MIAX Sapphire Adds Commodity Options: Another Layer of Trading Layers
Published Date: 3/19/2025
Notice
Summary
MIAX Sapphire wants to update its rules so it can offer options trading on Commodity-Based Trust Shares, which are special investment products tied to commodities like gold or oil. This change affects investors who trade options and could open up new ways to invest starting soon after approval. The Exchange fixed some small errors in their proposal and is now asking for public feedback before moving forward.
Analyzed Economic Effects
5 provisions identified: 5 benefits, 0 costs, 0 mixed.
Faster listing of options on commodity ETFs
If an ETF that is a Commodity-Based Trust Share meets the Exchange's initial listing criteria, MIAX Sapphire would be able to list and trade options on that ETF without any additional Commission approval, which can shorten the time and reduce the costs to bring those options to market.
Exchange-listed trading instead of OTC for commodity ETF options
The proposal would allow investors to trade options on Commodity-Based Trust Shares on a regulated exchange rather than in the unregulated OTC options market, which the Exchange says will increase market transparency, improve price discovery, and provide a lower-cost way to hedge exposure to commodity prices.
Standardized trading terms for commodity ETF options
Options on Commodity-Based Trust Shares will be physically settled, American-style and may be listed with weekly, monthly, quarterly, or LEAP expirations (LEAPS expire 12 to 39 months). Strike price intervals include short-term intervals (e.g., $0.50 where strike is under $100, $1 between $100–$150, $2.50 above $150) and minimum quoting increments of $0.05 when an option price is under $3.00 and $0.10 when an option price is $3.00 or higher.
Position and exercise limits apply to new ETF options
Options on Commodity-Based Trust Shares will be subject to the Exchange's position and exercise limits: the largest and most frequently traded ETFs can have limits of 250,000 contracts on the same side of the market, while smaller ETFs can have limits of 200,000, 75,000, 50,000, or 25,000 contracts (with adjustments for splits and recapitalizations).
Existing surveillance and regulatory safeguards apply
MIAX Sapphire will apply its existing surveillance and reporting safeguards (including coordination through the Intermarket Surveillance Group and regulatory arrangements with FINRA) to options on Commodity-Based Trust Shares to deter and detect potential manipulative behavior.
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