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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
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Rule 25150Thinly Traded Securities and Suspension of Unlisted Trading Privileges Proposed Rule 25150 would set forth the criteria for eligible Securities to be considered Thinly Traded Securities for which UTP may be suspended at the election of the issuer. Discussion of this Rule is set forth above in Part II.H.
Market Making on BSTX Rule 25200
Series The BSTX Market Making Rules Rules 2520025240 provide for registration and describe the obligations of Market Makers on the Exchange. The proposed Market Making Rules also provide for registration and obligations of Designated Market Makers DMMs in a given Security, allocation of a DMM
to a particular Security, and parameters for business combinations of DMMs.
Proposed Rule 25200 sets forth the basic registration requirement for a BSTX Market Maker by noting that a Market Maker must enter a registration request to BSTX and that such registration shall become effective on the next trading day after the registration is entered, or, in the Exchanges discretion, the registration may become effective the day that it is entered and the Exchange will provide notice to the Market Maker in such cases. The proposed Rule further provides that a BSTX Market Makers registration shall be terminated by the Exchange if the Market Maker fails to enter quotations within five business days after the registration becomes effective.248
Proposed Rule 25210 sets forth the obligations of Market Makers, including DMMs. Under the proposed Rule, a BSTX Participant that is a Market Maker, including a DMM, is generally required to post two-sided quotes during the regular market session for each Security in which it is registered as a Market Maker.249 The Exchange proposes that such quotes must be entered within a certain percentage, called the Designated Percentage, of the National Best Bid Offer price in such Security or last sale price, in the event there is no National Best Bid Offer on the Exchange.250 The Exchange proposes that the Designated Percentage would be 30%.251 The Exchange notes that the proposed Designated Percentage is substantially similar to the corresponding Designated Percentage for NYSE American market 248 Proposed Rule 25200 is substantially similar to IEX Rule 11.150.
249 See proposed Rule 25210a1.
250 See proposed Rule 25210a1iiA.
251 See proposed Rule 25210a1iiB.

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makers with respect to Tier 2 NMS
stocks as defined under the LULD
plan.252 The Exchange believes that the proposed Designated Percentage for quotation obligations of Market Makers would be sufficient to ensure that there is adequate liquidity sufficiently close to the National Best Bid or Offer NBBO in Securities and to ensure fair and orderly markets. The Exchange notes that pursuant to proposed Rule 25210a1iii, there is nothing to preclude a Market Maker from entering trading interest at price levels that are closer to the NBBO, so Market Makers have the ability to quote must closer to the NBBO than required by the Designated Percentage requirement if they so choose.
The Exchange proposes in Rule 25210a4 that, in the event that price movements cause a Market Maker or DMMs quotations to fall outside of the National Best Bid Offer or last sale price in the event there is no National Best Bid Offer by a given percentage, with such percentage called the Defined Limit, in a Security for which they are a Market Maker, the Market Maker or DMM must enter a new bid or offer at not more than the Designated Percentage away from the National Best Bid Offer in that Security. The Exchange proposes that the Defined Limit shall be 31.5%.253 Under the proposed Rules, a Market Makers quotations must be firm and automatically executable for their size, and, to the extent the Exchange finds that a Market Maker has a substantial or continued failure to meet its quotation obligations, such Market Maker may face disciplinary action from the Exchange.254 Under the proposed Market Maker and DMM Rules, Market Makers and DMMs two-sided quotation obligations must be maintained for a quantity of a normal unit of trading which is defined as one Security.255 The Exchange believes that Securities may initially trade in smaller increments relative to other listed equities and that reducing the two-sided quoting increment from one round lot i.e., 100
shares to one Security will be sufficient 252 See NYSE American Rule 7.23Ea1Biii providing that, other than during certain time periods around the market open and close, the Designated Percentage for Tier 2 NMS stocks priced below $1.00 is 30% and for Tier 2 NMS stocks priced above $1.00 is 28%.
253 See proposed Rule 25210a1ii3.
254 See proposed Rule 25210b and c. Pursuant to proposed Rule 25310d, a BSTX Market Maker, other than a DMM, may apply for a temporary withdrawal from its Market Maker status provided it meets certain conditions such as demonstrating legal or regulatory requirements that necessitate its temporary withdrawal.
255 See proposed Rule 25210a1.

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to meet liquidity demands and would make it easier for Market Makers and DMMs to meet their quotation obligations, which in turn incentivize more Market Maker participation.
The Exchange notes that proposed Rule 25210 is substantially similar to NYSE American Rule 7.23E, with the exceptions of: i The modified normal unit of trading, Designated Percentage, and Defined Limit as discussed above;
ii specifying that the minimum quotation increment shall be $0.01; and iii specifying that Market Maker quotations must be firm for their displayed size and automatically executable. The Exchange believes that the additional specifications with respect to the minimum quotation increment and firm quotation requirement will add additional clarity to the expectations of Market Makers on the Exchange.
Proposed Rule 25220 sets forth the registration requirements for a DMM.
Under proposed Rule 25220, a DMM
must be a registered Market Maker and be approved as a DMM in order to receive an allocation of Securities pursuant to proposed Rule 25230, which is described below.256 For Securities in which a Participant serves as a DMM, it must meet the same obligations as if it were a Market Maker and must also maintain a bid or offer at the National Best Bid and Offer at least 25% of the day measured across all Securities in which such Participant serves as DMM.257 The proposed Rule provides, among other things, that a there will be no more than one DMM
per Security and that a DMM must maintain information barriers between the trading unit operating as a DMM and the trading unit operating as a BSTX
Market Maker in the same Security to the extent applicable.258 The Rule further provides a process by which a DMM may temporarily withdraw from its DMM status, which is similar to the same process for a BSTX Market Maker 259 and similar to the same process for DMMs on other exchanges.260 The Exchange notes that proposed Rule 25220 is substantially similar to NYSE American Rule 7.24E
with the exception that the Exchanges proposes to add a provision stating that the Exchange is not required to assign a DMM if the Security has an adequate number of BSTX Market Makers assigned to such Security. The purpose 256 See proposed 25220b. DMMs would be approved by the Exchange pursuant to an application process an sic.
257 See proposed Rule 25220c.
258 See proposed Rule 25220b.
259 See proposed Rule 25210d.
260 See e.g., NYSE American Rule 7.24Eb4.

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