The US Securities and Exchange Commission (SEC) is seeking public feedback on a proposal from New York Stock Exchange (NYSE) American LLC to list and trade options on Bitwise and Grayscale’s spot Ethereum exchange-traded funds (ETFs), according to an August 7 filing.
The SEC stated:
“The Exchange proposes to amend Rule 915 to allow the listing and trading of options on the Bitwise Ethereum ETF, the Grayscale Ethereum Trust (ETH), the Grayscale Ethereum Mini Trust, and any trust that holds ether.”
Options are financial instruments that grant the right, but not the obligation, to buy or sell an asset, like a stock or ETF, at a predetermined price by a specified date. They provide a cost-efficient way to increase buying power and are frequently utilized by institutional investors to manage risk.
NYSE contends that introducing options on ETH ETFs will provide investors with a cost-effective method to gain exposure to spot Ethereum. It also suggests that these options will serve as a valuable hedging tool for mitigating risks associated with the digital asset.
It further added:
“The Exchange believes that offering options on a competitively priced ETF based on spot ether will benefit investors by providing them with an additional, relatively lower-cost risk management tool allowing them to manage, more easily, their positions, and associated risks, in their portfolios in connection with exposure to spot ether.”
This request from NYSE follows a similar proposal from Nasdaq on August 6, seeking approval to list options for BlackRock’s iShares Ethereum Trust (ETHA).
Public comments on these proposals must be submitted within 21 days.
Meanwhile, Bloomberg ETF analyst James Seyffart anticipates a final decision from the SEC on these proposals next year.
He also noted that SEC approval is just one part of the process, as other regulatory bodies such as the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC) must also give their consent, given that ETH is considered a commodity.
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Liam ‘Akiba’ Wright
