SEC Approves 15% Nonqualifying Cap for Nasdaq Texas Trusts

The SEC on Sept. 3 approved a Nasdaq Texas rule that lets qualifying commodity-based trusts hold up to 15% of net asset value in holdings that do not meet the exchange’s eligibility tests while requiring at least 85% to remain in cash, cash equivalents, commodities, commodity-linked assets or eligible securities.

The 15% allowance applies to all nonqualifying holdings combined and is restricted to digital commodities as defined by the rule or specified securities. The SEC’s order approves the exchange rule itself and does not approve any individual fund or sponsor product.

The rule measures derivatives exposure by gross notional value, so the full underlying exposure counts toward the 85% test rather than the option premium or initial cash outlay. The SEC used an example of a trust holding $100 million of Bitcoin plus over-the-counter call options that add $40 million of exposure; the trust would report $140 million of total exposure, leaving only $100 million as qualifying assets and reducing the qualifying share to 71.42%, below the 85% requirement.

Sponsors must calculate compliance with the 85% threshold daily and notify Nasdaq Texas promptly if a trust breaches the limit. The exchange filing sets the requirement that the nonqualifying portion fit within the 15% cap and meet the rule’s digital-commodity definition.

The amendments permit actively managed strategies under the exchange’s generic listing standards. Trusts must publish full portfolio holdings, including quantities and percentage weights, on a free public website before the regular trading session opens. Nasdaq Texas may halt trading if required portfolio information is not made available to all market participants at the same time, and the filing requires procedures to limit misuse of nonpublic portfolio data.

The order aligns Nasdaq Texas’s rules with earlier SEC approvals for Nasdaq, NYSE Arca and Cboe BZX. Products that meet the exchanges’ generic listing standards can begin trading under SEC Rule 19b-4(e) without a separate SEC review for each individual product; products that fall outside those standards can still seek individual SEC approval.

For sponsors of Bitcoin-heavy or commodity-linked trusts, the rule creates limited flexibility to include other digital assets or certain derivative exposures within the 15% window while maintaining the 85% qualifying-asset requirement and imposing daily compliance and disclosure obligations.