BOX Exchange Unlocks Options Trading on Commodity Trust Bundles
Published Date: 5/15/2025
Notice
Summary
BOX Exchange wants to let people trade options on Commodity-Based Trust Shares, which are special investment products tied to commodities like gold or oil. This change affects investors and traders by giving them new ways to invest and manage risk starting soon after approval. It could open up fresh opportunities without adding extra costs right away.
Analyzed Economic Effects
4 provisions identified: 2 benefits, 0 costs, 2 mixed.
Options on Commodity-Based ETFs
BOX proposes to allow listing and trading of options on Commodity-Based Trust Shares (ETF-like trusts that hold a specified commodity or commodity plus cash) under amended Rule 5020(h)(iv). If the underlying Commodity-Based Trust Share is an NMS stock and meets BOX's initial listing criteria, BOX could list options on that security without a separate product-by-product SEC approval (using the Rule 19b-4(e) generic listing approach).
Position and Exercise Limits Applied
Options on Commodity-Based Trust Shares would be subject to BOX position and exercise limits that vary by fund size: the largest and most frequently traded funds have limits of 250,000 contracts on the same side of the market, while smaller funds have limits of 200,000, 75,000, 50,000, or 25,000 contracts (with adjustments for corporate actions).
Exchange Trading, Margin, and Surveillance
Options on Commodity-Based Trust Shares would trade on BOX under existing options rules (including margin requirements under Rule Series 10100) and subject to BOX surveillance, FINRA regulatory allocation under a 17d-2 plan, and ISG information sharing. Trading listed options on BOX replaces OTC trading for these instruments, increasing market transparency and price discovery and providing a listed hedging tool.
Strike Prices and Minimum Increments
Options on Commodity-Based Trust Shares would use BOX's existing strike and increment rules: strike intervals of $1 or greater when the strike price is $200 or less and $5 or greater when the strike price is over $200. BOX may also list series under its $1, $0.50, $2.50 and $5 strike programs, and minimum trading increments follow Rule 7050 (for example, where option price is less than $3.00 the minimum increment is $0.05, and $0.10 when $3.00 or higher), with penny-interval program increments ($0.01 below $3.00 and $0.05 above $3.00) applying if eligible.
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