BSTX

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BSTX (Boston Security Token Exchange)
BSTX logo.jpg
Founded 2018
Headquarters Boston, Massachusetts
Key People Lisa J. Fall, CEO; William Easley
Website BSTX Home
Releases Company News

BSTX (Boston Security Token Exchange), which is jointly owned by BOX Digital Markets LLC and tZERO, is a nascent stock market for tokenized securities. It received approval from the US Securities and Exchange Commission (SEC) as an equity trading facility of BOX Exchange in January 2022.

BSTX says it is the first fully-automated, price/time priority execution exchange for trading securities that is both regulated by the SEC and leverages existing private blockchain technologies.[1]

The SEC approval for BSTX doesn't apply to the trading of digital tokens; the technology would be used for services such as settlement.[2] The proposal for BSTX was initially rejected by the SEC in December 2020.[3]

Background[edit]

BOX Digital Markets is an affiliate of BOX Exchange. BSTX will operate as a facility of BOX Options Exchange. tZERO, a subsidiary of Overstock.com, began operating an alternative trading system or ATS for its own tokenized securities in 2019.

BOX provides strategic leadership and regulatory advice to BSTX and tZERO manages technology, administration, maintenance, and support.[4] TZERO operates its own registered alternative trading system (ATS) for security tokens, access to which is limited by its regulatory status.

Trading proposal[edit]

On September 27, 2019 BOX Exchange filed proposed changes to its options exchange rules with the SEC to permit it to list equity securities. In its request for comments on the proposal that the agency published on October 11, 2019 the SEC characterized the BSTX proposal saying, ". . . BSTX would operate a fully automated, price/time priority execution system for the trading of “security tokens,” which would be equity securities that meet BSTX listing standards and for which ancillary records of ownership would be able to be created and maintained using distributed ledger (or “blockchain”) technology."[5] The SEC published revisions to BSTX's proposed rulebook on February 28, 2020.[6]

SEC disapproval[edit]

On December 28, 2020, the SEC published in the Federal Register its order disapproving the rule change. The commission said that, among other things, the proposed design would lead to inaccurate public reporting of transactions. The commission also complained that the materials submitted by the exchange did not contain sufficient information about the workings of the systems for the commission to assess the proposal fully. The order also indicates that there had been a number of interactions between the SEC and BSTX which failed to resolve the SEC's issues.[7]

SEC Approval[edit]

On January 27, 2022, the SEC approved BSTX, a joint venture between tZERO and Boston Options Exchange, as a trading facility of BOX Exchange. [8] BSTX eventually hopes to support regulated crypto markets alongside its equity offerings. [9]

References[edit]

  1. BSTX receives regulatory approval for blockchain-based US securities exchange. The Trade News.
  2. Blockchain-Fueled Stock Exchange BSTX Gets Greenlight From SEC. Bloomberg.
  3. SEC Disapproves BOX Security’s Request to Report Stock Trading Data on Ethereum Blockchain. CoinDesk.
  4. SEC Publishes BSTX Security Token Exchange Rulebook. The Tokenist.
  5. Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing of Proposed Rule Change Related to Adopt Rules to Govern the Trading of Equity Securities on the Exchange Through a Facility of the Exchange Known as the Boston Security Token Exchange LLC. U.S. Securities and Exchange Commission.
  6. Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing of Amendment No. 2 to Proposed Rule Change to Adopt Rules Governing the Trading of Equity Securities on the Exchange Through a Facility of the Exchange Known as the Boston Security Token Exchange LLC. U.S. Securities and Exchange Commission.
  7. Securities and Exchange Commission; Self-Regulatory Organizations; BOX Exchange LLC; Order Disapproving Proposed Rule Change, as Modified by Amendment No. 1, To Adopt Rules Governing the Trading of Equity Securities on the Exchange Through a Facility of the Exchange Known as the Boston Security Token Exchange LLC. Federal Register.
  8. SEC Approves BSTX as Newest National Securities Exchange Facility. Business Wire.
  9. tZERO’s BSTX Joint Venture Receives Approval as National Securities Exchange Facility. Business Wire.

Catefory:stock exchange