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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
that, by comparison, with respect to the trading of options, the Exchange does not currently enforce equidistant cabling among and between participants and its matching engine located in the same data center.357 This commenter states that, absent confirmation that access to BSTX will be offered on an equal and non-discriminatory basis, the commenter urges the Commission to disapprove the proposal.358 In response, the Exchange states that BSTX will provide for equidistant cabling arrangements to ensure that all colocated BSTX Participants are on a level playing field in connecting to the BSTX
matching engine.359 The Exchange also states that BSTX plans to have equidistant cabling arrangements within the area of the data center that it controls, and that it will make technical details regarding those arrangements available to prospective BSTX
Participants in certain specification documents after approval of BSTX as a new facility of the Exchange.360

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IV. Proceedings To Determine Whether To Approve or Disapprove SRBOX
202106, as Modified by Amendment No. 1, and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19b2B of the Act 361 to determine whether the proposed rule change, as modified by Amendment No. 1, should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide additional comment on the proposed rule change to inform the Commissions analysis of whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1.
Pursuant to Section 19b2B of the Act,362 the Commission is providing 357 See Letter from Andrew Stevens, General Counsel, IMC Chicago, LLC and Richard McDonald, Compliance Coordinator, Susquehanna International Group, LLP June 28, 2021, at 2.
358 See id. at 3.
359 See Letter from Lisa J. Fall, President, BOX
Exchange LLC July 1, 2021, at 1.
360 See id. at 2. The Exchange states that its options trading platform is an entirely separate facility of the Exchange with a separate ownership structure from BSTX, and BSTX will use separate data center operations and a different technology provider. See id. at 3.
361 15 U.S.C. 78sb2B.
362 Id.

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notice of the grounds for disapproval under consideration. As described above, the Exchange proposes to adopt rules to govern the trading of equity securities on the Exchange through the BSTX facility. Among other things, the Exchange proposes to operate the BSTX
Market Data Blockchain and to submit trades to NSCC for settlement on a T+0
or T+1 basis under certain conditions.
As stated above, the Commission has received comment letters on the proposal and a response letter from the Exchange. Moreover, on August 18, 2021, the Exchange filed Amendment No. 1 to the proposed rule change. The Commission is instituting proceedings to allow for additional analysis of, and input from commenters with respect to, the consistency of the proposed rule change, as modified by Amendment No.
1, with the Act and, in particular, with Section 6b5 of the Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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 to protect investors and the public interest, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers; 363 Section 6b7 of the Act, which requires that the rules of a national securities exchange provide a fair procedure for the prohibition or limitation by the exchange of any person with respect to access to services offered by the exchange; 364 and Section 6b8 of the Act, which requires that the rules of a national securities exchange not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.365
The Exchange proposes to make available the BSTX Market Data Blockchain, which would operate as a private, permission-based blockchain that would be accessible through an API
available through the internet. Through use of the API, BSTX Participants would be able to see detailed information about their own trading activity on BSTX and anonymized, general information with respect to the trading activity of other 363 15

U.S.C. 78fb5.
U.S.C. 78fb7.
365 15 U.S.C. 78fb8.
364 15

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BSTX Participants.366 Non-BSTX
Participants permissioned by the Exchange would be able to view only the anonymized, general market data through login credentials provided by the Exchange, although it is not clear what conditions, if any, the Exchange may place on non-BSTX Participants before granting this access.367 The Exchange proposes to post information to the BSTX Market Data Blockchain on a delayed basis of at least five minutes.
This five minute delay distinguishes the BSTX Market Data Blockchain from sources of real-time market data, but is much shorter than the delay used by other historical market data products, such as the New York Stock Exchanges TAQ data, to which the Exchange draws a comparison.368 The Exchange states that posting five minute blocks of data would allow the Exchange to accrue sufficient information to record to the BSTX Market Data Blockchain.369 The Commission believes there are questions as to whether the Exchanges proposed use of the BSTX Market Data Blockchain is consistent with Sections 6b5, 6b7, and 6b8 of the Act, and, in particular, the requirements that the rules of the Exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers;
provide a fair procedure for the prohibition or limitation by the Exchange of any person with respect to access to services offered by the Exchange; and not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
In addition, the Exchange proposes to allow BSTX Participants to utilize an order parameter to indicate a preference 366 The Exchange states that BSTX Participants may find the BSTX Market Data Blockchain useful to review their trading activity on BSTX, determine what the market for a given Security was at a particular time, evaluate execution quality on BSTX, help confirm the accrual of internal trading data, or back test trading strategies. See Amendment No. 1, supra note 6, at 27.
367 See id. at 1820. The Exchange states that nonBSTX Participants may find the data useful for academic study. See id. at 27.
368 See id. at 17, 22 n.35, 128. The New York Stock Exchanges TAQ data is produced as a daily file that becomes available after the close of U.S.
equities markets on the same day. See New York Stock Exchange, Daily TAQ Client Specifications August 31, 2020, available at https
www.nyse.com/publicdocs/nyse/data/Daily_TAQ_
Client_Spec_v3.3a.pdf.
369 See Amendment No. 1, supra note 6, at 23
n.37.

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