VanEck: Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 402, Criteria for Underlying Securities, To List and Trade Options on the VanEck Bitcoin Trust

Document headings vary by document type but may contain the following: See the Document Drafting Handbook for more details. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 ("Act"), [ 1 ] and Rule 19b-4 thereunder, [ 2 ] notice is hereby given that on April 1, 2025, MIAX Sapphire, LLC ("MIAX Sapphire" or "Exchange") filed with the Securities and Exchange Commission ("Commission") a proposed rule change ( printed page 16712) as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 proposes to amend [sic] Exchange Rule 402, Criteria for Underlying Securities to list and trade options on the iShares Ethereum [sic] Trust. The text of the proposed rule change is available on the Exchange's website at https://www.miaxglobal.com/ markets/ us-options/ miax-sapphire/ rule-filings , at the Exchange's principal office, and at the Commission's Public Reference Room. 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 Exchange 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 these 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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Exchange Rule 402, Criteria for Underlying Securities, [ 3 ] to allow the Exchange to list and trade options on the Trust, designating it as appropriate for options trading on the Exchange. [ 4 ] This is a competitive filing based on a similar proposal submitted by Cboe Exchange, Inc. ("Cboe"), which is currently pending with the Securities and Exchange Commission (the "Commission"). [ 5 ] Current Exchange Rule 402(i)(4) provides that, subject to certain other criteria set forth in that Rule, securities deemed appropriate for options trading include shares or other securities ("Exchange Traded Fund Shares" or "ETFs") that represent certain types of interests, [ 6 ] including interests in certain specific trusts that hold financial instruments, money market instruments, precious metals (which are deemed commodities). The Trust is a Bitcoin-backed commodity ETF structured as a trust. Similar to any ETF currently deemed appropriate for options trading under Exchange Rule 402(i)(4), the investment objective of the Trust is for its shares to reflect the performance of Bitcoin (less the expenses of the Trust's operations), offering investors an opportunity to gain exposure to Bitcoin without the complexities of Bitcoin delivery. As is the case for ETFs currently deemed appropriate for options trading, the Trust's shares represent units of fractional undivided beneficial interest in the trust, the assets of which consist principally of Bitcoin and are designed to track Bitcoin or the performance of the price of Bitcoin and offer access to the Bitcoin market. [ 7 ] The Trust provides investors with cost-efficient alternatives that allow a level of participation in the Bitcoin market through the securities market. The Exchange believes the Trust satisfies the Exchange's initial listing standards for ETFs on which the Exchange may list options. Specifically, the Trust satisfies the initial listing standards set forth in Exchange Rule 402(a), as is the case for other ETFs on which the Exchange lists options (including trusts that hold commodities). Exchange Rule 402(i)(5)(i) requires that the ETFs must either (1) meet the criteria and standards set forth in Exchange Rule 402(a) or 402(b), [ 8 ] or (2) be available for creation or redemption each business day from or through the issuer in cash or in kind at a price related to net asset value, and the issuer must be obligated to issue ETFs in a specified aggregate number even if some or all of the investment assets required to be deposited have not been received by the issuer, subject to the condition that the person obligated to deposit the investments has ( printed page 16713) undertaken to deliver the investment assets as soon as possible and such undertaking is secured by the delivery and maintenance of collateral consisting of cash or cash equivalents satisfactory to the issuer, as provided in the respective prospectus. The Trust satisfies Exchange Rule 402(i)(5)(i), as it is subject to this creation and redemption process. While not required by the Rules for purposes of options listings, the Exchange believes the Trust satisfies the criteria and guidelines set forth Exchange Rule 402(b). Pursuant to Rule 402(a), a security (which includes an ETF) on which options may be listed and traded on the Exchange must be registered (with the Commission) and be an NMS stock (as defined in Rule 600 of Regulation NMS under the Act, and be characterized by a substantial number of outstanding shares that are widely held and actively traded. [ 9 ] The Trust is an NMS Stock as defined in Rule 600 of Regulation NMS under the Act. [ 10 ] The Exchange believes the VanEck Bitcoin Trust is characterized by a substantial number of outstanding shares that are widely held and actively traded. As of March 5, 2025, based on the data presented in the Cboe Proposal, the Trust had the following number of shares outstanding: Further, the below table presented in the Cboe Proposal contains information regarding the number of beneficial holders of the Trust as of the specified dates: The Exchange also believes the shares of the Trust are actively traded. As of March 5, 2025, based on the data presented in the Cboe Proposal, the total trading volume (by shares) for the trust for the six-month period of September 5, 2024, through March 5, 2025, and the approximate average daily volume ("ADV") (in shares and notional) over the 30-day period of September 5, 2024, through March 5, 2025, for the Trust was as follows: As demonstrated above, as of March 5, 2025, based on the data presented in the Cboe Proposal, the six-month trading volume for the Trust as of that date was substantially higher than 2,400,000 shares (approximately 55 times that amount), which is the minimum 12-month volume the Exchange generally requires for an underlying security in order to list options on that security as set forth in Exchange Rule 402(b)(4). The Exchange believes this data demonstrates the Trust is characterized as having shares that are actively traded. Options on the Trust will be subject to the Exchange's continued listing standards set forth in Exchange Rule 403(g), for ETFs deemed appropriate for options trading pursuant to Exchange Rule 402(i). Specifically, Exchange Rule 403(g) provides that ETFs that were initially approved for options trading pursuant to Exchange Rule 402(i) shall be deemed not to meet the requirements for continued approval, and the Exchange shall not open for trading any additional series of option contracts of the class covering that such ETFs, if the ETFs cease to be an NMS stock or the ETFs, are delisted from trading pursuant to Exchange Rule 403(b)(4), are halted or suspended from trading in their primary market. Additionally, options on ETFs may be subject to the suspension of opening transactions in any of the following circumstances: (1) in the case of options covering ETFs approved for trading under Exchange Rule 402(i)(5)(i)(A), in accordance with the terms of paragraphs (b)(1), (2), and (3) of Exchange Rule 403; (2) in the case of options covering ETFs approved for trading under Exchange Rule 402(i)(5)(i)(B)(as is the case for the Trust), following the initial twelve-month period beginning upon the commencement of trading in the ETFs on a national securities exchange and are defined as an NMS stock, there are fewer than 50 record and/or beneficial holders of such ETFs for 30 or more consecutive trading days; (3) the value of the index or portfolio of securities, non-U.S. currency, or portfolio of commodities including commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/or options on physical commodities and/or financial ( printed page 16714) instruments and money market instruments on which the ETFs are based is no longer calculated or available; or (4) such other event shall occur or condition exist that in the opinion of the Exchange makes further dealing in such options on the Exchange inadvisable. Options on the Trust will be physically settled contracts with American-style exercise. [ 11 ] Consistent with current Exchange Rule 404, which governs the opening of options series on a specific underlying security (including ETFs), the Exchange will open at least one expiration month for options on the Trust [ 12 ] at the commencement of trading on the Exchange and may also list series of options on the Trust for trading on a weekly, [ 13 ] monthly, [ 14 ] or quarterly [ 15 ] basis. The Exchange may also list long-term equity option series ("LEAPS") that expire from 12 to 39 months from the time they are listed. [ 16 ] Pursuant to Exchange Rule 404, Interpretations and Policies .06, which governs strike prices of series of options on ETFs, the interval between strike prices of series of options on ETFs approved for options trading pursuant to Exchange Rule 402(i) shall be fixed at a price per share which is reasonably close to the price per share at which the underlying security is traded in the primary market at or about the same time such series of options is first open for trading on the Exchange, or at such intervals as