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1/ Boston Security Token Exchange LLC (BSTX) filed a proposed rulebook for its security token exchange that is a JV between Box Exchange and @tzeroblockchain. Rather than going through the rules, here is a description of key aspects of how BSTX will work 👇
2/ All security tokens traded on BSTX will be registered with the Commission under both Section 12 of the Exchange Act and Section 6 of the Securities Act of 1933.
3/ BSTX will not support trading of security tokens offered under an exemption from registration for public offerings, with the exception of certain offerings under Regulation A that meet the proposed BSTX listing standards.
4/ BSTX would maintain listing standards that would enable security tokens to have a record of their ownership recorded on the Ethereum blockchain using a protocol standard determined by BSTX (the “BSTX security token protocol”).
5/ The Ethereum blockchain would serve as a complementary recordkeeping mechanism to the official records of security token ownership that would be maintained by an Approved Settlement Provider and the BSTX Participants.
6/ The BSTX security token protocol generally address the same considerations that are addressed by the ERC-884 protocol and is designed to comply with the requirements of Delaware law.
7/ Each BSTX Participant must arrange to have its security tokens managed by a party that operates wallet manager software to custody and transfer the eligible security tokens of the member and its customers.
8/ To send a security token outside of BSTX, the token holder would need to have its personal Ethereum wallet whitelisted and then the token could be sent there.
9/ Upon receipt of the transaction information, the Wallet Manager for the seller would then use the private key to cause the transfer of the security token from the public wallet address of the selling BSTX Participant to the public address of the purchasing BSTX Participant.
10/ Trading in security tokens to BSTX only in order to concentrate liquidity in security tokens on a single trading center. The Exchange believes that limiting trading in security tokens to just BSTX will promote efficiency, competition, and capital formation in several ways.
11/ First, limiting security token trading to BSTX would mitigate the impact of market fragmentation on security token issuers.
12/ Second, it would encourage additional issuers to list their securities knowing that the securities would be traded in an environment that minimizes these impediments that smaller issuers currently face.
13/ Third, exchanges would have strong incentives to innovate in order to attract issuers to trade exclusively on their exchange, which would promote competition among exchanges.
14/ Expect standard trading hours – no 24/7 trading.
15/ If you want to read 421 pages, then here you go: …xstorageaccount.blob.core.windows.net/boxvr/SE_resou…
