Nasdaq, Cboe apply to offer BTC ETF options trading, get fast response

The United States Securities and Exchange Commission (SEC) on Jan. 19 acknowledged Nasdaq and Cboe proposals to begin trading options on Bitcoin (BTC) exchange-traded funds (ETFs).

Nasdaq filed for a rule change to allow it to list and trade options on BlackRock’s iShares Bitcoin Trust. Cboe applied to trade options on “ETPs [exchange-traded products] that Hold Bitcoin.” Cboe launched six of the ten BTC ETFs approved by the SEC.

BTC ETFs began trading on Nasdaq and Cboe on Jan. 11, after receiving approval from the SEC a day earlier. Cboe executive vice president Catherine Clay told CNBC on Jan. 18 the exchange was seeing “good inflows” into the BTC ETFs, which continued to track the price of BTC “as expected.”

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Clay called options “the next logical step on the [BTC] ETFs.” She said BTC ETF options trading would add utility and risk mitigation to the products. Nasdaq said in its filing that options would offer “cost efficiencies and increased hedging strategies.”

Options are a derivative that allows the holder to buy or sell an asset at a predetermined price at a predetermined time. VettaFi analyst Dave Nadig told CNBC on Jan. 17:

“I think you’re going to start seeing all sorts of hedge fund players in the [BTC ETF options] space. Folks that might not have been traditionally speculating on crypto directly in the crypto ecosystem are now going to have something to play with.”

Cboe filed for permission to list options “last week,” Clay said, and “We’re really in this holding pattern to see what the regulators will do with our filing and other exchanges’ filings as well. […] It’s really difficult to know if we will even see approval.”

The SEC has already acknowledged the 19b-4's requesting the ability to trade options on spot #Bitcoin ETFs. This is faster than SEC typically moves. Options could be approved before end of February if SEC wants to move fast?...

AT ABSOLUTE EARLIEST options still ~27+ days away pic.twitter.com/ohbvHgP2uO

— James Seyffart (@JSeyff) January 19, 2024

Cboe’s options clearing corporation had to make similar filings with the SEC and Commodity Futures Trading Commission, Clay added.

Bloomberg ETF analyst James Seyffart commented on the unusual speediness of the Nasdaq announcement. It would be possible that options trading approval could come before the end of February, and by around Sept. 21, 2024, at the latest.

The proposals will be open for comment for 21 days after their publication in the Federal Register.

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