SEC Seeks Consultations Again on Bitcoin ETPs Trading Options Rule Change
Summary:
The U.S. Securities and Exchange Commission (SEC) is consulting again on a rule change proposal for trading options on Bitcoin exchange-traded products (ETPs). The aim is to understand potential market impact and investigate the adequacy of current exchange enforcement and surveillance mechanisms. Original feedback deadline is May 15, 2024, with rebuttals till May 29, 2024. Earlier feedback highlighted the positive impact on market efficiency and liquidity. Financial firms like Nasdaq and Cboe have proposed to trade Bitcoin options. Asset managers like Bitwise and Grayscale also apply for regulatory approval to list options on their Bitcoin ETFs.
The United States' primary regulator of securities, the Securities and Exchange Commission (SEC), is once again seeking feedback concerning potential changes to guidelines regarding trading options for Bitcoin exchange-traded products (ETPs). As per an official document filed on April 24, the aim of these consultations is to gain an in-depth understanding of the potential market ramifications, particularly in periods of heightened tension, of listing Bitcoin (BTC) options. The review also includes an inquiry into the sufficiency of the current enforcement and surveillance protocols of exchanges to effectively manage the distinctive characteristics associated with Bitcoin options. Obligatory initial feedback needs to be received within 21 days of the document's official registration, defining the final submission date as May 15, 2024, while retorts can be offered until May 29, 2024.
Bitcoin options, which are financial tools allowing the option holder the choice – not the requirement – to exchange Bitcoin at a pre-agreed price on a specified date, are typically employed by option-savvy traders acquainted with market fluctuations and option valuing. Comparable to other investment forms, option trading harbours certain risks, potentially making it incompatible for every type of investor.
Earlier consultations regarding the proposal yielded responses that the SEC included in the document. Many respondents emphasized that options for Bitcoin ETPs could stimulate liquidity and enhance market efficiency, with one commentator pointing out that "green-lighting the listing and trading of spot Bitcoin ETP options could broaden Bitcoin's inclusion in regulatory circulation by permitting further regulated market participants such as SEC-regulated broker-dealers and CFTC-regulated designated contract merchants to trade the products".
Several esteemed financial firms like Nasdaq and Cboe have appealed to the SEC for authorization to trade Bitcoin options. Nasdaq's request pertains to listing and trading options on the iShares Bitcoin Trust by BlackRock, while Cboe anticipates providing options trading on an assortment of Bitcoin-held ETPs. Prominent asset management firms like Grayscale and Bitwise are also seeking regulatory clearance to list options for their Bitcoin ETFs via applications to the New York Stock Exchange.
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Published At
4/25/2024 7:40:00 PM
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