exchange to 
immediately list and trade options on Commodity-Based Trust Shares, 
provided the initial listing criteria has been met, without requiring 
additional approvals from the Commission.\32\ Commodity-Based Trust 
Shares are securities approved for trading by the Commission. The 
Exchange believes that allowing options on qualifying Commodity-Based 
Trust Shares soon after the listing of such underlying security in the 
primary market will benefit investors and the public interest as it 
will afford market participants the opportunity to hedge their 
positions in the underlying ETF in a timely manner. Given the potential 
to reduce the time to market for options on Commodity-Based Trust 
Shares, the proposed rule change will also reduce the burdens on 
issuers and other market participants, while also promoting competition 
among options exchanges to the benefit of the investing public. This 
proposal will enable the listing of options on Commodity-Based Trust 
Shares in the same manner as other securities listed and traded on the 
Exchange. The Exchange notes that most ETFs are eligible for options 
trading without the need for additional approvals, provided the ETFs 
meet the initial listing criteria. Accordingly, the proposed rule 
change would align the treatment of Commodity-Based Trust Shares with 
other ETFs for purposes of options trading, which would add internal 
consistency to Exchange rules.
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    \32\ As noted herein, the Exchange believes this proposal is 
consistent with the OCC's determination that, based on a staff 
advisory from the CFTC, the ``it no longer needs to seek product-by-
product exemptive relief from the CFTC to clear spot commodity-based 
ETF products.'' See supra note 5.
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    The Exchange believes that the proposed rule change will facilitate 
the listing and trading of options on additional ETFs that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. Like options on any other securities, options on 
Commodity-Based Trust Shares will provide investors with the ability to 
hedge exposure to the underlying security. The Exchange believes that 
offering options on Commodity-Based Trust Shares will benefit investors 
by providing them with a relatively lower-cost risk management tool, 
which will allow them to manage their positions and associated risk in 
their portfolios more easily in connection with exposure to the price 
of a commodity. Additionally, the Exchange's offering of options on 
Commodity-Based Trust Shares will provide investors with the ability to 
transact in such options in a listed market environment as opposed to 
in the unregulated over-the-counter market, which would increase market 
transparency and enhance the process of price discovery conducted on 
the Exchange through increased order flow to the benefit of all 
investors.
    As noted herein, the Exchange already lists options on other 
commodity-based ETFs,\33\ which are trusts structured in substantially 
the same manner 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. 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 Commodity-Based Trust Shares 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.\34\ Options on Commodity-Based 
Trust Shares will trade in the same manner as any other ETF options--
the same Exchange Rules that currently govern the listing and trading 
of options, including permissible expirations, strike prices minimum 
increments, position and exercise limits, and margin requirements, will 
govern the listing and trading of options on Commodity-Based Trust 
Shares in the same manner.
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    \33\ See Rule 4.3, Interpretation and Policy .06.
    \34\ See id.
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    The Exchange believes the proposed rule change will result in 
increased competition as other exchanges will likely adopt an identical 
rule to the one proposed by the Exchange that would allow the listing 
and trading of options on Commodity-Based Trust Shares that are 
approved for trading on those other markets.\35\ Multiple listing of 
ETFs, options and other securities and competition are some of the 
central features of the national market system. The Exchange believes 
that the proposal would encourage a more open market

[[Page 12869]]

and national market system based on competition and multiple listing. 
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, except 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 options on Commodity-Based Trust Shares.
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    \35\ See supra note 4.
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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. To the contrary, the 
Exchange believes that the proposal is pro-competitive and is a 
competitive response to the Exchange's inability to list options on 
Commodity-Based Trust Shares without submitting a separate proposed 
rule change. The Exchange believes the proposed rule change will result 
in additional investment options and opportunities to achieve the 
investment objectives of market participants seeking efficient trading 
and hedging vehicles, to the benefit of investors, market participants, 
and the marketplace in general. Competition is one of the principal 
features of the national market system. The Exchange believes that this 
proposal will expand competitive opportunities to list and trade 
products on the Exchange as noted.
    The Exchange does not believe the proposal will impose any burden 
on intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because Commodity-Based Trust 
Shares, like any other ETF, would have to satisfy the Exchange's 
initial listing standards to be eligible for options trading. 
Additionally, the proposed rule change would apply to all market 
participants in the same manner as options on Commodity-Based Trust 
Shares will be equally available to all market participants who wish to 
trade such options.
    The Exchange does not believe the proposal will impose any burden 
on inter-market competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as nothing prevents the other 
options exchanges from proposing similar rules to list and trade 
options on Commodity-Based Trust Shares. As noted herein, other options 
exchanges have submitted proposed rule changes to adopt identical rules 
to permit the listing and trading of options on Commodity-Based Trust 
Shares without submitting a separate proposed rule change.\36\ 
Furthermore, 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.
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    \36\ See id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CBOE-2025-014 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-CBOE-2025-014. 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-CBOE-2025-014 and should be 
submitted on or before April 9, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-04502 Filed 3-18-25; 8:45 am]
BILLING CODE 8011-01-P