Read on Twitter
1/ So Nasdaq is saying that approving the Boston #SecurityToken Exchange would place an “unreasonable burden on competition” due to the underlying #Blockchain
technology
They have a point... https://twitter.com/CoinDesk/status/1245637290866569217
technology
They have a point... https://twitter.com/CoinDesk/status/1245637290866569217
2/ Because the BSTX is seeking to issue and trade public equities as security tokens, there is a whole bunch of public market regulations that need to be considered such as Reg NMS and something called "Unlisted Trading Privileges" - UTP
3/ UTP basically states that exchanges other than the listing venue can trade a stock. So GE is listed on NYSE but can be traded on Nasdaq and other exchanges... generally speaking this is good for markets as it increases competition among exchanges...
4/ So if the BSTX listed a public equity security token, all the other exchanges would need to develop expertise in blockchain technology, wallet management etc in order to trade these securities under UTP... so yes, that is a bit of a burden...
5/ But UTP isn't always a good thing... for stocks with low trading volume, it may not make sense for liquidity to be fragmented across 13 public stock exchanges....
6/ In fact, the SEC is considering proposals to suspend UTP:
https://www.sec.gov/rules/policy/2019/34-87327.pdf
https://www.sec.gov/rules/policy/2019/34-87327.pdf
7/ Also, FWIW, Nasdaq has even asked the SEC to suspend UTP for certain securities: https://www.mondaq.com/unitedstates/CorporateCommercial-Law/699726/NASDAQ-Requests-Suspension-In-UTP-Trading-For-Certain-Thinly-Traded-Securities
8/ So one way to get around this "unreasonable burden" issue would be for the SEC to permit the suspension of unlisted trading privileges for security tokens traded on BSTX.
This would allow firms to innovate with blockchain within a kind of 'sandbox' environment.
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This would allow firms to innovate with blockchain within a kind of 'sandbox' environment.
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