What is the "Oversight Sharing Agreement" that appears frequently in Bitcoin ETF application proposals?

币指多量化-LPC策略-阿星科技 · 2023-06-29T12:15:35.000Z

In the latest wave of spot Bitcoin ETF filings, one term appears frequently: surveillance-sharing agreement. Following asset management giant BlackRock, firms including ARK Invest, Valkyrie, Bitwise, WisdomTree and Invesco have all added this to their proposals. What is the “supervision sharing agreement” that frequently appears in Bitcoin ETF application proposals? Ophelia Snyder, co-founder and president of 21 Shares, said: "These agreements will provide greater transparency to the market and more closely align the cryptocurrency market with the regulatory approach of the U.S. market." In considering the proposed Bitcoin ETF, U.S. Securities Exchange The Commission (SEC) weighs whether a proposed exchange (Nasdaq, NYSE or other entity) can meet certain obligations under the Exchange Act to prevent fraud and manipulation. According to the SEC’s June 2022 filing rejecting the Bitwise spot Bitcoin ETF, the SEC argued that the exchange could do so by demonstrating “a comprehensive oversight-sharing agreement with a sizable regulated market related to the underlying or reference Bitcoin asset.” make it happen. The SEC defined a "supervisory sharing agreement" very clearly in its denial order: The characteristics of a sharing agreement are that it provides for the sharing of information about market trading activities, clearing activities, and customer identities; the parties to the agreement have the reasonable ability to obtain and provide all information the requested information; and no existing rule, law or practice will prevent a party to the Agreement from obtaining this information from or providing this information to the other party. The size of this market cannot be quantified in numbers. The document states that the metric refers to a market in which a potential manipulator "has a reasonable probability" that he or she would have to trade in that market to do so - "so that monitoring sharing protocols will help detect and prevent inappropriate behavior." Behavior". In its Bitwise order, the SEC noted that oversight sharing agreements are not the only way for exchanges seeking to list Bitcoin ETFs to satisfy Section 6(b)(5) of the Exchange Act. But the securities regulator said, “Such agreements have previously provided a basis for exchanges listing commodity trust ETPs to meet these obligations, and the Commission has historically recognized their importance by allowing the sharing of information regarding market trading activities, clearing activities and customer identities.” information". David Hirsch, head of the U.S. Securities and Exchange Commission’s Enforcement Division’s Crypto-Assets and Cyber Division, said last week that potential Bitcoin ETF spot issuers have not established “appropriate monitoring systems” equivalent to registered exchange trading. BlackRock, a fund giant with about $9 trillion in assets under management, filed for its first spot Bitcoin ETF last week. Its filing states that the U.S. Securities and Exchange Commission approves ETFs that hold Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME): “If CME’s regulation is sufficient to mitigate concerns related to trading in Bitcoin futures due to the pricing of Bitcoin futures, Based directly on spot Bitcoin market pricing, it is unclear how such a conclusion would apply only to Bitcoin futures-based ETPs and not to spot Bitcoin ETPs.” Nasdaq is expected to enter into an oversight-sharing agreement with "an operator of a U.S. Bitcoin spot trading platform," which was not named in the filing. Sumit Roy, senior analyst at ETF.com, told Blockworks earlier this week that the additional agreement may not be enough to win approval, especially if the platform operator is Coinbase (which the U.S. Securities and Exchange Commission sued earlier this month). But he said: "Because BlackRock was involved, they were expected to have inside information and make it happen." Different proposals correspond to different exchanges Investment firm Valkyrie is the latest company to rejoin the race for a spot Bitcoin ETF. The company’s last attempt at a spot Bitcoin ETF ended in December 2021 when the SEC failed to approve it. According to the new filing, the Valkyrie Bitcoin Fund will trade under the ticker BRRR (BRRR is also used to describe the sound of the money printing press). The company, like BlackRock, designates Nasdaq as the exchange on which it is listed, which could give it an advantage over other companies, Bloomberg Intelligence analyst James Seyffart said in a tweet. Valkyrie follows applications from Bitwise, whose proposed spot Bitcoin ETF would be listed on NYSE Arca, and more traditional financial firms WisdomTree and Invesco, whose planned products would trade on the Cboe BZX exchange. A spot Bitcoin ETF filed in April by Ark Invest and 21 Shares also plans to trade on Cboe. Seyffart told Blockworks in an email: “21 Shares, ARK, and Cboe [Chicago Board Options Exchange] are at the top of the list because the SEC’s next decision date is August 13, 2023, and we have not yet determined the others. 19 b-4 Date of filing, such as BlackRock’s filing.”

In the latest wave of spot Bitcoin ETF application documents, a term appears frequently: surveillance-sharing agreement. Following asset management giant BlackRock, companies such as ARK Invest, Valkyrie, Bitwise, WisdomTree and Invesco have added this to their proposals. What is the "surveillance-sharing agreement" that appears frequently in Bitcoin ETF application proposals? Ophelia Snyder, co-founder and president of 21 Shares, said: "These agreements will provide greater transparency to the market and make the cryptocurrency market more consistent with the regulation of the U.S. market." When considering the proposed Bitcoin ETF, the U.S. Securities and Exchange Commission (SEC) weighs whether the proposed listing exchange (Nasdaq, New York Stock Exchange or other entity) can fulfill certain obligations under the Exchange Act to prevent fraud and manipulation. According to the SEC's June 2022 rejection of the Bitwise spot Bitcoin ETF, the SEC believes that the exchange can do this by proving that "a comprehensive surveillance-sharing agreement has been signed with a regulated market of considerable size related to the underlying or reference Bitcoin assets." The SEC defines a “surveillance sharing agreement” very clearly in its denial order: A sharing agreement is characterized by the agreement providing for the sharing of information about market trading activity, clearing activity, and customer identities; the parties to the agreement have reasonable ability to obtain and provide the requested information; and no existing rules, laws, or practices prevent one party from obtaining this information from or providing this information to the other party. The size of such a market cannot be quantified with a number. The document states that the metric refers to a market where a potential manipulator “has a reasonable probability” of having to trade in that market to do so — “so that monitoring sharing agreements will help detect and deter misconduct.” The SEC noted in its Bitwise order that surveillance sharing agreements are not the only way exchanges seeking to list a bitcoin ETF can satisfy Section 6(b)(5) of the Exchange Act. But the securities regulator said that “such agreements have previously provided a basis for exchanges listing commodity trust ETPs to meet these obligations, and the Commission has historically recognized their importance in allowing the sharing of information about market trading activity, clearing activity, and customer identities.”David Hirsch, chief of the SEC’s Enforcement Division’s Crypto Assets and Cyber ​​Unit, said last week that potential spot bitcoin ETF issuers have not established “adequate monitoring systems” comparable to those trading on registered exchanges. BlackRock, a fund giant with about $9 trillion in assets under management, filed for its first spot bitcoin ETF last week. Its filing states that the SEC approved an ETF that holds bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME): “If CME’s oversight is sufficient to mitigate concerns associated with trading in bitcoin futures, where pricing is directly based on pricing in the spot bitcoin market, it is unclear how such a conclusion could apply only to an ETP based on bitcoin futures and not to a spot bitcoin ETP.” Nasdaq is expected to enter into a supervisory sharing agreement with “the operator of a U.S.-based bitcoin spot trading platform,” which was not named in the filing. Sumit Roy, senior analyst at ETF.com, told Blockworks earlier this week that additional agreements may not be enough to gain approval, especially if the platform operator is Coinbase, which the SEC sued earlier this month. But he said: "Because BlackRock is involved, they are expected to have inside information and make this happen." Different proposals correspond to different exchanges Investment company Valkyrie is the latest company to rejoin the spot Bitcoin ETF race. The company's last attempt at a spot Bitcoin ETF ended in December 2021 when the SEC failed to approve it. According to the newly filed documents, the Valkyrie Bitcoin Fund will trade under the ticker BRRR (BRRR is also used to describe the sound of a money printing machine). The company, like BlackRock, designated Nasdaq as its listing exchange, which Bloomberg Intelligence analyst James Seyffart said in a tweet could give it an advantage over other companies. Valkyrie submitted its application after Bitwise, as well as more traditional financial companies WisdomTree and Invesco, filed applications. Bitwise's proposed spot Bitcoin ETF would be listed on NYSE Arca, while WisdomTree and Invesco's planned products would be traded on the Cboe BZX exchange.Ark Invest and 21 Shares’ spot bitcoin ETFs filed in April are also slated to trade on Cboe. “21 Shares, ARK, and Cboe [Chicago Board Options Exchange] are first in line because the next SEC decision date is August 13, 2023, and we have not yet set dates for other 19b-4 filings, such as BlackRock’s,” Seyffart told Blockworks in an email.