BZX Exchange Pushes for Commodity Trust Share Trading Options
Published Date: 3/19/2025
Notice
Summary
Cboe BZX Exchange wants to let people trade options on Commodity-Based Trust Shares, which are like special funds tied to commodities. This change opens up new ways for investors to buy and sell these options starting soon, making the market more exciting and flexible. If approved, it could impact traders and fund managers by giving them fresh tools to manage their money.
Analyzed Economic Effects
5 provisions identified: 5 benefits, 0 costs, 0 mixed.
Allow Options on Commodity ETFs
Cboe BZX filed on March 5, 2025 to amend Rule 19.3 so the Exchange may list and trade options on Commodity-Based Trust Shares (commodity ETFs) that are approved to list on a primary equities market. If approved, options on qualifying commodity ETFs could begin trading without a separate SEC approval, subject to the Exchange's initial listing criteria.
Listed Options Give Hedging Tools
If you hold commodity ETFs, options listed on Commodity-Based Trust Shares give you a market-traded way to hedge price risk instead of using over-the-counter (OTC) contracts. The Exchange says listed options increase transparency and price discovery compared with OTC trading.
Faster Market Access for Issuers
The proposed change would let the Exchange list options on qualifying Commodity-Based Trust Shares without separate SEC approval, which the Exchange says reduces time and costs for issuers and market participants. This could lower the burden on funds that want options listed once the ETF meets the Exchange's initial listing criteria.
Product Specs: Settlement, Expirations, Strikes
Options on Commodity-Based Trust Shares will be physically settled and American-style. The Exchange may list weekly, monthly, quarterly, and long-term options (12 to 39 months), with strike intervals of $1 or greater for strikes $200 or less and $5 or greater for strikes over $200, and minimum increments of $0.05 for prices below $3.00 and $0.10 for prices at or above $3.00 (with penny-interval exceptions in certain programs).
Limits, Margin, and Surveillance Apply
Options on Commodity-Based Trust Shares will be subject to existing position and exercise limits (up to 250,000 contracts for the largest funds, with lower limits of 200,000, 75,000, 50,000 or 25,000 for smaller funds) and to the Exchange's margin rules and surveillance programs, including Intermarket Surveillance Group and FINRA arrangements. The Exchange says it has systems capacity and will apply its surveillance rules to these options.
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Previous: 2025-04502 — Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 4.3 To Permit the Listing of Options on Commodity-Based Trust Shares
Cboe Exchange wants to let people trade options on Commodity-Based Trust Shares, which are like special investment units tied to commodities. This change affects investors and traders by giving them new ways to invest and trade starting soon after approval. It’s a smart move to keep Cboe competitive and offer fresh opportunities without extra costs right now.
Next: 2025-04504 — Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 19.3 To Permit the Listing of Options on Commodity-Based Trust Shares
Cboe EDGX Exchange wants to let people trade options on Commodity-Based Trust Shares, which are special funds tied to commodities like gold or oil. This change affects investors and traders by giving them new ways to invest and trade starting soon after approval. It’s a smart move to keep up with other exchanges and could open fresh money-making chances.