SEC Approves First National Blockchain-powered Boston Security Token Exchange

key takeaways

The SEC has given the nod for BSTX to begin providing customers a market and price feed based on blockchain technology
The move marks the first time the SEC has granted approval for a national blockchain-enabled securities exchange

A joint venture between the Boston Options Exchange (BOX) and crypto tokenization firm tZero has been granted regulatory approval to operate a bourse utilizing blockchain tech for its settlements and market data.

The US Securities and Exchange Commission (SEC) gave the nod to the Boston Security Token Exchange (BSTX) for its Market Data Blockchain product following a lengthy rule review process, according to an SEC notice on Wednesday.

BSTX has been cleared to offer “several proprietary market data products,” similar to those provided by other national securities exchanges in addition to a historical market data product powered by the blockchain.

The move marks the first time the SEC has granted approval for a national blockchain-enabled securities exchange. BSTX will serve as the listing market for eligible companies and issuers of exchange-traded products.

Specifically, BSTX’s blockchain product will seek to settle transactions within the same day (T+0) or a day after (T+2) while providing “proprietary and transparent blockchain data feeds,” according to a statement on Thursday.

BSTX will also offer “improved market quality” for early-stage companies. Companies looking to unlock further liquidity will be able to tap into solutions designed to improve trading while democratizing access to other companies and assets, the statement reads.

Conditionally, BOX is required to join all relevant national market system plans related to BSTX equities trading. These include the Consolidated Tape Association Plan, the Consolidated Quotation Plan, and the Nasdaq UTP Plan. BOX must also join the National Market System Plan and the National Market System Plan, per the notice.

“This is a watershed event in the digital evolution of the securities markets and the trading experience,” said BSTX Board Member and tZERO Interim CEO, Alan Konevsky.

Indeed, the march towards its approval from the regulator stretches back more than two years following BOX’s amended filing in Jan. 2020 to use an omnibus entry based on the Ethereum blockchain. Shortly after, the SEC declined the application.

“With BOX Digital’s experience in building and operating a sophisticated securities exchange and tZERO’s industry-leading blockchain technology innovation, we have brought together our organizations’ combined expertise to drive innovation,” said Konevsky.

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