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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
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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 three active Market Makers at initial listing and two Market Makers for continued listing, consistent with proposed Rule 26106 Market Maker Requirement, which is discussed further below.
In proposed Rule 25230, the Exchange proposes to set forth the process by which a DMMs are allocated and reallocated responsibility for a particular Security. Proposed Rule 25230a sets forth the basic eligibility criteria for when a Security may be allocated to a DMM, providing that this may occur when the Security is initially listed on BSTX, when it is reassigned pursuant to Rule 25230, or when it is currently listed without a DMM
assigned to the Security.261 Proposed Rule 2530a also specifies that a DMMs eligibility to participate in the allocation process is determined at the time the interview is scheduled by the Exchange and specifies that a DMM must meet with the quotation requirements set forth in proposed Rule 25220c DMM
obligations. The proposed Rule further specifies how the Exchange will handle several situations in which the DMM
does not meet its obligations, such as, for example, by issuing an initial warning advising of poor performance if the DMM fails to meet its obligations for a one-month period.262
Proposed Rule 25230b sets forth the manner in which a DMM may be selected and allocated a Security. Under proposed Rule 25230b, an issuer may select its DMM directly, delegate the authority to the Exchange to selects its DMM, or may opt to proceed with listing without a DMM, in which case a minimum of three non-DMM Market Makers at initial listing and two nonDMM Market Makers for continued listing must be assigned to its Security consistent with proposed Rule 26106.
Proposed Rule 25230b further sets forth provisions relating to the interview between the issuer and DMMs, the Exchange selection by delegation, and a requirement that a DMM serve as a 261 As previously noted, pursuant to proposed Rule 26106, a Security may, in lieu of having a DMM assigned to it, have a minimum of three nonDMM Market Makers at initial listing and two nonDMM Market Makers for continued listing to be eligible for listing on the Exchange. Consequently, a Security might not have a DMM when it initially begins trading on BSTX, but may acquire a DMM
later.
262 See proposed Rule 25230a4. The proposed handling of these scenarios where a DMM does not meet its obligations is substantially similar to parallel requirements in NYSE American Rule 7.25Ea4.

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DMM for a Security for at least one year unless compelling circumstances exist for which the Exchange may consider a shorter time period. Each of these provisions is substantially similar to corresponding provisions in NYSE
American Rule 7.25Eb13, with the exception that the Exchange may shorten the one year DMM commitment period in compelling circumstances.263
Proposed Rule 25230b further sets forth specific provisions related to a variety of different issuances and types of securities, including spin-offs or related companies, warrants, rights, relistings, equity Security listing after preferred Security, listed company mergers, target Securities, and closedend management investment companies.264 Each of these provisions is substantially similar to corresponding provisions in NYSE American Rule 7.25Eb411.
Proposed Rule 25230c sets forth the reallocation process for a DMM in a manner that is substantially similarly to corresponding provisions in NYSE
American Rule 7.25Ec. Generally, under the proposed Rule, an issuer may request a reallocation to a new DMM
and Exchange staff will review this request, along with any DMM response letter, and eventually make a determination.265 Proposed Rule 25230d, e, and f, set forth provisions governing an allocation freeze, allocation sunset, and criteria for applicants that are not currently DMMs to be eligible to be allocated a Security as a DMM respectively. Each of these provisions are likewise substantially similar to corresponding provisions in NYSE American Rule 7.25Edf.
Finally, proposed Rule 25240 sets forth the DMM combination review policy. The proposed Rule, among other things, defines a proposed combination among DMMs, requires that DMMs provide a written submission to the Office of the Corporate Secretary of the Exchange and specifies, among other things, the items to be disclosed in the written submission, the criteria that the 263 The Exchange believes that providing the Exchange with flexibility to shorten the one year commitment period is appropriate to accommodate unforeseen events or circumstances that might arise with respect to a DMM, such as a force majeure event, preventing a DMM from being able to carry out its functions.
264 See proposed Rule 25230b411.
265 In addition, proposed Rule 25230c2 sets forth provisions that allow for the Exchanges CEO
to immediately initiate a reallocation proceeding upon written notice to the DMM and the issuer when the DMMs performance in a particular market situation was, in the judgment of the Exchange, so egregiously deficient as to call into question the Exchanges integrity or impair the Exchanges reputation for maintaining an efficient, fair, and orderly market.

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Exchange will use to evaluate a proposed combination, and the timing for a decision by the Exchange, subject to the Exchanges right to extend such time period. The Exchange notes that proposed Rule 25240 is substantially similar to NYSE American Rule 7.26E.
The Exchange believes that the proposed Market Making Rules set forth in the Rule 25200 Series are consistent with Section 6b5 of the Exchange Act 266 because they are designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. The Exchange notes that the proposed Rules are substantially similar to the market making rules of other exchanges, as detailed above,267 and that all BSTX Participants are eligible to become a Market Maker or DMM
provided they comply with the proposed requirements.268 The proposed Market Maker Rules set forth the quotation and related expectations of BSTX Market Makers which the Exchange believes will help ensure that there is sufficient liquidity in Securities.
Although the corresponding NYSE
American rules upon which the proposed Rules are based provide for multiple tiers and classes of stocks that were each associated with a different Designated Percentage and Defined Limit, the Exchange has collapsed all such classes in to one category and provided a single Designated Percentage of 30% and Defined Limit of 31.5% for all Security trading on BSTX. The Exchange believes that simplifying the Rules in this manner can reduce the potential for confusion and allows for easier compliance and will still adequately serve the liquidity needs of investors of Security investors, which the Exchange believes promotes the removal of impediments to and perfection of the mechanism of a free and open market and a national market system, consistent with Section 6b5
of the Exchange Act.269
The Exchange has also proposed that the minimum quotation size of Market Makers will be one Security. As noted above, the Exchange believes that Securities may initially trade in smaller increments relative to other listed 266 15

U.S.C. 78fb5.
NYSE American Rule 7, Section 2.
268 In this regard, the Exchange believes the proposed Market Making Rules are not designed to permit unfair discrimination between BSTX
Participants, consistent with Section 6b5 of the Exchange Act. 15 U.S.C. 78fb5.
269 15 U.S.C. 78fb5.
267 See
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