The Security Exchange Commission (SEC) of the United States approved the country’s 17th stock exchange Thursday evening, a subsidiary of Boston-based BOX Exchange that would use blockchain technology.
According to the report, the Boston Security Token Exchange (BSTX) might employ the emerging technology to provide faster transaction settlements. In contrast to existing exchanges, where trades are normally settled in two days, BSTX will enable same-day and next-day settlements. It will also employ a private blockchain to provide a market feed, allowing users to observe their own trades as well as those of others on an anonymous basis.
The new exchange, named BSTX, aims to launch in the second quarter, said Jay Fraser, a director. It will first trade securities, such as stocks or exchange-traded funds, that are originally listed on its exchange, but those securities will be marketable on competitor exchanges.
According to Fraser, BSTX’s long-term goal is to expand trading to all U.S. equities and possibly blockchain – enabled assets. Stock tokens are digital equities that are linked to the underlying share and are often exchanged in fractional quantities.
In addition to typical price data feeds, BSTX intends to provide a market data feed based on a private blockchain. According to the exchange filing, this stream will allow exchange members to observe their own behaviour as well as the activity of other BSTX participants on an anonymous, delayed basis.
Fraser said that the exchange intends to extend its usage of blockchain, the technology that supports cryptocurrencies such as bitcoin, over time to enable items such as tokenized securities. He further stated that the goal is to create an exchange that eventually looks more like Coinbase than something like the NASDAQ or NYSE. Until then, BSTX will operate more like a traditional exchange when it opens before the second half of the year.
What it will not provide members with is the ability to exchange digital tokens, implying that it is not a new marketplace for buying and selling cryptocurrencies and other virtual assets.