SEC gives nod to new US stock exchange with blockchain feed

Highlights

• BSTX would initially allow securities trading, such as stocks and ETFs, which are first listed on the exchange but tradable on rival bourses.
  
  
• BSTX will finally evolve into a crypto exchange like Coinbase, different from Nasdaq or NYSE.
  
  
• The exchange also aims to facilitate single-day trade settlements for members.

The US Securities and Exchange Commission (SEC) on Thursday gave its nod to the country's 17th stock exchange that will include blockchain technology, Reuters reported.

SEC director Jay Fraser said the BSTX exchange, a subsidiary of Boston-based BOX Exchange, will be launched in the second quarter.

The report added that it would initially allow trading in securities, including ETFs, first listed on the exchange but tradable on rival bourses. Over time, it aims to expand trading to tokenized securities. But BSTX eventually plans to evolve into a crypto exchange like Coinbase.

The approval comes a day after the regulator rejected Fidelity's application for spot bitcoin ETF, Wise Origin Bitcoin Trust. Earlier, it had also rejected a similar proposal from WisdomTree.

The ProShares Bitcoin Strategy ETF became the first bitcoin futures to start trading in a US stock exchange, launched on NYSE in October last year. The Valkyrie Bitcoin Strategy ETF and the VanEck Bitcoin Strategy ETF also had received SEC authorization in the subsequent period.

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BSTX’s Blockchain Plans

BSTX originally planned to trade only in tokenized securities, but the SEC rejected the proposal in 2020. However, it intends to expand the blockchain use to support tokenized securities.

BSTX will also offer a market data feed built on blockchain in addition to conventional pricing data feeds, its filing said. The feed will allow members to see each other's activity on the platform.

The exchange also aims to facilitate single-day trade settlements for members. Currently, the standard settlement time is two days. It is expected to help reduce the risk of default.

However, in its notice on Thursday, the SEC noted that BSTX's modified rules bring it at par with other exchanges, although it plans a blockchain feed and faster settlement time. According to Reuters, BSTX is a joint venture of BOX and tZero, a blockchain technology provider.

BOX is an options exchange and is jointly owned by TMX Group, Citadel Securities Principal Investments LLC, and brokers Citigroup, UBS, among others.