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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES2

oversight. Because Exchange Participants, including BSTX
Participants, also must be members of at least one other SRO, the Exchange would generally not be designated as the DEA for any of its members.328
Rule 17d2 under the Exchange Act 329 permits SROs to file with the Commission plans under which the SROs allocate among each other the responsibility to receive regulatory reports from, and examine and enforce compliance with specified provisions of the Exchange Act and rules thereunder and SRO rules by, firms that are members of more than one SRO
common members. If such a plan is declared effective by the Commission, an SRO that is a party to the plan is relieved of regulatory responsibility as to any common member for whom responsibility is allocated under the plan to another SRO. The Exchange plans to join the Plan for the Allocation of Regulatory Responsibilities Regarding Regulation NMS.330 The Exchange may choose to join certain Rule 17d2
agreements such as the agreement allocating responsibility for insider trading rules.331
For those regulatory responsibilities that fall outside the scope of any Rule 17d2 agreements that the Exchange may join, subject to Commission approval, the Exchange will retain full regulatory responsibility under the Exchange Act. However, as noted, the Exchange will extend its existing Regulatory Services Agreement with FINRA to provide that FINRA personnel will operate as agents for the Exchange in performing certain regulatory functions with respect to BSTX. As is the case with the Exchanges options trading platform, the Exchange will supervise FINRA and continue to bear ultimate regulatory responsibility for BSTX. Consistent with the Exchanges existing regulatory structure, the Exchanges Chief Regulatory Officer shall have general supervision of the regulatory operations of BSTX, including responsibility for overseeing the surveillance, examination, and enforcement functions and for administering all regulatory services agreements applicable to BSTX.
Similarly, the Exchanges existing Regulatory Oversight Committee will be responsible for overseeing the adequacy and effectiveness of Exchanges 328 See Exchange Rule 2020a requiring that a Participant be a member of another registered national securities exchange or association.
329 17 CFR 240.17d2.
330 Exchange Act Release No. 85046 February 4, 2019, 84 FR 2643 February 7, 2019.
331 Exchange Act Release No. 84392 October 10, 2018, 83 FR 52243 October 16, 2018.

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regulatory and self-regulatory organization responsibilities, including those applicable to BSTX. Finally, as it does with options, the Exchange will perform automated surveillance of trading on BSTX for the purpose of maintaining a fair and orderly market at all times and monitor BSTX to identify unusual trading patterns and determine whether particular trading activity requires further regulatory investigation by FINRA.
In addition, the Exchange will oversee the process for determining and implementing trade halts, identifying and responding to unusual market conditions, and administering the Exchanges process for identifying and remediating clearly erroneous trades pursuant to proposed Rule 25110.
NMS Plans The Exchange intends to join the Order Execution Quality Disclosure Plan, the Plan to Address Extraordinary Market Volatility, the Plan Governing the Process of Selecting a Plan Processor, and the applicable plans for consolidation and dissemination of market data. The Exchange is already a participant in the NMS plan related to the Consolidated Audit Trail. Consistent with Section 6b5 of the Exchange Act,332 the Exchange believes that joining the same set of NMS plans that all other national securities exchanges that trade equities must join fosters cooperation and coordination with other national securities exchanges and other market participants engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of the Exchange Act,333
in general and with Section 6b5 of the Exchange Act,334 in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers, or to regulate by virtue of any authority 332 15

U.S.C. 78fb5.
U.S.C. 78a et seq.
334 15 U.S.C. 78fb5.
333 15

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conferred by this title matters not related to the purposes of this title or the administration of the Exchange.
The Exchange believes that BSTX will benefit individual investors, other market participants, and the equities market generally. The Exchange proposes to establish BSTX as a facility of the Exchange that would trade equities in a similar manner to how equities presently trade on other exchanges. BSTX would also make available to BSTX Participants the BSTX
Market Data Blockchain, which provides certain order and transaction information with respect to a BSTX
Participants trading activity on BSTX, as well as anonymized order and transaction data with respect to all trading activity occurring on BSTX. The Exchange believes that the content of information available on the BSTX
Market Data Blockchain would generally be similar to TAQ data made available by NYSE today, except that i the BSTX Market Data Blockchain would use a private, permissioned network controlled by the Exchange to make the market data available to BSTX
Participants; ii a BSTX Participant would be able to certain see nonanonymized information about its own trading activity on BSTX; 335 and iii the BSTX Market Data Blockchain would include market data only with respect to trading activity occurring on BSTX, while the Exchange understands that TAQ data includes certain trading and quotation data that may occur on other markets.336 The Exchange believes that the use of blockchain technology, through a private permissioned network that operates in manner that is fully compatible with the existing regulatory structures for trading, recordkeeping, and clearance and settlement that market participants are familiar with is an appropriate way to introduce blockchain to the current market structure. BSTX Participants would have not have affirmative obligations to provide information to the blockchain nor would they be required to access or use it. The data inputs to the BSTX
Market Data Blockchain would be captured in the ordinary course as BSTX
Participants orders and messages are 335 All non-anonymized information would be available only to the BSTX Participant who provided such information to the Exchange through its trading activity on BSTX.
336 See e.g., NYSE, Daily TAQ Fact Sheet, noting that TAQ data provides users access to all trades and quotes for all issues traded on NYSE, Nasdaq and the regional exchanges for a single trading day and is a comprehensive history of daily activity from NYSE markets and the U.S. Consolidated Tape covering U.S. Equities instruments CTA and UTP
participating markets https www.nyse.com/
publicdocs/nyse/data/Daily_TAQ_Fact_Sheet.pdf.

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