Nasdaq seeks SEC approval to list and trade bitcoin index options
Quick Take
- Nasdaq has filed with the SEC to list and trade bitcoin index options.
- The proposed Nasdaq Bitcoin Index Options (XBTX) will track the CME CF Bitcoin Real-Time Index.
Nasdaq, in partnership with CF Benchmarks, has filed with the U.S. Securities and Exchange Commission (SEC) to list and trade Nasdaq Bitcoin Index Options (XBTX).
Regulatory approval would enable investors to manage and hedge bitcoin positions using options that track the underlying asset through the CME CF Benchmarks Bitcoin Real-Time Index (BRTI). If approved, these bitcoin options would become the first cryptocurrency derivatives cleared by the U.S. Options Clearing Corporation (OCC).
"This collaboration combines the innovative crypto landscape with the resiliency and reliability of traditional securities markets and would mark a significant milestone for expanding the maturation of the digital assets market," Nasdaq Vice President and Head of Exchange Business Management Greg Ferrari said.
Key features of Nasdaq Bitcoin Index Options
Nasdaq's bitcoin options product features European-style exercise and cash settlement. The final settlement value is based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY), calculated every second by aggregating bitcoin-to-U.S. dollar order data from leading cryptocurrency exchanges.
Options are listed derivatives that grant the holder the right, but not the obligation, to buy or sell an asset — such as a stock or exchange-traded product — at a predetermined price within a specified timeframe. They provide traders a cost-effective means to leverage their purchasing power, while institutional investors use them to manage and hedge risk. Unlike American-style options, which can be exercised anytime until expiration, European-style options can only be exercised at expiration.
According to CF Benchmarks CEO Sui Chung, the spot bitcoin options settling to BRRNY will build on the existing futures and options contracts offered by CME and will complement already existent trading in spot bitcoin exchange-traded funds (ETFs).
"Together these regulated crypto derivatives will give investors the confidence to deploy more nuanced ways to gain exposure to the largest digital asset and will complement the spot ETFs that have already proved so popular with investors," Chung added.
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