On 20 August 2025, the United States Securities and Exchange Commission (US SEC) published notice of a filing by BOX Exchange LLC. The proposal, filed on 15 August 2025, seeks to amend BOX Rule 3120 to raise position and exercise limits for options on the iShares Bitcoin Trust ETF (IBIT). The rule change would remove IBIT from IM-3120-2, thereby lifting the existing 25,000 contract cap and subjecting IBIT options to the higher thresholds in Rule 3120 and Rule 3140. Based on trading volume and market data, IBIT currently qualifies for a 250,000 contract limit. The US SEC designated the proposal effective immediately and waived the standard thirty-day operative delay. Comments are invited under File No. SR-BOX-2025-22.
Documents and Legal Position of iShares Bitcoin Trust ETF Options
The US SEC’s notice was issued under Release No. 34-103747; File No. SR-BOX-2025-22.
IBIT is an exchange-traded fund that holds bitcoin and is listed on Nasdaq. Options on IBIT began trading in November 2024 with a fixed 25,000 contract limit under BOX Rule 3120.
BOX proposes to remove IBIT from the fixed table so that position and exercise limits will instead be set under the graduated thresholds of Rule 3120(d). These allow limits up to 250,000 contracts depending on trading volume and shares outstanding.
Reasoning for Increasing iShares Bitcoin Trust ETF Option Limits
The US SEC noted in prior approvals that “rules regarding position and exercise limits are intended to prevent the establishment of options positions that can be used or might create incentives to manipulate or disrupt the underlying market”.
Data show that at a 25,000 contract cap, exercisable risk represents only 0.4% of IBIT’s outstanding shares. With more than 866 million IBIT shares outstanding, the fund qualifies for the 250,000 contract tier under Rule 3120.
Comparisons with other products show:
- GLD (SPDR Gold Shares) and SLV (iShares Silver Trust) both operate under 250,000 contract limits.
- BITO (ProShares Bitcoin Strategy ETF) also has a 250,000 contract cap.
In contrast, a 250,000 contract limit for IBIT represents 2.89% of its float, which is more conservative than the percentages applicable to GLD, SLV, or BITO.
Comparative Analysis and External Benchmarks
The proposal relies on analyses by Nasdaq ISE, which concluded that a modeled position limit for IBIT could be more than 565,000 contracts, based on regression analysis of market capitalisation and average daily volume.
Further comparisons include:
- CME Bitcoin futures: with a 2,000 contract limit (five bitcoin multiplier), notional exposure exceeds $949 million, implying a higher tolerance than the current IBIT limit.
- Cboe Bitcoin U.S. ETF Index Options (CBTX and MBTX): IBIT is weighted at 20% in these indices, which trade under a 24,000 contract limit equivalent to one million IBIT contracts in notional exposure.
Surveillance and Reporting Safeguards
BOX emphasised that existing surveillance remains in place.
- Large Option Position Reporting will continue to apply.
- Market Makers remain exempt from customer reporting but are subject to disclosure requests.
- Automated surveillance and FINRA cooperation remain active safeguards.
The US SEC in the above stresses that financial and margin requirements will also contain risks from large, unhedged positions.
Immediate Effectiveness and Comment Process
The filing became effective on submission under Section 19(b)(3)(A)(iii) and Rule 19b-4(f)(6). The US SEC waived the thirty-day delay, making the proposal operative immediately.
Public comments must reference File No. SR-BOX-2025-22 and can be submitted through the US SEC’s portal or by email to rule-comments@sec.gov.
(Source: https://www.sec.gov/files/rules/sro/box/2025/34-103747.pdf)
