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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices that extends UTP for a Security because the third party exchange has the NBBO
at that time. The Exchange believes that this setting is not relevant under the proposed rules of BSTX. Specifically, the Exchange believes that it is not relevant because proposed BSTX Rule 25130d states 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. Therefore, any such orders that would otherwise be required to be routed by BSTX to another exchange will instead be rejected by the BSTX System. Accordingly, any specification by a BSTX Participant of a T+0 or T+1 settlement timing parameter for an order in this setting could not create any burden on competition because the order will be rejected and would never lead to an execution.
In addition to not imposing any burden on competition, the Exchange believes that allowing BSTX
Participants to use faster settlement cycles where consistent with the rules, policies and procedures of a registered clearing agency would mitigate settlement risk for transactions in such Securities, consistent with the benefits the Commission has noted in this area.
Namely, in adopting amendments to SEC Rule 15c61 in 2017 to shorten the standard settlement cycle for most broker-dealer transactions in securities from T+3 to T+2, the Commission stated its belief that the shorter settlement cycle would have positive effects regarding the liquidity risks and costs faced by members in a clearing agency, like NSCC, that performs CCP services, and that it would also have positive effects for other market participants.
Specifically, the Commission stated its belief that the resulting reduction in the amount of unsettled trades and the period of time during which the CCP is exposed to risk would reduce the amount of financial resources that the CCP members may have to provide to support the CCPs risk management process . . . and that this reduction in the potential need for financial resources should, in turn, reduce the liquidity costs and capital demands clearing broker-dealers face . . . and allow for improved capital utilization. 345 The Commission went on to state its belief that shortening the settlement cycle would also lead to benefits to other market participants, including introducing broker-dealers, institutional investors, and retail investors such as quicker access to funds and securities following trade execution and reduced margin 345 See
supra n.7578 and accompanying text.

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charges and other fees that clearing broker-dealers may pass down to other market participants. 346 The Commission also noted that a move to a T+1 standard settlement cycle could have similar qualitative benefits of market, credit, and liquidity risk reduction for market participants. 347
The Exchange agrees with these statements by the Commission and has therefore proposed BSTX Rule 25100d in a form that would promote the benefits of shorter settlement cycles for Securities without imposing burdens on other national securities exchanges or market participants that are not BSTX
Participants.
With respect to consideration 4
above, as previously noted, market participants would not be limited in their ability to trade Securities OTC
because Securities could be traded OTC
and would be cleared and settled in the same manner as other NMS stocks through the facilities of a registered clearing agency. Thus, the Exchange does not believe that its proposal will place any new burden on competition with respect to OTC trading, given that trading, clearance and settlement will take place in the same manner as for other NMS stocks.
With respect to consideration 5
noted above regarding other exchanges extending UTP to Securities, the Exchange does not believe that the proposed Rules would impose a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. This is because other national securities exchanges would be able to extend UTP
to Securities in accordance with Commission rules just as they can regarding any other NMS stock.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change.
III. Summary of the Comment Letters Received Several commenters express support for the proposals proposed use of a shortened settlement cycle under certain circumstances.348 One commenter states in support of the 346 Id.
347 Id.
348 See Letter from Meagan Darata, Utah Salt Supplements June 21, 2021 Darata Letter;
Letter from Mark Nelson June 10, 2021 Nelson Letter; Letter from Robert Shaw June 11, 2021
Shaw Letter; Letter from Neil Skinner June 11, 2021 Skinner Letter.

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proposal that the proposed BSTX
exchange would provide significant advantages over existing exchanges by providing fairer conditions to market participants through reduced settlement times and more transparency.349 This commenter states that T+0 settlement would improve market conditions for retail investors by reducing risk of failure to deliver on highly shorted stocks, and would reduce actual and opportunity costs by eliminating margin lending for the period before settlement and lost opportunities to reinvest.350
Two commenters refer to recent problems that they characterize as arising from T+2 settlement and short selling,351 and state that the proposal for a shorter settlement cycle would level the playing field for retail investors.352
One commenter states that the United States should support blockchain technologies like BSTX to be competitive globally, and that blockchain affords more efficiency and transparency.353 Another commenter states that blockchain will bring the advantages of better security, higher transparency, more trust, and a fairer marketplace to the sector.354 This commenter also states that blockchain would afford savings in time and money, make the market safer against fraud, and help United States markets keep up with other global systems.355
Another commenter states that it would like to see the development of financial institutions and securities exchanges that allow access to financial instruments and investments without the burdens and controls placed by traditional exchanges, and that the proposal represents the first steps in a free and equitable publicly auditable financial system.356
Finally, one commenter states that the proposal does not specifically address how participants shall access BSTX and 349 See
Nelson Letter, supra note 348.
id. This commenter also states that the commenter expects the reduced costs of operating the exchange to be passed on to prospective companies and issuers, thereby creating more opportunities for companies and asset holders to offer securities, and resulting in a market boom as new market participants join the exchange. See id.
351 See Letter from Anonymous June 15, 2021
Anonymous Letter I; Skinner Letter, supra note 348. See also Shaw Letter, supra note 348 stating that, with the current issues regarding settlement time, the proposal to offer speedy settlement is one answer to improving the system.
352 See Anonymous Letter I, supra note 351;
Skinner Letter, supra note 348. See also Darata Letter, supra note 348 stating that there is a wide power differential between retail and institutional traders.
353 See Letter from Anonymous June 15, 2021
Anonymous Letter II.
354 See Letter from Anonymous June 21, 2021.
355 See id.
356 See Letter from Tyler Hess June 17, 2021.
350 See
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