- Nasdaq seeks to raise iShares Bitcoin Trust option limits to 1M contracts.
- Higher limits aim to ease hedging constraints for large institutional traders.
- Proposal includes removing FLEX option caps to shift big trades onto exchanges.
Nasdaq is seeking to change the scene for U.S.-listed Bitcoin derivatives by asking regulators to widen the risk-management capacity available to institutional traders. A recent filing submitted to the U.S. Securities and Exchange Commission (SEC) outlines the exchange’s plan to lift position limits on options tied to the iShares Bitcoin Trust, proposing an increase from the current 250,000-contract threshold to 1,000,000 contracts.
Proposal Places ETF in Highest Derivatives Category
According to Nasdaq’s International Securities Exchange, the trust now exhibits trading activity and market capitalization comparable to top-tier underlyings. The submission requests that regulators reclassify the BlackRock-managed fund into the same derivatives tier as instruments linked to the S&P 500, Nasdaq-100, Apple, and NVIDIA. The filing states that the ETF’s size and average daily volume meet criteria already applied to heavily traded equity and index products.
Nasdaq’s analysis shows that a fully exercised 1,000,000-contract position would equal approximately 7.5% of the ETF’s publicly available shares and around 0.284% of all Bitcoin in circulation (figures directly cited from the filing). The exchange argues that this exposure remains controllable under existing surveillance and margin frameworks.
Constraints Cited for Market Makers and Institutional Desks
The proposal points out challenges dealers encounter when managing large hedging flows linked to pensions, hedge funds, and institutional allocators. Under current limits, firms handling complex exposures reportedly face restrictions when balancing delta, gamma, and vega across large transactions, particularly during periods of elevated volatility.
Nasdaq says the increased ceiling could allow market makers to process large blocks more efficiently, without splitting orders across unrelated products. The filing also references the ETF’s rapid rise in open interest, noting that options activity on the trust has overtaken volumes at major offshore venues this year.
Implications for Structured Contracts and FLEX Activity
Another component of the request involves removing limits on physically settled FLEX options linked to the fund. If approved, this would open the door for institutions to transition large, customized exposures away from bilateral swaps and into exchange-cleared structures. The exchange argues that the shift could support improved transparency and standardized counterparty protections.
The SEC has not indicated when it will issue a ruling. Rule-change proposals typically undergo a comment period that can include multiple rounds of feedback before any approval or modification is finalised.
Stay informed with daily updates from Blockchain Magazine on Google News. Click here to follow us and mark as favorite: [Blockchain Magazine on Google News].
Disclaimer: Any post shared by a third-party agency are sponsored and Blockchain Magazine has no views on any such posts. The views and opinions expressed in this post are those of the clients and do not necessarily reflect the official policy or position of Blockchain Magazine. The information provided in this post is for informational purposes only and should not be considered as financial, investment, or professional advice. Blockchain Magazine does not endorse or promote any specific products, services, or companies mentioned in this posts. Readers are encouraged to conduct their own research and consult with a qualified professional before making any financial decisions.
About the Author: Peter Mwangi
