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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices discussion of notable differences 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
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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.8 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 8 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 9 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.10 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 11 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.12
Securities Would Be NMS Stocks The Securities would qualify as NMS
stocks pursuant to Regulation NMS,13
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 9 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.
10 15 U.S.C. 78f; 15 U.S.C. 78s.
11 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.
12 Id.
13 17 CFR 242.600 through .613.

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. . . . 14 The Exchange plans to join existing transaction reporting plans, as discussed in Part VIII below, for the purposes of Security quotation and transaction reporting.15 The term NMS
stock means any NMS security other than an option 16 and therefore Securities traded on BSTX would be classified as NMS stock.
Securities would meet the definition of NMS stock and would trade, clear, and settle in the same manner as all other NMS stocks traded today. As described in further detail below, the operation of the BSTX Market Data Blockchain would in no way modify or alter market participants obligations under Regulation NMS.
BSTX Would Support Trading of Registered Securities All Securities traded on BSTX would generally be required to be registered with the Commission under both Section 12 of the Exchange Act 17 and Section 6 of the Securities Act of 1933
Securities Act.18 BSTX would not support trading of Securities offered under an exemption from registration for public offerings, with the exception of certain offerings under Regulation A
that meet the proposed BSTX listing standards.
Issuance and Clearance and Settlement of Securities BSTX would maintain certain rules, as described below, to address custody, clearance and settlement in connection with Securities. All transactions in Securities would clear and settle in accordance with the rules, policies and procedures of registered clearing agencies. Specifically, BSTX anticipates that at the time it commences operations, Securities that are listed and traded on BSTX would be securities that have been made eligible for services by The Depository Trust Company DTC
and that DTC would serve as the securities depository 19 for such 14 17

CFR 242.600b47.
CFR 242.601a1. The Rule states in relevant part that every national securities exchange shall file with the SEC a transaction reporting plan regarding transactions in listed equity and Nasdaq securities executed through its facilities . . . .
16 17 CFR 242.600b47.
17 15 U.S.C. 78l.
18 15 U.S.C. 77f.
19 15 U.S.C. 78ca23A. Section 3a23A of the Exchange Act defines the term clearing agency to include any person, such as a securities depository, who i acts as a custodian of securities in connection with a system for the handling of securities whereby all securities of a particular class or series of any issuer deposited within the system are treated as fungible and may be transferred, loaned, or pledged by bookkeeping entry without 15 17

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