Pursuant to Section 19(b)(1) ^[1] of the Securities Exchange Act of 1934 (“Act”) ^[2] and Rule 19b-4 thereunder,^[3] notice is hereby given that, on August 15, 2025, NYSE Arca, Inc. (“NYSE Arca” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to amend Rule 6.8-O (Position Limits) regarding the position limits for options on iShares Bitcoin Trust ETF (“IBIT”). The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change

1. Purpose

The Exchange proposes to amend Rule 6.8-O (Position Limits) regarding the position limits for options on IBIT. Specifically, the proposed rule change amends Rule 6.8-O, Commentary .06(f) to delete the 25,000-contract position limit on IBIT options. As a result, the position limits for IBIT options would be determined in accordance with Rule 6.8-O, Commentary .06(a)-(e) and be based on trading in IBIT during the most-recent six-month period.^[4] This is a competitive filing based on a substantially identical proposal ( printed page 41463) submitted by Nasdaq ISE, LLC (“ISE”) and approved by the Securities and Exchange Commission (“Commission”).^[5]

IBIT is an Exchange-Traded Fund (“ETF”) that holds bitcoin and is listed on The Nasdaq Stock Market LLC.^[6] In September 2024, ISE received approval to list options on IBIT.^[7] On November 22, 2024, the Commission noticed the Exchange's filing and immediate effectiveness of a proposed rule change to list and trade IBIT options.^[8] The position and exercise limits for IBIT options are 25,000 contracts as set forth in Rule 6.8-O, Commentary .06(f), the lowest limit available in equity options.^[9]

Per the Commission “rules regarding position and exercise limits are intended to prevent the establishment of options positions that can be used or might create incentives to manipulate or disrupt the underlying market so as to benefit the options positions.” ^[10] For this reason, the Commission requires that “position and exercise limits must be sufficient to prevent investors from disrupting the market for the underlying security by acquiring and exercising a number of options contracts disproportionate to the deliverable supply and average trading volume of the underlying security.” ^[11] Based on its review and analysis of IBIT data, the Commission concluded that the 25,000-contract position limit for IBIT options satisfied these objectives.^[12]

While the Exchange proposed a 25,000-contract position limit in its rule filing to list and trade IBIT options, it nonetheless believes that evidence existed to support a much higher position limit. Specifically, when the Commission approved ISE's proposal to permit the listing and trading of IBIT options, it considered and reviewed ISE's data analysis that the exercisable risk associated with a position limit of 25,000 contracts represented only 0.4% of the outstanding shares of IBIT.^[13] The Commission stated that it also considered and reviewed ISE's statement that with a position limit of 25,000 contracts on the same side of the market for IBIT options and 611,040,000 shares of IBIT outstanding, 244 market participants would have to simultaneously exercise their positions to place IBIT under stress.^[14] Based on this review, the Commission concluded that the 25,000-contract position and exercise limit for IBIT options were designed to prevent investors from disrupting the market for the underlying security by acquiring and exercising a number of options contracts disproportionate to the deliverable supply and average trading volume of the underlying security, and to prevent the establishment of options positions that can be used or might create incentives to manipulate or disrupt the underlying market so as to benefit the options position.^[15]

IBIT currently qualifies for a 250,000-limit on same-side contracts pursuant to Rule 6.8-O, Commentary .06(e)(i), which requires that trading volume for the underlying security in the most-recent six months be at least 100 million shares.^[16] As of November 25, 2024, the market capitalization for IBIT was $46,783,480,800 ^[17] with an average daily volume (“ADV”), for the preceding three months prior to November 25, 2024, of 39,421,877 shares. Therefore, IBIT is well-above the requisite 100 million shares necessary to qualify for the 250,000-contract position and exercise limit. Also, as of November 25, 2024, there were 19,787,762 bitcoins in circulation.^[18] At a price of $94,830 per bitcoin,^[19] that equates to a market capitalization of greater than $1.876 trillion. If a position limit of 250,000 contracts were considered, the exercisable risk would represent 2.89% ^[20] of IBIT shares outstanding. Given IBIT's liquidity, the current 25,000-contract position and exercise limit on IBIT options is extremely conservative.

As noted above, position and exercise limits are designed to limit the number of options contracts traded on an exchange in an underlying security that an investor, acting alone or in concert with others directly or indirectly, may control. These limits, which are described in Rules 6.8-O and 6.9-O, are intended to address potential manipulative schemes and adverse market impacts surrounding the use of options, such as disrupting the market in the security underlying the options. Position and exercise limits must balance concerns regarding mitigating potential manipulation and the cost of inhibiting potential hedging activity that could be used for legitimate economic purposes.

To achieve this balance, the Exchange proposes to remove IBIT (and the associated 25,000-contract limit) from the table of position limits in Commentary .06(f), which would enable IBIT options to trade in the same manner as options on other ETFs not included in this Commentary.^[21] Specifically, this proposal would result in an increased position and exercise limit for IBIT options from 25,000 to 250,000 same-side contacts, pursuant to Commentary .06(e)(i). In addition, like options on other ETFs not listed in Commentary .06(f), position limits for IBIT options would be subject to subsequent six-month reviews to determine future position and exercise limits.^[22]

With respect to IBIT options, in its filing proposing to amend the position and exercise limits for IBIT options, ISE considered IBIT's market capitalization and ADV measured against those of ( printed page 41464) other underlying securities, as well as the position limit of 250,000 contracts in relation to the position limits of other options.^[23] In measuring IBIT against other securities, ISE aggregated market capitalization and volume data for securities that have defined position limits utilizing data from The Options Clearing Corporations (“OCC”).^[24] This pool of data took into consideration 3,897 options on single stock securities, excluding broad-based ETFs.^[25] Next, ISE aggregated the data based on market capitalization and ADV and grouped option symbols by position limit utilizing statistical thresholds for ADV, based on 90 days, and market capitalization that were one standard deviation above the mean for each position limit category ( i.e., 25,000, 50,000 to 65,000, 75,000, 100,000 to less than 250,000, and 250,000).^[26] Rule 6.8-O sets out position limits for various contracts. For example, on the Exchange, like ISE, a 25,000-contract position limit applies to options with an underlying security that does not meet the requirements for a higher options contract position limit.^[27] ISE performed an exercise to demonstrate the IBIT options position limit relative to other options symbols in terms of market capitalization and ADV. For reference, the market capitalization for IBIT was $46,783,480,800 ^[28] with an ADV, for the preceding three months prior to November 25, 2024, of 39,421,877 shares. By comparison, ISE determined that if IBIT were compared to the 1,934 stocks underlying options that have position limits of 250,000 contracts (and less than 500,000 contracts), IBIT would rank in the 88th percentile for market capitalization and the 99th percentile for ADV.

ISE also analyzed a position limit of 250,000 contracts for IBIT by regressing the market capitalization figures and 90-day ADV of all non-ETF equities, against their respective position limit figures. From this regression, ISE indicated it determined the implied coefficients to create a formulaic method for determining an appropriate position limit. In this case, the modeled position limit was 565,796 contracts.^[29] Based on this analysis, the Exchange believes the proposed rule change that would result in a 250,000-contract position and exercise limit for IBIT is appropriate.

In addition, ISE reviewed IBIT's data relative to the market capitalization of the entire bitcoin market in terms of exercise risk and availability of deliverables. As noted above, as of November 25, 2024, there were 19,787,762 bitcoins in circulation.^[30] ISE took a price of $94,830 per bitcoin,^[31] that equates to a market capitalization of greater than $1.876 trillion. If a position limit of 250,000 contracts were considered, the exercisable risk would represent only 2.89% ^[32] of the outstanding shares outstanding of IBIT. Since IBIT has a creation and redemption process managed through the issuer (whereby bitcoin is used to create IBIT shares), the position sought limit can be compared to the total market capitalization of the entire bitcoin market, and in that case, ISE determined that the exercisable risk for options on IBIT would represent less than 0.072% of all bitcoin outstanding.^[33] Assuming a scenario where all options on IBIT shares were exercised given a 250,000-contract position and exercise limit, this would have a virtually unnoticed impact on the entire bitcoin market. This ISE analysis demonstrates that a 250,000-contract position (and exercise) limit for IBIT options is appropriate given its liquidity.

Next, ISE reviewed a position (and exercise) limit of 250,000-contracts for IBIT options by comparing it to position limits for derivative products regulated by the Commodity Futures Trading Commission (“CFTC”). While the CFTC, through the relevant Designated Contract Markets, only regulates options positions based upon delta equivalents (creating a less stringent standard), ISE examined equivalent bitcoin futures position limits. In particular, ISE looked to the Chicago Mercantile Exchange (“CME”) bitcoin futures contract,^[34] which has a position limit of 2,000 futures (for the initial spot month).^[35] On October 22, 2024, CME bitcoin futures settled at $94,945.^[36] On October 22, 2024, IBIT settled at $54.02, which would equate to greater than 17,557,898 shares of IBIT if the CME notional position limit was utilized. Since substantial portions of any distributed options portfolio are likely to be out of the money on expiration, an options position limit equivalent to the CME position limit for bitcoin futures (considering that all options deltas are <=1.00) should be a bit higher than the CME implied limit of 177,004. Of note, unlike options contracts, CME position limits are calculated on a net futures-equivalent basis by contract and include contracts that aggregate into one or more base contracts according to an aggregation ratio(s).^[37] If a position exceeds position limits because of an option assignment, CME permits market participants to liquidate the excess position within one business day without being considered in violation of its rules. Additionally, if at the close of trading, a position that includes options exceeds position limits for futures contracts, when evaluated using the delta factors as of that day's close of trading but does not exceed the limits when evaluated using the previous day's delta factors, then the position shall not constitute a position limit violation. The Exchange believes ISE's comparison to CME's position limits on bitcoin futures demonstrates that a 250,000-contract limit for IBIT options is appropriate.

Further, ISE analyzed a position and exercise limit of 250,000 for IBIT options against other options on ETFs with an underling commodity, namely SPDR Gold Shares (“GLD”), iShares Silver Trust (“SLV”), and ProShares Bitcoin ETF (“BITO”).^[38] GLD has a float of 306.1 million shares and a position ( printed page 41465) limit of 250,000 contracts.^[39] SLV has a float of 520.7 million shares and a position limit of 250,000 contracts.^[40] BITO has a float of 107.65 million shares and a position limit of 250,000 contracts.^[41] As previously noted, position and exercise limits are designed to limit the number of options contracts traded on the exchange in an underlying security that an investor, acting alone or in concert with others directly or indirectly, may control. A position limit exercise in GLD would represent 8.17% of the float of GLD; a position limit exercise in SLV would represent 4.8% of the float of SLV; and a position limit exercise in BITO would represent 23.22% of the float of BITO. In comparison, a 250,000-contract position limit in IBIT would represent only 2.89% of the float of IBIT. Consequently, a 250,000-contract position and exercise limit in IBIT options is more conservative than the standard applied to GLD, SLV, and BITO, and thus appropriate.

ISE also noted that IBIT options began trading in penny increments as of January 2, 2025 pursuant to the Penny Interval Program.^[42] The Commission noted that evidence contained in both the Exchanges' Report and the Cornerstone analysis demonstrates that the Penny Pilot has benefitted investors and other market participants in the form of narrower spreads.^[43] The most actively traded options classes are included in the Penny Program based on certain objective criteria (trading volume thresholds and initial price tests). As noted in the Penny Approval Order, the Penny Program reflects a certain level of trading interest (either because the class is newly listed or a class that experience a significant growth in investor interest) to quote in finer trading increments, which in turn should benefit market participants by reducing the cost of trading such options.^[44] IBIT options are among a select group of products that have achieved a certain level of liquidity that have garnered it the ability to trade in finer increments. Failing to increase position and exercise limits for IBIT options, now that it is trading in finer increments, may artificially inhibit liquidity and create price inefficiency.

The Exchange believes the above information and analysis by ISE demonstrates that IBIT has more than sufficient liquidity to garner an increased position and exercise limit of 250,000 same-side contracts. The Exchange believes that any concerns related to manipulation and protection of investors are mollified by the significant liquidity provision in IBIT. The Exchange states that, as a general principle, increases in active trading volume and deep liquidity of the underlying securities do not lead to manipulation and/or disruption.

The Exchange believes that allowing IBIT options to have increased position and exercise limits would lead to a more liquid and competitive market environment for such options, which will benefit customers that trade these options. Further, the reporting requirement for such options would remain unchanged. Thus, the Exchange will still require that each member that maintains positions in IBIT options on the same side of the market, for its own account or for the account of a customer, report certain information to the Exchange. This information includes, but would not be limited to, the options positions, whether such positions are hedged and, if so, a description of the hedge(s). Market Makers ^[45] would continue to be exempt from this reporting requirement, however, the Exchange may access Market Maker position information.^[46] Moreover, the Exchange's requirement that members file reports with the Exchange for any customer who held aggregate large long or short positions on the same side of the market of 200 or more option contracts of any single class for the previous day will remain at this level.^[47]

The Exchange also has no reason to believe that the growth in trading volume in IBIT options will not continue. Rather, the Exchange expects continued options volume growth in IBIT as opportunities for investors to participate in the options markets increase and evolve. The Exchange believes that the current position and exercise limits in IBIT options are restrictive and will hamper the listed options markets from being able to compete fairly and effectively with the over-the-counter (“OTC”) markets. OTC transactions occur through bilateral agreements, the terms of which are not publicly disclosed to the marketplace. As such, OTC transactions do not contribute to the price discovery process on a public exchange or other lit markets. The Exchange believes that without the proposed changes to position and exercise limits for IBIT options, market participants will find the 25,000-contract position and exercise limit an impediment to their business and investment objectives as well as an impediment to efficient pricing. As a result, market participants may find the less transparent OTC markets a more attractive alternative to achieve their investment and hedging objectives, leading to a retreat from the listed options markets, where trades are subject to reporting requirements and daily surveillance. The Exchange notes that, consistent with Rules 6.8-O and 6.9-O, the position (and exercise) limits for IBIT options would be reviewed on a six-month basis, as is done for other options.

The Exchange represents that its existing trading surveillances are adequate to monitor trading in IBIT options. Additionally, the Exchange is a member of the Intermarket Surveillance Group (“ISG”) under the ISG Agreement. ISG members work together to coordinate surveillance and investigative information sharing in the stock, options, and futures markets. In ( printed page 41466) addition to the surveillance that is conducted by the Exchange's market surveillance staff, the Exchange would also be able to obtain information regarding trading in shares of IBIT on other exchanges through ISG. In addition, and as referenced above, the Exchange has a regulatory services agreement with FINRA, pursuant to which FINRA conducts certain surveillances on behalf of the Exchange. Further, pursuant to a multi-party 17d-2 joint plan, all options exchanges allocate regulatory responsibilities to FINRA to conduct certain options-related market surveillances.^[48]

2. Statutory Basis

The Exchange believes that its proposal is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the “Act”),^[49] in general, and furthers the objectives of Section 6(b)(5) of the Act,^[50] in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.

In particular, the Exchange believes the proposed rule change will remove impediments to and perfect the mechanism of free and open market and a national market system, and, in general, protect investors and the public interest, because it will provide market participants with the ability to more effectively execute their trading and hedging activities. Also, based on current trading volume, the resulting increase in the position (and exercise) limits for IBIT options may allow Market Makers to maintain their liquidity in these options in amounts commensurate with the continued high consumer demand in IBIT options. Subjecting IBIT options to the position limits in Rule 6.8-O, Commentary .06 and corresponding exercise limits in Rule 6.9-O may also encourage other liquidity providers to continue to trade on the Exchange rather than shift their volume to OTC markets, which will enhance the process of price discovery conducted on the Exchange through increased order flow. The Exchange notes the proposed rule change would further allow institutional investors to utilize IBIT options for prudent risk management purposes.

In support of the proposed rule change, the Exchange cites the in-depth analysis ISE performed which, as noted above, considered, among other things: (1) IBIT's market capitalization and ADV, and a 250,000 contract position and exercise limit in relation to the position limits of options on other securities; (2) market capitalization of the entire Bitcoin market in terms of exercise risk and availability of deliverables; and (3) comparing a 250,000 contract position limit to position limits for derivative products regulated by the CFTC. Based on the Exchange's review of these analyses, and consistent with the ISE Approval Order, the Exchange believes that subjecting IBIT options to the position (and exercise) limits set forth in Rule 6.8-O, Commentary .06 (which may go up to 250,000 contracts) is more than appropriate.^[51]

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because all market participants would be subject to the same position and exercise limits for IBIT options. The Exchange does not believe the proposed rule change will impose any burden on intermarket competition, and may benefit competition, as the proposed rule change is identical to ISE's recently-approved rule change.^[52] The Exchange believes that the proposed rule change will also provide additional opportunities for market participants to continue to efficiently achieve their investment and trading objectives for equity options on the Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act ^[53] and Rule 19b-4(f)(6) thereunder.^[54] Because the proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) ^[55] of the Act and Rule 19b-4(f)(6)(iii) thereunder.^[56]

A proposed rule change filed under Rule 19b-4(f)(6) ^[57] under the Act does not normally become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),^[58] the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission previously approved the removal of the 25,000 contract position and exercise limits for IBIT, such that those funds will be subject to the position and exercise limits as ( printed page 41467) determined for equity options for which no set limit has been otherwise established on that exchange.^[59] The Exchange is proposing similarly to remove of the 25,000 contract position and exercise limit for IBIT, such that those funds will be subject to the position and exercise limits as determined by the position limit rules at Rule 6.8-O. The Exchange has provided information regarding IBIT, including, among other things, information regarding trading volume, and the market capitalization of IBIT and surveillance procedures that will apply. The Commission notes that the proposal raises no new or novel legal issues and would simply provide an additional venue for trading IBIT with position and exercise limits that may be higher than 25,000 contracts. Therefore, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposed rule change as operative upon filing.^[60]

At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) ^[61] of the Act to determine whether the proposed rule change should be approved or disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form (https://www.sec.gov/​rules/​sro.shtml); or
• Send an email torule-comments@sec.gov. Please include file number SR-NYSEARCA-2025-59 on the subject line.

Paper Comments

• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSEARCA-2025-59. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/​rules/​sro.shtml). Copies of the filing will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-NYSEARCA-2025-59 and should be submitted on or before September 15, 2025.