September 20, 2021
20 September 2021
Vanessa A. Countryman
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: File Number SR-BOX-2021-06 / Release Number 34-92796
Dear Ms. Countryman:
I am pleased to submit this letter of comment in support of the proposal by BOX Exchange, LLC 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, as modified by Amendment No 1.
In response to the Commissions stated concerns which were provided as potential grounds for disapproval in the latest released dated 27 August 2021, please note my comments as follows:
Regarding the Commissions concerns regarding the Exchanges use of BSTX Market Data Blockchain and its adherence to Sections 6(b)(5-8) of 15 USC 78f(b)(5), I believe that not only is the proposed BSTX facility specifically designed to promote just and equitable principles of trade and remove existing and legacy impediments to a free and open national market system, it does so in a transparent and secure manner through its proposed use of blockchain technology. It would of course place a burden on competition, as any new technological or procedural advance does when it modifies or improves upon an existing system. However, this burden should not be construed as unnecessarily onerous or inappropriate for the purposes of this evaluation and analysis, as it does not explicitly permit unfair discrimination between participants and non-participants beyond a normal customer/non-customer relationship. Capital markets in the United States are the most developed and advanced in the world, and the Exchanges proposed facility would be an enhancement to the nations systems, not an impediment.
Regarding the Commissions concerns regarding the Exchanges proposed order parameters indicating preference for a T+0 or T+1 settlement basis and its consistency with Sections 6(b)(5) and Section 6(b)(8) of 15 USC 78f(b)(5), I believe that having certainty that an order would receive faster settlement at the time of order entry would not necessarily increase or reduce the ability of a market participant to reap the potential benefits of faster settlement, but that this uncertainty would not represent any additional inconsistency with the referenced sections of the Act than current settlement systems, and is therefore an inappropriate basis for a disapproval decision.
Regarding the Commissions concern for adverse market effects surrounding the introducing the possibility for T+0 or T+1 settlement for on-exchange trades in NMS stocks at a time when the industry standard is still T+2 settlement, I believe that there has been a strong shift in public focus in recent months bringing the inefficiency of the current T+2 settlement system into question. There is simply no evidence to suggest that an improvement in the industry standard, similar to the recent improvement from T+3 to the current T+2 standard, would have adverse market effects, particularly at a time when technological advances, including the proposed facilitys blockchain technology, render a T+2 settlement period unnecessary and archaic. A disapproval from the Commission on these grounds would represent an indication that the Commission is not prepared to address public concerns regarding settlement times and not committed to continual improvement of its capital market systems.
Thank you for the opportunity to submit my comments on the above-referenced rule proposal. I look forward to an expedient analysis and consideration of this and other commentary and rebuttals, and a fair and well-reasoned determination by the Commission in the near future.
Respectfully submitted,
Jonathan Seeley