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On October 18, the U.S. Securities and Exchange Commission (SEC) approved two significant documents allowing NYSE American LLC and Cboe Exchange, Inc. to list and trade options on spot Bitcoin ETFs.
NYSE American, a subsidiary of the NYSE Group primarily serving smaller companies, was formerly known as the American Stock Exchange (AMEX). It offers trading in stocks, options, and exchange-traded products (ETPs), providing opportunities for companies that may not meet the listing standards of the larger NYSE. Known for its focus on various asset options, including stocks and ETFs, it recently added spot Bitcoin ETFs to its offerings after receiving regulatory approval in January.
Cboe Exchange, formerly the Chicago Board Options Exchange, is one of the world’s largest and most renowned options exchanges, specializing in derivatives trading and known for its innovations in the options market. Cboe operates globally, offering not just options but also stock trading across multiple exchanges.
According to SEC memorandums released on Friday, the NYSE can now list and trade options on the Grayscale Bitcoin Trust (GBTC), Grayscale Bitcoin Mini Trust (BTC), and Bitwise Bitcoin ETF (BITB). Cboe has been authorized 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 SEC that on September 20, the SEC had approved a rule change proposal by Nasdaq ISE, LLC, allowing 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 specific timeframe. Many in the financial sector believe that allowing options on Bitcoin ETFs will attract more institutional investors to the cryptocurrency market, thereby increasing liquidity.
The SEC emphasized that options on Bitcoin ETFs will support hedging strategies, enhance liquidity, improve price accuracy, and reduce volatility in the underlying funds. Additionally, the SEC believes this will improve market transparency and efficiency for Bitcoin ETFs and related products.
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