Nasdaq applies to trade Bitcoin index options, awaits SEC green light

Key Takeaways

• Nasdaq plans to introduce Bitcoin index options pending SEC approval.
• The options are based on the CME CF Bitcoin Real-Time Index.

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Nasdaq has filed with the SEC to list and trade Bitcoin Index Options, seeking to provide institutions and traders with a new method to hedge their Bitcoin exposure.

The proposed Bitcoin Index Options (XBTX) would be based on the CME CF Bitcoin Real-Time Index (BRTI) developed by CF Benchmarks. This index tracks Bitcoin futures and options contracts on CME Group’s exchange platform, providing real-time pricing data for the cryptocurrency.

Nasdaq’s proposed options would feature European-style exercise and cash settlement, with the final settlement value based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY). This rate is calculated every second by aggregating Bitcoin-to-USD order data from leading crypto exchanges.

If approved, these Bitcoin options would become the first crypto derivatives cleared by the US Options Clearing Corporation (OCC). Greg Ferrari, Nasdaq Vice President and Head of Exchange Business Management, emphasized the significance of this development, stating:

“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.”

The move comes as Bitcoin investment products are seeing increased interest. BlackRock’s spot Bitcoin ETF recently recorded its largest daily net inflow in 35 days, with $224.1 million on August 26. This event contributed to a $202.6 million daily joint net inflow across all 11 US spot Bitcoin ETFs. Additionally, crypto investment products saw their largest inflows in five weeks, with $533 million from August 18 to August 24, according to data from CoinShares.

The introduction of Bitcoin index options could provide a new tool for institutional investors and traders to manage their respective crypto exposure. Sui Chung, CEO of CF Benchmarks, noted that these options would complement existing futures and options contracts offered by CME and the trading of spot Bitcoin ETFs.

“Together these regulated crypto derivatives will give investors the confidence to deploy more nuanced ways to gain exposure to the largest digital asset,” Chung adds.

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