Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices 5881 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f). 

20 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 92017 

(May 25, 2021), 86 FR 29634 (‘‘Notice’’). Comments 

on the proposed rule change can be found at: 

https://www.sec.gov/comments/sr-box-2021-06/ 

srbox202106.htm. 

4See Securities Exchange Act Release No. 92387 

(July 13, 2021), 86 FR 38140 (July 19, 2021). 

(B) Clearing Agency’s Statement on 

Burden on Competition 

ICE Clear Europe does not believe the 

proposed amendments would have any 

impact, or impose any burden, on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. The proposed 

amendments to the Delivery Procedures 

are intended to address new settlement 

discipline procedures applicable to 

certain contracts as provided in the 

CSDR and RTS. Although the 

procedures could result in certain 

additional costs to Clearing Members, if 

certain fines were imposed as a result of 

a settlement failure, those additional 

costs result from the requirements of 

relevant EU legislation applicable to 

settlements in the affected underlying 

securities which would be applicable to 

all market participants for the relevant 

contracts and it would be inappropriate 

for the Clearing House to bear the cost 

of late delivery fines, which should 

reasonably be passed on to the Clearing 

Members responsible for delivery 

failures. Furthermore, any such 

additional costs would result from a 

failure by the relevant Clearing Member 

or its customer to comply in a timely 

manner with its settlement obligations 

as specified under EU legislation. 

Accordingly, ICE Clear Europe does not 

believe the amendments would 

adversely affect competition among 

Clearing Members, materially affect the 

cost of clearing, adversely affect access 

to clearing for Clearing Members or their 

customers, or otherwise adversely affect 

competition in clearing services. 

Accordingly, ICE Clear Europe does not 

believe that the amendments would 

impose any impact or burden on 

competition that is not appropriate in 

furtherance of the purpose of the Act. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments relating to the 

proposed amendments have not been 

solicited or received by ICE Clear 

Europe. ICE Clear Europe will notify the 

Commission of any comments received 

with respect to the proposed rule 

change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 18 and paragraph (f) of Rule 

19b–4 19 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml) or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

ICEEU–2022–002 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–ICEEU–2022–002. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filings will also be available for 

inspection and copying at the principal 

office of ICE Clear Europe and on ICE 

Clear Europe’s website at https://

www.theice.com/notices/Notices.shtml?

regulatoryFilings. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number SR–ICEEU–2022–002 

and should be submitted on or before 

February 23, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02078 Filed 2–1–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94092; File No. SR–BOX– 

2021–06] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing of 

Amendment Nos. 2 and 3 and Order 

Granting Accelerated Approval of a 

Proposed Rule Change, as Modified by 

Amendment Nos. 2 and 3, To Adopt 

Rules Governing the Trading of Equity 

Securities on the Exchange Through a 

Facility of the Exchange Known as 

BSTX LLC 

January 27, 2022. 

Introduction 

On May 12, 2021, BOX Exchange LLC 

(‘‘Exchange’’ or ‘‘BOX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to adopt rules governing the 

listing and trading of equity securities 

on the Exchange through a facility of the 

Exchange to be known as BSTX LLC 

(‘‘BSTX’’). The proposed rule change 

was published for comment in the 

Federal Register on June 2, 2021.3 On 

July 13, 2021, the Commission extended 

the time period within which to 

approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to approve or disapprove the 

proposed rule change, to August 31, 

2021.4 On August 18, 2021, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which replaced 

and superseded the proposed rule 


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5 In Amendment No. 1, the Exchange revised the 

proposal to: (i) Eliminate the proposed suspension 

of unlisted trading privileges for thinly traded 

securities; (ii) modify proposed rule text regarding 

the order parameter that would allow participants 

to indicate a preference for same day or next day 

settlement to clarify that, based on how the 

preferences of the two sides of an executed trade 

compare, the Exchange will transmit matched order 

information to a registered clearing agency for 

settlement as indicated to the extent that such 

settlement timing may be permitted under the rules, 

policies, and procedures of the registered clearing 

agency; (iii) modify aspects of the proposed market 

data blockchain to remove the Exchange’s ability to 

change the content of the market data blockchain 

through a regulatory circular, remove the unique 

identification number from the types of memberspecific market data, specify that anonymized, 

general market data will pertain to displayed 

orders, and add that the Exchange may provide 

permission for non-members to view the 

anonymized, general market data; (iv) add rule text 

regarding the Exchange’s proposed market data 

products; (v) eliminate a proposed rule regarding 

issuer conversion of a security to listing on BSTX; 

(vi) provide additional description of several 

aspects of the proposal, including the market data 

blockchain and the possibility to settle on a sameday or next-day basis; and (vii) make technical and 

conforming changes. Amendment No. 1 is available 

on the Commission’s website at: https://

www.sec.gov/comments/sr-box-2021-06/ 

srbox202106-9159349-247726.pdf. 6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 92796, 

86 FR 49416 (September 2, 2021) (‘‘OIP’’). 

8See Securities Exchange Act Release No. 93649, 

86 FR 68023 (November 30, 2021). 

9 In Amendment No. 2, the Exchange revised the 

proposal to: (i) Provide additional information 

regarding the connectivity and co-location services 

that will be offered at the Exchange’s primary data 

center, including equidistant cabling arrangements; 

(ii) state that, pursuant to its authority under 

proposed BSTX Rule 26101, the Exchange would 

not permit an issuer to list a new class of securities 

on BSTX that is not distinct from an existing class 

of securities of the issuer; (iii) modify proposed rule 

text regarding the proposed market data blockchain 

to clarify that non-members will have access to 

anonymized, general market data and specify what 

fields are included in this data, to specify that the 

market data will apply to trading activity for regular 

trading hours, and to clarify that users will view the 

data through an application programming interface; 

(iv) modify proposed rule text related to the 

proposed order parameter that would be used to 

preference same-day settlement to add a cut-off 

time by which an execution must occur to be 

eligible for same-day settlement; (v) modify certain 

proposed rules to bring them into closer alignment 

with the rules of other national securities exchanges 

on which equity securities are traded, including 

rules regarding securities eligible for trading, 

prohibitions against trading ahead of customer 

orders, round lots, minimum price variants, 

auctions used to open or reopen trading, the 

dissemination of market data concerning such 

auctions, risk controls, market maker registration 

process and obligations, business conduct, trading 

practices, maintaining books and records, offexchange transactions, scope of the minor rule 

violation plan, trade reporting and the 

dissemination of quotations, clearly erroneous 

executions, and locking and crossing quotations; 

(vi) eliminate a proposed rule regarding an audit 

trail that has been superseded by rules pertaining 

to the Consolidated Audit Trail; (vii) modify certain 

proposed listing standards to comply with the 

thresholds in Rule 3a51–1, and bring the proposed 

listing standards into closer alignment with the 

rules of other national securities exchanges on 

which equities securities are traded, including with 

respect to the listing of secondary classes and 

preferred stock, the required number of market 

makers, requirements for securities of foreign 

issuers that would apply to the listing of Canadian 

issuers, the listing of securities that are subject to 

an exemption from Exchange Act registration, the 

method of computing the payment of cash in lieu 

of fractional shares, the settlement timing of 

securities transactions, requirements to notify the 

Exchange before engaging in activities relating to a 

proxy contest, requirements that listed companies 

establish and maintain an internal audit function, 

the calculation of regulatory transaction fees under 

Section 31 of the Exchange Act, and the distribution 

of funds in the event of liquidation of the Exchange; 

(viii) eliminate a proposed listing requirement that 

an applicant provide a legal opinion that its 

security qualifies as a security under applicable 

United States securities laws; (ix) provide 

additional description to clarify operation of the 

proposed market data blockchain and proposed 

order parameter that would be used to preference 

same-day or next-day settlement; and (x) make 

technical and conforming changes. Amendment No. 

2 is available on the Commission’s website at: 

https://www.sec.gov/comments/sr-box-2021-06/ 

srbox202106-20110109-264393.pdf (‘‘Amendment 

No. 2’’). 

10 In Amendment No. 3, the Exchange revised the 

proposal to make certain changes to the proposed 

listing rules in proposed BSTX Rule 26000 to 

promote consistency with the definition of ‘‘penny 

stock’’ under Exchange Act Rule 3a51–1, including 

by defining ‘‘public distribution’’ and ‘‘public 

shareholder’’ consistently with Rule 3a51–1, 

changing references to ‘‘Market Value of Listed 

Securities’’ to ‘‘Total Value of Market 

Capitalization,’’ and eliminating initial listing 

standards for preferred stock that were based on the 

rules of NYSE American. Amendment No. 3 is 

available on the Commission’s website at: https:// 

www.sec.gov/comments/sr-box-2021-06/ 

srbox202106-20112225-265310.pdf (‘‘Amendment 

No. 3’’). 

11See OIP, supra note 7; Amendment No. 2, 

supra note 9; Amendment No. 3, supra note 10. 

12See OIP, supra note 7, 86 FR at 49416. Pursuant 

to a separate proposed rule change, the Exchange 

proposes to establish BSTX as a facility of the 

Exchange that will operate a market for the trading 

of securities (‘‘BSTX Market’’) and adopt the BSTX 

Third Amended and Restated LLC Agreement. See 

Securities Exchange Act Release No. 93094 

(September 21, 2021), 86 FR 53365 (September 27, 

2021) (SR–BOX–2021–14) (Notice of Filing of 

Amendment No. 1 and Order Instituting 

Proceedings to Determine Whether to Approve or 

Disapprove a Proposed Rule Change, as Modified by 

Amendment No. 1, in Connection with the 

Proposed Establishment of BSTX as a Facility of the 

Exchange) (‘‘Amended BSTX Governance 

Proposal’’); Amendment No. 2, supra note 9, at 7. 

Among other things, the Amended BSTX 

Governance Proposal sets forth the proposed 

ownership structure for BSTX. The Exchange states 

that without Commission approval of the trading 

rules, the Exchange would not permit BSTX to 

commence operations of the BSTX Market, and that 

the Exchange’s regulatory oversight responsibilities 

with respect to BSTX would not be triggered unless 

SR–BOX–2021–14 is approved by the Commission. 

See Amended BSTX Governance Proposal, 86 FR at 

53366. The Exchange also states that without 

approved rules pertaining to the governance 

structure of BSTX as a facility of the Exchange, the 

Exchange will not commence operation of BSTX. 

See Amendment No. 2, supra note 9, at 9. 

13See OIP, supra note 7, 86 FR at 49416. 

14 17 CFR 242.600(b)(54). 

15See OIP, supra note 7, 86 FR at 49417. The 

Exchange proposes listing standards that, according 

to the Exchange, are similar to the listing standards 

of NYSE American LLC (‘‘NYSE American’’). See 

id. at 49439. 

16See id. at 49417. 

17See id. The Exchange also states that, therefore, 

it would only trade Securities listed on BSTX 

unless and until it proposes and receives 

Commission approval for rules that would support 

trading in other types of securities, including 

through the extension of UTP to other NMS stocks. 

See id. 

18 ‘‘BSTX Participant’’ would be defined as a 

Participant or Options Participant that is authorized 

to trade securities on the Exchange. See proposed 

BSTX Rule 17000(a)(12). See also proposed BOX 

Rules 100(a)(41) (defining ‘‘Options Participant’’ to 

mean a Participant registered with the Exchange for 

change as originally filed.5 On August 

27, 2021, the Commission published 

notice of Amendment No. 1 and 

instituted proceedings pursuant to 

Section 19(b)(2)(B) of the Exchange 

Act 6 to determine whether to approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1.7 On 

November 23, 2021, the Commission 

designated a longer period for 

Commission action on the proposed rule 

change, as modified by Amendment No. 

1.8 On December 20, 2021, the Exchange 

filed Amendment No. 2, which replaced 

and superseded the proposed rule 

change, as modified by Amendment No. 

1.9 On January 20, 2022, the Exchange 

filed partial Amendment No. 3 to the 

proposed rule change.10 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as modified by Amendment 

Nos. 2 and 3, from interested persons 

and is approving the proposed rule 

change, as modified by Amendment 

Nos. 2 and 3, on an accelerated basis. 

II. Description of the Proposal, as 

Modified by Amendment Nos. 2 and 3 

As set forth in the OIP and 

Amendment Nos. 2 and 3,11 the 

Exchange proposes to adopt listing 

standards for certain equity securities 

(‘‘Securities’’) along with rules 

governing the trading of Securities 

through a facility of the Exchange 

known as BSTX.12 BSTX would operate 

a fully automated, price/time priority 

execution system (‘‘BSTX System’’) for 

the trading of Securities.13 Under the 

proposed rules, Securities would be 

NMS stocks, as defined in Rule 

600(b)(54),14 that meet BSTX listing 

standards and that trade on the BSTX 

System.15 BSTX would serve as the 

listing market for eligible companies 

and issuers of exchange traded products 

(‘‘ETPs’’).16 The Exchange states that it 

is not proposing rules that would 

support the extension of unlisted 

trading privileges (‘‘UTP’’) to NMS 

stocks listed on other national securities 

exchanges.17

The Exchange proposes rules for 

participation on BSTX, business 

conduct for BSTX Participants,18


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purposes of participating in options trading on the 

Exchange); and 100(a)(42) (defining ‘‘Participant’’ to 

mean a firm or organization that is registered with 

the Exchange pursuant to BOX Rule 2000 Series for 

purposes of participating in trading on a facility of 

the Exchange, including an Options Participant and 

BSTX Participant). 

19See OIP, supra note 7, 86 FR at 49417. 

20See proposed BSTX Rule 22060. The Exchange 

states that its rule concerning market data products 

is substantially similar to that of MEMX LLC 

(‘‘MEMX’’). See OIP, supra note 7, 86 FR at 49424 

& n.154. 

21See proposed BSTX Rules 17000(a)(9) and 

17020. 

22See OIP, supra note 7, 86 FR at 49420. The 

Exchange states that only the Exchange would have 

direct access to the underlying data on the private 

blockchain. See id. 

23See id. 

24See id. 

25See id. at 49421. See also infra note 156 

(describing that by ‘‘five minute delay,’’ the 

Exchange means that market data would be 

uploaded once every five minutes). 

26See OIP, supra note 7, 86 FR at 49421. 

27See id. at 49423. The Exchange states that it is 

proposing to use blockchain technology for 

purposes of the BSTX Market Data Blockchain and 

that, to the extent the Exchange proposes future 

applications of blockchain technology to the 

Exchange’s business, the Exchange would file such 

proposal with the Commission. See Amendment 

No. 2, supra note 9, at 29 n.52. The Commission 

notes that the Exchange’s current proposal does not 

involve the trading of digital tokens and such a 

proposal, or any other additional use of blockchain 

technology, would require that the Exchange file a 

proposed rule change pursuant to Section 19(b) and 

Rule 19b–4 of the Exchange Act. 

28See OIP, supra note 7, 86 FR at 49418. The 

Exchange also states that the operation of the BSTX 

Market Data Blockchain would have no impact or 

effect on the manner in which a Security clears and 

settles. See id. 

29See id. 

30See id. at 49423; proposed BSTX Rule 

25060(h). 

31See OIP, supra note 7, 86 FR at 49424. 

32See id. 

33See id. at 49425. 

34See id. at 49424. 

35 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

36 15 U.S.C. 78f(b)(5). 

37 15 U.S.C. 78f(b)(1). 

financial and operational provisions for 

BSTX Participants, supervision, trading 

practices, discipline, trading on the 

BSTX System, market making, and 

listing Securities on BSTX.19 The 

Exchange proposes to offer several 

proprietary market data products that 

are similar to those offered by other 

national securities exchanges, as well as 

a historical market data product that 

utilizes blockchain technology.20

Specifically, the Exchange proposes to 

record and disseminate certain 

information regarding orders and 

executions on BSTX on a proprietary 

market data feed that BSTX would 

operate using a proprietary blockchain 

system (‘‘BSTX Market Data 

Blockchain’’).21 The Exchange states 

that the BSTX Market Data Blockchain 

would be accessible through an 

application program interface (‘‘API’’) 

available through the internet, and the 

Exchange would control all aspects of 

the BSTX Market Data Blockchain and 

the associated API.22

The Exchange states that two types of 

information would be available on the 

BSTX Market Data Blockchain. Each 

BSTX Participant would be able to see 

its own order and transaction 

information related to its own trading 

activity on BSTX (‘‘Participant 

Proprietary Data’’).23 In addition, all 

BSTX Participants and non-BSTX 

Participants with permission to view the 

BSTX Market Data Blockchain would be 

able to see anonymized, general market 

data related to all trading activity 

occurring on BSTX (‘‘General Market 

Data’’).24 The Exchange states that 

information would be posted to the 

BSTX Market Data Blockchain on a 

delayed basis of at least five minutes.25

The Exchange states that the General 

Market Data that would be available on 

the BSTX Market Data Blockchain 

would contain substantively similar 

information as would be available 

through the Exchange’s proprietary 

market data feeds.26 The Exchange 

further states that the BSTX Market Data 

Blockchain would not impact the ability 

of Securities to trade on other national 

securities exchanges or over-the-counter 

(‘‘OTC’’).27

According to the Exchange, all 

transactions in Securities would clear 

and settle in accordance with the rules, 

policies, and procedures of registered 

clearing agencies.28 The Exchange states 

that BSTX anticipates that The 

Depository Trust Company (‘‘DTC’’) 

would serve as the securities depository 

for Securities and that confirmed trades 

in Securities on BSTX would be 

transmitted to National Securities 

Clearing Corporation (‘‘NSCC’’) for 

clearing.29 The Exchange proposes to 

introduce an optional order parameter 

that would allow BSTX Participants to 

indicate a preference for settlement on 

a shorter settlement cycle than the 

standard two business day (‘‘T+2’’) 

settlement cycle. Specifically, the 

Exchange proposes that BSTX 

Participants would be able to utilize an 

order parameter that would indicate a 

preference for settlement on a same day 

(‘‘T+0’’) or next day (‘‘T+1’’) basis when 

certain conditions are met.30 The 

Exchange states that orders in a Security 

that include a parameter indicating a 

preference for settlement on a T+0 basis 

or on a T+1 basis would only result in 

executions that would actually settle 

more quickly than on a T+2 basis if, and 

only if, all of the specified conditions 

are met and the execution that is 

transmitted by BSTX to NSCC is eligible 

for T+0 or T+1 settlement under the 

rules, policies, and procedures of a 

registered clearing agency.31 The 

Exchange states that any such 

preference would only become 

operative if the order happened to 

execute against another order that also 

includes a parameter indicating a 

preference for settlement on a T+0 or 

T+1 basis.32 According to the Exchange, 

an order with a preference for faster 

settlement would continue to interact 

with any other order against which it is 

marketable, and a resulting execution 

would always settle using the latest 

settlement timing associated with the 

two matching orders.33 The Exchange 

also states that the possibility of a 

shortened settlement time would have 

no impact on the Exchange’s proposed 

price/time priority structure for order 

matching.34

III. Discussion and Commission 

Findings 

After careful review of the proposed 

rule change, as modified by Amendment 

Nos. 2 and 3, the Commission finds that 

the proposal is consistent with the 

requirements of the Exchange Act and 

the rules and regulations thereunder 

applicable to a national securities 

exchange.35 Specifically, the 

Commission finds that the proposed 

rule change, as amended, is consistent 

with Section 6(b)(5) of the Exchange 

Act,36 which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices; to promote just and 

equitable principles of trade; to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, and processing information 

with respect to, and facilitating 

transactions in securities; to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system; and, in 

general, to protect investors and the 

public interest. Section 6(b)(5) also 

requires that the rules of a national 

securities exchange not be designed to 

permit unfair discrimination among 

customers, issuers, brokers, or dealers. 

Further, the Commission finds that the 

proposed rule change, as amended, is 

consistent with Section 6(b)(1) of the 

Exchange Act,37 which requires, among 

other things, that a national securities 

exchange be so organized and have the 

capacity to carry out the purposes of the 

Exchange Act, and to comply and 

enforce compliance by its members and 


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38 15 U.S.C. 78f(b)(6) and (b)(7). 

39 15 U.S.C. 78k–1. 

40 15 U.S.C. 78f(b)(8). 

41 17 CFR 240.19d–1(c)(2). 

42BSTX’s rules, including its rules relating to 

participation on BSTX and business conduct, 

financial and operational, supervisory, and trading 

practice rules, and certain trading, market making, 

and listing rules, are similar to existing national 

securities exchanges’ trading and listing rules. See, 

e.g., Rules of the Cboe BZX Exchange, Inc. (‘‘Cboe 

BZX’’), Investors Exchange LLC (‘‘IEX’’), and NYSE 

American. 

43See OIP, supra note 7, 86 FR at 49417. The 

Exchange proposes defined terms for use in the 

BSTX Rules, and states that terms defined 

elsewhere in the BOX Rules shall have the same 

meaning. See proposed BSTX Rule 17000. The 

Exchange also proposes to specify that the proposed 

BSTX Rules apply to the trading of securities by 

BSTX Participants approved for such trading, the 

listing of securities, and related matters pertaining 

to the trading of securities, and that unless specific 

BSTX Rules related to securities govern or the 

context otherwise requires, the provisions of the 

existing BOX Rules shall be applicable to BSTX 

Participants and the trading of securities on the 

BSTX System. See proposed BSTX Rule 17010. 

Further, the Exchange proposes to make conforming 

changes to certain existing BOX Rules that would 

apply to BSTX Participants, but currently only 

contemplate trading in options. See Amendment 

No. 2, supra note 9, at 123; proposed BOX Rules 

100, 2020, 2060, 3180, 7130, 7150, 7230, 7245, IM– 

8050–3, 11010, 11030, and 12140. 

44See Exhibits 3A, 3B, and 3C, respectively. 

45The BOX Rule 2000 Series requires, among 

other things, that a Participant (including a BSTX 

Participant) remain a member of another registered 

national securities exchange or national securities 

association. See OIP, supra note 7, 86 FR at 49448 

n.320. 

46See proposed BSTX Rule 18000. 

47See proposed BSTX Rule 18010(b). See also 

Exhibits 3F and 3G. 

48See proposed BSTX Rule 18020(b). 

49See proposed BSTX Rule Series 19000, 20000, 

21000, 23000, 24000, 25000, and 25200. 

50See Amendment No. 2, supra note 9, at 48 

(citing to Cboe BZX Rules Chapter III and IEX Rules 

Chapter 3). 

51See OIP, supra note 7, 86 FR at 49427. For 

example, the Exchange is not proposing to adopt a 

rule contained in other national securities 

exchanges’ business conduct rules relating to 

disclosures that broker-dealers give to their 

customers regarding the risks of effecting securities 

transactions during times other than Regular 

Trading Hours because executions may only occur 

during Regular Trading Hours on the BSTX System. 

See id. at 49427 n.113 (citing to IEX Rule 3.290 and 

Cboe BZX Rule 3.21). ‘‘Regular Trading Hours’’ 

would mean the time between 9:30 a.m. and 4:00 

p.m. Eastern Time (‘‘ET’’). See proposed BSTX Rule 

17000(a)(29). 

persons associated with its members, 

with the provisions of the Exchange Act, 

the rules and regulations thereunder, 

and the rules of the exchange, and with 

Sections 6(b)(6) and 6(b)(7) of the 

Exchange Act,38 which require a 

national securities exchange to provide 

fair procedures for the disciplining of 

members and persons associated with 

members. The Commission also finds 

that the proposed rule change, as 

amended, is consistent with Section 

11A of the Exchange Act,39 and, 

consistent with Section 6(b)(8) of the 

Exchange Act, does not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act.40 The 

Commission further finds that the 

proposed rule change, as amended, is 

consistent with the public interest, the 

protection of investors, or otherwise in 

furtherance of the purposes of the 

Exchange Act, as required by Rule 19d– 

1(c)(2) under the Exchange Act,41 which 

governs minor rule violation plans. 

The Exchange proposes to adopt rules 

governing the trading of Securities 

under the proposed rules through a 

facility of the Exchange known as BSTX, 

which will function in a manner similar 

to equities trading platforms that the 

Commission has approved for other 

national securities exchanges.42 With 

the exception of the proposed BSTX 

Market Data Blockchain and optional 

order parameter for preferencing 

settlement on a T+0 or T+1 basis, the 

Exchange’s proposed rules for BSTX are 

substantively similar to the 

corresponding rules of other equities 

exchanges. As discussed below, the 

Commission believes that the proposed 

rule change, as modified by Amendment 

Nos. 2 and 3, is consistent with the 

Exchange Act. 

A. BSTX Participants 

The Exchange proposes to adopt 

BSTX Rule 18000, which will set forth 

requirements for participation on BSTX. 

A ‘‘BSTX Participant’’ will be a new 

category of Exchange participant for 

effecting transactions on the BSTX 

System. All BOX Participants would be 

eligible to participate in BSTX provided 

that they become a BSTX Participant 

pursuant to the proposed rules.43 A 

BSTX Participant must complete the 

BSTX Participation Application, 

Participation Agreement, and User 

Agreement; 44 be an existing Participant 

or Options Participant or become a 

Participant or Options Participant of the 

Exchange pursuant to BOX Rule 2000 

Series and continue to abide by all 

applicable provisions in BOX Rule 2000 

Series; 45 and provide such other 

information as required by the 

Exchange.46 BSTX Participants would 

be required to comply with, among 

other things, financial responsibility 

requirements established by Rule 15c3– 

1 under the Exchange Act and 

applicable books and records 

requirements, and be a member or 

participant of a registered clearing 

agency or clear security transactions 

through another BSTX Participant that 

is a member or participant of a 

registered clearing agency.47 In 

addition, proposed BSTX Rule 18020 

would require associated persons of a 

BSTX Participant to be bound by the 

rules of the Exchange to the same extent 

as each BSTX Participant and allow the 

Exchange to discipline, suspend, or 

terminate the registration with the 

Exchange of any person associated with 

a BSTX Participant for violation of the 

Exchange rules.48

The Exchange also proposes rules for 

business conduct for BSTX Participants, 

financial and operational provisions for 

BSTX Participants, and rules for 

supervision, trading practices, 

discipline, and market making.49

According to the Exchange, the 

proposed BSTX Rule 19000 Series 

would specify business conduct 

requirements that are substantially 

similar to those of other national 

securities exchanges,50 which pertain 

to: Just and equitable principles of trade; 

adherence to law; use of fraudulent 

devices; false statements; know your 

customer; fair dealing with customers; 

suitability; prompt receipt and delivery 

of securities; charges for services 

performed; use of information obtained 

in a fiduciary capacity; publication of 

transactions and quotations; offers at 

stated prices; payments involving 

publications that influence the market 

price of a security; customer 

confirmations; disclosure of a control 

relationship with an issuer of securities; 

discretionary accounts; improper use of 

customers’ securities or funds and a 

prohibition against guarantees and 

sharing in accounts; the extent to which 

sharing in accounts is permissible; 

communications with customers and 

the public; gratuities; telemarketing; 

mandatory systems testing; and short 

interest reporting. The Exchange states 

that the proposed business conduct 

rules are identical to those of other 

national securities exchanges, other 

than changes to defined terms and 

certain other provisions that would not 

apply to the trading of Securities on the 

BSTX System.51

According to the Exchange, the 

proposed BSTX Rule 20000 Series 

would specify financial and operational 

rules for BSTX Participants associated 

with maintenance and furnishing of 

books and records, financial reports, net 

capital compliance, early warning 

notifications pursuant to Rule 17a–11 

under the Exchange Act, authority of the 

Chief Regulatory Officer to impose 

certain restrictions, margin, day-trading 

margin, customer account information, 

maintaining records of customer 

complaints, and disclosure of financial 


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52See OIP, supra note 7, 86 FR at 49428. 

53See id. at 49428 & n.116 (citing to Cboe BZX 

Rules Chapter VI and IEX Rules Chapter 5). The 

Exchange states that the proposed BSTX Rule 20000 

Series also incorporates existing rules of the 

Exchange or another self-regulatory organization 

(‘‘SRO’’) by reference. See id. at 49428. 

54See id. 

55See id. at 49428 & n.128 (citing to Cboe BZX 

Rules Chapter V and IEX Rule 5.150). 

56See proposed BSTX Rule 22000 Series. 

57See Amendment No. 2, supra note 9, at 58; 

proposed BSTX Rule 22070. The Exchange states 

that the proposed rule is consistent with the 

requirements of Rules 19c–1 and 19c–3 under the 

Exchange Act and substantially similar to rules of 

other national securities exchanges. See 

Amendment No. 2, supra note 9, at 58 (citing to, 

for example, Cboe BZX Rule 13.6). 

58See OIP, supra note 7, 86 FR at 49429 & n.138 

(citing to Cboe BZX Rules Chapter XIII and IEX 

Rule 6.180). 

59According to the Exchange, the proposed BSTX 

Rule 23000 Series would specify trading practice 

requirements related to: (i) Market manipulation; 

(ii) fictitious transactions; (iii) excessive sales by a 

BSTX Participant; (iv) manipulative transactions; 

(v) dissemination of false information; (vi) 

prohibition against trading ahead of customer 

orders; (vii) joint activity; (viii) influencing data 

feeds; (ix) trade shredding; (x) best execution; (xi) 

publication of transactions and changes; (xii) 

trading ahead of research reports; (xiii) front 

running of block transactions; and (xiv) a 

prohibition against disruptive quoting and trading 

activity. See id. at 49429. 

60See id. at 49429 & n.155 (citing to Cboe BZX 

Rules Chapter XII). The Exchange states that the 

proposed minimum price improvement standards 

in proposed BSTX Rule 23050(h) are consistent 

with those of other national securities exchanges 

and the Financial Industry Regulatory Authority 

(‘‘FINRA’’). See Amendment No. 2, supra note 9, at 

62 (citing to Cboe BZX Rule 12.6.06). 

61See BOX Rule 11000 Series (Summary 

Suspension), 12000 Series (Discipline), 13000 

Series (Review of Certain Exchange Actions), and 

14000 Series (Arbitration). 

62See OIP, supra note 7, 86 FR at 49430–31; 

proposed BSTX Rule 24000. In addition, the 

Exchange proposes to amend its Minor Rule 

Violation Plan to add certain rules relating to BSTX 

to the list of rules eligible for minor rule violation 

plan treatment, by amending BOX Rule 12140 and 

adopting proposed BSTX Rule 24010 (Penalty for 

Minor Rule Violations). See Amendment No. 2, 

supra note 9, at 121. 

63 ‘‘Designated Market Maker’’ or ‘‘DMM’’ would 

be defined as a BSTX Participant registered as a 

DMM pursuant to the BSTX Rule 25200 Series. See 

proposed BSTX Rule 17000(a)(20). 

64See proposed BSTX Rule 25200 Series. The 

Exchange states that rules relating to market makers 

are similar to the rules of other national securities 

exchanges. See Amendment No. 2, supra note 9, at 

95–102 (citing to IEX Rules 11.150 and 11.151 and 

NYSE American Rules 7.20E through 7.26E). The 

Exchange states that proposed BSTX Rule 25200 

differs from IEX Rule 11.150 in that IEX makes the 

registration effective on the trading day after the 

request is entered, whereas the Exchange would 

have discretion to make registration effective the 

day the request is entered with notice provided to 

the prospective BSTX Market Maker. See id. at 95 

n.277. 

65See proposed BSTX Rule 25220. The Exchange 

states that proposed BSTX Rule 25220 is 

substantially similar to NYSE American Rule 7.23E, 

with certain exceptions, and IEX Rule 11.151. 

According to the Exchange, the proposed BSTX rule 

differs from NYSE American Rule 7.23E in that, 

among other things, the proposed BSTX rule 

specifies the minimum quotation increment for 

securities priced above $1.00 per share and below 

$1.00 per share and requires Market Maker 

quotations to be firm for their displayed size and 

automatically executable. See Amendment No. 2, 

supra note 9, at 97–98. See also infra note 66. 

66See proposed BSTX Rule 25220(a)(1). The 

Exchange proposes that the quotes must be entered 

within the ‘‘Designated Percentage,’’ which 

according to the Exchange would be the same as 

that required of market makers on other national 

securities exchanges. See Amendment No. 2, supra 

note 9, at 96 (citing to IEX Rule 11.151). The 

Exchange notes, however, that the Defined 

Percentage and ‘‘Defined Limit,’’ which is the 

percentage by which price movements cause a 

Market Maker or DMM’s quotations to fall outside 

of the national best bid and offer (‘‘NBBO’’) or last 

sale price, differ from NYSE American Rule 7.23E 

in that the Exchange specifies Defined Percentage 

and Defined Limit with reference to securities that 

are part of the S&P500 Index, Russell 1000 Index, 

or a pilot list of exchange traded products. The 

Exchange states its belief that the difference does 

not pose any novel requirements and is similar to 

the market maker requirements of IEX. See id. at 98 

(citing to IEX Rules 11.151(a)(6), (7), (11), and 

11.151(b)(1)). 

67See proposed BSTX Rule 25220(d). According 

to the Exchange, the process by which a DMM may 

temporarily withdraw from its DMM status is 

similar to the process applicable to a non-DMM 

Market Maker. See proposed BSTX Rule 

25240(b)(4); OIP, supra note 7, 86 FR at 49438. 

68See proposed BSTX Rule 25210(d). 

69See supra note 66; proposed BSTX Rule 

25220(a). 

condition.52 The Exchange represents 

that the financial and operational 

requirements are substantially similar to 

those of other national securities 

exchanges.53 Further, the Exchange 

proposes to adopt supervisory 

requirements for BSTX Participants in 

the proposed BSTX Rule 21000 Series, 

which, according to the Exchange, are 

substantially similar to those of other 

national securities exchanges.54 The 

proposed supervisory requirements 

pertain to enforcing written procedures 

to appropriately supervise the BSTX 

Participant’s conduct and compliance 

with applicable regulatory 

requirements, designation of an 

individual to carry out written 

supervisory procedures, maintenance 

and keeping of records carrying out the 

BSTX Participant’s written supervisory 

procedures, review of activities of each 

BSTX Participant’s offices, including 

periodic examination of customer 

accounts to detect and prevent 

irregularities or abuses, prevention of 

the misuse of material non-public 

information, and implementation of an 

anti-money laundering compliance 

program.55

The proposed BSTX Rule 22000 

Series would provide, among other 

things, that BSTX Participants must 

comply with requirements with respect 

to comparison and settlement, 

borrowing and deliveries in accordance 

with Rule 203 of Regulation SHO, 

forwarding of proxy and other issuerrelated materials, commissions, 

regulatory services agreements, and 

conditions and limitations on 

transactions involving Exchange 

employees.56 Proposed BSTX Rule 

22070 would generally provide that the 

rules of the Exchange would not 

prohibit, condition, or limit the ability 

of any BSTX Participant, including a 

BSTX Participant acting as an agent, to 

effect any transaction otherwise than on 

the Exchange with another person in 

any security listed on the Exchange or 

to which UTP on the Exchange has been 

extended.57 The Exchange represents 

that these miscellaneous requirements 

are substantially similar to rules of other 

national securities exchanges.58 The 

Exchange also proposes to adopt the 

BSTX Rule 23000 Series relating to 

trading practice requirements for BSTX 

Participants, including prohibiting 

forms of market manipulation and 

specifying certain obligations brokerdealers have to their customers, such as 

the duty of best execution.59 The 

Exchange represents that the trading 

practice rules are substantially similar 

to those of other national securities 

exchanges.60

With respect to the imposition of 

suspension and disciplinary actions, the 

Exchange states that it proposes to adopt 

the BSTX Rule 24000 Series, which 

would provide that the Exchange 

rules 61 pertaining to discipline and 

suspension of Exchange Participants 

that have been approved by the 

Commission shall be applicable to 

BSTX Participants and trading on the 

BSTX System.62

The Exchange proposes to allow firms 

to register as Market Makers and 

Designated Market Makers (‘‘DMMs’’) 63

with affirmative and negative market 

making obligations.64 A BSTX 

Participant registered as a BSTX Market 

Maker, including a DMM, would be 

required to engage in a course of dealing 

for its own account in the maintenance 

of a fair and orderly market.65 Among 

other things, each Market Maker must 

maintain two-sided quotes during the 

regular market session for each Security 

in which it is registered as a Market 

Maker.66 A non-DMM Market Maker 

may temporarily withdraw its Market 

Maker status,67 and any BSTX Market 

Maker, other than a DMM, may 

voluntarily terminate its registration 

with the Exchange.68 If the Exchange 

finds any substantial or continued 

failure by a BSTX Market Maker to 

engage in a course of dealings specified 

in proposed BSTX Rule 25220(a),69 the 


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70See proposed BSTX Rule 25220(c). 

71See proposed BSTX Rule 25230. 

72See id. 

73See Amendment No. 2, supra note 9, at 98 

(citing to NYSE American Rule 7.21E and Cboe BZX 

Rule 11.6). 

74See proposed BSTX Rule 25240. The Exchange 

represents that proposed BSTX Rule 25240 is 

substantially similar to NYSE American Rule 7.24E, 

except the Exchange would not be required to 

assign a DMM if the Security has an adequate 

number of BSTX Market Makers assigned to such 

Security. The Exchange states that the purpose of 

this requirement is to acknowledge the possibility 

that a Security need not necessarily have a DMM, 

provided that each Security has been assigned at 

least four active Market Makers, consistent with 

proposed the Market Maker requirement in BSTX 

Rule 26106. See Amendment No. 2, supra note 9, 

at 99–100. 

75See supra notes 65–66. 

76See proposed BSTX Rule 25240(c). 

77See proposed BSTX Rule 25240(a). 

78See proposed BSTX Rule 25240(b)(3). 

79See proposed BSTX Rule 25250. 

80See proposed BSTX Rule 25250(a). The 

Exchange states that the process by which the 

Exchange would handle a DMM that fails to meet 

its obligations, as proposed in BSTX Rule 

25250(a)(4), is substantially similar to NYSE 

American Rule 7.25E(a)(4). See OIP, supra note 7, 

86 FR at 49438 & n.254. 

81See proposed BSTX Rule 25250(b). See also 

Exhibit 3D. The Exchange states that the proposed 

rule is similar to NYSE American Rule 7.25E(b). See 

Amendment No. 2, supra note 9, at 101. 

82See proposed BSTX Rule 25250(c). The 

Exchange represents that the proposed reallocation 

policy is substantially similarly to corresponding 

provisions in NYSE American Rule 7.25E(c). See 

OIP, supra note 7, 86 FR at 49439. 

83See proposed BSTX Rule 25250(d); OIP, supra 

note 7, 86 FR at 49439 (stating that the proposed 

rule is substantially similar to NYSE American Rule 

7.25E(d)). 

84See proposed BSTX Rule 25250(e); OIP, supra 

note 7, 86 FR at 49439 (stating that the proposed 

rule is substantially similar to NYSE American Rule 

7.25E(e)). 

85See proposed BSTX Rule 25250(f); OIP, supra 

note 7, 86 FR at 49439 (stating that the proposed 

rule is substantially similar to NYSE American Rule 

7.25E(f)). 

86See proposed BSTX Rule 25260. 

87See id. 

88See id. The Exchange represents that the 

proposed rule is substantially similar to NYSE 

American Rule 7.26E. See OIP, supra note 7, 86 FR 

at 49439. 

89 15 U.S.C. 78f(b)(5). 

90 15 U.S.C. 78f(b)(6) and (7). 

91See OIP, supra note 7, 86 FR at 49416. 

92 17 CFR 242.600(b)(6) and (b)(7). See 

Amendment No. 2, supra note 9, at 86; proposed 

BSTX Rule 25100(c). 

Exchange would subject the Market 

Maker to disciplinary action or 

suspension or revocation of the 

registration by the Exchange in one or 

more of the Securities in which the 

Market Maker is registered.70

Proposed BSTX Rule 25230 sets forth 

certain requirements for Market Maker 

Authorized Traders (‘‘MMATs’’), which 

are individuals permitted to enter orders 

only for the account of the Market 

Maker or DMM for which they are 

registered.71 The proposed rule 

specifies, among other things, eligibility 

for registration as a MMAT, the 

Exchange’s ability to suspend an 

individual’s registration as a MMAT, 

and the process for voluntary 

withdrawal of a MMAT via written 

request of the BSTX Participant for 

which the MMAT is registered.72 The 

Exchange represents that the proposed 

provisions related to MMATs are 

substantially similar to those of other 

national securities exchanges.73

Proposed BSTX Rule 25240 sets forth 

the registration and obligations of 

DMMs.74 Among other things, a DMM 

must be registered as a Market Maker 

and, in addition to meeting the 

obligations of Market Makers set forth in 

proposed BSTX Rule 25220,75 the DMM 

must maintain a bid or offer at the 

NBBO at least 25% of the day as 

measured across all Securities that have 

been assigned to the DMM.76 Proposed 

BSTX Rule 25240 further provides that 

all BSTX-listed Securities may be 

assigned to a DMM and there would be 

no more than one DMM per BSTX-listed 

Security.77 A BSTX Participant 

registered as a DMM in a Security may 

also be registered as a Market Maker in 

that Security only if the BSTX 

Participant maintains information 

barriers between the trading unit 

operating as a DMM and the trading unit 

operating as a non-DMM Market Maker 

in the same Security.78 Proposed BSTX 

Rule 25250 would set forth the 

allocation and reallocation of Securities 

to DMMs.79 Among other things, the 

proposed rule would set forth when a 

Security is eligible for allocation or 

reallocation, as well as the eligibility of 

DMMs to participate in the allocation 

process.80 The proposed rule further 

sets forth the allocation process— 

whether the issuer selects the DMM 

directly, delegates the selection to the 

Exchange, or opts to proceed with 

listing without a DMM, in which case a 

minimum of four non-DMM Market 

Makers must be assigned to its 

Security.81

In the event that a listed company 

wishes to change its DMM, proposed 

BSTX Rule 25250(c) sets forth the 

reallocation process.82 Should a DMM 

lose its registration or voluntarily 

withdraw its registration, the DMM 

would be ineligible, under the 

Exchange’s ‘‘Allocation Freeze Policy,’’ 

for future allocations for a six-month 

period.83 For companies that list 

Securities through an initial public 

offering, the allocation decision would 

remain effective for 18 months.84 The 

proposed rule also sets forth criteria the 

Exchange may consider for applicants 

that are not currently DMMs to be 

allocated a Security as a DMM.85

The Exchange proposes the DMM 

combination review policy in BSTX 

Rule 25260.86 A DMM combination 

would require proponents of the 

combination to make a written 

submission to the Office of the 

Corporate Secretary of the Exchange 

addressing certain enumerated factors 

for the Exchange to consider in 

reviewing the proposed combination, 

and as well as the procedures the 

Exchange would follow in approving or 

disapproving a combination.87 The 

proposed rule also sets forth the 

timeline for the Exchange to approve or 

disapprove a combination, the ability of 

the Exchange to grant conditional 

approvals, and the ability to have the 

Exchange’s board of directors to review 

a disapproval decision.88

The Exchange’s rules with respect to 

participation on BSTX, including the 

proposed affirmative and negative 

obligations for Market Makers and 

DMMs, and the proposed business 

conduct, financial and operational, 

supervision, and trading practice rules, 

raise no novel regulatory issues. The 

Commission finds that these proposed 

rules are consistent with the Exchange 

Act, and Section 6(b)(5) of the Exchange 

Act in particular,89 because by setting 

forth these requirements for different 

types of participants, they establish a 

framework for what entities will 

participate in BSTX and how they will 

interact with other BSTX Participants 

and fulfill their obligations, which 

should help to promote just and 

equitable principles of trade, perfect the 

mechanism of a national market system 

and, in general, protect investors and 

the public interest. The Commission 

also finds that these proposed rules 

subject BSTX Participants, including 

BSTX Market Makers and DMMs, to 

appropriate discipline for improper 

conduct, consistent with Sections 

6(b)(6) and 6(b)(7) of the Exchange 

Act.90

B. BSTX System 

The Exchange proposes that BSTX 

would operate the BSTX System as a 

fully automated, price-time priority 

execution system.91 The BSTX System 

would operate as an ‘‘automated trading 

center’’ under Rule 600(b)(7) of 

Regulation NMS and would display 

‘‘automated quotations’’ under Rule 

600(b)(6) of Regulation NMS at all 

times, except in the event that a system 

malfunction renders the BSTX System 

incapable of displaying automated 

quotations.92 BSTX’s best-priced 

quotation in an NMS stock would be a 


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93 17 CFR 242.600(b)(70) and (b)(71). See OIP, 

supra note 7, 86 FR at 49435 & n.210. 

94See OIP, supra note 7, 86 FR at 49431; 

proposed BSTX Rule 25000(a). The Exchange 

represents that proposed BSTX Rule 25000 is 

substantially similar to IEX Rule 11.140. See 

Amendment No. 2, supra note 9, at 65 n.175. 

95See proposed BSTX Rule 25060(c). The 

Exchange states that if a BSTX Participant fails to 

specify a limit price with respect to its limit order, 

such order shall be rejected. ISOs must be limit 

orders, are ineligible for routing, may be submitted 

with a limit price during Regular Trading Hours, 

and must have a time-in-force of immediate-orcancel (‘‘IOC’’). See OIP, supra note 7, 86 FR at 

49434 & n.202. 

96See OIP, supra note 7, 86 FR at 49434; 

proposed BSTX Rule 25060(d). 

97See OIP, supra note 7, 86 FR at 49434; 

proposed BSTX Rule 25060(d)(1). 

98 ‘‘Pre-Opening Phase’’ would mean the time 

between 8:30 a.m. and 9:30 a.m. ET. See proposed 

BSTX Rule 17000(a)(28). 

99See OIP, supra note 7, 86 FR at 49434; 

proposed BSTX Rule 25060(d)(1). 

100See OIP, supra note 7, 86 FR at 49434; 

proposed BSTX Rule 25060(d)(2). 

101See id. 

102 ‘‘BSTX Book’’ would mean the electronic book 

of orders on each Security maintained by the BSTX 

System. See proposed BSTX Rule 17000(a)(10). 

103See OIP, supra note 7, 86 FR at 49434; 

proposed BSTX Rule 25060(f). 

104See OIP, supra note 7, 86 FR at 49434. The 

Exchange states that the BSTX System will not 

support hidden orders, undisplayed liquidity, price 

sliding, pegged orders, or other order type features 

that add complexity upon the initial launch of 

BSTX. See id. 

105See infra notes 190–207 and accompanying 

text. 

106See, e.g., Cboe BZX Rule 11.9(d). 

107 15 U.S.C. 78f(b)(5). 

108Although the Exchange initially plans to only 

support trading in securities listed on BSTX, the 

Exchange states that it may in the future propose 

to trade securities listed on other national securities 

exchanges, subject to any necessary changes to its 

rules to support its trading pursuant to Section 

19(b) and Rule 19b–4 of the Exchange Act. The 

Exchange also states that for such reason it proposes 

to adopt an opening process for non-BSTX-listed 

securities as a placeholder for potential trading of 

securities listed on other national securities 

exchanges in the future. The Exchange states that 

the proposed process for opening securities listed 

on other national securities exchanges is similar to 

the existing rules of another national securities 

exchange. See proposed BSTX Rule 25040(e); 

Amendment No. 2, supra note 9, at 74–75 (citing 

to Cboe BZX Rule 11.24). 

109See OIP, supra note 7, 86 FR at 49431. During 

the Pre-Opening Phase, orders may not be cancelled 

or modified from 9:28 a.m. to 9:30 a.m. Orders 

received during the 10 seconds prior to the Opening 

Auction would be rejected. See proposed BSTX 

Rule 25040(a)(1). ‘‘Opening Auction’’ would be 

defined as the process of crossing orders in BSTXlisted Securities to open the market. See proposed 

BSTX Rule 25040(a)(6). The Exchange states that 

these provisions are consistent with the rules of 

other equities exchanges. See Amendment No. 2, 

supra note 9, at 68 n.185 (citing to IEX Rules 

11.350(c)(1)(B) and (C)). 

110See OIP, supra note 7, 86 FR at 49431; 

proposed BSTX Rule 25040(a)(2). The TOP is the 

price at which the Opening Auction would occur 

at the current time, if that time were the opening, 

according to the Opening Auction procedures in 

proposed BSTX Rule 25040(a)(6). See proposed 

BSTX Rule 25040(a). 

111See OIP, supra note 7, 86 FR at 49431–32. 

Specifically, in addition to the TOP, ‘‘Broadcast 

Information’’ would include: (i) ‘‘Paired Orders,’’ 

which is the quantity of shares that would execute 

at the TOP; (ii) the ‘‘Imbalance Quantity,’’ which is 

the number of shares that may not be matched with 

other orders at the TOP at the time of 

dissemination; and (iii) the ‘‘Imbalance Side,’’ 

which is the buy/sell direction of any imbalance at 

the time of dissemination. See Amendment No. 2, 

supra note 9, at 68–69. 

112See Amendment No. 2, supra note 9, at 69; 

proposed BSTX Rule 25040(a)(4). The Exchange 

states that Cboe BZX similarly broadcasts opening 

auction information every five seconds. See 

Amendment No. 2, supra note 9, at 69 n.189 (citing 

to Cboe BZX Rule 11.23(b)(2)(A)). 

113See Amendment No. 2, supra note 9, at 69– 

70. See proposed BSTX Rule 25040(a)(5) for a 

definition of the ‘‘Collar Price Range.’’ As the BSTX 

Official Opening Price is determined and the 

matched shares are executed in the Opening 

Auction, the BSTX System would proceed to move 

the Security from the Pre-Opening Phase to the 

continuous or regular trading phase and 

disseminate the opening trade price, if any. Any 

orders that remain unexecuted in the Opening 

Auction, including any remaining portion of a 

partially executed order, would be moved onto the 

BSTX Book for the regular trading phase and would 

retain their price/time priority consistent with 

proposed BSTX Rule 25080. See proposed BSTX 

Rule 25040(a)(7). 

‘‘protected quotation’’ under Rules 

600(b)(70) and 600(b)(71) of Regulation 

NMS.93 Only a BSTX Participant 

approved for trading on the BSTX 

System or a person associated with such 

a BSTX Participant would be able to 

effect any transactions on the BSTX 

System.94

Order Types and Instructions 

Proposed BSTX Rule 25060(c) 

provides that BSTX Participants may 

enter orders to the BSTX System as limit 

orders or Inter-Market Sweep Orders 

(‘‘ISOs’’).95 The BSTX System would 

only support two time-in-force (‘‘TIF’’) 

designations: DAY and IOC.96 Under 

proposed BSTX Rule 25060(d), all 

orders would be given a default TIF of 

DAY.97 DAY orders may queue during 

the Pre-Opening Phase 98 or before the 

resumption of trading following a 

trading halt, may trade only during 

Regular Market Hours, and, if 

unexecuted at the close of the trading 

day (4:00 p.m. ET), would be cancelled 

by the BSTX System.99 BSTX 

Participants may also designate orders 

as IOC, which overrides the default TIF 

of DAY.100 IOC orders are not accepted 

by the BSTX System during the PreOpening Phase, and during Regular 

Trading Hours, IOC orders will execute 

in whole or in part immediately upon 

receipt by the BSTX System.101 The 

BSTX System would not support 

modification of resting orders, and to 

change the price or quantity of an order 

resting on the BSTX Book,102 a BSTX 

Participant must cancel the resting order 

and submit a new order, which would 

result in a new time stamp for purposes 

of BSTX Book priority.103 The Exchange 

states that all orders on BSTX would be 

displayed.104 With the exception of the 

order parameter to preference faster 

settlement,105 the order types and 

instructions the Exchange has proposed 

for the BSTX System are similar to those 

approved by the Commission and 

currently available on other national 

securities exchanges 106 and raise no 

new regulatory issues. The Commission 

finds these proposed rules are 

consistent with the Exchange Act, and 

Section 6(b)(5) 107 of the Exchange Act 

in particular, because they establish the 

types of orders and modifiers that all 

BSTX Participants may use and provide 

transparency regarding how orders 

would operate on the BSTX System, 

which should help promote just and 

equitable principles of trade, foster 

coordination with persons engaged in 

facilitating transactions in securities, 

and remove impediments to and perfect 

the mechanism of a national market 

system. 

Auctions 

The Exchange proposes that order 

entry in BSTX-listed Securities 108 may 

commence at 8:30 a.m. ET during the 

Pre-Opening Phase, in which orders are 

placed on the BSTX Book but do not 

generate executions until Regular 

Trading Hours begin at 9:30 a.m. ET.109

The Exchange states that, similar to how 

its opening process works for options 

trading, BSTX would calculate and 

disseminate a theoretical opening price 

(‘‘TOP’’) from the time that the BSTX 

System commences accepting orders to 

BSTX Participants for the current orders 

resting on the BSTX Book during the 

Pre-Opening Phase.110 The Exchange 

proposes to disseminate the TOP and 

other Broadcast Information pursuant to 

proposed BSTX Rule 25040(a)(3) during 

the Pre-Opening Phase.111 Broadcast 

Information would be recalculated and 

disseminated via electronic means (i.e., 

market data feeds) every five seconds.112

At the time of the opening match (i.e., 

9:30 a.m. ET), the BSTX System would 

establish a single price at which the 

BSTX-listed Security would be opened 

(‘‘BSTX Official Opening Price’’), which 

would be the TOP at the moment of the 

Opening Auction, provided that the 

resulting price must be within the Collar 

Price Range.113 The Exchange states that 

the BSTX System would determine a 

single price at which a BSTX-listed 

Security would be opened by 

calculating the optimum number of 

shares that could be matched at a price, 

taking into consideration all the orders 


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114See Amendment No. 2, supra note 9, at 69; 

proposed BSTX Rule 25040(a)(6)(ii). The Exchange 

states that the determination of the opening match 

price is consistent with the manner in which the 

Exchange opens options trading. See Amendment 

No. 2, supra note 9, at 69. Proposed BSTX Rule 

25040(a)(6)(ii) would further provide that the BSTX 

Official Opening Price is the price which results in 

the matching of the highest number of shares. If two 

or more prices would satisfy this maximum 

quantity criteria, the price leaving the fewest resting 

shares in the BSTX Book would be selected as the 

BSTX Official Opening Price. Where two or more 

prices would satisfy the maximum quantity criteria 

and leave the fewest shares in the BSTX Book, the 

price closest to the previous day’s last round lot 

trade occurring during Regular Trading Hours on 

the Exchange (‘‘BSTX Official Closing Price’’) will 

be selected as the BSTX Official Opening Price. See 

proposed BSTX Rules 25040(a)(5)(ii) and (6)(ii). 

115See OIP, supra note 7, 86 FR at 49432; 

proposed BSTX Rule 25040(a)(5). 

116See Amendment No. 2, supra note 9, at 70; 

proposed BSTX Rule 25040(a)(7). See also proposed 

BSTX Rule 25040(a)(5)(ii) (defining ‘‘Final Last Sale 

Eligible Trade’’). 

117See OIP, supra note 7, 86 FR at 49432. 

118See id.; proposed BSTX Rule 25040(b)(1). The 

Quote-Only Period may be extended in certain 

cases where (i) there is no TOP; (ii) the underwriter 

requests an extension; (iii) the TOP moves the 

greater of 10% or 50 cents in the 15 seconds prior 

to the initial cross; or (iv) in the event of a technical 

or systems issue at the Exchange that may impair 

the ability of BSTX Participants to participate in the 

Initial Security Offering Auction or of the Exchange 

to complete the Initial Security Offering Auction. 

See proposed BSTX Rule 25040(b)(2). In the event 

of any extension to the Quote-Only Period or a 

trading pause, the Exchange proposes to notify 

market participants regarding the circumstances 

and length of the extension. See OIP, supra note 7, 

86 FR at 49432; proposed BSTX Rule 25040(b)(4). 

119See proposed BSTX Rule 25040(b)(1). 

120See id. 

121See id. Orders marked IOC submitted during 

the Quote-Only Period would be rejected. See id. 

122See Amendment No. 2, supra note 9, at 71; 

proposed BSTX Rule 25040(b)(3). 

123See OIP, supra note 7, 86 FR at 49432; 

proposed BSTX Rule 25040(b)(5). 

124See Amendment No. 2, supra note 9, at 71– 

72; proposed BSTX Rule 25040(b)(5). 

125See proposed BSTX Rule 25050(g). The 

Exchange states that proposed BSTX Rule 25050 

regarding trading halts is substantially similar to 

other national securities exchange rules adopted in 

connection with the NMS Plan to Address 

Extraordinary Market Volatility (‘‘LULD Plan’’)—for 

example, IEX Rule 11.280—with certain exceptions, 

such as excluding rules relating to order types and 

other aspects of the LULD Plan that would not be 

supported by the Exchange, including market 

orders and auction orders. See Amendment No. 2, 

supra note 9, at 78–79. The Exchange would cancel 

all resting orders in a non-BSTX listed security 

subject to a trading halt, reject any incoming orders 

in that security, and will only resume accepting 

orders following a broadcast message to BSTX 

Participants indicating a forthcoming re-opening of 

trading. See OIP, supra note 7, 86 FR at 49433; 

proposed BSTX Rule 25050(d). In addition, the 

Exchange proposes to reserve the right to halt or 

suspend trading in other circumstances where the 

Exchange deems it necessary to do so for the 

protection of investors and the public interest, or 

pursuant to any other Exchange rule or policy. See 

OIP, supra note 7, 86 FR at 49434; proposed BSTX 

Rule 25050(f). Proposed BSTX Rule 25010(d) would 

allow for the CEO, President, or Chief Regulatory 

Officer, or such person’s designee, provided the 

designee is a senior officer, to halt or suspend 

trading in securities. The Exchange states that while 

comparable rules of other national securities 

exchanges (e.g., IEX Rule 11.110(c) and BOX Rule 

7020) may not currently specify that the Chief 

Regulatory Officer has the authority, both of these 

comparable rules contemplate the CEO or President 

delegating the task to a senior officer, which could 

be the Chief Regulatory Officer. The Exchange states 

that it does not believe that the addition of the Chief 

Regulatory Officer would expand the authority of 

who can declare a trading halt or suspend trading. 

See Amendment No. 2, supra note 9, at 65 n.176. 

126See Amendment No. 2, supra note 9, at 72; 

proposed BSTX Rule 25040(c). 

127See Amendment No. 2, supra note 9, at 72– 

73; proposed BSTX Rule 25040(c)(1). Limit orders 

with TIF of DAY submitted during the Quote-Only 

Period would be eligible to participate in the Halt 

Auction, whereas orders marked IOC submitted 

during the Quote-Only Period would be rejected. 

See OIP, supra note 7, 86 FR at 49432; proposed 

BSTX Rule 25040(c)(1). In addition, Halt Auctions 

would be subject to the proposed Halt Auction 

Collars, which the Exchange states are substantially 

similar to those provided by Cboe BZX, and are 

designed to ensure that the Exchange is able to reopen trading in a Security in a fair and orderly 

manner. To the extent a Halt Auction is unable to 

be performed due to the absence of a TOP or the 

TOP is outside the proposed Halt Auction Collars, 

the Exchange would extend the period of Halt 

Auction for an additional five minutes (‘‘Initial 

Extension Period’’). After the Initial Extension 

Period, the Exchange proposes that the Quote-Only 

Period be extended for additional five-minute 

periods, should a Halt Auction be unable to be 

performed due to absence of a TOP or because the 

TOP is outside the proposed Halt Auction Collars 

(‘‘Additional Extension Period’’), until a Halt 

Auction occurs. See Amendment No. 2, supra note 

9, at 72 n.206 and n.207; proposed BSTX Rule 

25040(c)(2). 

128See Amendment No. 2, supra note 9, at 73; 

proposed BSTX Rule 25040(c)(3). In addition, the 

Exchange represents that if a trading halt is 

triggered by the Exchange or if the Exchange is 

unable to reopen trading at the end of the trading 

halt due to a systems or technology issue, the 

Exchange will immediately notify the single plan 

processor responsible for consolidation of 

information for the security pursuant to Rule 603 

of Regulation NMS under the Exchange Act. See 

proposed BSTX Rule 25040(c)(4). 

129See OIP, supra note 7, 86 FR at 49432. 

on the BSTX Book.114 The Exchange 

states that the requirement that the 

BSTX Official Opening Price must be 

within the Collar Price Range is 

designed to ensure that a Security opens 

in a fair and orderly manner and under 

market conditions where there is 

sufficient quotation interest (e.g., a 

NBBO), the market is not crossed, and 

where the opening price will not 

drastically depart from the market at the 

time of the auction or the preceding 

day’s closing price.115 The Exchange 

proposes that when the BSTX System 

cannot determine an opening price from 

the Opening Auction, BSTX would 

nevertheless open the Security for 

trading and move all trading interest 

received during the Pre-Opening Phase 

to the BSTX Book, and that in such case, 

the BSTX Official Opening Price would 

be the Final Last Sale Eligible Trade.116

The Exchange states that the opening 

process for initial public offerings of 

Securities (‘‘Initial Security Offerings’’) 

would be generally the same as regular 

market openings.117 However, in 

advance of an Initial Security Offering 

auction (‘‘Initial Security Offering 

Auction’’), the Exchange would 

announce a ‘‘Quote-Only Period’’ of 

between 15 and 30 minutes plus a short 

random period prior to the Initial 

Security Offering Auction.118 Orders 

may not be submitted to participate in 

an Initial Security Offering Auction 

until the beginning of the Quote-Only 

Period.119 All orders associated with the 

Initial Security Offering Auction must 

be received prior to the end of the 

Quote-Only Period in order to 

participate in the auction.120 Limit 

orders with TIF of DAY submitted 

during the Quote-Only Period would be 

eligible to participate in the Initial 

Security Offering Auction.121 According 

to the Exchange, it would disseminate 

Broadcast Information at the 

commencement of the Quote-Only 

Period as with regular market openings, 

and Broadcast Information would be recalculated and disseminated via 

electronic means every five seconds.122

Orders would be matched and executed 

at the conclusion of the Quote-Only 

Period, rather than at 9:30 a.m. ET.123

Following the initial cross at the end of 

the Quote-Only Period wherein orders 

will execute based on price/time 

priority, consistent with proposed BSTX 

Rule 25080, the Exchange would 

transition to normal trading pursuant to 

proposed BSTX Rule 25040(a)(6).124

The Exchange also proposes a process 

for reopening trading following a 

‘‘trading halt,’’ a halt or pause in trading 

initiated by the Exchange, or a Limit 

Up-Limit Down Trading Pause 125 (‘‘Halt 

Auctions’’).126 For Halt Auctions, the 

Exchange proposes that in advance of 

reopening, the Exchange would 

announce a Quote-Only Period that 

would be five minutes prior to the Halt 

Auction, and that all orders associated 

with the Halt Auction must be received 

prior to the end of the Quote-Only 

Period in order to participate in the 

auction.127 According to the Exchange, 

it would disseminate the same 

Broadcast Information as it does for an 

Initial Security Offering Auction, except 

it would also disseminate to market 

participants the applicable Halt Auction 

Reference Price and the Halt Auction 

Collars, and would similarly provide 

notification of any extension to the 

Quote-Only Period as with an Initial 

Security Offering Auction.128 The 

transition to normal trading would also 

occur in the same manner as for Initial 

Security Offering Auctions.129


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130See id. at 49432–33; proposed BSTX Rule 

25040(d). 

131See OIP, supra note 7, 86 FR at 49432–33; 

proposed BSTX Rule 25040(d)(1). 

132See OIP, supra note 7, 86 FR at 49433; 

proposed BSTX Rule 25040(d)(2). 

133See Amendment No. 2, supra note 9, at 77– 

78; proposed BSTX Rule 25040(a)(5)(ii). 

134See Amendment No. 2, supra note 9, at 78. 

135 15 U.S.C. 78f(b)(5). 

136See proposed BSTX Rule 25080. 

137See OIP, supra note 7, 86 FR at 49434; 

proposed BSTX Rule 25080(a). 

138See proposed BSTX Rule 25080(b). The 

Exchange states that sell orders cannot execute at 

a price below the best bid in the marketplace and 

buy orders cannot execute at a price above the best 

offer in the marketplace. See OIP, supra note 7, 86 

FR at 49434. 

139See proposed BSTX Rules 25080(b)(1)–(3). 

140See OIP, supra note 7, 86 FR at 49437; 

proposed BSTX Rule 25130. The Exchange states 

that the proposed rule is substantially similar to the 

rules of other national securities exchanges. See 

Amendment No. 2, supra note 9, at 93 (citing to IEX 

Rule 11.310 and Cboe BZX Rule 11.20). 

141See Securities Exchange Act Release No. 

53829 (May 18, 2006), 71 FR 30038, 30041 (May 24, 

2006) (File No. S7–10–04) (extending the 

compliance dates for Rule 610 and Rule 611 of 

Regulation NMS under the Exchange Act). 

142See, e.g., Securities Exchange Act Release Nos. 

85828 (May 10, 2019), 84 FR 21841 (May 15, 2019) 

(File No. 10–234) (order granting registration of 

Long-Term Stock Exchange, Inc.); and 88806 (May 

4, 2020), 85 FR 27451 (May 8, 2020) (File No. 10– 

237) (order granting registration of MEMX). 

143 15 U.S.C. 78f(b)(5). 

144See proposed BSTX Rule 22060. BSTX Depthof-Book is a data feed that contains all displayed 

orders for securities traded on the Exchange, order 

executions, order cancellations, order 

modifications, order identification numbers, 

administrative messages, and auction information 

disseminated pursuant to proposed BSTX Rule 

25040 (Auctions). See proposed BSTX Rule 

22060(a). BSTX Top-of-Book is an uncompressed 

data feed that offers top of book quotations and 

execution information based on orders entered into 

the BSTX System, as well as auction information 

disseminated pursuant to proposed BSTX Rule 

25040 (Auctions). See proposed BSTX Rule 

22060(b). BSTX Last Sale is an uncompressed data 

feed that offers only execution information based on 

orders entered into the BSTX System. See proposed 

BSTX Rule 22060(c). 

145See OIP, supra note 7, 86 FR at 49429 (citing 

to MEMX Rule 13.8). 

146See proposed BSTX Rule 22060(d); OIP, supra 

note 7, 86 FR at 49420. 

147See OIP, supra note 7, 86 FR at 49420. 

In the event a disruption occurs that 

prevents the execution of an Initial 

Security Offering Auction or Halt 

Auction, including any extensions, the 

Exchange proposes to apply certain 

contingency procedures.130 For a 

disruption in an Initial Security Offering 

Auction, the Exchange would publicly 

announce that the Quote-Only Period 

for the Initial Security Offering Auction 

will reset for the subject Security, cancel 

all orders on the BSTX Book, and 

disseminate a new scheduled time for 

the Quote-Only Period and opening 

match.131 Similarly, for a disruption in 

a Halt Auction, the Exchange would 

publicly announce that no Halt Auction 

will occur and all orders in the halted 

Security on the BSTX Book will be 

cancelled, after which the Exchange will 

open the Security for trading without an 

auction.132

The Exchange has not proposed to 

operate a closing auction. Instead, the 

Exchange proposes that the BSTX 

Official Closing Price will be the last 

round lot trade occurring during Regular 

Trading Hours on BSTX.133 The 

Exchange states that it believes this 

method is a simple and fair way to 

establish the closing price of a Security, 

and is consistent with the overall 

proposed simplified market structure for 

BSTX that does not include order types 

such as market-on-close or limit-onclose.134

The Commission believes that the 

proposed opening, re-opening, and 

closing procedures are reasonably 

designed to provide for an orderly 

opening or re-opening of trading or 

close of trading on BSTX, and thus are 

consistent with the Exchange Act, and 

in particular the Section 6(b)(5) goals of 

removing impediments to the 

mechanism of a national market system 

and protecting investors and the public 

interest.135

Order Priority and Execution 

The Exchange proposes BSTX Rule 

25080 to govern the execution of orders 

on the BSTX System.136 The proposed 

rule provides that orders of BSTX 

Participants shall be ranked and 

maintained in the BSTX Book according 

to price/time priority, such that within 

each price level, all orders shall be 

organized by the time of entry.137

Further, the proposed rule provides that 

an order would be cancelled back to the 

BSTX Participant if, based on market 

conditions, BSTX Participant 

instructions, applicable Exchange Rules, 

and/or the Exchange Act and the rules 

and regulations thereunder, such order 

is not executable and cannot be posted 

to the BSTX Book.138 Specifically, 

proposed BSTX Rules 25080(b)(1) 

through (3) provide that executions 

occurring on BSTX will comply with 

Regulation SHO, Regulation NMS, 

including Rule 611, and the LULD 

Plan.139 In addition, proposed BSTX 

Rule 25130 prohibits BSTX Participants 

from engaging in a pattern or practice of 

displaying quotations that lock or cross 

a protected quotation, unless an 

exception applies, and provides that the 

BSTX System will reject any order or 

quotation that would lock or cross a 

protected quotation of another national 

securities exchange at the time of 

entry.140

To meet their regulatory 

responsibilities under Rule 611(a) of 

Regulation NMS, other trading centers 

will be required to have sufficient notice 

of new protected quotations, as well as 

all necessary information (such as final 

technical specifications).141 The 

Commission believes that it would be a 

reasonable policy and procedure under 

Rule 611(a) to require that industry 

participants begin treating BSTX’s best 

bid and best offer as a protected 

quotation as soon as possible but no 

later than 90 days after BOX begins 

operation of its equities trading 

platform. The Commission has taken the 

same position with other new equities 

exchanges.142

In light of the foregoing, the 

Commission finds that the proposed 

BSTX trading rules are consistent with 

the Exchange Act and, in particular, 

Section 6(b)(5) of the Exchange Act, 

because they set forth a fair and 

transparent process for establishing 

order priority and are reasonably 

designed to ensure compliance with 

Commission rules concerning quoting 

and executions, which should promote 

just and equitable principles of trade, 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, and 

protect investors and the public 

interest.143

Market Data Products 

The Exchange proposes to offer 

proprietary market data products, 

including BSTX Depth-of-Book, BSTX 

Top-of-Book, and BSTX Last Sale.144

The Exchange states that its proposed 

rule regarding market data product 

offerings is substantially similar to the 

rules of another national securities 

exchange.145

In addition, the Exchange proposes to 

offer a historical market data product, 

known as the BSTX Market Data 

Blockchain, that would provide 

information about trading on the BSTX 

System.146 The BSTX Market Data 

Blockchain would operate as a private, 

permission-based blockchain that will 

allow BSTX Participants to see detailed 

information on their own trading 

activity on BSTX and anonymized 

information with respect to the trading 

activity of other BSTX Participants. 

According to the Exchange, BSTX 

Participants would have no obligations 

with respect to providing information 

to, accessing, maintaining, or using the 

BSTX Market Data Blockchain.147 Each 

BSTX Participant would be assigned a 

BSTX Market Data Blockchain address 

that corresponds to the BSTX 

Participant’s trading activity on 


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148See proposed BSTX Rule 17020(b). 

149See Amendment No. 2, supra note 9, at 19 & 

n.36; proposed BSTX Rule 17020(b). 

150See OIP, supra note 7, 86 FR at 49420. 

151See id. The Exchange states that BSTX 

Participants (and non-BSTX Participants to which 

the BSTX Market Data Blockchain is made available 

by the Exchange) would only be able to access the 

information contained on the BSTX Market Data 

Blockchain through the API, and only the Exchange 

would have direct access to the underlying data on 

the private blockchain. See id. The Exchange 

further states that the FIX gateway and the BSTX 

System are the same sources of information used to 

generate consolidated market data. See id. at 49420 

n.39. 

152See id. at 49420. 

153See id. Under proposed BSTX Rule 

17020(c)(1), a BSTX Participant would be able to 

see the following information with respect to all 

orders and messages submitted by the BSTX 

Participant and any executions of such orders: (i) 

Symbol, side (buy/sell), limit price, quantity, timein-force; (ii) order type (e.g., limit order, ISO); (iii) 

order capacity (principal/agent); (iv) short/long sale 

order marking; and (v) message type (e.g., order, 

modification, cancelation). 

154See id. Under proposed BSTX Rule 

17020(c)(2), this would include, in an anonymized 

format, all displayed orders, modifications, 

cancelations, and executions occurring on BSTX 

(i.e., the user may see the symbol, side (buy/sell), 

limit price, quantity, and message type), along with 

administrative data and other information from the 

Exchange (e.g., trading halts or technical messages). 

See Amendment No. 2, supra note 9, at 22–23; 

proposed BSTX Rule 17020(c)(2). The Exchange 

states that the BSTX Market Data Blockchain would 

not include details regarding the T+0 or T+1 order 

matching preference or matched trades bound for 

shorter settlement. See Amendment No. 2, supra 

note 9, at 41 n.73. 

155See OIP, supra note 7, 86 FR at 49421. The 

Exchange states that since no BSTX Participant, or 

non-BSTX Participant, would be provided with 

access to trading information of another BSTX 

Participant, it would not allow for reverse 

engineering of trading strategies or otherwise 

compromise the confidential nature of each BSTX 

Participant’s trading information. See id. 

156See Amendment No. 2, supra note 9, at 25. 

The Exchange specifies that the market data 

uploaded as part of each block would contain the 

most recent transactions on the Exchange, aged only 

a few seconds, as well as market data for the 

preceding five minutes, such that the oldest market 

data on each new block would be aged at least five 

minutes. See id. at 25 n.44. 

157See OIP, supra note 7, 86 FR at 49421. The 

Exchange states that consolidated market data or 

proprietary market data are disseminated on a subsecond, or sub-millisecond, timescale and that even 

the consolidated securities information processor’s 

99th percentile of quote latency today is below 100 

microseconds. See id. at 49421 n.44. The Exchange 

also states that, to promote clarity with respect to 

how a BSTX Participant may use the BSTX Market 

Data Blockchain, proposed BSTX Rule 17020(c)(3) 

would provide that information available on the 

BSTX Market Data Blockchain does not act as a 

substitute for any recordkeeping obligations of a 

BSTX Participant. See id. at 49422. 

158The BSTX Participant would be able to filter 

the different information fields or run searches for 

a particular item (e.g., only showing cancel orders 

or only showing activity in a particular symbol). 

See id. at 49421. 

159Similar to the Participant Proprietary Data, the 

General Market Data would generally be visible in 

sequential order of when each action occurred, 

although viewers would also have the ability to 

filter the different information fields or run searches 

for a particular symbol. The Exchange states that 

the General Market Data would differ from the 

Exchange’s propriety market data feed, which 

provides real-time snapshots of the order book, 

including depth-of-book quotations and quantity of 

shares available at each price point. Additionally, 

the General Market Data would show viewers, in an 

anonymized format, the sequential entry of each 

order, modification, or cancelation in the order 

book in each symbol as historical orders and 

transaction information, rather than real-time 

snapshots. See id. at 49421 n.42. 

160See id. at 49421. 

161See id. at 49422. 

162See id.; proposed BSTX Rule 17020(d). See 

also proposed BSTX Rule 17020(c)(3) (stating that 

information available on the BSTX Market Data 

Blockchain does not act as a substitute for any 

recordkeeping obligations of a BSTX Participant). 

163See OIP, supra note 7, 86 FR at 49422. 

164See Amendment No. 2, supra note 9, at 27. 

The Exchange states that it has classified the BSTX 

Market Data Blockchain as an ‘‘SCI system’’ and not 

as an ‘‘indirect SCI system.’’ See id. 

165See OIP, supra note 7, 86 FR at 49422. 

BSTX.148 The Exchange would issue 

login credentials to each user, including 

any non-BSTX Participant that chooses 

to subscribe.149 The BSTX Market Data 

Blockchain would generally operate by 

collecting information from two sources, 

which the Exchange would then 

translate into information capable of 

being recorded to the BSTX Market Data 

Blockchain.150 Specifically, the data 

provided would be collected from (i) the 

BSTX System, with respect to 

information such as executed 

transactions; and (ii) each BSTX 

Participant’s order/message passing 

through the financial information 

exchange (‘‘FIX’’) gateway through 

which all orders and messages pass to 

connect to the BSTX System.151 The 

Exchange states that the BSTX Market 

Data Blockchain does not require any 

affirmative action on the part of the 

BSTX Participants in order for the 

information to be recorded, but rather 

captures trading activity that occurs on 

BSTX in the normal course of 

trading.152

The BSTX Market Data Blockchain 

would provide two types of information 

for Regular Trading Hours: (i) 

Participant Proprietary Data with 

respect to the specific BSTX 

Participant; 153 and (ii) General Market 

Data made available to all BSTX 

Participants and non-BSTX Participants 

that subscribe.154 The Exchange 

represents that no BSTX Participant, or 

non-BSTX Participant, would have 

access to the Participant Proprietary 

Data of another BSTX Participant.155

Both types of data would be available on 

a delayed basis of at least five minutes, 

with each new block of market data 

showing market data for the preceding 

five minutes.156 According to the 

Exchange, the BSTX Market Data 

Blockchain would not function as a 

substitute for real-time market data.157

A BSTX Participant, through the API, 

would be able to run searches of its 

previous orders and trading activity 

using the BSTX Market Data 

Blockchain. The Participant Proprietary 

Data would be visible to the specific 

BSTX Participant in sequential order of 

when each action occurred 158 and the 

General Market Data, available to both 

BSTX Participants and non-BSTX 

Participants, would allow viewers to 

observe the historical orders, 

executions, and other events (e.g., 

cancelations) received by and occurring 

on BSTX, which is generally the same 

information available through 

subscribing to proprietary data feeds of 

other exchanges.159 The Exchange also 

proposes to append timestamps to the 

information made available through the 

BSTX Market Data Blockchain, which 

would indicate the time to the 

microsecond at which an order posted 

to the BSTX Book or that the BSTX 

System took other actions with respect 

to an order.160 A BSTX Participant 

would have the ability to download 

market data from the BSTX Market Data 

Blockchain and could potentially use 

the data to back test trading strategies or 

evaluate executions received on 

BSTX.161

The Exchange also proposes to 

periodically audit, at least bi-annually, 

the BSTX Market Data Blockchain to 

help ensure the proper functioning of 

the BSTX Market Data Blockchain and 

the accuracy of the information 

thereon.162 The Exchange states that it 

expects to initially audit the BSTX 

Market Data Blockchain more 

frequently, likely monthly, during the 

first year of operations to ensure the 

BSTX Market Data Blockchain operates 

as intended.163

The Exchange states that as a system 

of the Exchange, the BSTX Market Data 

Blockchain will be subject to the 

requirements of the Exchange Act, 

including Regulation Systems 

Compliance and Integrity (‘‘Regulation 

SCI’’) and that the Exchange has in 

place, among other requirements of 

Regulation SCI, robust safeguards to 

protect against any possible system 

intrusion to the market data 

blockchain.164 The Exchange states that 

any unauthorized access to the API 

through which data on the BSTX Market 

Data Blockchain may be accessed would 

not allow for any intruder to modify, 

delete, or otherwise change any data on 

the BSTX Market Data Blockchain.165

The Exchange states that the benefits 

of the BSTX Market Data Blockchain are 

twofold: (1) BSTX Participants may find 

the information useful to them for a 


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166See id. 

167See id. at 49423. 

168See Letter from Anonymous (June 15, 2021) 

(‘‘Anonymous Letter II’’). 

169See Letter from Anonymous (June 21, 2021) 

(‘‘Anonymous Letter III’’). 

170See id. See also Letter from Jonathan Seeley 

(September 20, 2021) (‘‘Seeley Letter’’) (stating that 

the proposed BSTX facility is designed to promote 

just and equitable principles of trade and remove 

impediments to a free and open national market 

system in a transparent and secure manner through 

the proposed use of blockchain technology and 

would not inappropriately burden competition); 

Letter from Tyler Hess (June 17, 2021) (stating that 

the commenter would like to see the development 

of financial institutions and securities exchanges 

that allow access to financial instruments and 

investments without the burdens and controls 

placed by traditional exchanges, and that the 

proposal represents the first steps in a free and 

equitable publicly auditable financial system). 

171See Letter from Anonymous (September 6, 

2021) (‘‘Anonymous Letter IV’’). 

172See supra notes 144–145 and accompanying 

text. 173The Commission has previously approved 

proposals by national securities exchanges to offer 

a data product to a member of the exchange 

consisting of information regarding the member’s 

own trading activity on the exchange. See, e.g., 

Securities Exchange Act Release Nos. 78886 

(September 20, 2016), 81 FR 66113 (September 26, 

2016) (approving Nasdaq ‘‘Trading Insights’’ 

product); 91787 (May 6, 2021), 86 FR 26111 (May 

12, 2021) (approving MIAX Emerald ‘‘Liquidity 

Taker Event Report’’). 

174See, e.g., 17 CFR 242.1001(a)(1) (requiring 

each SCI entity to establish, maintain, and enforce 

written policies and procedures reasonably 

designed to ensure that its SCI systems have levels 

of capacity, integrity, resiliency, availability, and 

security adequate to maintain the SCI entity’s 

operational capability and promote the 

maintenance of fair and orderly markets). 

175See 15 U.S.C. 78f(b)(5). 

176See OIP, supra note 7, 86 FR at 49454. 177See Amendment No. 2, supra note 9, at 25 

(stating that the Exchange would make the General 

Market Data available to BSTX Participants and 

non-BSTX Participants for the same fee and on the 

same subscription terms, once the Exchange 

establishes a fee schedule pursuant to the proposed 

rule change process under the Exchange Act prior 

to the launch of BSTX). 178 15 U.S.C. 78f(b)(5). 179 15 U.S.C. 78f(b)(8). 180 15 U.S.C. 78f(b)(7). 

variety of purposes, such as to review 

the BSTX Participant’s trading activity 

on BSTX, determine what the market 

was at a particular point in time on 

BSTX for a given Security, evaluate 

equation quality, help confirm the 

accuracy of their internal trading data, 

or download the data to back-test 

trading strategies; and (2) help 

familiarize BSTX Participants with the 

use and capabilities of blockchain 

technology in a manner that does not 

impose any burden on them or other 

market participants.166 The Exchange 

also states that BSTX Securities would 

be eligible for trading on other national 

securities exchanges that extend UTP to 

them and that the BSTX Market Data 

Blockchain would not impact the ability 

of Securities to trade on other national 

securities exchanges or OTC.167

One commenter states that the United 

States should support blockchain 

technologies like BSTX to be 

competitive globally, and that 

blockchain affords more efficiency and 

transparency.168 Another commenter 

states that blockchain will bring the 

advantages of better security, higher 

transparency, more trust, and a fairer 

marketplace to the sector.169 This 

commenter also states that blockchain 

would afford savings in time and 

money, make the market safer against 

fraud, and help United States markets 

keep up with other global systems.170

Another commenter states that the 

proposed five minute delay is not 

problematic given delays in other 

market data products.171

The Commission finds that the 

Exchange’s proposed market data 

products are consistent with the 

Exchange Act. The Commission believes 

that the proposed BSTX Depth-of-Book, 

BSTX Top-of-Book, and BSTX Last Sale 

data products do not raise any novel 

regulatory issues.172 The Commission 

also believes that the BSTX Market Data 

Blockchain would not result in the 

disclosure of novel information about 

trading activity on the BSTX System. A 

BSTX Participant viewing the 

Participant Proprietary Data would 

access the same underlying information 

that the BSTX Participant would already 

have from FIX messages sent to and 

received from the Exchange.173 Further, 

the General Market Data would contain 

the same substantive information that 

could be found in BSTX’s proprietary 

market data feeds and this information 

would be comparable to the proprietary 

market data distributed by other 

national securities exchanges. At the 

same time, the Commission believes 

that the BSTX Market Data Blockchain 

is reasonably designed to prevent other 

market participants from learning BSTX 

Participants’ sensitive trading 

information. The BSTX Market Data 

Blockchain would not be a real-time 

market data product and would contain 

historical market data posted in fiveminute increments. In addition, the 

Participant Proprietary Data accessible 

to each BSTX Participant would be 

specific to that BSTX Participant’s 

orders and executions, and the General 

Market Data would be anonymized by 

displaying only the symbol, side (buy/ 

sell), limit price, quantity, and message 

type. As an SCI system operated by an 

SCI entity, the BSTX Market Data 

Blockchain would also be subject to the 

requirements of Regulation SCI.174

National securities exchanges are not 

required to offer proprietary market 

data, but those that do so must offer 

such data in a manner that is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers.175 The 

Commission believes that the proposed 

dissemination of the Participant 

Proprietary Data is not designed to 

permit unfair discrimination because 

each BSTX Participant will have access 

to information specific to its own orders 

and executions through the Participant 

Proprietary Data. In the OIP, the 

Commission states that it was not clear 

what conditions, if any, the Exchange 

may place on non-BSTX Participants 

before granting access to the General 

Market Data.176 In Amendment No. 2, 

the Exchange states that all BSTX 

Participants and non-BSTX Participants 

will have access to the same 

anonymized market data on the same 

terms through the General Market 

Data.177 In addition, market participants 

would be able to obtain the same 

substantive information contained in 

the General Market Data through access 

to BSTX’s other proprietary market data 

feeds. Further, the five-minute delay for 

the BSTX Market Data Blockchain 

would be a uniform delay for all BSTX 

Participants and non-BSTX Participants 

that subscribe, and the data on the 

BSTX Market Data Blockchain would 

not be available on a faster basis than 

other BSTX data products (and instead 

would be available on a slower basis). 

For these reasons, the Commission 

finds that the Exchange’s proposed 

market data products are consistent 

with the Exchange Act, and, in 

particular, Section 6(b)(5) of the 

Exchange Act 178 because they would 

prevent fraudulent and manipulative 

acts and practices, promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest, and would not permit unfair 

discrimination among customers, 

issuers, brokers, or dealers; and with 

Section 6(b)(8) of the Exchange Act 179

because they would not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

Exchange Act. The Commission also 

finds that the proposed BSTX Market 

Data Blockchain is consistent with the 

Exchange Act, and Section 6(b)(7) of the 

Exchange Act 180 in particular, and its 

requirements that the rules of a national 

securities exchange provide a fair 

procedure for the prohibition or 

limitation by the exchange of any access 

to services, because the Exchange will 


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181See Letter from Andrew Stevens, General 

Counsel, IMC Chicago, LLC and Richard McDonald, 

Compliance Coordinator, Susquehanna 

International Group, LLP (June 28, 2021), at 2. 

182See id. 

183See id. at 3. 

184See Letter from Lisa J. Fall, President, BOX 

Exchange LLC (July 1, 2021), at 1. 

185See id. The Exchange also states that its 

options trading platform is an entirely separate 

facility of the Exchange with a separate ownership 

structure from BSTX, and BSTX will use separate 

data center operations and a different technology 

provider. See id. at 2. 

186See Amendment No. 2, supra note 9, at 6. 

187See id. at 6 n.6. 

188See id. Specifically, the equidistant cabling 

cabinet contains equal length spools of fiber that 

connect to each external BSTX Participant cabinet 

in the data center, and all BSTX Participants must 

connect to BSTX through the equidistant cabling 

cabinet from their own external cabinets. See id. 

189See id. The Exchange states that it believes 

that this structure is designed to prevent unfair 

discrimination between market participants, 

consistent with Section 6(b)(5) of the Exchange Act, 

by ensuring that all co-located BSTX Participants 

have equidistant connections to BSTX irrespective 

of where their equipment is located within the data 

center. See id. 

190See proposed BSTX Rule 25100(d). See also 

proposed BSTX Rule 25140 for additional 

provisions regarding clearance and settlement. 

191See OIP, supra note 7, 86 FR at 49418. 

192See id. 

193See id. at 49419. 

194See proposed BSTX Rule 25140(h). The 

Exchange states that T+1 and T+0 are shorter 

settlement cycles than the longest settlement cycle 

of T+2 that is generally permitted under SEC Rule 

15c6–1, for a security trade that involves a brokerdealer. See OIP, supra note 7, 86 FR at 49419 (citing 

17 CFR 240.15c6–1). The Exchange states that 

under SEC Rule 15c6–1, with certain exceptions, a 

broker-dealer is not permitted to enter a contract for 

the purchase or sale of a security that provides for 

payment of funds and delivery of securities later 

than the second business day after the date of the 

contract unless otherwise expressly agreed to by the 

parties at the time of the transaction. See id. at 

49419 n.33. 

195See OIP, supra note 7, 86 FR at 49423. The 

Exchange states that it understands that NSCC and 

DTC are already using this authority for shortened 

settlement times, and that DTCC makes data 

regarding T+0 and T+1 clearance and settlement 

through NSCC and DTC available on the DTCC 

website for review by the public. See id. at 49424. 

196See id. at 49423–24; proposed BSTX Rule 

25060(h). See also proposed BSTX Rule 25100(d). 

The Exchange states that it understands that under 

its current rules, policies, and procedures, NSCC 

accepts trades for T+0 settlement through its 

continuous net settlement system provided that 

they are received by NSCC before a cut-off time of 

not limit non-BSTX Participants’ access 

to the BSTX Market Data Blockchain 

beyond applying the same general terms 

that apply to BSTX Participants. 

Access to BSTX 

The Commission received a comment 

stating that the proposal does not 

specifically address how participants 

shall access BSTX and that, by 

comparison, with respect to the trading 

of options, the Exchange does not 

currently enforce equidistant cabling 

among and between participants and its 

matching engine located in the same 

data center.181 This commenter states 

that concerns regarding unfair 

discrimination and inappropriate 

burdens on competition could arise in 

the absence of confirmation that BOX 

will ensure that all co-location 

participants will enjoy the same 

opportunity for order execution 

regardless of their location in the data 

center relative to the BSTX matching 

engine.182 Absent such confirmation, 

the commenter urges the Commission to 

disapprove the proposal.183 In response, 

the Exchange states that BSTX will 

provide for equidistant cabling 

arrangements to ensure that all colocated BSTX Participants are on a level 

playing field in connecting to the BSTX 

matching engine.184 The Exchange also 

states that BSTX plans to have 

equidistant cabling arrangements within 

the area of the data center that it 

controls, and that it will make technical 

details regarding those arrangements 

available to prospective BSTX 

Participants in certain specification 

documents after approval of BSTX as a 

new facility of the Exchange.185

In further response, in Amendment 

No. 2, the Exchange states that it will 

offer connectivity services at its primary 

data center (Equinix NY4 in Secaucus, 

NJ) and that connectivity to the 

Exchange in the primary data center for 

both order entry and market data 

dissemination is equalized for all 

Participants with equipment co-located 

in Equinix NY4.186 Specifically, the 

Exchange states that all BSTX 

Participants co-located in the same data 

center would connect to BSTX through 

an equidistant cabling cabinet, which is 

a separate cabinet from the cabinet 

hosting the BSTX System and market 

data distribution system. The cross 

connects from the equidistant cabling 

cabinet to the cabinet hosting BSTX’s 

systems are equidistant.187

Additionally, the Exchange states that 

all cross connects from the equidistant 

cabling cabinet to each BSTX 

Participant’s cabinet, wherever located 

in the data center, provide for 

equidistant connectivity.188 As a result, 

even if BSTX Participant X’s cabinet is 

closer in physical proximity to the 

equidistant cabling cabinet than BSTX 

Participant Y’s cabinet, the arrangement 

is such that both BSTX Participant X 

and BSTX Participant Y have 

equidistant connectivity to the 

equidistant cabling cabinet and in turn 

to BSTX’s systems.189

The Commission believes that 

Amendment No. 2 addresses the 

commenter’s concern regarding whether 

all co-location participants will enjoy 

the same opportunity for order 

execution regardless of their location in 

the data center relative to the BSTX 

matching engine. As described above, 

the Exchange states in Amendment No. 

2 that all BSTX Participants co-located 

in the data center would access BSTX’s 

systems through an equidistant cabling 

cabinet that connects to each BSTX 

Participant’s cabinet through fiber 

connections of equal length and that the 

cross connects from the equidistant 

cabling cabinet to the cabinet hosting 

BSTX’s systems are also equidistant. 

This arrangement would prevent BSTX 

Participants located in closer proximity 

to the cabinet hosting the BSTX System 

and market data distribution system 

from having a shorter path to connect to 

BSTX’s systems. 

Clearance and Settlement 

Under the Exchange’s proposal, 

executions occurring as a result of 

orders matched against the BSTX Book 

will be transmitted by BSTX to a 

registered clearing agency to clear and 

settle pursuant to the rules, policies, 

and procedures of the registered 

clearing agency.190 The Exchange states 

that Securities would be cleared and 

settled by NSCC and DTC in the same 

manner as those activities are performed 

by NSCC and DTC currently with 

respect to a class of NMS stock.191 The 

Exchange also states that the operation 

of the BSTX Market Data Blockchain 

will have no impact or effect on the 

manner in which a Security clears and 

settles.192

The Exchange proposes to allow 

BSTX Participants to indicate a 

preference for settling faster than the 

standard T+2 settlement cycle.193

Specifically, BSTX Participants would 

be able to submit an order with a 

preference for settlement on a T+0 basis 

(‘‘Order with a T+0 Preference’’) or on 

a T+1 basis (‘‘Order with a T+1 

Preference’’).194 The Exchange states 

that, based on discussions with 

representatives from The Depository 

Trust & Clearing Corporation (‘‘DTCC’’), 

BSTX believes that NSCC already has 

the authority under its rules, policies, 

and procedures to clear certain trades 

on T+1 or T+0 basis.195 Orders with a 

T+0 Preference and Orders with a T+1 

Preference would result in executions 

that settle more quickly than on a T+2 

basis if, and only if, all of the conditions 

in proposed BSTX Rule 25060(h) are 

met and the execution that is 

transmitted by BSTX to NSCC is eligible 

for T+0 or T+1 settlement under the 

rules, policies, and procedures of the 

registered clearing agency.196 For an 


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11:30 a.m. ET. DTCC provides on its website an 

overview of the cut-off times for participation in the 

continuous net settlement system process and other 

procedural considerations under its rules, policies, 

and procedures that are associated with processing 

trades for accelerated settlement on a T+0 or T+1 

basis. See Amendment No. 2, supra note 9, at 34 

n.62. 

197See Amendment No. 2, supra note 9, at 35; 

proposed BSTX Rule 25060(h)(3). The BSTX 

System would not accept any new Orders with a 

T+0 Preference after the T+0 Cut-Off Time. See 

Amendment No. 2, supra note 9, at 36; proposed 

BSTX Rule 25060(h)(3). However, an Order with a 

T+0 Preference resting on the BSTX Book after the 

T+0 Cut-Off Time would still be able to execute 

against orders against which it is marketable, and 

would remain eligible for potential T+1 settlement 

to the extent it executed against an Order with a 

T+1 Preference. See id. According to the Exchange, 

it believes that a one minute buffer between its T+0 

Cut-Off Time and NSCC’s cut-off time for inclusion 

of such same-day settling trades in NSCC’s 

continuous net settlement process would be 

sufficient time to allow the Exchange to transmit 

the relevant execution details to NSCC and for 

NSCC to include such same-day settling trades in 

its continuous net settlement system. See 

Amendment No. 2, supra note 9, at 35–36. The 

Exchange represents that it will monitor the 

application of the one minute buffer and whether 

it provides the Exchange and NSCC with sufficient 

time to prevent executed trades from being 

transmitted by the Exchange to NSCC after NSCC’s 

cut-off time for inclusion of same-day settling trades 

in NSCC’s continuous net settlement system, and 

the Exchange will submit additional rule changes 

in the future as may be necessary to increase the 

buffer if appropriate. See id. at 36. The Exchange 

also represents that it will post the then-applicable 

T+0 Cut-Off Time on the BSTX website to ensure 

BSTX Participants are adequately informed. See id. 

at 36 n.64. 

198See OIP, supra note 7, 86 FR at 49424. Under 

the proposal, an Order with a T+0 Preference will 

execute against any order against which it is 

marketable and BSTX will transmit the matched 

order information to a registered clearing agency for 

settlement on a standard settlement cycle (T+2) 

pursuant to the rules, policies, and procedures of 

the registered clearing agency, except where: (i) the 

Order with a T+0 Preference executes against 

another Order with a T+0 Preference, in which case 

BSTX will transmit the matched order information 

to a registered clearing agency for settlement on the 

trade date as may be permitted by the rules, 

policies, and procedures of the registered clearing 

agency, subject to the limitations in proposed BSTX 

Rule 25060(h)(3); or (ii) the Order with a T+0 

Preference executes against an Order with a T+1 

Preference, in which case BSTX will transmit the 

matched order information to a registered clearing 

agency for settlement on the next trading day after 

the trade date (i.e., T+1) as may be permitted by the 

rules, policies, and procedures of the registered 

clearing agency. See proposed BSTX Rule 

25060(h)(1). An Order with a T+1 Preference will 

execute against any order against which it is 

marketable and BSTX will transmit the matched 

order information to a registered clearing agency for 

settlement on a standard settlement cycle (T+2), 

except where the Order with a T+1 Preference 

executes against another Order with a T+1 

Preference or an Order with a T+0 Preference, in 

which case BSTX will transmit the matched order 

information to a registered clearing agency for 

settlement on the next trading day after the trade 

date (i.e., T+1) as may be permitted by the rules, 

policies, and procedures of the registered clearing 

agency. See proposed BSTX Rule 25060(h)(2). 

199See OIP, supra note 7, 86 FR at 49423. 

200See id. at 49424. 

201See id. 

202See id. 

203See id. at 49424–25. 

204See id. 

205See id. at 49425. 

206See id. (citing 17 CFR 242.611(b)(2)). 

207See id. 

208See Letter from Meagan Darata, Utah Salt 

Supplements (June 21, 2021) (‘‘Darata Letter’’); 

Letter from Mark Nelson (June 10, 2021); Letter 

from Robert Shaw (June 11, 2021) (‘‘Shaw Letter’’); 

Letter from Neil Skinner (June 11, 2021) (‘‘Skinner 

Letter’’). 

209See Skinner Letter, supra note 208. 

210See id. This commenter also states that the 

commenter expects the reduced costs of operating 

the exchange to be passed on to prospective 

companies and issuers, thereby creating more 

opportunities for companies and asset holders to 

Continued 

Order with a T+0 Preference to be 

eligible to be transmitted by BSTX to 

NSCC for same-day settlement, the 

resulting execution must occur on the 

BSTX System prior to the ‘‘T+0 Cut-Off 

Time,’’ which would be one minute 

before any applicable cut-off time 

established by NSCC for inclusion of 

T+0 settling trades in its continuous net 

settlement process established pursuant 

to its rules, policies, and procedures.197

Any preference for T+0 or T+1 

settlement included by a BSTX 

Participant would only become 

operative if the order happens to 

execute against another order from a 

BSTX Participant that also includes a 

parameter indicating a preference for 

settlement on a T+0 or T+1 basis.198 The 

Exchange states that, at the time of order 

entry, any orders that include a 

parameter indicating a preference for 

faster settlement would be regular way 

orders that would be presumed to settle 

on a T+2 basis, just like any orders 

without such a parameter.199

The Exchange states that, in all cases, 

an order not marked with a preference 

for either T+0 or T+1 settlement would 

be assured under the settlement timing 

logic in proposed BSTX Rule 25060(h) 

of settlement on a T+2 basis. The 

Exchange also states that the possibility 

of a shortened settlement time would 

have no impact on the Exchange’s 

proposed price/time priority structure 

for order matching.200 The Exchange 

states that, as a result of this structure, 

all orders in Securities would be eligible 

to match and execute against any order 

against which they are marketable, with 

settlement to occur at the later 

settlement date of any two matching 

orders.201 Therefore, according to the 

Exchange, only where an Order with a 

T+1 Preference or an Order with a T+0 

Preference match with another Order 

with a T+1 Preference or Order with a 

T+0 Preference will those orders (or 

matching portions thereof) be eligible to 

settle more quickly than the standard 

settlement cycle of T+2.202

The Exchange states that it believes 

the proposal to allow BSTX Participants 

to access the shorter settlement cycles of 

T+1 and T+0 that are already being used 

by NSCC and DTC today represents a 

change that is both consistent with and 

in furtherance of broader industry 

efforts to move the standard settlement 

style to T+1.203 The Exchange also states 

that it believes that providing an 

optional T+0 or T+1 settlement cycle to 

BSTX Participants could also 

incrementally and immediately provide 

market participants with the benefits of 

shorter settlement cycles.204 The 

Exchange further states that it believes 

that BSTX Participants have an interest 

in being able to assess risk-reducing 

market functionality that is presently 

available and compatible with market 

structure and that this can reduce costs 

for market participants settling trading 

obligations in that Security and reduce 

settlement risk.205

According to the Exchange, because 

all orders in Securities submitted to 

BSTX would at the time of order entry 

be presumed to settle on a regular way 

T+2 basis and would interact with any 

other order against which the order is 

marketable, the Exchange believes that 

Orders with a T+0 Preference and 

Orders with a T+1 Preference would be 

considered ‘‘protected’’ within the 

meaning of Rule 611 under the 

Exchange Act.206 The Exchange states 

that Orders with a T+0 Preference and 

Orders with a T+1 Preference would not 

fall within the exception for protected 

quotation status set forth in Rule 

611(b)(2) under the Exchange Act, 

because they will only settle more 

quickly than T+2 when all of the 

conditions in proposed BSTX Rule 

25060(h) are met and where faster 

settlement is consistent with the rules, 

policies, and procedures of a registered 

clearing agency.207

The Commission has received several 

comments expressing support for the 

proposal’s use of a shortened settlement 

cycle under certain circumstances.208

One commenter states in support of the 

proposal that BSTX would provide 

significant advantages over existing 

national securities exchanges by 

providing fairer conditions to market 

participants through reduced settlement 

times and more transparency.209 This 

commenter states that T+0 settlement 

would improve market conditions for 

retail investors by reducing risk of 

failure to deliver on highly shorted 

stocks, and would reduce actual and 

opportunity costs by eliminating margin 

lending for the period before settlement 

and lost opportunities to reinvest.210


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offer securities, and resulting in a market boom as 

new market participants join the exchange. See id. 

211See Letter from Anonymous (June 15, 2021) 

(‘‘Anonymous Letter I’’); Skinner Letter, supra note 

208. See also Shaw Letter, supra note 208 (stating 

that, with the current issues regarding settlement 

time, the proposal to offer speedy settlement is one 

answer to improving the system). 

212See Anonymous Letter I, supra note 211; 

Skinner Letter, supra note 208. See also Darata 

Letter, supra note 208 (stating that there is a wide 

power differential between retail and institutional 

traders). 

213See Anonymous Letter IV, supra note 171. 

214See Seeley Letter, supra note 170 (stating also 

that this uncertainty would not represent any 

additional inconsistency with the Exchange Act 

compared to current settlement systems and does 

not provide an appropriate basis for disapproving 

the proposal). 

215 Id. 

216 In the OIP, the Commission raises whether 

introducing the possibility for T+0 or T+1 

settlement for on-exchange trades in NMS stocks 

pursuant to the rules of a single national securities 

exchange, at a time when the industry standard is 

T+2 settlement, might have any adverse market 

effects. See OIP, supra note 7, 86 FR at 49455. The 

Commission notes that no commenters raised any 

potential adverse market effects. 

217 15 U.S.C. 78f(b)(5). 

218 15 U.S.C. 78f(b)(8). 

219 15 U.S.C. 78l; proposed BSTX Rule 26210. 

220 15 U.S.C. 78f. 

221See Amendment No. 2, supra note 9, at 10– 

11. See also 17 CFR 230.251. The Exchange states 

that IEX similarly allows for securities subject to an 

exemption from registration under Section 12(b) of 

the Exchange Act to be listed on IEX. See 

Amendment No. 2, supra note 9, at 11 n.20 (citing 

to IEX Rule 14.203). 

222See proposed BSTX Rules 26210–26217; 15 

U.S.C. 78l(b). Prior to submitting a listing 

application to the Exchange, the issuer would be 

required to participate in a confidential preapplication eligibility review, in which the 

Exchange will determine whether the issuer meets 

its listing criteria and is eligible to submit a listing 

application. See proposed BSTX Rule 26201. 223See proposed BSTX Rule 26210(b); 15 U.S.C. 

78l(d). See Exhibits 3G, 3H, 3I, 3J, 3K, and 3L for 

agreements and forms related to the listing process. 

224 15 U.S.C. 78l(d). 

225See proposed BSTX Rule 26202. See also 15 

U.S.C. 78l(d). 

226See proposed BSTX Rule 25020(a) (providing 

that any class of securities listed on the Exchange 

shall be eligible to become designated for trading 

on the Exchange in accordance with the proposed 

BSTX Rule 26000 and 28000 Rule Series). 

227See OIP, supra note 7, 86 FR at 49417. The 

Exchange also states that it would only trade BSTXlisted Securities on BSTX unless and until the 

Exchange proposes and receives Commission 

approval for rules that would support trading in 

other types of securities, including thorough any 

extension of UTP to other NMS stock. See id. 

228See id. at 49423. 

229See Amendment No. 2, supra note 9, at 13. 

Two commenters refer to recent 

problems that they characterize as 

arising from T+2 settlement and short 

selling,211 and state that the proposal for 

a shorter settlement cycle would level 

the playing field for retail investors.212

Another commenter states that if a 

particular trade does not meet the 

criteria or conditions on T+0 or T+1, the 

fallback option will be the standard 

settlement cycle, and that because 

shorter settlement will depend on the 

NSCC clearing system, addressing any 

adverse market effects is NSCC’s 

responsibility.213 Another commenter 

states that uncertainty regarding 

whether an order would receive faster 

settlement at the time of order entry 

would not affect the ability of a market 

participants to reap the potential 

benefits of faster settlement.214 This 

commenter also states that there has 

been much recent public focus on the 

inefficiency of the current settlement 

system and that there is no evidence 

that the proposal would have adverse 

market effects.215

The Commission believes that the 

optional order parameter that would 

allow a BSTX Participant to place an 

Order with a T+0 Preference or Order 

with a T+1 Preference would permit 

BSTX Participants to take advantage of 

faster settlement timing provided by 

DTC and NSCC in manner that is 

consistent with fair and orderly markets. 

Use of the order parameter would be 

optional and would not have any effect 

on price/time execution priority. 

Therefore, any order placed by a BSTX 

Participant that prefers to settle on a 

T+2 basis (or any order routed to BSTX 

from another national securities 

exchange) would receive T+2 settlement 

and that order would not be 

disadvantaged in obtaining an execution 

due to the absence of a preference for 

faster settlement.216 The Commission 

also believes that the proposal that 

Orders with a T+0 Preference must be 

executed on the BSTX System prior to 

the T+0 Cut-Off Time to be eligible for 

same-day settlement is reasonably 

designed to ensure that when BSTX 

transmits an order to the registered 

clearing agency for same-day settlement, 

the registered clearing agency will be 

able to include that trade in its 

continuous net settlement process. 

For these reasons, the Commission 

finds that the proposed order parameter 

that BSTX Participants could use to 

preference faster settlement is consistent 

with the Exchange Act and, in 

particular, Section 6(b)(5)’s requirement 

to foster cooperation and coordination 

with persons engaged in clearing, 

settling, and processing information 

with respect to transactions in 

securities; remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system; and, in general, protect 

investors and the public interest.217 The 

Commission also finds that the 

proposed order parameter for faster 

settlement is consistent with Section 

6(b)(8)’s requirement that the proposal 

not impose any burden on competition 

not necessary or appropriate in further 

of the purposes of the Exchange Act, 

because the operation of this order 

parameter will not impact the ability of 

a market participant that instead prefers 

T+2 settlement to obtain an 

execution.218

C. Eligibility for Listing and Trading on 

BSTX 

Once BSTX begins operations as a 

facility of the Exchange, a security 

would be considered for listing on 

BSTX only if such security is registered 

under both Section 12 of the Exchange 

Act 219 and Section 6 of the Securities 

Act of 1933 (‘‘Securities Act’’),220 or 

such security to subject to an exemption 

under Regulation A.221 An issuer may 

register a security pursuant to Section 

12(b) by submitting to the Exchange a 

listing application that provides certain 

required information.222 The Exchange 

will review the listing application and, 

if the listing application is approved, 

will certify to the Commission that it 

has approved the security for listing and 

registration.223 Registration of the 

security will become effective thirty 

days after the receipt of such 

certification by the Commission or 

within a shorter period of time as the 

Commission may determine.224 Once 

registration is effective, the Security 

would be eligible to be admitted to 

dealings on BSTX.225

The Exchange proposes that the only 

securities that will be eligible for trading 

on BSTX will be BSTX-listed 

securities.226 The Exchange states that it 

is not proposing rules that would 

support its extension of UTP to other 

NMS stock.227 However, according to 

the Exchange, BSTX-listed Securities 

would be eligible for trading on other 

national securities exchanges that 

extend UTP to them and would be able 

to trade on other national securities 

exchanges and OTC in the same manner 

as other NMS stock.228

Classes of Securities Eligible for Listing 

The Exchange states that issuers on 

BSTX could include both: (i) New 

issuers who do not currently have any 

class of securities registered on a 

national securities exchange, and (ii) 

issuers who currently have securities 

registered on a national securities 

exchange and who are seeking 

registration of a new class of equity 

securities for listing on BSTX as 

Securities.229 In the original Notice, the 

Exchange stated that while BSTX does 

not intend for Securities listed on BSTX 

to be fungible with any other class of 

securities from the same issuer, to the 


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230See Notice, supra note 3, 86 FR at 29636 & 

n.20. 

231See Letter from Ellen Greene, Managing 

Director, Equities & Options Market Structure, 

Securities Industry and Financial Markets 

Association (September 27, 2021) (‘‘SIFMA Letter’’), 

at 2 (stating that ‘‘the definition of ‘class’ of 

securities in Section 12(g)(5) of the Exchange Act 

contemplates that securities of an issuer that have 

identical economic and voting rights would be part 

of the same class of securities’’). 

232See id. (stating that ‘‘issuers have dually-listed 

securities on two exchanges to meet the different 

listing standards of each of the exchanges, but the 

issuers have done so by listing the same class of 

securities on both exchanges’’). 

233See Amendment No. 2, supra note 9, at 13. 

234See id. 

235See proposed BSTX Rule 26101. 

236The Commission has stated in approving 

national securities exchange listing requirements 

that the development and enforcement of adequate 

standards governing the listing of securities on an 

exchange is an activity of critical importance to the 

financial markets and the investing public. In 

addition, once a security has been approved for 

initial listing, maintenance criteria allow an 

exchange to monitor the status and trading 

characteristics of that issue to ensure that it 

continues to meet the exchange’s standards for 

market depth and liquidity so that fair and orderly 

markets can be maintained. See, e.g., Securities 

Exchange Act Release Nos. 90768 (December 22, 

2020), 85 FR 85807, 85811 n.55 (December 29, 

2020) (SR–NYSE–2019–67) (‘‘NYSE 2020 Order’’); 

82627 (February 2, 2018), 83 FR 5650, 5653 n.53 

(February 8, 2018) (SR–NYSE–2017–30) (‘‘NYSE 

2018 Order’’); 81856 (October 11, 2017), 82 FR 

48296, 48298 (October 17, 2017) (SR–NYSE–2017– 

31); 81079 (July 5, 2017), 82 FR 32022, 32023 (July 

11, 2017) (SR–NYSE–2017–11). The Commission 

has stated that adequate listing standards, by 

promoting fair and orderly markets, are consistent 

with Section 6(b)(5) of the Exchange Act, in that 

they are, among other things, designed to prevent 

fraudulent and manipulative acts and practices, 

promote just and equitable principles of trade, and 

protect investors and the public interest. See, e.g., 

NYSE 2020 Order, 85 FR at 85811 n.55; NYSE 2018 

Order, 83 FR at 5653 n.53; Securities Exchange Act 

Release Nos. 87648 (December 3, 2019), 84 FR 

67308, 67314 n.42 (December 9, 2019) (SR– 

NASDAQ–2019–059); 88716 (April 21, 2020), 85 FR 

23393, 23395 n.22 (April 27, 2020) (SR–NASDAQ– 

2020–001). 237 ‘‘Meaningful listing standards are also 

important given investor expectations regarding the 

nature of securities that have achieved a national 

securities exchange listing, and the role of a 

national securities exchange in overseeing its 

market and assuring compliance with its listing 

standards.’’ Securities Exchange Act Release No. 

65708 (November 8, 2011), 76 FR 70799, 70802 

(November 15, 2011) (SR–NASDAQ–2011–073). See 

also, e.g., NYSE 2020 Order, supra note 236, 85 FR 

at 85811 n.56; Securities Exchange Act Release Nos. 

65709 (November 8, 2011), 76 FR 70795 (November 

15, 2011) (SR–NYSE–2011–38); 88389 (March 16, 

2020), 85 FR 16163 (March 20, 2020) (SR– 

NASDAQ–2019–089). The Exchange, in addition to 

requiring companies seeking to list to meet the 

quantitative initial listing standards and once listed 

the quantitative continued listing standards, also 

requires listed companies to meet other qualitative 

requirements. See, e.g., proposed BSTX Rules 26800 

Series, Corporate Governance. 

238See OIP, supra note 7, 86 FR at 49439 (citing 

Parts 1–12 of the NYSE American Company Guide). 

The Exchange states that it understands that the 

Commission has extended relief to NYSE American 

with respect to certain quantitative listing standards 

that do not meet the thresholds of Rule 3a51–1, and 

that initial listings of securities that do not meet 

such thresholds and are not subject to the relief 

provided to NYSE American would qualify as 

‘‘penny stocks’’ and would be subject to additional 

regulation. See Amendment No. 2, supra note 9, at 

106 (citing 17 CFR 240.3a51–1); Amendment No. 3, 

supra note 10, at 4–5. The Exchange states that it 

is not seeking relief related to Rule 3a51–1 and 

describes certain adjustments made to the proposed 

BSTX rules to meet the requirements in Rule 3a51– 

1. See Amendment No. 2, supra note 9, at 106; 

Amendment No. 3, supra note 10, at 4–5. 

239See proposed BSTX Rules 26000 Series (BSTX 

Listing Rules Other Than for Exchange Traded 

Products), 26200 Series (Original Listing 

Procedures), 26300 Series (Additional Listings), 

27000 Series (Suspension and Delisting), 27100 

Series (Guide to Filing Requirements), and 27200 

Series (Procedures for Review of Exchange Listing 

Determinations). 

240See, e.g., Securities Exchange Act Release Nos. 

59050 (December 3, 2008), 73 FR 75144 (December 

10, 2008) (SR-Amex-2008–70) (approving revisions 

to the listing process and removal of alternative 

listing standards for American Stock Exchange LLC 

(‘‘Amex’’), a predecessor to NYSE American); 53050 

(January 3, 2006), 71 FR 1580 (January 10, 2006) 

(SR-Amex-2005–114) (approving change to initial 

listing standards for Amex). 

241See Amendment No. 2, supra note 9, at 103 

n.301. For example, the Exchange does not propose 

to list bonds, debentures, securities of foreign 

companies (other than Canadian companies), or 

investment trusts. See id. The Exchange also does 

not propose to allow the issuance of fractional 

shares of Securities. See id. at 114. 

extent that two classes of an issuer’s 

shares had identical voting and 

economic rights but were registered 

with the Commission as separate 

classes, the two classes of shares could 

be ‘‘economically fungible’’ with each 

other.230 With respect to the Notice, one 

commenter states that BSTX appears to 

be contemplating that an issuer could 

list shares with identical voting and 

economic rights on BSTX and another 

exchange but designate the shares listed 

on BSTX as a separate class of the 

issuer’s securities, with the only 

distinguishing factor between the two 

classes of securities being that the 

BSTX-listed securities would have the 

additional blockchain functionality.231

The commenter states that, in the 

trading context, having two separate 

classes of an issuer’s securities with 

identical economic and voting rights 

trading at the same time on different 

exchanges could result in investor and 

market confusion.232 In Amendment No. 

2, the Exchange states that BSTX does 

not intend for a Security listed on BSTX 

to be a unique class of security due only 

to the fact that certain trading activity in 

the Security on BSTX would be 

recorded on the BSTX Market Data 

Blockchain.233 The Exchange also states 

that if an issuer sought to list a new 

class of securities on BSTX that is not 

distinct from an existing class of 

securities of the issuer, the Exchange 

would not allow such a class to be listed 

pursuant to its authority under 

proposed BSTX Rule 26101.234 The 

Commission believes that Amendment 

No. 2 addresses the commenter’s 

concern that an issuer could list one 

class of securities on BSTX and a 

separate class of securities on another 

national securities exchange, with both 

classes having identical voting and 

economic interests. Proposed BSTX 

Rule 26101 provides that the approval 

of an application for listing of a security 

for trading on BSTX is a matter solely 

within the discretion of the 

Exchange.235 The Exchange’s use of this 

discretionary authority to prevent an 

issuer from listing a class of securities 

on BSTX that is not distinct from an 

existing class of securities would 

prevent the listing of a class of securities 

that has the same voting and economic 

rights as another listed class of 

securities of that same issuer. 

Initial and Continued Listing Standards 

The Commission has consistently 

recognized the importance and 

significance of national securities 

exchange listing standards. Among 

other things, such listing standards help 

ensure that exchange-listed companies 

will have sufficient public float, 

investor base, and trading interest to 

provide the depth and liquidity 

necessary to promote fair and orderly 

markets.236 The standards, collectively, 

also provide investors and market 

participants with some level of 

assurance that the listed company has 

the resources, policies, and procedures 

to comply with the requirements of the 

Exchange Act and Exchange rules.237

The Exchange has proposed initial 

and continued listing standards for 

companies to be listed on BSTX that are 

substantially similar to the current rules 

for NYSE American.238 These proposed 

listing standards relate to the listing and 

delisting of companies, including 

procedures and prerequisites for initial 

and continued listing on BSTX, the 

obligations of issuers with Securities 

listed on BSTX, as well as rules 

describing the application and 

qualification process, the suspension 

and delisting process, and procedures 

for review of the Exchange’s listing 

determinations.239 The Commission has 

previously determined that the initial 

and continued listing standards of 

NYSE American are consistent with the 

Exchange Act.240 The Exchange states 

that it did not integrate certain sections 

of NYSE American’s listing standards 

that the Exchange deemed were 

inapplicable to its operations, such as 

with respect to types of securities that 

the Exchange does not propose to make 

eligible for listing.241 The Exchange also 

proposes to include certain listing 

standards that are substantially similar 


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242See, e.g., Amendment No. 3, supra note 10, at 

5–6 (stating that the Exchange is including initial 

listing standards for preferred securities and 

secondary classes based on Nasdaq Rule 5510). 

243See OIP, supra note 7, 86 FR at 49442 (citing 

to NYSE Arca Rules 5.2–E(j)(3), 5.2–E(j)(6), 5.2– 

E(j)(8), 8.200–E, 8.201–E, 8.600–E, 8.601–E, and 

8.900–E). 

244See proposed BSTX Rules 28000 (Investment 

Company Units), 28001 (Equity Index-Linked 

Securities, Commodity-Linked Securities, CurrencyLinked Securities, Fixed Income Index-Linked 

Securities, Futures-Listed Securities, and 

Multifactor Index-Linked Securities), 28002 

(Exchange-Traded Fund Shares), 28003 (Trust 

Issued Receipts), 28004 (Commodity-Based Trust 

Shares), 28005 (Managed Fund Shares), 28006 

(Active Proxy Portfolio Shares), and 28007 

(Managed Portfolio Shares). 

245See OIP, supra note 7, 86 FR at 49443 (stating 

that the Exchange will not support trading in a 

Nasdaq-100 Index Product, Currency Trust Shares, 

or Commodity Index Trust Shares). 

246See, e.g., Securities Exchange Act Release Nos. 

44551 (July 12, 2001), 66 FR 37716 (July 19, 2001) 

(PCX–2001–14) (approving generic listing standards 

for investment company units and portfolio 

depository receipts for Pacific Exchange, Inc. 

(‘‘PCX’’), a predecessor to NYSE Arca); 52204 

(August 3, 2005), 70 FR 46559 (August 10, 2005) 

(PCX–2005–63) (approving PCX’s generic listing 

standards for index-linked securities); 78397 (July 

22, 2016), 81 FR 49320 (July 27, 2016) (NYSEArca2015–110) (approving NYSE Arca’s generic listing 

standards for managed fund shares). 

247 15 U.S.C. 78f(b)(5). 

248 15 U.S.C. 78f(b)(7). 

249See, e.g., Securities Exchange Act Release Nos. 

85374 (March 20, 2019), 84 FR 11354, 11356 (March 

26, 2019); 91567 (April 14, 2021), 86 FR 20556, 

20559 (April 20, 2021). 

250See, e.g., Securities Exchange Act Release Nos. 

85374 (March 20, 2019), 84 FR 11354, 11356 (March 

26, 2019); 91567 (April 14, 2021), 86 FR 20556, 

20559 (April 20, 2021). 

251See OIP, supra note 7, at 49442 (citing to 

NYSE American Sections 401–404, 501–522, 603– 

624, 701–726, 801–809, and 920–994). 

252See proposed BSTX Rule 26400 Series 

(Disclosure Policies), 26500 Series (Dividends and 

Splits), 26600 Series (Accounting; Annual and 

Quarterly Reports), 26700 Series (Shareholders’ 

Meetings, Approval and Voting of Proxies), 26800 

Series (Corporate Governance), and 26900 Series 

(Additional Matters). 

253See proposed BSTX Rules 26802, 26803, and 

27807. 

254See, e.g., Securities Exchange Act Release Nos. 

48863 (December 1, 2003), 68 FR 68432 (December 

8, 2003) (SR–Amex–2003–65) (approving proposal 

to enhance the corporate governance requirements 

applicable to listed companies for Amex); 54851 

(November 30, 2006), 71 FR 71201 (December 8, 

2006) (SR–Amex–2006–48) (approving exchange’s 

independent director and audit committee 

corporate governance standards for Amex). 

255See Amendment No. 2, supra note 9, at 115 

(citing to IEX Rule 14.414). See also proposed BSTX 

Rule 26801(i). 

256See 15 U.S.C. 78j–1(m); 15 U.S.C. 78j–3; 17 

CFR 240.10A–3; 17 CFR 240.10C–1. 

to the rules of other national securities 

exchanges.242

In addition, the Exchange has 

proposed initial and continued listing 

standards for ETP-related securities to 

be listed on BSTX that are substantially 

similar to the rules of NYSE Arca, Inc. 

(‘‘NYSE Arca’’).243 These initial and 

continued listing standards relate to the 

specific types of ETPs that the Exchange 

proposes to make eligible for listing on 

BSTX.244 The Exchange states that the 

proposed rules do not include certain 

products that are supported by NYSE 

Arca but that the Exchange does not 

plan to offer.245 The Commission has 

previously determined that the ETPrelated listing standards of NYSE Arca 

are consistent with the Exchange Act.246

Accordingly, the Commission finds 

that the Exchange’s proposed initial and 

continued listing requirements, 

including the procedures for listing and 

delisting securities, are consistent with 

the Exchange Act, and Section 6(b)(5) of 

the Exchange Act 247 in particular, and 

its requirements that the rules of a 

national securities exchange be 

reasonably designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principals of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest; and that the rules not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

Commission also finds that procedures 

for listing and delisting securities, 

including the procedures for 

challenging the Exchange’s listing 

determinations, are consistent with 

Section 6(b)(7) of the Exchange Act,248

which requires, among other things, that 

the rules of a national securities 

exchange provide a fair procedure for 

the prohibition or limitation by the 

exchange of any person with respect to 

access to services offered by the 

exchange. 

Corporate Governance Standards 

The development and enforcement of 

meaningful corporate governance listing 

standards for a national securities 

exchange is of substantial importance to 

financial markets and the investing 

public, especially given investor 

expectations regarding the nature of 

companies that have achieved an 

exchange listing for their securities.249

The corporate governance standards 

embodied in the listing standards of 

national securities exchanges, in 

particular, play an important role in 

assuring that exchange-listed companies 

observe good governance practices 

including safeguarding the interests of 

shareholders.250

The Exchange proposes corporate 

governance standards in connection 

with Securities to be listed and traded 

on BSTX that are substantially similar to 

the corporate governance standards for 

listed issuers of NYSE American.251

These corporate governance standards 

for listed issuers include policies 

relating to disclosures, the handling of 

stock dividends and splits, accounting, 

shareholder meetings and voting, and 

required notifications to the Exchange, 

as well as standards for the issuer’s 

corporate structure and its board of 

directors and committees thereof.252

Further, these standards include rules 

requiring a majority of directors on a 

listed issuer’s board to be independent, 

rules and independence requirements 

relating to audit and compensation 

committees and the oversight of 

nominations, and rules requiring listed 

issuers to adopt codes of conduct 

applicable to all their directors, officers, 

and employees.253 The Commission has 

previously determined that the 

corporate governance standards for 

listed issuers of NYSE American are 

consistent with the Exchange Act.254

The Exchange also proposes to require 

listed companies to maintain an internal 

audit function pursuant to a rule that is 

substantially similar to the requirements 

of IEX.255

The Commission finds that BSTX’s 

proposed corporate governance 

standards for listed issuers contained in 

BSTX’s proposed rules are consistent 

with the Exchange Act, and in particular 

Section 6(b)(5) of the Exchange Act and 

its requirements that the rules of a 

national securities exchange be 

reasonably designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest; and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission further finds that 

BSTX’s proposed rules satisfy the 

requirements of Section 10A(m) of the 

Exchange Act and Rule 10A–3 

thereunder and Section 10C of the 

Exchange Act and Rule 10C–1 

thereunder, relating to audit and 

compensation committees, 

respectively.256 The Commission 

believes that BSTX’s corporate 

governance standards for listed issuers 

that require a fully independent audit 

committee are designed to promote 

independent and objective review and 

oversight of the accounting and auditing 

practices of listed issuers and to 

enhance audit committee independence, 

authority, and responsibility by 

implementing the standards set forth in 


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257See Securities Exchange Act Release No. 

47654 (April 9, 2003), 68 FR 18788 (April 16, 2003). 258See Securities Exchange Act Release No. 

67220 (June 20, 2012), 77 FR 38422, 38425 (June 27, 

2012). 259See proposed BSTX Rule 26805. See, e.g., 

Securities Exchange Act Release No. 68640 (January 

11, 2013), 78 FR 4554, 4563 (January 22, 2013) (SR– 

NASDAQ–2012–109) (‘‘Nasdaq 2012 Order’’) 

(approving proposal relating to rules for 

compensation committees for listed companies). 260See, e.g., Nasdaq 2012 Order, supra note 259 

(finding Nasdaq compensation committee rules 

consistent with the Exchange Act). See also, e.g., 

Securities Exchange Act Release Nos. 68639 

(January 11, 2013), 78 FR 4570 (January 22, 2013) 

(order approving NYSE’s compensation committee 

rules, which was cited by Nasdaq as precedent for 

a subsequent amendment to its own rules that was 

filed on an immediately effective basis); 71037 

(December 11, 2013), 78 FR 76179 (December 16, 

2013) (SR–NASDAQ–2013–147). 

261See OIP, supra note 7, 86 FR at 49448. 

262See id. The Exchange states that, as is the case 

with the Exchange’s options trading platform, the 

Exchange will supervise FINRA and bear ultimate 

regulatory responsibility for BSTX. See id. 

263See id. 

264See id. 

265See id. at 49448–49. 

266See id. at 49427–30 (discussing proposed 

BSTX Rules regarding Business Conduct for BSTX 

Participants (Rule 19000 Series), Financial and 

Operational Rules for BSTX Participants (Rule 

20000 Series), Supervision (Rule 21000 Series) and 

Miscellaneous Provisions (Rule 22000 Series)). 

267See id. at 49430–31; proposed BSTX Rule 

24000. The Exchange proposes to make conforming 

edits to certain existing Exchange Rules to expand 

their coverage to all Participants. See proposed BOX 

Rules 11010 and 11030. 

268See OIP, supra note 7, 86 FR at 49431. 

269 17 CFR 240.19d–1(c)(1). 

270See OIP, supra note 7, 86 FR at 49443. 

271See id. 

272See Amendment No. 2, supra note 9, at 121. 

273See OIP, supra note 7, 86 FR at 49443; 

proposed BOX Rule 12140(f). The Exchange also 

proposes to make conforming changes to replaced 

references to ‘‘Options Participant’’ with 

‘‘Participant.’’ See proposed BOX Rule 12140. 

274See proposed BSTX Rule 24010. The Exchange 

proposes that violations of the following rules 

would be appropriate for dispositions under the 

MRVP: proposed BSTX Rule 19180 

(Communications with the Public), proposed BSTX 

Rule 20000 (Maintenance, Retention and 

Furnishing of Records), proposed BSTX Rule 25070 

(Consolidated Audit Trail), proposed BSTX Rule 

25130 (Locking or Crossing Quotations in NMS 

Stocks), proposed BSTX Rule 25210(a)(1) (BSTX 

Market Maker Two-Sided Quote Obligation), and 

proposed BSTX Rule 25120 (Short Sales). See 

proposed BSTX Rule 24010(b). 

275See Amendment No. 2, supra note 9, at 122 

(citing to IEX Rule 9.218, Cboe BZX Rule 8.15.01, 

and MIAX Pearl Rule 1014(d)(15)). 

276See id. at 143. Rule 17d–2 provides that any 

two or more SROs may file with the Commission 

a plan for allocating among such SROs the 

responsibility to receive regulatory reports from 

persons who are members or participants of more 

than one of such SROs to examine such persons for 

compliance, or to enforce compliance by such 

persons, with specified provisions of the Exchange 

Act, the rules and regulations thereunder, and the 

rules of such SROs, or to carry out other specified 

regulatory functions with respect to such persons. 

See 17 CFR 240.17d–2. 

Rule 10A–3.257 In addition, the 

Commission believes that BSTX’s 

proposed requirements relating to 

independent compensation committees 

for listed issuers would benefit investors 

by implementing the standards set forth 

in Rule 10C–1, which requires that the 

independent directors of a listed issuer 

oversee executive compensation 

matters, consider independence criteria 

before retaining compensation advisers, 

and have responsibility for the 

appointment, compensation, and 

oversight of these advisers.258 Corporate 

governance standards play an important 

role in assuring that companies listed 

for trading on the national securities 

exchanges’ markets have a reasoned, 

fair, and impartial approach for 

determining the compensation of 

corporate executives.259 The 

Commission believes that the 

Exchange’s rules will foster greater 

transparency, accountability, and 

objectivity in the oversight of 

compensation practices of listed issuers 

and in the decision-making processes of 

their compensation committees.260

Regulation 

The Exchange states that in 

connection with the operation of BSTX, 

it will leverage many of the Exchange’s 

existing regulatory structures.261 The 

Exchange states that it will extend its 

Regulatory Services Agreement with 

FINRA to cover BSTX Participants and 

trading on the BSTX System, and this 

Regulatory Services Agreement will 

govern many aspects of the regulation 

and discipline of BSTX Participants.262

According to the Exchange, the 

Exchange will regulate the listing of 

Securities, authorize BSTX Participants 

to trade on the BSTX System, and 

conduct surveillance of Security trading 

on the BSTX System.263 The Exchange 

states that, consistent with the 

Exchange’s existing regulatory structure, 

the Exchange’s Chief Regulatory Officer 

will have general supervision of the 

regulatory operations of BSTX, 

including responsibility for overseeing 

the surveillance, examination, and 

enforcement functions and for 

administering all regulatory services 

agreements applicable to BSTX.264 The 

Exchange states that its existing 

Regulatory Oversight Committee will be 

responsible for overseeing the adequacy 

and effectiveness of the Exchange’s 

regulatory and self-regulatory 

organization responsibilities, including 

those applicable to BSTX.265

The Exchange proposes specific 

business conduct and operational rules 

for BSTX Participants that include rules 

covering similar subject matter as 

existing Exchange Rules applicable to 

Options Participants.266 The Exchange 

also proposes to adopt proposed BSTX 

Rule 24000 (Discipline and Summary 

Suspension), which provides that the 

provisions of the Exchange’s existing 

BOX Rule 11000 Series (Summary 

Suspension), 12000 Series (Discipline), 

13000 Series (Review of Certain 

Exchange Actions), and 14000 Series 

(Arbitration) shall be applicable to 

BSTX Participants and trading on the 

BSTX System.267 According to the 

Exchange, the Exchange already has 

Rules pertaining to discipline and 

suspension of Exchange Participants 

that it proposes to extend to BSTX 

Participants and trading on the BSTX 

System.268

In addition to the Exchange’s other 

disciplinary rules, the Exchange’s Minor 

Rule Violation Plan (‘‘MRVP’’) specifies 

those uncontested minor rule violations 

with sanctions not exceeding $2,500 

that would not be subject to the 

provisions of Rule 19d–1(c)(1) under the 

Exchange Act 269 requiring that an SRO 

promptly file notice with the 

Commission of any final disciplinary 

action taken with respect to any person 

or organization.270 The Exchange’s 

MRVP includes the policies and 

procedures set forth in existing BOX 

Rule 12140 (Imposition of Fines for 

Minor Violations).271 The Exchange 

proposes to amend its MRVP to add 

certain rules relating to BSTX to the list 

of rules eligible for MRVP treatment, by 

amending BOX Rule 12140 and 

adopting proposed BSTX Rule 24010.272

Specifically, the Exchange proposes to 

modify BOX Rule 12140 to specify that 

rules and penalties relating to trading on 

BSTX are set forth in proposed BSTX 

Rule 24010.273 The Exchange also 

proposes to set forth a fine schedule for 

violations of certain rules related to 

activity on BSTX and provide that a 

subsequent violation is calculated on 

the basis of a rolling 12-month 

period.274 The Exchange states that the 

rules that it proposes to include in its 

MRVP are comparable to the rules 

included in the MRVPs of other national 

securities exchanges.275

The Exchange represents that it plans 

to join the multi-party Rule 17d–2 Plan 

for Allocation of Regulatory 

Responsibilities Regarding Regulation 

NMS and is in the process of joining 

certain Rule 17d–2 agreements, 

including those applicable to equities 

trading and equities market 

surveillance.276 The Exchange states 

that it is a participant in the NMS plan 

related to the Consolidated Audit Trail, 

and that it intends to join the Order 

Execution Quality Disclosure Plan, the 

LULD Plan, and the applicable plans for 

the consolidation and dissemination of 


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277See Amendment No. 2, supra note 9, at 144. 

278See id. 

279See OIP, supra note 7, 86 FR at 49449. The 

Exchange states that it currently does this for 

options. See id. 

280See id. 

281See id. at 49433. The Exchange represents that 

it intends to join the LULD Plan prior to the 

commencement of trading Securities. See id. 

282See proposed BSTX Rule 25080(b)(3). 

283See proposed BSTX Rule 25050. See also 

supra note 125 (discussing how proposed BSTX 

Rule 25050 is substantially similar to the rules of 

other national securities exchanges adopted in 

connection with the LULD Plan). 

284See 15 U.S.C. 78f(b)(5). 

285 15 U.S.C. 78f(b)(1). 

286 15 U.S.C. 78f(b)(6) and (b)(7). 

287 17 CFR 240.19d–1(c)(2). 

288 15 U.S.C. 78k(a)(1). 

289 17 CFR 240.11a2–2(T). 

290This prohibition also applies to associated 

persons. The member may, however, participate in 

clearing and settling the transaction. 

291See Letter from Lisa Fall, President, BOX, 

dated December 23, 2021 (‘‘BSTX 11(a) Letter’’) 

available on the Commission’s website at: https:// 

www.sec.gov/comments/sr-box-2021-06/ 

srbox202106-20110741-264607.pdf. 

market data.277 The Exchange also states 

that it will ensure that its membership 

in the Intermarket Surveillance Group 

extends to the BSTX facility.278

According to the Exchange, the 

Exchange will perform automated 

surveillance of trading on BSTX for the 

purposes of maintaining a fair and 

orderly market at all times and monitor 

BSTX to identify unusual trading 

patterns and determine whether 

particular trading activity requires 

further regulatory investigation by 

FINRA.279 The Exchange states that it 

will oversee the process for determining 

and implementing trading halts, 

identifying and responding to unusual 

market conditions, and administering 

the Exchange’s process for identifying 

and remediating ‘‘clearly erroneous 

trades’’ pursuant to proposed BSTX 

Rule 25110.280

The Exchange has also proposed 

BSTX Rules 25050 and 25080(b)(3) to 

comply with the LULD Plan.281

Proposed BSTX Rule 25080(b)(3) 

provides that, for any execution to occur 

during Regular Trading Hours, such 

executions must comply with the LULD 

plan, as set forth in BSTX Rule 

25050.282 Proposed BSTX Rule 25050 

describes the Exchange’s order handling 

procedures to comply with the LULD 

Plan.283

The Exchange’s proposed regulatory 

structure raises no new regulatory 

issues. Accordingly, the Commission 

finds that the Exchange’s proposed 

regulatory structure, including the 

Exchange’s proposed application of its 

existing rules to BSTX and BSTX 

Participants’ conduct, the Exchange’s 

commitment to establish new or expand 

existing agreements with third-parties 

including FINRA for purposes such as 

surveillance, member discipline, and 

overseeing and enforcing compliance 

with BSTX rules, and proposed BSTX 

Rule 25050 requiring compliance with 

the LULD Plan are consistent with the 

Exchange Act and, in particular, the 

Section 6(b)(5) requirement that a 

national securities exchange’s rules be 

designed to promote just and equitable 

principles of trade, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, and 

protect investors and the public 

interest.284 The Commission also finds 

that the Exchange’s proposed regulatory 

structure is consistent with the 

requirements of Section 6(b)(1) of the 

Exchange Act, which requires a national 

securities exchange to be so organized 

and have the capacity to be able to carry 

out the purposes of the Exchange Act 

and to comply, and to enforce 

compliance by its members and persons 

associated with its members, with the 

Exchange Act and the rules and 

regulations thereunder, and the rules of 

the Exchange,285 and with Sections 

6(b)(6) and 6(b)(7) of the Exchange 

Act,286 which require an Exchange to 

provide fair procedures for the 

disciplining of members and persons 

associated with members. 

Finally, the Commission finds that the 

proposed changes to the Exchange’s 

MRVP are consistent with the public 

interest, the protection of investors, or 

otherwise in furtherance of the purpose 

of the Exchange Act, as required by Rule 

19d–1(c)(2) under the Exchange Act,287

which governs minor rule violation 

plans. The Commission believes that 

BOX Rule 12140 is an effective way to 

discipline a member for a minor 

violation of a rule. The Commission 

believes that the Exchange’s proposal to 

add rules related to BSTX to the list of 

rules that are eligible for minor rule 

violation plan treatment is consistent 

with the Exchange Act because it may 

help the Exchange’s ability to better 

carry out its oversight and enforcement 

responsibilities. 

In approving the proposed changes to 

the Exchange’s MRVP, the Commission 

in no way minimizes the importance of 

complying with the Exchange’s rules 

and all other rules subject to fines under 

BOX Rule 12140 and proposed BSTX 

Rule 24010. The Commission believes 

that a violation of any SRO’s rules, as 

well as Commission rules, is a serious 

matter. However, BOX Rule 12140 and 

proposed BSTX Rule 24010 provide a 

reasonable means of addressing rule 

violations that may not rise to the level 

of requiring formal disciplinary 

proceedings, while providing greater 

flexibility in handling certain violations. 

Consistent with its rules and the 

requirements of the Exchange Act, the 

Commission expects that the Exchange 

will continue to conduct surveillance 

with due diligence and make a 

determination based on its findings, on 

a case-by-case basis, whether a fine of 

more or less than the recommended 

amount is appropriate for a violation 

under BOX Rule 12140 and proposed 

BSTX Rule 24010 or whether a violation 

requires formal disciplinary action. 

Section 11(a) of the Exchange Act 

Section 11(a)(1) of the Exchange 

Act 288 prohibits a member of a national 

securities exchange from effecting 

transactions on that exchange for its 

own account, the account of an 

associated person, or an account over 

which it or its associated person 

exercises investment discretion 

(collectively, ‘‘covered accounts’’) 

unless an exception applies. Rule 11a2– 

2(T) under the Exchange Act,289 known 

as the ‘‘effect versus execute’’ rule, 

provides exchange members with an 

exemption from the Section 11(a)(1) 

prohibition. Rule 11a2–2(T) permits an 

exchange member, subject to certain 

conditions, to effect transactions for 

covered accounts by arranging for an 

unaffiliated member to execute 

transactions on the exchange. To 

comply with Rule 11a2–2(T)’s 

conditions, a member: (i) Must transmit 

the order from off the exchange floor; 

(ii) may not participate in the execution 

of the transaction once it has been 

transmitted to the member performing 

the execution; 290 (iii) may not be 

affiliated with the executing member; 

and (iv) with respect to an account over 

which the member or an associated 

person has investment discretion, 

neither the member nor its associated 

person may retain any compensation in 

connection with effecting the 

transaction except as provided in the 

Rule. 

In a letter to the Commission, the 

Exchange requests that the Commission 

concur with the Exchange’s conclusion 

that Exchange members that enter 

orders into the BSTX System satisfy the 

conditions of Rule 11a2–2(T).291 For the 

reasons set forth below, the Commission 

believes that members entering orders 

into the BSTX System could satisfy the 

requirements of Rule 11a2–2(T). 

The Rule’s first condition is that 

orders for covered accounts be 

transmitted from off the exchange floor. 

In the context of automated trading 


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292See, e.g., Securities Exchange Act Release Nos. 

78101 (June 17, 2016), 81 FR 41141 (June 23, 2016) 

(order approving IEX exchange registration); 75650 

(August 7, 2015), 80 FR 48600 (August 13, 2015) 

(order approving EDGX Options as an options 

trading facility of the EDGX Exchange, Inc.); 61419 

(January 26, 2010), 75 FR 5157 (February 1, 2010) 

(order approving the BATS Options as an options 

trading facility of the BATS Exchange, Inc.); 49068 

(January 13, 2004), 69 FR 2775 (January 20, 2004) 

(order approving the Boston Options Exchange as 

an options trading facility of the Boston Stock 

Exchange); 44983 (October 25, 2001), 66 FR 55225 

(November 1, 2001) (order approving Archipelago 

Exchange as electronic trading facility of the Pacific 

Exchange); 29237 (May 24, 1991), 56 FR 24853 

(May 31, 1991) (regarding NYSE’s Off-Hours 

Trading Facility); 15533 (January 29, 1979), 44 FR 

6084 (January 31, 1979) (‘‘1979 Release’’); and 

14563 (March 14, 1978), 43 FR 11542 (March 17, 

1978) (‘‘1978 Release’’) (regarding NYSE’s 

Designated Order Turnaround System). 

293See BSTX 11(a) Letter, supra note 291, at 3. 

294See id. at 4. 

295See id. The Exchange states that a member 

may cancel or modify the order, or modify the 

instructions for executing the order, provided such 

cancellations or modifications are transmitted from 

off an exchange floor. See id. at 3 (citing the 1978 

Release). The Commission has stated that the nonparticipation requirement is satisfied under such 

circumstances, so long as such modifications or 

cancellations are also transmitted from off the floor. 

See 1978 Release, supra note 292 (stating that the 

‘‘non-participation requirement does not prevent 

initiating members from canceling or modifying 

orders (or the instructions pursuant to which the 

initiating member wishes orders to be executed) 

after the orders have been transmitted to the 

executing member, provided that any such 

instructions are also transmitted from off the 

floor’’). 

296 In considering the operation of automated 

execution systems operated by an exchange, the 

Commission has stated that while there is not an 

independent executing exchange member, the 

execution of an order is automatic once it has been 

transmitted into the system. Because the design of 

these systems ensures that members do not possess 

any special or unique trading advantages in 

handling their orders after transmitting them to the 

exchange, the Commission has stated that 

executions obtained through these systems satisfy 

the independent execution requirement of Rule 

11a2–2(T). See 1979 Release, supra note 292. 

297See BSTX 11(a) Letter, supra note 291, at 4. 

The Exchange also states that access to the BSTX 

Market Data Blockchain will not allow a member 

or an associated person of such member to acquire 

control or influence over the result or timing of an 

order’s execution. See id. 

298 17 CFR 240.11a2–2(T)(a)(2)(iv). In addition, 

Rule 11a2–2(T)(d) requires a member or associated 

person authorized by written contract to retain 

compensation, in connection with effecting 

transactions for covered accounts over which such 

member or associated persons thereof exercises 

investment discretion, to furnish at least annually 

to the person authorized to transact business for the 

account a statement setting forth the total amount 

of compensation retained by the member in 

connection with effecting transactions for the 

account during the period covered by the statement. 

See 17 CFR 240.11a2–2(T)(d). See also 1978 

Release, supra note 292 (stating ‘‘[t]he contractual 

and disclosure requirements are designed to assure 

that accounts electing to permit transaction-related 

compensation do so only after deciding that such 

arrangements are suitable to their interests’’). 

299See BSTX 11(a) Letter, supra note 291, at 4– 

5. 

systems, the Commission has found that 

the off-floor transmission condition is 

met if a covered account order is 

transmitted from a remote location 

directly to an exchange’s floor by 

electronic means.292 The Exchange has 

represented that BSTX does not have a 

physical trading floor, and the BSTX 

System will receive orders from 

members electronically through remote 

terminals or computer-to-computer 

interfaces.293 The Commission believes 

that the BSTX System satisfies this offfloor transmission condition. 

The second condition states that the 

member and any associated person not 

participate in the execution of its order 

after the order has been transmitted. The 

Exchange has represented that at no 

time following the submission of an 

order is a member or an associated 

person of the member able to acquire 

control or influence over the result or 

timing of the order’s execution.294

According to the Exchange, the 

execution of a member’s order is 

determined solely by what quotes and 

orders are present in the BSTX System 

at the time the member submits the 

order, and the order priority based on 

the BSTX rules.295 Accordingly, the 

Commission believes that a member and 

its associated persons do not participate 

in the execution of an order submitted 

to the BSTX System. 

The third condition states that the 

order be executed by an exchange 

member who is unaffiliated with the 

member initiating the order. The 

Commission has stated that this 

condition is satisfied when automated 

exchange facilities are used, as long as 

the design of these systems ensures that 

members do not possess any special or 

unique trading advantages in handling 

their orders after transmitting them to 

the exchange.296 The Exchange has 

represented that the design of the BSTX 

System ensures that no member has any 

special or unique trading advantage in 

the handling of its orders after 

transmitting its orders to the 

Exchange.297 Based on the Exchange’s 

representation that the design of the 

BSTX System ensures that no member 

has any special or unique trading 

advantage in the handling of its orders 

after transmitting its orders to BSTX, the 

Commission believes that the BSTX 

System satisfies this condition of Rule 

11a2–2(T). 

Fourth, in the case of a transaction 

effected for an account with respect to 

which the initiating member or an 

associated person thereof exercises 

investment discretion, neither the 

initiating member nor any associated 

person thereof may retain any 

compensation in connection with 

effecting the transaction, unless the 

person authorized to transact business 

for the account has expressly provided 

otherwise by written contract referring 

to Section 11(a) of the Exchange Act and 

Rule 11a2–2(T) thereunder.298 Members 

trading for covered accounts over which 

they exercise investment discretion 

must comply with this condition in 

order to rely on the rule’s exemption.299

IV. Solicitation of Comments on 

Amendment Nos. 2 and 3 to the 

Proposed Rule Change 

Interested persons are invited to 

submit written data, views, and 

arguments concerning whether 

Amendment Nos. 2 and 3 are consistent 

with the Exchange Act. Comments may 

be submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

BOX–2021–06 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BOX–2021–06. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 


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300See Notice, supra note 3; OIP, supra note 7. 

301 15 U.S.C. 78f(b)(2). 

302 15 U.S.C. 78s(b)(2). 

303 17 CFR 240.19d–1(c)(2). 

304See also supra note 12 and accompanying text. 

305 17 CFR 200.30–3(a)(12). 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–BOX–2021–06, and should 

be submitted on or before February 23, 

2022. 

V. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment Nos. 2 and 3 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment Nos. 2 and 3, 

prior to the thirtieth day after the date 

of publication of notice of the filing of 

Amendment Nos. 2 and 3 in the Federal 

Register. The Commission notes that the 

original proposal and the proposal as 

modified by Amendment No. 1 were 

published for comment in the Federal 

Register.300

In Amendment No. 2, the Exchange 

revised the proposal to: (i) Provide 

additional information regarding the 

connectivity and co-location services 

that will be offered at the Exchange’s 

primary data center, including 

equidistant cabling arrangements; (ii) 

state that, pursuant to its authority 

under proposed BSTX Rule 26101, the 

Exchange would not permit an issuer to 

list a new class of securities on BSTX 

that is not distinct from an existing class 

of securities of the issuer; (iii) modify 

proposed rule text regarding the 

proposed BSTX Market Data Blockchain 

to clarify that non-BSTX Participants 

will have access to anonymized, general 

market data and specify what fields are 

included in this data, to specify that the 

market data will apply to trading 

activity for regular trading hours, and to 

clarify that users will view the data 

through an application programming 

interface; (iv) modify proposed rule text 

related to the proposed order parameter 

that would be used to preference T+0 

settlement to add the T+0 Cut-Off Time 

by which an execution must occur to be 

eligible for T+0 settlement; (v) provide 

additional description to clarify 

operation of the proposed BSTX Market 

Data Blockchain and proposed optional 

order parameter for T+0 or T+1 

settlement; and (vi) make technical and 

conforming changes. The Commission 

believes that these changes help to 

clarify the proposal and address 

concerns raised by commenters 

regarding the Exchange’s equidistant 

cabling arrangements and the potential 

for listing a class of securities that has 

the same economic and voting rights as 

a class of securities listed on another 

national securities exchange. The 

Commission also believes that the 

changes regarding General Market Data 

on the BSTX Market Data Blockchain 

help to clarify access for non-BSTX 

Participants and how the Exchange will 

anonymize the data. The Commission 

further believes that the addition of the 

T+0 Cut-Off Time will help to ensure 

that trades submitted to NSCC for T+0 

settlement are received by NSCC before 

NSCC’s cut-off time and thus can be 

settled using the consolidated net 

settlement process, and that the 

additional explanation regarding the 

order parameter for T+0 and T+1 

settlement helps to clarify how this 

functionality will operate. 

In addition, the Exchange made 

several changes in Amendment No. 2 to 

bring the proposed rules into closer 

alignment with the rules of other 

national securities exchanges on which 

equities securities are traded, including 

by: (i) Modifying certain trading rules 

regarding securities eligible for trading, 

prohibitions against trading ahead of 

customer orders, round lots, minimum 

price variants, auctions used to open or 

reopen trading, the dissemination of 

market data concerning such auctions, 

risk controls, market maker registration 

process and obligations, business 

conduct, trading practices, maintaining 

books and records, off-exchange 

transactions, scope of the MRVP, trade 

reporting and the dissemination of 

quotations, clearly erroneous 

executions, and locking and crossing 

quotations; (ii) eliminating a proposed 

rule regarding an audit trail that has 

been superseded by rules pertaining to 

the Consolidated Audit Trail; (iii) 

modifying certain proposed listing 

standards regarding the listing of 

secondary classes and preferred stock, 

the required number of market makers, 

requirements for securities of foreign 

issuers that would apply to the listing 

of Canadian issuers, the listing of 

securities subject to an exemption from 

Exchange Act registration, the method 

of computing the payment of cash in 

lieu of fractional shares, the settlement 

timing of securities transactions, 

requirements to notify the Exchange 

before engaging in activities relating to 

a proxy contest, requirements that listed 

companies establish and maintain an 

internal audit function, the calculation 

of regulatory transaction fees under 

Section 31 of the Exchange Act, and the 

distribution of funds in the event of 

liquidation of the Exchange; and (iv) 

eliminating a proposed listing 

requirement that an applicant provide a 

legal opinion that its security qualifies 

as a security under applicable United 

States securities laws. The Exchange 

also made changes in Amendment Nos. 

2 and 3 to certain quantitative listing 

requirements to comply with the 

thresholds and other terminology in 

Rule 3a51–1. The Commission believes 

that these changes help make these 

aspects of the proposal substantially 

similar to the existing rules of national 

securities exchanges. 

Accordingly, the Commission finds 

good cause, pursuant to Section 19(b)(2) 

of the Exchange Act,301 to approve the 

proposed rule change, as modified by 

Amendment Nos. 2 and 3, on an 

accelerated basis. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act 302

and Rule 19d–1(c)(2) thereunder,303 that 

the proposed rule change (SR–BOX– 

2021–06), as modified by Amendment 

Nos. 2 and 3 thereto, be, and it hereby 

is, approved on an accelerated basis. 

Although the Commission’s approval 

of the proposed rule change is final, and 

the proposed rules are therefore 

effective, it is further ordered that the 

operation of BSTX is conditioned on the 

satisfaction of the requirements below: 

A. Participation in National Market 

System Plans Relating to Equities 

Trading. BOX must join all relevant 

national market system plans related to 

BSTX equities trading, including: (1) 

The Consolidated Tape Association 

Plan, the Consolidated Quotation Plan, 

and the Nasdaq UTP Plan (or any 

successors thereto); (2) the National 

Market System Plan to Address 

Extraordinary Market Volatility; and (3) 

the National Market System Plan 

Establishing Procedures Under Rule 605 

of Regulation NMS. 

B. Regulatory Services Agreement and 

Rule 17d–2 Agreements. BOX must 

ensure that all necessary changes are 

made to its Regulatory Services 

Agreement with FINRA and must be a 

party to the multi-party Rule 17d–2 

agreements applicable to BSTX equities 

trading and equities market 

surveillance. 

C. Intermarket Surveillance Group. 

BOX must ensure that its membership 

in the Intermarket Surveillance Group 

extends to the BSTX facility. 

D. Governance Structure. BOX must 

ensure, consistent with the 

requirements of Section 19(b) and Rule 

19b–4, that it has adopted a rule 

establishing BSTX as a facility of the 

Exchange.304


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1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

4See Securities Exchange Act Release Nos. 93775 

(December 14, 2021), 86 FR 71996 (‘‘MIAX 

Notice’’); 93774 (December 14, 2021), 86 FR 71952 

(‘‘Pearl Notice’’). For ease of reference, citations to 

statements generally applicable to both notices are 

to the MIAX Notice. 

5 15 U.S.C. 78s(b)(3)(C). 

6See MIAX Notice, supra note 4 at 71998. 

7See id. 1Gb connections to the primary/ 

secondary facility, and 1Gb and 10Gb connections 

to the disaster recovery facility are subject to 

separate monthly charges that are not affected by 

the proposed rule changes. As the MIAX Pearl filing 

relates only the MIAX Pearl Options Fee Schedule, 

fees for the MIAX Pearl Equities facility also are 

outside the scope of the proposed rule changes. 

8The Exchanges initially filed the proposed fee 

changes on July 30, 2021. See Securities Exchange 

Act Release Nos. 92643 (August 11, 2021), 86 FR 

46034 (August 17, 2021) (SR–MIAX–2021–35), 

92644 (August 11, 2021), 86 FR 46055 (August 17, 

2021) (SR–PEARL–2021–36). These filings were 

withdrawn by the Exchanges. The Exchanges filed 

new proposed fee changes with additional 

justification (SR–MIAX–2021–41 and SR–PEARL– 

2021–45), which were the subject of a Suspension 

of and Order Instituting Proceedings. See Securities 

Exchange Act Release No. 93639 (November 22, 

2021), 86 FR 67758 (November 29, 2021). The 

Exchanges subsequently withdrew those filings and 

replaced them with the instant filings to provide 

additional information and a revised justification 

for the proposal, which is discussed herein. See 

Securities Exchange Act Release No. 93733 

(December 7, 2021), 86 FR 71108 (December 14, 

2021) (Notice of Withdrawal); see also MIAX Notice 

and Pearl Notice, supra note 4 at 71997, 71984, 

respectively. 

9See MIAX Notice, supra note 4, at 71998. The 

Exchanges state that they deem connectivity fees to 

be access fees, and records these fees as part of its 

‘‘Access Fees’’ revenue in its financial statements. 

Id. at 71999. 

10 15 U.S.C. 78s(b)(3)(C). 

11 15 U.S.C. 78s(b)(1). 

12See MIAX Notice, supra note 4, at 72004. The 

Exchanges state that approximately 80% of the 

firms that purchased at least one 10Gb ULL 

connection experienced a decrease in their monthly 

connectivity fees, while approximately 20% of 

firms experienced an increase in their monthly 

connectivity fees. See id. 

13See id. 

14See MIAX Notice, supra note 4, at 72004. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.305

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02086 Filed 2–1–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94088; File Nos. SR–MIAX– 

2021–59, SR–PEARL–2021–57] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC, MIAX PEARL, LLC; Suspension of 

and Order Instituting Proceedings To 

Determine Whether To Approve or 

Disapprove Proposed Rule Changes 

To Amend the Fee Schedules To Adopt 

a Tiered-Pricing Structure for Certain 

Connectivity Fees 

January 27, 2022. 

I. Introduction 

On December 1, 2021, Miami 

International Securities Exchange LLC, 

LLC (‘‘MIAX’’) and MIAX PEARL, LLC 

(‘‘MIAX Pearl’’) (collectively, the 

‘‘Exchanges’’) each filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’ or ‘‘Act’’),1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change (File Numbers SR–MIAX–2021– 

59 and SR–PEARL–2021–57) to amend 

the MIAX Fee Schedule and MIAX Pearl 

Options Fee Schedule (collectively, the 

‘‘Fee Schedules’’) to adopt a tiered 

pricing structure for certain connectivity 

fees. The proposed rule changes were 

immediately effective upon filing with 

the Commission pursuant to Section 

19(b)(3)(A) of the Act.3 The proposed 

rule changes were published for 

comment in the Federal Register on 

December 20, 2021.4 Under Section 

19(b)(3)(C) of the Act,5 the Commission 

is hereby: (i) Temporarily suspending 

File Numbers SR–MIAX–2021–59 and 

SR–PEARL–2021–57; and (ii) instituting 

proceedings to determine whether to 

approve or disapprove File Numbers 

SR–MIAX–2021–59 and SR–PEARL– 

2021–57. 

II. Background and Description of the 

Proposed Rule Changes 

MIAX and the MIAX Pearl options 

facility have a shared connectivity 

infrastructure that permits Members and 

non-Members to connect directly to 

either or both of the Exchanges, and 

thereby access the associated 

Exchanges’ trading platforms, market 

data systems, test systems, and disaster 

recovery facilities via a single, shared 

connection.6 Prior to implementation of 

the proposed rule changes, a market 

participant connecting to the primary or 

secondary facility of either or both of 

the Exchanges options platforms via a 

10 gigabit ultra-low latency (‘‘10Gb 

ULL’’) fiber connection was assessed a 

monthly fee of $10,000 per connection.7

The Exchanges proposes to modify their 

respective Fee Schedules to adopt a 

tiered pricing structure for 10Gb ULL 

fiber connections as follows: 

• $9,000 each for the 1st and 2nd 

10Gb ULL connections; 

• $11,000 each for the 3rd and 4th 

10Gb ULL connections; and 

• $13,000 for each additional 

connection 10Gb ULL connection.8

These fees (the ‘‘Proposed Access 

Fees’’) are assessed in any month the 

Member or non-Member is credentialed 

to use any of the Exchanges’ APIs or 

market data feeds in the Exchanges’ 

production environment, pro-rated 

when a Member or non-Member adds or 

deletes a connection.9

III. Suspension of the Proposed Rule 

Changes 

Pursuant to Section 19(b)(3)(C) of the 

Act,10 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,11 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) if it appears to the Commission 

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. As discussed below, the 

Commission believes a temporary 

suspension of the proposed rule changes 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

changes’ consistency with the Act and 

the rules thereunder. 

In support of the proposals, the 

Exchanges argue that the proposed 

tiered pricing structure for 10Gb ULL 

connections is reasonable, equitable, 

and not unfairly discriminatory because 

the new tiers result in a majority of 

10Gb ULL purchasers either saving 

money or paying the same amount.12 As 

discussed further below, the Exchanges 

state that ‘‘a higher fee to a Member or 

non-Member that utilizes numerous 

connections is directly related to the 

increased costs the Exchange incurs in 

providing and maintaining those 

additional connections.’’ 13 The 

Exchanges also maintain that the tiered 

pricing structure will encourage 

Members and non-Members to be more 

efficient and economical when 

determining how to connect to the 

Exchanges and should better enable the 

Exchanges to monitor and provide 

access to the Exchanges’ network to 

ensure sufficient capacity and headroom 

in the System.14

In further support of the proposals, 

the Exchanges argue that the Proposed 

Access Fees are reasonable because they 

will permit recovery of the Exchange’s 

costs in providing the associated 

services and will not result in the 

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