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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices Securities 10 under the proposed rules would be equity securities that meet BSTX listing standards and that trade on the BSTX System. The Exchange would operate the BSTX Market Data Blockchain, which would record certain information regarding orders and transactions occurring on BSTX with respect to Securities. All BOX
Participants would be eligible to participate in BSTX provided that they become a BSTX Participant pursuant to the proposed rules. Under the proposed rules, BSTX would serve as the listing market for eligible companies and issuers of exchange traded products ETPs that wish to issue their registered securities as Securities.
Securities would trade as NMS stock.11
The Exchange is not proposing rules that would support its extension of unlisted trading privileges UTP to other NMS stock, and accordingly the Exchange does not intend to extend any such UTP in connection with this proposal. The Exchange would therefore 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 any extension of UTP to other NMS
stock. A guide to the structure of the proposed rule change is described immediately below.

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Guide to the Scope of the Proposed Rule Change The proposal for trading of Securities through BSTX generally involves changes to existing BOX Rules and new BOX Rules pertaining specifically to BSTX BSTX Rules. In addition, the Exchange plans to submit a separate proposed rule change pertaining to BSTXs corporate governance documents. To support the trading of Securities through BSTX, certain conforming changes are proposed to existing BOX Rules and entirely new BSTX Rules are also proposed as Rule Series 17000 through 29000.12 Each of those new Rule Series and the provisions thereunder are described in greater detail below. Where the BSTX
Rules are based on existing rules of another national securities exchange, the source rule from the relevant exchange is noted along with a discussion of notable differences 10 As discussed further below, BSTX proposes to use the term Security to refer to BSTX-listed securities to distinguish them from other securities issued by an issuer that the issuer does not list on BSTX.
11 17 CFR 242.600b48.
12 The proposed changes to BOX Rules and the proposed BSTX Rules have been submitted with this proposal as Exhibits 5B and 5A, respectively.

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between the source rule and the proposed BSTX Rule. The proposed BSTX Rules are addressed in Part III
below and they generally cover the following areas:
Section 17000General Provisions of BSTX;
Section 18000Participation on BSTX;
Section 19000Business Conduct for BSTX Participants;
Section 20000Financial and Operational Rules for BSTX
Participants;
Section 21000Supervision;
Section 22000Miscellaneous Provisions;
Section 23000Trading Practice Rules;
Section 24000Discipline and Summary Suspension;
Section 25000Trading Rules;
Section 25200Market Making on BSTX;
Section 26000BSTX Listing Rules Other Than for Exchange Traded Products;
Section 27000Suspension and Delisting;
Section 27100Guide to Filing Requirements;
Section 27200Procedures for Review of Exchange Listing Determinations; and Section 28000Trading and Listing of Exchange Traded Products;
Section 29000Dues, Fees, Assessments and Other Charges.
Overview of BSTX and Considerations Related to the Listing, Trading and Clearance and Settlement of Securities The Joint Venture and Ownership of BSTX
On June 19, 2018, t0.com Inc.
tZERO and BOX Digital Markets LLC BOX Digital announced a joint venture to facilitate the trading of Securities on the Exchange.13 As part of the joint venture, BOX Digital, which is a subsidiary of BOX Holdings Group LLC, and tZERO each own 50% of the voting class of equity and over 45%
economic interest of BSTX LLC.
Pursuant to the BSTX LLC Agreement, BOX Digital and tZERO will perform certain specified functions with respect to the operation of BSTX. As noted, these details, as well as the proposed governance structure of the joint venture will be the subject of a separate 13 See tZERO and BOX Digital Markets Sign Deal to Create Joint Venture, Business Wire June 19, 2018, https www.businesswire.com/news/home/
20180619005897/en/tZERO-and-BOX-DigitalMarkets-Sign-Deal-to-Create-Joint-Venture.

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proposed rule change that the Exchange will submit to the Commission.
BSTX Would Be a Facility of BOX That Would Support Trading in the New Asset Class of Securities for BOX
BSTX would operate as a facility 14 of BOX, which is a national securities exchange registered with the SEC. As a facility of BOX, BSTXs operations would be subject to applicable requirements in Sections 6 and 19 of the Exchange Act, among other applicable rules and regulations.15 Currently, BOX
functions as an exchange only for standardized options. At the time that BSTX commences operations it would support trading in Securities that are equity securities including certain ETPs, as descried in more detail below.
Accordingly, the proposal represents a new asset class for BOX, and the discussion below sets forth the changes and additions to the Exchanges Rules to support the trading of equity securities as Securities on BSTX.
The Exchange proposes to use the term Security 16 to describe a NMS
stock trading on the BSTX system. The legal significance, therefore, of a Security is that it would be an equity security that is approved for listing on BSTX and that trades on the BSTX
System. A security that is offered by an issuer with the intent of it becoming listed on BSTX would therefore not become a Security under the proposed BSTX Rules unless and until it actually does become listed on BSTX
and trades on the BSTX System.17
Securities Would Be NMS Stocks The Securities would qualify as NMS
stocks pursuant to Regulation NMS,18
which defines the term NMS security in relevant part to mean any security or class of securities for which transaction reports are collected, processed and made available pursuant to an effective transaction reporting plan 14 15 U.S.C. 78ca2. Section 3a2 of the Exchange Act, provides that the term facility when used with respect to an exchange includes its premises, tangible or intangible property whether on the premises or not, any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange, and any right of the exchange to the use of any property or service.
Because BSTX will share certain systems of the Exchange, BSTX would be a facility of the Exchange.
15 15 U.S.C. 78f; 15 U.S.C. 78s.
16 The Exchange proposes to define the term Security to mean a NMS stock, as defined in Rule 600b47 of the Exchange Act, trading on the BSTX System. See proposed Rule 17000a31.
17 Id.
18 17 CFR 242.600 through 613.

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