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The Options Clearing Corporation (OCC), the largest clearinghouse for equity derivatives in the U.S., has announced it is preparing to clear options tied to spot Bitcoin ETFs. The OCC’s latest move follows regulatory developments and increased demand for such products.
Will Bitcoin ETF Options Launch This Week?
Eric Balchunas, senior ETF analyst at Bloomberg, described the development as pivotal. He noted on X that the process could advance swiftly after OCC approval. “That’s a wrap. Now it’s just a matter of when, not if,” he remarked.
Re bitcoin ETF options, now the OCC just posted a response to the CFTC’s Friday approval saying they are “preparing” for the options to list etc. That’s a wrap. Now it’s just a matter of when not if. We will get the exact data as soon as we can.. h/t @DunkirkTrading https://t.co/PsVNssC1ge pic.twitter.com/uKYFe3oTzM
— Eric Balchunas (@EricBalchunas) November 18, 2024
Nasdaq has also indicated readiness for immediate action. Alison Hennessy, Nasdaq’s head of ETP Listings, stated during Bloomberg’s ETF IQ that IBIT options could be listed imminently. “As soon as tomorrow,” she said, referring to Tuesday, Nov. 19, a date later confirmed on the OCC’s website as the anticipated listing day.
This preparation aligns with a staff advisory issued by the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk last Friday. The advisory clarified that ETF options tied to spot commodity funds fall under the purview of the OCC. “[I]t is substantially likely these spot commodity ETF shares would be held to be securities,” the advisory noted.
The CFTC further stated that the SEC has jurisdiction over these products since they involve securities traded on SEC-regulated exchanges. The OCC confirmed it is moving forward with clearing, settlement, and risk management processes for these options, contingent on the new listing procedures.
A Look At Recent SEC Approval
Interest in trading options on Bitcoin ETFs has grown significantly since the SEC approved multiple spot BTC ETFs in January. BlackRock’s iShares Bitcoin Trust (IBIT), which received SEC approval on Sept. 20 to list and trade options, has emerged as a market leader.
Traders and institutional investors see options as versatile financial tools, with traders often using them for speculative purposes while institutions employ them to hedge risks. Market structure analyst Dennis Dick observed in September that Bitcoin’s appeal to retail investors is likely to drive higher speculation in Bitcoin ETF options compared to those based on traditional equities.
Bitcoin ETFs have generated substantial trading activity, surpassing $500 billion in volume since their launch. The IBIT fund, in particular, dominates this space, accounting for nearly two-thirds of the market share, according to latest data.