Federal Register / Vol. 89, No. 175 / Tuesday, September 10, 2024 / Notices 73457 

6 15 U.S.C. 78s(b)(2). 

7See Securities Exchange Act Release No. 100628 

(Jul. 31, 2024), 89 FR 64010 (Aug. 6, 2024). The 

Commission designated October 10, 2024 as the 

date by it should approve or disapprove the 

proposed rule change. 

8 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5Pursuant to Section 11.3(a) of the CAT NMS 

Plan, FINRA filed a separate proposed rule change 

to establish fees assessed to Industry Members, 

payable to Consolidated Audit Trail, LLC, related to 

reasonably budgeted CAT costs for the period of 

July 16, 2024 through December 31, 2024. See File 

No. SR–FINRA–2024–011. Unless otherwise 

specified, capitalized terms used in this rule filing 

are defined as set forth in the CAT NMS Plan and 

FINRA Rule 6800 Series (Consolidated Audit Trail 

Compliance Rule). 

6See Securities Exchange Act Release No. 67457 

(July 18, 2012), 77 FR 45722 (August 1, 2012). 

7See Securities Exchange Act Release No. 79318 

(November 15, 2016), 81 FR 84696 (November 23, 

2016) (‘‘CAT NMS Plan Approval Order’’). 

8See Section 11.1(b) of the CAT NMS Plan. 

9See Securities Exchange Act Release No. 98290 

(September 6, 2023), 88 FR 62628 (September 12, 

2023) (‘‘CAT Funding Model Approval Order’’). 

10See Section 11.3(b) of the CAT NMS Plan. 

11See Section 11.3(a) of the CAT NMS Plan. 

12As detailed in File No. SR–FINRA–2024–011, 

Budgeted CAT Costs 2024–1 would be 

$138,476,925. Industry Members would be 

collectively responsible for two-thirds of those costs 

or $92,317,950, and Participants would be 

collectively responsible for one-third or 

$46,158,975. See also Sections 11.3(a)(ii)(A) and 

11.3(a)(iii)(A) of the CAT NMS Plan. 

13See Section 11.3(a)(ii) and Appendix B of the 

CAT NMS Plan; see also CAT Funding Model 

Approval Order, 88 FR 62628, 62660 (‘‘The CAT 

Fees charged to Participants would be implemented 

Continued 

to Section 19(b)(2) of the Act,6 the 

Commission designated a longer period 

within which to approve the proposed 

rule change or disapprove the proposed 

rule change.7 On August 29, 2024, the 

Exchange withdrew the proposed rule 

change (SR–MEMX–2024–01). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–20328 Filed 9–9–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–100920; File No. SR– 

FINRA–2024–012] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Adopt FINRA Rule 

6897(b) (CAT Cost Recovery Fees) 

Related to Reasonably Budgeted Costs 

of the National Market System Plan 

Governing the Consolidated Audit Trail 

for the Period From July 16, 2024 

Through December 31, 2024 

September 4, 2024. 

Pursuant to Section 19(b)(1) under the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 

26, 2024, the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by FINRA. FINRA 

has designated the proposed rule change 

as ‘‘establishing or changing a due, fee 

or other charge’’ under Section 

19(b)(3)(A)(ii) of the Act 3 and Rule 19b– 

4(f)(2) thereunder,4 which renders the 

proposal effective upon receipt of this 

filing by the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to adopt FINRA 

Rule 6897(b) (CAT Cost Recovery Fees) 

to implement a Consolidated Audit 

Trail (‘‘CAT’’) cost recovery fee 

designed to permit FINRA substantially 

to recoup its designated portion of the 

reasonably budgeted CAT costs of the 

National Market System Plan Governing 

the Consolidated Audit Trail (the ‘‘CAT 

NMS Plan’’ or ‘‘Plan’’) for the period of 

July 16, 2024 through December 31, 

2024.5

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Background 

On July 11, 2012, the Commission 

adopted Rule 613 of Regulation NMS, 

which required the self-regulatory 

organizations to submit a national 

market system (‘‘NMS’’) plan to create, 

implement and maintain a consolidated 

audit trail that would capture customer 

and order event information for orders 

in NMS securities across all markets, 

from the time of order inception through 

routing, cancellation, modification, or 

execution.6 On November 15, 2016, the 

Commission approved the CAT NMS 

Plan.7 Under the CAT NMS Plan, the 

Operating Committee has the discretion 

to establish funding for Consolidated 

Audit Trail, LLC (‘‘CAT LLC’’) to 

operate the CAT, including establishing 

fees for Industry Members to be assessed 

by CAT LLC that would be implemented 

on behalf of CAT LLC by the 

Participants.8 The Operating Committee 

adopted a revised funding model to 

fund the CAT (‘‘CAT Funding Model’’) 

and, on September 6, 2023, the 

Commission approved the CAT Funding 

Model, after concluding that the model 

was reasonable and that it satisfied the 

requirements of Section 11A of the 

Exchange Act and Rule 608 thereunder.9

The CAT Funding Model provides a 

framework for the recovery of the costs 

to create, develop, and maintain the 

CAT, including providing a method for 

allocating costs to fund the CAT among 

Participants and Industry Members. The 

CAT Funding Model establishes two 

categories of fees: (1) CAT fees assessed 

by CAT LLC and payable by certain 

Industry Members to recover a portion 

of historical CAT costs previously paid 

by the Participants; 10 and (2) CAT fees 

assessed by CAT LLC and payable by 

Participants and Industry Members to 

fund Prospective CAT Costs, i.e., costs 

not previously paid by the 

Participants.11

With respect to CAT fees 

implemented to fund Prospective CAT 

Costs, to date, the CAT Operating 

Committee has established CAT Fee 

2024–1 to implement fees payable by 

Industry Members regarding reasonably 

budgeted Prospective CAT Costs for the 

period July 16, 2024 through December 

31, 2024 (‘‘Budgeted CAT Costs 2024– 

1’’).12 Consistent with the Plan, the 

Operating Committee has also 

established fees payable to CAT LLC by 

the Participants to collect the 

Participants’ designated portion of 

Budgeted CAT Costs 2024–1.13


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73458 Federal Register / Vol. 89, No. 175 / Tuesday, September 10, 2024 / Notices 

through an approval of the CAT Fees by the 

Operating Committee and not through a plan 

amendment submitted each time the Fee Rate 

changes, while CAT Fees charged to Industry 

Members may only become effective in accordance 

with the requirements of Section 19(b) of the 

Exchange Act.’’). 

14See Section 11.3(a)(ii)(B) of the CAT NMS Plan; 

see also CAT Funding Model Approval Order, 88 

FR 62628, 62660 (‘‘The Commission also believes 

it is reasonable that proposed Section 11.3(a)(ii)(B) 

provides that the Participants would be required to 

pay CAT Fees only when Industry Members are 

required to pay CAT Fees.’’). 

15CAT Funding Model Approval Order, 88 FR 

62628, 62636–37. 

16FINRA has consistently made clear its intention 

to file a rule change to implement member CAT fees 

simultaneous with the filing of any proposed rule 

change to effectuate the CAT Funding Model. See 

Letter from Marcia E. Asquith, Corporate Secretary, 

EVP, Board and External Relations, FINRA, to 

Vanessa Countryman, Secretary, Commission, dated 

April 11, 2023 (‘‘FINRA April 2023 Letter’’) at 7 (‘‘If 

the Funding Model is approved by the Commission, 

FINRA intends to file a rule change to increase 

member fees simultaneous with the filing of any 

proposed rule change to effectuate the Funding 

Model.’’); see also Letter from Marcia E. Asquith, 

Corporate Secretary, EVP, Board and External 

Relations, FINRA, to Vanessa Countryman, 

Secretary, Commission, dated June 22, 2022 

(‘‘FINRA June 2022 Letter’’) at 6 (‘‘[G]iven FINRA’s 

unique nature, FINRA necessarily must seek 

recovery in turn for the costs it is allocated.’’). 

FINRA also requested that, if the Commission were 

to approve the CAT Funding Model, it acknowledge 

‘‘FINRA’s need and ability to cover CAT costs that 

are not recovered through contractual arrangements 

through member fee increases, so as not to 

jeopardize FINRA’s ability to carry out its critical 

regulatory mission.’’ See CAT Funding Model 

Approval Order, 88 FR 62628, 62645. 

17See File No. SR–FINRA–2024–011. 

18The CAT NMS Plan states that ‘‘[n]o Participant 

will make a filing with the SEC pursuant to Section 

19(b) of the Exchange Act regarding any CAT Fee 

related to Prospective CAT Costs until the Financial 

Accountability Milestone related to Period 4 

described in Section 11.6 has been satisfied.’’ See 

Section 11.3(a)(iii)(C) of the CAT NMS Plan. As 

discussed in File No. SR–FINRA–2024–011, the 

substantive requirements of the Financial 

Accountability Milestones related to Period 4 have 

been satisfied, as the CAT has completed the 

requirements for the Full Implementation of CAT 

NMS Plan Requirements. Under Section 1.1 of the 

CAT NMS Plan, this Financial Accountability 

Milestone is considered complete as of the date 

identified in the Participants’ Quarterly Progress 

Reports. As indicated by the Participants’ Quarterly 

Progress Report for the second and third quarter of 

2024, Full Implementation of CAT NMS Plan 

Requirements was completed on July 15, 2024. See 

CAT Q2 & Q3 2024 Quarterly Progress Report (July 

29, 2024), https://www.catnmsplan.com/sites/ 

default/files/2024-07/CAT_Q2-and-Q3-2024- 

QPR.pdf. 

19Consistent with Section 11.3(a)(iii)(B) of the 

CAT NMS Plan, Budgeted CAT Costs 2024–1 

include reasonably budgeted (1) technology line 

items (including cloud hosting services, operating 

fees, CAIS operating fees, change request fees, and 

capitalized developed technology costs), (2) legal 

fees, (3) consulting fees, (4) insurance, (5) 

professional and administration expenses, (6) 

public relations costs, and (7) a reserve. A detailed 

description (including the amounts) of all such 

costs budgeted during the July 16, 2024 through 

December 31, 2024 period is provided in File No. 

SR–FINRA–2024–011. 

20 In approving the CAT Funding Model, the 

Commission concluded that ‘‘the use of executed 

equivalent share volume as the basis of the 

proposed cost allocation methodology is reasonable 

and consistent with the approach taken by the 

funding principles of the CAT NMS Plan.’’ See CAT 

Funding Model Approval Order, 88 FR 62628, 

62640. Under the CAT NMS Plan, executed 

equivalent shares in a transaction in Eligible 

Securities are reasonably counted as follows: (1) 

each executed share for a transaction in NMS 

Stocks will be counted as one executed equivalent 

share; (2) each executed contract for a transaction 

in Listed Options will be counted based on the 

multiplier applicable to the specific Listed Options 

(i.e., 100 executed equivalent shares or such other 

applicable multiplier); and (3) each executed share 

for a transaction in OTC Equity Securities shall be 

counted as 0.01 executed equivalent share. See 

Section 11.3(a)(i)(B) and 11.3(b)(i)(B) of the CAT 

NMS Plan. 

21 Dividing $0.0001043598251997246 by three 

and rounding to six decimal places equals 

$0.000035. 

22See File No. SR–FINRA–2024–011. 

23See supra note 16. 

24 In approving the CAT Funding Model, the 

Commission noted that it ‘‘believe[d] that FINRA’s 

allocation of CAT fees likely will be passed through 

Participants would only be required to 

pay such fees once CAT Fee 2024–1 is 

in effect with regard to Industry 

Members in accordance with Section 

19(b) of the Exchange Act.14

In light of the filing of File No. SR– 

FINRA–2024–011, which implements 

CAT Fee 2024–1 with regard to Industry 

Members, FINRA is filing the instant 

proposed rule change to establish a fee 

that would allow FINRA substantially to 

recover the monthly fees it is required 

to pay to CAT LLC towards Budgeted 

CAT Costs 2024–1 (‘‘Prospective CAT 

Cost Recovery Fee 2024–1’’). In the 

Approval Order, the Commission 

acknowledged that ‘‘the Exchange Act 

expressly contemplates the ability of the 

Participants to recoup their costs to 

fulfill their statutory obligations under 

the Exchange Act.’’ 15 The Commission 

also noted FINRA’s statement ‘‘that it 

would file a rule change to increase its 

member fees with the filing of any 

proposed rule change to effectuate the 

Funding Model.’’ 16 Given the approval 

of the CAT Funding Model and FINRA’s 

proposed rule change to establish CAT 

Fee 2024–1 to effectuate the CAT 

Funding Model,17 FINRA is submitting 

this filing to implement Prospective 

CAT Cost Recovery Fee 2024–1.18

FINRA’s Designated Portion of Budgeted 

CAT Costs 2024–1 

As discussed in File No. SR–FINRA– 

2024–011, the Operating Committee has 

established CAT Fee 2024–1, payable to 

CAT LLC by Industry Members, to 

contribute toward the recovery of twothirds of the $138,476,925 in Budgeted 

CAT Costs 2024–1 over the July 16, 

2024 through December 31, 2024 

period.19 The Operating Committee 

further determined that the fee rate for 

CAT Fee 2024–1 is 

$0.0001043598251997246 per executed 

equivalent share,20 and, under the CAT 

Funding Model, each of the CAT 

Executing Broker for the Buyer 

(‘‘CEBB’’), the CAT Executing Broker for 

the Seller (‘‘CEBS’’), and the relevant 

Participant for a given transaction in an 

Eligible Security would be responsible 

for one-third of that rate, or $0.000035 

per executed equivalent share.21

Consequently, CEBBs collectively, 

CEBSs collectively, and the Participants 

collectively will each be responsible for 

$46,158,975, which is one-third of 

Budged CAT Costs 2024–1 during the 

September 1, 2024 through December 

31, 2024 CAT Fee 2024–1 period.22

For the twelve months from June 1, 

2023 through May 31, 2024, the average 

monthly executed equivalent share 

volume in Eligible Securities where 

FINRA was the relevant Participant (i.e., 

off-exchange transactions) was 

approximately 104.7 billion shares. 

Assuming similar monthly executed 

equivalent share volume for offexchange transactions in Eligible 

Securities for the period of September 1, 

2024 through December 31, 2024, 

FINRA would be responsible for paying 

approximately $3.7 million per month 

and approximately $14.7 million in total 

to CAT LLC toward the Participants’ 

$46,158,975 designated portion of 

Budgeted CAT Costs 2024–1 (or 

approximately 31.8% of the total). 

FINRA’s recovery of its designated 

portion of Budgeted CAT Costs 2024–1 

is reasonable and consistent with the 

Exchange Act. As discussed herein and 

in File No. SR–FINRA–2024–011, 

Budgeted CAT Costs 2024–1 are 

reasonable, appropriate and necessary 

for the creation, implementation, and 

maintenance of the CAT. And the 

portion of Budgeted CAT Costs 2024–1 

designated to FINRA has been 

established under the SEC-approved 

CAT Funding Model. As stated by 

FINRA and permitted under the 

Exchange Act, FINRA will seek to 

recover its designated portion of the 

Participants’ share of CAT costs to 

ensure that FINRA can fulfill its 

regulatory mandate and 

responsibilities.23

Prospective CAT Cost Recovery Fee 

2024–1 

FINRA is proposing to adopt Rule 

6897(b) (CAT Cost Recovery Fees) to 

implement Prospective CAT Cost 

Recovery Fee 2024–1 to allow FINRA 

substantially to recover its designated 

portion of Budgeted CAT Costs 2024– 

1.24 FINRA intends that the fee 


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to Industry Members.’’ See CAT Funding Model 

Approval Order, 88 FR 62628, 62684. 

25As per Section 1.1 of the Plan, for a transaction 

in an Eligible Security executed otherwise than on 

an exchange and required to be reported to an 

equity trade reporting facility of a registered 

national securities association, i.e., one of FINRA’s 

Trade Reporting Facilities (each a ‘‘TRF’’), OTC 

Reporting Facility (‘‘ORF’’) or Alternative Display 

Facility (‘‘ADF’’), the CEBB and CEBS are the 

Industry Members identified as the executing 

broker and the contra-side executing broker in the 

TRF/ORF/ADF transaction data event in CAT Data. 

In those circumstances where there is a nonIndustry Member identified as the contra-side 

executing broker in the TRF/ORF/ADF transaction 

data event or no contra-side executing broker is 

identified in the TRF/ORF/ADF transaction data 

event, then the Industry Member identified as the 

executing broker in the TRF/ORF/ADF transaction 

data event would be treated as, and be required to 

pay the fee assessed to, both the CEBB and CEBS. 

26See Table 61, Section 6.1 (TRF/ORF/ADF 

Transaction Data Event) of the CAT Reporting 

Technical Specifications for Plan Participants. 27As noted in File No. SR–FINRA–2024–011, 

CAT LLC determined to use six decimal places for 

the CAT Fee 2024–1 fee rate (i.e., $0.000035 per 

executed equivalent share) to balance the accuracy 

of the calculation with the potential systems and 

other impracticalities of using additional decimal 

places in the calculation. 

28See supra note 27. 

29FINRA believes that it is appropriate at this 

time to use six decimal places to maintain 

consistency with the approach determined by CAT 

LLC. FINRA notes that the billing system used for 

both invoices in connection with CAT Fee 2024– 

1 and the Prospective CAT Cost Recovery Fee 2024– 

1 is configured for up to six decimal places, making 

extending the fee rate for Prospective CAT Cost 

Recovery Fee 2024–1 to seven decimal places 

impracticable in the near term. 

30 Dividing $0.000035 by two equals $0.0000175. 

31 Given that the average monthly executed 

equivalent share volume in Eligible Securities 

where FINRA was the relevant Participant was 

approximately 104.7 billion shares for the 12 

months from June 1, 2023 through May 31, 2024, 

and assuming similar volumes for the period from 

September 1, 2024 through December 31, 2024, 

FINRA would be invoiced approximately $14.7 

million for CAT Fee 2024–1 but would only bill 

approximately $14.3 million to member CEBBs and 

CEBSs via Prospective CAT Cost Recovery Fee 

2024–1 during the same period. 

However, FINRA intends to avoid a similar 

shortfall from occurring with respect to future fee 

recovery past December 2024 (e.g., by rounding up 

the last digit instead of truncating, or another means 

of addressing this issue). The fee rate resulting from 

any such determinations would be subject to a 

proposed rule change filed pursuant to Section 

19(b) of the Exchange Act and Rule 19b–4 

thereunder. 

framework for the Prospective CAT Cost 

Recovery Fee 2024–1 would generally 

correspond to the framework put in 

place by CAT LLC with respect to CAT 

Fee 2024–1, as provided for in File No. 

SR–FINRA–2024–011, as further 

discussed below. FINRA also intends 

that the timing and commencement of 

payment for Prospective CAT Cost 

Recovery Fee 2024–1 would correspond 

with that established by CAT LLC with 

respect to CAT Fee 2024–1, as provided 

for in File No. SR–FINRA–2024–011. 

Thus, as with CAT Fee 2024–1, FINRA 

proposes that each member CAT 

Executing Broker shall receive its first 

invoice for Prospective CAT Cost 

Recovery Fee 2024–1 in October 2024, 

setting forth fees calculated based on 

September 2024 transactions in Eligible 

Securities executed otherwise than on 

an exchange, as reflected in CAT Data. 

The following fields of the Participant 

Technical Specifications indicate the 

CAT Executing Brokers for transactions 

executed otherwise than on an 

exchange.25

TRF/ORF/ADF Transaction Data 

Event 26

No. Field name Data type Description Include 

key 

26 ..................... reportingExecutingMpid .... Member Alias MPID of the executing party ............................................................... R 

28 ..................... contraExecutingMpid ........ Member Alias MPID of the contra-side executing party ............................................ C 

As discussed in File No. SR–FINRA– 

2024–011, consistent with the CAT 

Funding Model, in implementing CAT 

Fee 2024–1, the Operating Committee 

has determined that each of the CEBB, 

CEBS and relevant Participant for a 

given transaction in an Eligible Security 

would be assessed a fee of $0.000035 

per executed equivalent share.27 In line 

with this approach, FINRA is proposing, 

for Prospective CAT Cost Recovery Fee 

2024–1, to split the fee rate that is 

assessed to FINRA under CAT Fee 

2024–1 between each of the CEBB and 

CEBS for transactions where FINRA is 

the relevant Participant, subject to 

truncation at six decimal places. To 

maintain consistency with CAT LLC’s 

use of six decimal places,28 FINRA 

proposes to use six decimal places for 

Prospective CAT Cost Recovery Fee 

2024–1.29 FINRA proposes to limit 

Prospective CAT Cost Recovery Fee 

2024–1 to six decimal places by 

truncating the halved CAT Fee 2024–1 

fee rate such that each member CEBB 

and CEBS would pay a fee of $0.000017 

per executed equivalent share for each 

transaction in Eligible Securities 

executed otherwise than on an 

exchange.30

By truncating half of the CAT Fee 

2024–1 fee rate in this manner, FINRA 

would recover less per executed 

equivalent share under Prospective CAT 

Cost Recovery Fee 2024–1 ($0.000034) 

than it will be invoiced each month for 

CAT Fee 2024–1 ($0.000035), resulting 

in a total deficit of approximately 

$400,000 during the September 1, 2024 

through December 31, 2024 period, 

which FINRA is not seeking to 

recover.31

To implement Prospective CAT Cost 

Recovery Fee 2024–1, FINRA proposes 

to adopt Rule 6897(b)(1)(C)(i) to provide 

that each member CAT Executing 

Broker shall receive its first invoice 

from FINRA in October 2024, setting 

forth the Prospective CAT Cost 

Recovery Fee 2024–1 fees calculated 

based on transactions in September 

2024, and shall receive an invoice for 

Prospective CAT Cost Recovery Fee 

2024–1 from FINRA for each month 

thereafter until January 2025. As 

provided in proposed Rule 

6897(b)(1)(C)(ii), FINRA shall provide 

each member CAT Executing Broker 

with an invoice for Prospective CAT 

Cost Recovery Fee 2024–1 on a monthly 

basis (which shall be separate from the 

invoice provide by CAT LLC with 

respect to CAT Fee 2024–1). Each 

monthly invoice provided by FINRA 

shall set forth a fee for each transaction 

in Eligible Securities executed by the 

CAT Executing Broker in its capacity as 

the CEBB and/or the CEBS (as 

applicable) otherwise than on an 

exchange from the prior month as set 

forth in CAT Data. The fee assessed to 

each CEBB and CEBS for each such 

transaction will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

the Prospective CAT Cost Recovery Fee 

2024–1 fee rate of $0.000017 per 

executed equivalent share. 

Further, as provided in proposed Rule 

6897(b)(1)(C)(iii), notwithstanding the 

last invoice date of January 2025 for 

Prospective CAT Cost Recovery Fee 

2024–1 in Rule 6897(b)(1)(C)(i), 

Prospective CAT Cost Recovery Fee 

2024–1 shall continue in effect after 

January 2025, with each CAT Executing 

Broker receiving an invoice for 

Prospective CAT Cost Recovery Fee 

2024–1 each month, until a new 

subsequent Prospective CAT Cost 

Recovery Fee is in effect with regard to 

members in accordance with Section 


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32As noted in File No. SR–FINRA–2024–011, 

CAT Fee 2024–1 would continue in effect after 

January 2025 until a new subsequent CAT Fee to 

collect the Industry Members’ designated portion of 

Budgeted CAT Costs is in effect, in accordance with 

Section 19(b) of the Exchange Act. While CAT Fee 

2024–1 remains in effect for Industry Members, the 

Participants would continue to be assessed a 

monthly fee based on that same fee rate, i.e., 

$0.000035 per executed equivalent share. Likewise, 

unless amended, Prospective CAT Cost Recovery 

Fee 2024–1 also would remain in effect to allow 

FINRA to continue substantially to recoup funds in 

connection with its monthly payment obligations 

under CAT Fee 2024–1, until a new CAT Fee is 

established by the Operating Committee. 

33See File No. SR–FINRA–2024–011. 

34 15 U.S.C. 78o–3(b)(6). 

35 15 U.S.C. 78o–3(b)(5). 

36 15 U.S.C. 78o–3(b)(9). 

37See 15 U.S.C. 78o–3(b)(2). 

38CAT NMS Plan Approval Order, 81 FR 84696, 

84697. 

39See supra note 31 and accompanying text. 

19(b) of the Exchange Act.32 Proposed 

paragraph (b)(1)(C)(iii) of Rule 6897 also 

states that FINRA will provide notice 

when Prospective CAT Cost Recovery 

Fee 2024–1 will no longer be in effect. 

Proposed Rule 6897(b)(1)(C)(iv) 

provides that each member CAT 

Executing Broker shall be required to 

pay each invoice for Prospective CAT 

Cost Recovery Fee 2024–1 as set forth in 

Rule 6897(b)(2). 

FINRA also proposes to adopt Rule 

6897(b)(2) (Timing and Manner of 

Payments), which provides that each 

member CAT Executing Brokers shall 

pay the CAT Cost Recovery Fees as 

required pursuant to Rule 6897(b)(1) 

each month to FINRA in the manner 

prescribed by FINRA. In addition, 

proposed paragraph (b)(2)(B) of Rule 

6897 provides that each CAT Executing 

Broker shall pay the CAT Cost Recovery 

Fees required pursuant to Rule 

6897(b)(1) within 30 days after receipt 

of an invoice or other notice indicating 

payment is due (unless a longer 

payment period is otherwise indicated). 

Beginning with the initial invoice for 

Prospective CAT Cost Recovery Fee 

2024–1 in October 2024, FINRA will 

make available to each member CAT 

Executing Broker a copy of the relevant 

details for fee liable transactions 

executed each month otherwise than on 

an exchange. Similar to the information 

that would be provided by CAT LLC to 

CAT Executing Brokers in assessing the 

off-exchange portion of CAT Fee 2024– 

1 each month,33 such information 

would provide member CAT Executing 

Brokers with the ability to understand 

the details regarding the calculation of 

their Prospective CAT Cost Recovery 

Fee 2024–1 fees. In addition, to provide 

transparency to the industry, FINRA 

will make publicly available on its 

website: (i) the total amount invoiced 

each month that Prospective CAT Cost 

Recovery Fee 2024–1 is in effect, (ii) the 

total amount invoiced for Prospective 

CAT Cost Recovery Fee 2024–1 for all 

months since its commencement, (iii) 

the total amount that FINRA is invoiced 

each month by CAT LLC in connection 

with CAT Fee 2024–1, (iv) the total 

amount that FINRA has been invoiced 

for CAT Fee 2024–1 for all months since 

its commencement, and (v) the variance, 

both on a monthly and cumulative 

basis, between the amount invoiced by 

FINRA under Prospective CAT Cost 

Recovery 2024–1 and the amount 

FINRA is invoiced under CAT Fee 

2024–1. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

effective date and the implementation 

date will be the date of filing. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,34 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest; and must not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers. FINRA also 

believes that the proposed rule change 

is consistent with the provisions of 

Section 15A(b)(5) of the Act,35 which 

requires, among other things, that 

FINRA rules provide for the equitable 

allocation of reasonable dues, fees and 

other charges among members and 

issuers and other persons using any 

facility or system that FINRA operates 

or controls. FINRA further believes that 

the proposed rule change is consistent 

with Section 15A(b)(9) of the Act, which 

requires that FINRA rules not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Exchange Act.36

Section 15A(b)(2) of the Act also 

requires that FINRA be ‘‘so organized 

and [have] the capacity to be able to 

carry out the purposes’’ of the Act and 

‘‘to comply, and . . . to enforce 

compliance by its members, and persons 

associated with its members,’’ with the 

provisions of the Exchange Act.37

FINRA believes that this proposed 

rule change is consistent with the Act 

because it is designed to assist FINRA 

in meeting regulatory obligations 

pursuant to the Plan. In approving the 

Plan, the SEC noted that the Plan ‘‘is 

necessary and appropriate in the public 

interest, for the protection of investors 

and the maintenance of fair and orderly 

markets, to remove impediments to, and 

perfect the mechanism of a national 

market system, or is otherwise in 

furtherance of the purposes of the 

Act.’’ 38 To the extent that this proposed 

rule change implements a requirement 

that facilitates FINRA’s achievement of 

its regulatory obligations under the Plan 

and applies specific requirements to 

FINRA members in this regard, FINRA 

believes that this proposed rule change 

furthers the objectives of the Plan, as 

identified by the SEC, and is therefore 

consistent with the Act. 

As discussed in detail in File No. SR– 

FINRA–2024–011, FINRA believes that 

the proposed fees paid by the CEBBs 

and CEBSs in connection with CAT Fee 

2024–1 are reasonable, equitably 

allocated and not unfairly 

discriminatory. Prospective CAT Cost 

Recovery Fee 2024–1 would similarly 

allow FINRA substantially to recover 

costs related to CAT Fee 2024–1 from 

member CAT Executing Brokers in a fair 

and reasonable manner, as 

contemplated by the Exchange Act and 

consistent with the CAT Funding Model 

Approval Order. 

Proposed Prospective CAT Cost 

Recovery Fee 2024–1 would be charged 

to member CAT Executing Brokers in 

support of the maintenance of a 

consolidated audit trail for regulatory 

purposes. The proposed fees, therefore, 

are consistent with the Commission’s 

view that regulatory fees be used for 

regulatory purposes. The proposed fees 

would not cover FINRA services 

unrelated to the CAT and would not 

result in any surplus to FINRA.39

Accordingly, FINRA believes that the 

proposed fees are reasonable, equitable 

and not unfairly discriminatory. 

The reasonableness of Prospective 

CAT Cost Recovery Fee 2024–1 and its 

consistency with the Exchange Act 

likewise is grounded in the facts 

described above and detailed in File No. 

SR–FINRA–2024–011. Specifically, the 

reasonably budgeted expenses that 

compose the portion of Budgeted CAT 

Costs 2024–1 sought substantially to be 

recovered through Prospective CAT Cost 

Recovery Fee 2024–1 were recognized 

by the SEC as appropriate for recovery 

pursuant to the formula approved in the 

CAT Funding Model (i.e., technology, 

legal, consulting, insurance, 

professional administration, and public 

relations costs). FINRA has determined 

that these costs, which are described in 

detail in File No. SR–FINRA–2024–011, 

are reasonable and it is appropriate that 

FINRA substantially recover its 

designated portion of such costs through 

Prospective CAT Cost Recovery Fee 


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40See supra note 16 and note 31 and 

accompanying text. 

41See CAT Funding Model Approval Order, 88 

FR 62628, 62645. 

42See CAT Funding Model Approval Order, 88 

FR 62628, 62636. 

43See supra note 41. 

44See supra note 16. 

45See FINRA’s Financial Guiding Principles, 

https://www.finra.org/sites/default/files/finra_

financial_guiding_principles_0.pdf. See also 

Securities Exchange Act Release No. 90176 (October 

14, 2020), 85 FR 66592, 66602–03 (October 20, 

2020) (Notice of Filing and Immediate Effectiveness 

of File No. SR–FINRA–2020–032). 

46 In its approval of the CAT Funding Model, the 

Commission determined that charging CAT fees to 

CAT Executing Brokers was reasonable. In reaching 

this conclusion the Commission noted that the use 

of CAT Executing Brokers is appropriate because 

the CAT Funding Model is based upon the 

calculation of executed equivalent shares, and, 

therefore, charging CAT Executing Brokers would 

reflect their executing role in each transaction. 

Furthermore, the Commission noted that, because 

CAT Executing Brokers are already identified in 

transaction reports from FINRA’s equity trade 

reporting facilities recorded in CAT Data, charging 

CAT Executing Brokers could streamline the billing 

process. See CAT Funding Model Approval Order, 

88 FR 62628, 62629. 

47Based on historical executed equivalent share 

volumes in Eligible Securities where FINRA was 

the relevant Participant, FINRA would expect to 

recoup roughly $3.6 million per month during the 

time that Prospective CAT Cost Recovery Fee 2024– 

1 is in effect. See supra note 31. 

48See supra note 46. 

49See supra note 46. 

50 15 U.S.C. 78o-3(b)(9). 

2024–1. FINRA also has determined that 

Prospective CAT Cost Recovery Fee 

2024–1 provides for the equitable 

allocation of fees among FINRA 

members and is not unfairly 

discriminatory, as discussed herein. 

Prospective CAT Cost Recovery Fee 

2024–1 is designed to allow FINRA to 

substantially recover its designated 

portion of Budgeted CAT Costs 2024–1, 

consistent with the Exchange Act and 

the CAT Funding Model Approval 

Order.40 In approving the CAT Funding 

Model, the Commission noted FINRA’s 

request that it acknowledge ‘‘FINRA’s 

need and ability to cover CAT costs that 

are not recovered through contractual 

arrangements through member fee 

increases, so as not to jeopardize 

FINRA’s ability to carry out its critical 

regulatory mission.’’ 41 The Commission 

also recognized that ‘‘the Exchange Act 

expressly contemplates the ability of the 

Participants to recoup their costs to 

fulfill their statutory obligations under 

the Exchange Act.’’ 42 The Commission 

further noted FINRA’s statement ‘‘that it 

would file a rule change to increase its 

member fees with the filing of any 

proposed rule change to effectuate the 

Funding Model.’’ 43 The instant 

proposed rule change to adopt 

Prospective CAT Cost Recovery Fee 

2024–1 represents such a fee with 

respect to Budgeted CAT Costs 2024–1. 

Without a mechanism to recover its 

CAT costs, FINRA, which is unique 

among the Participants as a not-forprofit, national securities association, 

would not be able to effectively sustain 

its regulatory mission.44 Thus, 

consistent with the cost allocation 

framework put in place by the SECapproved CAT Funding Model, whereby 

CEBBs and CEBSs share equal 

responsibility for the costs assessed 

directly to Industry Members based on 

their transactions in Eligible Securities, 

FINRA is seeking substantially to 

recoup its designated portion of 

Budgeted CAT Costs 2024–1 in a like 

manner that is fair, reasonable, and 

equitably allocated among FINRA’s 

member firms in their capacity as CAT 

Executing Brokers. 

Prospective CAT Cost Recovery Fee 

2024–1 is designed substantially to 

recover FINRA’s designated portion of 

budgeted CAT costs to be incurred by 

CAT LLC associated with the 

development, implementation, and 

operation of the CAT system under the 

CAT NMS Plan. Thus, Prospective CAT 

Cost Recovery Fee 2024–1 also generally 

is designed to support FINRA’s efforts to 

align its operating expenses with its 

operating revenues, target break-even 

cash flows, and continue to responsibly 

manage expenses driven by mandatory 

initiatives, like the CAT NMS Plan, in 

a manner consistent with FINRA’s 

public Financial Guiding Principles.45

FINRA’s approach in determining 

Prospective CAT Cost Recovery Fee 

2024–1, which generally is consistent 

with the approach provided for under 

the SEC-approved CAT Funding Model, 

is also reasonable and consistent with 

the Exchange Act. Specifically, similar 

to the CAT cost assessment 

methodology approved by the 

Commission, FINRA proposes to 

allocate equally among member CEBBs 

and CEBSs FINRA’s designated portion 

of the Participants’ one-third share of 

Budgeted CAT Costs 2024–1.46 FINRA 

proposes to determine the rate for 

Prospective CAT Cost Recovery Fee 

2024–1 by dividing the fee rate assessed 

to the Participants in connection with 

the implementation of CAT Fee 2024–1, 

i.e., $0.000035 per executed equivalent 

share, by two and then truncating the 

result to six decimal places such that 

member CEBBs and CEBSs would each 

be subject to an equal fee, i.e., 

$0.000017 per executed equivalent 

share, for each transaction in Eligible 

Securities executed otherwise than on 

an exchange. Therefore, for each month 

that Prospective CAT Cost Recovery Fee 

2024–1 is in effect, member CEBBs and 

CEBSs will pay a fee to FINRA based on 

the same transactions used to determine 

fees payable by CEBBs and CEBSs to 

CAT LLC under CAT Fee 2024–1 for offexchange transactions.47 FINRA 

believes that this approach is reasonable 

in that, as is the case with the SECapproved CAT Funding Model, it 

apportions the assessed fee for members 

equally between the CAT Executing 

Broker for the buyer and the seller.48

FINRA believes that it is reasonable, 

appropriate, and consistent with the 

Exchange Act to determine Prospective 

CAT Cost Recovery Fee 2024–1 by 

dividing CAT Fee 2024–1, i.e., 

$0.000035 per executed equivalent 

share, by two (which equals 

$0.0000175) and then truncating the 

result to six decimal places such that 

member CEBBs and CEBSs would each 

be subject to an equal fee of $0.000017 

per executed equivalent share. As 

discussed above, equally apportioning 

the fee between the CEBBs and CEBSs 

is consistent with the approach to 

apportioning costs between Executing 

Brokers under the SEC-approved CAT 

Funding Model.49 In addition, FINRA 

believes it is reasonable and appropriate 

at this time to truncate half of CAT Fee 

2024–1 to limit the Prospective CAT 

Cost Recovery Fee 2024–1 fee rate to six 

decimal places. As noted above and in 

File No. SR–FINRA–2024–011, CAT 

LLC determined to use six decimal 

places for the CAT Fee 2024–1 fee rate 

to balance the accuracy of the 

calculation with the potential systems 

and other impracticalities of using 

additional decimal places in the 

calculation. FINRA likewise believes 

that it is appropriate at this time to use 

six decimal places to maintain 

consistency with the approach 

determined by CAT LLC, to which 

members have been testing since earlier 

this year, which should reduce potential 

complexity in connection with the fee 

and billing structure for Prospective 

CAT Cost Recovery Fee 2024–1. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Section 

15A(b)(9) of the Act 50 requires that 

FINRA’s rules not impose any burden 

on competition that is not necessary or 

appropriate in furtherance of the 

purpose of the Exchange Act. FINRA 

notes that Prospective CAT Cost 

Recovery Fee 2024–1 is designed to 


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51See CAT Funding Model Approval Order, 88 

FR 62628, 62678–86. 

52See supra note 51. 

53See also File No. SR–FINRA–2024–011. 

54For the twelve months from June 1, 2023, 

through May 31,2024, approximately 1.25 trillion 

shares of NMS stocks were reported to the TRF, and 

approximately 1.16 trillion shares of OTC Equity 

Securities were reported to ORF. Given that each 

executed share for a transaction in an OTC Equity 

Security is counted as 0.01 equivalent share, FINRA 

estimates that the executed equivalent share volume 

for NMS stocks and OTC Equity Securities reported 

to a FINRA equity trade reporting facility in that 

twelve-month period is approximately 1.26 trillion 

shares. Dividing that figure by twelve provides the 

average monthly executed equivalent share volume 

of approximately 104.7 billion shares. 

55See also File No. SR–FINRA–2024–011 and 

CAT Funding Model Approval Order, 88 FR 62628. 

56See supra notes 29 through 31 and 

accompanying text. 

57See CAT Funding Model Approval Order, 88 

FR 62628, 62684. 

58 15 U.S.C. 78s(b)(3)(A)(ii). 

59 17 CFR 240.19b–4(f)(2). 

assist FINRA in meeting its regulatory 

obligations pursuant to the Plan. 

Furthermore, in approving the CAT 

Funding Model, the SEC analyzed the 

potential competitive impact of the CAT 

Funding Model, including competitive 

issues related to market services, trading 

services and regulatory services, 

efficiency concerns, and capital 

formation.51 The SEC also analyzed the 

potential effect of CAT fees calculated 

pursuant to the CAT Funding Model on 

affected categories of market 

participants, including Participants 

(including exchanges and FINRA), 

Industry Members (including 

subcategories of Industry Members, 

such as alternative trading systems, CAT 

Executing Brokers and market makers), 

and investors generally, and considered 

market effects related to equities and 

options, among other things.52 Based on 

this analysis, the SEC approved the CAT 

Funding Model as compliant with the 

Exchange Act. The Prospective CAT 

Cost Recovery Fee 2024–1 framework 

generally is consistent with the fee 

framework of the CAT Funding Model, 

as approved by the SEC. 

As discussed in File No. SR–FINRA– 

2024–011, each of the inputs into the 

calculation of CAT Fee 2024–1 is 

reasonable and the resulting fee rate for 

CAT Fee 2024–1 is reasonable. 

Therefore, Prospective CAT Cost 

Recovery Fee 2024–1, for these same 

reasons, is reasonable and would not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purpose of the 

Exchange Act. 

Economic Impact Assessment 

Based on the regulatory need 

discussed above, FINRA has undertaken 

an economic impact assessment, as set 

forth below, to analyze the potential 

economic impacts of the proposed rule 

change, including potential costs, 

benefits, and distributional and 

competitive effects, relative to the 

current baseline. 

Regulatory Need 

As discussed above under the 

‘‘FINRA’s Designated Portion of 

Budgeted CAT Costs 2024–1’’ section, 

FINRA is filing a proposed rule change 

to establish Prospective CAT Cost 

Recovery Fee 2024–1 substantially to 

recover its designated portion of the 

Participants’ share of Budgeted CAT 

Costs 2024–1. FINRA intends that the 

fee framework and timeline for 

Prospective CAT Cost Recovery Fee 

2024–1 generally correspond to the fee 

framework and timeline put in place by 

CAT LLC with respect to CAT Fee 

2024–1, as provided for in File No. SR– 

FINRA–2024–011 and as discussed 

above. 

Economic Baseline 

Also, as discussed above under the 

‘‘FINRA’s Designated Portion of 

Budgeted CAT Costs 2024–1’’ section, 

FINRA arrived at the fee rate for 

Prospective CAT Cost Recovery Fee 

2024–1 by dividing by two the fee rate 

assessed to the Participants in 

connection with the implementation of 

CAT Fee 2024–1, i.e., $0.000035 per 

executed equivalent share, and 

truncating the result to six decimal 

places.53

For the twelve months from June 1, 

2023, through May 31, 2024, based on 

transactions reported to a FINRA TRF or 

to the ORF, there were 896 firm MPIDs 

that executed at least one purchase or 

sale of an equivalent share of an Eligible 

Security.54 The top 50 MPIDs by 

reported executed equivalent share 

volume bought and/or sold 

2,161,308,428,108 equivalent shares, or 

85.08% of total shares bought and/or 

sold. 

Economic Impacts 

FINRA’s proposal substantially to 

recover its designated portion of the 

Participants’ share of Prospective CAT 

Costs applies an approach generally 

consistent with the CAT Funding Model 

as approved by the SEC in that it 

assesses half of the fee rate that is 

assessed to FINRA under CAT Fee 

2024–1 (truncated to six decimal places) 

to each of the CEBB and CEBS for 

transactions where FINRA is the 

relevant Participant.55 With regard to 

off-exchange transactions in Eligible 

Securities, generally the same members 

that will be assessed Prospective CAT 

Cost Recovery Fee 2024–1 will also be 

assessed CAT Fee 2024–1. Therefore, 

FINRA’s proposed approach in 

substantially recovering its designated 

portion of Budgeted CAT Costs 2024–1 

should reduce potential complexity in 

connection with the fee and billing 

structure for Prospective CAT Cost 

Recovery Fee 2024–1.56

As the SEC noted in approving the 

revised CAT Funding Model, if FINRA 

passes on its portion of the CAT fee 

allocation to its member firms and 

exchanges choose not to pass through 

their CAT fee allocations to their 

members, the cost to transact offexchange may increase relative to 

executing on an exchange, potentially 

giving exchanges a competitive 

advantage.57 However, we do not know 

whether or to what extent (or how) the 

exchanges may seek to recover their 

portion of the Budgeted CAT Costs 

2024–1, and we do not know whether or 

to what extent member firms will 

choose to pass through exchangeincurred CAT fees to customers. We also 

note that FINRA members remain 

subject to regulatory obligations, such as 

best execution obligations, with respect 

to their order routing decisions. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Exchange Act 58

and Rule 19b–4(f)(2) thereunder,59

because it establishes or changes a due, 

or fee. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend the rule change if 

it appears to the Commission that the 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or would otherwise further 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 


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60 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number 

SR–FINRA–2024–012 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–FINRA–2024–012. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of 

FINRA. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. 

All submissions should refer to file 

number SR–FINRA–2024–012 and 

should be submitted on or before 

October 1, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.60

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–20323 Filed 9–9–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–100918; File No. SR–NYSE– 

2024–47] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Amend Section 102.01 of the NYSE 

Listed Company Manual To Provide 

That the Distribution Standard Therein 

Will Be Calculated on a Worldwide 

Basis 

September 4, 2024. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on August 

22, 2024, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Section 102.01 of the NYSE Listed 

Company Manual to provide that the 

distribution standard therein will be 

calculated on a worldwide basis. The 

proposed rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Section 102.01A of the Manual sets 

forth the Exchange’s minimum initial 

listing requirements with respect to 

distribution for companies seeking to 

list under the Exchange’s ‘‘domestic’’ 

initial listing standards. A note included 

in Section 102.01B (under the heading 

‘‘Calculations under the Distribution 

Criteria’’) provides that, when 

considering a listing application from a 

company organized under the laws of 

Canada, Mexico or the United States 

(‘‘North America’’), the Exchange will 

include all North American holders and 

North American trading volume in 

applying the minimum stockholder and 

trading volume requirements of Section 

102.01A. 

Notwithstanding the foregoing, the 

note included in Section 102.01B also 

provides that, in connection with the 

listing of any issuer from outside North 

America, the Exchange will have the 

discretion, but will not be required, to 

consider holders and trading volume in 

the company’s home country market or 

primary trading market outside the 

United States in determining whether a 

company is qualified for listing under 

Section 102.01, provided such market is 

a regulated stock exchange. The note 

specifies that, in exercising this 

discretion, the Exchange would 

consider all relevant factors including: 

(i) whether the information was derived 

from a reliable source, preferably either 

a regulated securities market or a 

transfer agent that was subject to 

governmental regulation; (ii) whether 

there existed efficient mechanisms for 

the transfer of securities between the 

company’s non-U.S. trading market and 

the United States; and (iii) the number 

of shareholders and the extent of trading 

in the company’s securities in the 

United States prior to the listing. 

The Exchange proposes to amend the 

note in Section 102.01B under the 

heading ‘‘Calculations under the 

Distribution Criteria’’ to provide that, 

when considering a listing application 

from a company regardless of whether 

the company is domestic or foreign, the 

Exchange will include all holders on a 

global basis and worldwide trading 

volume in applying the minimum 

stockholder and trading volume 

requirements of Section 102.01A. As the 

discretion provided with respect to the 

inclusion of non-U.S. holders and 

trading volume in the current rule 

would no longer be relevant if there was 

no geographic limitation on the 


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