Nasdaq ISE Seeks SEC Approval to Raise BlackRock’s IBIT Options Trading Limits

Nasdaq ISE, LLC, the Nasdaq-owned options exchange, has submitted a proposal to the US SEC (Securities and Exchange Commission) to significantly increase the position and exercise limits for options on BlackRock’s iShares Bitcoin Trust ETF (IBIT).

The proposal seeks to raise the current cap of 25,000 contracts to 250,000, citing growing trading volumes and liquidity in IBIT options as justification.

In its filing, Nasdaq ISE cited IBIT’s rapid growth and institutional appeal. Specifically, it cited a market capitalization of $46.8 billion and an average daily trading volume of 39.4 million shares. According to the exchange, these metrics reflect the need for higher trading limits to better accommodate demand from large-scale investors.

The proposal borrows a leaf from the New York Stock Exchange (NYSE), which proposed extending Bitcoin ETFs (exchange-traded funds) trading hours in October. As BeInCrypto reported, NYSE Arca cited growing demand.

For Nasdaq ISE, however, the proposed increase would bring IBIT options limits in line with — or even below — comparable ETFs. For example, SPDR Gold Shares (GLD) and iShares Silver Trust (SLV) have higher position limits relative to their respective floats. ISE noted that a position limit in GLD represents 8.17% of its float, while SLV stands at 4.8%.

By contrast, the proposed IBIT limit of 250,000 contracts would represent only 2.89% of the ETF’s total shares. Comparing it to the ProShares Bitcoin Strategy ETF (BITO), whose position limits account for 23.22% of its float further bolsters this conservative approach.

If approved, the new limits could significantly enhance market liquidity. It would also provide institutional players with greater flexibility to hedge their Bitcoin-related positions.

“The Exchange believes that increasing the position (and exercise) limits for IBIT options would lead to a more liquid and competitive market environment,” the ISE stated.

The SEC has 45 days to evaluate the proposal, after which it may approve, disapprove, or initiate further proceedings. Meanwhile, since its approval four months ago, IBIT has steadily gained traction among institutional investors. On its first day of trading, BlackRock’s Bitcoin ETF options saw sales exceeding $425 million, reflecting the pent-up demand for regulated Bitcoin exposure.

The SEC’s green light for IBIT options trading last September was a pivotal moment. It provided investors with a regulated avenue to hedge against Bitcoin price fluctuations. Nasdaq ISE’s latest proposal builds on that momentum, aligning with broader industry efforts to integrate digital assets into traditional finance.

Nasdaq’s move to expand IBIT options trading is part of a broader strategy to increase its digital asset offerings. In August, it also sought to offer options trading on BlackRock’s Spot Ethereum ETF. The exchange also plans to seek approval for Bitcoin options trading tied to the CME CF Bitcoin Real-Time Index. This step mirrors similar initiatives by the NYSE.

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