On December 30, in the Eastern Standard Time Zone, the Cboe Exchange in the United States submitted a proposal to adjust the quote increment for MBTX options, which has entered the public discussion phase. This technical modification in the derivatives market is being viewed as a potential prelude to the further derivative development of Bitcoin spot ETFs.

Regulatory Trends: MBTX Options and Quote Increment Adjustment

● News Driven:

● Cboe submitted a rule change application to the SEC, primarily to adjust the minimum quote increment for options contracts linked to the MBTX index, refining the minimum tick size for some in-the-money/at-the-money contracts from 0.05 cents to 0.01 cents, in order to enhance the accuracy and depth of the order book quotes.
● The SEC has opened a comment period in the Federal Register, with a time window of approximately 21 days for public comments + 45 days for preliminary review (the briefing did not provide a more granular timeline, so no further breakdown is given). During this period, market participants can submit written opinions on issues such as quote increments, liquidity, and manipulation risks.
● This application is not a singular trial but is included in Cboe's unified microstructure optimization plan for a basket of highly liquid ETF/index options, with MBTX being a representative of crypto assets.

● Policy and Market Background:

● The MBTX index is labeled in the briefing as “institutional Bitcoin-related assets”, used for linking options contracts, with its historical volatility significantly higher than that of traditional stock index options products, making it a key piece in Cboe's layout of crypto-related derivatives.
● Since the beginning of this year, the average daily trading volume of Bitcoin spot ETFs in the U.S. market has repeatedly surpassed $10 billion, with leading products entering the top ten in U.S. ETF trading volume on multiple trading days, prompting exchanges to reassess the microstructure of options around ETFs and indices.
● The briefing notes that Cboe internally views MBTX options as a “bridge connecting traditional institutional funds with crypto price volatility,” especially after the spread of spot ETFs, with options seen as the core vehicle for risk management and speculation in the next phase.

Core Impact: How Quote Refinement Changes the MBTX Options Ecosystem

● Liquidity and Spread Structure:

● The quote increment from 0.05 refined to 0.01 theoretically could compress the minimum visible spread by 80%, allowing market makers to place orders with smaller spreads, thereby:
● Reducing the entry and hedging costs of options contracts, facilitating high-frequency hedging and algorithmic trading.
● Increasing the density of orders closer to the mid-price, improving market depth and impact costs.
● The briefing cites Cboe's experience with other ETF options products, indicating that historically similar quote increment optimizations have led to an average narrowing of bid-ask spreads by 2%–8%, although specific empirical data for MBTX is not yet available.

● Institutional Participation and Strategy Complexity:

● Quote refinement is beneficial for splitting execution of large orders and implementing cash-and-carry arbitrage/volatility arbitrage strategies, especially in combination with Bitcoin spot ETFs, futures ETFs, and over-the-counter swap products.
● The briefing points out that some market-making institutions and quantitative funds have informally indicated that if the microstructure of MBTX options further aligns with mainstream stock index options, they would be more willing to allocate to continuous market-making and structured product strategies.

● Market Risks and Regulatory Considerations:

● The SEC notes in the document that while the reduction in quote increments enhances price discovery efficiency, it may also amplify:
● An increase in high-frequency trading, leading to short-term volatility becoming “noisy.”
● Accelerated order book cancellations during extreme market conditions, creating chain reactions of flash crashes or flash rallies.
● The briefing mentions that regulators are particularly concerned about whether high-volatility assets like MBTX will amplify the space for manipulation and “wash trading” under more refined quote increments, thus focusing on collecting risk control opinions from market makers and brokers during the comment period.

Deep Logic: Another Piece of the Puzzle for Bitcoin ETF Derivatization

The adjustment of the MBTX options quote increment is not an isolated micro-adjustment but resonates with the large-scale listing of Bitcoin spot ETFs and the acceleration of institutionalization in the derivatives market. With spot ETFs already widely accepted by mainstream funds, constructing richer options, structured products, and hedging tools around these ETFs and related indices has become a common direction for exchanges, market makers, and institutional investors. The refinement of quote increments reduces friction costs at the micro level for institutions building complex strategies, making cash-and-carry arbitrage, volatility trading, and ETF combination hedging easier to standardize and scale. It also preemptively polishes the market infrastructure for potential future “Bitcoin ETF options” or “multi-ETF index options.” In other words, this step for MBTX options is more about paving the way for the next stage of Bitcoin ETF derivatization, and the SEC's attitude towards such microstructure adjustments will also serve as an important barometer for assessing its overall openness to crypto asset derivatives.

Market Divergence: The Clash of Optimism and Concerns

● Optimistic/Supportive Side:

● Supporters believe this is a key step towards the maturity of crypto asset derivatives market standards:
● The refinement of quote increments will compress trading costs and improve price discovery efficiency, which is beneficial for attracting more institutional participation.
● A microstructure aligned with traditional ETFs and stock index options helps to reduce resistance from institutional compliance and risk control departments, incorporating products like MBTX into standard derivatives portfolios.
● Against the backdrop of the continuous expansion of spot ETF volumes, only with complementary options and risk management tools in place can institutions potentially increase their allocation weight in Bitcoin-related assets.

● Pessimistic/Opposing Side:

● Cautious individuals worry that quote refinement on high-volatility assets may amplify hidden risks:
● Finer increments may attract high-frequency and ultra-short-term strategies, leading to a surge in “noise trading” in the order book, increasing the trading difficulty for ordinary investors.
● During abnormal linkages between spot and derivatives, more concentrated algorithmic trading may amplify the risks of instant price imbalances and chain liquidations.
● Some traditional institutions are concerned that accelerating microstructure optimization before fully clarifying cross-market manipulation paths may expose new systemic vulnerabilities during extreme market conditions.

Outlook: Key Time Window and Observational Indicators

In the short term, the market will focus on the SEC's review pace and feedback points regarding Cboe's quote increment adjustment application. Once the rule is approved and implemented, key observations should include:
● Whether the trading volume and open interest of MBTX options show sustained growth, and whether the bid-ask spread narrows significantly;
● Changes in the behavior of market makers and quantitative institutions regarding market depth, quote frequency, and hedging scale;
● Whether Cboe will use MBTX as a model to replicate similar quote increment optimizations and product designs for more Bitcoin-related ETFs/index options. In the medium term, if this round of microstructure adjustments can be smoothly implemented and receive positive liquidity feedback, it will strengthen the expectation of the path from “Bitcoin spot ETF → options and structured products → a more complete institutional toolbox,” creating conditions for the further embedding of crypto assets in the traditional financial system.

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