Participants shall comply with the requirements of current Exchange
Rule 10020 (Financial Reports).
    \142\ Proposed Rule 20020 (Capital Compliance) provides that
each BSTX Participant subject to Rule 15c3-1 under the Exchange Act
(17 CFR 240.15c3-1) shall comply with such rule and other financial
and operational rules contained in the proposed Rule 20000 series.
    \143\ 17 CFR 240.17a-11. Proposed Rule 20030 (``Early Warning''
Notification) provides that BSTX Participants subject to the
reporting or notifications requirements of Rule 17a-11 under the
Exchange Act (17 CFR 240.17a-11) or similar ``early warning''
requirements imposed by other regulators shall provide the Exchange
with certain reports and financial statements.
    \144\ Proposed Rule 20040 (Power of CRO to Impose Restrictions)
generally provides that the Exchange's Chief Regulatory Officer may
impose restrictions and conditions on a BSTX Participant subject to
the early warning notification requirements under certain
circumstances.
    \145\ Proposed Rule 20050 (Margin) sets forth the required
margin amounts for certain securities held in a customer's margin
account.
    \146\ Proposed Rule 20060 (Day Trading Margin) sets forth
additional requirements with respect to customers that engage in day
trading.
    \147\ Proposed Rule 20070 (Customer Account Information)
requires that BSTX Participants comply with FINRA Rule 4512 as if
such rule were part of the Exchange Rules and further clarifies
certain cross-references within FINRA Rule 4512.
    \148\ Proposed Rule 20080 (Record of Written Customer
Complaints) requires that BSTX Participants comply with FINRA Rule
4513 as if such rule were part of the Exchange Rules.
    \149\ Proposed Rule 20090 (Disclosure of Financial Condition)
generally requires that BSTX Participants make available certain
information regarding the BSTX Participant's financial condition
upon request of a customer.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 20000 (Financial and
Operational Rules) Series is consistent with Section 6(b)(5) of the
Exchange Act \150\ because these proposed rules are designed to prevent
fraudulent and manipulative acts and practices, promote just and
equitable principles of trade, and protect investors and the public
interest by subjecting BSTX Participants to certain recordkeeping,
disclosure, and related requirements designed to ensure that BSTX
Participants conduct themselves in a financially responsible manner.
For example, proposed Rule 20000 would require BSTX Participants to
comply with existing Exchange Rule 1000, which sets forth certain
recordkeeping responsibilities and the obligation to furnish these to
the Exchange upon request so that the Exchange can appropriately
monitor the financial condition of a BSTX Participant and its
compliance with applicable regulatory requirements. Similarly, proposed
Rule 20050 would set forth the margin requirements that BSTX
Participants must retain with respect to customers trading in a margin
account to ensure that BSTX Participants are not extending credit to
customers in a manner that might put the financial condition of the
BSTX Participant in jeopardy. Each of the proposed rules in the Rule
20000 Series (Financial and Operational Rules) is substantially similar
to existing rules of other exchanges or incorporates an existing rule
of the Exchange or another self-regulatory organization (``SRO'') by
reference.
---------------------------------------------------------------------------

    \150\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

E. Supervision (Rule 21000 Series)
    The Exchange proposes to adopt as its Rule 21000 Series
(Supervision), six rules relating to certain supervisory requirements
for BSTX Participants that are substantially similar to supervisory
rules of other exchanges.\151\ The Proposed Rule 21000 Series would
specify supervisory requirements with respect to: (i) Enforcing written
procedures to appropriately supervise the BSTX Participant's conduct
and compliance with applicable regulatory requirements; \152\ (ii)
designation of an individual to carry out written supervisory
procedures; \153\ (iii) maintenance and keeping of records carrying out
the BSTX Participant's written supervisory procedures; \154\ (iv)
review of activities of each of a BSTX Participant's offices, including
periodic examination of customer accounts to detect and prevent
irregularities or abuses; \155\ (v) the prevention of the misuse of
material non-public

information; \156\ and (vi) implementation of an anti-money laundering
(``AML'') compliance program.\157\ These rules are designed to ensure
that BSTX Participants are able to appropriately supervise their
business activities, review and maintain records with respect to such
supervision, and enforce specific procedures relating insider-trading
and AML.
---------------------------------------------------------------------------

    \151\ See Cboe BZX Chapter 5 rules. See also IEX Rule 5.150 with
respect to proposed Rule 21040 (Prevention of the Misuse of
Material, Non-Public Information).
    \152\ Proposed Rule 21000 (Written Procedures).
    \153\ Proposed Rule 21010 (Responsibility of BSTX Participants)
would also require that a copy of a BSTX's written supervisory
procedures be kept in each office and makes clear that final
responsibility for proper supervision rests with the BSTX
Participant.
    \154\ Proposed Rule 21020 (Records).
    \155\ Proposed Rule 21030 (Review of Activities).
    \156\ Proposed Rule 21040 (Prevention of the Misuse of Material,
Non-Public Information) generally requires BSTX Participants to
enforce written procedures designed to prevent misuse of material
non-public information and sets forth examples of conduct that would
constitute a misuse of material, non-public information.
    \157\ Proposed Rule 21050 (Anti-Money Laundering Compliance
Program). The Exchange already has rules with respect to Exchange
Participants enforcing an AML compliance program set forth in
Exchange Rule 10070 (Anti-Money Laundering Compliance Program), so
proposed Rule 21050 specifies that BSTX Participants shall comply
with the requirements of that pre-existing rule.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 21000 (Supervision)
Series is consistent with Section 6(b)(5) of the Exchange Act \158\
because these proposed rules are designed to prevent fraudulent and
manipulative acts and practices, promote just and equitable principles
of trade, and protect investors and the public interest by ensuring
that BSTX Participants have appropriate supervisory controls in place
to carry out their business activities in compliance with applicable
regulatory requirements. For example, proposed Rule 21000 (Written
Procedures) would require BSTX Participants to enforce written
procedures which enable them to supervise the activities of their
associated persons and proposed Rule 21010 (Responsibility of BSTX
Participants) would require a BSTX Participant to designate a person in
each office to carry out written supervisory procedures. Requiring
appropriate supervision of a BSTX Participant's business activities and
associated persons would promote compliance with the federal securities
laws and other applicable regulatory requirements in furtherance of the
protection of investors and the public interest.\159\ In addition, each
of the rules in the proposed Rule 21000 Series (Supervision) is
substantially similar to supervisory rules of other exchanges.\160\
---------------------------------------------------------------------------

    \158\ 15 U.S.C. 78f(b)(5).
    \159\ Id.
    \160\ See supra n.151.
---------------------------------------------------------------------------

F. Miscellaneous Provisions (Rule 22000 Series)
    The Exchange proposes to adopt as its Rule 22000 Series
(Miscellaneous Provisions), six rules relating to a variety of
miscellaneous requirements applicable to BSTX Participants that are
substantially similar to rules of other exchanges.\161\ These
miscellaneous provisions relate to: (i) Comparison and settlement
requirements; \162\ (ii) failures to deliver and failures to receive;
\163\ (iii) forwarding of proxy and other issuer-related materials;
\164\ (iv) commissions; \165\ (v) regulatory services agreements; \166\
and (vi) transactions involving Exchange employees.\167\ These rules
are designed to capture additional regulatory requirements applicable
to BSTX Participants, such as setting forth their obligation to deliver
proxy materials at the request of an issuer and to incorporate by
reference Rule 200-203 of Regulation SHO.\168\
---------------------------------------------------------------------------

    \161\ See Cboe BZX Chapter 13 rules. See also IEX Rule 6.180
with respect to proposed Rule 22050 (Transactions Involving BOX
Employees).
    \162\ Proposed Rule 22000 (Comparison and Settlement
Requirements) provides that a BSTX Participant that is a member of a
registered clearing agency shall implement comparison and settlement
procedures as may be required under the rules of such entity. The
proposed rule would further provide that, notwithstanding this
general provision, the Board may extend or postpone the time of
delivery of a BSTX transaction whenever the Board determines that it
is called for by the public interest, just and equitable principles
of trade or to address unusual conditions. In such a case, delivery
will occur as directed by the Board.
    \163\ Proposed Rule 22010 (Failure to Deliver and Failure to
Receive) provides that borrowing and deliveries must be effected in
accordance with Rule 203 of Regulation SHO (17 CFR 242.203) and
incorporates Rules 200--203 of Regulation SHO by reference into the
rule (17 CFR Sec. Sec.  242.200-203).
    \164\ Proposed Rule 22020 (Forwarding of Proxy and Other
Information; Proxy Voting) generally provides that BSTX Participants
shall forward proxy materials when requested by an issuer and sets
forth certain conditions and limitations for BSTX Participants to
give a proxy to vote stock that is registered in its name.
    \165\ Proposed Rule 22030 (Commissions) provides that the
Exchange Rules or practices shall not be construed to allow a BSTX
Participant or its associated persons to agree or arrange for the
charging of fixed rates commissions for transactions on the
Exchange.
    \166\ Proposed Rule 22040 (Regulatory Service Agreement)
provides that the Exchange may enter into regulatory services
agreements with other SROs to assist in carrying out regulatory
functions, but the Exchange shall retain ultimate legal
responsibility for, and control of, its SRO responsibilities.
    \167\ Proposed Rule 22040 (Transactions Involving Exchange
Employees) sets forth conditions and limitations on a BSTX
Participant providing loans or supporting the account of an Exchange
employee (e.g., promptly obtaining and implementing an instruction
from the employee to provide duplicate account statement to the
Exchange) in order to mitigate any potential conflicts of interest
that might arise from such a relationship.
    \168\ 17 CFR Sec. Sec.  242.200-203.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 22000 (Miscellaneous
Provisions) Series is consistent with Section 6(b)(5) of the Exchange
Act \169\ because these proposed rules are designed to prevent
fraudulent and manipulative acts and practices, promote just and
equitable principles of trade, and protect investors and the public
interest by ensuring that BSTX Participants comply with additional
regulatory requirements, such as Rule 203 of Regulation SHO \170\ as
provided in proposed Rule 22010 (Failure to Deliver and Failure to
Receive), in connection with their participation on BSTX. For example,
proposed Rule 22030 (Commissions) prohibits BSTX Participants from
charging fixed rates of commissions for transactions on the Exchange
consistent with Section 6(e)(1) of the Exchange Act.\171\ Similarly,
proposed Rule 22050 (Transactions involving Exchange Employees) sets
forth certain requirements and prohibitions relating to a BSTX
Participant providing certain financial services to an Exchange
employee, which the Exchange believes helps prevent potentially
fraudulent and manipulative acts and practices and furthers the
protection of investors and the public interest.
---------------------------------------------------------------------------

    \169\ 15 U.S.C. 78f(b)(5).
    \170\ 17 CFR 242.203.
    \171\ 15 U.S.C. 78f(e)(1).
---------------------------------------------------------------------------

G. Trading Practice Rules (Rule 23000 Series)
    The Exchange proposes to adopt as its Rule 23000 Series (Trading
Practice Rules), 14 rules relating to trading practice requirements for
BSTX Participants that are substantially similar to trading practice
rules of other exchanges.\172\ The proposed Rule 23000 series would
specify trading practice requirements related to: (i) Market
manipulation; (ii) fictitious transactions; (iii) excessive sales by a
BSTX Participant; (iv) manipulative transactions; (v) dissemination of
false information; (vi) prohibition against trading ahead of customer
orders; (vii) joint activity; (viii) influencing data feeds; (ix) trade
shredding; (x) best execution; (xi) publication of transactions and
changes; (xii) trading ahead of research reports; (xiii) front running
of block transactions; and (xiv) a prohibition against disruptive
quoting and trading activity. The purpose of the trading practice rules
is to set forth standards and rules relating to the trading conduct of
BSTX Participants, primarily with respect to prohibiting forms of
market manipulation and specifying certain obligations broker-dealers
have to their customers, such as the duty of best execution. For
example, proposed Rule 23000 (Market Manipulation) sets forth a general
prohibition against a BSTX Participant purchasing a security at
successively higher prices or sales of a security at

successively lower prices, or to otherwise engage in activity for the
purpose of creating or inducing a false, misleading or artificial
appearance of activity in such security.\173\ Proposed Rule 23010
(Fictitious Transactions) similarly prohibits BSTX Participants from
fictitious transaction activity, such as executing a transaction which
involves no beneficial change in ownership, and proposed Rule 23020
(Excessive Sales by a BSTX Participant) prohibits a BSTX Participant
from executing purchases or sales in any security trading on the
Exchange for any account in which it has an interest, which are
excessive in view of the BSTX Participant's financial resources or in
view of the market for such security.\174\ Proposed Rule 23060 (Joint
Activity) prohibits a BSTX Participant from directly or indirectly
holding any interest or participation in any joint account for buying
or selling a security traded on the Exchange unless reported to the
Exchange with certain information provided and proposed Rule 23090
(Best Execution) reaffirms BSTX Participants best execution obligations
to their customers.\175\
---------------------------------------------------------------------------

    \172\ See Cboe BZX Chapter 12 rules.
    \173\ Proposed Rule 23030 (Manipulative Transactions) specifies
further prohibitions relating to potential manipulation by
prohibiting BSTX Participants from, among other things,
participating or having any direct or indirect interest in the
profits of a manipulative operation or knowingly managing or
financing a manipulative operation.
    \174\ Other proposed rules relating to potential manipulation
include: (i) Rule 23040 (Dissemination of False Information), which
generally prohibits, consistent with Exchange Rule 3080, BSTX
Participants from spreading information that is false or misleading;
(ii) Rule 23070 (Influencing Data Feeds), which generally prohibits
transactions to influence data feeds; (iii) Rule 23080 (Trade
Shredding), which generally prohibits conduct that has the intent or
effect of splitting any order into multiple smaller orders for the
primary purpose of maximizing remuneration to the BSTX Participant;
(iv) Rule 23110 (Trading Ahead of Research Reports), which generally
prohibits BSTX Participants from trading based on non-public advance
knowledge of a research report and requires BSTX Participants to
enforce policies and procedures to limit information flow from
research personnel to trading personnel that might trade on such
information; (v) Rule 23120 (Front Running Block Transactions),
which incorporates FINRA Rule 5270 as though it were part of the
Exchange's Rules; and (vi) Rule 23130 (Disruptive Quoting and
Trading Activity Prohibited), which incorporates Exchange Rule 3220
by reference.
    \175\ In addition, proposed Rule 23100 (Publication of
Transactions and Changes) provides that the Exchange will
disseminate transaction information to appropriate data feeds, BSTX
participants must provide information necessary to facilitate the
dissemination of such information, and that an Exchange official
shall be responsible for approving corrections to any reports
transmitted over data feeds.
---------------------------------------------------------------------------

    Proposed Rule 23050 (Prohibition against Trading Ahead of Customer
Orders) is substantially similar to FINRA 5320 and rules adopted by
other exchanges,\176\ and generally prohibits BSTX Participants from
trading ahead of customer orders unless certain enumerated exceptions
are available and requires BSTX Participants to have a written
methodology in place governing execution priority to ensure compliance
with the Rule. The Exchange proposes to adopt each of the exceptions to
the prohibition against trading ahead of customer orders as provided in
FINRA Rule 5320 other than the exception related to trading outside of
normal market hours, since trading on the Exchange would be limited to
regular trading hours.
---------------------------------------------------------------------------

    \176\ See e.g., Cboe BZX Rule 12.6.
---------------------------------------------------------------------------

    The Exchange proposes to adopt the order handling procedures
requirement in proposed Rule 23050(i) consistent with the rules of
other exchanges.\177\ Specifically, proposed Rule 23050(i) would
provide that a BSTX Participant must make every effort to execute a
marketable customer order that it receives fully and promptly and must
cross customer orders when they are marketable against each other
consistent with the proposed Rule.
---------------------------------------------------------------------------

    \177\ See e.g., Cboe BZX Rule 12.6.07.
---------------------------------------------------------------------------

    The Exchange proposes to adopt a modified version of the exception
set forth in FINRA Rule 5320.06 relating to minimum price improvement
standards as proposed in Rule 23050(h). Under proposed Rule 23050(h),
BSTX Participants would be permitted to execute an order on a
proprietary basis when holding an unexecuted limit order in that same
security without being required to execute the held limit order
provided that they give price improvement of $0.01 to the unexecuted
held limit order. While FINRA Rule 5320.06 sets forth alternate, lower
price improvement standards for securities priced below $1, the
Exchange proposes to adopt a uniform price improvement requirement of
$0.01 for securities traded on the BSTX System consistent with the
Exchange's proposed uniform minimum price variant of $0.01 set forth in
proposed Rule 25030.
    In addition, the Exchange proposes to adopt an exception for bona
fide error transactions as proposed in Rule 25030(g) which would allow
a BSTX Participant to trade ahead of a customer order if the trade is
to correct a bona fide error, as defined in the rule. This proposed
exception is nearly identical to similar exceptions of other exchanges
\178\ except that other exchange rules also provide an exception
whereby firms may submit a proprietary order ahead of a customer order
to offset a customer order that is in an amount other than a round lot
(i.e., 100 shares). The Exchange is not adopting an exception for odd-
lot orders under these circumstances because the minimum unit of
trading for security tokens pursuant to proposed Rule 25020 is one
security token. The Exchange believes that there may be a notable
amount of trading in amounts of less than 100 security tokens (i.e.,
trading in odd-lot amounts), and the Exchange accordingly does not
believe that it is appropriate to allow BSTX Participants to trade
ahead of customer orders just to offset an odd-lot customer order.
---------------------------------------------------------------------------

    \178\ See e.g., Cboe BZX Rule 12.5.05.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 23000 Series relating
to trading practice rules is consistent with Section 6(b)(5) of the
Exchange Act \179\ because these proposed rules are designed to prevent
fraudulent and manipulative acts and practices that could harm
investors and to promote just and equitable principles of trade. The
proposed rules in the Rule 23000 Series are substantially similar to
the rules of other exchanges and generally include a variety of
prohibitions against types of trading activity or other conduct that
could potentially be manipulative, such as prohibitions against market
manipulation, fictitious transactions, and the dissemination of false
information. The Exchange has proposed to exclude certain provisions
from, or make certain modifications to, comparable rules of other SROs,
as detailed above, in order to account for certain unique aspects
related to the proposed trading of security tokens. The Exchange
believes that it is consistent with applicable requirements under the
Exchange Act to exclude these provisions and exceptions because they
set forth requirements that would not apply to BSTX Participants
trading in security tokens and are not necessary for the Exchange to
carry out its functions of facilitating security token transactions and
regulating BSTX Participants.
---------------------------------------------------------------------------

    \179\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

H. Disciplinary Rules (Rule 24000 Series)
    With respect to disciplinary matters, the Exchange proposes to
adopt Rule 24000 (Discipline and Summary Suspension), which provides
that the provisions of the Exchange Rule 11000 Series (Summary
Suspension), 12000 Series (Discipline), 13000 Series (Review of Certain
Exchange Actions), and 14000 Series (Arbitration) of the Exchange Rules
shall be applicable to BSTX Participants and trading on the BSTX
System. The Exchange already has Rules pertaining to discipline and

suspension of Exchange Participants that it proposes to extend to BSTX
Participants and trading on the BSTX System. The Exchange also proposes
to adopt as Rule 24010 a minor rule violation plan with respect to
transactions on BSTX.\180\
---------------------------------------------------------------------------

    \180\ The proposed additions to the Exchange's minor rule
violation plan pursuant to proposed Rule 25010 are discussed below
in Part IV.
---------------------------------------------------------------------------

    Proposed Rule 24000 incorporates by reference existing rules that
have already been approved by the Commission.
I. Trading Rules and the BSTX System (Rule 25000 Series)
1. Rule 25000--Access to and Conduct on the BSTX Marketplace
    The Exchange proposes to adopt Rule 25000 (Access to and Conduct on
the BSTX Marketplace) to set forth rules relating to access to the BSTX
System and certain conduct requirements applicable to BSTX
Participants. Specifically, proposed Rule 25000 provides that only BSTX
Participants, including their associated persons, that are approved for
trading on the BSTX System shall effect any transaction on the BSTX
System. Proposed Rule 25000(b) generally requires that a BSTX
Participant maintain a list of authorized traders that may obtain
access to the BSTX System on behalf of the BSTX Participant, have
procedures in place reasonably designed to ensure that all authorized
traders comply with Exchange Rules and to prevent unauthorized access
to the BSTX System, and to provide the list of authorized traders to
the Exchange upon request. Proposed Rule 25000(c) and (d) restate
provisions that are already set forth in Exchange Rule 7000, generally
providing that BSTX Participants shall not engage in conduct that is
inconsistent with the maintenance of a fair and orderly market or the
ordinary and efficient conduct of business, as well as conduct that is
likely to impair public confidence in the operations of the Exchange.
Examples of such prohibited conduct include failure to abide by a
determination of the Exchange, refusal to provide information requested
by the Exchange, and failure to adequately supervise employees.
Proposed Rule 25000(f) provides the Exchange with authority to suspend
or terminate access to the BSTX System under certain circumstances.
    The Exchange believes that proposed Rule 25000 is consistent with
Section 6(b)(5) of the Exchange Act \181\ because it is designed to
protect investors and the public interest and promote just and
equitable principles of trade by ensuring that BSTX Participants would
not allow for unauthorized access to the BSTX System and would not
engage in conduct detrimental to the maintenance of fair and orderly
markets.
---------------------------------------------------------------------------

    \181\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

2. Rule 25010--Days/Hours
    Proposed Rule 25010 sets forth the days and hours during which BSTX
would be open for business and during which transactions may be
effected on the BSTX System. Under the proposed rule, transactions may
be executed on the BSTX System between 9:30 a.m. and 4:00 p.m. Eastern
Time. The proposed rule also specifies certain holidays BSTX would be
not be open (e.g., New Year's Day) and provides that the Chief
Executive Officer, President, or Chief Regulatory Officer of the
Exchange, or such person's designee who is a senior officer of the
Exchange, shall have the power to halt or suspend trading in any
security tokens, close some or all of BSTX's facilities, and determine
the duration of any such halt, suspension, or closing, when such person
deems the action necessary for the maintenance of fair and orderly
markets, the protection of investors, or otherwise in the public
interest.
    The Exchange believes that proposed Rule 25010 is designed to
protect investors and the public interest, consistent with Section
6(b)(5) of the Exchange Act,\182\ by setting forth the days and hours
that trades may be effected on the BSTX System and by providing
officers of the Exchange with the authority to halt or suspend trading
when such officers believe that such action is necessary or appropriate
to maintain fair and orderly markets or to protect investors or in the
public interest.
---------------------------------------------------------------------------

    \182\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

3. Rule 25020--Units of Trading
    Proposed Rule 25020 sets forth the minimum unit of trading on the
BSTX System, which shall be one security token. The Exchange believes
that proposed Rule 25020 is consistent with Section 6(b)(5) of the
Exchange Act \183\ because it fosters cooperation and coordination of
persons engaged in facilitating transactions in securities by
specifying the minimum unit of trading of security tokens on the BSTX
System. In addition, other exchanges similarly provide that the minimum
unit of trading is one share for their market and/or for certain
securities.\184\
---------------------------------------------------------------------------

    \183\ 15 U.S.C. 78f(b)(5).
    \184\ See e.g., IEX Rule 11.180.
---------------------------------------------------------------------------

4. Rule 25030--Minimum Price Variant
    Proposed Rule 25030 provides the minimum price variant for security
tokens shall be $0.01. The Exchange believes that proposed Rule 25030
is consistent with Section 6(b)(5) of the Exchange Act because it
fosters cooperation and coordination of persons engaged in facilitating
transactions in securities by specifying the minimum price variant for
security tokens and promotes compliance with Rule 612 of Regulation
NMS.\185\ Under Rule 612 of Regulation NMS, the Exchange is, among
other things, prohibited from displaying, ranking or accepting from any
person a bid or offer or order in an NMS stock in an increment smaller
than $0.01 if that bid or offer or order is priced equal to or greater
than $1.00 per share. Where a bid or offer or order is priced less than
or equal to $1.00 per share, the minimum acceptable increment is
$0.0001. Proposed Rule 25030 sets a uniform minimum price variant for
all security tokens of $0.01 irrespective of whether the security token
is trading below $1.00.
---------------------------------------------------------------------------

    \185\ 17 CFR 242.611.
---------------------------------------------------------------------------

5. Rule 25040--Opening the Marketplace
    Proposed Rule 25040 sets forth the opening process for the BSTX
System for BSTX-listed security tokens and non-BSTX-listed security
tokens. For BSTX-listed security tokens, the Exchange proposes to allow
for order entry to commence at 8:30 a.m. ET during the Pre-Opening
Phase. Proposed Rule 25040(a) provides that orders will not execute
during the Pre-Opening Phase, which lasts until regular trading hours
begin at 9:30 a.m. ET.\186\ Similar to how the Exchange's opening
process works for options trading, BSTX would disseminate a theoretical
opening price (``TOP'') to BSTX Participants, which is the price at
which the opening match would occur at a given moment in time.\187\
Under the proposed rule, the Exchange will also broadcast other
information during the Pre-Opening Phase. Specifically, in addition to
the TOP, the Exchange would disseminate pursuant to proposed Rule
25040(a)(3): (i) ``Paired Tokens,'' which is the quantity of security
tokens that would execute at the TOP; (ii) the ``Imbalance Quantity,''
which is the number of security tokens that may not be matched with
other orders at the TOP at the time

of dissemination; and (iii) the ``Imbalance Side,'' which is the buy/
sell direction of any imbalance at the time of dissemination
(collectively, with the TOP, ``Broadcast Information'').\188\ Broadcast
Information will be recalculated and disseminated every time a new
order is received or cancelled and where such event causes the TOP or
Paired Tokens to change. With respect to priority during the opening
match for all security tokens, consistent with proposed Rule 25080
(Execution and Price/Time Priority), among multiple orders at the same
price, execution priority during the opening match is determined based
on the time the order was received by the BSTX System.
---------------------------------------------------------------------------

    \186\ As a result, orders marked IOC submitted during the Pre-
Opening Phase will be rejected by the BSTX System. See proposed Rule
25040(a)(7).
    \187\ The TOP can only be calculated where the BSTX Book is
crossed during the Pre-Opening Phase. See proposed Rule 25040(a)(2).
    \188\ Pursuant to proposed Rule 25040(a)(3), any orders which
are at a better price (i.e., bid higher or offer lower) than the TOP
will be shown only as a total quantity on the BSTX Book at a price
equal to the TOP.
---------------------------------------------------------------------------

    Consistent with the manner in which the Exchange opens options
trading, the BSTX System would determine a single price at which a
BSTX-listed security token will be opened by calculating the optimum
number of security tokens that could be matched at a price, taking into
consideration all the orders on the BSTX Book.\189\ Proposed Rule
25040(a)(5) provides that the opening match price is the price which
results in the matching of the highest number of security tokens. If
two or more prices would satisfy this maximum quantity criteria, the
price leaving the fewest resting security tokens in the BSTX Book will
be selected at the opening price and where two or more prices would
satisfy the maximum quantity criteria and leave the fewest security
tokens in the BSTX Book, the price closest to the previous day's
closing price will be selected.\190\ Unexecuted trading interest during
the opening match will move to the BSTX Book and will preserve price
time priority.\191\ When the BSTX System cannot determine an opening
price of a BSTX-listed security token at the start of regular trading
hours, BSTX would nevertheless open the security token for trading and
move all trading interest received during the Pre-Opening Phase to the
BSTX Book.\192\
---------------------------------------------------------------------------

    \189\ See proposed Rule 25040(a)(4)(ii).
    \190\ With respect to an initial public offering of a security
token where there is no previous day's closing price, the opening
price will be the price assigned to the security token by the
underwriter for the offering, referred to as the ``ISTO Reference
Price.'' See Proposed Rule 25040(a)(5)(ii)(3).
    \191\ See proposed Rule 25040(a)(6).
    \192\ Id.
---------------------------------------------------------------------------

    For initial public offerings of security tokens (``ISTOs''), the
process will be generally the same as regular market openings. However,
in advance of an ISTO auction (``ISTO Auction''), the Exchange shall
announce a ``Quote-Only Period'' that shall be between fifteen (15) and
thirty (30) minutes plus a short random period prior to the ISTO
Auction.\193\ The Quote-Only Period may be extended in certain
cases.\194\ As with regular market openings the Exchange would
disseminate Broadcast Information at the commencement of the Quote Only
Period, and Broadcast Information would be re-calculated and
disseminated every time a new order is received or cancelled and where
such event causes the TOP price or Paired Tokens to change.\195\ In the
event of any extension to the Quote-Only Period or a trading pause, the
Exchange will notify market participants regarding the circumstances
and length of the extension.\196\ Orders will be matched and executed
at the conclusion of the Quote-Only Period, rather than at 9:30 a.m.
Eastern Time.\197\ Following the initial cross at the end of the Quote-
Only Period wherein orders will execute based on price/time priority
consistent with proposed Rule 25080, the Exchange will transition to
normal trading pursuant to proposed Rule 25040(a)(6).\198\
---------------------------------------------------------------------------

    \193\ See proposed Rule 25040(b)(1).
    \194\ Such cases are when: (i) There is no TOP; (ii) the
underwriter requests an extension; (iii) the TOP moves the greater
of 10% or fifty (50) cents in the fifteen (15) seconds prior to the
initial cross; or (iv) in the event of a technical or systems issue
at the Exchange that may impair the ability of BSTX Participants to
participate in the ISTO or of the Exchange to complete the ISTO. See
proposed Rule 25040(b)(2).
    \195\ See proposed Rule 25040(b)(3).
    \196\ See proposed Rule 25040(b)(4). The Exchange also proposes
that if a trading pause is triggered by the Exchange or if the
Exchange is unable to reopen trading at the end of the trading pause
due to a systems or technology issue, the Exchange will immediately
notify the single plan processor responsible for consolidation of
information for the security pursuant to Rule 603 of Regulation NMS
under the Securities Exchange Act of 1934. Id.
    \197\ See proposed Rule 25040(b)(5).
    \198\ As with the regular opening process, orders marked IOC
submitted during the Pre-Opening Phase of an ISTO Auction would be
rejected. See proposed Rule 25040(b)(6).
---------------------------------------------------------------------------

    The Exchange also proposes a process for reopening trading
following a Limit Up-Limit Down Halt or trading pause (``Halt
Auctions''). For Halt Auctions, the Exchange proposes that in advance
of reopening, the Exchange shall announce a Quote-Only Period that
shall be five (5) minutes prior to the Halt Auction.\199\ This Quote-
Only Period may be extended in certain circumstances.\200\ The Exchange
proposes to disseminate the same Broadcast Information as it does for
an ISTO Auction and would similarly provide notification of any
extension to the quote-only period as with an ISTO Auction.\201\ The
transition to normal trading would also occur in the same manner as
ISTO Auctions, as described above.\202\
---------------------------------------------------------------------------

    \199\ See proposed Rule 25040(c)(1). Orders marked IOC submitted
during the Quote-Only Period would be rejected.
    \200\ See proposed Rule 25040(c)(2). The Quote-Only Period shall
be extended for an additional five (5) minutes should a Halt Auction
be unable to be performed due to the absence of a TOP (``Initial
Extension Period''). After the Initial Extension Period, the
Exchange proposes that the Quote-Only Period shall be extended for
additional five (5) minute periods should a Halt Auction be unable
to be performed due to absence of a TOP (``Additional Extension
Period'') until a Halt Auction occurs. Under the proposed Rule, the
Exchange shall attempt to conduct a Halt Auction during the course
of each Additional Extension Period. Id.
    \201\ See proposed Rule 25040(c)(3)-(5).
    \202\ Id.
---------------------------------------------------------------------------

    The Exchange also proposes to adopt certain contingency procedures
in proposed Rule 25040(d) that would provide that when a disruption
occurs that prevents the execution of an ISTO Auction the Exchange will
publicly announce the Quote-Only Period for the ISTO Auction, and the
Exchange will then cancel all orders on the BSTX Book and disseminate a
new scheduled time for the Quote-Only Period and opening match.\203\
Similarly, when a disruption occurs that prevents the execution of a
Halt Auction, the Exchange will publicly announce that no Halt Auction
will occur, and all orders in the halted security token on the BSTX
Book will be canceled after which the Exchange will open the security
token for trading without an auction.\204\
---------------------------------------------------------------------------

    \203\ See proposed Rule 25040(d)(1).
    \204\ See proposed Rule 25040(d)(2). The Exchange notes that
these contingency procedures are substantially similar to those of
another exchange (see e.g., IEX Rule 11.350(c)(4)) and are designed
to ensure that the Exchange has appropriate mechanisms in place to
address possible disruptions that may arise in an ISTO Auction or
Halt Auction, consistent with the protection of investors and the
public interest pursuant to Section 6(b)(5) of the Exchange Act. 15
U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The opening process with respect to non-BSTX-listed security tokens
is set forth in proposed Rule 25040(e). Pursuant to that Rule, BSTX
Participants who wish to participate in the opening process may submit
orders and quotes for inclusion in the BSTX Book, but such orders and
quotes cannot execute until the termination of the Pre-Opening Phase
(``Opening Process''). Orders that are canceled before the Opening
Process will not participate in the Opening Process. The Exchange will
attempt to perform the Opening Process and will match buy and sell
orders that are executable at the midpoint of the NBBO.\205\ Generally,
the price of the

Opening Process will be at the midpoint of the first NBBO subsequent to
the first two-sided quotation published by the listing exchange after
9:30:00 a.m. Eastern Time. Pursuant to proposed Rule 25040(e)(4), if
the conditions to establish the price of the Opening Process set forth
above do not occur by 9:45:00 a.m. Eastern Time, orders will be handled
in time sequence, beginning with the order with the oldest time stamp,
and will be placed on the BSTX Book cancelled, or executed in
accordance with the terms of the order. A similar process will occur
for re-opening a non-BSTX-listed security token subject to a halt.\206\
The proposed opening process for security tokens listed on another
exchange serves as a placeholder in anticipation of other exchanges
eventually listing and trading security tokens, or the equivalent
thereof, given that there are no other exchanges currently trading
security tokens. The proposed process for opening security tokens
listed on another exchange is similar to existing exchange rules
governing the opening of trading of a security listed on another
exchange.\207\
---------------------------------------------------------------------------

    \205\ See proposed Rule 25040(e)(2).
    \206\ See proposed Rule 25040(e)(5).
    \207\ See e.g., Cboe BZX Rule 11.24.
---------------------------------------------------------------------------

    Consistent with Section 6(b)(5) of the Exchange Act,\208\ the
Exchange believes that the proposed process for opening trading in
BSTX-listed security tokens and security tokens listed on other
exchanges will promote just and equitable principles of trade and will
help perfect the mechanism of a free and open market by establishing a
uniform process to determine the opening price of security tokens.\209\
Proposed Rule 25040 provides a mechanism by which BSTX Participants may
submit orders in advance of the start of regular trading hours, perform
an opening cross, and commence regular hours trading in security tokens
listed on BSTX or otherwise. Where an opening cross is not possible in
a BSTX-listed security token, the Exchange will proceed by opening
regular hours trading in the security token anyway, which is consistent
with the manner in which other exchanges open trading in
securities.\210\ With respect to initial public offerings of security
tokens and openings after a Limit Up-Limit Down halt or trading pause,
BSTX proposes to use a process with features similar to its normal
opening process. There are a variety of different ways in which an
exchange can open trading in securities, including with respect to an
initial public offering of a security token, and the Exchange believes
that proposed Rule 25040 provides a simple and clear method for opening
transactions that is consistent with the protection of investors and
the public interest.\211\ Additionally, proposed Rule 25040 applies to
all BSTX Participants in the same manner and is therefore not designed
to permit unfair discrimination among BSTX Participants.
---------------------------------------------------------------------------

    \208\ 15 U.S.C. 78f(b)(5).
    \209\ The Exchange has not proposed to operate a closing auction
at this time. As a result, the closing price of a security token on
BSTX would be the last regular way transaction occurring on BSTX,
which the Exchange believes is a simple and fair way to establish
the closing price of a security token that does not permit unfair
discrimination among customers, issuers, or broker-dealers
consistent with Section 6(b)(5) of the Exchange Act. Id. This
proposed process is consistent with the overall proposed simplified
market structure for BSTX, which does not include a variety of order
types offered by other exchanges such as market-on-close and limit-
on-close orders. The Exchange believes that a simplified market
structure, including the proposed manner in which a closing price
would be determined, promotes the public interest and the protection
of investors consistent with Section 6(b)(5) of the Exchange Act
through reduced complexity. Id.
    \210\ See e.g., BOX Rule 7070.
    \211\ The Exchange notes that its proposed opening, ISTO
Auction, and Halt Auction processes are substantially similar to
those of another exchange. See Cboe BZX Rule 11.23. The key
differences between the Exchange's proposed processes and those of
the Cboe BZX exchange are that the Exchange has substantially fewer
order types, which make its opening process less complex, and that
the Exchange does not proposes to use order auction collars to limit
the price at which a security token opens. The Exchange does not
believe that auction collars are necessary at this time because
there are a variety of other mechanisms in place to prevent
erroneous orders and the execution of an opening cross at an
erroneous price (e.g., market access controls pursuant to Rule 15c3-
5 and the ability of an underwriter to request an extension to the
Quote-Only Period in an ISTO Auction).
---------------------------------------------------------------------------

6. Rule 25050--Trading Halts
    BSTX proposes to adopt rules relating to trading halts \212\ that
are substantially similar to other exchange rules adopted in connection
with the NMS Plan to Address Extraordinary Market Volatility (``LULD
Plan''), with certain exceptions that reflect Exchange functionality.
BSTX intends to join the LULD Plan prior to the commencement of trading
security tokens. Below is an explanation of BSTX's approach to certain
categories of orders during a trading halt:
---------------------------------------------------------------------------

    \212\ The Exchange notes that rules on opening trading for non-
BSTX-listed security token are set forth in proposed Rule 25040(e).
---------------------------------------------------------------------------

    [ssquf] Short Sales--BSTX cancels all orders on the book during a
halt and rejects any new orders, so rules relating to the repricing of
short sale orders during a trading halt that certain other exchanges
have adopted have been omitted.
    [ssquf] Pegged Orders--BSTX would not support pegged orders, at
least initially, so rules relating to pegged orders during a trading
halt have been omitted.
    [ssquf] Routable Orders--Pursuant to proposed Rule 25130, the BSTX
System will reject any order or quotation that would lock or cross a
protected quotation of another exchange (rather than routing such order
or quotation), and therefore rules relating to handling of routable
orders during a trading halt have been omitted.
    [ssquf] Limit Orders--Because BSTX would cancel resting order
interest and reject incoming orders during a trading halt, specific
rules relating to the repricing of limit-priced interest that certain
other exchanges have adopted have been omitted.\213\
---------------------------------------------------------------------------

    \213\ See e.g., Cboe BZX 11.18(e)(5)(B).
---------------------------------------------------------------------------

    [ssquf] Auction Orders, Market Orders, and FOK Orders--BSTX would
not support these order types, at least initially, so rules relating to
these order types during a trading halt have been omitted.\214\
---------------------------------------------------------------------------

    \214\ IOC orders will be handled pursuant to proposed Rule
25050(g)(5).
---------------------------------------------------------------------------

    Pursuant to proposed Rule 25050(d), the Exchange would cancel all
resting orders in a non-BSTX listed security token subject to a trading
halt, reject any incoming orders in that security token, and will only
resume accepting orders following a broadcast message to BSTX
Participants indicating a forthcoming re-opening of trading.\215\
---------------------------------------------------------------------------

    \215\ Trading would resume pursuant to proposed Rule
25040(e)(5). See proposed Rule 25050(g)(7).
---------------------------------------------------------------------------

    BSTX believes that it is in the public interest and furthers the
protection of investors, consistent with Section 6(b)(5) of the
Exchange Act \216\ to provide for a mechanism to halt trading in
security tokens during periods of extraordinary market volatility
consistent with the LULD Plan. However, the Exchange has excluded rules
relating to order types and other aspects of the LULD Plan that would
not be supported by the Exchange, such as market orders and auction
orders. The Exchange has also reserved the right in proposed Rule
25050(f) to halt or suspend trading in other circumstances where the
Exchange deems it necessary to do so for the protection of investors
and in the furtherance of the public interest.
---------------------------------------------------------------------------

    \216\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that canceling resting order interest during
a trading halt and rejecting incoming orders received during the
trading halt is consistent with Section 6(b)(5) of the Exchange Act
\217\ because it is not designed to permit unfair discrimination among
BSTX Participants. The orders and trading interest of all BSTX
Participants would

be canceled in the event of a trading halt and each BSTX Participant
would be required to resubmit any orders they had resting on the order
book.
---------------------------------------------------------------------------

    \217\ Id.
---------------------------------------------------------------------------

7. Rule 25060--Order Entry
    Proposed Rule 25060 sets forth the manner in which BSTX
Participants may enter orders to the BSTX System. The BSTX System would
initially only support limit orders.\218\ Orders that do not designate
a limit price would be rejected.\219\ The BSTX System would also only
support two time-in-force (``TIF'') designations initially: (i) DAY;
and (ii) immediate or cancel (``IOC''). DAY orders will queue during
the Pre-Opening Phase, may trade during regular market hours, and, if
unexecuted at the close of the trading day (4:00 p.m. ET), are canceled
by the BSTX System.\220\ All orders are given a default TIF of DAY.
BSTX Participants may also designate orders as IOC, which designation
overrides the default TIF of DAY. IOC orders are not accepted by the
BSTX System during the Pre-Opening Phase. During regular trading hours,
IOC orders will execute in whole or in part immediately upon receipt by
the BSTX System. The BSTX System will not support modification of
resting orders. To change the price or quantity of an order resting on
the BSTX Book, a BSTX Participant must cancel the resting order and
submit a new order, which will result in a new time stamp for purposes
of BSTX Book priority. In addition, all orders on BSTX will be
displayed, and the BSTX System will not support hidden orders or
undisplayed liquidity, as set forth in proposed Rule 25100.
---------------------------------------------------------------------------

    \218\ The BSTX System will also accept incoming Intermarket
Sweep Orders (``ISO'') pursuant to proposed Rule 25060(c)(2). ISOs
must be limit orders, are ineligible for routing, may be submitted
with a limit price during Regular Trading Hours, and must have a
time-in-force of IOC. Proposed Rule 25060(c)(2) is substantially
similar to rules of other national securities exchanges. See e.g.,
Cboe BZX Rule 11.9(d).
    \219\ Proposed Rule 25060(c)(1).
    \220\ Proposed Rule 25060(d)(1).
---------------------------------------------------------------------------

    Consistent with Section 6(b)(5) of the Exchange Act,\221\ the
Exchange believes that the proposed order entry rules will promote just
and equitable principles of trade and help perfect the mechanism of a
free and open market by establishing the types of orders and modifiers
that all BSTX Participants may use in entering orders to the BSTX
System. Because these order types and TIFs are available to all BSTX
Participants, the proposed rule does not unfairly discriminate among
market participants, consistent with Section 6(b)(5) of the Exchange
Act. The proposed rule sets forth a very simple exchange model whereby
there is only one order type--limit orders--and two TIFs. Upon the
initial launch of BSTX, there will be no hidden orders, price sliding,
pegged orders, or other order type features that add complexity. The
Exchange believes that creating a simplified exchange model is designed
to protect investors and is in the public interest because it reduces
complexity, thereby helping market participants better understand how
orders would operate on the BSTX System.
---------------------------------------------------------------------------

    \221\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

8. Rule 25070--Audit Trail
    Proposed Rule 25070 (Audit Trail) is designed to ensure that BSTX
Participants provide the Exchange with information to be able to
identify the source of a particular order and other information
necessary to carry out the Exchange's oversight functions. The proposed
rule is substantially similar to existing BOX Rule 7120 but eliminates
certain information unique to orders for options contracts (e.g.,
exercise price) because security tokens are equity securities. The
proposed rule also provides that BSTX Participants that employ an
electronic order routing or order management system that complies with
Exchange requirements will be deemed to comply with the Rule if the
required information is recorded in an electronic format. The proposed
rule also specifies that order information must be kept for no less
than three years and that where specific customer or account number
information is not provided to the Exchange, BSTX Participants must
maintain such information on their books and records.
    The Exchange believes that proposed Rule 25070 is designed to
protect investors and the public interest, consistent with Section
6(b)(5) of the Exchange Act,\222\ because it will provide the Exchange
with information necessary to carry out its oversight role. Without
being able to identify the source and terms of a particular order, the
Exchange's ability to adequately surveil its market, with or through
another SRO, for trading inconsistent with applicable regulatory
requirements would be impeded. In order to promote compliance with Rule
201 of Regulation SHO, proposed Rule 25080(b)(3) provides that when a
short sale price test restriction is in effect, the execution price of
the short sale order must be higher than (i.e., above) the best bid,
unless the sell order is marked ``short exempt'' pursuant to Regulation
SHO.
---------------------------------------------------------------------------

    \222\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

9. Rule 25080--Execution and Price Time Priority
    Proposed Rule 25080 governs the execution of orders on the BSTX
System, providing a price-time priority model. The proposed rule
provides that orders of BSTX Participants shall be ranked and
maintained in the BSTX Book according to price-time priority, such that
within each price level, all orders shall be organized by the time of
entry. The proposed rule further provides that sell orders may not
execute a price below the best bid in the marketplace and buy orders
cannot execute at a price above the best offer in the marketplace.
Further, the proposed rule ensures compliance with Regulation SHO,
Regulation NMS, and the LULD Plan, in a manner consistent with the
rulebooks of other national securities exchanges.\223\
---------------------------------------------------------------------------

    \223\ See e.g., Cboe BZX Rule 11.13(a)(2)-(3) governing regular
trading hours.
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 25080 is consistent with
Section 6(b)(5) of the Exchange Act \224\ because it is designed to
promote just and equitable principles of trade and foster cooperation
and coordination with persons facilitating transactions in securities
by setting forth the order execution priority scheme for security token
transactions. Numerous other exchanges similarly operate a price-time
priority structure for effecting transactions. The proposed rule also
does not permit unfair discrimination among BSTX Participants because
all BSTX Participants are subject to the same price-time priority
structure. In addition, the Exchange believes that specifying in
proposed Rule 25080(b)(3) that execution of short sale orders when a
short sale price test restriction is in effect must occur at a price
above the best bid unless the order is market ``short exempt,'' is
consistent with the Exchange Act because it is intended promote
compliance with Regulation SHO in furtherance of the protection of
investors and the public interest.
---------------------------------------------------------------------------

    \224\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

10. Rule 25090--BSTX Risk Controls
    Proposed Rule 25090 sets forth certain risk controls applicable to
orders submitted to the BSTX System. The proposed risk controls are
designed to prevent the submission and execution of potentially
erroneous orders. Under the proposed rule, the BSTX System will reject
orders that exceed a maximum order size, as designated by each BSTX
Participant. The Exchange, however may set default values for this
control. The proposed rule also provides a means by which all of a BSTX

Participant's orders will be canceled in the event that the BSTX
Participant loses its connection to the BSTX System. Proposed Rule
25090(c) provides a risk control that prevents incoming limit orders
from being accepted by the BSTX System if the order's price is more
than a designated percentage away from the National Best Bid or Offer
in the marketplace. Proposed Rule 25090(d) provides a maximum order
rate control whereby the BSTX System will reject an incoming order if
the rate of orders received by the BSTX System exceeds a designated
threshold. With respect to both of these risk controls (price
protection for limit orders and maximum order rate), BSTX Participants
may designate the appropriate thresholds, but the Exchange may also
provide default values and mandatory minimum levels.
    The Exchange believes the proposed risk controls in Rule 25090 are
consistent with Section 6(b)(5) of the Exchange Act \225\ because they
are designed to help prevent the execution of potentially erroneous
orders, which furthers the protection of investors and the public
interest. Among other things, erroneous orders can be disruptive to the
operation of an exchange marketplace, can lead to temporary price
dislocations, and can hinder price formation. The Exchange believes
that offering configurable risk controls to BSTX Participants, along
with default values where a BSTX Participant has not designated its
desired controls, will protect investors by reducing the number of
erroneous executions on the BSTX System and will remove impediments to
and perfect the mechanism of a free and open market system. The
proposed risk controls are also similar to existing risk controls
provided by the Exchange to Options Participants.
---------------------------------------------------------------------------

    \225\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

11. Rule 25100--Trade Execution, Reporting, and Dissemination of
Quotations
    Proposed Rule 25100 provides that the Exchange shall collect and
disseminate last sale information for transactions executed on the BSTX
system. The proposed rule further provides that the aggregate of the
best-ranked non-marketable Limit Order(s), pursuant to Rule 25080, to
buy and the best-ranked non-marketable Limit Order(s) to sell in the
BSTX Book shall be collected and made available to quotation vendors
for dissemination. Proposed Rule 25100 further provides that the BSTX
System will operate as an ``automated market center'' within the
meaning of Regulation NMS and will display ``automated quotations'' at
all times except in the event of a system malfunction.\226\ In
addition, the proposed Rule specifies that the Exchange shall identify
all trades executed pursuant to an exception or an exemption of
Regulation NMS. The Exchange will disseminate last sale and quotation
information pursuant to Rule 602 of Regulation NMS and will maintain
connectivity to the securities information processors for dissemination
of quotation information.\227\ BSTX Participants may obtain access to
this information through the securities information processors.
---------------------------------------------------------------------------

    \226\ 17 CFR 242.600(b)(4) and (5). The general purpose of an
exchange being deemed an ``automated trading center'' displaying
``automated quotations'' relates to whether or not an exchange's
quotations may be considered protected under Regulation NMS. See
Exchange Act Release No. 51808, 70 FR 37495, 37520 (June 29, 2005).
Other trading centers may not effect transactions that would trade
through a protected quotation of another trading center. The
Exchange believes that it is useful to specify that it will operate
as an automated trading center at this time to make clear to market
participants that it is not operating a manual market with respect
to security tokens.
    \227\ 17 CFR 242.602.
---------------------------------------------------------------------------

    Proposed Rule 25100(d) provides that executions that occur as a
result of orders matched against the BSTX Book, pursuant to Rule 25080,
shall clear and settle pursuant to the rules, policies, and procedures
of a registered clearing agency and shall settle on a T+1 basis (i.e.,
trade date plus one additional business day) where permitted under the
rules, policies, and procedures of the relevant registered clearing
agency. However, pursuant to proposed Rule 25100(d), the BSTX
Participants that are party to the trade may agree to a shorter or
longer settlement cycle as may be permitted by the relevant registered
clearing agency and where they have so agreed shall communicate that
agreement to the Exchange in a manner consistent with the Exchange's
procedures. Rule 25100(e) obliges BSTX Participants, or a clearing
member/participant clearing on behalf of a BSTX Participant to honor
trades effected on the BSTX System on the scheduled settlement date,
and the Exchange shall not be liable for the failure of BSTX
Participants to satisfy these obligations.\228\
---------------------------------------------------------------------------

    \228\ These proposed provisions are substantially similar to
those of exchanges. See e.g., Nasdaq Rule 4627 and IEX Rule 10.250.
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 25100 is consistent with
Section 6(b)(5) of the Exchange Act \229\ because it will foster
cooperation and coordination with persons processing information with
respect to, and facilitating transactions in securities by requiring
the Exchange to collect and disseminate quotation and last sale
transaction information to market participants. BSTX Participants will
need last sale and quotation information to effectively trade on the
BSTX System, and proposed Rule 25100 sets forth the requirement for the
Exchange to provide this information as well as the information to be
provided. The proposed rule is similar to rules of other exchanges
relating to the dissemination of last sale and quotation information.
The Exchange believes that requiring BSTX Participants (or firms
clearing trades on behalf of other BSTX Participants) to honor their
trade obligations on the settlement date is consistent with the
Exchange Act because it will foster cooperation with persons engaged in
clearing and settling transactions in security tokens, consistent with
Section 6(b)(5) of the Exchange Act.\230\
---------------------------------------------------------------------------

    \229\ 15 U.S.C. 78f(b)(5).
    \230\ Id.
---------------------------------------------------------------------------

12. Rule 25110--Clearly Erroneous
    Proposed Rule 25110 sets forth the manner in which BSTX will
resolve clearly erroneous executions that might occur on the BSTX
System and is substantially similar to comparable clearly erroneous
rules on other exchanges. Under proposed Rule 25100, transactions that
involve an obvious error such as price or quantity, may be canceled
after review and a determination by an officer of BSTX or such other
employee designee of BSTX (``Official'').\231\ BSTX Participants that
believe they submitted an order erroneously to the Exchange may request
a review of the transaction, and 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.\232\ Under proposed Rule 25100(c), 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'' \233\ by an amount that equals or exceeds specified
``Numerical Guidelines.'' \234\ 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.\235\ 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 Officer's (or senior employee designee) own
motion, during a trading halt, or with respect to a series of
transactions over multiple days.\236\ Under proposed Rule 25110(e)(2),
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.\237\ The Chief Regulatory Officer's determination shall
constitute final action by the Exchange on the matter at issue pursuant
to proposed Rule 25110(e)(2)(ii).
---------------------------------------------------------------------------

    \231\ A transaction made in clearly erroneous error and canceled
by both parties or determined by the Exchange to be clearly
erroneous will be removed from the Consolidated Tape. Proposed Rule
25110(a).
    \232\ Proposed Rule 25110(b). 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 2511(d).
    \233\ The Reference Price will be equal to the consolidated last
sale immediately prior to the execution(s) 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 25110(c)(1).
    \234\ 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
25110(c)(1).
    \235\ Proposed Rule 25110(c)(1).
    \236\ See proposed Rule 25110(f)-(j). 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
token'').
    \237\ Determinations by an Official pursuant to proposed Rule
25110(f) 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 25110(d)(2).
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 25110 is consistent with
Section 6(b)(5) of the Exchange Act,\238\ 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 6(b)(5) of the Exchange Act.\239\ The proposed rule is
substantially similar to the clearly erroneous rules of other
exchanges.\240\ For example, proposed Rule 25110 does not include
provisions related to clearly erroneous transactions for routed orders
because orders for security tokens will not route to other
exchanges.\241\ Security tokens 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: (i) Leverage ETF/ETNs; and (ii) unlisted trading
privileges securities that are subject to an initial public
offering.\242\
---------------------------------------------------------------------------

    \238\ 15 U.S.C. 78f(b)(5).
    \239\ Id.
    \240\ 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, and securities
subject to the LULD Plan.
    \241\ Other exchange clearly erroneous rules reference removing
trades from the Consolidated Tape. Because security token
transactions will be reported pursuant to a separate transaction
reporting plan, proposed Rule 25110 eliminates references to the
``Consolidated Tape'' and provides that clearly erroneous security
token transactions will be removed from ``all relevant data feeds
disseminating last sale information for security token
transactions.'' See proposed Rule 25110(a).
    \242\ 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. With respect to leveraged ETFs/ETNs, the Exchange does not
expect to support trading of such products at this time, so the
Exchange does not believe it is necessary to include provisions
related to them.
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    The Exchange believes that its proposed process for BSTX
Participants 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 6(b)(5) of the
Exchange Act \243\ 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 Official's
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 6(b)(5) of the Exchange Act. The Exchange notes that, with
respect to options trading on the Exchange, the Exchange's 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.\244\ In addition, proposed Rule 25110(e)(2)(iii) 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 Exchange's
clearly erroneous determination.
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    \243\ 15 U.S.C. 78f(b)(5).
    \244\ See BOX Rule 7170(n).
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    To the extent security tokens 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 \245\ at
such future date.
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    \245\ 15 U.S.C. 78s.
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13. Rule 25120--Short 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.\246\ Specifically,
proposed Rule 25120 requires BSTX Participants to appropriately mark
orders as long, short, or short exempt and provides that the BSTX
System will not execute or display a short sale order not marked short
exempt with respect to a ``covered security'' \247\ at a price that is
less than or equal to the current

national best bid if the price of that security decreases by 10% or
more, as determined by the listing market for the covered security,
from the covered security's closing price on the listing market as of
the end of Regular Trading Hours on the prior day (the ``Trigger
Price''). The proposed rule further specifies the duration of the
``Short Sale Price Test'' and that the BSTX System shall determine
whether a transaction in a covered security has occurred at a Trigger
Price and shall immediately notify the responsible single plan
processor.\248\
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    \246\ See e.g., IEX Rule 11.290.
    \247\ Proposed Rule 25120(b) provides that the terms ``covered
security,'' ``listing market,'' and ``national best bid'' shall have
the same meaning as in Rule 201 of Regulation SHO. 17 CFR
242.201(a).
    \248\ Proposed Rule 25120(d). The proposed rule further provides
in paragraph (d)(1) that if a covered security did not trade on BSTX
on the prior trading day, BSTX's determination of the Trigger Price
shall be based on the last sale price on the BSTX System for that
security token on the most recent day on which the security token
traded.
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    The Exchange believes that proposed Rule 25120 is consistent with
Section 6(b)(5) of the Exchange Act,\249\ because it would promote just
and equitable principles of trade and further the protection of
investors and the public interest by enforcing rules consistent with
Regulation SHO. Pursuant to Regulation SHO, broker-dealers are required
to appropriately mark orders as long, short, or short exempt,\250\ and
trading centers are required to establish, maintain, and enforce
written policies and procedures reasonably designed to, among other
things, prevent the execution or display of a short sale order of a
covered security at a price that is less than or equal to the current
national best bid if the price of that covered security decreases by
10% or more from its closing price on the primary listing market on the
prior day.\251\ Proposed Rule 25120 is designed to promote compliance
with Regulation SHO, is nearly identical to similar rules of other
exchanges, and would apply equally to all BSTX Participants.
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    \249\ 15 U.S.C. 78f(b)(5).
    \250\ 17 CFR 242.200(g).
    \251\ 17 CFR 242.201(b)(1).
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14. Rule 25130--Locking or Crossing Quotations in NMS Stocks
    Proposed Rule 25130 sets forth provisions related to locking or
crossing quotations. The proposed rule is substantially similar to the
rules of other national securities exchanges.\252\ Proposed Rule 25130
is designed to promote compliance with Regulation NMS and prohibits
BSTX participants from engaging in a pattern or practice of displaying
quotations that lock or cross a protected quotation unless an exception
applies. The Exchange notes that there may be no other national
securities exchanges trading security tokens upon the launch of BSTX
that may be displaying protected quotations. Notwithstanding that there
may be no other away markets displaying a protected quotation when
trading on BSTX commences, the Exchange proposes in Rule 25130(d) that
the BSTX System will reject any order or quotation that would lock or
cross a protected quotation of another exchange at the time of entry.
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    \252\ See IEX Rule 25130.
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    The Exchange believes proposed Rule 25130 is consistent with
Section 6(b)(5) of the Exchange Act \253\ because it is designed to
promote just and equitable principles of trade and foster cooperation
and coordination with persons facilitating transactions in securities
by ensuring that the Exchange prevents display of quotations that lock
or cross any protected quotation in an NMS stock, in compliance with
applicable provisions of Regulation NMS.
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    \253\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

15. Rule 25140--Clearance and Settlement: Anonymity
    Proposed Rule 25140 provides that each BSTX Participant must either
(1) be a member of a registered clearing agency that uses a CNS system,
or (2) clear transactions executed on the Exchange through another
Participant that is a member of such a registered clearing agency. The
Exchange would maintain connectivity and access to the UTC of NSCC for
transmission of executed transactions. The proposed Rule requires a
Participant that clears through another participant to obtain a written
agreement, in a form acceptable to the Exchange, that sets out the
terms of such arrangement. The proposed Rule also provides that BSTX
transaction reports shall not reveal contra party identities and that
transactions would be settled and cleared anonymously. In certain
circumstances, such as for regulatory purposes, the Exchange may reveal
the identity of a Participant or its clearing firm such as to comply
with a court order.
    The Exchange believes that proposed Rule 25140 is consistent with
Section 6(b)(5) of the Exchange Act \254\ because it would foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities. Proposed Rule 25140 is similar
to rules of other exchanges relating to clearance and settlement.\255\
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    \254\ 15 U.S.C. 78f(b)(5).
    \255\ See e.g. IEX Rule 11.250.
---------------------------------------------------------------------------

J. Market Making on BSTX (Rule 25200 Series)
    The BSTX Market Making Rules (Rules 25200-25240) provide for
registration and describe the obligations of Market Makers on the
Exchange. The proposed Market Making Rules also provide for
registration and obligations of Designated Market Makers (``DMMs'') in
a given security token, allocation of a DMM to a particular security
token, and parameters for business combinations of DMMs.
    Proposed Rule 25200 sets forth the basic registration requirement
for a BSTX Market Maker by noting that a Market Maker must enter a
registration request to BSTX and that such registration shall become
effective on the next trading day after the registration is entered,
or, in the Exchange's discretion, the registration may become effective
the day that it is entered (and the Exchange will provide notice to the
Market Maker in such cases). The proposed Rule further provides that a
BSTX Market Maker's registration shall be terminated by the Exchange if
the Market Maker fails to enter quotations within five business days
after the registration becomes effective.\256\
---------------------------------------------------------------------------

    \256\ Proposed Rule 25200 is substantially similar to IEX Rule
11.150.
---------------------------------------------------------------------------

    Proposed Rule 25210 sets forth the obligations of Market Makers,
including DMMs. Under the proposed Rule, a BSTX Participant that is a
Market Maker, including a DMM, is generally required to post two-sided
quotes during the regular market session for each security token in
which it is registered as a Market Maker.\257\ The Exchange proposes
that such quotes must be entered within a certain percentage, called
the ``Designated Percentage,'' of the National Best Bid (Offer) price
in such security token (or last sale price, in the event there is no
National Best Bid (Offer)) on the Exchange.\258\ The Exchange proposes
that the Designated Percentage would be 30%.\259\ The Exchange notes
that the proposed Designated Percentage is substantially similar to the
corresponding Designated Percentage for NYSE American market makers
with respect to Tier 2 NMS stocks (as defined under the LULD
plan).\260\ The Exchange

believes that the proposed Designated Percentage for quotation
obligations of Market Makers would be sufficient to ensure that there
is adequate liquidity sufficiently close to the National Best Bid or
Offer (``NBBO'') in security tokens and to ensure fair and orderly
markets. The Exchange notes that pursuant to proposed Rule
25210(a)(1)(iii), there is nothing to preclude a Market Maker from
entering trading interest at price levels that are closer to the NBBO,
so Market Makers have the ability to quote must closer to the NBBO than
required by the Designated Percentage requirement if they so choose.
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    \257\ See proposed Rule 25210(a)(1).
    \258\ See proposed Rule 25210(a)(1)(ii)(A).
    \259\ See proposed Rule 25210(a)(1)(ii)(B).
    \260\ See NYSE American Rule 7.23E(a)(1)(B)(iii) (providing
that, other than during certain time periods around the market open
and close, the Designated Percentage for Tier 2 NMS stocks priced
below $1.00 is 30% and for Tier 2 NMS stocks priced above $1.00 is
28%).
---------------------------------------------------------------------------

    The Exchange proposes in Rule 25210(a)(4) that, in the event that
price movements cause a Market Maker or DMM's quotations to fall
outside of the National Best Bid (Offer) (or last sale price in the
event there is no National Best Bid (Offer)) by a given percentage,
with such percentage called the ``Defined Limit,'' in a security token
for which they are a Market Maker, the Market Maker or DMM must enter a
new bid or offer at not more than the Designated Percentage away from
the National Best Bid (Offer) in that security token. The Exchange
proposes that the Defined Limit shall be 31.5%.\261\ Under the proposed
Rules, a Market Maker's quotations must be firm and automatically
executable for their size, and, to the extent the Exchange finds that a
Market Maker has a substantial or continued failure to meet its
quotation obligations, such Market Maker may face disciplinary action
from the Exchange.\262\ Under the proposed Market Maker and DMM Rules,
Market Makers and DMMs' two-sided quotation obligations must be
maintained for a quantity of a ``normal unit of trading'' which is
defined as one security token.\263\ The Exchange believes that security
tokens may initially trade in smaller increments relative to other
listed equities and that reducing the two-sided quoting increment from
one round lot (i.e., 100 shares) to one security token will be
sufficient to meet liquidity demands and would make it easier for
Market Makers and DMMs to meet their quotation obligations, which in
turn incentivize more Market Maker participation.
---------------------------------------------------------------------------

    \261\ See proposed Rule 25210(a)(1)(ii)(3).
    \262\ See proposed Rule 25210(b) and (c). Pursuant to proposed
Rule 25310(d), a BSTX Market Maker, other than a DMM, may apply for
a temporary withdrawal from its Market Maker status provided it
meets certain conditions such a demonstrating legal or regulatory
requirements that necessitate its temporary withdrawal.
    \263\ See proposed Rule 25210(a)(1).
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    The Exchange notes that proposed Rule 25210 is substantially
similar to NYSE American Rule 7.23E, with the exceptions of: (i) The
modified normal unit of trading, Designated Percentage, and Defined
Limit (as discussed above); (ii) specifying that the minimum quotation
increment shall be $0.01; and (iii) specifying that Market Maker
quotations must be firm for their displayed size and automatically
executable. The Exchange believes that the additional specifications
with respect to the minimum quotation increment and firm quotation
requirement will add additional clarity to the expectations of Market
Makers on the Exchange.
    Proposed Rule 25220 sets forth the registration requirements for a
DMM. Under proposed Rule 25220, a DMM must be a registered Market Maker
and be approved as a DMM in order to receive an allocation of security
tokens pursuant to proposed Rule 25230, which is described below.\264\
For security tokens in which a Participant serves as a DMM, it must
meet the same obligations as if it were a Market Maker and must also
maintain a bid or offer at the National Best Bid and Offer at least 25%
of the day measured across all security tokens in which such
Participant serves as DMM.\265\ The proposed Rule provides, among other
things, that a there will be no more than one DMM per security token
and that a DMM must maintain information barriers between the trading
unit operating as a DMM and the trading unit operating as a BSTX Market
Maker in the same security token (to the extent applicable).\266\ The
Rule further provides a process by which a DMM may temporarily withdraw
from its DMM status, which is similar to the same process for a BSTX
Market Maker \267\ and similar to the same process for DMMs on other
exchanges.\268\ The Exchange notes that proposed Rule 25220 is
substantially similar to NYSE American Rule 7.24E with the exception
that the Exchanges proposes to add a provision stating that the
Exchange is not required to assign a DMM if the security token has an
adequate number of BSTX Market Makers assigned to such security token.
The purpose of this requirement is to acknowledge the possibility that
a security token need not necessarily have a DMM provided that each
security token has been assigned at least three active Market Makers at
initial listing and two Market Makers for continued listing, consistent
with proposed Rule 26106 (Market Maker Requirement), which is discussed
further below.
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    \264\ See proposed 25220(b). DMMs would be approved by the
Exchange pursuant to an application process an [sic].
    \265\ See proposed Rule 25220(c).
    \266\ See proposed Rule 25220(b).
    \267\ See proposed Rule 25210(d).
    \268\ See e.g., NYSE American Rule 7.24E(b)(4).
---------------------------------------------------------------------------

    In proposed Rule 25230, the Exchange proposes to set forth the
process by which a DMMs are allocated and reallocated responsibility
for a particular security token. Proposed Rule 25230(a) sets forth the
basic eligibility criteria for a when a security token may be allocated
to a DMM, providing that this may occur when the security token is
initially listed on BSTX, when it is reassigned pursuant to Rule 25230,
or when it is currently listed without a DMM assigned to the security
token.\269\ Proposed Rule 2530(a) also specifies that a DMM's
eligibility to participate in the allocation process is determined at
the time the interview is scheduled by the Exchange and specifies that
a DMM must meet with the quotation requirements set forth in proposed
Rule 25220(c) (DMM obligations). The proposed Rule further specifies
how the Exchange will handle several situations in which the DMM does
not meet its obligations, such as, for example, by issuing an initial
warning advising of poor performance if the DMM fails to meet its
obligations for a one-month period.\270\
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    \269\ As previously noted, pursuant to proposed Rule 26106, a
security token may, in lieu of having a DMM assigned to it, have a
minimum of three non-DMM Market Makers at initial listing and two
non-DMM Market Makers for continued listing to be eligible for
listing on the Exchange. Consequently, a security token might not
have a DMM when it initially begins trading on BSTX, but may acquire
a DMM later.
    \270\ See proposed Rule 25230(a)(4). The proposed handling of
these scenarios where a DMM does not meet its obligations is
substantially similar to parallel requirements in NYSE American Rule
7.25E(a)(4).
---------------------------------------------------------------------------

    Proposed Rule 25230(b) sets forth the manner in which a DMM may be
selected and allocated a security token. Under proposed Rule 25230(b),
an issuer may select its DMM directly, delegate the authority to the
Exchange to selects its DMM, or may opt to proceed with listing without
a DMM, in which case a minimum of three non-DMM Market Makers at
initial listing and two non-DMM Market Makers for continued listing
must be assigned to its security token consistent with proposed Rule
26106. Proposed Rule 25230(b) further sets forth provisions relating to
the interview between the issuer and DMMs, the Exchange selection by
delegation, and a requirement that a DMM serve as a DMM for a security
token for at least one year unless

compelling circumstances exist for which the Exchange may consider a
shorter time period. Each of these provisions is substantially similar
to corresponding provisions in NYSE American Rule 7.25E(b)(1)-(3), with
the exception that the Exchange may shorten the one year DMM commitment
period in compelling circumstances.\271\ Proposed Rule 25230(b) further
sets forth specific provisions related to a variety of different
issuances and types of securities, including spin-offs or related
companies, warrants, rights, relistings, equity security token listing
after preferred security token, listed company mergers, target security
tokens, and closed-end management investment companies.\272\ Each of
these provisions is substantially similar to corresponding provisions
in NYSE American Rule 7.25E(b)(4)-(11).
---------------------------------------------------------------------------

    \271\ The Exchange believes that providing the Exchange with
flexibility to shorten the one year commitment period is appropriate
to accommodate unforeseen events or circumstances that might arise
with respect to a DMM, such as a force majeure event, preventing a
DMM from being able to carry out its functions.
    \272\ See proposed Rule 25230(b)(4)-(11).
---------------------------------------------------------------------------

    Proposed Rule 25230(c) sets forth the reallocation process for a
DMM in a manner that is substantially similarly to corresponding
provisions in NYSE American Rule 7.25E(c). Generally, under the
proposed Rule, an issuer may request a reallocation to a new DMM and
Exchange staff will review this request, along with any DMM response
letter, and eventually make a determination.\273\ Proposed Rule
25230(d), (e), and (f), set forth provisions governing an allocation
freeze, allocation sunset, and criteria for applicants that are not
currently DMMs to be eligible to be allocated a security token as a DMM
respectively. Each of these provisions are likewise substantially
similar to corresponding provisions in NYSE American Rule 7.25E(d)-(f).
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    \273\ In addition, proposed Rule 25230(c)(2) sets forth
provisions that allow for the Exchange's CEO to immediately initiate
a reallocation proceeding upon written notice to the DMM and the
issuer when the DMM's performance in a particular market situation
was, in the judgment of the Exchange, so egregiously deficient as to
call into question the Exchange's integrity or impair the Exchange's
reputation for maintaining an efficient, fair, and orderly market.
---------------------------------------------------------------------------

    Finally, proposed Rule 25240 sets forth the DMM combination review
policy. The proposed Rule, among other things, defines a proposed
combination among DMMs, requires that DMMs provide a written submission
to the Office of the Corporate Secretary of the Exchange and specifies,
among other things, the items to be disclosed in the written
submission, the criteria that the Exchange will use to evaluate a
proposed combination, and the timing for a decision by the Exchange,
subject to the Exchange's right to extend such time period. The
Exchange notes that proposed Rule 25240 is substantially similar to
NYSE American Rule 7.26E.
    The Exchange believes that the proposed Market Making Rules set
forth in the Rule 25200 Series are consistent with Section 6(b)(5) of
the Exchange Act \274\ because they are designed to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The Exchange notes that the
proposed Rules are substantially similar to the market making rules of
other exchanges, as detailed above,\275\ and that all BSTX Participants
are eligible to become a Market Maker or DMM provided they comply with
the proposed requirements.\276\ The proposed Market Maker Rules set
forth the quotation and related expectations of BSTX Market Makers
which the Exchange believes will help ensure that there is sufficient
liquidity in security tokens. Although the corresponding NYSE American
rules upon which the proposed Rules are based provide for multiple
tiers and classes of stocks that were each associated with a different
Designated Percentage and Defined Limit, the Exchange has collapsed all
such classes in to one category and provided a single Designated
Percentage of 30% and Defined Limit of 31.5% for all security token
trading on BSTX. The Exchange believes that simplifying the Rules in
this manner can reduce the potential for confusion and allows for
easier compliance and will still adequately serve the liquidity needs
of investors of security token investors, which the Exchange believes
promotes the removal of impediments to and perfection of the mechanism
of a free and open market and a national market system, consistent with
Section 6(b)(5) of the Exchange Act.\277\
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    \274\ 15 U.S.C. 78f(b)(5).
    \275\ See NYSE American Rule 7, Section 2.
    \276\ In this regard, the Exchange believes the proposed Market
Making Rules are not designed to permit unfair discrimination
between BSTX Participants, consistent with Section 6(b)(5) of the
Exchange Act. 15 U.S.C. 78f(b)(5).
    \277\ 15 U.S.C. 78f(b)(5).
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    The Exchange has also proposed that the minimum quotation size of
Market Makers will be one security token. As noted above, the Exchange
believes that security tokens may initially trade in smaller increments
relative to other listed equities and that reducing the two-sided
quoting increment from one round lot (i.e., 100 shares) to one security
token would be sufficient to meet liquidity demands and would make it
easier for Market Makers and DMMs to meet their quotation obligations,
which in turn incentivize more Market Maker participation. The Exchange
believes that adopting quotation requirements and parameters that are
appropriate for the nature and types of securities that will trade on
the Exchange will promote the protection of investors and the public
interest by assuring that the Exchange Rules are appropriately tailored
to its market.
K. BSTX Listing Rules (Rule 26000 and 27000 Series)
    The BSTX Listing Rules, which include the Rule 26000 and 27000
Series, have been adapted from, and are substantially similar to, Parts
1-12 of the NYSE American LLC Company Guide.\278\ Except as described
below, each proposed Rule in the BSTX 26000 and 27000 series is
substantially similar to a Section of the NYSE American Company
Guide.\279\ Below is further detail.
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    \278\ All references to various ``Sections'' in the discussion
of these Listing Rules refer to the various Sections of the NYSE
American Company Guide.
    \279\ The Exchange notes that while the numbering of BSTX's
Listing Rules generally corresponds to a Section of the NYSE
American LLC Company Guide, BSTX did not integrate certain Sections
of the NYSE American Company Guide that the Exchange deemed
inapplicable to its operations, such as with respect to types of
securities which the Exchange is not proposing to make eligible for
listing (e.g., foreign issuers, other than those from Canada).
Further, the Exchange formulated a small amount of new rules to
reflect requirements relating to the use of blockchain technology as
an ancillary recordkeeping mechanism, as described more fully
herein. The Exchange also proposes to modify cross-references in the
proposed Listing Rules to accord with its Rules.
---------------------------------------------------------------------------

     The BSTX Listing Rules (26100 series) are based on the
NYSE American Original Listing Requirements (Sections 101-146).\280\
---------------------------------------------------------------------------

    \280\ Pursuant to proposed Rule 26135, all securities initially
listing on BSTX, except securities which are book-entry only, must
be eligible for a Direct Registration Program operated by a clearing
agency registered under Section 17A of the Exchange Act. 15 U.S.C.
78q-1.
---------------------------------------------------------------------------

     The BSTX Original Listing Procedures (26200 series) are
based on the NYSE American Original Listing Procedures (Sections 201-
222).
     The BSTX Additional Listings Rules (26300 series) are
based on the NYSE American Additional Listings Sections (Sections 301-
350).
     The BSTX Disclosure Policies (26400 series) are based on
the NYSE American Disclosure Policies (Sections 401-404).

     The BSTX Dividends and Splits Rules (26500 series) are
based on the NYSE American Dividends and Stock Splits Sections
(Sections 501-522).
     The BSTX Accounting; Annual and Quarterly Reports Rules
(26600 series) are based on the NYSE American Accounting; Annual and
Quarterly Reports Sections (Sections 603-624).
     The BSTX Shareholders' Meetings, Approval and Voting of
Proxies Rules (26700 series) are based on the NYSE American
Shareholders' Meetings, Approval and Voting of Proxies Sections
(Sections 701-726).\281\
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    \281\ The Exchange notes that the proposed fees for certain
items in the proposed Listing Rules (e.g., proxy follow-up mailings)
are the same as those charged by NYSE American. See e.g., proposed
IM-26722-8 cf. NYSE American Section 722.80.
---------------------------------------------------------------------------

     The BSTX Corporate Governance Rules (26800 series) are
based on the NYSE American Corporate Governance Sections (Sections 801-
809).
     The BSTX Additional Matters Rules (26900 series) are based
on the NYSE American Additional Matters Sections (Sections 920-994).
     The BSTX Suspension and Delisting Rules (27000 series) are
based on the NYSE American Suspension and Delisting Sections (Sections
1001-1011).
     The BSTX Guide to Filing Requirements (27100 series) are
based on the NYSE American Guide to Filing Requirements (Section 1101).
     The BSTX Procedures for Review of Exchange Listing
Determinations (27200 series) are based on the NYSE American Procedures
for Review of Exchange Listing Determinations (Sections 1201-1211).
    Notwithstanding that the proposed BSTX Listing Rules are
substantially similar to those of other exchanges, BSTX proposes
certain additions or modifications to these rules specific to its
market. For example, BSTX proposes to add definitions that apply to the
proposed BSTX Listing Rules. The definitions set forth in proposed Rule
26000 are designed to facilitate understanding of the BSTX Listing
Rules by market participants. Increased clarity may serve to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and may also foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, consistent with Section 6(b)(5) of the Exchange
Act.\282\
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    \282\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    With respect to initial listing standards, which begin at proposed
Rule 26101, the Exchange proposes to adopt listing standards that are
substantially similar to the NYSE American listing rules.\283\ The
Exchange believes that adopting listing rules similar to those in place
on other national securities exchanges will facilitate more uniform
standards across exchanges, which helps foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, consistent with Section 6(b)(5) of the Exchange
Act.\284\ Market participants that are already familiar with NYSE
American's listing standards will already be familiar with most of the
substance of the proposed listing rules. The Exchange also believes
that adopting proposed listing standards that closely resemble those of
NYSE American may also foster competition among listing exchanges for
companies seeking to publicly list their securities. The Exchange is
proposing an addition (relative to the NYSE American listing rules) to
the initial listing standards for preferred security tokens.\285\
Specifically, the Exchange proposes an additional standard for
preferred security tokens to list on the Exchange based on NASDAQ Rule
5510.\286\ The Exchange believes a proposed rule providing an
additional initial listing standard for preferred security tokens
consistent with a similar provision of NASDAQ would expand the possible
universe of issuances that would be eligible to list on the Exchange to
include preferred security tokens. The Exchange believes that such a
rule would help remove impediments to and perfect the mechanism of a
free and open market and a national market system, consistent with
Section 6(b)(5) of the Exchange Act by giving issuers an additional
means by which it could list a different type of security (i.e., a
preferred security token) and investors the opportunity to trade in
such preferred security tokens.\287\ Further, consistent with the
public interest, rules that provide more opportunity for listings may
promote competition among listing exchanges and capital formation for
issuers.
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    \283\ See NYSE American Section 101. The Exchange understands
that the Commission has extended relief to NYSE American with
respect to certain quantitative listing standards that do not meet
the thresholds of SEC Rule 3a51-1. 17 CFR 240.3a51-1. Initial
listings of securities that do not meet such thresholds and are not
subject to the relief provided to NYSE American would qualify as
``penny stocks'' and would be subject to additional regulation. BSTX
notes that it is not seeking relief related to SEC Rule 3a51-1 and
therefore has clarified proposed Rule 26101(a)(2) to ensure that
issuers have at least one year of operating history. BSTX will also
require new listings pursuant to proposed Rule 26102 to have a
public distribution of 1 million security tokens, 400 public
security token holders, and a minimum market price of $4 per
security token. These provisions meet the requirements in SEC Rule
3a51-1 and are consistent with the rules of other national
securities exchanges. See e.g., Nasdaq Rule 5510. The quantitative
thresholds specified in Rule 26102 are also reflected in the Sample
Underwriter's Letter that is Exhibit 3M to this proposal. In
addition, the Exchange notes that proposed Rule 26140, which governs
the additional listing requirements of a company that is affiliated
with the Exchange, is based on similar provisions in NYSE American
Rule 497 and IEX 14.205.
    \284\ 15 U.S.C. 78f(b)(5).
    \285\ See proposed Rule 26103.
    \286\ See proposed Rule 26103(b)(2). Preferred Security Token
Distribution Standard 2 requires that a preferred security token
listing satisfy the following conditions: Minimum bid price of at
least $4 per security token; at least 10 Round Lot holders; at least
200,000 Publicly Held Security Tokens; and Market Value of Publicly
Held Security Tokens of at least $3.5 million.
    \287\ 15 U.S.C. 78f(b)(5).
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    In certain instances, BSTX proposes to add additional provisions
not currently provided for in the NYSE American LLC Company Guide that
are specific to security tokens. For example, pursuant to proposed Rule
26230(a) (Security Token Architecture Responsibility and Audit), prior
to approving a security token for trading on BSTX, the Exchange would
conduct an audit of the security token's architecture to ensure
compliance with the BSTX Protocol as outlined in Rule 26138.\288\ The
purpose of this requirement is to ensure that the design and structure
of a prospective BSTX-listed company's security token is compatible
with the BSTX Protocol for purposes of facilitating updates to the
blockchain as an ancillary recordkeeping mechanism. The Exchange may
use third party service providers that have demonstrated sufficient
technical expertise in blockchain technology and an understanding of
the BSTX Protocol to conduct this audit on behalf of the Exchange. To
the extent an issuer looking to list its shares on BSTX as security
tokens failed the audit by BSTX of its security token architecture, the
issuer would not meet the requirements of BSTX's listing rules and
would therefore not be permitted to list its shares on BSTX until it
successfully passed the security token audit.\289\
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    \288\ Proposed Rule 26230 further provides that an applicant
that is denied pursuant to this section may appeal the decision via
the process outlined in the Rule 27200 Series.
    \289\ The Exchange expects that some issuers may choose to use
an outside vendor to help build their security token in a manner
that complies with the BSTX Security Token Protocol. The BSTX
Security Token Protocol is open-source, so there is no need to use
any particular vendor over another. The Exchange understands that
there are numerous technology companies that offer these services,
and issuers would be free to select one of their choosing.

---------------------------------------------------------------------------

    Further, the Exchange proposes that Rule 26230(b) would provide
that a listed company (i.e., issuer) remains responsible for ensuring
that its security token remains compatible with the BSTX Protocol and
accurately reflects the number of shares outstanding. The Exchange
recognizes that, in certain circumstances, it may be necessary for a
listed company to modify certain aspects of the smart contract
corresponding to a security token. For example, in the case of a stock
split, a listed company may need to increase the total supply of
security tokens as programmed into its security token smart contract.
Proposed Rule 26230(b) would provide that notice of any such
modification of the smart contract corresponding to a security token
(e.g., to increase the total supply) must be provided to the Exchange
at least five calendar days in advance of implementation to allow the
Exchange to audit the proposed modification.\290\ While the Exchange
believes that five calendar days will provide sufficient time for it to
ensure that a security token is appropriately updated in advance of any
implementation, the Exchange recognizes that there could conceivably be
circumstances in which a change takes longer than expected to
implement. Accordingly, the Exchange proposes that Rule 26230(b) would
also provide that, to the extent additional time is needed to
appropriately implement the modification, the Exchange may exercise its
authority to suspend the ancillary recordkeeping process pursuant to
Rule 17020(e). The Exchange notes that the primary circumstances under
which a modification to a smart contract corresponding to a security
token may be necessary is where there is a change to the total supply
of the security token, which could occur in the case of a stock split,
a reverse stock split, a buy-back, or a dividend in kind. The Exchange
notes that any delay in the implementation of a change to a smart
contract that corresponds to a security token shall in no way impact
the record date or ex-dividend date for any dividend, distribution, or
other action. The Exchange believes that proposed Rule 26230 would
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, consistent with Section
6(b)(5) of the Exchange Act,\291\ because it facilitates the ancillary
recordkeeping mechanism for BSTX-listed security tokens which is a
first step toward the potential integration of blockchain technology to
securities transactions. Without ensuring that BSTX-listed companies'
security tokens are compatible with the BSTX Protocol, the use of
blockchain technology as an ancillary recordkeeping mechanism could be
impaired.
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    \290\ The Exchange expects that it will work with issuers to
help ensure that there security tokens comply with the BSTX
Protocol. However, as with all Exchange Rules, failure to comply
could result in potential suspension and delisting in accordance
with the Rule 27000 Series.
    \291\ Id.
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    With respect to the definitions in proposed Rule 26000, these are
designed to facilitate understanding of the BSTX Listing Rules by
market participants. The Exchange believes that allowing market
participants to better understand and interpret the BSTX Listing Rules
removes impediments to and perfects the mechanism of a free and open
market and a national market system, and may also foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, consistent with Section 6(b)(5) of the
Exchange Act.\292\
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    \292\ Id.
---------------------------------------------------------------------------

    The Exchange also proposes certain enhancements to the notice
requirements for listed companies to communicate to BSTX related to
record dates and defaults.\293\ The Exchange believes that these
additional disclosure and communication obligations can help BSTX in
monitoring for listed company compliance with applicable rules and
regulations; such additional disclosure obligations are 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, in general, to
protect investors and the public interest, consistent with Section
6(b)(5) of the Exchange Act.\294\
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    \293\ See Proposed Rule 26502, which requires, among other
things, a listing company to give the Exchange at least ten days'
notice in advance of a record date established for any other
purpose, including meetings of shareholders.
    \294\ Id.
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    The Exchange's proposed Rules provide additional flexibility for
listed companies in choosing how liquidity would be provided in their
listings by allowing listed companies to meet either the DMM
Requirement or Active Market Maker Requirement for initial listing and
continued trading.\295\ Pursuant to proposed Rule 26205, a company may
choose to be assigned a DMM by the Exchange or to select its own
DMM.\296\ Alternatively, a company may elect, or the Exchange may
determine, that, in lieu of a DMM, a minimum of three (3) market makers
would be assigned to the security token at initial listing; such
requirement may be reduced to two (2) market makers following the
initial listing, consistent with proposed Rule 26106. The Exchange
believes that such additional flexibility would promote the removal of
impediments to and perfection of the mechanism of a free and open
market and a national market system, consistent with Section 6(b)(5) of
the Exchange Act.\297\ The Commission has previously approved exchange
rules providing for three market makers to be assigned to a particular
security upon initial listing and only two for continued listing.\298\
In accordance with these previously approved rules, the Exchange
believes proposed Rule 26205 would ensure fair and orderly markets and
would facilitate the provision of sufficient liquidity for security
tokens.
---------------------------------------------------------------------------

    \295\ See proposed Rule 26205. BSTX-listed security tokens must
meet the criteria specified in proposed Rule 26106, which provides
that unless otherwise provided, all security tokens listed pursuant
to the BSTX Listing Standards must meet one of the following
requirements: (1) The DMM Requirement whereby a DMM must be assigned
to a given security token; or (2) the Active Market Maker
Requirement which states that (i) for initial inclusion the security
token must have at least three registered and active Market Makers,
and (ii) for continued listing, a security token must have at least
two registered and active Market Makers, one of which may be a
Market Maker entering a stabilizing bid.
    \296\ Exchange personnel responsible for managing the listing
and onboarding process will be responsible for determining to which
DMM a security token will be assigned. As provided in proposed Rule
26205, the Exchange makes every effort to see that each security
token is allocated in the best interests of the company and its
shareholders, as well as that of the public and the Exchange.
Similarly, the Exchange anticipates that these same personnel will
be responsible for answering questions relating to the Exchange's
listing rules pursuant to proposed Rule 26994 (New Policies). The
Exchange notes that certain provisions in the NYSE American Listing
Manual contemplate a ``Listing Qualifications Analyst'' that would
perform a number of these functions. The Exchange is not proposing
to adopt provisions that specifically contemplate a ``Listing
Qualifications Analyst,'' but expects to have personnel that will
perform the same basic functions, such as advising issuers and
prospective issuers with respect to the BSTX Listing Rules.
    \297\ Id.
    \298\ See e.g., IEX Rule 14.206.
---------------------------------------------------------------------------

    The Exchange also proposes a number of other non-substantive
changes from the baseline NYSE American listing rules, such as to
eliminate references to the concept of a ``specialist,'' since

BSTX will not have a specialist,\299\ or references to certificated
equities, since security tokens will be uncertificated equities.\300\
As another example, NYSE American Section 623 requires that three
copies of certain press releases be sent to the exchange, while the
Exchange proposes only that a single copy of such press release be
shared with the Exchange.\301\ In addition, the Exchange proposes to
adopt Rule 26720 in a manner that is substantially similar to NYSE
American Section 720, but proposes to modify the internal citations to
ensure consistency with its proposed Rulebook.\302\ In its proposed
Rules, the Exchange has not included certain form letters related to
proxy rules that are included in the NYSE American rules; \303\
instead, these forms will be included in the BSTX Listing
Supplement.\304\ The Exchange is not proposing to adopt provisions
relating to future priced securities at this time.\305\ In addition,
the Exchange is not proposing to allow for listing of foreign
companies, other than Canadian companies,\306\ or to allow for issuers
to transfer their existing securities to BSTX.\307\ Similarly, the
Exchange is not proposing at this time to support security token debt
securities, so the Exchange has not proposed to adopt certain
provisions from the NYSE American Listing Manual related to bonds/debt
securities \308\ or the trading of units.\309\ The Exchange believes
that the departures from the NYSE American rules upon which the
proposed Rules are based, as described above, are non-substantive
(e.g., by not including provisions relating to instruments that will
not trade on the Exchange), would apply to all issuers in the same
manner and are therefore not designed to permit unfair discrimination,
consistent with Section 6(b)(5) of the Exchange Act.\310\
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    \299\ See e.g., NYSE American Section 513(f), noting that open
orders to buy and open orders to sell on the books of a specialist
on an ex rights date are reduced by the cash value of the rights.
Proposed Rule 26340(f) deletes this provision because BSTX will not
have specialists. Similarly, because BSTX will not have specialists,
the Exchange is not proposing to adopt a parallel rule to NYSE
American Section 516, which specifies that certain types of orders
are to be reduced by a specialist when a security is quoted ex-
dividend, ex-distribution or ex-rights are set forth in NYSE
American Rule 132.
    \300\ See e.g., NYSE American Section 117 including a clause
relating to paired securities for which ``the stock certificates of
which are printed back-to-back on a single certificate'').
Similarly, the Exchange has proposed to replace certain references
to the ``Office of General Counsel'' contained in certain NYSE
American Listing Rule (see e.g., Section 1205) with references to
the Exchange's ``Legal Department'' to accommodate differences in
BSTX's organizational structure. See proposed Rule 27204. As another
example, proposed Rule 27205 refers to the Exchange's ``Hearing
Committee'' as defined in Section 6.08 of the Exchange's By-Laws to
similarly accommodate organizational differences between the
Exchange and NYSE American.
    \301\ See proposed Rule 26623.
    \302\ Specifically, proposed Rule 26720 would provide that
participants must comply with Rules 26720 through 26725 and BSTX's
Rule 22020 (Forwarding of Proxy and Other Issuer-Related Materials;
Proxy Voting). NYSE American Section 726, upon which proposed Rule
26720 is based, includes cross-references to NYSE American's
corresponding rules to proposed Rules 26720 through 26725, and also
includes cross-references to NYSE American Rules 578 through 585,
for which the Exchange is not proposing corresponding rules. These
NYSE American rules for which the Exchange is not proposing to adopt
a parallel rule relate to certain requirements specific to proxy
voting (e.g., requiring that a member state the actual number of
shares for which a proxy is given--NYSE American Rule 578) or, in
some cases, relate to certificated securities (e.g., NYSE American
Rule 579), which would be inapplicable to the Exchange since it
proposes to only list uncertificated securities. The Exchange
believes that it does not need to propose to adopt parallel rules
corresponding to NYSE American Rules 578-585 at this time and notes
that other listing exchanges do not appear have corresponding
versions of these NYSE American Rules. See e.g., Cboe BZX Rules. The
Exchange believes that proposed Rule 26720 and the Exchange's other
proposed Rules governing proxies, including those referenced in
proposed Rule 26720, are sufficient to govern BSTX Participants'
obligations with respect to proxies.
    \303\ The forms found in NYSE American Section 722.20 and 722.40
will be included in the BSTX Listing Supplement.
    \304\ The BSTX Listing Supplement would contain samples of
letters containing the information and instructions required
pursuant to the proxy rules to be given to clients in the
circumstances indicated in the appropriate heading. These are
intended to serve as examples and not as prescribed forms.
Participants would be permitted to adapt the form of these letters
for their own purposes provided all of the required information and
instructions are clearly enumerated in letters to clients. Pursuant
to proposed Rule 26212, the BSTX Listing Supplement would also
include a sample application for original listing, which the
Exchange has included as Exhibit 3G. In addition, proposed Rule
26350 states that the BSTX Listing Supplement will include a sample
cancellation notice; the Exchange expects such notice to be
substantially in the same form as NYSE American's sample notice in
NYSE American Section 350. Other examples of items that would appear
in the BSTX Listing Supplement include certain certifications to be
completed by the CEO of listed companies pursuant to proposed Rule
26810(a) and (c), and forms of letters to be sent to clients
requesting voting instructions and other letters relating to proxy
votes pursuant to proposed IM-26722-2 and IM-26722-4. The Exchange
expects that these proposed materials in the BSTX Listing Supplement
will be substantially similar to the corresponding versions of such
samples used by NYSE American. The purpose of putting these sample
letters and other information into the BSTX Listing Supplement
rather than directly in the rules is to improve the readability of
the Rules.
    \305\ See e.g., NYSE American Section 101, Commentary .02. The
Exchange is also not proposing to adopt a parallel provision to NYSE
American Section 950 (Explanation of Difference between Listed and
Unlisted Trading Privileges) because the Exchange believes that such
provision is not necessary and contains extraneous historical
details that are not particularly relevant to the trading of
security tokens. The Exchange notes that numerous other listing
exchanges do not have a similar provision to NYSE American Section
950. See e.g., IEX Listing Rules.