Nasdaq ISE Applies to the SEC to Approve a 10-Fold Increase in Bitcoin ETF Options

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The proposal submitted by Nasdaq ISE to the U.S. Securities and Exchange Commission (SEC) aims to increase the position and exercise limits of iShares Bitcoin Trust (IBIT) ETF options, a move that may have significant implications for the Bitcoin market. Here are the main points of the proposal and its potential impact:

Proposal Details:

Increase in Position and Exercise Limits:

Current Limit: Currently, the position and exercise limit for IBIT ETF options is 25,000 contracts, which is the lowest restriction in the industry.

Proposal: Nasdaq ISE proposed to raise this limit to 250,000 contracts to accommodate the growing market influence and daily trading volume (39.4 million shares) of the IBIT ETF.

Comparison with Other ETFs' Limits:

Nasdaq ISE emphasized that the new limit would represent 2.89% of IBIT's outstanding shares, which is still lower than the limits of similar ETFs.

For example:

GLD (SPDR Gold Shares) has an options position limit that represents 8.17% of its outstanding shares.

SLV (iShares Silver Trust) has an options position limit that represents 4.8% of its outstanding shares.

BITO (ProShares Bitcoin Strategy ETF) has an options position limit that represents 23.22% of its outstanding shares.

Therefore, although the limit proposed is 250,000 contracts, it is relatively conservative compared to ETFs like GLD, SLV, and BITO.

Purpose of the Proposal:

The increase in options limit is intended to enhance market liquidity and allow institutional investors to better manage risk. This change may further enhance the market depth and trading efficiency of the IBIT ETF. Nasdaq ISE also noted that this change aims to better reflect the market influence of IBIT, especially when its market capitalization reaches $46.8 billion.

Potential Impact:

Enhanced Market Liquidity:

After the increase in options limits, market liquidity will be significantly enhanced, allowing investors, especially institutional investors, to manage risks and allocate capital more flexibly. Higher liquidity helps improve trading efficiency and reduce transaction costs.

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