the opportunity for more efficient and effective markets). While the
Exchange believes that its proposal represents an introductory step
in pairing the benefits of blockchain technology with the current
equity market infrastructure, other market participants and FINRA
have recognized additional potential benefits to blockchain
technology in various applications related to the securities
markets. FINRA has stated ``[o]ne of the proposed benefits of
[blockchain technology] is the ability to offer a timestamped,
sequential, audit trail of transaction records. This may provide
regulators and other interested parties (e.g., internal audit,
public auditors) with the opportunity to leverage the technology to
view the complete history of a transaction where it may not be
available today and enhance existing records related to securities
transactions.'' Financial Industry Regulatory Authority, Distributed
Ledger Technology: Implications of Blockchain for the Securities
Industry (January 2017), available at: https://www.finra.org/sites/default/files/FINRA_Blockchain_Report.pdf. Further, Paxos Trust
Company echoed similar themes in connection with its receipt of no-
action relief from the Commission staff, and explained in its
request letter certain benefits of blockchain technology including
``greater data accuracy and transparency, advanced security, and
increased levels of availability and operational efficiency[.]'' the
Exchange believes such benefits may be generally relevant to future
potential applications of blockchain technology. See Letter from
Jeffrey S. Mooney, Division of Trading and Markets, Securities and
Exchange Commission to Charles Cascarilla and Daniel Burstein, Paxos
Trust Company, LLC re: Clearing Agency Registration Under Section
17A(b)(1) of the Securities Exchange Act of 1934 (October 28, 2019),
available at: https://www.sec.gov/divisions/marketreg/mr-noaction/2019/paxos-trust-company-102819-17a.pdf.
    \111\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

III. Proposed BSTX Rules
    The discussion in this Part III addresses the proposed BSTX Rules
that would be adopted as Rule Series 17000 through 28000.
A. General Provisions of BSTX and Definitions (Rule 17000 Series)
    The Exchange proposes to adopt as its Rule 17000 Series (General
Provisions of BSTX) a set of general provisions relating to the trading
of Securities and other rules governing participation on BSTX. Proposed
Rule 17000 sets forth the defined terms used throughout the BSTX Rules.
The majority of the proposed definitions are substantially similar to
defined terms used in other equities exchange rulebooks, such as with
respect to the term ``customer.'' \112\ The Exchange proposes to set
forth new definitions for certain terms to specifically identify
systems, agreements, or persons as they relate to BSTX and as distinct
from other Exchange systems, agreements, or persons that may be used in
connection with the trading of other options on the Exchange.\113\ The
Exchange also proposes to define certain unique terms relating to the
trading of Securities, including the term ``Security'' itself \114\ and
``Wallet Manager.'' \115\ The term ``Wallet Manager'' is defined to
provide context to the wallet address whitelisting and end-of-day
Security balance reporting processes used to update the Ethereum
blockchain as an ancillary recordkeeping mechanism.\116\
---------------------------------------------------------------------------

    \112\ Proposed Rule 17000(a)(16) defines the term ``customer''
to not include a broker or dealer, which parallels the same
definition in other exchange rulebooks. See e.g., IEX Rule 1.160(j).
Similarly, the Exchange proposes to define the term ``Regular
Trading Hours'' as the time between 9:30 a.m. and 4:00 p.m. Eastern
Time. See proposed Rule 17000(a)(28) cf. IEX Rule 1.160(gg)
(defining ``Regular Market Hours'' in the same manner).
    \113\ For example, the Exchange proposes to define the term
``BSTX'' to mean the facility of the Exchange for executing
transaction in Securities, the term ``BSTX Participant'' to mean a
Participant or Options Participant (as those terms are defined in
the Exchange's Rule 100 Series) that is authorized to trade
Securities, and the term ``BSTX System'' to mean the automated
trading system used by BSTX for the trading of Securities. See
proposed Rule 17000(a)(8), (11), and (14).
    \114\ Proposed Rule 17000(a)(30) provides that the term
``Security'' means a NMS stock, as defined in Rule 600(b)(47) of the
Exchange Act, trading on the BSTX System and for which ancillary
Ethereum blockchain records are maintained under the BSTX Rules. The
proposed definition further specifies that references to a
``security'' or ``securities'' in the Rules may include Securities.
    \115\ Proposed Rule 17000(a)(31) defines the term ``Wallet
Manager'' as a party approved by BSTX to operate software compatible
with the BSTX Protocol. See also supra Sections II.G and H. for a
discussion of the role of a Wallet Manager.
    \116\ See supra note 62.
---------------------------------------------------------------------------

    In addition to setting forth proposed definitions used throughout
the proposed Rules, the Exchange proposes to specify in proposed Rule
17010 (Applicability) that the Rules set forth in the Rule 17000 Series
to Rule 28000 Series apply to the trading, listing, and related matters
pertaining to the trading of Securities. Proposed Rule 17010(b)
provides that, unless specific Rules relating to Securities govern or
unless the context otherwise requires, the provisions of any Exchange
Rule (i.e., including Exchange Rules in the Rule 100 through 16000
Series) shall be applicable to BSTX Participants.\117\ This is intended
to make clear that BSTX Participants are subject to all of the
Exchange's Rules that may be applicable to them, notwithstanding that
their trading activity may be limited solely to trading Securities. The
Exchange believes that the proposed definitions set forth in Rule 17000
are consistent with Section 6(b)(5) of the Exchange Act \118\ because
they protect investors and the public interest by setting forth clear
definitions that help BSTX Participants understand and apply Exchange
Rules. Without clearly defining terms used in the Exchanges Rules and
providing clarity as to the Exchange Rules that may apply, market
participants could be confused as to the application of certain rules,
which could cause harm to investors.
---------------------------------------------------------------------------

    \117\ Proposed Rule 17010 further specifies that to the extent
the provisions of the Rules relating to the trading of Securities
contained in Rule 17000 Series to Rule 28000 Series are inconsistent
with any other provisions of the Exchange Rules, the Rules relating
to Security trading shall control.
    \118\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Proposed Rule 17020 sets forth the requirements to obtain a
whitelisted wallet address from BSTX, and the end-of-day Security
balance reporting, which are discussed in greater detail above in Parts
II.G through L.
B. Participation on BSTX (Rule 18000 Series)
    The Exchange proposes to adopt as its Rule 18000 Series
(Participation on BSTX), three rules setting forth certain requirements
relating to participation on BSTX. Proposed Rule 18000 (BSTX
Participation) establishes ``BSTX Participants'' as a new category of
Exchange participation for effecting transactions on the BSTX System,
provided they: (i) Complete the BSTX Participant Application,
Participation Agreement, and User Agreement; \119\ (ii) be an existing
Options Participant or become a Participant of the Exchange pursuant to
the Rule 2000 Series; and (iii) provide such other information as
required by the Exchange.\120\ Proposed Rule 18010 (Requirements for
BSTX Participants) sets forth certain requirements for BSTX
Participants including requirements that each BSTX Participant comply
with Rule 15c3-1 under the Exchange Act, comply with applicable books
and records requirements, and be a member of a registered clearing
agency or clear Security transactions through another BSTX Participant
that is a member/participant of a registered clearing agency.\121\
Finally, proposed Rule 18020

(Associated Persons) provides that associated persons of a BSTX
Participant are bound by the Rules of the Exchange to the same extent
as each BSTX Participant.
---------------------------------------------------------------------------

    \119\ The BSTX Participant Application, Participation Agreement,
and User Agreement are attached as Exhibits 3A, 3B, and 3C
respectively.
    \120\ Proposed Rule 18000 also sets forth the Exchange's review
process regarding BSTX Participation Agreements and certain
limitations on the ability to transfer BSTX Participant status
(e.g., in the case of a change of control). In addition proposed
Rule 18000(b)(2) provides that a BSTX Participant shall continue to
abide by all applicable requirements of the Rule 2000 Series, which
would include, for example, IM-2040-5, which specifies continuing
education requirements of Exchange Participants and their associated
persons.
    \121\ Proposed Rule 18010(b) is similar to the rules of existing
exchanges. See e.g., IEX Rule 2.160(c). Proposed Rule 18010(a) is
also similar to the rules of existing exchanges. See e.g., IEX Rule
1.160(s) and Cboe BZX Rule 17.2(a).
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 18000 Series
(Participation on BSTX) is consistent with Section 6(b)(5) of the
Exchange Act \122\ because these proposed rules are designed to promote
just and equitable principles of trade, and protect investors and the
public interest by setting forth the requirements to become a BSTX
Participant and specifying that associated persons of a BSTX
Participant are bound by Exchange Rules. Under proposed Rule 18000, a
BSTX Participant must first become an Exchange Participant pursuant to
the Exchange Rule 2000 Series which the Exchange believes would help
assure that BSTX Participants meet the appropriate standards for
trading on BSTX in furtherance of the protection of investors.\123\
---------------------------------------------------------------------------

    \122\ 15 U.S.C. 78f(b)(5).
    \123\ The Exchange notes that the approach of requiring members
of a facility of an exchange to first become members of the exchange
is consistent with the approach used by another national securities
exchange. See Cboe BZX Rule 17.1(b)(3) (requiring that a Cboe BZX
options member be an existing member or become a member of the Cboe
BZX equities exchange pursuant to the Cboe BZX Chapter II Series).
---------------------------------------------------------------------------

C. Business Conduct for BSTX Participants (Rule 19000 Series)
    The Exchange proposes to adopt as its Rule 19000 Series (Business
Conduct for BSTX Participants), twenty two rules relating to business
conduct requirements for BSTX Participants that are substantially
similar to business conduct rules of other exchanges.\124\ The proposed
Rule 19000 Series would specify business conduct requirements with
respect to: (i) Just and equitable principles of trade; \125\ (ii)
adherence to law; \126\ (iii) use of fraudulent devices; \127\ (iv)
false statements; \128\ (v) know your customer; \129\ (vi) fair dealing
with customers; \130\ (vii) suitability; \131\ (viii) the prompt
receipt and delivery of securities; \132\ (ix) charges for services
performed; \133\ (x) use of information obtained in a fiduciary
capacity; \134\ (xi) publication of transactions and quotations; \135\
(xii) offers at stated prices; \136\ (xiii) payments involving
publications that influence the market price of a security; \137\ (xiv)
customer confirmations; \138\ (xv) disclosure of a control relationship
with an issuer of Securities; \139\ (xvi) discretionary accounts; \140\
(xvii) improper use of customers' securities or funds and a prohibition
against guarantees and sharing in accounts; \141\ (xviii) the extent to
which sharing in accounts is permissible; \142\ (xix) communications
with customers and the public; \143\ (xx) gratuities; \144\ (xxi)
telemarketing; \145\ and (xxii) mandatory systems testing.\146\ The
Exchange notes that the proposed financial responsibility rules are
virtually identical to those of other national securities exchanges
other than changes to defined terms and certain other provisions that
would not apply to the trading of Securities on the BSTX System.\147\
---------------------------------------------------------------------------

    \124\ 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).
    \125\ Proposed Rule 19000 (Just and Equitable Principles of
Trade) provides that no BSTX Participant, including its associated
persons, shall engage in acts or practices inconsistent with just
and equitable principles of trade.
    \126\ Proposed Rule 19010 (Adherence to Law) generally requires
BSTX Participants to adhere to applicable laws and regulatory
requirements.
    \127\ Proposed Rule 19020 (Use of Fraudulent Devices) generally
prohibits BSTX Participants from effecting a transaction in any
security by means of a manipulative, deceptive or other fraudulent
device or contrivance.
    \128\ Proposed Rule 19030 (False Statements) generally prohibits
BSTX Participants and their associated persons from making false
statements or misrepresentations in communications with the
Exchange.
    \129\ Proposed Rule 19040 (Know Your Customer) requires BSTX
Participants to comply with FINRA Rule 2090 as if such rule were
part of the Exchange Rules.
    \130\ Proposed Rule 19050 (Fair Dealing with Customers)
generally requires BSTX Participants to deal fairly with customers
and specifies certain activities that would violate the duty of fair
dealing (e.g., churning or overtrading in relation to the objectives
and financial situation of a customer).
    \131\ Proposed Rule 19060 (Suitability) provides that BSTX
Participants and their associated persons shall comply with FINRA
Rule 2111 as if such rule were part of the Exchange Rules.
    \132\ Proposed Rule 19070 (Prompt Receipt and Delivery of
Securities) would generally prohibit a BSTX Participant from
accepting a customer's purchase order for a security until it can
determine that the customer agrees to receive the securities against
payment.
    \133\ Proposed Rule 19080 (Charges for Services Performed)
generally requires that charges imposed on customers by broker-
dealers shall be reasonable and not unfairly discriminatory.
    \134\ Proposed Rule 19090 (Use of Information Obtained in a
Fiduciary Capacity) generally restricts the use of information as to
the ownership of securities when acting in certain capacities (e.g.,
as a trustee).
    \135\ Proposed Rule 19100 (Publication of Transactions and
Quotations) generally prohibits a BSTX Participant from
disseminating a transaction or quotation information unless the BSTX
Participant believes it to be bona fide.
    \136\ Proposed Rule 19110 (Offers at Stated Prices) generally
prohibits a BSTX Participant from offering to transact in a security
at a stated price unless it is in fact prepared to do so.
    \137\ Proposed Rule 19120 (Payments Involving Publications that
Influence the Market Price of a Security) generally prohibits direct
or indirect payments with the aim of disseminating information that
is intended to effect the price of a security.
    \138\ Proposed Rule 19130 (Customer Confirmations) requires that
BSTX Participants comply with Rule 10b-10 of the Exchange Act. 17
CFR 240.10b-10.
    \139\ Proposed Rule 19140 (Disclosure of Control Relationship
with Issuer) generally requires BSTX Participants to disclose any
control relationship with an issuer of a security before effecting a
transaction in that security for the customer.
    \140\ Proposed Rule 19150 (Discretionary Accounts) generally
provides certain restrictions on BSTX Participants handling of
discretionary accounts, such as by effecting excessive transactions
or obtained authorization to exercise discretionary powers.
    \141\ Proposed Rule 19160 (Improper Use of Customers' Securities
or Funds and Prohibition against Guarantees and Sharing in Accounts)
generally prohibits BSTX Participants from making improper use of
customers securities or funds and prohibits guarantees to customers
against losses.
    \142\ Proposed Rule 19170 (Sharing in Accounts; Extent
Permissible) generally prohibits BSTX Participants and their
associated persons from sharing directly or indirectly in the profit
or losses of the account of a customer unless certain exceptions
apply such as where an associated person receives prior written
authorization from the BSTX Participant with which he or she is
associated.
    \143\ Proposed Rule 19180 (Communications with Customers and the
Public) generally provides that BSTX Participants and their
associated persons shall comply with FINRA Rule 2210 as if such rule
were part of the Exchange Rules.
    \144\ Proposed Rule 19200 (Gratuities) requires BSTX
Participants to comply with the requirements set forth in BOX
Exchange Rule 3060 (Gratuities).
    \145\ Proposed Rule 19210 (Telemarketing) requires that BSTX
Participants and their associated persons comply with FINRA Rule
3230 as if such rule were part of the Exchange's Rules.
    \146\ Proposed Rule 19220 (Mandatory Systems Testing) requires
that BSTX Participants comply with Exchange Rule 3180 (Mandatory
Systems Testing).
    \147\ For example, the Exchange is not proposing to adopt a rule
contained in other exchanges' business conduct rules relating to
disclosures that broker-dealers give to their customers regarding
the risks of effecting securities transactions during times other
than during regular trading hours (e.g., higher volatility, possibly
lower liquidity) because executions may only occur during regular
trading hours on the BSTX System. See e.g., IEX Rule 3.290, Cboe BZX
Rule 3.21.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 19000 Series (Business
Conduct) is consistent with Section 6(b)(5) of the Exchange Act \148\
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 setting
forth appropriate standards of conduct applicable to BSTX Participants
in carrying out their business activities. For example, proposed Rule
19000 (Just and Equitable Principles of Trade) and 19010 (Adherence to
Law) would prohibit BSTX Participants from engaging in acts or
practices inconsistent with just and equitable principles of trade or
that would violate

applicable laws and regulations. Similarly, proposed Rule 19050 (Fair
Dealing with Customers) would require that BSTX Participants deal
fairly with their customers and proposed Rule 19030 (False Statements)
would generally prohibit BSTX Participants, or their associated persons
from making false statements or misrepresentations to the Exchange. The
Exchange believes that requiring that BSTX Participants comply with the
proposed business conduct rules in the Rule 19000 Series would further
the protection of investors and the public interest by promoting high
standards of commercial honor and integrity. In addition, each of the
rules in the proposed Rule 19000 Series (Business Conduct) is
substantially similar to supervisory rules of other exchanges.\149\
---------------------------------------------------------------------------

    \148\ 15 U.S.C. 78f(b)(5).
    \149\ See supra note 134.
---------------------------------------------------------------------------

D. Financial and Operational Rules for BSTX Participants (Rule 20000
Series)
    The Exchange proposes to adopt as its Rule 20000 Series (Financial
and Operational Rules), ten rules relating to financial and operational
requirements for BSTX Participants that are substantially similar to
financial and operational rules of other exchanges.\150\ The proposed
Rule 20000 Series would specify financial and operational requirements
with respect to: (i) Maintenance and furnishing of books and records;
\151\ (ii) financial reports; \152\ (iii) net capital compliance; \153\
(iv) early warning notifications pursuant to Rule 17a-11 under the
Exchange Act; \154\ (v) authority of the Chief Regulatory Officer to
impose certain restrictions; \155\ (vi) margin; \156\ (vii) day-trading
margin; \157\ (viii) customer account information; \158\ (ix)
maintaining records of customer complaints; \159\ and (x) disclosure of
financial condition.\160\
---------------------------------------------------------------------------

    \150\ See Cboe BZX Chapter 6 rules and IEX Chapter 5 rules.
    \151\ Proposed Rule 20000 (Maintenance, Retention and Furnishing
of Books, Records and Other Information) requires that BSTX
Participants comply with current Exchange Rule 1000 (Maintenance,
Retention and Furnishing of Books, Records and Other Information)
and that BSTX Participants shall submit to the Exchange order,
market and transaction data as the Exchange may specify by
Information Circular.
    \152\ Proposed Rule 20010 (Financial Reports) provides that BSTX
Participants shall comply with the requirements of current Exchange
Rule 10020 (Financial Reports).
    \153\ 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.
    \154\ 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.
    \155\ 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.
    \156\ Proposed Rule 20050 (Margin) sets forth the required
margin amounts for certain securities held in a customer's margin
account.
    \157\ Proposed Rule 20060 (Day Trading Margin) sets forth
additional requirements with respect to customers that engage in day
trading.
    \158\ 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.
    \159\ 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.
    \160\ 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 \161\ 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.
---------------------------------------------------------------------------

    \161\ 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.\162\ 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; \163\ (ii)
designation of an individual to carry out written supervisory
procedures; \164\ (iii) maintenance and keeping of records carrying out
the BSTX Participant's written supervisory procedures; \165\ (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; \166\ (v) the prevention of the misuse of
material non-public information; \167\ and (vi) implementation of an
anti-money laundering (``AML'') compliance program.\168\ 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.
---------------------------------------------------------------------------

    \162\ 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).
    \163\ Proposed Rule 21000 (Written Procedures).
    \164\ 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.
    \165\ Proposed Rule 21020 (Records).
    \166\ Proposed Rule 21030 (Review of Activities).
    \167\ 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.
    \168\ 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 \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
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.\170\ In addition, each of the rules
in the proposed Rule 21000 Series (Supervision) is substantially
similar to supervisory rules of other exchanges.\171\
---------------------------------------------------------------------------

    \169\ 15 U.S.C. 78f(b)(5).
    \170\ Id.
    \171\ See supra note 172.
---------------------------------------------------------------------------

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.\172\ These
miscellaneous provisions relate to: (i) Comparison and settlement
requirements; \173\ (ii) failures to deliver and failures to receive;
\174\ (iii) forwarding of proxy and other issuer-related materials;
\175\ (iv) commissions; \176\ (v) regulatory services agreements; \177\
and (vi) transactions involving Exchange employees.\178\ 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.\179\
---------------------------------------------------------------------------

    \172\ See Cboe BZX Chapter 13 rules. See also IEX Rule 6.180
with respect to proposed Rule 22050 (Transactions Involving BOX
Employees).
    \173\ 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.
    \174\ 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).
    \175\ 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.
    \176\ 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.
    \177\ 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.
    \178\ 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.
    \179\ 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 \180\ 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 \181\ 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.\182\ 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.
---------------------------------------------------------------------------

    \180\ 15 U.S.C. 78f(b)(5).
    \181\ 17 CFR 242.203.
    \182\ 15 U.S.C. 78f(e)(1).
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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.\183\ 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.\184\ 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.\185\ 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.\186\
---------------------------------------------------------------------------

    \183\ See Cboe BZX Chapter 12 rules.
    \184\ 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.
    \185\ 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.
    \186\ 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,\187\ 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.
---------------------------------------------------------------------------

    \187\ 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.\188\ 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.
---------------------------------------------------------------------------

    \188\ 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
\189\ 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 Securities pursuant to proposed Rule 25020 is one Security.
The Exchange believes that there may be a notable amount of trading in
amounts of less than 100 Securities (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.
---------------------------------------------------------------------------

    \189\ 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 \190\ 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 Securities. 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
Securities and are not necessary for the Exchange to carry out its
functions of facilitating Security transactions and regulating BSTX
Participants.
---------------------------------------------------------------------------

    \190\ 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.\191\
---------------------------------------------------------------------------

    \191\ The proposed additions to the Exchange's minor rule
violation plan pursuant to proposed Rule 24010 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 \192\ 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.
---------------------------------------------------------------------------

    \192\ 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
Securities, 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,\193\ 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.
---------------------------------------------------------------------------

    \193\ 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. The Exchange believes that
proposed Rule 25020 is consistent with Section 6(b)(5) of the Exchange
Act \194\ because it fosters cooperation and coordination of persons
engaged in facilitating transactions in securities by specifying the
minimum unit of trading of Securities 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.\195\
---------------------------------------------------------------------------

    \194\ 15 U.S.C. 78f(b)(5).
    \195\ See e.g., IEX Rule 11.180.
---------------------------------------------------------------------------

4. Rule 25030--Minimum Price Variant
    Proposed Rule 25030 provides the minimum price variant for
Securities 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
Securities and promotes compliance with Rule 612 of Regulation
NMS.\196\ 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 Securities of $0.01 irrespective of whether the Security is trading
below $1.00.
---------------------------------------------------------------------------

    \196\ 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 Securities and non-BSTX-listed securities. For
BSTX-listed Securities, 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.\197\ 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.\198\ 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
Securities,'' which is the quantity of Securities that would execute at
the TOP; (ii) the ``Imbalance Quantity,'' which is the number of
Securities 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'').\199\ 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 Securities to change. With respect to priority during the
opening match for all Securities, 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.
---------------------------------------------------------------------------

    \197\ 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).
    \198\ The TOP can only be calculated where the BSTX Book is
crossed during the Pre-Opening Phase. See proposed Rule 25040(a)(2).
    \199\ 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 will be opened by calculating the optimum number
of Securities that

could be matched at a price, taking into consideration all the orders
on the BSTX Book.\200\ Proposed Rule 25040(a)(5) provides that the
opening match price is the price which results in the matching of the
highest number of Securities. If two or more prices would satisfy this
maximum quantity criteria, the price leaving the fewest resting
Securities 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 Securities in the BSTX Book, the price closest to
the previous day's closing price will be selected.\201\ Unexecuted
trading interest during the opening match will move to the BSTX Book
and will preserve price time priority.\202\ When the BSTX System cannot
determine an opening price of a BSTX-listed Security at the start of
regular trading hours, BSTX would nevertheless open the Security for
trading and move all trading interest received during the Pre-Opening
Phase to the BSTX Book.\203\
---------------------------------------------------------------------------

    \200\ See proposed Rule 25040(a)(4)(ii).
    \201\ With respect to an initial public offering of a Security
where there is no previous day's closing price, the opening price
will be the price assigned to the Security by the underwriter for
the offering, referred to as the ``Initial Security Offering
Reference Price.'' See Proposed Rule 25040(a)(5)(ii)(3).
    \202\ See proposed Rule 25040(a)(6).
    \203\ Id.
---------------------------------------------------------------------------

    For initial public offerings of Securities (``Initial Security
Offerings''), the process will be generally the same as regular market
openings. However, in advance of an Initial Security Offering auction
(``Initial Security Offering 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 Initial Security
Offering Auction.\204\ The Quote-Only Period may be extended in certain
cases.\205\ 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 Securities to change.\206\ 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.\207\ Orders will be matched
and executed at the conclusion of the Quote-Only Period, rather than at
9:30 a.m. Eastern Time.\208\ 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).\209\
---------------------------------------------------------------------------

    \204\ See proposed Rule 25040(b)(1).
    \205\ 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 Initial Security Offering or of the Exchange to
complete the Initial Security Offering. See proposed Rule
25040(b)(2).
    \206\ See proposed Rule 25040(b)(3).
    \207\ 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.
    \208\ See proposed Rule 25040(b)(5).
    \209\ As with the regular opening process, orders marked IOC
submitted during the Pre-Opening Phase of an Initial Security
Offering 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.\210\ This Quote-
Only Period may be extended in certain circumstances.\211\ The Exchange
proposes to disseminate the same Broadcast Information as it does for
an Initial Security Offering Auction and would similarly provide
notification of any extension to the quote-only period as with an
Initial Security Offering Auction.\212\ The transition to normal
trading would also occur in the same manner as Initial Security
Offering Auctions, as described above.\213\
---------------------------------------------------------------------------

    \210\ See proposed Rule 25040(c)(1). Orders marked IOC submitted
during the Quote-Only Period would be rejected.
    \211\ 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.
    \212\ See proposed Rule 25040(c)(3)-(5).
    \213\ 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 Initial Security Offering
Auction the Exchange will publicly announce the Quote-Only Period for
the Initial Security Offering 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.\214\ 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 on the BSTX Book will be canceled
after which the Exchange will open the Security for trading without an
auction.\215\
---------------------------------------------------------------------------

    \214\ See proposed Rule 25040(d)(1).
    \215\ 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 Initial Security
Offering 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 securities 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.\216\ 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
subject to a halt.\217\ The proposed opening process for Securities
listed on another exchange serves as a placeholder in anticipation of
other exchanges eventually listing and trading Securities, or the
equivalent thereof, given that there are no other exchanges currently
trading Securities. The

proposed process for opening Securities listed on another exchange is
similar to existing exchange rules governing the opening of trading of
a security listed on another exchange.\218\
---------------------------------------------------------------------------

    \216\ See proposed Rule 25040(e)(2).
    \217\ See proposed Rule 25040(e)(5).
    \218\ See e.g., Cboe BZX Rule 11.24.
---------------------------------------------------------------------------

    Consistent with Section 6(b)(5) of the Exchange Act,\219\ the
Exchange believes that the proposed process for opening trading in
BSTX-listed Securities and Securities 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 Securities.\220\ 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 Securities listed
on BSTX or otherwise. Where an opening cross is not possible in a BSTX-
listed Security, the Exchange will proceed by opening regular hours
trading in the Security anyway, which is consistent with the manner in
which other exchanges open trading in securities.\221\ With respect to
initial public offerings of Securities 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, 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.\222\ 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.
---------------------------------------------------------------------------

    \219\ 15 U.S.C. 78f(b)(5).
    \220\ The Exchange has not proposed to operate a closing auction
at this time. As a result, the closing price of a Security 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 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.
    \221\ See e.g., BOX Rule 7070.
    \222\ The Exchange notes that its proposed opening, Initial
Security Offering 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 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 Initial Security Offering Auction).
---------------------------------------------------------------------------

6. Rule 25050--Trading Halts
    BSTX proposes to adopt rules relating to trading halts \223\ 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
Securities. Below is an explanation of BSTX's approach to certain
categories of orders during a trading halt:
---------------------------------------------------------------------------

    \223\ The Exchange notes that rules on opening trading for non-
BSTX-listed security 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.\224\
---------------------------------------------------------------------------

    \224\ 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.\225\
---------------------------------------------------------------------------

    \225\ 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 subject to a trading halt,
reject any incoming orders in that Security, and will only resume
accepting orders following a broadcast message to BSTX Participants
indicating a forthcoming re-opening of trading.\226\
---------------------------------------------------------------------------

    \226\ 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 \227\ to provide for a mechanism to halt trading in
Securities 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.
---------------------------------------------------------------------------

    \227\ 15 U.S.C. 78f(b)(5).
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    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
\228\ 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.
---------------------------------------------------------------------------

    \228\ 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.\229\ Orders that do not designate
a limit price would be rejected.\230\ 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.\231\ 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.
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    \229\ 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).
    \230\ Proposed Rule 25060(c)(1).
    \231\ Proposed Rule 25060(d)(1).
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    Consistent with Section 6(b)(5) of the Exchange Act,\232\ 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.
---------------------------------------------------------------------------

    \232\ 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 Securities 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,\233\ 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.
---------------------------------------------------------------------------

    \233\ 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.\234\
---------------------------------------------------------------------------

    \234\ 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 \235\ 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
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.
---------------------------------------------------------------------------

    \235\ 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 \236\ 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.
---------------------------------------------------------------------------

    \236\ 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.\237\ 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.\238\ BSTX Participants may obtain access to
this information through the securities information processors.
---------------------------------------------------------------------------

    \237\ 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 Securities.
    \238\ 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. 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.\239\
---------------------------------------------------------------------------

    \239\ 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 \240\ 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 Securities, consistent with
Section 6(b)(5) of the Exchange Act.\241\
---------------------------------------------------------------------------

    \240\ 15 U.S.C. 78f(b)(5).
    \241\ 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'').\242\ 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.\243\ 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'' \244\ by an amount that equals or
exceeds specified ``Numerical Guidelines.'' \245\ 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.\246\ 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.\247\ 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.\248\ 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).
---------------------------------------------------------------------------

    \242\ 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).
    \243\ 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).
    \244\ 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).
    \245\ 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).
    \246\ Proposed Rule 25110(c)(1).
    \247\ 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'').
    \248\ 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,\249\ 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.\250\ The proposed rule is
substantially similar to the clearly erroneous rules of other
exchanges.\251\ For example, proposed Rule 25110 does not include
provisions related to clearly erroneous transactions for routed orders
because orders for Securities will not route to other exchanges.\252\
Securities would also only trade during regular trading hours (i.e.,
9:30 a.m. ET to 4:00 p.m. ET), so provisions from comparable exchange
rules relating to clearly erroneous executions occurring outside of
regular trading hours have been excluded. Proposed Rule 25110 also
excludes provisions from comparable clearly erroneous rules of certain
other exchanges relating to clearly erroneous executions in: (i)
Leverage ETF/ETNs; and (ii) unlisted trading privileges securities that
are subject to an initial public offering.\253\
---------------------------------------------------------------------------

    \249\ 15 U.S.C. 78f(b)(5).
    \250\ Id.
    \251\ 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.
    \252\ Other exchange clearly erroneous rules reference removing
trades from the Consolidated Tape. Because Security 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 transactions
will be removed from ``all relevant data feeds disseminating last
sale information for Security transactions.'' See proposed Rule
25110(a).
    \253\ 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.
---------------------------------------------------------------------------

    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 \254\ 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.\255\ 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.
---------------------------------------------------------------------------

    \254\ 15 U.S.C. 78f(b)(5).
    \255\ See BOX Rule 7170(n).
---------------------------------------------------------------------------

    To the extent Securities become tradeable on other national
securities exchanges or other changes arise that may necessitate
changes to proposed Rule 25110 to conform more closely with the clearly
erroneous execution rules of other exchanges, the Exchange intends to
implement changes as necessary through a proposed rule change filed
with the Commission pursuant to Section 19 of the Exchange Act \256\ at
such future date.
---------------------------------------------------------------------------

    \256\ 15 U.S.C. 78s.
---------------------------------------------------------------------------

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.\257\ 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'' \258\ 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.\259\
---------------------------------------------------------------------------

    \257\ See e.g., IEX Rule 11.290.
    \258\ 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).
    \259\ 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 on the most recent day on which the Security traded.
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 25120 is consistent with
Section 6(b)(5) of the Exchange Act,\260\ 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,\261\ 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.\262\ 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.
---------------------------------------------------------------------------

    \260\ 15 U.S.C. 78f(b)(5).
    \261\ 17 CFR 242.200(g).
    \262\ 17 CFR 242.201(b)(1).
---------------------------------------------------------------------------

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.\263\ 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 Securities 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.
---------------------------------------------------------------------------

    \263\ See IEX Rule 25130.
---------------------------------------------------------------------------

    The Exchange believes proposed Rule 25130 is consistent with
Section 6(b)(5) of the Exchange Act \264\ 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.
---------------------------------------------------------------------------

    \264\ 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 \265\ 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.\266\
---------------------------------------------------------------------------

    \265\ 15 U.S.C. 78f(b)(5).
    \266\ 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, allocation of a DMM to a particular Security, 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.\267\
---------------------------------------------------------------------------

    \267\ 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 in which it
is registered as a Market Maker.\268\ 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 (or last sale price, in the event there is no National
Best Bid (Offer)) on the Exchange.\269\ The Exchange proposes that the
Designated Percentage would be 30%.\270\ 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).\271\ 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 Securities 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.
---------------------------------------------------------------------------

    \268\ See proposed Rule 25210(a)(1).
    \269\ See proposed Rule 25210(a)(1)(ii)(A).
    \270\ See proposed Rule 25210(a)(1)(ii)(B).
    \271\ 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%).
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    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 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. The Exchange proposes that
the Defined Limit shall be 31.5%.\272\ 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.\273\ 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.\274\ The Exchange believes
that Securities 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 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.
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    \272\ See proposed Rule 25210(a)(1)(ii)(3).
    \273\ 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.
    \274\ 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
Securities pursuant to proposed Rule 25230, which is described
below.\275\ For Securities 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 Securities in which such
Participant serves as DMM.\276\ The proposed Rule provides, among other
things, that a there will be no more than one DMM per Security 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 (to the extent applicable).\277\ 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 \278\ and similar to the same process for DMMs on other
exchanges.\279\ 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 has an
adequate number of BSTX Market Makers assigned to such Security. The
purpose of this requirement is to acknowledge the possibility that a
Security need not necessarily have a DMM provided that each Security
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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    \275\ See proposed 25220(b). DMMs would be approved by the
Exchange pursuant to an application process an [sic].
    \276\ See proposed Rule 25220(c).
    \277\ See proposed Rule 25220(b).
    \278\ See proposed Rule 25210(d).
    \279\ See e.g., NYSE American Rule 7.24E(b)(4).
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    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. Proposed Rule 25230(a) sets forth the basic
eligibility criteria for a when a Security may be allocated to a DMM,
providing that this may occur when the Security 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.\280\ 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.\281\
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    \280\ As previously noted, pursuant to proposed Rule 26106, a
Security 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 might not have a DMM when it
initially begins trading on BSTX, but may acquire a DMM later.
    \281\ 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).
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    Proposed Rule 25230(b) sets forth the manner in which a DMM may be
selected and allocated a Security. 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 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
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.\282\ 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 listing after preferred Security, listed
company mergers, target Securities, and closed-end management
investment companies.\283\ Each of these provisions is substantially
similar to corresponding provisions in NYSE American Rule 7.25E(b)(4)-
(11).
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    \282\ 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.
    \283\ See proposed Rule 25230(b)(4)-(11).
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    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.\284\ 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 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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    \284\ 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.
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    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 \285\ 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,\286\ and that all BSTX Participants
are eligible to become a Market Maker or DMM provided they comply with
the proposed requirements.\287\ 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 Securities. 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 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
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.\288\
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    \285\ 15 U.S.C. 78f(b)(5).
    \286\ See NYSE American Rule 7, Section 2.
    \287\ 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).
    \288\ 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. As noted above, the Exchange
believes that Securities 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
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.\289\ 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.\290\ Below is further detail.
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    \289\ All references to various ``Sections'' in the discussion
of these Listing Rules refer to the various Sections of the NYSE
American Company Guide.
    \290\ 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.
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     The BSTX Listing Rules (26100 series) are based on the
NYSE American Original Listing Requirements (Sections 101-146).\291\
---------------------------------------------------------------------------

    \291\ 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.
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     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).\292\
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    \292\ 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.
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     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.\293\
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    \293\ 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.\294\ 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.\295\ 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 Securities.\296\
Specifically, the Exchange proposes an additional standard for
preferred Securities to list on the Exchange based on NASDAQ Rule
5510.\297\ The Exchange believes a proposed rule providing an