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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
lotter on DSK11XQN23PROD with NOTICES2

must do so within thirty 30 minutes of execution and provide certain information, including the factual basis for believing that the trade is clearly erroneous, to the Official.216 Under proposed Rule 25100c, an Official may determine that a transaction is clearly erroneous if the price of the transaction to buy sell that is the subject of the complaint is greater than less than the Reference Price 217 by an amount that equals or exceeds specified Numerical Guidelines. 218 The Official may consider additional factors in determining whether a transaction is clearly erroneous, such as whether trading in the security had recently halted or overall market conditions.219
Similar to other exchanges clearly erroneous rules, the Exchange may determine that trades are clearly erroneous in certain circumstances such as during a system disruption or malfunction, on a BSTX Officers or senior employee designee own motion, during a trading halt, or with respect to a series of transactions over multiple days.220 Under proposed Rule 25110e2, BSTX Participants affected by a determination by an Official may appeal this decision to the Chief Regulatory Officer of BSTX, provided such appeal is made within thirty 30
minutes after the party making the appeal is given notice of the initial determination being appealed.221 The Chief Regulatory Officers determination 216 Proposed Rule 25110b. The Official may also consider certain outlier transactions on a case by case basis where the request for review is submitted after 30 minutes but no longer than sixty 60
minutes after the transaction. Proposed Rule 2511d.
217 The Reference Price would be equal to the consolidated last sale immediately prior to the executions under review except for in circumstances, such as, for example, relevant news impacting a security or securities, periods of extreme market volatility, sustained illiquidity, or widespread system issues, where use of a different Reference Price is necessary for the maintenance of a fair and orderly market and the protection of investors and the public interest. Proposed Rule 25110c1.
218 The proposed Numerical Guidelines are 10%
where the Reference Price ranges from $0.00 to $25.00, 5% where the Reference Price is greater than $25.00 up to and including $50.00, and 3%
where the Reference Price ranges is greater than $50. Proposed Rule 25110c1.
219 Proposed Rule 25110c1.
220 See proposed Rule 25110fj. These provisions are virtually identical to similar provisions of other exchanges clearly erroneous rules other than by making certain administrative edits e.g., replacing the term security with Security.
221 Determinations by an Official pursuant to proposed Rule 25110f relating to system disruptions or malfunctions may not be appealed if the Official made a determination that the nullification of transactions was necessary for the maintenance of a fair and orderly market or the protection of invests and the public interest.
Proposed Rule 25110d2.

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shall constitute final action by the Exchange on the matter at issue pursuant to proposed Rule 25110e2ii.
The Exchange believes that proposed Rule 25110 is consistent with Section 6b5 of the Exchange Act,222 because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system by setting forth the process by which clearly erroneous trades on the BSTX System may be identified and remedied.
Proposed Rule 25110 would apply equally to all BSTX Participants and is therefore not designed to permit unfair discrimination among BSTX
Participants, consistent with Section 6b5 of the Exchange Act.223 The proposed rule is substantially similar to the clearly erroneous rules of other exchanges.224 For example, proposed Rule 25110 does not include provisions related to clearly erroneous transactions for routed orders because orders for Securities will not route to other exchanges.225 Securities would also only trade during regular trading hours i.e., 9:30 a.m. ET to 4:00 p.m. ET, so provisions from comparable exchange rules relating to clearly erroneous executions occurring outside of regular trading hours have been excluded.
Proposed Rule 25110 also excludes provisions from comparable clearly erroneous rules of certain other exchanges relating to clearly erroneous executions in unlisted trading privileges securities that are subject to an initial public offering.226
The Exchange believes that its proposed process for BSTX Participants 222 15

U.S.C. 78fb5.

223 Id.
224 See e.g., Cboe BZX Rule 11.17. Similar to other exchanges comparable rules, proposed Rule 25110
provides BSTX with the ability to determine clearly erroneous trades that result from a system disruption or malfunction, a BSTX Official acting on his or her own motion, trading halts, multi-day trading events, multi-stock events involving five or more but less than twenty securities whose executions occurred within a period of five minutes or less, multi-stock events involving twenty or more securities whose executions occurred within a period of five minutes or less, securities subject to the LULD Plan, and for leveraged ETP Securities.
225 Other exchange clearly erroneous rules reference removing trades from the Consolidated Tape. Because Security transactions would be reported pursuant to a separate transaction reporting plan, proposed Rule 25110 eliminates references to the Consolidated Tape and provides that clearly erroneous Security transactions will be removed from all relevant data feeds disseminating last sale information for Security transactions. See proposed Rule 25110a.
226 The Exchange notes that not all equities exchanges have a provision with respect to trade nullification for UTP securities that are the subject of an initial public offering. See IEX Rule 11.270.

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to appeal clearly erroneous execution determinations made by an Exchange Official pursuant to proposed Rule 25110 to the Chief Regulatory Officer of BSTX is consistent with Section 6b5
of the Exchange Act 227 because it promotes just and equitable principles of trade and fosters cooperation and coordination with persons regulating, settling, and facilitating transactions in securities by providing a clear and expedient process to appeal determinations made by an Official.
BSTX Participants benefit from having a quick resolution to potentially clearly erroneous executions and giving the Chief Regulatory Officer discretion to decide any appeals of an Officials determination provides an efficient means to resolve potential appeals that applies equally to all BSTX Participants and therefore does not permit unfair discrimination among BSTX
Participants, consistent with Section 6b5 of the Exchange Act. The Exchange notes that, with respect to options trading on the Exchange, the Exchanges Chief Regulatory Officer similarly has sole authority to overturn or modify obvious error determinations made by an Exchange Official and that such determination constitutes final Exchange action on the matter at issue.228 In addition, proposed Rule 25110e2iii provides that any determination made by an Official or the Chief Regulatory Officer of BSTX
under proposed Rule 25110 shall be rendered without prejudice as to the rights of the parties to the transaction to submit their dispute to arbitration.
Accordingly, there is an additional safeguard in place for BSTX Participants to seek further review of the Exchanges clearly erroneous determination.
To the extent Securities become tradeable on other national securities exchanges or other changes arise that may necessitate changes to proposed Rule 25110 to conform more closely with the clearly erroneous execution rules of other exchanges, the Exchange intends to implement changes as necessary through a proposed rule change filed with the Commission pursuant to Section 19 of the Exchange Act 229 at such future date.
Rule 25120Short Sales Proposed Rule 25120 sets forth certain requirements with respect to short sale orders submitted to the BSTX System that is virtually identical to similar rules on other exchanges.230 Specifically, 227 15

U.S.C. 78fb5.
BOX Rule 7170n.
229 15 U.S.C. 78s.
230 See e.g., IEX Rule 11.290.
228 See
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