Nasdaq ISE Aims to Lift Trading Cap on BlackRock Bitcoin ETF IBIT

TLDR

Table of Contents

Nasdaq ISE wants IBIT options cap raised from 250K to 1 million contracts.
BOX Exchange filed to permit FLEX options on IBIT with the SEC.
SEC yet to approve FLEX IBIT options outside of cash-settled types.
IBIT leads global bitcoin ETF options market by open interest.

Nasdaq’s ISE and BOX Exchange have submitted proposals to the U.S. Securities and Exchange Commission (SEC) requesting approval for trading FLEX equity options on the BlackRock iShares Bitcoin Trust ETF (IBIT). These filings come amid increased institutional demand and competition among exchanges offering Bitcoin ETF options.

IBIT Options Limits Under Review by SEC

Nasdaq’s International Securities Exchange (ISE) has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to raise the trading limit on IBIT options. The exchange seeks to lift the current cap from 250,000 contracts to 1 million contracts. According to the filing, the existing position and exercise limits are preventing institutional investors from entering larger positions for hedging and trading.

BOX Exchange LLC has also filed a similar proposal with the SEC. The exchange is seeking approval to amend BOX Rule 5055 to allow FLEX equity options on the iShares Bitcoin Trust ETF (IBIT). FLEX options offer customizable terms such as strike prices, expiration dates, and exercise styles. These are typically used by institutional market participants for risk management.

Competitive Push to Expand FLEX Options Market

The filings follow the approval of similar proposals from Nasdaq and PHLX earlier in 2025. Nasdaq ISE was the first exchange to receive approval to list IBIT options in 2024, and BOX began trading them in November that year. However, current IBIT options do not include FLEX equity options unless they are cash-settled.

Both ISE and BOX want to match the flexibility and no-limit status enjoyed by options on commodity ETFs like GLD and SLV. The exchanges argue that the proposed rule change would promote fair competition across trading venues. According to the filings, expanding access to FLEX options would also reduce counterparty credit risk.

The exchanges have asked the SEC to waive the standard 30-day operative delay for rule changes. They argue that immediate approval is necessary to protect investors and keep up with market demand.

IBIT Dominates Global Bitcoin ETF Options by Open Interest

The iShares Bitcoin Trust ETF, managed by BlackRock, has rapidly grown to lead the global market in bitcoin ETF options open interest. Market analysts attribute this to the rising involvement of institutions in digital asset markets. As of late 2025, trading volumes and open interest in IBIT options have outpaced rival products.

According to the proposal, IBIT’s share creation and redemption mechanism allows for efficient arbitrage, helping the ETF’s price track the underlying bitcoin value. The exchanges say this structure supports larger and more flexible options trading.

Regulatory Steps and SEC’s Current Position

The SEC has not yet approved the inclusion of non-cash-settled FLEX options on IBIT. The latest filings are under review, and the Commission has invited public comments on the proposed rule changes.

A statement from BOX in the filing says, “FLEX IBIT options trading would enable market participants to better manage risks and increase liquidity.” The SEC will consider whether the proposals align with market stability, investor protection, and fair competition principles under the Securities Exchange Act.

The SEC’s decisions on these proposals will determine how quickly institutional traders can access broader hedging tools in bitcoin ETFs.