The US Securities and Exchange Commission (SEC) has approved the country’s 17th stock exchange, a subsidiary of Boston-based BOX Exchange, which will incorporate blockchain technology.
The new exchange, named BSTX, aims to launch in the second quarter, said Jay Fraser, a director.
BSTX would initially trade securities, such as stocks or exchange-traded funds, first listed on its exchange, but those securities would be tradable on rival bourses.
The exchange ultimately aims to expand trading to all US stocks and potentially tokenised securities, Fraser said.
Stock tokens are digital versions of equities pegged to the underlying share, usually traded in fractional units.
Fraser said the aim is for BSTX to look “more like” crypto exchanges such as Coinbase as opposed to traditional exchanges like Nasdaq.
In addition to traditional pricing data feeds, BSTX plans to offer a market data feed that will operate on a private blockchain.
“As the newest national securities exchange, BSTX creates a new dynamic for retail and institutional investors as well as issuers while setting a new standard for the use of blockchain by spearheading adoption of innovative technology for use cases in the mainstream securities markets,” BSTX chief executive Lisa Fall said.
Anonymised, Delayed Basis
That feed will allow exchange members to see their own activity, as well as the activity of other BSTX participants on an anonymised, delayed basis, the exchange filing said.
The exchange plans to expand its use of blockchain, the technology that underpins cryptocurrencies such as bitcoin, over time to support products like tokenised securities.
“Today’s approval is only the start for BSTX,” Fall said. Utilising future rule filings, we plan to respond with a series of further innovations that will benefit both the issuer and trading communities.”
BSTX was originally going to be called the Boston Security Token Exchange and planned to exclusively trade tokenised securities, but the SEC rejected that plan in December o2020.
The exchange will also give members the option to settle trades as quickly as the same day, as opposed to the current two-day standard settlement time.
That would free up cash counterparties have to pledge against trades while also reducing the risk of either party defaulting.
The securities industry as a whole is currently debating moving to single-day settlement.
- Reuters, with additional editing by George Russell