BOX Exchange Enables Direct Swaps of Options for ETF Shares
Published Date: 6/4/2025
Notice
Summary
BOX Exchange is rolling out a new rule that lets traders swap options positions for ETF shares or UIT units without selling them first. This smooth move helps authorized participants and broker-dealers trade more easily at the net asset value price, making big trades faster and potentially saving money. The rule is already in effect as of May 15, 2025, so market players can start using it right away!
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
Allows in-kind options transfers at NAV
The BOX Exchange adopted Rule 7165 permitting positions in options listed on the Exchange to be transferred off the Exchange in connection with (a) purchases or redemptions of ETF creation units between an authorized participant and the ETF issuer, and (b) creation or redemption of UIT units between a broker-dealer and the UIT issuer. Those transfers must occur at the price(s) used to calculate the net asset value (NAV) of the ETF shares or UIT units. The rule became effective May 15, 2025.
May increase tax efficiency for ETF/UIT investors
BOX expects ETFs and UITs that hold options to be able to effect in-kind creations and redemptions for those option positions, which the Exchange says can increase tax efficiency and potentially reduce transaction costs for those funds. The Exchange states these tax and transaction cost benefits may be passed along to investors and could make option-holding ETFs and UITs more attractive and competitive.
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