SEC Approves Nasdaq and Cboe Proposals to Launch Bitcoin ETF Options Trading
Summary:
The United States Securities and Exchange Commission (SEC) has accepted proposals from Nasdaq and Cboe to kickstart options trading on Bitcoin (BTC) exchange-traded funds (ETFs). The approval came after Nasdaq's request to allow the listing and trading of options linked to BlackRock’s iShares Bitcoin Trust. Cboe also asked to trade options on Bitcoin-holding exchange-traded products, backing six out of the ten approved BTC ETFs. With ETFs mirroring BTC prices as expected, the addition of options trading would introduce cost efficiencies and diversify hedging strategies. The proposals now await public feedback for three weeks.
On January 19, the United States Securities and Exchange Commission (SEC) ratified proposals from Nasdaq and Cboe to initiate options trading on Bitcoin (BTC) exchange-traded funds (ETFs). Nasdaq proposed a rule adjustment to enable the listing and trading on options related to BlackRock’s iShares Bitcoin Trust. Likewise, Cboe requested the authority to trade options on "exchange-traded products (ETPs) storing Bitcoin”. Cboe has launched 60% of the ten BTC ETFs approved by SEC.
BTC ETFs started to be traded on Cboe and Nasdaq as of January 11, following SEC's approval the preceding day. Catherine Clay, Cboe's executive vice president, informed CNBC on January 18 that the exchange was witnessing considerable flow into the BTC ETFs, which were continually mirroring the price of BTC as predicted.
As Bitcoin-coupled Strategy ETFs are about to be removed by VanEck due to lackluster performance and dwindling investor engagement, Clay labeled options as the progressive step for BTC ETFs. She opined that the inclusion of options trading to BTC ETFs would incorporate utility and risk reduction. Nasdaq's filing indicated that options would bring about cost-effectiveness and amplified hedging strategies.
Options, a type of derivative, grant the holder the liberty to buy or sell an asset at a set price at a specified time. Dave Nadig, a VettaFi analyst, explained to CNBC on January 17, how the BTC ETF options market would attract hedge funds which have until now not ventured into direct speculation on crypto in the crypto domain.
Cboe's request to list options was filed "last week", according to Clay, and the decision of the regulators about the proposal and that from other exchanges is eagerly anticipated. Clay also highlighted the uncertainty around approval. The SEC has confirmed receipt of the 19b-4's seeking permission to trade options on BTC ETFs. Seyffart, an ETF analyst with Bloomberg, noted the unusual speed of the announcement from Nasdaq. It is speculated that approval for options trading might arrive by the end of February or latest by September 21, 2024.
The proposals will be accessible for public comment for a span of 21 days once they are documented in the Federal Register. Eric Balchunas, the acclaimed Bitcoin ETF expert, has proved naysayers wrong, receiving recognition in the X Hall of Flame.
Published At
1/20/2024 1:23:54 AM
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