The United States Securities and Exchange Commission (SEC) has granted approval to the New York Stock Exchange Stock Exchange (NYSE) and Chicago Board Options Exchange (Cboe) to list trading options for various spot bitcoin ETFs. This development comes amid massive inflows recorded by these bitcoin ETFs last week.
NYSE and Cboe Secure Accelerated Approval for Spot bitcoin ETF Options Trading
According to SEC filings, NYSE and Cboe were granted permission to list and trade options on multiple spot bitcoin ETFs.
Based on rule change proposed by the NYSE, the US securities regulator. has allowed The exchange will provide trading options for Grayscale bitcoin Trust (GBTC), Grayscale bitcoin Mini Trust btc (btc), and Bitwise bitcoin ETF (BITB). Meanwhile, Cboe has been authorized to quote and trade options on the Fidelity Wise Origin bitcoin Fund (FBTC) and the ARK 21Shares bitcoin ETF (ARKB).
Interestingly, both exchanges obtained “expedited approval” from the Commission, meaning that authorization was granted before the usual 30-day public comment period on the proposed amendments under Section 19(b) had elapsed (2 ) of the Securities Exchange Act of 1934.
However, an expedited approval typically occurs when the Commission decides that waiting a full 30 days is not necessary for the public's protection of market stability or there is good cause to expedite the process, as in the case of the NYSE and Cboe.
Commenting on this development, Bloomberg analyst Eric Balchumasx.com/EricBalchunas/status/1847384202440036828″ target=”_blank” rel=”noopener nofollow”> has expressed Not surprising, although he applauds the SEC's decision. Balchunas said:
They recently approved the same thing for Nasdaq, so it's not a huge surprise, but it's still good news since the SEC was a big hurdle. We've heard good things about the rest of the process, although the exact timeline for the listing date is still unclear.
Before NYSE and Cboe, the SEC had approved Nasdaq to list and trade options on the BlackRock iShares bitcoin Trust (IBIT). This represents the first approval for spot bitcoin ETF options trading and came nine months after the SEC application.
What potential does options trading bring to spot bitcoin ETFs?
Options trading refers to buy and sell contracts that give traders the right, but not the obligation, to buy or sell an asset, e.g. ETF, at a predetermined price, albeit within a specific time period. . Since six of the bitcoin ETFs' active spots are eligible for options trading, investors in these institutional funds are exposed to new trading strategies in terms of hedging against volatility or overnight leverage of bitcoin price movement.
Jeff Park, Bit by Bit Executive x.com/dgt10011/status/1847385905663004837″ target=”_blank” rel=”noopener nofollow”>shed more light on these in what he calls “free leverage.” park said:
ETF options will have cross-margining capabilities on multi-asset portfolios, which single-asset exchanges like Derbit will never be able to offer. Only spot ETF options can leverage your GLD, SPY, HYG, bond and cross-margin ETFs to achieve untapped capital efficiency – the closest thing to free leverage.
Ultimately, this will result in increased institutional interest in an already booming bitcoin ETF spot market that boasts over $65 billion in total net assets in ten months of trading.
Featured image from Forbes, chart from Tradingview
