Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule 5020 (Criteria for Underlying Securities) To Permit the Listing of Options on Commodity-Based Trust Shares, 20699-20703 [2025-08547]
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Federal Register / Vol. 90, No. 93 / Thursday, May 15, 2025 / Notices
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–NASDAQ–2025–036. 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
10:00 a.m. and 3:00 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–NASDAQ–2025–036,
and should be submitted on or before
June 5, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025–08548 Filed 5–14–25; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–103015; File No. SR–BOX–
2025–12]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing of
Proposed Rule Change, as Modified by
Amendment No. 1, To Amend Rule
5020 (Criteria for Underlying
Securities) To Permit the Listing of
Options on Commodity-Based Trust
Shares
May 9, 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 April 25,
2025, BOX Exchange LLC (‘‘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.
On May 7, 2025, the Exchange filed
Amendment No. 1 to the proposed rule
change, which supersedes and replaces
the original proposal in its entirety.3
The Commission is publishing this
notice to solicit comments on the
proposed rule change, as modified by
Amendment No. 1, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 5020 (Criteria for Underlying
Securities) to permit the listing of
options on Commodity-Based Trust
Shares. The Exchange initially filed this
rule change on April 25, 2025 (the
‘‘Original Filing’’),4 this Amendment
No.1 amends and replaces the Original
Filing in its entirety.5 The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
internet website at https://rules.
boxexchange.com/rulefilings.
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1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 This Amendment No. 1 modifies the original
filing by adding clarification regarding the
applicability of the $5.00 strike program and
correcting minor technical errors.
4 See SR–BOX–2025–12.
5 This Amendment No. 1 corrects typographical
errors, adds clarity, and makes other corrections to
the Original Filing.
2 17
11 17
CFR 200.30–3(a)(12).
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20699
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization 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 purpose of this filing is to amend
Rule 5020 (Criteria for Underlying
Securities). Specifically, the Exchange
proposes to modify Rule 5020(h),
regarding the criteria for listing and
trading options on Exchange-Traded
Fund Shares (‘‘ETFs’’), to allow options
on units that represent interests in a
trust that is a Commodity-Based Trust.
The Exchange notes that this proposal is
competitive as Nasdaq ISE, LLC
(‘‘Nasdaq ISE’’), NYSE American LLC
(‘‘NYSE American’’), NYSE Arca, Inc.
(‘‘NYSE ARCA’’), Cboe Exchange, Inc.
(‘‘Cboe’’), and Miami International
Securities Exchange, LLC (‘‘MIAX’’)
have submitted substantially identical
rule changes.6 A Commodity-Based
Trust is defined in NYSE ARCA Rule
8.201–E(c)(1), The Nasdaq Stock Market
LLC Rule 5711(d)(iv), and Cboe BZX
Exchange, Inc. Rule 14.11(e)(4) 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
6 See Securities Exchange Act Release No. 102465
(February 20, 2025), 90 FR 10740 (February 26,
2025) (SR–ISE–2025–08) (Notice of Filing of
Proposed Rule Change to Amend Options 4, Section
3, Criteria for Underlying Securities to permit
options on Commodity-Based Trust Shares);
Securities Exchange Act Release No. 102577 (March
11, 2025), 90 FR 12377 (March 17, 2025) (SR–
NYSEARCA–2025–16); Securities Exchange Act
Release No. 102555 (March 10, 2025), 90 FR 12189
(March 14, 2025) (SR–NYSEAMER–2025–07);
Securities Exchange Act Release No. 102647 (March
13, 2025), 90 FR 12865 (March 19, 2025) (SR–Cboe–
2025–014); and Securities Exchange Act Release
No. 102658 (March 13, 2025), 90 FR 12870 (March
19, 2025) (SR–MIAX–2025–07).
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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 its
listing criteria at Rule 5020(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 . . .
(iv) represent interests in a security (a)
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’’).
The Exchange proposes to insert this
proposed rule text and to remove the
now unnecessary references to the
SPDR® Gold Trust, the iShares COMEX
Gold Trust, the iShares Silver Trust, the
abrdn Gold ETF Trust, the abrdn Silver
ETF Trust, the abrdn Palladium ETF
Trust, the abrdn Platinum ETF Trust,
the Sprott Physical Gold Trust, the
iShares Bitcoin Trust, the Grayscale
Bitcoin Trust, the Grayscale Bitcoin
Mini Trust, the Bitwise Bitcoin ETF, the
Fidelity Wise Origin Bitcoin Fund, the
ARK 21Shares Bitcoin ETF, the iShares
Ethereum Trust, the Grayscale Ethereum
Trust ETF, the Grayscale Ethereum Mini
Trust ETF, the Bitwise Ethereum ETF,
or the Fidelity Ethereum Fund, which
are all Commodity-Based Trust Shares.7
As a result of this amendment, the
Exchange’s listing criteria would allow
any ETF approved to list on the primary
market as a Commodity-Based Trust
Share to qualify as an underlying for
options traded on BOX, provided other
listing criteria have been met.8
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7 See
proposed BOX Rule 5020(h)(iv).
Exchange believes this proposal is
consistent with the OCC’s recent amendment of
‘‘Fund Share’’ (which covers ETFs), as defined in
Article I of OCC’s By-Laws (including the
Interpretation and Policy), to remove reference to
specific precious metals 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
8 The
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The Exchange also proposes to delete
IM–5020–1 (Commodity-Based Trust
Shares) which contains a now
unnecessary and duplicative definition
of Commodity-Based Trust Shares. IM–
5020–1 provides, ‘‘Commodity-Based
Trust Shares’’ shall, unless the context
otherwise requires, mean a security that
(a) is issued by a trust (‘‘Trust’’) that
holds a specified commodity deposited
with the Trust; (b) is issued by such
Trust in a specified aggregate minimum
number in return for a deposit of a
quantity of the underlying commodity;
and (c) 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. The Exchange is
proposing to delete IM–5020–1 to align
with the proposed changes herein.
The Exchange’s initial listing
standards in Rule 5020(a) will apply to
options on Commodity-Based Trust
Shares. Rule 5020(a) requires that, a
security on which options may be listed
and traded on the Exchange must be
duly registered (with the Commission)
and be an NMS stock (as defined in Rule
600 of Regulation NMS under the Act)
and be characterized by a substantial
number of outstanding shares that are
widely held and actively traded.9
Further, for an ETF to qualify for
options transactions pursuant to Rule
5020(h), the ETF must either (1) meet
the criteria for underlying securities set
forth in Rule 5020(a) and (b),10 or (2) be
available for creation and redemption
each business day as set forth in Rule
5020(h)(1).11
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., 89 FR, 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.
9 See BOX Rules 5020(a) and (b).
10 The criteria and guidelines for a security to be
considered widely held and actively traded are set
forth in BOX Rule 5020(b), subject to the exceptions
outlined in Rule 5020(b)(6).
11 BOX Rule 5020(h)(1) requires that the
Exchange-Traded Fund Shares 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 Exchange-Traded Fund Shares
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
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Additionally, Commodity-Based Trust
Shares will also be subject to the
Exchange’s continued listing standards
for options on ETFs, including those set
out in Rule 5030(h). Moreover,
Commodity-Based Trust Shares will not
be deemed to meet the requirements for
continued approval, and the Exchange
will not open for trading any additional
series of option contracts covering
Commodity-Based Trust Shares if such
security ceases to be an ‘‘NMS stock’’ as
provided for in Rule 5030(b)(6) or the
Commodity-Based Trust Share is halted
from trading on its primary market.12
The Exchange notes that ETFs that hold
financial instruments, money market
instruments, or precious metal
commodities on which the Exchange
may already list and trade options
pursuant to Rule 5020(h), are trusts
structured in substantially the same
manner as options on a CommodityBased 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 BOX.
Consistent with Rule 5050, which
governs the opening of options series on
a specific underlying security (including
ETFs), BOX will open at least one
expiration month for options on a
Commodity-Based Trust Share 13 at the
undertaking is secured by the delivery and
maintenance of collateral consisting of cash or cash
equivalents satisfactory to the issuer of the
Exchange-Traded Fund Shares, all as described in
the Exchange-Traded Fund Shares’ prospectus.
12 See BOX Rule 5030(h).
13 See BOX Rule 5050(b). The standard
expirations are subject to certain listing criteria for
underlying securities described within BOX Rule
5020. Standard 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 BOX Rule 5050(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 in the case of an option contract expiring
on a business day, 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 the
expiration.
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commencement of trading on BOX and
may also list series of options on such
Commodity-Based Trust Share for
trading on a weekly,14 monthly,15 or
quarterly 16 basis. BOX may also list
long-term equity option series
(‘‘LEAPS’’) that expire from twelve to
one hundred eighty months from the
time they are listed.17
Pursuant to IM–5050–1(b), 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 will be
$1 or greater when the strike price is
$200 or less and $5 or greater where the
strike price is over $200.18 Additionally,
BOX may list series of options pursuant
to the $1 Strike Price Interval Program,19
the $0.50 Strike Program,20 the $2.50
Strike Price Program,21 and the $5.00
Strike Program.22 Pursuant to Rule
7050, where the price of a series of
options on a Commodity-Based Trust
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 $0.10.23 Any and all
new series of options on a CommodityBased Trust Share that BOX lists will be
consistent and comply with the
expirations, strike prices, and minimum
increments set forth in Rules 5050 and
7050, as applicable. Further, the
Exchange notes that Rule Series 10100,
which governs margin requirements
applicable to the trading of all options
on BOX, including options on ETFs,
will also apply to the trading of options
on a Commodity-Based Trust Share.
Options on a Commodity-Based Trust
Share will trade in the same manner as
options on other ETFs on BOX. The
Exchange Rules that currently apply to
the listing and trading of all options on
ETFs on BOX, including, for example,
Rules that govern listing criteria,
expirations, exercise prices, minimum
14 See
BOX IM–5050–6.
BOX IM–5050–13.
16 See BOX IM–5050–4.
17 See BOX Rule 5070.
18 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, IM–5050–6, IM–
5050–13, and IM–5050–4, specifically set forth
intervals between strike prices on Short Term
Option Series, Monthly Options Series, and
Quarterly Options Series, respectively.
19 See BOX IM–5050–2.
20 See BOX IM–5050–5.
21 See BOX IM–5050–3.
22 See BOX Rule 5050(d)(5).
23 If options on a Commodity-Based Trust Share
are eligible to participate in the Penny Interval
Program, the minimum increment of $0.01 below
$3.00 and $0.05 above $3.00 would apply. See BOX
Rule 7050(a)(3). See also BOX Rule 7260 (which
describes the requirements for the Penny Interval
Program).
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15 See
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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 BOX in the same manner as
they apply to other options on all other
ETFs that are listed and traded on BOX.
Position and exercise limits for
options, including options on a
Commodity-Based Trust Share are
determined pursuant to Rules 3120 and
3140, 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, recapitalizations, 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.24
The Exchange represents that the
surveillance procedures applicable to all
other options on ETFs will apply to
options on Commodity-Based Trust
Shares, and that the Exchange has the
necessary systems capacity to support
the new option series. The Exchange’s
existing surveillance and reporting
safeguards are designed to deter and
detect possible manipulative behavior
which might arise from listing and
trading options on ETFs, including
options on Commodity-Based Trust
Shares. Also, the Exchange may obtain
trading information via the Intermarket
Surveillance Group (‘‘ISG’’) 25 from
other exchanges who are members of the
ISG. In addition, the Exchange has a
Regulatory Services Agreement with the
Financial Industry Regulatory Authority
(‘‘FINRA’’). Pursuant to a multi-party
17d–2 joint plan, all options exchanges
allocate regulatory responsibilities to
FINRA to conduct certain optionsrelated market surveillances. Further,
the Exchange will implement any new
surveillance procedures it deems
necessary to effectively monitor the
trading of options on Commodity-Based
Trust Shares. 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
24 See
BOX Rules 3120(d) and 3140(c).
complete list of the current members of the
ISG, is available at https://www.isgportal.org.
25 A
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20701
of ETFs, including options on a
Commodity-Based Trust Share, up to
the number of expirations currently
permissible under the Exchange 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
Participants 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 CommodityBased Trust Shares will be available via
OPRA 26 and major market data vendors.
The Exchange notes that the
Commission has previously approved
generic listing standards pursuant to
Rule 19b–4(e) of the Act 27 for ETFs
based on indexes that consist of stocks
listed on U.S. exchanges.28 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).29
In approving Commodity-Based Trust
Shares for equities exchange trading, the
Commission thoroughly considered the
structure of the Commodity-Based Trust
Shares, their usefulness to investors and
to the markets, and SRO rules that
govern their trading. The Exchange
believes that allowing the listing of
options overlying Commodity-Based
26 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.
27 17 CFR 240.19b–4(e).
28 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).
29 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–2004–05) (approving the listing and
trading of certain Vanguard International Equity
Index Funds); and 44700 (August 14, 2001), 66 FR
43927 (August 21, 2001) (SR–Amex–2001–34)
(approving the listing and trading of series of the
iShares Trust based on foreign stock indexes).
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Trust Shares that are listed pursuant to
Commission approval on equities
exchanges and applying Rule 19b–
4(e) 30 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 CommodityBased Trust Share to comply with the
generic listing standards under Rule
19b–4(e) 31 would not, however,
preclude the Exchange from submitting
a separate filing pursuant to Section
19(b)(2),32 requesting Commission
approval to list and trade options on a
particular Commodity-Based Trust
Share.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 33 in general, and furthers the
objectives of Section 6(b)(5) of the Act 34
in particular, in that it is designed to
promote just and equitable principles of
trade, 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.
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 BOX 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.35
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
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30 17
CFR 240.19b–4(e).
31 Id.
32 15
U.S.C. 78s(b)(2).
U.S.C. 78f(b).
34 15 U.S.C. 78f(b)(5).
35 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 8.
33 15
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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 CommodityBased Trust Shares, the proposed rule
change will also reduce the burdens on
issuers and other market participants,
while 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 all other
securities listed and traded on BOX. 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. 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.
Similar to 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 OTC market, which
would increase market transparency and
enhance the process of price discovery
conducted on BOX through increased
order flow to the benefit of all investors.
As noted herein, the Exchange already
lists options on other commodity-based
ETFs,36 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 CommodityBased 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
BOX.37 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, and margin requirements,
will govern the listing and trading of
options on Commodity-Based Trust
Shares in the same manner.
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.38 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
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.
The Exchange believes the proposed
deletion of IM–5020–1 will remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, because
it will delete a now unnecessary and
duplicative definition of CommodityBased Trust Shares to conform with the
changes proposed herein.
37 See
36 See
PO 00000
BOX Rule 5020(h)(iv).
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38 See
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supra note 6.
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Federal Register / Vol. 90, No. 93 / Thursday, May 15, 2025 / Notices
khammond on DSK9W7S144PROD with NOTICES
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 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 BOX’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 BOX as noted previously.
Intramarket Competition: The
Exchange does not believe the proposal
will impose any burden on intra-market
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.
Intermarket Competition: 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, Nasdaq ISE,
Cboe, MIAX, NYSE ARCA, and NYSE
American have submitted proposals to
adopt similar rules to allow them to list
and trade options on Commodity-Based
Trust Shares without submitting a
separate proposed rule change.39
Furthermore, the Exchange notes that
listing and trading options on a
Commodity-Based Trust Share on BOX
will subject such options to transparent
exchange-based rules as well as price
discovery and liquidity, as opposed to
39 Id.
VerDate Sep<11>2014
16:47 May 14, 2025
Jkt 265001
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 BOX 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 the
proposed change to delete IM–5020–1
will impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because it seeks to remove a now
unnecessary and duplicative definition
of Commodity-Based Trust Shares to
conform with the changes proposed
herein.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received 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 (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 self-regulatory
organization consents, the Commission
will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
20703
All submissions should refer to file
number SR–BOX–2025–12. 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–BOX–2025–12 and should be
submitted on or before June 5, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.40
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025–08547 Filed 5–14–25; 8:45 am]
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:
BILLING CODE 8011–01–P
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–
BOX–2025–12 on the subject line.
Self-Regulatory Organizations; MIAX
Sapphire, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX
Sapphire Fee Schedule To Adopt Fees
To Access the Testing Systems
Environment
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
May 9, 2025.
PO 00000
Frm 00085
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–103011; File No. SR–
SAPPHIRE–2025–22]
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
40 17
E:\FR\FM\15MYN1.SGM
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 90, Number 93 (Thursday, May 15, 2025)]
[Notices]
[Pages 20699-20703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08547]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103015; File No. SR-BOX-2025-12]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rule
5020 (Criteria for Underlying Securities) To Permit the Listing of
Options on Commodity-Based Trust Shares
May 9, 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 April 25, 2025, BOX Exchange LLC (``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. On May 7, 2025, the Exchange filed
Amendment No. 1 to the proposed rule change, which supersedes and
replaces the original proposal in its entirety.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as modified by Amendment No. 1, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ This Amendment No. 1 modifies the original filing by adding
clarification regarding the applicability of the $5.00 strike
program and correcting minor technical errors.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 5020 (Criteria for Underlying
Securities) to permit the listing of options on Commodity-Based Trust
Shares. The Exchange initially filed this rule change on April 25, 2025
(the ``Original Filing''),\4\ this Amendment No.1 amends and replaces
the Original Filing in its entirety.\5\ The text of the proposed rule
change is available from the principal office of the Exchange, at the
Commission's Public Reference Room and also on the Exchange's internet
website at https://rules.boxexchange.com/rulefilings.
---------------------------------------------------------------------------
\4\ See SR-BOX-2025-12.
\5\ This Amendment No. 1 corrects typographical errors, adds
clarity, and makes other corrections to the Original Filing.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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 purpose of this filing is to amend Rule 5020 (Criteria for
Underlying Securities). Specifically, the Exchange proposes to modify
Rule 5020(h), regarding the criteria for listing and trading options on
Exchange-Traded Fund Shares (``ETFs''), to allow options on units that
represent interests in a trust that is a Commodity-Based Trust. The
Exchange notes that this proposal is competitive as Nasdaq ISE, LLC
(``Nasdaq ISE''), NYSE American LLC (``NYSE American''), NYSE Arca,
Inc. (``NYSE ARCA''), Cboe Exchange, Inc. (``Cboe''), and Miami
International Securities Exchange, LLC (``MIAX'') have submitted
substantially identical rule changes.\6\ A Commodity-Based Trust is
defined in NYSE ARCA Rule 8.201-E(c)(1), The Nasdaq Stock Market LLC
Rule 5711(d)(iv), and Cboe BZX Exchange, Inc. Rule 14.11(e)(4) 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
[[Page 20700]]
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.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 102465 (February 20,
2025), 90 FR 10740 (February 26, 2025) (SR-ISE-2025-08) (Notice of
Filing of Proposed Rule Change to Amend Options 4, Section 3,
Criteria for Underlying Securities to permit options on Commodity-
Based Trust Shares); Securities Exchange Act Release No. 102577
(March 11, 2025), 90 FR 12377 (March 17, 2025) (SR-NYSEARCA-2025-
16); Securities Exchange Act Release No. 102555 (March 10, 2025), 90
FR 12189 (March 14, 2025) (SR-NYSEAMER-2025-07); Securities Exchange
Act Release No. 102647 (March 13, 2025), 90 FR 12865 (March 19,
2025) (SR-Cboe-2025-014); and Securities Exchange Act Release No.
102658 (March 13, 2025), 90 FR 12870 (March 19, 2025) (SR-MIAX-2025-
07).
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The Exchange proposes to amend its listing criteria at Rule
5020(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 . . . (iv) represent
interests in a security (a) 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'').
The Exchange proposes to insert this proposed rule text and to
remove the now unnecessary references to the SPDR[supreg] Gold Trust,
the iShares COMEX Gold Trust, the iShares Silver Trust, the abrdn Gold
ETF Trust, the abrdn Silver ETF Trust, the abrdn Palladium ETF Trust,
the abrdn Platinum ETF Trust, the Sprott Physical Gold Trust, the
iShares Bitcoin Trust, the Grayscale Bitcoin Trust, the Grayscale
Bitcoin Mini Trust, the Bitwise Bitcoin ETF, the Fidelity Wise Origin
Bitcoin Fund, the ARK 21Shares Bitcoin ETF, the iShares Ethereum Trust,
the Grayscale Ethereum Trust ETF, the Grayscale Ethereum Mini Trust
ETF, the Bitwise Ethereum ETF, or the Fidelity Ethereum Fund, which are
all Commodity-Based Trust Shares.\7\ As a result of this amendment, the
Exchange's listing criteria would allow any ETF approved to list on the
primary market as a Commodity-Based Trust Share to qualify as an
underlying for options traded on BOX, provided other listing criteria
have been met.\8\
---------------------------------------------------------------------------
\7\ See proposed BOX Rule 5020(h)(iv).
\8\ The Exchange believes this proposal is consistent with the
OCC's recent amendment of ``Fund Share'' (which covers ETFs), as
defined in Article I of OCC's By-Laws (including the Interpretation
and Policy), to remove reference to specific precious metals
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.,
89 FR, 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.
---------------------------------------------------------------------------
The Exchange also proposes to delete IM-5020-1 (Commodity-Based
Trust Shares) which contains a now unnecessary and duplicative
definition of Commodity-Based Trust Shares. IM-5020-1 provides,
``Commodity-Based Trust Shares'' shall, unless the context otherwise
requires, mean a security that (a) is issued by a trust (``Trust'')
that holds a specified commodity deposited with the Trust; (b) is
issued by such Trust in a specified aggregate minimum number in return
for a deposit of a quantity of the underlying commodity; and (c) 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. The Exchange is
proposing to delete IM-5020-1 to align with the proposed changes
herein.
The Exchange's initial listing standards in Rule 5020(a) will apply
to options on Commodity-Based Trust Shares. Rule 5020(a) requires that,
a security on which options may be listed and traded on the Exchange
must be duly registered (with the Commission) and be an NMS stock (as
defined in Rule 600 of Regulation NMS under the Act) and be
characterized by a substantial number of outstanding shares that are
widely held and actively traded.\9\ Further, for an ETF to qualify for
options transactions pursuant to Rule 5020(h), the ETF must either (1)
meet the criteria for underlying securities set forth in Rule 5020(a)
and (b),\10\ or (2) be available for creation and redemption each
business day as set forth in Rule 5020(h)(1).\11\
---------------------------------------------------------------------------
\9\ See BOX Rules 5020(a) and (b).
\10\ The criteria and guidelines for a security to be considered
widely held and actively traded are set forth in BOX Rule 5020(b),
subject to the exceptions outlined in Rule 5020(b)(6).
\11\ BOX Rule 5020(h)(1) requires that the Exchange-Traded Fund
Shares 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 Exchange-Traded
Fund Shares 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 Exchange-Traded
Fund Shares, all as described in the Exchange-Traded Fund Shares'
prospectus.
---------------------------------------------------------------------------
Additionally, Commodity-Based Trust Shares will also be subject to
the Exchange's continued listing standards for options on ETFs,
including those set out in Rule 5030(h). Moreover, Commodity-Based
Trust Shares will not be deemed to meet the requirements for continued
approval, and the Exchange will not open for trading any additional
series of option contracts covering Commodity-Based Trust Shares if
such security ceases to be an ``NMS stock'' as provided for in Rule
5030(b)(6) or the Commodity-Based Trust Share is halted from trading on
its primary market.\12\ The Exchange notes that ETFs that hold
financial instruments, money market instruments, or precious metal
commodities on which the Exchange may already list and trade options
pursuant to Rule 5020(h), 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 BOX.
---------------------------------------------------------------------------
\12\ See BOX Rule 5030(h).
---------------------------------------------------------------------------
Consistent with Rule 5050, which governs the opening of options
series on a specific underlying security (including ETFs), BOX will
open at least one expiration month for options on a Commodity-Based
Trust Share \13\ at the
[[Page 20701]]
commencement of trading on BOX and may also list series of options on
such Commodity-Based Trust Share for trading on a weekly,\14\
monthly,\15\ or quarterly \16\ basis. BOX may also list long-term
equity option series (``LEAPS'') that expire from twelve to one hundred
eighty months from the time they are listed.\17\
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\13\ See BOX Rule 5050(b). The standard expirations are subject
to certain listing criteria for underlying securities described
within BOX Rule 5020. Standard 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 BOX Rule
5050(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 in the case of an
option contract expiring on a business day, 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 the expiration.
\14\ See BOX IM-5050-6.
\15\ See BOX IM-5050-13.
\16\ See BOX IM-5050-4.
\17\ See BOX Rule 5070.
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Pursuant to IM-5050-1(b), 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 will be $1 or greater when the
strike price is $200 or less and $5 or greater where the strike price
is over $200.\18\ Additionally, BOX may list series of options pursuant
to the $1 Strike Price Interval Program,\19\ the $0.50 Strike
Program,\20\ the $2.50 Strike Price Program,\21\ and the $5.00 Strike
Program.\22\ Pursuant to Rule 7050, where the price of a series of
options on a Commodity-Based Trust 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.\23\ Any and all new series
of options on a Commodity-Based Trust Share that BOX lists will be
consistent and comply with the expirations, strike prices, and minimum
increments set forth in Rules 5050 and 7050, as applicable. Further,
the Exchange notes that Rule Series 10100, which governs margin
requirements applicable to the trading of all options on BOX, including
options on ETFs, will also apply to the trading of options on a
Commodity-Based Trust Share.
---------------------------------------------------------------------------
\18\ 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, IM-5050-6, IM-
5050-13, and IM-5050-4, specifically set forth intervals between
strike prices on Short Term Option Series, Monthly Options Series,
and Quarterly Options Series, respectively.
\19\ See BOX IM-5050-2.
\20\ See BOX IM-5050-5.
\21\ See BOX IM-5050-3.
\22\ See BOX Rule 5050(d)(5).
\23\ If options on a Commodity-Based Trust Share are eligible to
participate in the Penny Interval Program, the minimum increment of
$0.01 below $3.00 and $0.05 above $3.00 would apply. See BOX Rule
7050(a)(3). See also BOX Rule 7260 (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 BOX. The Exchange Rules that
currently apply to the listing and trading of all options on ETFs on
BOX, 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 BOX in the same manner as they apply to
other options on all other ETFs that are listed and traded on BOX.
Position and exercise limits for options, including options on a
Commodity-Based Trust Share are determined pursuant to Rules 3120 and
3140, 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.\24\
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\24\ See BOX Rules 3120(d) and 3140(c).
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The Exchange represents that the surveillance procedures applicable
to all other options on ETFs will apply to options on Commodity-Based
Trust Shares, and that the Exchange has the necessary systems capacity
to support the new option series. The Exchange's existing surveillance
and reporting safeguards are designed to deter and detect possible
manipulative behavior which might arise from listing and trading
options on ETFs, including options on Commodity-Based Trust Shares.
Also, the Exchange may obtain trading information via the Intermarket
Surveillance Group (``ISG'') \25\ from other exchanges who are members
of the ISG. In addition, the Exchange has a Regulatory Services
Agreement with the Financial Industry Regulatory Authority (``FINRA'').
Pursuant to a multi-party 17d-2 joint plan, all options exchanges
allocate regulatory responsibilities to FINRA to conduct certain
options-related market surveillances. Further, the Exchange will
implement any new surveillance procedures it deems necessary to
effectively monitor the trading of options on Commodity-Based Trust
Shares. 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
options on a Commodity-Based Trust Share, up to the number of
expirations currently permissible under the Exchange 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 Participants 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 Trust Shares will be
available via OPRA \26\ and major market data vendors. The Exchange
notes that the Commission has previously approved generic listing
standards pursuant to Rule 19b-4(e) of the Act \27\ for ETFs based on
indexes that consist of stocks listed on U.S. exchanges.\28\ 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).\29\
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\25\ A complete list of the current members of the ISG, is
available at https://www.isgportal.org.
\26\ 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.
\27\ 17 CFR 240.19b-4(e).
\28\ 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).
\29\ 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-2004-05) (approving the listing and
trading of certain Vanguard International Equity Index Funds); and
44700 (August 14, 2001), 66 FR 43927 (August 21, 2001) (SR-Amex-
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 Commission thoroughly considered the structure of the
Commodity-Based Trust Shares, their usefulness to investors and to the
markets, and SRO rules that govern their trading. The Exchange believes
that allowing the listing of options overlying Commodity-Based
[[Page 20702]]
Trust Shares that are listed pursuant to Commission approval on
equities exchanges and applying Rule 19b-4(e) \30\ 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) \31\
would not, however, preclude the Exchange from submitting a separate
filing pursuant to Section 19(b)(2),\32\ requesting Commission approval
to list and trade options on a particular Commodity-Based Trust Share.
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\30\ 17 CFR 240.19b-4(e).
\31\ Id.
\32\ 15 U.S.C. 78s(b)(2).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \33\ in general, and furthers the objectives of Section
6(b)(5) of the Act \34\ in particular, in that it is designed to
promote just and equitable principles of trade, 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.
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\33\ 15 U.S.C. 78f(b).
\34\ 15 U.S.C. 78f(b)(5).
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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 BOX 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.\35\
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\35\ 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 8.
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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 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 all other securities listed and
traded on BOX. 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. 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.
Similar to 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 OTC market, which would increase market transparency
and enhance the process of price discovery conducted on BOX through
increased order flow to the benefit of all investors. As noted herein,
the Exchange already lists options on other commodity-based ETFs,\36\
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.
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\36\ See BOX Rule 5020(h)(iv).
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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 BOX.\37\
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, and margin requirements, will govern
the listing and trading of options on Commodity-Based Trust Shares in
the same manner.
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\37\ 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.\38\ 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 and national
market system based on competition and multiple listing.
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\38\ See supra note 6.
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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.
The Exchange believes the proposed deletion of IM-5020-1 will
remove impediments to and perfect the mechanism of a free and open
market and a national market system, because it will delete a now
unnecessary and duplicative definition of Commodity-Based Trust Shares
to conform with the changes proposed herein.
[[Page 20703]]
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 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 BOX'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 BOX as noted
previously.
Intramarket Competition: The Exchange does not believe the proposal
will impose any burden on intra-market 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.
Intermarket Competition: 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, Nasdaq ISE, Cboe, MIAX, NYSE ARCA, and NYSE American have
submitted proposals to adopt similar rules to allow them to list and
trade options on Commodity-Based Trust Shares without submitting a
separate proposed rule change.\39\
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\39\ Id.
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Furthermore, the Exchange notes that listing and trading options on
a Commodity-Based Trust Share on BOX 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 BOX 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 the proposed change to delete IM-
5020-1 will impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act because it seeks
to remove a now unnecessary and duplicative definition of Commodity-
Based Trust Shares to conform with the changes proposed herein.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received 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 (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 self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-BOX-2025-12 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-BOX-2025-12. 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-BOX-2025-12 and should be
submitted on or before June 5, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
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\40\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025-08547 Filed 5-14-25; 8:45 am]
BILLING CODE 8011-01-P
