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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices proposed Rule 25120 requires BSTX
Participants to appropriately mark orders as long, short, or short exempt and provides that the BSTX System will not execute or display a short sale order not marked short exempt with respect to a covered security 231 at a price that is less than or equal to the current national best bid if the price of that security decreases by 10% or more, as determined by the listing market for the covered security, from the covered securitys closing price on the listing market as of the end of Regular Trading Hours on the prior day the Trigger Price. The proposed rule further specifies the duration of the Short Sale Price Test and that the BSTX System shall determine whether a transaction in a covered security has occurred at a Trigger Price and shall immediately notify the responsible single plan processor.232
The Exchange believes that proposed Rule 25120 is consistent with Section 6b5 of the Exchange Act,233 because it would promote just and equitable principles of trade and further the protection of investors and the public interest by enforcing rules consistent with Regulation SHO. Pursuant to Regulation SHO, broker-dealers are required to appropriately mark orders as long, short, or short exempt,234 and trading centers are required to establish, maintain, and enforce written policies and procedures reasonably designed to, among other things, prevent the execution or display of a short sale order of a covered security at a price that is less than or equal to the current national best bid if the price of that covered security decreases by 10% or more from its closing price on the primary listing market on the prior day.235 Proposed Rule 25120 is designed to promote compliance with Regulation SHO, is nearly identical to similar rules of other exchanges, and would apply equally to all BSTX Participants.

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Rule 25130Locking or Crossing Quotations in NMS Stocks Proposed Rule 25130 sets forth provisions related to locking or crossing quotations. The proposed rule is 231 Proposed Rule 25120b provides that the terms covered security, listing market, and national best bid shall have the same meaning as in Rule 201 of Regulation SHO. 17 CFR 242.201a.
232 Proposed Rule 25120d. The proposed rule further provides in paragraph d1 that if a covered security did not trade on BSTX on the prior trading day, BSTXs determination of the Trigger Price shall be based on the last sale price on the BSTX System for that Security on the most recent day on which the Security traded.
233 15 U.S.C. 78fb5.
234 17 CFR 242.200g.
235 17 CFR 242.201b1.

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substantially similar to the rules of other national securities exchanges.236
Proposed Rule 25130 is designed to promote compliance with Regulation NMS and prohibits BSTX Participants from engaging in a pattern or practice of displaying quotations that lock or cross a protected quotation unless an exception applies. The Exchange proposes in Rule 25130d that the BSTX System will reject any order or quotation that would lock or cross a protected quotation of another exchange at the time of entry.
The Exchange believes proposed Rule 25130 is consistent with Section 6b5
of the Exchange Act 237 because it is designed to promote just and equitable principles of trade and foster cooperation and coordination with persons facilitating transactions in securities by ensuring that the Exchange prevents display of quotations that lock or cross any protected quotation in an NMS stock, in compliance with applicable provisions of Regulation NMS.
Rule 25140Clearance and Settlement:
Anonymity Proposed Rule 25140 provides that each BSTX Participant must either 1
be a member of a registered clearing agency that uses a CNS system, or 2
clear transactions executed on the Exchange through another Participant that is a member of such a registered clearing agency. The Exchange would maintain connectivity and access to the UTC of NSCC for transmission of executed transactions. The proposed Rule requires a Participant that clears through another participant to obtain a written agreement, in a form acceptable to the Exchange, that sets out the terms of such arrangement. The proposed Rule also provides that BSTX transaction reports shall not reveal contra party identities and that transactions would be settled and cleared anonymously. In certain circumstances, such as for regulatory purposes, the Exchange may reveal the identity of a Participant or its clearing firm such as to comply with a court order.
The Exchange believes that proposed Rule 25140 is consistent with Section 6b5 of the Exchange Act 238 because it would foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities.
Proposed Rule 25140 is similar to rules 236 See
IEX Rule 11.310.
U.S.C. 78fb5.
238 15 U.S.C. 78fb5.
237 15

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of other exchanges relating to clearance and settlement.239
Market Making on BSTX Rule 25200
Series The BSTX Market Making Rules Rules 2520025240 provide for registration and describe the obligations of Market Makers on the Exchange. The proposed Market Making Rules also provide for registration and obligations of Designated Market Makers DMMs in a given Security, allocation of a DMM
to a particular Security, and parameters for business combinations of DMMs.
Proposed Rule 25200 sets forth the basic registration requirement for a BSTX Market Maker by noting that a Market Maker must enter a registration request to BSTX and that such registration shall become effective on the next trading day after the registration is entered, or, in the Exchanges discretion, the registration may become effective the day that it is entered and the Exchange will provide notice to the Market Maker in such cases. The proposed Rule further provides that a BSTX Market Makers registration shall be terminated by the Exchange if the Market Maker fails to enter quotations within five business days after the registration becomes effective.240
Proposed Rule 25210 sets forth the obligations of Market Makers, including DMMs. Under the proposed Rule, a BSTX Participant that is a Market Maker, including a DMM, is generally required to post two-sided quotes during the regular market session for each Security in which itis registered as a Market Maker.241 The Exchange proposes that such quotes must be entered within a certain percentage, called the Designated Percentage, of the National Best Bid Offer price in such Security or last sale price, in the event there is no National Best Bid Offer on the Exchange.242 The Exchange proposes that the Designated Percentage would be 30%.243 The Exchange notes that the proposed Designated Percentage is substantially similar to the corresponding Designated Percentage for NYSE American market makers with respect to Tier 2 NMS
stocks as defined under the LULD
plan.244 The Exchange believes that the 239 See
e.g., IEX Rule 11.250.
Rule 25200 is substantially similar to IEX Rule 11.150.
241 See proposed Rule 25210a1.
242 See proposed Rule 25210a1iiA.
243 See proposed Rule 25210a1iiB.
244 See NYSE American Rule 7.23Ea1Biii providing that, other than during certain time periods around the market open and close, the 240 Proposed
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