BSTX, a company created in 2018, that aims to be a fully automated securities exchange by leveraging blockchain technology, has gotten conditional approval from the United States’ Securities and Exchange Commission (SEC), to operate as a trading facility of BOX Exchange.
BSTX is a joint venture borne out of the partnership between tZero, a liquidity platform for private companies and Boston Options Exchange (BOX), an equity options marketplace. The approval gotten from the SEC means that the firm is on track to be the first blockchain-based securities exchange, provided that they join relevant national market system plans.
This is a major leap forward in the list of use cases of Distributed Ledger Technology (DLT) beyond the current use cases we see in multinational firms like Walmart and Honeywell.
According to the press release, BSTX aims to be the first exchange to allow participants choose between accelerated settlements (i.e T+0 or T+1). This is made possible because the platform will be leveraging blockchain technology. The platform will also provide market data recorded on the blockchain.
The press release also stated that BSTX will leverage the technology of a private and permissioned Distributed Ledger Technology (DLT) that it controls to “make participant market data available to them and to make general market data available to industry participants.”
This is not the first time BSTX has sought after approval from the SEC. In 2020, before leveraging private and permissioned DLT, BSTX wanted to record end-of-day securities ownership balances and other trading data to the Ethereum blockchain. The SEC rejected this proposal stating that inaccurate information could be published to the blockchain, as BSTX intended to use an “omnibus wallet” for non-BSTX stock transaction data, which the regulator feared could not stay up to date.
BSTX CEO Lisa Fall stated, “The SEC has taken an important step forward today in its approval of BSTX as a national securities exchange facility. We are eager to continue to work closely with the SEC to launch BSTX as a fully regulated exchange and to help provide capital markets with more modern tools for issuers and investors. We are particularly grateful to our technology partner in this endeavour tZERO. We are looking forward to continuing to work with them to provide institutional-grade trading technology to participants on BSTX.”
We have seen many use cases of DLT helping traditional companies solve complex problems that have consistently been an issue and have ultimately affected their bottom line. Walmart for example is able to use blockchain technology to help trace where food comes from and this became important in times of an outbreak of a food-borne disease. Asides from Walmart, we have Honeywell, a multi-industry conglomerate that covers aerospace technology, manufacturing, retail and many more, leverages blockchain technology to reform the market for used airplane parts, a market worth more than $4 billion.
DLT is faster becoming a necessity in making building processes easier so that the organization can deliver the best value to its respective clients. BSTX also mentioned that it is working to eventually support regulated crypto markets alongside its equity offerings.