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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES2

thinly traded would the Security become eligible.
The Exchange proposes in Rule 25150a3 that a Security that becomes a Thinly Traded Security under the Initial Eligibility Criteria would be considered a Thinly Traded Security until it has been publicly traded for at least six months, at which time the Security would have to meet the Ongoing Eligibility Criteria. In effect, the Exchange proposes that a Security that meets the Initial Eligibility Criteria would be deemed to meet such criteria until it has been publicly traded for long enough to determine whether it meets the Ongoing Eligibility Criteria. The Exchange notes that any suspension of UTP, as discussed further below, would not be effective for at least thirty days after publication of a rule filing with the Commission in the Federal Register. As a result, a Security that meets the Initial Eligibility Criteria for the first three months that it trades publicly could only have UTP suspended at the earliest at the commencement of month four and more likely at the four and one half month mark.61 Thus, a Security that meets the Initial Eligibility Requirements and for which UTP was suspended would be deemed to be a Thinly Traded Security for 1.5 to two months before it would have to meet the Ongoing Eligibility Criteria.
The Exchange believes that this approach of initially allowing a Security to be eligible for UTP promotes consistency with Section 6b5 of the Exchange Act 62 by helping to perfect the mechanism of a free and open market and by promoting just and equitable principles of trade.
Specifically, the Exchange believes that companies engaged in an initial public offering should not have UTP
suspended until it can be determined whether those shares have an ADV of 100,000 shares or less and market capitalization of less than $1 billion, thereby ensuring that IPOs resulting in a high ADV or market capitalization are 61 After a seven business day review period during which the Commission may reject a rule filing submitted by the Exchange under certain circumstances 15 U.S.C. 78sb10, the Commission must publish a proposed rule change by the Exchange within 15 days after the initial submission by the Exchange to the Commission 15
U.S.C. 78sb2E. As a result, a rule filing seeking suspension of UTP for a qualifying Thinly Traded Security would likely only be published in the Federal Register at the earliest after the Security had been trading for 3.5 months and the suspension of UTP would only commence thirty days thereafter i.e., after the Security had traded for 4.5 months.
Suspension of UTP would then last for a minimum of 1.5 months, at which time, the Security would need to meet the Ongoing Eligibility requirements to continue to have UTP continue to be suspended.
62 15 U.S.C. 78fb5.

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freely and openly available on all venues and equitably available on other exchange venues. The Exchange believes that three months is a sufficient amount of time to determine whether a Security that recently underwent its IPO
is thinly traded given that interest in a Security is likely to be highest around the time of its IPO in connection with underwriters selling efforts and the media attention that often accompanies an IPO. Thus, if a Security has an ADV
of 100,000 shares or less during its first three months of trading despite this time period being among the most likely to have the highest market interest in the Security, the Security is likely to benefit from a suspension of UTP. The Exchange therefore proposes the Initial Eligibility Criteria as an early on-ramp to the suspension of UTP for a Security that has not yet traded for a full four to six months to be able to determine whether it meets the Ongoing Eligibility Criteria.
Suspension of Unlisted Trading Privileges As noted above, the Exchange proposes that a Security that qualifies as a Thinly Traded Security would be eligible for a suspension of UTP. The Exchange proposes that an issuer of a qualifying Thinly Traded Security would have to affirmatively request in writing that UTP be suspended. The Exchange believes that issuers should be empowered to make the decision as to whether UTP should be suspended with respect to the issuers Thinly Traded Security.
Thereafter, in order to effectuate a suspension of UTP and to provide notice to market participants of the suspension of UTP, the Exchange would submit an immediately effective rule filing pursuant to Section 19b3A of the Exchange Act,63 with the effectiveness of such suspension of UTP
occurring at least 30 calendar days after publication of the rule filing in the Federal Register.64 Conversely, when a Security no longer meets the definition of a Thinly Traded Security under the Exchanges Rules, the Exchange would similarly submit a rule filing pursuant to Section 19bb3A within 14
calendar days of the Thinly Traded Security no longer qualifying as a Thinly Traded Security and therefore no longer eligible to have UTP
suspended.65 The resumption of UTP
with respect to the former Thinly Traded Security would be effective 63 15

U.S.C. 78sb3A.
proposed Rule 25150b1.
65 See proposed Rule 25150b2.
64 See
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upon publication of the rule filing in the Federal Register.
The Exchange believes that these rule filings to effectuate the suspension of UTP would be appropriately filed pursuant to Section 19b3A and Rule 19b4f thereunder as a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule.66
Specifically, the proposed rule change would provide notice of the Exchanges upcoming enforcement of proposed Rule 25150 to suspend UTP or remove a suspension of UTP with respect to a qualifying Thinly Traded Security.
The Exchange believes that exchanges are readily capable of suspending trading in a security that is currently traded on their exchange. Exchanges need and provide for the ability to suspend trading in securities on their exchange for regulatory halts, triggering of market wide or single stock circuit breakers, and to comply with the Commissions authority to order a trading halt pursuant to Section 12k of the Exchange Act.67 Accordingly, the Exchange believes that voluntarily delaying the implementation of the suspension of UTP by 30 calendar days will provide other exchanges and market participants with adequate notice and sufficient time to prepare for a suspension of UTP in the relevant Thinly Traded Security. The Exchange also believes that exchanges are also readily capable of extending UTP to a Security that is not currently traded on the exchange.68 Accordingly, the Exchange believes that other exchanges would be able to extend UTP to a Security for which the suspension of UTP is lifted shortly after the effectiveness of the rule filing providing notice of a resumption in UTP with respect to the Security.
The Exchange recognizes that suspending UTP and making BSTX the only national securities exchange on which a Thinly Traded Security trades would increase both the relative importance of BSTX as a trading venue for such Thinly Traded Security and the disruption that might arise if access to BSTX were somehow disrupted.
Accordingly, the Exchange proposes to run a live, parallel system in addition to the Exchanges primary system supporting trading in any Thinly Traded 66 15

U.S.C. 78sb3A. 17 CFR 240.19b4f1.
U.S.C. 78lk.
68 For example, in November 2000, the Commission adopted amendment to Rule 12f2
lifting a limitation that previously prevented an exchange from extending UTP until the day after trading commenced on the primary listing exchange. See Exchange Act Release No. 43217, 65
FR 53560 Sept. 5, 2000.
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