As Bitcoin financial products are poised to fully capture the institutional investment landscape by 2025, Wall Street’s infrastructure is rapidly evolving to accommodate the impending wave of capital. In a significant move, Nasdaq ISE, the derivatives exchange arm of Nasdaq, has officially submitted a proposal to the U.S. Securities and Exchange Commission (SEC) seeking to substantially ease options trading restrictions on BlackRock’s spot Bitcoin Exchange-Traded Fund (ETF), IBIT.
According to information disclosed in the Federal Register, Nasdaq ISE’s application proposes to quadruple the “Position and Exercise Limits” for IBIT options, elevating them from the current 250,000 contracts to an impressive 1,000,000 contracts.
Should this proposal gain approval, IBIT would be elevated to the ranks of Wall Street’s “top liquidity club,” standing shoulder-to-shoulder with established behemoths such as the iShares MSCI Emerging Markets ETF (EEM) and the iShares China Large-Cap ETF (FXI).
Nasdaq ISE highlighted a burgeoning trend, noting an explosive growth in IBIT options trading volume since the beginning of 2025. The current trading limits, it argues, have become a significant impediment, constraining market makers and institutions that rely on options for sophisticated hedging and yield-generation strategies.
“As investor opportunities to participate in the options market continue to expand, we anticipate IBIT’s options trading volume will consistently climb,” Nasdaq ISE stated, underscoring the necessity for the proposed changes.
To substantiate its request for relaxed trading limits, Nasdaq ISE provided a comprehensive data analysis. This analysis meticulously compared IBIT’s market capitalization and average daily trading volume against other ETFs that already benefit from the 1 million contract cap.
The exchange further emphasized that even if all 1 million contracts were exercised, their aggregate size would represent only approximately 7.5% of IBIT’s outstanding shares. When viewed against the total supply of Bitcoin, this figure dwindles to a negligible 0.284%. Nasdaq ISE firmly asserts that a volume of this magnitude is highly unlikely to cause any material market disruption.
Beyond increasing the general options limits, the proposal’s second key objective targets more flexible institutional instruments. Nasdaq ISE is also seeking to eliminate position and exercise limits for physically settled FLEX IBIT options, a treatment currently afforded to major commodity ETFs like the SPDR Gold ETF (GLD).
FLEX (Flexible Exchange Options) are bespoke contracts that empower trading counterparties to customize terms such as strike prices and expiration dates. These are frequently utilized by large funds to craft highly tailored hedging or structured exposure strategies. The removal of these trading restrictions would empower institutional capital to engage with IBIT options in a more agile and substantial manner.
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