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.\150\ In addition, each
of the rules in the proposed Rule 21000 Series (Supervision) is
substantially similar to supervisory rules of other exchanges.\151\
---------------------------------------------------------------------------

    \149\ 15 U.S.C. 78f(b)(5).
    \150\ Id.
    \151\ See supra note 142.
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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.\152\ These
miscellaneous provisions relate to: (i) Comparison and settlement
requirements; \153\ (ii) failures to deliver and failures to receive;
\154\ (iii) forwarding of proxy and other issuer-related materials;
\155\ (iv) commissions; \156\ (v) regulatory services agreements; \157\
and (vi) transactions involving Exchange employees.\158\ 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.\159\
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    \152\ See Cboe BZX Chapter 13 rules. See also IEX Rule 6.180
with respect to proposed Rule 22050 (Transactions Involving BOX
Employees).
    \153\ 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.
    \154\ 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 242.200 through .203).
    \155\ 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.
    \156\ 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.
    \157\ 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.
    \158\ 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.
    \159\ 17 CFR 242.200 through .203.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Rule 22000 (Miscellaneous
Provisions) Series is consistent with Section 6(b)(5) of the Exchange
Act \160\ 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
\161\ 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.\162\ 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.
---------------------------------------------------------------------------

    \160\ 15 U.S.C. 78f(b)(5).
    \161\ 17 CFR 242.203.
    \162\ 15 U.S.C. 78f(e)(1).
---------------------------------------------------------------------------

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.\163\ 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.\164\ 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.\165\ 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.\166\
---------------------------------------------------------------------------

    \163\ See Cboe BZX Chapter 12 rules.
    \164\ 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.
    \165\ 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.
    \166\ 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,\167\ 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.
---------------------------------------------------------------------------

    \167\ 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.\168\ 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.
---------------------------------------------------------------------------

    \168\ 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
\169\ 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.
---------------------------------------------------------------------------

    \169\ 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 \170\ 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.
---------------------------------------------------------------------------

    \170\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.\171\
---------------------------------------------------------------------------

    \171\ 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.
Trading Rules and the BSTX System (Rule 25000 Series)
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 \172\ 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.
---------------------------------------------------------------------------

    \172\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 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,\173\ 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.
---------------------------------------------------------------------------

    \173\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 \174\ 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.\175\
---------------------------------------------------------------------------

    \174\ 15 U.S.C. 78f(b)(5).
    \175\ See e.g., IEX Rule 11.180.

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

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.\176\ 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.
---------------------------------------------------------------------------

    \176\ 17 CFR 242.611.
---------------------------------------------------------------------------

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.\177\ 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.\178\ 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'').\179\ Broadcast
Information would 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.
---------------------------------------------------------------------------

    \177\ As a result, orders marked IOC submitted during the Pre-
Opening Phase would be rejected by the BSTX System. See proposed
Rule 25040(a)(7).
    \178\ The TOP can only be calculated where the BSTX Book is
crossed during the Pre-Opening Phase. See proposed Rule 25040(a)(2).
    \179\ 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
would 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 would 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.\180\ Proposed Rule
25040(a)(6) 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.\181\ The opening price must also be within the ``Collar Price
Range'' as set forth in proposed Rule 25040(a)(5), which is designed to
ensure that a Security opens in an fair and orderly manner and under
market conditions where there is sufficient quotation interest (e.g., a
national best bid and offer), the market is not crossed, and where the
opening price will not drastically depart from the market at the time
of the auction or the preceding day's closing price.\182\ Unexecuted
trading interest during the opening match will move to the BSTX Book
and will preserve price time priority.\183\ 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.\184\
---------------------------------------------------------------------------

    \180\ See proposed Rule 25040(a)(4)(ii).
    \181\ With respect to an initial public offering of a Security
where there is no previous day's closing price, the opening price
would 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).
    \182\ See proposed Rule 25040(a)(5). The Exchange notes that the
auction collars proposed in Rule 25040(a)(5) are substantially
similar to those of Cboe BZX. See Cboe BZX Rule 11.23.
    \183\ See proposed Rule 25040(a)(7).
    \184\ Id.
---------------------------------------------------------------------------

    For initial public offerings of Securities (``Initial Security
Offerings''), the process would 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.\185\ The Quote-Only Period may be extended in certain
cases.\186\ 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.\187\ 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.\188\ Orders will be matched
and executed at the conclusion of the Quote-Only Period, rather than at
9:30 a.m. Eastern Time.\189\ 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).\190\
---------------------------------------------------------------------------

    \185\ See proposed Rule 25040(b)(1).
    \186\ 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).
    \187\ See proposed Rule 25040(b)(3).
    \188\ 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.
    \189\ See proposed Rule 25040(b)(5).
    \190\ 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.\191\ This Quote-
Only Period may be extended in certain circumstances.\192\ 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.\193\ The transition to normal
trading would also occur in the same manner as Initial Security
Offering Auctions, as described above.\194\
---------------------------------------------------------------------------

    \191\ See proposed Rule 25040(c)(1). Orders marked IOC submitted
during the Quote-Only Period would be rejected. In addition, Halt
Auctions would be subject to the proposed Halt Auction Collar, as
set forth in proposed Rule 25040(c)(2)(i) and (ii). These proposed
collars for Halt Auctions are substantially similar to those
provided by Cboe BZX, and are designed to make sure that the
Exchange is able to reopen trading in a Security in a fair and
orderly manner. See Cboe BZX Rule 11.23(d). To the extent an Halt
Auction would occur at an ``Impermissible Price'' (i.e., a price
outside of the proposed Halt Auction collars), the Exchange would
extend the period of Halt Auction and gradually expand the scope of
the collar price range over time until it is able to re-open trading
in the Security in a manner consistent with proposed Rule
25040(c)(2).
    \192\ 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.
    \193\ See proposed Rule 25040(c)(3)-(5).
    \194\ 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.\195\ 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.\196\
---------------------------------------------------------------------------

    \195\ See proposed Rule 25040(d)(1).
    \196\ 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.\197\ 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.\198\ 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.\199\
---------------------------------------------------------------------------

    \197\ See proposed Rule 25040(e)(2).
    \198\ See proposed Rule 25040(e)(5).
    \199\ See e.g., Cboe BZX Rule 11.24.
---------------------------------------------------------------------------

    Consistent with Section 6(b)(5) of the Exchange Act,\200\ 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.\201\ 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.\202\ 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.\203\ 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.
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    \200\ 15 U.S.C. 78f(b)(5).
    \201\ 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.
    \202\ See e.g., BOX Rule 7070.
    \203\ 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.
---------------------------------------------------------------------------

Rule 25050--Trading Halts
    BSTX proposes to adopt rules relating to trading halts \204\ 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:
---------------------------------------------------------------------------

    \204\ The Exchange notes that rules on opening trading for non-
BSTX-listed security are set forth in proposed Rule 25040(e).
---------------------------------------------------------------------------

     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.
     Pegged Orders--BSTX would not support pegged orders, at
least initially, so rules relating to pegged orders during a trading
halt have been omitted.
     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.
     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.\205\
---------------------------------------------------------------------------

    \205\ See e.g., Cboe BZX 11.18(e)(5)(B).
---------------------------------------------------------------------------

     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.\206\
---------------------------------------------------------------------------

    \206\ IOC orders would 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.\207\
---------------------------------------------------------------------------

    \207\ 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 \208\ 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.
---------------------------------------------------------------------------

    \208\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that canceling resting order interest during
a trading halt and rejecting incoming orders received during the
trading halt is consistent with Section 6(b)(5) of the Exchange Act
\209\ 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.
---------------------------------------------------------------------------

    \209\ Id.
---------------------------------------------------------------------------

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.\210\ Orders that do not designate
a limit price would be rejected.\211\ 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.\212\ 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. The
Exchange has also proposed an additional order parameter for BSTX
Participants to indicate a preference for T+0 or T+1 settlement, as
previously described in Item 3, Part II.I.
---------------------------------------------------------------------------

    \210\ 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).
    \211\ Proposed Rule 25060(c)(1).
    \212\ Proposed Rule 25060(d)(1).
---------------------------------------------------------------------------

    Consistent with Section 6(b)(5) of the Exchange Act,\213\ 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.
---------------------------------------------------------------------------

    \213\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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,\214\ 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.
---------------------------------------------------------------------------

    \214\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.\215\
---------------------------------------------------------------------------

    \215\ 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 \216\ 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.
---------------------------------------------------------------------------

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

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

    \217\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.\218\ 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.\219\ BSTX Participants may obtain access to
this information through the securities information processors.
---------------------------------------------------------------------------

    \218\ 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.
    \219\ 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.\220\
---------------------------------------------------------------------------

    \220\ 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 \221\ 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.\222\
---------------------------------------------------------------------------

    \221\ 15 U.S.C. 78f(b)(5).
    \222\ Id.
---------------------------------------------------------------------------

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'').\223\ 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.\224\ 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'' \225\ by an amount that equals or
exceeds specified ``Numerical Guidelines.'' \226\ 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.\227\ 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.\228\ 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.\229\ 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).
---------------------------------------------------------------------------

    \223\ A transaction made in clearly erroneous error and canceled
by both parties or determined by the Exchange to be clearly
erroneous would be removed from the Consolidated Tape. Proposed Rule
25110(a).
    \224\ 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).
    \225\ The Reference Price would 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).
    \226\ 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).
    \227\ Proposed Rule 25110(c)(1).
    \228\ 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'').
    \229\ 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,\230\ 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.\231\ The proposed rule is
substantially similar to the clearly erroneous rules of other
exchanges.\232\ 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.\233\
Securities would also only trade during regular trading hours (i.e.,
9:30 a.m. ET to 4:00 p.m. ET), so provisions from comparable exchange
rules relating to clearly erroneous executions occurring outside of
regular trading hours have been excluded. Proposed Rule 25110 also
excludes provisions from comparable clearly erroneous rules of certain
other exchanges relating to clearly erroneous executions in unlisted
trading privileges securities that are subject to an initial public
offering.\234\
---------------------------------------------------------------------------

    \230\ 15 U.S.C. 78f(b)(5).
    \231\ Id.
    \232\ See e.g., Cboe BZX Rule 11.17. Similar to other exchanges'
comparable rules, proposed Rule 25110 provides BSTX with the ability
to determine clearly erroneous trades that result from a system
disruption or malfunction, a BSTX Official acting on his or her own
motion, trading halts, multi-day trading events, multi-stock events
involving five or more (but less than twenty) securities whose
executions occurred within a period of five minutes or less, multi-
stock events involving twenty or more securities whose executions
occurred within a period of five minutes or less, securities subject
to the LULD Plan, and for leveraged ETP Securities.
    \233\ Other exchange clearly erroneous rules reference removing
trades from the Consolidated Tape. Because Security transactions
would be reported pursuant to a separate transaction reporting plan,
proposed Rule 25110 eliminates references to the ``Consolidated
Tape'' and provides that clearly erroneous Security transactions
will be removed from ``all relevant data feeds disseminating last
sale information for Security transactions.'' See proposed Rule
25110(a).
    \234\ 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.
---------------------------------------------------------------------------

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

    \235\ 15 U.S.C. 78f(b)(5).
    \236\ 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 \237\ at
such future date.
---------------------------------------------------------------------------

    \237\ 15 U.S.C. 78s.
---------------------------------------------------------------------------

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.\238\ 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'' \239\ 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.\240\
---------------------------------------------------------------------------

    \238\ See e.g., IEX Rule 11.290.
    \239\ 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).
    \240\ 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,\241\ 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,\242\ 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.\243\ 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.
---------------------------------------------------------------------------

    \241\ 15 U.S.C. 78f(b)(5).
    \242\ 17 CFR 242.200(g).
    \243\ 17 CFR 242.201(b)(1).
---------------------------------------------------------------------------

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.\244\ 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 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.
---------------------------------------------------------------------------

    \244\ See IEX Rule 11.310.
---------------------------------------------------------------------------

    The Exchange believes proposed Rule 25130 is consistent with
Section 6(b)(5) of the Exchange Act \245\ 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.
---------------------------------------------------------------------------

    \245\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 \246\ 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.\247\
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    \246\ 15 U.S.C. 78f(b)(5).
    \247\ See e.g. IEX Rule 11.250.

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

Rule 25150--Thinly Traded Securities and Suspension of Unlisted Trading
Privileges
    Proposed Rule 25150 would set forth the criteria for eligible
Securities to be considered ``Thinly Traded Securities'' for which UTP
may be suspended at the election of the issuer. Discussion of this Rule
is set forth above in Part II.H.
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.\248\
---------------------------------------------------------------------------

    \248\ 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.\249\ 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.\250\ The Exchange proposes that the
Designated Percentage would be 30%.\251\ 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).\252\ 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.
---------------------------------------------------------------------------

    \249\ See proposed Rule 25210(a)(1).
    \250\ See proposed Rule 25210(a)(1)(ii)(A).
    \251\ See proposed Rule 25210(a)(1)(ii)(B).
    \252\ See NYSE American Rule 7.23E(a)(1)(B)(iii) (providing
that, other than during certain time periods around the market open
and close, the Designated Percentage for Tier 2 NMS stocks priced
below $1.00 is 30% and for Tier 2 NMS stocks priced above $1.00 is
28%).
---------------------------------------------------------------------------

    The Exchange proposes in Rule 25210(a)(4) that, in the event that
price movements cause a Market Maker or DMM's quotations to fall
outside of the National Best Bid (Offer) (or last sale price in the
event there is no National Best Bid (Offer)) by a given percentage,
with such percentage called the ``Defined Limit,'' in a Security 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%.\253\ 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.\254\ 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.\255\ 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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    \253\ See proposed Rule 25210(a)(1)(ii)(3).
    \254\ 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 as demonstrating legal or regulatory
requirements that necessitate its temporary withdrawal.
    \255\ 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.\256\ 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.\257\ 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).\258\ 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 \259\ and similar to the same process for DMMs on other
exchanges.\260\ 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.
---------------------------------------------------------------------------

    \256\ See proposed 25220(b). DMMs would be approved by the
Exchange pursuant to an application process an [sic].
    \257\ See proposed Rule 25220(c).
    \258\ See proposed Rule 25220(b).
    \259\ See proposed Rule 25210(d).
    \260\ See e.g., NYSE American Rule 7.24E(b)(4).
---------------------------------------------------------------------------

    In proposed Rule 25230, the Exchange proposes to set forth the
process by which a DMMs are allocated and reallocated responsibility
for a particular Security. Proposed Rule 25230(a) sets forth the basic
eligibility criteria for 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.\261\ 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.\262\
---------------------------------------------------------------------------

    \261\ 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.
    \262\ See proposed Rule 25230(a)(4). The proposed handling of
these scenarios where a DMM does not meet its obligations is
substantially similar to parallel requirements in NYSE American Rule
7.25E(a)(4).
---------------------------------------------------------------------------

    Proposed Rule 25230(b) sets forth the manner in which a DMM may be
selected and allocated a Security. 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.\263\ 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.\264\ Each of these provisions is substantially
similar to corresponding provisions in NYSE American Rule 7.25E(b)(4)-
(11).
---------------------------------------------------------------------------

    \263\ 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.
    \264\ See proposed Rule 25230(b)(4)-(11).
---------------------------------------------------------------------------

    Proposed Rule 25230(c) sets forth the reallocation process for a
DMM in a manner that is substantially similarly to corresponding
provisions in NYSE American Rule 7.25E(c). Generally, under the
proposed Rule, an issuer may request a reallocation to a new DMM and
Exchange staff will review this request, along with any DMM response
letter, and eventually make a determination.\265\ 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).
---------------------------------------------------------------------------

    \265\ In addition, proposed Rule 25230(c)(2) sets forth
provisions that allow for the Exchange's CEO to immediately initiate
a reallocation proceeding upon written notice to the DMM and the
issuer when the DMM's performance in a particular market situation
was, in the judgment of the Exchange, so egregiously deficient as to
call into question the Exchange's integrity or impair the Exchange's
reputation for maintaining an efficient, fair, and orderly market.
---------------------------------------------------------------------------

    Finally, proposed Rule 25240 sets forth the DMM combination review
policy. The proposed Rule, among other things, defines a proposed
combination among DMMs, requires that DMMs provide a written submission
to the Office of the Corporate Secretary of the Exchange and specifies,
among other things, the items to be disclosed in the written
submission, the criteria that the Exchange will use to evaluate a
proposed combination, and the timing for a decision by the Exchange,
subject to the Exchange's right to extend such time period. The
Exchange notes that proposed Rule 25240 is substantially similar to
NYSE American Rule 7.26E.
    The Exchange believes that the proposed Market Making Rules set
forth in the Rule 25200 Series are consistent with Section 6(b)(5) of
the Exchange Act \266\ 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,\267\ and that all BSTX Participants
are eligible to become a Market Maker or DMM provided they comply with
the proposed requirements.\268\ 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.\269\
---------------------------------------------------------------------------

    \266\ 15 U.S.C. 78f(b)(5).
    \267\ See NYSE American Rule 7, Section 2.
    \268\ 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).
    \269\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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.
BSTX Listing Rules Other Than for Exchange Traded Products and
Suspension and Delisting Rules (Rule 26000 and 27000 Series)
    The BSTX Listing Rules Other than for Exchange Traded Products (the
``Non-ETP Listing Rules'') in the Rule Series 26000 and the Suspension
and Delisting Rules in the Rule 27000 Series have been adapted from,
and are substantially similar to, Parts 1--12 of the NYSE American LLC
Company Guide.\270\ 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.\271\ Below is further detail.
---------------------------------------------------------------------------

    \270\ All references to various ``Sections'' in the discussion
of these Listing Rules refer to the various Sections of the NYSE
American Company Guide.
    \271\ 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 (i.e., bonds, debentures, securities of foreign companies
(other than Canadian companies), investment trusts, and securities
such as equity-linked term notes). The Exchange also proposes to
modify cross-references in the proposed Non-ETP Listing Rules to
accord with its Rules.
---------------------------------------------------------------------------

     The BSTX Rule 26100 Series are based on the NYSE American
Original Listing Requirements (Sections 101-146).\272\
---------------------------------------------------------------------------

    \272\ Pursuant to proposed Rule 26136, all securities initially
listing on BSTX, except securities which are book-entry only, must
be eligible for a Direct Registration Program operated by a clearing
agency registered under Section 17A of the Exchange Act. 15 U.S.C.
78q-1.
---------------------------------------------------------------------------

     The BSTX Original Listing Procedures (26200 Series) are
based on the NYSE American Original Listing Procedures (Sections 201-
222).
     The BSTX Additional Listings Rules (26300 Series) are
based on the NYSE American Additional Listings Sections (Sections 301-
350).
     The BSTX Disclosure Policies (26400 Series) are based on
the NYSE American Disclosure Policies (Sections 401-404).
     The BSTX Dividends and Splits Rules (26500 Series) are
based on the NYSE American Dividends and Stock Splits Sections
(Sections 501-522).
     The BSTX Accounting; Annual and Quarterly Reports Rules
(26600 Series) are based on the NYSE American Accounting; Annual and
Quarterly Reports Sections (Sections 603-624).
     The BSTX Shareholders' Meetings, Approval and Voting of
Proxies Rules (26700 Series) are based on the NYSE American
Shareholders' Meetings, Approval and Voting of Proxies Sections
(Sections 701-726).\273\
---------------------------------------------------------------------------

    \273\ The Exchange notes that the proposed fees for certain
items in the proposed Listing Rules (e.g., proxy follow-up mailings)
are the same as those charged by NYSE American. See e.g., proposed
IM-26722-8 cf. NYSE American Section 722.80.
---------------------------------------------------------------------------

     The BSTX Corporate Governance Rules (26800 Series) are
based on the NYSE American Corporate Governance Sections (Sections 801-
809).
     The BSTX Additional Matters Rules (26900 Series) are based
on the NYSE American Additional Matters Sections (Sections 920-994).
     The BSTX Suspension and Delisting Rules (27000 Series) are
based on the NYSE American Suspension and Delisting Sections (Sections
1001-1011).
     The BSTX Guide to Filing Requirements (27100 Series) are
based on the NYSE American Guide to Filing Requirements (Section 1101).
     The BSTX Procedures for Review of Exchange Listing
Determinations (27200 Series) are based on the NYSE American Procedures
for Review of Exchange Listing Determinations (Sections 1201-1211).
    Notwithstanding that the proposed Rule 26000 and 27000 Series 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 Rule 26000 and 27000 Series. The definitions set forth in
proposed Rule 26000 are designed to facilitate understanding of these
Rule Series 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.\274\
---------------------------------------------------------------------------

    \274\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    With respect to initial listing standards for non-ETP Securities,
which begin at proposed Rule 26101, the Exchange proposes to adopt
listing standards that are substantially similar to the NYSE American
listing rules.\275\ 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.\276\ 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.\277\ Specifically, the Exchange proposes an additional
standard for preferred Securities to list on the Exchange based on
NASDAQ Rule 5510.\278\ The Exchange believes a

proposed rule providing an additional initial listing standard for
preferred Securities consistent with a similar provision of NASDAQ
would expand the possible universe of issuances that would be eligible
to list on the Exchange to include preferred Securities. The Exchange
believes that such a rule would help remove impediments to and perfect
the mechanism of a free and open market and a national market system,
consistent with Section 6(b)(5) of the Exchange Act by giving issuers
an additional means by which it could list a different type of security
(i.e., a preferred Security) and investors the opportunity to trade in
such preferred Securities.\279\ Further, consistent with the public
interest, rules that provide more opportunity for listings may promote
competition among listing exchanges and capital formation for issuers.
---------------------------------------------------------------------------

    \275\ See NYSE American Section 101. The Exchange understands
that the Commission has extended relief to NYSE American with
respect to certain quantitative listing standards that do not meet
the thresholds of SEC Rule 3a51-1. 17 CFR 240.3a51-1. Initial
listings of securities that do not meet such thresholds and are not
subject to the relief provided to NYSE American would qualify as
``penny stocks'' and would be subject to additional regulation. BSTX
notes that it is not seeking relief related to SEC Rule 3a51-1 and
therefore has clarified proposed Rule 26101(a)(2) to ensure that
issuers have at least one year of operating history. BSTX will also
require new listings pursuant to proposed Rule 26102 to have a
public distribution of 1 million Securities, 400 public Security
holders, and a minimum market price of $4 per Security. These
provisions meet the requirements in SEC Rule 3a51-1 and are
consistent with the rules of other national securities exchanges.
See e.g., Nasdaq Rule 5510. The quantitative thresholds specified in
Rule 26102 are also reflected in the Sample Underwriter's Letter
that has been submitted as Exhibit 3L to this proposal. In addition,
the Exchange notes that proposed Rule 26140, which governs the
additional listing requirements of a company that is affiliated with
the Exchange, is based on similar provisions in NYSE American Rule
497 and IEX 14.205.
    \276\ 15 U.S.C. 78f(b)(5).
    \277\ See proposed Rule 26103.
    \278\ See proposed Rule 26103(b)(2). Preferred Security
Distribution Standard 2 requires that a preferred Security listing
satisfy the following conditions: Minimum bid price of at least $4
per Security; at least 10 Round Lot holders; At least 200,000
Publicly Held Securities; and Market Value of Publicly Held
Securities of at least $3.5 million.
    \279\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    With respect to the definitions in proposed Rule 26000, these are
designed to facilitate understanding of the BSTX Non-ETP Listing Rules
by market participants. The Exchange believes that allowing market
participants to better understand and interpret the BSTX Non-ETP
Listing Rules removes impediments to and perfects the mechanism of a
free and open market and a national market system, and may also foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, consistent with Section
6(b)(5) of the Exchange Act.\280\
---------------------------------------------------------------------------

    \280\ Id.
---------------------------------------------------------------------------

    The Exchange also proposes certain enhancements to the notice
requirements for listed companies to communicate to BSTX related to
record dates and defaults.\281\ The Exchange believes that these
additional disclosure and communication obligations can help BSTX in
monitoring for listed company compliance with applicable rules and
regulations; such additional disclosure obligations are designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, consistent with Section
6(b)(5) of the Exchange Act.\282\
---------------------------------------------------------------------------

    \281\ See Proposed Rule 26502, which requires, among other
things, a listing company to give the Exchange at least ten days'
notice in advance of a record date established for any other
purpose, including meetings of shareholders.
    \282\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange's proposed Rules provide additional flexibility for
listed companies in choosing how liquidity would be provided in their
listings by allowing listed companies to meet either the DMM
Requirement or Active Market Maker Requirement for initial listing and
continued trading.\283\ Pursuant to proposed Rule 26205, a company may
choose to be assigned a DMM by the Exchange or to select its own
DMM.\284\ Alternatively, a company may elect, or the Exchange may
determine, that, in lieu of a DMM, a minimum of three (3) market makers
would be assigned to the Security at initial listing; such requirement
may be reduced to two (2) market makers following the initial listing,
consistent with proposed Rule 26106. The Exchange believes that such
additional flexibility would promote the removal of impediments to and
perfection of the mechanism of a free and open market and a national
market system, consistent with Section 6(b)(5) of the Exchange
Act.\285\ The Commission has previously approved exchange rules
providing for three market makers to be assigned to a particular
security upon initial listing and only two for continued listing.\286\
In accordance with these previously approved rules, the Exchange
believes proposed Rule 26205 would ensure fair and orderly markets and
would facilitate the provision of sufficient liquidity for Securities.
---------------------------------------------------------------------------

    \283\ See proposed Rule 26205. BSTX-listed Securities must meet
the criteria specified in proposed Rule 26106, which provides that
unless otherwise provided, all Securities listed pursuant to the
BSTX Listing Standards must meet one of the following requirements:
(1) The DMM Requirement whereby a DMM must be assigned to a given
Security; or (2) the Active Market Maker Requirement which states
that (i) for initial inclusion the Security must have at least three
registered and active Market Makers, and (ii) for continued listing,
a Security must have at least two registered and active Market
Makers, one of which may be a Market Maker entering a stabilizing
bid.
    \284\ Exchange personnel responsible for managing the listing
and onboarding process would be responsible for determining to which
DMM a Security would be assigned. As provided in proposed Rule
26205, the Exchange makes every effort to see that each Security is
allocated in the best interests of the company and its shareholders,
as well as that of the public and the Exchange. Similarly, the
Exchange anticipates that these same personnel would be responsible
for answering questions relating to the Exchange's listing rules
pursuant to proposed Rule 26994 (New Policies). The Exchange notes
that certain provisions in the NYSE American Listing Manual
contemplate a ``Listing Qualifications Analyst'' that would perform
a number of these functions. The Exchange is not proposing to adopt
provisions that specifically contemplate a ``Listing Qualifications
Analyst,'' but expects to have personnel that will perform the same
basic functions, such as advising issuers and prospective issuers
with respect to relevant rules related to listing.
    \285\ 15 U.S.C. 78f(b)(5).
    \286\ See e.g., IEX Rule 14.206.
---------------------------------------------------------------------------

    The Exchange also proposes a number of other non-substantive
changes from the baseline NYSE American listing rules, such as to
eliminate references to the concept of a ``specialist,'' since BSTX
will not have a specialist,\287\ or references to certificated
equities, since Securities will be uncertificated equities.\288\ As
another example, NYSE American Section 623 requires that three copies
of certain press releases be sent to the exchange, while the Exchange
proposes only that a single copy of such press release be shared with
the Exchange.\289\ In addition, the Exchange proposes to adopt Rule
26720 in a manner that is substantially similar to NYSE American
Section 720, but proposes to modify the internal citations to ensure
consistency with its proposed Rulebook.\290\ In its proposed Rules, the

Exchange has not included certain form letters related to proxy rules
that are included in the NYSE American rules; \291\ instead, these
forms will be included in the BSTX Listing Supplement.\292\ The
Exchange is not proposing to adopt provisions relating to future priced
securities at this time.\293\ In addition, the Exchange is not
proposing to allow for listing of foreign companies, other than
Canadian companies,\294\ or to allow for issuers to transfer their
existing securities to BSTX.\295\ Similarly, the Exchange is not
proposing at this time to support debt securities (other than those
that may be ETPs), so the Exchange has not proposed to adopt certain
provisions from the NYSE American Listing Manual related to bonds/debt
securities \296\ or the trading of units.\297\ The Exchange believes
that the departures from the NYSE American rules upon which the
proposed Rules are based, as described above, are non-substantive
(e.g., by not including provisions relating to instruments that will
not trade on the Exchange), would apply to all issuers in the same
manner and are therefore not designed to permit unfair discrimination,
consistent with Section 6(b)(5) of the Exchange Act.\298\
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    \287\ See e.g., NYSE American Section 513(f), noting that open
orders to buy and open orders to sell on the books of a specialist
on an ex rights date are reduced by the cash value of the rights.
Proposed Rule 26340(f) deletes this provision because BSTX will not
have specialists. Similarly, because BSTX will not have specialists,
the Exchange is not proposing to adopt a parallel rule to NYSE
American Section 516, which specifies that certain types of orders
are to be reduced by a specialist when a security is quoted ex-
dividend, ex-distribution or ex-rights are set forth in NYSE
American Rule 132.
    \288\ See e.g., NYSE American Section 117 including a clause
relating to paired securities for which ``the stock certificates of
which are printed back-to-back on a single certificate'').
Similarly, the Exchange has proposed to replace certain references
to the ``Office of General Counsel'' contained in certain NYSE
American Listing Rule (see e.g., Section 1205) with references to
the Exchange's ``Legal Department'' to accommodate differences in
BSTX's organizational structure. See proposed Rule 27204. As another
example, proposed Rule 27205 refers to the Exchange's ``Hearing
Committee'' as defined in Section 6.08 of the Exchange's By-Laws to
similarly accommodate organizational differences between the
Exchange and NYSE American.
    \289\ See proposed Rule 26623.
    \290\ Specifically, proposed Rule 26720 would provide that
participants must comply with Rules 26720 through 26725 and BSTX's
Rule 22020 (Forwarding of Proxy and Other Issuer-Related Materials;
Proxy Voting). NYSE American Section 726, upon which proposed Rule
26720 is based, includes cross-references to NYSE American's
corresponding rules to proposed Rules 26720 through 26725, and also
includes cross-references to NYSE American Rules 578 through 585,
for which the Exchange is not proposing corresponding rules. These
NYSE American rules for which the Exchange is not proposing to adopt
a parallel rule relate to certain requirements specific to proxy
voting (e.g., requiring that a member state the actual number of
shares for which a proxy is given--NYSE American Rule 578) or, in
some cases, relate to certificated securities (e.g., NYSE American
Rule 579), which would be inapplicable to the Exchange since it
proposes to only list uncertificated securities. The Exchange
believes that it does not need to propose to adopt parallel rules
corresponding to NYSE American Rules 578-585 at this time and notes
that other listing exchanges do not appear have corresponding
versions of these NYSE American Rules. See e.g., Cboe BZX Rules. The
Exchange believes that proposed Rule 26720 and the Exchange's other
proposed Rules governing proxies, including those referenced in
proposed Rule 26720, are sufficient to govern BSTX Participants'
obligations with respect to proxies.
    \291\ The forms found in NYSE American Section 722.20 and 722.40
would be included in the BSTX Listing Supplement.
    \292\ The BSTX Listing Supplement would contain samples of
letters containing the information and instructions required
pursuant to the proxy rules to be given to clients in the
circumstances indicated in the appropriate heading. These are
intended to serve as examples and not as prescribed forms.
Participants would be permitted to adapt the form of these letters
for their own purposes provided all of the required information and
instructions are clearly enumerated in letters to clients. Pursuant
to proposed Rule 26212, the BSTX Listing Supplement would also
include a sample application for original listing, which the
Exchange has submitted as Exhibit 3G. In addition, proposed Rule
26350 states that the BSTX Listing Supplement will include a sample
cancellation notice; the Exchange expects such notice to be
substantially in the same form as NYSE American's sample notice in
NYSE American Section 350. Other examples of items that would appear
in the BSTX Listing Supplement include certain certifications to be
completed by the CEO of listed companies pursuant to proposed Rule
26810(a) and (c), and forms of letters to be sent to clients
requesting voting instructions and other letters relating to proxy
votes pursuant to proposed IM-26722-2 and IM-26722-4. The Exchange
expects that these proposed materials in the BSTX Listing Supplement
would be substantially similar to the corresponding versions of such
samples used by NYSE American. The purpose of putting these sample
letters and other information into the BSTX Listing Supplement
rather than directly in the rules is to improve the readability of
the Rules.
    \293\ See e.g., NYSE American Section 101, Commentary .02. The
Exchange is also not proposing to adopt a parallel provision to NYSE
American Section 950 (Explanation of Difference between Listed and
Unlisted Trading Privileges) because the Exchange believes that such
provision is not necessary and contains extraneous historical
details that are not particularly relevant to the trading of
Securities. The Exchange notes that numerous other listing exchanges
do not have a similar provision to NYSE American Section 950. See
e.g., IEX Listing Rules.
    \294\ See proposed Rule 26109. Because the Exchange does not
propose to allow foreign issuers of Securities, it does not propose
to adopt a parallel provision to NYSE American Section 110 and other
similar provisions relating to foreign issuers--e.g., NYSE American
Section 801(f).
    \295\ Consequently, the Exchange does not propose to adopt a
parallel provision to NYSE American Section 113 at this time.
    \296\ See e.g., NYSE American Sections 1003(b)(iv) and (e).
    \297\ See e.g., NYSE American Sections 106(f), 401(i), and
1003(g).
    \298\ 15 U.S.C. 78f(b)(5).
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    The Exchange proposes in Rule 26507 to prohibit the issuance of
fractional Securities and to provide that cash must be paid in lieu of
any distribution or part of a distribution that might result in
fractional interests in Securities.\299\ The Exchange believes that
disallowing fractional shares reduces complexity. By extension, the
requirement to provide cash in lieu of fractional shares simplifies the
process related to share transfer and tracking of share ownership. The
Exchange believes that this simplification promotes just and equitable
principles of trade, fosters cooperation and coordination with persons
engaged in regulating, clearing, settling, processing information with
respect to, and facilitating transactions in securities, removes
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, protects investors and the
public interest, consistent with Section 6(b)(5) of the Exchange
Act.\300\
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    \299\ The Exchange also proposes certain conforming changes in
Rule 26503 (Form of Notice) to reiterate that fractional interests
in Securities are not permitted by the Exchange.
    \300\ 15 U.S.C. 78f(b)(5).
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    Proposed BSTX Rule 26130 (Original Listing Applications) would
require listing applicants to furnish a legal opinion that the
applicant's Security is a security under applicable United States
securities laws. Such a requirement provides assurance to the Exchange
that Security trading relates to appropriate asset classes. The
Exchange believes that this Rule promotes just and equitable principles
of trade and, in general, protects investors and the public interest,
consistent with Section 6(b)(5) of the Exchange Act.\301\
---------------------------------------------------------------------------

    \301\ Id.
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    The Exchange proposes to adopt corporate governance listing
standards as its Rule 26800 Series that are substantially similar to
the corporate governance listing standards set forth in Part 8 of the
NYSE American Listing Manual. However, it includes certain
clarifications, most notably that certain proposed provisions are not
intended to restrict the number of terms that a director may serve
\302\ and that, if a limited partnership is managed by a general
partner rather than a board of directors, the audit committee
requirements applicable to the listed entity should be satisfied by the
general partner.\303\ The Exchange also notes that, unlike the current
NYSE American rules upon which the proposed Rules are based, the
proposed Rules on corporate governance do not include provisions on
asset-backed securities and foreign issues (other than those from
Canada), since the Exchange does not proposed to allow for such foreign
issuers to list on BSTX at this time.
---------------------------------------------------------------------------

    \302\ See proposed Rule 26802(d).
    \303\ See proposed Rule 26801(b).
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    The Exchange proposes to adopt additional listing rules as its Rule
26900 Series that are substantially similar to the corporate governance
listing standards set forth in Part 9 of the NYSE American Listing
Manual. The only significant difference from the baseline NYSE American
rules is that the proposed BSTX Rules do not include provisions related
to certificated securities, since Securities listed on BSTX will be
uncertificated.
    The Exchange proposes to adopt suspension and delisting rules as
its Rule 27000 Series that are substantially similar to the corporate
governance listing standards set forth in Parts 10, 11, and 12 of the
NYSE American Listing Manual. The proposed rules do not include
concepts from the baseline NYSE American rules regarding foreign, fixed
income securities, or other non-equity securities because the Exchange
is not proposing to allow for listing of such securities at this
time.\304\
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    \304\ As with all sections of the proposed rules, references to
``securities'' have been changed to ``Securities'' where appropriate
and, in the Rule 27000 Series, certain references have been
conformed from the baseline NYSE American provisions to account for
the differences in governance structure and naming conventions of
BSTX.
---------------------------------------------------------------------------

    The Exchange believes that the proposals in the Rule 26800 to Rule
27000 Series, which are based on the rules of NYSE American with the
differences explained above, are

designed to foster cooperation and coordination with persons engaged in
facilitating transactions in securities, remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
Further, the differences in the proposals compared to the analogous
NYSE American provisions appropriately reflect the differences between
the two exchanges. The Exchange believes that ensuring that its systems
are appropriately described in the BSTX Rules facilitates market
participants' review of such Rules, which serves to remove impediments
to and perfect the mechanism of a free and open market and a national
market system by ensuring that market participants can easily navigate,
understand and comply with the Exchange's rulebook. Therefore, the
Exchange believes its proposals are consistent with Section 6(b)(5) of
the Exchange Act.\305\
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    \305\ 15 U.S.C. 78f(b)(5).
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Trading and Listing Rules for Exchange-Trade Products (Rule 28000
Series)
    The Exchange proposes as the Rule 28000 Series rules related to
trading and listing ETPs. These proposed Rules allow for an array of
different types of ETPs to be traded and listed on the Exchange and
would provide individuals and institutions with diverse range of
products in which to invest. The proposed Rules would set forth
requirements and initial as well as continued listing standards for a
variety of ETPs noted in the bulleted list below. The proposed Rules
have been adapted from, and are substantially similar to, rules found
in the NYSE Arca Inc. (``NYSE Arca'') rulebook. Below is a list of the
proposed Rules in the 28000 Series and the NYSE Arca rules on which it
is based:
     Proposed Rule 28000 (Investment Company Units) is based on
NYSE Arca Rule 5.2-E(j)(3)
     Proposed Rule 28001 (Equity Index-Linked Securities,
Commodity-Linked Securities, Currency-Linked Securities, Fixed Income
Index-Linked Securities, Futures-Linked Securities and Multifactor
Index-Linked Securities) is based on NYSE Arca Rule 5.2-E(j)(6)
     Proposed Rule 28002 (Exchange-Traded Fund Shares) is based
on NYSE Arca Rule 5.2-E(j)(8)
     Proposed Rule 28003 (Trust Issued Receipts) is based on
NYSE Arca Rule 8.200-E
     Proposed Rule 28004 (Commodity-Based Trust Shares) is
based on NYSE Arca Rule 8.201-E
     Proposed Rule 28005 (Managed Fund Shares) is based on NYSE
Arca Rule 8.600-E
     Proposed Rule 28006 (Active Proxy Portfolio Shares) is
based on NYSE Arca Rule 8.601-E
     Proposed Rule 28007 (Managed Portfolio Shares) is based on
NYSE Arca Rule 8.900-E
    For each Rule in the 28000 Series, the Exchange proposes provisions
that are substantially similar to provisions in the NYSE Arca rulebook,
with adjustments made to ensure appropriate reference to concepts in
other parts of the BSTX Rulebook. For example, in cases where the
precedent NYSE Arca rule referred to a specific provision regarding
delisting procedures, the Exchange has modified the proposed Rules to
reference to the proposed Rule 27000 Series, which set forth the
Exchange's proposed Rules governing suspension and delisting.\306\ As
another example, the proposed definition of ``ETP Holder,'' which
closely parallels the same definition in the NYSE Arca Rulebook, but is
located in a different place in the proposed BSTX Rulebook as compared
to the NYSE Arca rulebook.\307\ In addition, certain products or
concepts that are supported by NYSE Arca but are not supported by the
Exchange have not been included in the proposal. For example, the
Exchange notes that the NYSE Arca rulebook provides for trading of a
Nasdaq-100 Index product, Currency Trust Shares, and Commodity Index
Trust Shares,\308\ whereas the Exchange will not support trading in
these specific ETPs and therefore has not included provisions relating
to the listing and trading of such products in its proposal. The
discussion below describes other notable variations from the NYSE Arca
rules set forth in the proposed Rule Series 28000.
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    \306\ As another example, the concept of ``Core Trading Hours''
in the NYSE Arca Rulebook (as defined therein) has no analog in the
BSTX Rulebook. The BSTX Rulebook only allows for Regular Trading
Hours and thus the proposal references the concept of Regular
Trading Hours.
    \307\ See proposed IM-28000-1g. In the NYSE Arca rule book, the
comparable definition is set forth in NYSE Arca Rulebook Rule 1.
    \308\ Specifically, Section 2 of Rule 8-E in the NYSE Arca
rulebook allows for trading of a Nasdaq-100 Index product, Currency
Trust Shares, and Commodity Index Trust Shares.
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    The Exchange believes that the proposals in the Rule 28000 Series
help remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general promote the
protecting of investors and the public interest because they will
facilitate an additional exchange on which ETPs can be listed and
traded. This adds competition to the marketplace for the listing of
ETPs, providing greater choice for issuers of ETPs and an additional
trading venue on which market participants can trade such products. As
noted, the proposed Rule 28000 Series is substantially similar to the
rules of NYSE Arca relating to ETPs, with only non-substantive
differences, which differences appropriately reflect the differences
between the two exchanges (e.g., internal cross-references within each
rule book or excluding provisions related to products that the Exchange
will not support).
Fees (Rule 29000 Series)
    The Exchange proposes to set forth as its Rule 29000 Series (Fees)
the Exchange's authority to prescribe reasonable dues, fees,
assessments or other charges as it may deem appropriate. As provided in
proposed Rule 29000 (Authority to Prescribe Dues, Fees, Assessments and
Other Charges), these fees may include membership dues, transaction
fees, communication and technology fees, regulatory fees, and other
fees, which will be equitably allocated among BSTX Participants,
issuers, and other persons using the Exchange's facilities.\309\
Proposed Rule 29010 (Regulatory Revenues) generally provides that any
revenues received by the Exchange from fees derived from its regulatory
function or regulatory fines will not be used for non-regulatory
purposes or distributed to the stockholder, but rather, shall be
applied to fund the legal and regulatory operations of the Exchange
(including surveillance and enforcement activities).
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    \309\ Proposed Rule 29000 further provides authority for the