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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
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. 75 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 charges and other fees that clearing broker-dealers may pass down to other market participants. 76 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. 77
BSTX agrees with these statements by the Commission and has therefore proposed BSTX Rules 25060h and 25100d in a form that would promote the benefits of available, shorter settlement cycles.78
Proposed BSTX Rules The discussion in this Part III
addresses the proposed BSTX Rules that would be adopted as Rule Series 17000
through 29000.

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General Provisions of BSTX and Definitions Rule 17000 Series The Exchange proposes to adopt as its Rule 17000 Series General Provisions of BSTX a set of general provisions relating to the trading of Securities and other rules governing participation on BSTX. Proposed Rule 17000 sets forth the defined terms used throughout the BSTX Rules. The majority of the proposed definitions are substantially similar to defined terms used in other equities exchange rulebooks, such as with respect to the term customer. 79
75 Exchange Act Release No. 80295 March 22, 2017, 82 FR 15564, 1557071 March 29, 2017.
76 Id. at 15571.
77 Id. at 15582.
78 As described in this Part II.I, an order for a Security marked for T+0 or T+1 could still interact with any other order, including an order with the default T+2 settlement, with settlement to occur at the later of any two matched orders e.g., if a T+1
order matches with a T+2 order, the orders would settle T+2. Only where an order marked for a shorter settlement time matches with another order similarly marked would a shorter settlement time occur. Consequently, the proposed use of shorter settlement times would not adversely impact any market participant seeking T+2 settlement in a transaction for a Security.
79 Proposed Rule 17000a17 defines the term customer to not include a broker or dealer, which parallels the same definition in other exchange rulebooks. See e.g., IEX Rule 1.160j. Similarly, the Exchange proposes to define the term Regular Trading Hours as the time between 9:30 a.m. and
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The Exchange proposes to set forth new definitions for certain terms to specifically identify systems, agreements, or persons as they relate to BSTX and as distinct from other Exchange systems, agreements, or persons that may be used in connection with the trading of other options on the Exchange.80 The Exchange also proposes to define certain unique terms relating to the trading of Securities, including the term Security itself,81 as well as for other features of BSTX such as the BSTX Market Data Blockchain. 82
In addition to setting forth proposed definitions used throughout the proposed Rules, the Exchange proposes to specify in proposed Rule 17010
Applicability that the Rules set forth in the Rule 17000 Series to Rule 29000
Series apply to the trading, listing, and related matters pertaining to the trading of Securities. Proposed Rule 17010b provides that, unless specific Rules relating to Securities govern or unless the context otherwise requires, the provisions of any Exchange Rule i.e., including Exchange Rules in the Rule 100 through 16000 Series shall be applicable to BSTX Participants.83 This is intended to make clear that BSTX
Participants are subject to all of the Exchanges Rules that may be applicable to them, notwithstanding that their trading activity may be limited solely to trading Securities. The Exchange believes that the proposed definitions set forth in Rule 17000 are consistent with Section 6b5 of the Exchange Act 84 because they protect investors 4:00 p.m. Eastern Time. See proposed Rule 17000a29 cf. IEX Rule 1.160gg defining Regular Market Hours in the same manner.
80 For example, the Exchange proposes to define the term BSTX to mean the facility of the Exchange for executing transaction in Securities, the term BSTX Participant to mean a Participant or Options Participant as those terms are defined in the Exchanges Rule 100 Series that is authorized to trade Securities, and the term BSTX
System to mean the automated trading system used by BSTX for the trading of Securities. See proposed Rule 17000a8, 11, and 15.
81 Proposed Rule 17000a31 provides that the term Security means a NMS stock, as defined in Rule 600b47 of the Exchange Act, trading on the BSTX System. The proposed definition further specifies that references to a security or securities in the Rules may include Securities.
82 Proposed Rule 17000a9 provides that the term BSTX Market Data Blockchain means the private, permissioned blockchain network through which a BSTX Participant may access certain order and transaction data related to trading activity on BSTX. See Part II.F for further discussion of the BSTX Market Data Blockchain.
83 Proposed Rule 17010 further specifies that to the extent the provisions of the Rules relating to the trading of Securities contained in Rule 17000 Series to Rule 29000 Series are inconsistent with any other provisions of the Exchange Rules, the Rules relating to Security trading shall control.
84 15 U.S.C. 78fb5.

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and the public interest by setting forth clear definitions that help BSTX
Participants understand and apply Exchange Rules. Without clearly defining terms used in the Exchanges Rules and providing clarity as to the Exchange Rules that may apply, market participants could be confused as to the application of certain rules, which could cause harm to investors.
Participation on BSTX Rule 18000
Series The Exchange proposes to adopt as its Rule 18000 Series Participation on BSTX, three rules setting forth certain requirements relating to participation on BSTX. Proposed Rule 18000 BSTX
Participation establishes BSTX
Participants as a new category of Exchange participation for effecting transactions on the BSTX System, provided they: i Complete the BSTX
Participant Application, Participation Agreement, and User Agreement; 85 ii be an existing Options Participant or become a Participant of the Exchange pursuant to the Rule 2000 Series; and iii provide such other information as required by the Exchange.86 Proposed Rule 18010 Requirements for BSTX
Participants sets forth certain requirements for BSTX Participants including requirements that each BSTX
Participant comply with Rule 15c31
under the Exchange Act, comply with applicable books and records requirements, and be a member of a registered clearing agency or clear Security transactions through another BSTX Participant that is a member/
participant of a registered clearing agency.87 Finally, proposed Rule 18020
Associated Persons provides that associated persons of a BSTX
Participant are bound by the Rules of the Exchange to the same extent as each BSTX Participant.
The Exchange believes that the proposed Rule 18000 Series Participation on BSTX is consistent 85 The BSTX Participant Application, Participation Agreement, and User Agreement have been submitted as Exhibits 3A, 3B, and 3C to the proposal respectively.
86 Proposed Rule 18000 also sets forth the Exchanges review process regarding BSTX
Participation Agreements and certain limitations on the ability to transfer BSTX Participant status e.g., in the case of a change of control. In addition proposed Rule 18000b2 provides that a BSTX
Participant shall continue to abide by all applicable requirements of the Rule 2000 Series, which would include, for example, IM20405, which specifies continuing education requirements of Exchange Participants and their associated persons.
87 Proposed Rule 18010b is similar to the rules of existing exchanges. See e.g., IEX Rule 2.160c.
Proposed Rule 18010a is also similar to the rules of existing exchanges. See e.g., IEX Rule 1.160s and Cboe BZX Rule 17.2a.

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