On October 18, the U.S. Securities and Exchange Commission (SEC) approved two key filings allowing the listing and trading of options on spot Bitcoin Exchange-Traded Funds (ETFs) by both NYSE American LLC and Cboe Exchange, Inc.
NYSE American LLC is a subsidiary of the New York Stock Exchange (NYSE) Group and primarily caters to small-cap companies. It was formerly known as the American Stock Exchange (AMEX) and offers trading in equities, options, and Exchange-Traded Products (ETPs). Its platform provides an opportunity for companies that might not meet the listing criteria of the larger NYSE exchange. The exchange is known for its focus on options trading across various assets, including stocks and ETFs, recently expanding to include spot Bitcoin ETFs following regulatory approval in January.
Cboe Exchange, Inc., formerly known as the Chicago Board Options Exchange, is one of the largest and most prominent options exchanges globally. It specializes in derivatives trading and is particularly well-known for its innovation in the options market. The exchange operates in various markets worldwide, offering not only options but also equity trading across multiple exchanges.
As outlined in two memos released by the SEC on Friday, the NYSE can now list and trade options for the Grayscale Bitcoin Trust (GBTC), Grayscale Bitcoin Mini Trust (BTC), and Bitwise Bitcoin ETF (BITB). Cboe Exchange has received approval to offer options trading on the Fidelity Wise Origin Bitcoin Fund (FBTC) and ARK 21Shares Bitcoin ETF (ARKB).
In their rule change proposals, both exchanges reminded the Commission that on September 20, it had approved a rule change proposal by Nasdaq ISE, LLC to allow the listing and trading of options on another spot Bitcoin ETF, the iShares Bitcoin Trust (IBIT).
Options are financial derivatives that provide the right to buy or sell an asset, in this case, Bitcoin ETFs, at a predetermined price within a certain time frame. Many in the financial community expect that allowing options on Bitcoin ETFs will draw more institutional investors to the crypto market while also boosting liquidity.
In its approval for the NYSE, the SEC emphasized that options on Bitcoin ETFs will support hedging strategies, promote greater liquidity, and improve price accuracy while reducing volatility for the underlying funds. Additionally, the SEC believes this will lead to better market transparency and efficiency for both Bitcoin ETFs and correlated products.
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