SEC Approves Options on Digital Commodity Funds, Subject to Daily Liquidity of at Least $700 Million
Key Facts
On November 10, 2026, the U.S. Securities and Exchange Commission approved an amendment to Nasdaq ISE rules allowing options on shares of digital commodity funds to be listed without separate SEC approval for each fund. The framework covers funds holding one or more digital commodities, provided the underlying fund shares are first listed on Nasdaq. The SEC said the options would give investors an additional way to gain exposure to or hedge against shares of these funds. The decision shifts approval to general eligibility rules, but does not make options automatically available for every fund. Listing depends on the assets held and their fund meeting the liquidity and surveillance requirements approved by the SEC.
The rules require the average daily market value of each digital commodity held by a fund to be at least $700 million over the preceding 12 months. The digital commodity must also underlie a derivatives contract traded on a market covered by a comprehensive surveillance-sharing agreement with ISE, either directly or through shared membership in the Intermarket Surveillance Group. The requirement is intended to link the underlying assets to markets that allow surveillance information to be shared, as part of the fund eligibility standards. The rule nevertheless allows digital commodities that do not meet the surveillance requirement to account for up to 15% of the fund’s combined net asset value. Thus, not every asset must meet the requirement, but the exempt portion remains capped at the prescribed limit.
The 15% cap is calculated based on the aggregate notional value of any derivatives held by the fund, according to the rule text. ISE also said it would continue to require an adequate amount of deliverable supply for each underlying digital commodity, along with Nasdaq’s approved standards for fund shares. The SEC said ongoing disclosure of a fund’s holdings gives the exchange and market participants a real-time view of its composition and value, allowing liquidity to be monitored and adding protection against manipulation. The options are subject to the same surveillance procedures that apply to other exchange-traded fund options. Existing options rules cover expiration dates, strike prices, position and exercise limits, margin, customer accounts and trading halts.
The regulatory process began with an application filed by ISE on July 28, 2026, which the SEC published for comment in August. After extending the review period, the exchange submitted a second amendment on November 5, ahead of the SEC’s November 11 deadline to act. The SEC said it had received no comments on the proposal. It approved the proposal on an accelerated basis, finding that the amendment raised no new regulatory issues and clarified surveillance and continued-listing requirements. The decision came on November 10, one day before the deadline.
ISE’s previous rules dated to a framework that allowed options on shares or securities representing interests in eligible commodity funds, while the proposal updated the terminology and standards to cover digital commodities and align with Nasdaq’s standards for fund shares. The SEC linked the eligibility framework to an earlier Nasdaq rule change concerning generic listing standards for commodity fund shares. ISE described options as a lower-cost tool for managing exposure to digital commodity prices and as a way to hedge exposure to fund shares. The exchange and the SEC said ISE and the Options Price Reporting Authority had the technical capacity to accommodate activity in the new option chains within the permitted expiration dates. If the underlying fund no longer meets the eligibility requirements, ISE will consider suspending the opening of new positions in its options.