SEC opened proceedings on fourfold increase in IBIT options limits

The Federal Register on February 27, 2026 published a Securities and Exchange Commission proceeding on Nasdaq ISE’s proposal to quadruple position and exercise limits for options on the iShares Bitcoin Trust ETF, or IBIT, from 250,000 to 1 million contracts.

The SEC had issued its order on February 24. The February 27 publication brought the amended proposal into the dated federal regulatory record and established March 20 as the deadline for comments and April 3 for rebuttals.

The development mattered because IBIT options had become sufficiently prominent for Nasdaq ISE to seek capacity beyond the highest limit available under its ordinary volume-based schedule. It also forced regulators to weigh larger hedging and market-making positions against manipulation, concentration and market-disruption risks connected to a fund holding bitcoin.

What Nasdaq ISE proposed

Position limits restrict the number of options contracts an investor, or investors acting together, may control on the same side of a market. Exercise limits constrain how many contracts may be exercised within the period specified by exchange rules.

Nasdaq ISE proposed a specifically enumerated limit of 1 million contracts for IBIT options. That was four times the existing 250,000-contract ceiling. The filing concerned options on shares of a listed exchange-traded product; it did not change Bitcoin’s protocol, cap direct bitcoin ownership or authorize a new spot fund.

The exchange argued that the existing ceiling could impede hedging, buy-write and put-write strategies and constrain market makers supplying liquidity. It said the higher limit could support tighter spreads and more trading capacity. Those were Nasdaq ISE’s stated expectations, not measured outcomes available on February 27. The filing supplied no controlled before-and-after evidence showing that the proposal would lower costs or increase liquidity.

The scale behind the request

Nasdaq ISE reported that IBIT’s average daily share volume was 61,803,035 over the six months preceding February 11, 2026. It also reported 1,337,920,000 shares outstanding and a net asset value of $38.29 per share as of February 11.

The filing stated a market capitalization of $52,661,063,818. There is an internal numerical inconsistency: multiplying the stated share count by the stated net asset value produces approximately $51.23 billion, not $52.66 billion. That discrepancy does not alter the proposed contract limit, but it limits reliance on the filing’s exact market-capitalization figure without clarification.

Using its other inputs, the exchange calculated that exercising 1 million standard contracts would represent 7.474% of IBIT shares outstanding. It further estimated the exposure as less than 0.278% of bitcoin outstanding. These were exchange calculations intended to support the filing, not independent SEC findings about safe concentration.

Proceedings were not approval

The SEC expressly said that instituting proceedings did not mean it had reached a conclusion. It asked whether Nasdaq ISE’s data and analysis adequately showed that the higher limits were consistent with Exchange Act requirements to prevent fraudulent and manipulative conduct and protect investors and the public interest.

That procedural status is central to the February 27 record. The 1-million-contract limit was proposed, not effective. No event-day evidence established that investors could immediately hold the larger positions or that IBIT, its options or bitcoin moved because of the publication.

Later context

In a decision unavailable on February 27, the SEC approved the amended proposal on April 27, 2026. That later outcome confirms the proceeding’s eventual resolution but does not change what market participants knew on the event date: the fourfold increase remained under regulatory review.