SEC allows NYSE to end 25,000-contract cap on crypto ETF options
The SEC waived a 30-day wait to let NYSE Arca and NYSE American remove 25,000-contract caps and price discovery limits on options for 11 Bitcoin and Ether ETFs, effective immediately.
The Securities and Exchange Commission (SEC) allowed NYSE Arca and NYSE American to eliminate the 25,000-contract position limit and certain price discovery restrictions on options linked to 11 Bitcoin and Ether exchange-traded funds, granting immediate effectiveness by waiving the usual 30-day waiting period.
The exchanges filed three rule changes in the Federal Register on March 10. The SEC acknowledged the filings and approved them for immediate effect, permitting larger positions and expanded trading formats on the two New York Stock Exchange-affiliated venues.
A total of 11 ETF options are covered, including BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity’s Wise Origin Bitcoin Fund (FBTC), and the ARK 21Shares Bitcoin ETF (ARKB). Options tied to Bitcoin and Ether ETFs offered by Bitwise and Grayscale are also included on NYSE Arca and NYSE American.
Position limits were set when crypto ETF options began trading in November 2024 to reduce risks of manipulation and volatility. The exchanges’ filings state the updates align treatment of crypto ETF options with standards applied to other commodity ETF options and provide greater trading flexibility for institutions.
The rule changes also allow these contracts to trade as FLEX options, which permit customized terms such as non-standard strike prices, expiration dates, and exercise styles.
The filings remove specified price-discovery constraints that were part of the initial guardrails for crypto ETF options.
In a separate action in late July, the SEC approved removing the 25,000-contract cap for options on the Grayscale Bitcoin Trust ETF (GBTC). A proposal from Nasdaq International Securities Exchange to remove position limits on Bitcoin ETF options remains under SEC review, per a Feb. 27 notice.
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