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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
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. Only where two orders that both indicate a preference for a shorter settlement cycle match on BSTX would a shorter settlement cycle be possible.
The Exchange also proposes to suspend unlisted trading privileges for Securities that qualify as Thinly Traded Securities, which the Exchange also believes is consistent with the Exchange Act for the reasons detailed in Part II.H
above.347 The Exchange proposes to suspend UTP only for Securities that qualify as Thinly Traded Securities, which are generally those with an ADV
of trading of 100,000 or less and a market capitalization of less than $1
billion, and where an issuer of a Thinly Traded Security elects to have UTP
suspended. The Exchange believes that the proposed suspension of UTP is consistent with Section 6b5 of the Exchange Act 348 because it is designed 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 by concentrating displayed liquidity on a single exchange, which many, including the Commission, have suggested could potentially improve the market quality for thinly traded securities. The Exchange believes that concentrating displayed liquidity on a single venue could make market making more attractive in Thinly Traded Securities, thereby increasing the overall amount and depth of liquidity in the market and in turn making it easier for investors to acquire and dispose of positions in Thinly Traded Securities, which furthers the protection of investors and the public interest, consistent with Section 6b5 of the Exchange Act.349
The Exchange would make available order and transaction data relating to Thinly Traded Securities to regulators, academics, and others upon request to evaluate how the suspension of UTP has impacted Thinly Traded Securities. The Exchange will also perform its own analysis across a range of market quality metrics to evaluate whether the suspension of UTP has had the intended effect of improving market quality for Thinly Traded Securities.350 The Exchange believes that by studying the effect of the suspension of UTP for Thinly Traded Securities and making 347 See 348 15

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349 Id.
350 See
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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 351 Commission Statement on Thinly Traded Securities at 56956.

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available market data for others to make similar studies, the Exchange can help ensure that the suspension of UTP is in fact having the intended effect of improving market quality for Thinly Traded Securities and/or determine what else might be necessary to improve market quality, all of which the Exchange believes will help further the protection of investors and the public interest.
Similarly, consistent the Exchange believes that the proposed suspension of UTP for Thinly Traded Securities would not permit unfair discrimination between customers, issuers, brokers or dealers, because the suspension is for the purpose of furthering the regulatory objective of improving market quality for securities that are thinly traded.
Although non-Thinly Traded Securities would not be able to have UTP
suspended, this discriminatory treatment is not unfair given the substantial public interest, as demonstrated through the Commissions statements and by market participants at the Roundtable, in improving market conditions for thinly traded securities.
The Exchange believes that the proposed suspension of UTP would help protect investors and the public interest, consistent with Section 6b5, by concentrating displayed liquidity on a single venue, thereby providing greater incentives for market makers in Thinly Traded Securities and in turn making it easier for investors to buy and sell shares of Thinly Traded Securities.
The Exchange believes that there is a general consensus among members of Commission staff, former Commissioners including former Chairman Jay Clayton, the Department of the Treasury, and market participants, as well as empirical evidence, making clear that operating company stocks with an ADV of less than 100,000 shares suffer significant liquidity and market quality challenges not faced by stocks with greater trading volume. It is for this reason, the Exchange believes, that the Commission specifically solicited requests from exchanges for innovative approaches to improve the market for thinly traded securities, including requests for suspension of UTP.351

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of the purposes of the Exchange Act.352
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 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 that are not Thinly Traded Securities; and 6
there would be a suspension of UTP for Thinly Traded 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;
352 15

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