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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices similar to other exchange rules adopted in connection with the NMS Plan to Address Extraordinary Market Volatility LULD Plan, with certain exceptions that reflect Exchange functionality.
BSTX intends to join the LULD Plan prior to the commencement of trading Securities. Below is an explanation of BSTXs approach to certain categories of orders during a trading halt:
Short SalesBSTX cancels all orders on the book during a halt and rejects any new orders, so rules relating to the repricing of short sale orders during a trading halt that certain other exchanges have adopted have been omitted.
Pegged OrdersBSTX would not support pegged orders, at least initially, so rules relating to pegged orders during a trading halt have been omitted.
Routable OrdersPursuant to proposed Rule 25130, the BSTX System will reject any order or quotation that would lock or cross a protected quotation of another exchange rather than routing such order or quotation, and therefore rules relating to handling of routable orders during a trading halt have been omitted.
Limit OrdersBecause BSTX
would cancel resting order interest and reject incoming orders during a trading halt, specific rules relating to the repricing of limit-priced interest that certain other exchanges have adopted have been omitted.205
Auction Orders, Market Orders, and FOK OrdersBSTX would not support these order types, at least initially, so rules relating to these order types during a trading halt have been omitted.206
Pursuant to proposed Rule 25050d, 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 reopening of trading.207
BSTX believes that it is in the public interest and furthers the protection of investors, consistent with Section 6b5 of the Exchange Act 208 to provide for a mechanism to halt trading in Securities during periods of extraordinary market volatility consistent with the LULD Plan.
However, the Exchange has excluded rules relating to order types and other aspects of the LULD Plan that would not 205 See
e.g., Cboe BZX 11.18e5B.
orders would be handled pursuant to proposed Rule 25050g5.
207 Trading would resume pursuant to proposed Rule 25040e5. See proposed Rule 25050g7.
208 15 U.S.C. 78fb5.
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be supported by the Exchange, such as market orders and auction orders. The Exchange has also reserved the right in proposed Rule 25050f to halt or suspend trading in other circumstances where the Exchange deems it necessary to do so for the protection of investors and in the furtherance of the public interest.
The Exchange believes that canceling resting order interest during a trading halt and rejecting incoming orders received during the trading halt is consistent with Section 6b5 of the Exchange Act 209 because it is not designed to permit unfair discrimination among BSTX
Participants. The orders and trading interest of all BSTX Participants would be canceled in the event of a trading halt and each BSTX Participant would be required to resubmit any orders they had resting on the order book.
Rule 25060Order Entry Proposed Rule 25060 sets forth the manner in which BSTX Participants may enter orders to the BSTX System.
The BSTX System would initially only support limit orders.210 Orders that do not designate a limit price would be rejected.211 The BSTX System would also only support two time-in-force TIF designations initially: i DAY;
and ii immediate or cancel IOC.
DAY orders will queue during the PreOpening Phase, may trade during regular market hours, and, if unexecuted at the close of the trading day 4:00 p.m.
ET, are canceled by the BSTX
System.212 All orders are given a default TIF of DAY. BSTX Participants may also designate orders as IOC, which designation overrides the default TIF of DAY. IOC orders are not accepted by the BSTX System during the Pre-Opening Phase. During regular trading hours, IOC
orders will execute in whole or in part immediately upon receipt by the BSTX
System. The BSTX System will not support modification of resting orders.
To change the price or quantity of an order resting on the BSTX Book, a BSTX
Participant must cancel the resting order and submit a new order, which will result in a new time stamp for purposes of BSTX Book priority. In addition, all orders on BSTX will be displayed, and 209 Id.
210 The BSTX System will also accept incoming Intermarket Sweep Orders ISO pursuant to proposed Rule 25060c2. 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 IOC. Proposed Rule 25060c2 is substantially similar to rules of other national securities exchanges. See e.g., Cboe BZX Rule 11.9d.
211 Proposed Rule 25060c1.
212 Proposed Rule 25060d1.

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the BSTX System will not support hidden orders or undisplayed liquidity, as set forth in proposed Rule 25100. The Exchange has also proposed an additional order parameter for BSTX
Participants to indicate a preference for T+0 or T+1 settlement, as previously described in Item 3, Part II.I.
Consistent with Section 6b5 of the Exchange Act,213 the Exchange believes that the proposed order entry rules will promote just and equitable principles of trade and help perfect the mechanism of a free and open market by establishing the types of orders and modifiers that all BSTX Participants may use in entering orders to the BSTX System. Because these order types and TIFs are available to all BSTX Participants, the proposed rule does not unfairly discriminate among market participants, consistent with Section 6b5 of the Exchange Act. The proposed rule sets forth a very simple exchange model whereby there is only one order typelimit orders and two TIFs. Upon the initial launch of BSTX, there will be no hidden orders, price sliding, pegged orders, or other order type features that add complexity.
The Exchange believes that creating a simplified exchange model is designed to protect investors and is in the public interest because it reduces complexity, thereby helping market participants better understand how orders would operate on the BSTX System.
Rule 25070Audit Trail Proposed Rule 25070 Audit Trail is designed to ensure that BSTX
Participants provide the Exchange with information to be able to identify the source of a particular order and other information necessary to carry out the Exchanges oversight functions. The proposed rule is substantially similar to existing BOX Rule 7120 but eliminates certain information unique to orders for options contracts e.g., exercise price because Securities are equity securities.
The proposed rule also provides that BSTX Participants that employ an electronic order routing or order management system that complies with Exchange requirements will be deemed to comply with the Rule if the required information is recorded in an electronic format. The proposed rule also specifies that order information must be kept for no less than three years and that where specific customer or account number information is not provided to the Exchange, BSTX Participants must maintain such information on their books and records.
The Exchange believes that proposed Rule 25070 is designed to protect 213 15

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