The FIA Principal Traders Group filed with the Securities Exchange Commission urging the agency to approve the Exchange's proposed position and exercise limit increases for options on iShares Bitcoin Trust ETF.
FIA PTG members, among the most active liquidity providers in option markets, believe “that increasing the position (and exercise) limits for IBIT options would lead to a more liquid and competitive market environment for IBIT options, which will benefit customers that trade these options."
Read the letter below or with footnotes.
January 27, 2025
Vanessa Countryman
Secretary
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Nasdaq ISE, LLC; Notice of Filing of Proposed Rule Change to Increase the Position and Exercise Limits for iShares Bitcoin Trust ETF
(Release No. 34-102065; File No. SR-ISE-2024-62)
Dear Ms. Countryman:
The FIA Principal Traders Group (“FIA PTG”)1 appreciates the opportunity to submit this letter to the Securities and Exchange Commission (“SEC” or the “Commission”) in response to the above-referenced Nasdaq ISE, LLC (“ISE” or “Exchange”) proposed rule change (the “Proposal”). For the reasons below, FIA PTG supports the proposed increase to the position and exercise limits for options on iShares Bitcoin Trust ETF (“IBIT”) from 25,000 to 250,000 contracts.
FIA PTG members are among the most active providers of liquidity to options markets including IBIT options. Our members believe “that increasing the position (and exercise) limits for IBIT options would lead to a more liquid and competitive market environment for IBIT options, which will benefit customers that trade these options.” Participation in IBIT options may also be stifled if position limits are too low. Position limits must balance concerns regarding mitigating potential manipulation and the cost of inhibiting legitimate hedging activity. Consistent with the data included in the Proposal, we believe “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.” Finally, we concur with the Exchange that “increasing 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 market.
Accordingly, we urge the Commission to approve the rule change proposal. In addition, we urge the Exchange to continue to monitor the growth in this market, which we expect to continue, and to propose additional position limit increases as appropriate.
If you have any questions, please do not hesitate to contact Joanna Mallers at jmallers@fia.org.
Respectfully,
FIA Principal Traders Group
Joanna Mallers
Secretary
cc:
Mark T. Uyeda, Acting Chair
Hester M. Peirce, Commissioner
Caroline A. Crenshaw, Commissioner
