The US Securities and Exchange Commission (SEC) has granted a go-ahead to the Latest York Stock Exchange (NYSE) and Chicago Board Options Exchange (Cboe) to list options trading for several spot Bitcoin ETFs. This development comes amidst the large inflows recorded by these Bitcoin ETFs previously week.
NYSE And Cboe Secure Accelerated Approval For Spot Bitcoin ETF Options Trading
Based on filings by the SEC, NYSE and Cboe have obtained permission to list and trade options on multiple spot Bitcoin ETFs.
Based on NYSE’s proposed rule change, the US securities regulator has allowed the exchange to offer options trading for Grayscale Bitcoin Trust (GBTC), Grayscale Bitcoin Mini Trust BTC (BTC), and Bitwise Bitcoin ETF (BITB). Meanwhile, Cboe has been greenlighted to list and trade options on the Fidelity Sensible Origin Bitcoin Fund (FBTC) and the ARK 21Shares Bitcoin ETF (ARKB).
Interestingly, each exchanges gained “accelerated approval” from the Commission which suggests authorization was granted before the same old 30-day public comment period on the proposed amendments had elapsed in line with Section 19(b)(2) of the Securities Exchange Act of 1934.
Nonetheless, an accelerated approval often happens when the Commission decides that waiting for a full 30 days shouldn’t be crucial for the general public protection of market stability or there’s a great cause to fast-track the method as within the case of NYSE and Cboe.
Commenting on this development, Bloomberg Analyst Eric Balchumas has expressed no surprise although applauding the SEC’s decision. Balchunas said:
They approved same thing for Nasdaq recently so not an enormous surprise but still excellent news as SEC was big hurdle. We hearing good things in regards to the remainder of process altho exact timeline for listing date 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 primary approval for spot Bitcoin ETF options trading and got here nine months after application with the SEC.
What Potential Does Options Trading Bring To Spot Bitcoin ETFs?
Options trading refers to purchasing and selling contracts that grant traders the correct but not the duty to purchase or sell an asset e.g.ETF at a predetermined price, albeit inside a selected time-frame. With six of the energetic spots of Bitcoin ETFs eligible for options trading, investors in these institutional funds are exposed to latest trading strategies by way of hedging against volatility or evening leveraging on Bitcoin’s price movement.
Bitwise executive Jeff Park sheds more light on these in what he calls “free leverage”. Park said:
ETF options may have cross-margining capabilities in multi-asset portfolios, which single-asset exchanges like Derbit can never provide. Only spot ETF options can leverage your GLD, SPY, HYG ETFs, bonds, and cross-margin to realize uncharted capital efficiency-the closest thing to free leverage.
Ultimately, this can end in increased institutional interest in an already booming spot Bitcoin ETF market which boasts over $65 billion in total net assets in ten months of trading.
Featured image from Forbes, chart from Tradingview