Key Street Shops
- Nasdaq ISE plans to increase IBIT options position and exercise limits by tenfold.
- The proposed change is driven by increased trading volumes and liquidity in IBIT.
Nasdaq ISE, LLC (ISE), the Nasdaq-owned options exchange, recently submitted a proposed amendment to the SEC to increase the position and exercise limits for options on the iShares Bitcoin Trust ETF (IBIT) from 25,000 to 250,000 contracts.
The current position and exercise limits for IBIT options are considered low limits available in options trading. The proposalpending SEC approval, it is aimed at serving the increased trading volume and liquidity of IBIT, the world’s leading fund that holds Bitcoin.
The exchange said increasing the limits to 250,000 contracts is justified given IBIT’s market cap of $46.8 billion and average daily trading volume of 39.4 million shares.
The proposed limit would be only 2.89% of IBIT shares, which is much lower than similar ETFs such as SPDR Gold Shares (GLD) and iShares Silver Trust (SLV), both of which have relatively higher percentage limits with its floats, according. SHE.
“Position limit exercise in GLD is 8.17% of the GLD float; position limit exercise in SLV was 4.8% of SLV float, and BITO position limit exercise was 23.22% of BITO float,” ISE wrote. “As a result, the 250,000 position proposed by IBIT and the exercise limit is more conservative than the standard applied to GLD, SLV and BITO, and is appropriate.”
If approved, the proposed change would promote market liquidity and enable institutional investors to better manage risk. The SEC has 45 days to approve or disapprove the changes, or initiate proceedings to determine whether the proposal should be rejected.
“The Exchange believes that this will lead to a more liquid and competitive market environment for IBIT options, which will benefit customers trading those options,” ISE said in the filing.
Last September, the SEC endorsement rule changes allowing Nasdaq ISE to list and trade options on IBIT BlackRock. The move enables investors to hedge against Bitcoin price fluctuations under strict regulatory oversight.
Nasdaq also announced plans to seek approval for Bitcoin options trading, which aims to expand its digital asset offerings by tracking the CME CF Bitcoin Real-Time Index, following a similar move by the NYSE.
