Nasdaq ISE, LLC, the options exchange owned by Nasdaq, has submitted a proposal to the US SEC (Securities and Exchange Commission). This proposal aims to significantly raise the position and exercise limits for options on BlackRock’s iShares Bitcoin Trust ETF (IBIT).
Currently, the cap is set at 25,000 contracts. Nasdaq wants to increase it to 250,000. They believe this adjustment is necessary due to the growing trading volumes and liquidity in IBIT options.
In their filing, Nasdaq ISE pointed out IBIT’s impressive growth and its appeal to institutional investors. They noted a market capitalization of $46.8 billion and an average daily trading volume of 39.4 million shares. These numbers show a clear need for higher trading limits to meet the demand from large investors.
This proposal takes cues from the New York Stock Exchange (NYSE), which suggested extending trading hours for Bitcoin ETFs last October due to increasing demand. Nasdaq’s proposed increase would align IBIT options limits with those of similar ETFs. For example, SPDR Gold Shares (GLD) and iShares Silver Trust (SLV) have higher position limits relative to their floats. Nasdaq ISE highlighted that a position limit in GLD represents 8.17% of its float, while SLV stands at 4.8%.
If the SEC approves these new limits, it could greatly enhance market liquidity. It would also give institutional players more flexibility to hedge their Bitcoin-related positions. The ISE stated, “The Exchange believes that increasing the position (and exercise) limits for IBIT options would lead to a more liquid and competitive market environment.”
The SEC has 45 days to review the proposal. They can either approve, disapprove, or initiate further proceedings. 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. This reflects the strong demand for regulated Bitcoin exposure.
The SEC’s green light for IBIT options trading last September was a major milestone. It provided investors with a regulated way to hedge against Bitcoin price fluctuations. Nasdaq ISE’s latest proposal builds on this 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 larger strategy to increase its digital asset offerings. In August, they also sought to offer options trading on BlackRock’s Spot Ethereum ETF. They plan to seek approval for Bitcoin options trading tied to the CME CF Bitcoin Real-Time Index, mirroring similar initiatives by the NYSE.