NYSE Arca Greenlights Options on Commodity Trust Shares
Published Date: 3/17/2025
Notice
Summary
NYSE Arca wants to let people trade options on Commodity-Based Trust Shares, which are like special investment bundles tied to commodities. This change affects investors and traders by opening up new ways to invest and trade starting soon after approval. It’s a smart move to keep up with competitors and could bring more trading action and money flow to the market.
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Analyzed Economic Effects
5 provisions identified: 4 benefits, 0 costs, 1 mixed.
Options Allowed on Commodity-Based Trust Shares
NYSE Arca proposes to amend Rule 5.3-O(g) to permit listing and trading of options on Commodity-Based Trust Shares (commodity-based ETF units). If approved, qualifying Commodity-Based Trust Shares that are listed on a national securities exchange could immediately become eligible as option underlyings under the Exchange's existing listing criteria.
Faster Market Access; Lower Time and Cost To Launch Options
The Exchange says the change would allow options on qualifying Commodity-Based Trust Shares to commence trading under the generic standards of Rule 19b-4(e) without a product-by-product Commission filing, which could reduce the time and costs to bring options on these ETF products to market.
Same Options Rules and Contract Details Apply
Options on Commodity-Based Trust Shares would trade under the same Exchange rules as other ETF options, including available expirations (weekly, monthly, quarterly, and LEAPS that expire 12 to 39 months), strike price intervals (at least $1 when strikes are $200 or less and $5 when strikes are over $200), and minimum increments (typically $0.05 when option price is under $3.00 and $0.10 at $3.00 or higher).
Position Limits and Margin Rules Apply
Position and exercise limits for options on Commodity-Based Trust Shares will follow Exchange Rules 6.8-O and 6.9-O, where the largest and most frequently traded funds may have an option position and exercise limit of 250,000 contracts on the same side of the market, and margin requirements under Rule 4.16-O will apply.
Exchange Listing Brings Transparency Versus OTC Trading
The Exchange states that listing options on Commodity-Based Trust Shares on an exchange (rather than trading in OTC markets) provides exchange-based transparency, price discovery, and order flow; existing surveillance, OPRA dissemination, and ISG/FINRA arrangements will apply to these listed options.
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