The US Securities and Exchange Commission (SEC) is inviting public comments 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 Aug. 7 filing.
The SEC stated:
“The Exchange proposes to amend Rule 915 to permit 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 derivatives that provide the right, but not the obligation, to buy or sell an asset, such as a stock or ETF, at a set price by a specified date. They offer a cost-effective way to increase purchasing power and are commonly used by institutional investors to manage risk.
NYSE argues that adding options on ETH ETFs will offer investors an economical means to gain exposure to spot Ethereum. It also suggested that these options will provide a valuable hedging tool for managing risks associated with the digital asset.
It 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 NYSE request follows a similar Aug. 6 proposal from Nasdaq, which requested approval to list options for BlackRock‘s iShares Ethereum Trust (ETHA).
Public comments on these proposals are due within 21 days.
Meanwhile, Bloomberg ETF analyst James Seyffart expects a final SEC decision on these proposals next year.
Additionally, he noted that SEC approval is only one step in the process, as other regulatory bodies, including the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC), must also give their approval since ETH is deemed a commodity.
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