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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
Securities using a price-time priority model and the clearance and settlement of Securities pursuant to the rules, policies and procedures of a registered clearing agency will all operate in a manner substantially similar to existing equities exchanges. In this way, the Exchange believes that BSTX provides a robust regulatory structure that protects investors and the public interest while introducing the use of blockchain technology as an additional feature in connection with Securities traded on the Exchange.
In connection with the clearance and settlement of Securities pursuant to the rules, policies and procedures of a registered clearing agency, the Exchange proposes that BSTX Participants would be able to include in their orders in Securities that are submitted to BSTX
certain parameters to indicate a preference for settlement on a same day T+0 or next trading day T+1 basis when certain conditions are met.332 Any such orders would at the time of order entry represent orders that would be regular-way and would be presumed to settle on a T+2 basis just like any other order submitted by a BSTX Participant that does not include a parameter indicating a preference for faster settlement. As described in greater detail above, however, an Order with a T+0 Preference or an Order with a T+1
Preference would only result in executions that would actually settle more quickly than on a T+2 basis if, and only if, all of the conditions in Rule 25060h are met and the execution that is transmitted to NSCC is eligible for T+0 or T+1 settlement under the rules, policies and procedures of a registered clearing agency.333 Any such preference included by a BSTX Participant would only become operative if the order happens to execute against another order from a BSTX Participant that also includes a parameter indicating a preference for settlement on a T+0 or T+1 basis.
The Exchange believes that the proposed ability for BSTX Participants to indicate a preference for shorter settlement times as described above is consistent with the Exchange Act and in particular Section 6b5 of the Exchange Act because it would help remove impediments to and perfect the mechanism of a free and open market and is not designed to permit unfair discrimination between or among market participants.334 Specifically, allowing for BSTX Participants to potentially reduce the settlement time proposed Rule 25060h.
proposed Rule 25100d.
334 15 U.S.C. 78fb5.

for transactions on BSTX pursuant to the rules, policies and procedures of a registered clearing agency helps remove impediments to and perfects a free and open market by allowing greater choice for BSTX Participants who may want to avail themselves of currently available functionality at registered clearing agencies. Moreover, the Commission has previously noted a number of positive effects relating to the liquidity risks and costs faced by members in a clearing agency, and the Exchange believes that this proposed functionality on BSTX
would help realize such positive effects.335 Proposed Rule 25060h is not designed to permit unfair discrimination between market participants consistent with Section 6b5 336 because the Rule would allow all orders that are marketable against one anotherregardless of the settlement preference of the BSTX
Participant submitting the order or their customerto execute against each other. A BSTX Participant that would like settlement of T+2 could still interact with orders on BSTX that indicate a preference for a shorter settlement cycle and vice-versa and, in all cases, the trade would settle pursuant to the rules, policies and procedures of a registered clearing agency. Only where two orders that both indicate a preference for a shorter settlement cycle match on BSTX would a shorter settlement cycle be possible pursuant to the rules, policies and procedures of a registered clearing agency.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act.337
The Exchange operates in an intensely competitive global marketplace for transaction services. The Exchange competes for the privilege of providing market services to broker-dealers through the Exchanges service offerings and associated benefits it is able to provide. The Exchanges ability to compete in this environment is based in large part on the quality of its trading systems, the overall quality of its market and its attractiveness to market participants who evaluate the Exchange on, among other things, speed, reliability, the likelihood and costs of
332 See
335 See
333 See
336 15

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supra notes 7578 and accompanying text.
U.S.C. 78fb5.
337 15 U.S.C. 78fb8.

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executions, as well as spreads, fairness, and transparency.
The Exchange believes that the primary areas where the proposed rule change could potentially result in a burden on competition are with regard to the terms on which: 1 Issuers may list their securities for trading, 2
market participants may access BSTX as a facility of the Exchange and use its services including the BSTX Market Data Blockchain, 3 Security transactions may be cleared and settled, 4 Security transactions would occur OTC 5 Security transactions would occur on other exchanges through an extension of UTP to Securities.
Regarding considerations 1 and 2, and as described in detail in Item 3
above, the BSTX Rules are drawn substantially from the existing rules of other exchanges that the Commission has already found to be consistent with the Exchange Act, including regarding whether they impose any burden on competition that is not necessary or appropriate in furtherance of its purposes. For example, the BSTX NonETP Listing Rules in the 26000 Series and Suspension and Delisting Rules in the 27000 Series that affect issuers and their ability to list Securities for trading are based substantially on the current rules of NYSE American. Additionally, the BSTX Trading and Listing of ETPs Rules in the 28000 Series that concern issuers and their ability to list Securities that are exchange-traded products are based substantially on the current rules of NYSE Arca. Additionally, the BSTX
Rules regarding membership and access to and use of the facilities of BSTX are also substantially based on existing exchange rules. Specifically, the relevant BSTX Rules are as follows:
Participation on BSTX Rule 18000
Series; business conduct for BSTX
Participants Rule 19000 Series;
financial and operational rules for BSTX
Participants Rule 20000 Series;
supervision Rule 21000 Series;
miscellaneous provisions Rule 22000
Series; trading practices Rule 23000
Series; discipline and summary suspension Rule 24000 Series; trading Rule 25000 Series; market making Rule 25200 Series; and dues, fees, assessments, and other charges Rule 28000 sic Series. As described in detail in Item 3, these rules are substantially based on analogous rules of the following exchanges, as applicable: BOX; Investors Exchange LLC; Cboe BZX Exchange, Inc.; The Nasdaq Stock Market LLC; and NYSE
American LLC.
Regarding consideration 2 and use of the BSTX Market Data Blockchain, the terms on which BSTX would operate
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