75848 Federal Register / Vol. 89, No. 179 / Monday, September 16, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3An ‘‘Industry Member’’ is defined as ‘‘a member 

of a national securities exchange or a member of a 

national securities association.’’ See Miami 

International Securities Exchange LLC (‘‘MIAX 

Rule’’) Rule 1701(u). The Exchange notes that MIAX 

Chapter XVII is incorporated by reference into the 

Exchange’s rulebook. As such, MIAX Chapter XVII 

also applies to the Exchange. See also Section 1.1 

of the CAT NMS Plan. Unless otherwise specified, 

capitalized terms used in this rule filing are defined 

as set forth in the CAT NMS Plan and/or the CAT 

Compliance Rule. See MIAX Rule 1701. 

4The term ‘‘CAT LLC’’ may be used to refer to 

Consolidated Audit Trail, LLC or CAT NMS, LLC, 

depending on the context. 

5Securities Exchange Act Rel. No. 67457 (July 18, 

2012), 77 FR 45721 (Aug. 1, 2012) (‘‘Rule 613 

Adopting Release’’). 

6Securities Exchange Act Rel. No. 79318 (Nov. 

15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘CAT NMS 

Plan Approval Order’’). 

7Section 11.1(b) of the CAT NMS Plan. 

8Securities Exchange Act Rel. No. 98290 (Sept. 6, 

2023), 88 FR 62628 (Sept. 12, 2023) (‘‘CAT Funding 

Model Approval Order’’). 9Under the CAT Funding Model, the Operating 

Committee may establish one or more Historical 

CAT Assessments. Section 11.3(b) of the CAT NMS 

Plan. This filing only establishes Historical CAT 

Assessment 1 related to certain Historical CAT 

Costs as described herein; it does not address any 

other potential Historical CAT Assessment related 

to other Historical CAT Costs. In addition, under 

the CAT Funding Model, the Operating Committee 

also may establish CAT Fees related to CAT costs 

going forward. Section 11.3(a) of the CAT NMS 

Plan. This filing does not address any potential 

CAT Fees related to CAT costs going forward. Any 

such other fee for any other Historical CAT 

Assessment or CAT Fee for Prospective CAT Costs 

will be subject to a separate fee filing. 

10Section 11.3(b) of the CAT NMS Plan. 11 In approving the CAT Funding Model, the 

Commission stated that, ‘‘[i]n the Commission’s 

view, the proposed recovery of the Past CAT Costs 

via the Historical CAT Assessment is reasonable.’’ 

CAT Funding Model Approval Order at 62662. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–100962; File No. SR– 

SAPPHIRE–2024–27] 

Self-Regulatory Organizations; MIAX 

Sapphire LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Establish Fees for 

Industry Members Related to Certain 

Historical Costs of the National Market 

System Plan Governing the 

Consolidated Audit Trail 

September 6, 2024. 

Pursuant to the provisions of Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on August 23, 2024, MIAX Sapphire, 

LLC (‘‘MIAX Sapphire’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. 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 is filing a proposal to 

amend the MIAX Sapphire Fee 

Schedule (the ‘‘Fee Schedule’’) to 

establish fees for Industry Members 3

related to certain historical costs of the 

National Market System Plan Governing 

the Consolidated Audit Trail (the ‘‘CAT 

NMS Plan’’ or ‘‘Plan’’) incurred prior to 

January 1, 2022. These fees would be 

payable to Consolidated Audit Trail, 

LLC (‘‘CAT LLC’’ or ‘‘the Company’’) 4

and referred to as Historical CAT 

Assessment 1, and would be described 

in a section of the Exchange’s fee 

schedule entitled ‘‘Consolidated Audit 

Trail Funding Fees.’’ The fee rate for 

Historical CAT Assessment 1 will be 

$0.000013 per executed equivalent 

share. CAT Executing Brokers will 

receive their first monthly invoice for 

Historical CAT Assessment 1 in 

November 2024 calculated based on 

their transactions as CAT Executing 

Brokers for the Buyer (‘‘CEBB’’) and/or 

CAT Executing Brokers for the Seller 

(‘‘CEBS’’) in October 2024. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/miax-sapphire/rule-filings, at 

the Exchange’s principal office, 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 

Exchange 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. The 

Exchange 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 

On July 11, 2012, the Commission 

adopted Rule 613 of Regulation NMS, 

which required the self-regulatory 

organizations (‘‘SROs’’) 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.5 On November 15, 2016, the 

Commission approved the CAT NMS 

Plan.6 Under the CAT NMS Plan, the 

Operating Committee has the discretion 

to establish funding for 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.7 The Operating Committee 

adopted a revised funding model to 

fund the CAT (‘‘CAT Funding Model’’). 

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.8

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 (‘‘Historical CAT 

Assessment’’ fees); and (2) CAT fees 

assessed by CAT LLC and payable by 

Participants and Industry Members to 

fund prospective CAT costs 

(‘‘Prospective CAT Costs’’ fees).9

Under the CAT Funding Model, ‘‘[t]he 

Operating Committee will establish one 

or more fees (each a ‘Historical CAT 

Assessment’) to be payable by Industry 

Members with regard to CAT costs 

previously paid by the Participants 

(‘Past CAT Costs’).’’ 10 In establishing a 

Historical CAT Assessment, the 

Operating Committee will determine a 

‘‘Historical Recovery Period’’ and 

calculate a ‘‘Historical Fee Rate’’ for that 

Historical Recovery Period. Then, for 

each month in which a Historical CAT 

Assessment is in effect, each CEBB and 

CEBS would be required to pay the 

fee—the Historical CAT Assessment— 

for each transaction in Eligible 

Securities executed by the CEBB or 

CEBS from the prior month as set forth 

in CAT Data, where the Historical CAT 

Assessment for each transaction will be 

calculated by multiplying the number of 

executed equivalent shares in the 

transaction by one-third and by the 

Historical Fee Rate.11

Each Historical CAT Assessment to be 

paid by CEBBs and CEBSs is designed 


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12Section 11.3(b)(ii) of the CAT NMS Plan. 13Section 11.1(b) of the CAT NMS Plan. 

14Section 11.3(b)(iii)(B)(I) of the CAT NMS Plan. 

15Note that there may be one or more Historical 

CAT Assessments depending on the timing of the 

completion of the Financial Accountability 

Milestones, among other things. Section 11.3(b) of 

the CAT NMS Plan. 

16 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 the exchanges and FINRA’s 

equity trade reporting facilities recorded in CAT 

Data, charging CAT Executing Brokers could 

streamline the billing process. CAT Funding Model 

Approval Order at 62629. 

17Section 1.1 of the CAT NMS Plan. Note that 

CEBBs and CEBSs may, but are not required to, 

pass-through their CAT fees to their clients, who 

may, in turn, pass their fees to their clients until 

they are imposed ultimately on the account that 

executed the transaction. See CAT Funding Model 

Approval Order at 62649. 

18See Table 23, Section 4.7 (Order Trade Event) 

of the CAT Reporting Technical Specifications for 

Plan Participants, Version 4.1.0-r21 (Apr. 15, 2024), 

https://www.catnmsplan.com/sites/default/files/ 

2024-04/04.15.2024-CAT_Reporting_Technical_

Specifications_for_Participants_4.1.0-r21.pdf 

(‘‘CAT Reporting Technical Specifications for Plan 

Participants’’). 

19See Table 51, Section 5.2.5.1 (Simple Option 

Trade Event) of the CAT Reporting Technical 

Specifications for Plan Participants. 

to contribute toward the recovery of 

two-thirds of the Historical CAT Costs. 

Because the Participants previously 

have paid Past CAT Costs via loans to 

the Company, the Participants would 

not be required to pay any Historical 

CAT Assessment. In lieu of a Historical 

CAT Assessment, the Participants’ onethird share of Historical CAT Costs will 

be paid by the cancellation of loans 

made by the Participants to the 

Company on a pro rata basis based on 

the outstanding loan amounts due under 

the loans, instead of through the 

payment of a CAT fee.12 In addition, the 

Participants also will be 100% 

responsible for certain Excluded Costs 

(as discussed below). 

CAT LLC proposes to charge CEBBs 

and CEBSs (as described in more detail 

below) Historical CAT Assessment 1 to 

recover certain historical CAT costs 

incurred prior to January 1, 2022, in 

accordance with the CAT Funding 

Model. To implement this fee on behalf 

of CAT LLC, the CAT NMS Plan 

requires the Participants to ‘‘file with 

the SEC under Section 19(b) of the 

Exchange Act any such fees on Industry 

Members that the Operating Committee 

approves, and such fees shall be labeled 

as ‘Consolidated Audit Trail Funding 

Fees.’ ’’ 13 The Plan further states that 

‘‘Participants will be required to file 

with the SEC pursuant to Section 19(b) 

of the Exchange Act a filing for each 

Historical CAT Assessment.’’ 14

Accordingly, the purpose of this filing is 

to implement a Historical CAT 

Assessment on behalf of CAT LLC for 

Industry Members, referred to as 

Historical CAT Assessment 1, in 

accordance with the CAT NMS Plan.15

(1) CAT Executing Brokers 

Historical CAT Assessment 1 will be 

charged to each CEBB and CEBS for 

each applicable transaction in Eligible 

Securities.16 The CAT NMS Plan defines 

a ‘‘CAT Executing Broker’’ to mean: 

(a) with respect to a transaction in an 

Eligible Security that is executed on an 

exchange, the Industry Member 

identified as the Industry Member 

responsible for the order on the buy-side 

of the transaction and the Industry 

Member responsible for the sell-side of 

the transaction in the equity order trade 

event and option trade event in the CAT 

Data submitted to the CAT by the 

relevant exchange pursuant to the 

Participant Technical Specifications; 

and (b) with respect to a transaction in 

an Eligible Security that is executed 

otherwise than on an exchange and 

required to be reported to an equity 

trade reporting facility of a registered 

national securities association, the 

Industry Member identified as the 

executing broker and the Industry 

Member identified as the contra-side 

executing broker in the TRF/ORF/ADF 

transaction data event in the CAT Data 

submitted to the CAT by FINRA 

pursuant to the Participant Technical 

Specifications; provided, however, in 

those circumstances where there is a 

non-Industry 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 CAT 

Executing Broker for the Buyer and for 

the Seller.17

The following fields of the Participant 

Technical Specifications indicate the 

CAT Executing Brokers for the 

transactions executed on an exchange. 

EQUITY ORDER (EOT) 18

No. Field name Data type Description Include 

key 

12.n.8/13.n.8 .... member ............................ Member Alias The identifier for the member firm that is responsible for the order 

on this side of the trade. Not required if there is no order for the 

side as indicated by the NOBUYID/NOSELLID instruction. This 

must be provided if orderID is provided.

C 

OPTION TRADE (OT) 19

No. Field name Data type Description Include 

key 

16.n.13/17.n.13 member ............................ Member Alias The identifier for the member firm that is responsible for the order .. R 


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20See Table 61, Section 6.1 (TRF/ORF/ADF 

Transaction Data Event) of the CAT Reporting 

Technical Specifications for Plan Participants. 

21Section 11.3(a)(i)(B) and 11.3(b)(i)(B) of the 

CAT NMS Plan. 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.’’ 

CAT Funding Model Approval Order at 62640. 

22Section 11.3(b)(i)(C) of the CAT NMS Plan. 

23Section 11.3(b)(iii)(B)(II)(B) of the CAT NMS 

Plan. 

In addition, the following fields of the 

Participant Technical Specifications 

would indicate the CAT Executing 

Brokers for the transactions executed 

otherwise than on an exchange. 

TRF/ORF/ADF TRANSACTION DATA EVENT (TRF) 20

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 

(2) Calculation of Historical Fee Rate 1 

The Operating Committee determined 

the Historical Fee Rate to be used in 

calculating Historical CAT Assessment 

1 (‘‘Historical Fee Rate 1’’) by dividing 

the Historical CAT Costs for Historical 

CAT Assessment 1 (‘‘Historical CAT 

Costs 1’’) by the projected total executed 

share volume of all transactions in 

Eligible Securities for the Historical 

Recovery Period for Historical CAT 

Assessment 1 (‘‘Historical Recovery 

Period 1’’), as discussed in detail below. 

Based on this calculation, the Operating 

Committee has determined that 

Historical Fee Rate 1 would be 

$0.00003994969693072937 per executed 

equivalent share. This rate is then 

divided by three and rounded to 

determine the fee rate of $0.000013 per 

executed equivalent share that will be 

assessed to CEBBs and CEBSs, as also 

discussed in detail below. 

(A) Executed Equivalent Shares for 

Transactions in Eligible Securities 

Under the CAT NMS Plan, for 

purposes of calculating each Historical 

CAT Assessment, executed equivalent 

shares in a transaction in Eligible 

Securities will be 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.21

(B) Historical CAT Costs 1 

The CAT NMS Plan states that ‘‘[t]he 

Operating Committee will reasonably 

determine the Historical CAT Costs 

sought to be recovered by each 

Historical CAT Assessment, where the 

Historical CAT Costs will be Past CAT 

Costs minus Past CAT Costs reasonably 

excluded from Historical CAT Costs by 

the Operating Committee. Each 

Historical CAT Assessment will seek to 

recover from CAT Executing Brokers 

two-thirds of Historical CAT Costs 

incurred during the period covered by 

the Historical CAT Assessment.’’ 22 As 

described in detail below, Historical 

CAT Costs 1 would be $318,059,819. 

This figure includes Past CAT Costs of 

$401,312,909 minus certain Excluded 

Costs of $83,253,090. Participants 

collectively will remain responsible for 

one-third of Historical CAT Costs 1 

(which is $106,019,939.67), plus the 

Excluded Costs of $83,253,090. CEBBs 

collectively will be responsible for onethird of Historical CAT Costs 1 (which 

is $106,019,939.67), and CEBSs 

collectively will be responsible for onethird of Historical CAT Costs 1 (which 

is $106,019,939.67). The following 

describes in detail Historical CAT Costs 

1 with regard to four separate historical 

time periods as well as Past CAT Costs 

excluded from Historical CAT Costs 1 

(‘‘Excluded Costs’’). The following cost 

details are provided in accordance with 

the requirement in the CAT NMS Plan 

to provide in the fee filing ‘‘a brief 

description of the amount and type of 

Historical CAT Costs, including (1) the 

technology line items of cloud hosting 

services, operating fees, CAIS operating 

fees, change request fees, and 

capitalized developed technology costs, 

(2) legal, (3) consulting, (4) insurance, 

(5) professional and administration and 

(6) public relations costs.’’ 23 Each of the 

costs described below are reasonable, 

appropriate and necessary for the 

creation, implementation and 

maintenance of CAT. 

(i) Historical CAT Costs Incurred Prior 

to June 22, 2020 (Pre-FAM Costs) 

Historical CAT Costs 1 would include 

costs incurred by CAT prior to June 22, 

2020 (‘‘Pre-FAM Period’’) and already 

funded by the Participants, excluding 

Excluded Costs (described further 

below). Historical CAT Costs 1 would 

include costs for the Pre-FAM Period of 

$124,290,730. The Participants would 

remain responsible for one-third of this 

cost (which they have previously paid) 

($41,430,243.33), and Industry Members 

would be responsible for the remaining 

two-thirds, with CEBBs paying onethird ($41,430,243.33) and CEBSs 

paying one-third ($41,430,243.33). 

These costs do not include Excluded 

Costs, as discussed further below. The 

following table breaks down Historical 

CAT Costs 1 for the Pre-FAM Period 

into the categories set forth in Section 

11.3(b)(iii)(B)(II) of the CAT NMS Plan. 

Operating expense 

Historical CAT 

costs 1 for 

Pre-FAM Period 

(prior to June 22, 2020) * 

Capitalized Developed Technology Costs ** ....................................................................................................................... $51,847,150 

Technology Costs ................................................................................................................................................................ 33,568,579 

Cloud Hosting Services ................................................................................................................................................ 10,268,840 

Operating Fees ............................................................................................................................................................. 21,085,485 

CAIS Operating Fees ................................................................................................................................................... 2,072,908 

Change Request Fees ................................................................................................................................................. 141,346 


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24With respect to certain costs that were 

‘‘appropriately excluded,’’ such excluded costs 

relate to the amortization of capitalized technology 

costs, which are amortized over the life of the Plan 

Processor Agreement. As such costs have already 

been otherwise reflected in the filing, their 

inclusion would double count the capitalized 

technology costs. In addition, amortization is a noncash expense. 

25CAT NMS, LLC was formed by FINRA and the 

U.S. national securities exchanges to implement the 

requirements of SEC Rule 613 under the Exchange 

Act. SEC Rule 613 required the SROs to jointly 

submit to the SEC the CAT NMS Plan to create, 

implement and maintain the CAT. The SEC 

approved the CAT NMS Plan on November 15, 

2016. CAT NMS Plan Approval Order. 

26On August 29, 2019, the Participants formed a 

new Delaware limited liability company named 

Consolidated Audit Trail, LLC for the purpose of 

conducting activities related to the CAT from and 

after the effectiveness of the proposed amendment 

of the CAT NMS Plan to replace CAT NMS, LLC. 

See Securities Exchange Act Rel. No. 87149 (Sept. 

27, 2019), 84 FR 52905 (Oct. 3, 2019). 

27For each of the costs paid by CAT NMS, LLC 

and Consolidated Audit Trail, LLC as discussed 

throughout this filing, CAT NMS, LLC and 

Consolidated Audit Trail, LLC paid these costs via 

loan contributions by the Participants to CAT NMS, 

LLC and Consolidated Audit Trail, LLC, 

respectively. 

28Appendix D–4 of the CAT NMS Plan at n.262. 

29Appendix D–5 of the CAT NMS Plan. 

30See Section 6.3(d) of the CAT NMS Plan. 

31See Securities Exchange Rel. No. 88702 (Apr. 

20, 2020), 85 FR 23075 (Apr. 24, 2020) (‘‘Phased 

Reporting Exemptive Relief Order’’) for a 

description of Phase 2a and Phase 2b Industry 

Member Data. 

32See Section 6.5(a)(ii) of the CAT NMS Plan. 

Operating expense 

Historical CAT 

costs 1 for 

Pre-FAM Period 

(prior to June 22, 2020) * 

Legal .................................................................................................................................................................................... 19,674,463 

Consulting ............................................................................................................................................................................ 17,013,414 

Insurance ............................................................................................................................................................................. 880,419 

Professional and administration .......................................................................................................................................... 1,082,036 

Public relations ............................................................................................................................................................. 224,669 

Total Operating Expenses ............................................................................................................................................ 124,290,730 

* The costs described in this table of costs for the Pre-FAM Period were calculated based upon CAT LLC’s review of applicable bills and invoices and related financial statements. CAT LLC financial statements are available on the CAT website. In addition, in accordance with Section 

6.6(a)(i) of the CAT NMS Plan, in 2018 CAT LLC provided the SEC with ‘‘an independent audit of fees, costs, and expenses incurred by the Participants on behalf of the Company prior to the Effective Date of the Plan that will be publicly available.’’ The audit is available on the CAT 

website. 

** The non-cash amortization of these capitalized developed technology costs of $2,115,545 incurred during the period prior to June 22, 2020 

have been appropriately excluded from the above table.24

The Pre-FAM Period includes a broad 

range of CAT-related activity from 2012 

through June 22, 2020, including the 

evaluation of the requirements of SEC 

Rule 613, the development of the CAT 

NMS Plan, the evaluation and selection 

of the initial and successor Plan 

Processors, the commencement of the 

creation and implementation of the CAT 

to comply with Rule 613 and the CAT 

NMS Plan, including technical 

specifications for transaction reporting 

and regulatory access, and related 

technology and the commencement of 

reporting to the CAT. The following 

describes the costs for each of the 

categories for the Pre-FAM Period. 

(a) Technology Costs—Cloud Hosting 

Services 

The $10,268,840 in technology costs 

for cloud hosting services represent 

costs incurred for services provided by 

the cloud services provider for the CAT, 

Amazon Web Services, Inc. (‘‘AWS’’), 

during the Pre-FAM Period. 

As part of its proposal for acting as 

the successor Plan Processor for the 

CAT, FCAT selected AWS as a 

subcontractor to provide cloud hosting 

services. In 2019, after reviewing the 

capabilities of other cloud services 

providers, FCAT determined that AWS 

was the only cloud services provider at 

that time sufficiently mature and 

capable of providing the full suite of 

necessary cloud services for the CAT, 

including, for example, the security, 

resiliency and complexity necessary for 

the CAT computing requirements. The 

use of cloud hosting services is standard 

for this type of high-volume data 

activity and reasonable and necessary 

for implementation of the CAT, 

particularly given the substantial data 

volumes associated with the CAT. 

Under the Plan Processor Agreement 

with FCAT, CAT LLC is required to pay 

FCAT the fees incurred by the Plan 

Processor for cloud hosting services 

provided by AWS as FCAT’s 

subcontrator [sic] on a monthly basis for 

the cloud hosting services, and FCAT, 

in turn, pays such fees to AWS. The fees 

for cloud hosting services were 

negotiated by FCAT on an arm’s length 

basis with the goals of managing cost 

and receiving services required to 

comply with the CAT NMS Plan and 

Rule 613, taking into consideration a 

variety of factors, including the 

expected volume of data, the breadth of 

services provided and market rates for 

similar services. The fees for cloud 

hosting services during the Pre-FAM 

Period were paid to FCAT by CAT NMS, 

LLC25 and subsequently Consolidated 

Audit Trail, LLC (as previously noted, 

both entities are referred to generally as 

‘‘CAT LLC’’),26 and FCAT, in turn, paid 

AWS. CAT LLC was funded via loan 

contributions by the Participants.27

AWS was engaged by FCAT to 

provide a broad array of cloud hosting 

services for the CAT, including data 

ingestion, data management, and 

analytic tools. Services provided by 

AWS include storage services, 

databases, compute services and other 

services (such as networking, 

management tools and DevOps tools). 

AWS also was engaged to provide 

various environments for CAT, such as 

development, performance testing, test 

and production environments. 

The cost for AWS services for the 

CAT is a function of the volume of CAT 

Data. The greater the amount of CAT 

Data, the greater the cost of AWS 

services to the CAT. During the PreFAM Period from the engagement of 

AWS in February 2019 through June 

2020, AWS provided cloud hosting 

services for volumes of CAT Data far in 

excess of the volume predictions set 

forth in the CAT NMS Plan. The CAT 

NMS Plan states, when all CAT 

Reporters are submitting their data to 

the CAT, it ‘‘must be sized to receive[,] 

process and load more than 58 billion 

records per day,’’ 28 and that ‘‘[i]t is 

expected that the Central Repository 

will grow to more than 29 petabytes of 

raw, uncompressed data.’’ 29 However, 

the volume of CAT Data for the PreFAM Period was far in excess of these 

predicted levels. By the end of this 

period, data submitted to the CAT 

included options and equities 

Participant Data,30 Phase 2a and Phase 

2b Industry Member Data 31 (including 

certain linkages), as well as SIP Data,32

reference data and other types of Other 


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33See Appendix C–108 of the CAT NMS Plan. 34Note that the volume data described in this 

table does not include CAIS data. 

35The term ‘‘Bidder’’ is defined in Section 1.1 of 

the CAT NMS Plan. 

36Letter from Michael J. Simon, Chair, CAT NMS, 

LLC Operating Committee, to Brent J. Fields, 

Secretary, SEC (Apr. 9, 2019), https://www.sec.gov/ 

divisions/marketreg/rule613-info-notice-of-planprocessor-selection-040919.pdf. 

37 Id. 

38The use of Exegy to provide market data, 

including the costs and market data provided, is 

discussed below in Section 3(a)(2)(B)(i)(i). 

Data.33 The following chart provides 

data regarding the average daily volume, 

cumulative total events, total compute 

hours and storage footprint of the CAT 

during the Pre-FAM Period.34

Date range: 

3/29/19 to 4/12/20 * 

Date range: 

4/13/20 to 6/21/20 ** 

Average Daily Volume in Billions: 

Participant—Equities ........................................................................................................ 5 5

Participant—Options ......................................................................................................... 80 981 

Industry Member—Equities .............................................................................................. ........................................ 3 

Industry Member—Options ............................................................................................... ........................................ 0.04 

SIP—Options & Equities .................................................................................................. 64 70 

Average Total Daily Volume ............................................................................................. 149 166 

Cumulative Total Events for the Period .................................................................................. 3,890 4,990 

Total Compute Hours for the Period ....................................................................................... *** N/A 5,663,247 

Storage Footprint at End of Period (Petabytes) ...................................................................... 30.57 47.96

* The Participant Equities in RSA format. 

** Start of Industry Member reporting on 4/13/2020. 

*** Note that, although there were compute hours during this period, data related to such compute hours are no longer available in current 

data. 

(b) Technology Costs—Operating Fees 

The $21,085,485 in technology costs 

related to operating fees represent costs 

incurred with regard to activities of 

FCAT as the Plan Processor. Operating 

fees are those fees paid by CAT LLC to 

FCAT as the Plan Processor to operate 

and maintain the CAT and to perform 

business operations related to the 

system, including compliance, security, 

testing, training, communications with 

the industry (e.g., management of the 

FINRA CAT Helpdesk, FAQs, website 

and webinars) and program 

management as required by the CAT 

NMS Plan. 

FCAT was selected to assume the role 

of the successor Plan Processor. Prior to 

this selection, the Participants engaged 

in discussions with two prior Bidders 35

for the successor Plan Processor role. 

The Operating Committee formed a 

Selection Subcommittee in accordance 

with Section 4.12 of the CAT NMS Plan 

to evaluate and review Bids and to make 

a recommendation to the Operating 

Committee with respect to the selection 

of the successor Plan Processor. In an 

April 9, 2019 letter to the Commission, 

the Participants described the reasons 

for its selection of the successor Plan 

Processor: 

The Selection Subcommittee 

considered factors including, but not 

limited to, the following, in 

recommending FINRA to the Operating 

Committee as the successor Plan 

Processor: 

a. FINRA’s specialized technical expertise 

and capabilities in the area of broker-dealer 

technology; 

b. The need to appoint a successor Plan 

Processor with specialized expertise to 

develop, implement, and maintain the CAT 

System in accordance with the CAT NMS 

Plan and SEC Rule 613; 

c. FINRA’s detailed proposal in response to 

CATLLC’s recent inquiries; and 

d. FINRA’s data query and analytics 

systems demonstration to the Participants. 

Based on these and other factors, the 

Selection Subcommittee determined that 

FINRA was the most appropriate Bidder to 

become the successor Plan Processor.36

On February 26, 2019, the Operating 

Committee (with FINRA recusing itself) 

voted to select FINRA as the successor 

Plan Processor pursuant to Section 6.1(t) 

of the CAT NMS Plan.37 On March 29, 

2019, CAT LLC and FCAT (a wholly 

owned subsidiary of FINRA) entered 

into a Plan Processor Agreement 

pursuant to which FCAT would perform 

the functions and duties of the Plan 

Processor contemplated by the CAT 

NMS Plan, including the management 

and operation of the CAT. 

Under the Plan Processor Agreement 

with FCAT, CAT LLC is required to pay 

FCAT a negotiated monthly fixed price 

for the operation of the CAT. This fixed 

price contract was negotiated on an 

arm’s length basis with the goals of 

managing costs and receiving services 

required to comply with the CAT NMS 

Plan and Rule 613, taking into 

consideration a variety of factors, 

including the breadth of services 

provided and market rates for similar 

types of activity. The operating fees 

during the Pre-FAM Period were paid to 

FCAT by CAT LLC. 

From March 29, 2019 (the 

commencement of the Plan Processor 

Agreement with FCAT) through June 22, 

2020 (the end of the Pre-FAM Period), 

the Plan Processor’s activities with 

respect to the CAT included the 

following: 

• Commenced user acceptance testing 

with market data provided by Exegy 

Incorporated (‘‘Exegy’’), a market data 

provider; 38

• Published Technical Specifications 

and related reporting scenarios 

documents for Phase 2a, 2b and 2c 

reporting for Industry Members, after 

substantial engagement with SEC staff, 

Industry Members and Participants on 

the Technical Specifications; 

• Facilitated testing for Phase 2a and 

2b reporting for Industry Members; 

• Began developing Technical 

Specifications and related reporting 

scenarios documents for Phase 2d 

reporting for Industry Members, after 

substantial engagement with SEC staff, 

Industry Members and Participants on 

the Technical Specifications; 

• Published Central Repository 

Access Technical Specifications, and 

provided regulator access to test data 

from Industry Members; 

• Facilitated Participant exchanges 

that support options market makers 

sending Quote Sent Time to the CAT; 

• Facilitated the introduction of 

OPRA and Options NBBO Other Data to 

CAT; 

• Addressed compliance items, 

including drafting CAT policies and 

procedures, and addressing 

requirements under Regulation SCI; 

• Provided support to the Operating 

Committee, the Compliance 


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39The CAT website is https://

www.catnmsplan.com. 

40For a discussion of the CCID Alternative, see 

Securities Exchange Act Rel. No. 88393 (Mar. 17, 

2020), 85 FR 16152 (Mar. 20, 2020). 

41Phased Reporting Exemptive Relief Order at 

23079–80. 

42Note that CAT LLC also has incurred costs 

related to specific Industry Members (e.g., 

reprocessing costs related to Industry Member 

reporting errors). 

43Letter from the Participants to Brent J. Fields, 

Secretary, SEC (Jan. 18, 2017), https://www.sec.gov/ 

divisions/marketreg/rule613-info-notice-of-planprocessor-selection.pdf. 

Subcommittee and CAT working 

groups; 

• Assisted with interpretive efforts 

and exemptive requests regarding the 

CAT NMS Plan; 

• Oversaw the security of the CAT; 

• Monitored the operation of the 

CAT, including with regard to 

Participant and Industry Member 

reporting; 

• Provided support to subcontractors 

under the Plan Processor Agreement; 

• Provided support in discussions 

with Participants, the SEC and its staff; 

• Operated the FINRA CAT Helpdesk, 

which is the primary source for answers 

to questions about CAT, including 

questions regarding: clock 

synchronization, firm reporting 

responsibilities, interpretive questions, 

technical specifications for reporting to 

CAT and more; 

• Facilitated communications with 

the industry, including via FAQs, CAT 

Alerts, meetings, presentations and 

webinars; 

• Administered the CAT website and 

all of its content; 39 and 

• Provided technical support and 

assistance with connectivity, data 

access, and user support, including the 

use of CAT Data and query tools, for 

Participants and the SEC staff. 

(c) Technology Costs—CAIS Operating 

Fees 

The $2,072,908 in technology costs 

related to CAIS operating fees represent 

the fees paid for FCAT’s subcontractor 

charged with the development and 

operation of CAT’s Customer and 

Account Information System (‘‘CAIS’’). 

The CAT is required under the CAT 

NMS Plan to capture and store 

Customer Identifying Information and 

Customer Account Information in a 

database separate from the transactional 

database and to create a CAT-CustomerID for each Customer. 

During the Pre-FAM Period, the CAISrelated services were provided by the 

Plan Processor through the Plan 

Processor’s subcontractor, Kingland 

Systems Incorporation (‘‘Kingland’’). 

Kingland had experience operating in 

the securities regulatory technology 

space, and as a part of its proposal for 

acting as the Plan Processor for the CAT, 

FCAT selected Kingland as a 

subcontractor to provide certain CAISrelated services. 

Under the Plan Processor Agreement 

with FCAT, CAT LLC is required to pay 

to the Plan Processor the fees incurred 

by FCAT for CAIS-related services 

provided by FCAT through Kingland on 

a monthly basis. FCAT negotiated the 

fees for Kingland’s CAIS-related services 

on an arm’s length basis with the goals 

of managing costs and receiving services 

required to comply with the CAT NMS 

Plan, taking into consideration a variety 

of factors, including the services to be 

provided and market rates for similar 

types of activity. The fees for CAISrelated services during the Pre-FAM 

Period were paid by CAT LLC to FCAT. 

FCAT, in turn, paid Kingland. 

During the Pre-FAM Period, Kingland 

began development of the CAIS 

Technical Specifications and the 

building of CAIS. In addition, Kingland 

also worked on the build related to the 

CCID Alternative, an alternative 

approach to customer information that 

was not included in the CAT NMS Plan 

as originally adopted.40 Furthermore, 

Kingland also worked on the 

acceleration of the reporting of large 

trader identifiers (‘‘LTID’’) earlier than 

originally contemplated during this 

period, in accordance with exemptive 

relief granted by the SEC.41

(d) Technology Costs—Change Request 

Fees 

The technology costs related to 

change request fees include costs related 

to certain modifications, upgrades or 

other changes to the CAT. Change 

requests are standard practice and 

necessary to reflect operational changes, 

including changes related to new market 

developments, such as new market 

participants. In general, if CAT LLC 

determines that a modification, upgrade 

or other change to the functionality or 

service is necessary and appropriate, 

CAT LLC will submit a request for such 

a change to the Plan Processor. The Plan 

Processor will then respond to the 

request with a proposal for 

implementing the change, including the 

cost (if any) of such a change. CAT LLC 

then determines whether to approve the 

proposed change. The change request 

costs were paid by CAT LLC to FCAT. 

During the Pre-FAM Period, CAT LLC 

incurred costs of $141,346 related to 

change requests implemented by FCAT. 

Such change requests related to a 

development fee regarding the OPRA 

and SIP data feeds, and the reprocessing 

of certain exchange data.42

(e) Technology Costs—Capitalized 

Developed Technology Costs 

This category of costs includes 

capitalizable application development 

costs incurred in the development of the 

CAT. The capitalized developed 

technology costs for the Pre-FAM Period 

of $51,847,150 relate to technology 

provided by the Initial Plan Processor 

and the successor Plan Processor. 

Initial Plan Processor: Thesys CAT, 

LLC. The capitalized developed 

technology costs related to the Initial 

Plan Processor include costs incurred 

with regard to testing for Participant 

reporting, Participant reporting to the 

CAT, a security assessment of the CAT, 

and the development of the billing 

function for the CAT. 

On January 17, 2017, the Selection 

Committee of the CAT NMS Plan 

selected the Initial Plan Processor, 

Thesys Technologies, LLC, for the CAT 

NMS Plan pursuant to Article V of the 

CAT NMS Plan.43 The Participants 

utilized a request for proposal (‘‘RFP’’) 

to seek proposals to build and operate 

the CAT, receiving a number of 

proposals in response to the RFP. The 

Participants carefully reviewed and 

considered each of the proposals, 

including holding in-person meetings 

with each of the Bidders. After several 

rounds of review, the Participants 

selected the Initial Plan Processor in 

accordance with the CAT NMS Plan, 

taking into consideration that the Initial 

Plan Processor had experience operating 

in the securities regulatory technology 

space, among other considerations. On 

April 6, 2017, CAT LLC entered into an 

agreement with Thesys CAT LLC 

(‘‘Thesys CAT’’), a Thesys affiliate, to 

perform the functions and duties of the 

Plan Processor contemplated by the 

CAT NMS Plan, including the 

management and operation of the CAT. 

Under the agreement, CAT LLC would 

pay Thesys CAT a negotiated, fixed 

price fee for its role as the Initial Plan 

Processor. Effective January 30, 2019, 

the Plan Processor Agreement with 

Thesys CAT was terminated, and FCAT 

was subsequently selected as the 

successor Plan Processor. 

From January 17, 2017 through 

January 30, 2019, the time in which the 

Thesys CAT was engaged for the CAT, 

but excluding the period from 

November 15, 2017 through January 30, 

2019, the Initial Plan Processor engaged 

in various activities with respect to the 

CAT, including preparing iterative 

drafts of Participant Technical 


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Specifications, Industry Member 

Technical Specifications and the Central 

Repository Access Technical 

Specifications. In addition, Thesys CAT 

also developed CAT technology, 

addressed compliance items, including 

drafting CAT policies and procedures, 

addressing Regulation SCI requirements, 

establishing a CAT Compliance Officer 

and a Chief Information Security 

Officer, addressed security-related 

matters for the CAT, and worked 

towards the initiation of Participant 

reporting per the Participant Technical 

Specifications. 

Successor Plan Processor: FCAT. The 

capitalized developed technology costs 

related to FCAT include: (1) 

development costs incurred during the 

application development stage to meet 

various agreed-upon milestones 

regarding the CAT, including the 

completion of go-live functionality 

related to options ingestion and 

validation, equities regulatory services 

agreement query tool updates and 

unlinked options data query, options 

linkages release, Industry Member Phase 

2a file submission and data integrity 

(including error corrections), and 

Industry Member testing, including 

reporting relationships, ATS order type 

management, basic reporting statistics, 

SFTP data integrity feedback and error 

correction; (2) costs related to certain 

modifications, upgrades, or other 

changes to the CAT that were not 

contemplated by the agreement between 

CAT LLC and the Plan Processor, 

including a one-time development fee 

for a secure analytics workspace, a onetime development fee of an Industry 

Member connectivity solution, and a 

one-time development fee for the 

acceleration of multi-factor 

authentication; (3) CAIS 

implementation fees; and (4) license 

fees. 

(f) Legal Costs 

The legal costs of $19,674,463 

represent the fees paid for legal services 

provided by two law firms, Wilmer 

Cutler Pickering Hale and Dorr LLP 

(‘‘WilmerHale’’) and Pillsbury Winthrop 

Shaw Pittman LLP (‘‘Pillsbury’’), during 

the Pre-FAM Period. The legal costs 

exclude those costs incurred from 

November 15, 2017 through November 

15, 2018. 

Law Firm: WilmerHale. Following the 

adoption of Rule 613, the Participants 

determined it was necessary to engage 

external legal counsel to advise the 

Participants with respect to corporate 

and regulatory legal matters related to 

the CAT, including drafting and 

developing the CAT NMS Plan. The 

Participants considered a variety of 

factors in their analysis of prospective 

law firms, including (1) the firm’s 

qualifications, resources and expertise; 

(2) the firm’s relevant experience and 

understanding of the regulatory matters 

raised by the CAT and in advising on 

matters of similar scope; (3) the 

composition of the legal team; and (4) 

professional fees. Following a series of 

interviews, the Participants acting as a 

consortium determined that WilmerHale 

was well qualified given the balance of 

these considerations and engaged 

WilmerHale in February 2013. 

WilmerHale’s billing rates are 

negotiated on an annual basis and are 

determined with reference to the rates 

charged by other leading law firms for 

similar work. The Participants assess 

WilmerHale’s performance and review 

prospective budgets and staffing plans 

submitted by WilmerHale on an annual 

basis. WilmerHale’s compensation 

arrangements are reasonable and 

appropriate, and in line with the rates 

charged by other leading law firms for 

similar work. 

The legal costs for WilmerHale during 

the Pre-FAM Period included costs 

incurred from 2013 until June 22, 2020 

to address corporate and regulatory legal 

matters related to the CAT. The legal 

fees for this law firm during the period 

from February 2013 until the formation 

of the CAT NMS, LLC on November 15, 

2016 were paid directly by the 

exchanges and FINRA to WilmerHale. 

After the formation of CAT NMS LLC, 

the legal fees were paid by CAT LLC to 

WilmerHale. 

After WilmerHale was engaged in 

2013 through the end of the Pre-FAM 

Period on June 22, 2020 (excluding the 

legal costs from November 15, 2017 

through November 15, 2018), 

WilmerHale provided legal assistance to 

the CAT on a variety of matters, 

including with regard to the following: 

• Analyzed various legal matters 

associated with the Selection Plan, and 

drafted an amendment to the Selection 

Plan; 

• Assisted with the RFP and bidding 

process for the CAT Plan Processor; 

• Analyzed legal matters related to 

the Development Advisory Group 

(‘‘DAG’’); 

• Drafted the CAT NMS Plan, 

analyzed various items related to the 

CAT NMS Plan, and responded to 

comment letters on CAT NMS Plan; 

• Provided legal support for the 

formation of the legal entity, the 

governance of the CAT, including 

governance support prior to the 

adoption of the CAT NMS Plan, which 

involved support for the full committee 

of exchanges and FINRA as well as 

subcommittees of this group (e.g., Joint 

Subcommittee Group, Technical, 

Industry Outreach, Cost and Funding 

and Other Products) and the DAG, 

governance support during the 

transition to the new governance 

structure under the CAT NMS Plan, and 

governance support after the adoption of 

the CAT NMS Plan, which involved 

support for the Operating Committee, 

Advisory Committee, Compliance 

Subcommittee and CAT working 

groups; 

• Assisted with the development of 

the CAT funding model and drafted 

related amendments of the CAT NMS 

Plan and related filings; 

• Negotiated and drafted the plan 

processor agreements with the Initial 

Plan Processor and the successor Plan 

Processor; 

• Provided assistance with 

compliance with Regulation SCI; 

• Assisted with clock 

synchronization study; 

• Provided assistance with respect to 

the establishment of CAT security; 

• Drafted exemptive requests from 

CAT NMS Plan requirements, including 

with regard to options market maker 

quotes, Customer IDs, CAT Reporter IDs, 

linking allocations to executions, CAT 

reporting timeline, FDIDs, customer and 

account information, timestamp 

granularity, small industry members, 

data facility reporting and linkage, 

allocation reports, SRO-assigned market 

participant identifiers and cancelled 

trade indicators, thereby seeking to 

implement changes that would be cost 

effective and benefit Industry Members 

and Participants; 

• Assisted with the Implementation 

Plan required pursuant to Section 

6.6(c)(i) of the CAT NMS Plan; 

• Provided advice regarding CAT 

policies and procedures; 

• Analyzed the SEC’s amendment of 

the CAT NMS Plan regarding financial 

accountability; 

• Provided interpretations of and 

related to the CAT NMS Plan; 

• Provided support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretive and implementation issues; 

and 

• Assisted with third-party vendor 

agreements. 

Law Firm: Pillsbury. The legal costs 

for CAT during the Pre-FAM Period 

include costs related to the legal 

services performed by Pillsbury. The 

Participants interviewed this law firm as 

well as other potential law firms to 

provide legal assistance regarding 

certain liability matters. After 

considering a variety of factors in its 

analysis, including the relevant 

expertise and fees of the firm, CAT LLC 


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determined to hire Pillsbury in April 

2019. The hourly fee rates for this law 

firm were in line with market rates for 

specialized legal expertise. The legal 

fees were paid by CAT LLC to Pillsbury. 

The legal costs for Pillsbury during the 

Pre-FAM Period included costs incurred 

from April 2019 until June 22, 2020 to 

address legal matters regarding the 

agreements between CAT Reporters and 

CAT LLC concerning certain terms 

associated with CAT Reporting (the 

‘‘Reporter Agreement’’). During that 

period, Pillsbury advised CAT LLC 

regarding applicable legal matters, 

participated in negotiations between the 

Participants and Industry Members, 

participated in meetings with senior 

SEC staff, the Chairman, and 

Commissioners, represented CAT LLC 

and the Participants in an SEC 

administrative proceeding, and drafted a 

proposed amendment to the CAT NMS 

Plan regarding liability matters. Liability 

issues related to the CAT are important 

matters that needed to be resolved and 

clarified. CAT LLC’s efforts to seek such 

resolution and clarity work to the 

benefit of Participants, Industry 

Members and other market participants. 

Moreover, litigation involving CAT LLC 

is an expense of operating the CAT, and, 

therefore, is appropriately an obligation 

of both Participants and Industry 

Members under the CAT Funding 

Model. 

(g) Consulting Costs 

The consulting costs of $17,013,414 

represent the fees paid to the consulting 

firm Deloitte & Touche LLP (‘‘Deloitte’’) 

as project manager during the Pre-FAM 

Period, from October 2012 until June 22, 

2020. These consulting costs include 

costs for advisory services related to the 

operation of the CAT, and meeting 

facilitation and communications 

coordination, vendor support and 

financial analyses. 

To help facilitate project management 

given the unprecedented complexity 

and scope of the CAT project, the 

Participants determined it was 

necessary to engage a consulting firm to 

assist with the CAT project in 2012, 

following the adoption of Rule 613. A 

variety of factors were considered in the 

analysis of prospective consulting firms, 

including (1) the firm’s qualifications, 

resources, and expertise; (2) the firm’s 

relevant experience and understanding 

of the regulatory issues raised by the 

CAT and in coordinating matters of 

similar scope; (3) the composition of the 

consulting team; and (4) professional 

fees. Following a series of interviews, 

the exchanges and FINRA as a 

consortium determined that Deloitte 

was well qualified given the balance of 

these considerations and engaged 

Deloitte on October 1, 2012. 

Deloitte’s fee rates are negotiated on 

an annual basis and are in line with 

market rates for this type of specialized 

consulting work. CAT LLC assesses 

Deloitte’s performance and reviews 

prospective budgets and staffing plans 

submitted by Deloitte on an annual 

basis. Deloitte’s compensation 

arrangements are reasonable and 

appropriate, and in line with the rates 

charged by other leading consulting 

firms for similar work. 

The consulting costs for CAT during 

the period from 2012 until the formation 

of the CAT NMS, LLC were paid 

directly by the Participants to Deloitte. 

After the formation of CAT NMS, LLC, 

the consulting fees were paid by CAT 

LLC to Deloitte. CAT LLC reviewed the 

consulting fees each month and 

approved the invoices. 

After Deloitte was hired in 2012 

through the end of the Pre-FAM Period 

on June 22, 2020 (excluding the 

consulting costs from November 15, 

2017 through November 15, 2018), 

Deloitte provided a variety of consulting 

services, including the following: 

• Established and implemented 

program operations for the CAT project, 

including the program managment [sic] 

office and workstream design; 

• Assisted with the Plan Processor 

selection process, including but not 

limited to, the development of the RFP 

and the bidder evaluation process, and 

facilitation and consolidation of the 

Participant’s independent reviews; 

• Assisted with the development and 

drafting of the CAT NMS Plan, 

including conducting cost-benefit 

studies, analyzing OATS and CAT 

requirements, and drafting appendices 

to the Plan; 

• Assisted with cost and fundingrelated activities for the CAT, including 

the development of the CAT funding 

model and assistance with loans and the 

CAT bank account for CAT funding; 

• Provided governance support to the 

CAT, including governance support 

prior to the adoption of the CAT NMS 

Plan, which involved support for the 

full committee of exchanges and FINRA 

as well as subcommittees of this group 

(e.g., Joint Subcommittee Group, 

Technical, Industry Outreach, Cost and 

Funding and Other Products) and the 

DAG, governance support during the 

transition to the new governance 

structure under the CAT NMS Plan and 

governance support after the adoption of 

the CAT NMS Plan, which involved 

support for the Operating Committee, 

Advisory Committee, Compliance 

Subcommittee and CAT working 

groups; 

• Provided support to the Operating 

Committee, the Chair of the Operating 

Committee and the Leadership Team, 

including project management support, 

coordination and planning for meetings 

and communications, and interfacing 

with law firms and the SEC; 

• Assisted with industry outreach 

and communications regarding the CAT, 

including assistance with industry 

outreach events, the development of the 

CAT website, frequently asked 

questions, and coordinating with the 

CAT LLC’s public relations firm; 

• Provided support for updating the 

SEC on the progress of the development 

of the CAT; 

• Provided active planning and 

coordination with and support for the 

Initial Plan Processor with regard to the 

development of the CAT, and reported 

to the Participants on the progress; 

• Coordinated efforts regarding the 

selection of the successor Plan 

Processor; 

• Assisted with the transition from 

the Initial Plan Processor to the 

successor Plan Processor, including 

support for the Operating Committee 

and successor Plan Processor for the 

new role; and 

• Provided support for third-party 

vendors for the CAT, including FCAT, 

Anchin and the law firms engaged by 

CAT LLC. 

(h) Insurance 

The insurance costs of $880,419 

represent the cost incurred for insurance 

for CAT during the Pre-FAM Period. 

Commencing in 2020, CAT LLC 

performed an evaluation of various 

potential alternatives for CAT insurance 

policies, which included engaging in 

discussions with different insurance 

companies and conducting cost 

comparisons of various alternative 

approaches to insurance. Based on an 

analysis of a variety of factors, including 

coverage and premiums, CAT LLC 

determined to purchase cyber security 

liability insurance, directors’ and 

officers’ liability insurance, and errors 

and omissions liability insurance from 

USI Insurance Services LLC (‘‘USI’’). 

Such policies are standard for corporate 

entities, and cyber security liability 

insurance is important for the CAT 

System. The annual premiums for these 

policies were competitive for the 

coverage provided. The annual 

premiums were paid by CAT LLC to 

USI. 

(i) Professional and Administration 

Costs 

In adopting the CAT NMS Plan, the 

Commission amended the Plan to add a 

requirement that CAT LLC’s financial 


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44Section 9.2 of the CAT NMS Plan. 45See Section 6.5(a)(ii) of the CAT NMS Plan. 

statements be prepared in compliance 

with GAAP, audited by an independent 

public accounting firm, and made 

publicly available.44 The professional 

and administration costs include costs 

related to accounting and accounting 

advisory services to support the 

operating and financial functions of 

CAT, financial statement audit services 

by an independent accounting firm, 

preparation of tax returns, and various 

cash management and treasury 

functions. In addition, professional and 

administration costs for the Pre-FAM 

Period include costs related to the 

receipt of market data and a security 

assessment. The costs for these 

professional and administration services 

were $1,082,036 for the Pre-FAM 

Period. 

Financial Advisory Firm: Anchin 

Accountants & Advisors (‘‘Anchin’’). 

CAT LLC determined to hire a financial 

advisory firm, Anchin, to assist with 

financial matters for the CAT in April 

2018. CAT LLC interviewed Anchin as 

well as other potential financial 

advisory firms to assist with the CAT 

project, considering a variety of factors 

in its analysis, including the firm’s 

relevant expertise and fees. The hourly 

fee rates for this firm were in line with 

market rates for these financial advisory 

services. The fees for these services 

were paid by CAT LLC to Anchin. 

After Anchin was hired in April 2018 

through the end of the Pre-FAM Period 

on June 22, 2020 (excluding the period 

from April 2018 through November 15, 

2018), Anchin provided a variety of 

services, including the following: 

• Developed, updated and 

maintained internal controls; 

• Provided cash management and 

treasury functions; 

• Facilitated bill payments; 

• Provided monthly bookkeeping; 

• Reviewed vendor invoices and 

documentation in support of cash 

disbursements; 

• Provided accounting research and 

consultations on various accounting, 

financial reporting and tax matters; 

• Addressed not-for-profit tax and 

accounting considerations; 

• Prepared tax returns; 

• Addressed various accounting, 

financial and operating inquiries from 

Participants; 

• Developed and maintained 

quarterly and annual operating and 

financial budgets, including budget to 

actual fluctuation analyses; 

• Addressed accounting and financial 

reporting matters relating to the 

transition from CAT NMS, LLC to 

Consolidated Audit Trail, LLC, 

including supporting the dissolution of 

CAT NMS, LLC; 

• Supported compliance with the 

CAT NMS Plan; 

• Worked with and provided support 

to the Operating Committee and various 

CAT working groups; 

• Prepared monthly, quarterly and 

annual financial statements; 

• Supported the annual financial 

statement audits by an independent 

auditor; 

• Reviewed historical costs from 

inception; and 

• Provided accounting and financial 

information in support of SEC filings. 

Accounting Firm: Grant Thornton LLP 

(‘‘Grant Thornton’’). In February 2020, 

CAT LLC determined to engage an 

independent accounting firm, Grant 

Thornton, to complete the audit of CAT 

LLC’s financial statements, in 

accordance with the requirements of the 

CAT NMS Plan. CAT LLC interviewed 

this firm as well as another potential 

accounting firm to audit CAT LLC’s 

financial statements, considering a 

variety of factors in its analysis, 

including the relevant expertise and fees 

of each of the firms. CAT LLC 

determined that Grant Thornton was 

well-qualified for the proposed role 

given the balance of these 

considerations. Grant Thornton’s fixed 

fee rate compensation arrangement was 

reasonable and appropriate, and in line 

with the market rates charged for these 

types of accounting services. The fees 

for these services were paid by CAT LLC 

to Grant Thornton. 

Market Data Provider: Exegy. The 

professional and administrative costs for 

the Pre-FAM Period included costs 

related to the receipt of certain market 

data for the CAT pursuant to an 

agreement with the CAT LLC, and then 

with FCAT. Exegy provided SIP Data 

required by the CAT NMS Plan. 

After performing an analysis of the 

available market data vendors to 

confirm that the data provided met the 

SIP Data requirements of the CAT NMS 

Plan and comparing the costs of the 

vendors providing the required SIP 

Data, CAT LLC determined to purchase 

market data from Exegy from July 2018 

through March 2019. CAT LLC 

determined that, unlike certain other 

vendors, Exegy provided market data 

that included all data elements required 

by the CAT NMS Plan.45 In addition, the 

fees were reasonable and in line with 

market rates for the market data 

received. Accordingly, the professional 

and administrative costs for the PreFAM Period include the Exegy costs 

from November 2018 through March 

2019. The cost of the market data was 

reasonable for the market data received. 

The fees for the market data were paid 

directly by CAT LLC to Exegy. 

Upon the termination of the contract 

between CAT LLC and Exegy, FCAT 

entered into a contract with Exegy to 

purchase the required market data from 

Exegy in July 2019. All costs under the 

contract were treated as a direct pass 

through cost to CAT LLC. Therefore, the 

fees for the market data were paid by 

CAT LLC to FCAT, who, in turn, paid 

Exegy for the market data. 

Security Assessment: RSM US LLP 

(‘‘RSM’’). The operating costs for the 

Pre-FAM Period include costs related to 

a third party security assessment of the 

CAT performed by RSM. The 

assessment was designed to verify and 

validate the effective design, 

implementation, and operation of the 

controls specified by NIST Special 

Publication 800–53, Revision 4 and 

related standards and guidelines. Such 

a security assessment is in line with 

industry practice and important given 

the data included in the CAT. CAT LLC 

determined to engage RSM to perform 

the security assessment, after 

considering a variety of factors in its 

analysis, including the firm’s relevant 

expertise and fees. The fees were 

reasonable and in line with market rates 

for such an assessment. RSM performed 

the assessment from October 2018 

through December 2018. Accordingly, 

the costs for the Pre-FAM Period 

include the costs incurred in November 

and December 2018. The cost for the 

security assessment were paid directly 

to RSM by CAT LLC. 

(j) Public Relations Costs 

The public relations costs of $224,669 

represent the fees paid to public 

relations firms during the Pre-FAM 

Period for professional communications 

services to CAT, including media 

relations consulting, strategy and 

execution. By engaging a public 

relations firm, CAT LLC was better 

positioned to understand and address 

CAT matters to the benefit of all market 

participants. Specifically, the public 

relations firms provided services related 

to communications with the public 

regarding the CAT, including 

monitoring developments related to the 

CAT (e.g., congressional efforts, public 

comments and reaction to proposals, 

press coverage of the CAT), reporting 

such developments to CAT LLC, and 

drafting and disseminating 

communications to the public regarding 

such developments as well as reporting 

on developments related to the CAT 

(e.g., amendments to the CAT NMS 

Plan). Public relations services were 


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46Section 11.6(a)(i)(A) of the CAT NMS Plan. 47As discussed above, with respect to certain 

costs that were ‘‘appropriately excluded,’’ such 

excluded costs relate to the amortization of 

capitalized technology costs, which are amortized 

over the life of the Plan Processor Agreement. As 

such costs have already been otherwise reflected in 

the filing, their inclusion would double count the 

capitalized technology costs. In addition, 

amortization is a non-cash expense. 

48See definition of ‘‘Initial Industry Member Core 

Equity and Options Reporting’’ in Section 1.1 of the 

CAT NMS Plan. 

important for various reasons, including 

monitoring comments made by market 

participants about CAT and 

understanding issues related to the CAT 

discussed on the public record. 

The services performed by each of the 

public relations firms were comparable. 

The fees for such services were 

reasonable and in line with market 

rates. Only one public relations firm 

was engaged at a time; the three firms 

were engaged sequentially as the 

primary public relations contact moved 

among the three firms during this time 

period. 

Public Relations Firm: Peppercomm, 

Inc. (‘‘Peppercomm’’). The national 

securities exchanges and FINRA, acting 

as a consortium, determined to hire the 

public relations firm Peppercomm in 

October 2014 and continued to engage 

this firm through September 2017. The 

exchanges and FINRA made this 

engagement decision after considering a 

variety of factors in its analysis, 

including the firm’s relevant expertise 

and fees. The fee rates for this public 

relations firm were negotiated on an 

arm’s length basis and were in line with 

market rates for these types of services. 

The public relations costs during the 

period from October 2014 until the 

formation of the CAT NMS, LLC were 

paid directly by the exchanges and 

FINRA to the public relations firm. After 

the formation of CAT NMS, LLC, the 

consulting fees were paid by CAT LLC. 

Public Relations Firm: Sloane & 

Company (‘‘Sloane’’). CAT LLC 

determined to hire a new public 

relations firm, Sloane, in March 2018, 

based on, among other things, their 

expertise and the primary contact’s 

history with the project. The fee rates 

for this public relations firm were in 

line with market rates for these types of 

services. The fees during the Pre-FAM 

Period were paid by CAT LLC to Sloane. 

CAT LLC continued the engagement 

with Sloane until February 2020. 

Public Relations Firm: Peak 

Strategies. CAT LLC determined to hire 

a new public relations firm, Peak 

Strategies, in March 2020, based on, 

among other things, their expertise and 

the primary contact’s history with the 

project. The fee rates for this public 

relations firm were in line with market 

rates for these types of services. The fees 

during the Pre-FAM Period were paid 

by CAT LLC to Peak Strategies. 

(ii) Historical CAT Costs Incurred in 

Financial Accountability Milestone 

Period 1 

Historical CAT Costs 1 would include 

costs incurred by CAT and already 

funded by the Participants during 

Period 1 of the Financial Accountability 

Milestones (‘‘FAM Period 1’’),46 which 

covers the period from June 22, 2020– 

July 31, 2020. Historical CAT Costs 1 

would include costs for FAM Period 1 

of $6,377,343. The Participants would 

remain responsible for one-third of this 

cost (which they have previously paid) 

($2,125,781), and Industry Members 

would be responsible for the remaining 

two-thirds, with CEBBs paying onethird ($2,125,781) and CEBSs paying 

one-third ($2,125,781). The following 

table breaks down Historical CAT Costs 

1 for FAM Period 1 into the categories 

set forth in Section 11.3(b)(iii)(B)(II) of 

the CAT NMS Plan. 

Operating expense Historical CAT costs for 

FAM Period 1 * 

Capitalized Developed Technology Costs ** ....................................................................................................................... $1,684,870 

Technology Costs ................................................................................................................................................................ 3,996,800 

Cloud Hosting Services ................................................................................................................................................ 2,642,122 

Operating Fees ............................................................................................................................................................. 1,099,680 

CAIS Operating Fees ................................................................................................................................................... 254,998 

Change Request Fees ................................................................................................................................................. ........................................

Legal .................................................................................................................................................................................... 481,687 

Consulting ............................................................................................................................................................................ 137,209 

Insurance ............................................................................................................................................................................. ........................................

Professional and administration .......................................................................................................................................... 69,077 

Public relations .................................................................................................................................................................... 7,700 

Total Operating Expenses ............................................................................................................................................ 6,377,343 

* The costs described in this table of costs for FAM Period 1 were calculated based upon CAT LLC’s review of applicable bills and invoices 

and related financial statements. CAT LLC financial statements are available on the CAT website. 

** The non-cash amortization of these capitalized developed technology costs of $362,121 incurred during FAM Period 1 have been appropriately excluded from the above table.47

By the completion of FAM Period 1, 

CAT LLC was required to implement the 

reporting by Industry Members 

(excluding Small Industry Members that 

are not OATS reporters) of equities 

transaction data and options transaction 

data, excluding Customer Account 

Information, Customer-ID and Customer 

Identifying Information.48 CAT LLC 

completed the requirements of FAM 

Period 1 by July 31, 2020. The following 

describes the costs for each of the 

categories for FAM Period 1. 

(a) Technology Costs—Cloud Hosting 

Services 

CAT LLC continued to utilize AWS in 

FAM Period 1 to provide a broad array 

of cloud hosting services for the CAT, 

including data ingestion, data 

management, and analytic tools. AWS 

continued to provide storage services, 

databases, compute services and other 

services (such as networking, 

management tools and DevOps tools), as 

well as various environments for CAT, 

such as development, performance 

testing, test, and production 

environments, during the FAM 1 Period. 

Accordingly, the $2,642,122 in 

technology costs for cloud hosting 

services represent costs incurred for 

services provided by AWS, as the cloud 

services provider, during FAM Period 1. 

The fee arrangement for AWS described 

above with regard to the Pre-FAM 

Period continued in place during FAM 

Period 1 pursuant to the Plan Processor 

Agreement. Moreover, CAT LLC 

continued to believe that AWS’s 


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49Note that the volume data described in this 

table does not include CAIS data. 

maturity in the cloud services space as 

well as the significant cost and time 

necessary to move the CAT to a different 

cloud services provider supported the 

continued engagement of AWS. 

The cost for AWS cloud services for 

the CAT continued to be a function of 

the volume of CAT Data. During the 

FAM 1 Period, the volume of CAT Data 

continued to far exceed the original 

predictions for the CAT as set forth in 

the CAT NMS Plan. During this period, 

data submitted to the CAT included 

options and equities Participant Data, 

Phase 2a and Phase 2b Industry Member 

Data (including certain linkages) as well 

as SIP Data, reference data and other 

types of Other Data. The following chart 

provides data regarding the average 

daily volume, cumulative total events, 

total compute hours and storage 

footprint of the CAT during FAM Period 

1.49

Date range: 

6/22/20–7/31/20 

Average Daily Volume in Billions: 

Participant—Equities .................................................................................................................................................... 6 

Participant—Options ..................................................................................................................................................... 103 

Industry Member—Equities .......................................................................................................................................... 7 

Industry Member—Options ........................................................................................................................................... 0.31 

SIP—Options & Equities .............................................................................................................................................. 74 

Average Total Daily Volume ......................................................................................................................................... 185 

Cumulative Total Events for the Period .............................................................................................................................. 5,190 

Total Compute Hours for the Period ................................................................................................................................... 2,612,082 

Storage Footprint at End of Period (Petabytes) .................................................................................................................. 57.47 

(b) Technology Costs—Operating Fees 

Pursuant to the Plan Processor 

Agreement discussed above, FCAT 

continued in its role as the Plan 

Processor for the CAT during FAM 

Period 1. Accordingly, the $1,099,680 in 

technology costs for operating fees 

represent costs incurred for the services 

provided by FCAT under the Plan 

Processor Agreement during FAM 

Period 1. The fee arrangement for FCAT 

described above with regard to the PreFAM Period continued in place during 

FAM Period 1 pursuant to the Plan 

Processor Agreement. During FAM 

Period 1, FCAT’s activities with respect 

to the CAT included the following: 

• Published iterative drafts of draft 

Technical Specifications for Phase 2d, 

after substantial engagement with SEC 

staff, Industry Members and Participants 

on the Technical Specifications; 

• Published iterative drafts of CAIS 

Technical Specifications, after 

substantial engagement with SEC staff, 

Industry Members and Participants on 

the Technical Specifications; 

• Facilitated Industry Member 

reporting of Quote Sent Time on 

Options Market Maker quotes; 

• Addressed compliance items, 

including drafting CAT policies and 

procedures, and addressing Regulation 

SCI requirements; 

• Provided support to the Operating 

Committee, the Compliance 

Subcommittee and CAT working 

groups; 

• Assisted with interpretive efforts 

and exemptive requests regarding the 

CAT NMS Plan; 

• Oversaw the security of the CAT; 

• Monitored the operation of the 

CAT, including with regard to 

Participant and Industry Member 

reporting; 

• Provided support to subcontractors 

under the Plan Processor Agreement; 

• Provided support in discussions 

with Participants and the SEC and its 

staff; 

• Operated the FINRA CAT Helpdesk; 

• Facilitated communications with 

the industry, including via FAQs, CAT 

Alerts, meetings, presentations and 

webinars; 

• Administered the CAT website and 

all of its content; and 

• Provided technical support and 

assistance with connectivity, data 

access, and user support, including the 

use of CAT Data and query tools, for 

Participants and the SEC staff. 

(c) Technology Costs—CAIS Operating 

Fees 

Pursuant to the Plan Processor 

Agreement discussed above, Kingland 

continued in its role as a subcontractor 

for the development and 

implementation of CAIS during FAM 

Period 1. Accordingly, the $254,998 in 

technology costs for CAIS operating fees 

represent costs incurred for services 

provided by Kingland during FAM 

Period 1. The fee arrangement for 

Kingland described above with regard to 

the Pre-FAM Period continued in place 

during FAM Period 1 pursuant to the 

Plan Processor Agreement. During FAM 

Period 1, Kingland continued the 

development of the CAIS Technical 

Specifications and building of CAIS. In 

addition, Kingland continued to work 

on the CAIS Technical Specifications 

and build related to CCID Alternative, as 

well as the acceleration of the reporting 

of LTIDs. 

(d) Technology Costs—Change Request 

Fees 

CAT LLC did not incur costs related 

to change requests during FAM Period 

1. 

(e) Technology Costs—Capitalized 

Developed Technology Costs 

Capitalized developed technology 

costs for FAM Period 1 of $1,684,870 

include capitalizable application 

development costs incurred in the 

development of the CAT by FCAT. Such 

costs include: (1) costs related to certain 

modifications, upgrades, or other 

changes to the CAT that were not 

contemplated by the agreement between 

CAT LLC and the Plan Processor, 

including separate production and 

industry test entitlements, and 

reprocessing of exchange event 

timestamps; (2) implementation fees; 

and (3) license fees. 

(f) Legal Costs 

The legal costs of $481,687 represent 

the fees paid for legal services provided 

by two law firms, WilmerHale and 

Pillsbury during FAM Period 1. 

Law Firm: WilmerHale. CAT LLC 

continued to employ WilmerHale 

during FAM Period 1 based on, among 

other things, their expertise and long 

history with the project. The hourly fee 

rates for this law firm were in line with 

market rates for specialized legal 

expertise. The legal fees during FAM 

Period 1 were paid by CAT LLC to 

WilmerHale. During FAM Period 1, 


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WilmerHale provided legal assistance to 

the CAT including with regard to the 

following: 

• Assisted with the development of 

the CAT funding model and drafted 

related amendments and fee filings; 

• Drafted exemptive requests from 

CAT NMS Plan requirements regarding, 

for example, verbal activity, options 

market maker quote sent time, TRF 

linkages, and allocations; 

• Provided interpretations related to 

CAT NMS Plan requirements, including 

the Financial Accountability Milestone 

amendment; 

• Assisted with compliance with 

Regulation SCI; 

• Provided support for the Operating 

Committee, Compliance Subcommittee, 

working groups and Leadership Team, 

including with regard to meetings with 

the SEC staff; 

• Assisted with the drafting of the 

Implementation Plan required pursuant 

to Section 6.6(c)(i) of the CAT NMS 

Plan; 

• Assisted with communications and 

presentations for the industry regarding 

CAIS; 

• Drafted SRO rule filings related to 

the CAT Compliance Rule; 

• Provided support for Compliance 

Subcommittee, including with regard to 

response to OCIE examinations and the 

annual assessment; 

• Provided guidance regarding CAT 

technical specifications; 

• Assisted with third-party vendor 

agreements; and 

• Provided support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretive and implementation issues. 

Law Firm: Pillsbury. CAT LLC 

continued to employ Pillsbury during 

FAM Period 1 based on, among other 

things, their expertise and history with 

the project. The hourly fee rates for this 

law firm were in line with market rates 

for specialized legal expertise. The legal 

fees during FAM Period 1 were paid by 

CAT LLC to Pillsbury. During FAM 

Period 1, Pillsbury provided legal 

assistance to the CAT regarding the CAT 

Reporter Agreement. During that period, 

Pillsbury advised CAT LLC regarding 

applicable legal matters and drafted a 

proposed amendment to the CAT NMS 

Plan regarding liability matters. Liability 

issues related to the CAT are important 

matters that needed to be resolved and 

clarified. CAT LLC’s efforts to seek such 

resolution and clarity work to the 

benefit of Participants, Industry 

Members and other market participants. 

(g) Consulting Costs 

The consulting costs of $137,209 

represent the fees paid to Deloitte as 

project manager during FAM Period 1. 

CAT LLC continued to employ Deloitte 

during FAM Period 1 based on, among 

other things, their expertise and 

cumulative experience with the CAT. 

The fee rates for Deloitte during FAM 

Period 1 were negotiated and in line 

with market rates for this type of 

specialized consulting work. The 

consulting fees during FAM Period 1 

were paid by CAT LLC to the consulting 

firm. CAT LLC reviewed the consulting 

fees each month and approved the 

invoices. During FAM Period 1, 

Deloitte’s CAT-related activities 

included the following: 

• Implemented program operations 

for the CAT project; 

• Provided support to the Operating 

Committee, the Chair of the Operating 

Committee and the Leadership Team, 

including project management support, 

coordination and planning for meetings 

and communications, and interfacing 

with law firms and the SEC; 

• Assisted with cost and funding 

matters for the CAT, including the 

development of the CAT funding model 

and assistance with loans and the CAT 

bank account for CAT funding; 

• Provided support for updating the 

SEC on the progress of the development 

of the CAT; 

• Assisted with the transition from 

the Initial Plan Processor to the 

successor Plan Processor; and 

• Provided support for third-party 

vendors for the CAT, including FCAT, 

Anchin and the law firms engaged by 

CAT LLC. 

(h) Insurance 

Although insurance was in effect 

during FAM Period 1, CAT LLC did not 

incur costs related to insurance during 

FAM Period 1. 

(i) Professional and Administration 

Costs 

Financial Advisory Firm: Anchin. The 

professional and administration costs of 

$69,077 represent the fees paid to 

Anchin during FAM Period 1. CAT LLC 

continued to employ Anchin during 

FAM Period 1 based on, among other 

things, their expertise and history with 

the project. The hourly fee rates for this 

firm were in line with market rates for 

these type of financial advisory services. 

The fees for these services during FAM 

Period 1 were paid by CAT LLC to 

Anchin. During FAM Period 1, Anchin 

provided a variety of services, including 

the following: 

• Maintained internal controls; 

• Provided cash management and 

treasury functions; 

• Facilitated bill payments; 

• Provided monthly bookkeeping; 

• Reviewed vendor invoices and 

documentation in support of cash 

disbursements; 

• Provided accounting research and 

consultations on various accounting, 

financial reporting and tax matters; 

• Addressed various accounting, 

financial reporting and operating 

inquiries from Participants; 

• Developed and maintained 

quarterly and annual operating and 

financial budgets, including budget to 

actual fluctuation analyses; 

• Supported compliance with the 

CAT NMS Plan; 

• Worked with and provided support 

to the Operating Committee and various 

CAT working groups; and 

• Prepared monthly and quarterly 

financial statements. 

(j) Public Relations Costs 

The public relations costs of $7,700 

represent the fees paid to Peak 

Strategies during FAM Period 1. CAT 

LLC continued to employ Peak 

Strategies during FAM Period 1 based 

on, among other things, their expertise 

and history with the project. The fee 

rates for this firm were reasonable and 

in line with market rates for these types 

of services. The fees for these services 

during FAM Period 1 were paid by CAT 

LLC to Peak Strategies. During FAM 

Period 1, Peak Strategies continued to 

provide professional communications 

services to CAT LLC, including media 

relations consulting, strategy and 

execution. Specifically, the public 

relations firm provided services related 

to communications with the public 

regarding the CAT, including 

monitoring developments related to the 

CAT (e.g., congressional efforts, public 

comments and reaction to proposals, 

press coverage of the CAT), reporting 

such developments to CAT LLC, and 

drafting and disseminating 

communications to the public regarding 

such developments as well as reporting 

on developments related to the CAT 

(e.g., amendments to the CAT NMS 

Plan). As discussed above, such public 

relations services were important for 

various reasons, including monitoring 

comments made by market participants 

about the CAT and understanding issues 

related to the CAT discussed on the 

public record. By engaging a public 

relations firm, CAT LLC was better 

positioned to understand and address 

CAT matters to the benefit of all market 

participants. 

(iii) Historical CAT Costs Incurred in 

Financial Accountability Milestone 

Period 2 

Historical CAT Costs 1 would include 

costs incurred by CAT LLC and already 


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50Section 11.6(a)(i)(B) of the CAT NMS Plan. 

51As discussed above, with respect to certain 

costs that were ‘‘appropriately excluded,’’ such 

excluded costs relate to the amortization of 

capitalized technology costs, which are amortized 

over the life of the Plan Processor Agreement. As 

such costs have already been otherwise reflected in 

the filing, their inclusion would double count the 

capitalized technology costs. In addition, 

amortization is a non-cash expense. 

52See definition of ‘‘Full Implementation of Core 

Equity Reporting Requirements’’ in Section 1.1 of 

the CAT NMS Plan. 

53Note that the volume data described in this 

table does not include CAIS data. 

funded by Participants during Period 2 

of the Financial Accountability 

Milestones (‘‘FAM Period 2’’),50 which 

covers the period from August 1, 2020– 

December 31, 2020. Historical CAT 

Costs 1 would include costs for FAM 

Period 2 of $42,976,478. The 

Participants would remain responsible 

for one-third of this cost (which they 

have previously paid) ($14,325,493), 

and Industry Members would be 

responsible for the remaining twothirds, with CEBBs paying one-third 

($14,325,493) and CEBSs paying onethird ($14,325,493). The following table 

breaks down Historical CAT Costs 1 for 

FAM Period 2 into the categories set 

forth in Section 11.3(b)(iii)(B)(II) of the 

CAT NMS Plan. 

Operating expense Historical CAT costs for 

FAM Period 2 * 

Capitalized Developed Technology Costs ** ....................................................................................................................... $6,761,094 

Technology Costs ................................................................................................................................................................ 31,460,033 

Cloud Hosting Services ................................................................................................................................................ 20,709,212 

Operating Fees ............................................................................................................................................................. 9,108,700 

CAIS Operating Fees ................................................................................................................................................... 1,590,298 

Change Request Fees ................................................................................................................................................. 51,823 

Legal .................................................................................................................................................................................... 2,766,644 

Consulting ............................................................................................................................................................................ 532,146 

Insurance ............................................................................................................................................................................. 976,098 

Professional and administration .......................................................................................................................................... 438,523 

Public relations .................................................................................................................................................................... 41,940 

Total Operating Expenses ............................................................................................................................................ 42,976,478 

* The costs described in this table of costs for FAM Period 2 were calculated based upon CAT LLC’s review of applicable bills and invoices 

and related financial statements. CAT LLC financial statements are available on the CAT website. 

** The non-cash amortization of these capitalized developed technology costs of $1,892,505 incurred during FAM Period 2 have been appropriately excluded from the above table.51

By the completion of FAM Period 2, 

CAT LLC was required to implement the 

following with regard to the CAT: 

(a) Industry Member reporting (excluding 

reporting by Small Industry Members that are 

not OATS reporters) for equities transactions, 

excluding Customer Account Information, 

CustomerID, and Customer Identifying 

Information, is developed, tested, and 

implemented at a 5% Error Rate or less and 

with sufficient intra-firm linkage, inter-firm 

linkage, national securities exchange linkage, 

and trade reporting facilities linkage to 

permit the Participants and the Commission 

to analyze the full lifecycle of an order across 

the national market system, excluding 

linkage of representative orders, from order 

origination through order execution or order 

cancellation; and (b) the query tool 

functionality required by Section 

6.10(c)(i)(A) and Appendix D, Sections 8.1.1– 

8.1.3 and Section 8.2.1 incorporates the 

Industry Member equities transaction data 

described in condition (a) and is available to 

the Participants and to the Commission.52

CAT LLC completed the requirements 

of FAM Period 2 by December 31, 2020. 

The following describes the costs for 

each of the categories for FAM Period 2. 

(a) Technology Costs—Cloud Hosting 

Services 

CAT LLC continued to utilize AWS in 

FAM Period 2 to provide a broad array 

of cloud hosting services for the CAT, 

including data ingestion, data 

management, and analytic tools. AWS 

continued to provide storage services, 

databases, compute services and other 

services (such as networking, 

management tools and DevOps tools), as 

well as various environments for CAT, 

such as development, performance 

testing, test, and production 

environments, during the FAM 2 Period. 

Accordingly, the $20,709,212 in 

technology costs for cloud hosting 

services represent costs incurred for 

services provided by AWS, as the cloud 

services provider, during FAM Period 2. 

The fee arrangement for AWS described 

above with regard to the Pre-FAM 

Period and FAM Period 1 continued in 

place during FAM Period 2 pursuant to 

the Plan Processor Agreement. 

The cost for AWS cloud services for 

the CAT continued to be a function of 

the volume of CAT Data. During the 

FAM 2 Period, the volume of CAT Data 

continued to far exceed the original 

predictions for the CAT as set forth in 

the CAT NMS Plan. During this period, 

data submitted to the CAT included 

options and equities Participant Data, 

Phase 2a and Phase 2b Industry Member 

Data (including certain linkages) as well 

as SIP Data, and Other Data, including 

reference data. In addition, Industry 

Members began reporting LTID account 

information. The following chart 

provides data regarding the average 

daily volume, cumulative total events, 

total compute hours and storage 

footprint of the CAT during FAM Period 

2.53

Date range: 

8/1/20–12/31/20 

Average Daily Volume in Billions: 

Participant—Equities .................................................................................................................................................... 6 

Participant—Options ..................................................................................................................................................... 116 

Industry Member—Equities .......................................................................................................................................... 11 

Industry Member—Options ........................................................................................................................................... 0.98 

SIP—Options & Equities .............................................................................................................................................. 80 

Average Total Daily Volume ......................................................................................................................................... 282 


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Date range: 

8/1/20–12/31/20 

Cumulative Total Events for the Period .............................................................................................................................. 2,170 

Total Compute Hours for the Period ................................................................................................................................... 15,660,392 

Storage Footprint at End of Period (Petabytes) .................................................................................................................. 114.59 

(b) Technology Costs—Operating Fees 

Pursuant to the Plan Processor 

Agreement discussed above, FCAT 

continued in its role as the Plan 

Processor for the CAT during FAM 

Period 2. Accordingly, the $9,108,700 in 

technology costs for operating fees 

represent costs incurred for the services 

provided by FCAT under the Plan 

Processor Agreement during FAM 

Period 2. The fee arrangement for FCAT 

described above with regard to the PreFAM Period and FAM Period 1 

continued in place during FAM Period 

2 pursuant to the Plan Processor 

Agreement. During FAM Period 2, 

FCAT’s activities with respect to the 

CAT included publishing the Technical 

Specifications for Phase 2d and 

overseeing the reporting of firm to firm 

and intrafirm linkages by Industry 

Members. In addition, FCAT also 

continued to engage in the following 

activities during FAM Period 2: 

• Addressed compliance items, 

including drafting CAT policies and 

procedures, and addressing Regulation 

SCI requirements; 

• Provided support to the Operating 

Committee, Compliance Subcommittee 

and CAT working groups; 

• Assisted with interpretive efforts 

and exemptive requests regarding the 

CAT NMS Plan; 

• Oversaw the development and 

implementation of the security of the 

CAT; 

• Monitored the operation of the 

CAT, including with regard to 

Participant and Industry Member 

reporting; 

• Provided support to subcontractors 

under the Plan Processor Agreement; 

• Provided support in discussions 

with the Participants and the SEC and 

its staff; 

• Operated the FINRA CAT Helpdesk; 

• Facilitated communications with 

the industry, including via FAQs, CAT 

Alerts, meetings, presentations and 

webinars; 

• Administered the CAT website and 

all of its content; and 

• Provided technical support and 

assistance with connectivity, data 

access, and user support, including the 

use of CAT Data and query tools, for 

Participants and the SEC staff. 

(c) Technology Costs—CAIS Operating 

Fees 

Pursuant to the Plan Processor 

Agreement discussed above, Kingland 

continued in its role as a subcontractor 

for the development and 

implementation of CAIS during FAM 

Period 2. Accordingly, the $1,590,298 in 

technology costs for CAIS operating fees 

represent costs incurred for services 

provided by Kingland during FAM 

Period 2. The fee arrangement for 

Kingland described above with regard to 

the Pre-FAM Period and FAM Period 1 

continued in place during FAM Period 

2 pursuant to the Plan Processor 

Agreement. During FAM Period 2, 

Kingland continued the development of 

the CAIS Technical Specifications and 

building of CAIS. In addition, Kingland 

continued to work on the CAIS 

Technical Specifications and build 

related to the CCID Alternative, as well 

as the acceleration of the reporting of 

LTIDs. 

(d) Technology Costs—Change Request 

Fees 

During FAM Period 2, CAT LLC 

engaged FCAT to pursue certain change 

requests in accordance with the Plan 

Processor Agreement. The change 

request costs were paid by CAT LLC to 

FCAT. Specifically, during FAM Period 

2, CAT incurred costs of $51,823 related 

to a change request regarding the 

addition of functionality for exchange 

Participants to report rejected messages 

to the CAT. 

(e) Technology Costs—Capitalized 

Developed Technology Costs 

Capitalized developed technology 

costs for FAM Period 2 of $6,761,094 

include capitalizable application 

development costs incurred in the 

development of the CAT by FCAT. Such 

costs include (1) development costs 

incurred during the application 

development stage to meet various 

agreed-upon milestones regarding the 

CAT, as defined in the agreement 

between CAT LLC and the Plan 

Processor; (2) costs related to certain 

modifications, upgrades, or other 

changes to the CAT that were not 

contemplated by the agreement between 

CAT LLC and the Plan Processor, 

including costs related to separate 

production and industry test 

entitlements, market maker reference 

data, and back-processing of exchange 

exception logic; (3) implementation 

fees; and (4) license fees. 

(f) Legal Costs 

The legal costs of $2,766,644 

represent the fees paid for legal services 

provided by two law firms, WilmerHale 

and Pillsbury during FAM Period 2. 

Law Firm: WilmerHale. CAT LLC 

continued to employ WilmerHale 

during FAM Period 2 based on, among 

other things, their expertise and long 

history with the project. The hourly fee 

rates for this law firm were in line with 

market rates for specialized legal 

expertise. The legal fees during FAM 

Period 2 were paid by CAT LLC to 

WilmerHale. During FAM Period 2, the 

legal assistance provided by 

WilmerHale included providing legal 

advice regarding the following: 

• Assisted with the development of 

the CAT funding model and drafting 

related amendments and rule filings; 

• Drafted exemptive requests from 

CAT NMS Plan requirements regarding, 

for example, allocations, exchange 

activity, OTQT, initial data validation, 

error corrections and recordkeeping; 

• Provided interpretations related to 

CAT NMS Plan requirements, including 

with regard to the Financial 

Accountability Milestone amendment, 

FAQs and technical specifications; 

• Provided support for the Operating 

Committee, Compliance Subcommittees, 

working groups and Leadership Team, 

including with regard to meetings with 

the SEC staff; 

• Assisted with the Implementation 

Plan and Quarterly Progress Reports 

required pursuant to Section 6.6 of the 

CAT NMS Plan; 

• Drafted SRO rule filings related to 

the CAT Compliance Rule; 

• Provided support for the 

Compliance Subcommittee, including 

with regard to responses to OCIE 

examinations and the annual 

assessment; 

• Provided guidance regarding the 

SEC’s proposed security amendments to 

the CAT NMS Plan; 

• Provided guidance regarding SRO 

rule filings for the retirement of systems; 

• Provided legal support for 

Operating Committee meetings, 

including drafting resolutions and other 

materials and voting advice; 


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• Assisted with third-party vendor 

agreements (e.g., with regard to Anchin, 

Grant Thornton and insurance policies); 

• Assisted with change requests; and 

• Provided support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretive and implementation issues. 

Law Firm: Pillsbury. CAT LLC 

continued to employ Pillsbury during 

FAM Period 2 based on, among other 

things, their expertise and history with 

the project. The hourly fee rates for this 

law firm were in line with market rates 

for specialized legal expertise. The legal 

fees during FAM Period 2 were paid by 

CAT LLC to Pillsbury. During FAM 

Period 2, Pillsbury provided legal 

assistance to the CAT regarding the CAT 

Reporter Agreement. During that period, 

Pillsbury advised CAT LLC regarding 

applicable legal matters and drafted and 

filed a proposed amendment to the CAT 

NMS Plan regarding liability matters. As 

discussed above, liability issues related 

to the CAT are important matters that 

needed to be resolved and clarified. 

CAT LLC’s efforts to seek such 

resolution and clarity work to the 

benefit of Participants, Industry 

Members and other market participants. 

(g) Consulting Costs 

The consulting costs of $532,146 

represent the fees paid to Deloitte as 

project manager during FAM Period 2. 

CAT LLC continued to employ Deloitte 

during FAM Period 2 based on, among 

other things, their expertise and long 

history with the project. The fee rates 

for Deloitte during FAM Period 2 were 

negotiated and in line with market rates 

for this type of specialized consulting 

work. The consulting fees during FAM 

Period 2 were paid to Deloitte by CAT 

LLC. CAT LLC reviewed the consulting 

fees each month and approved the 

invoices. During FAM Period 2, 

Deloitte’s CAT-related activities 

included the following: 

• Implemented program operations 

for the CAT project; 

• Provided support to the Operating 

Committee, the Chair of the Operating 

Committee and the Leadership Team, 

including project management support, 

coordination and planning for meetings 

and communications, and interfacing 

with law firms and the SEC; 

• Assisted with cost and funding 

matters for the CAT, including the 

development of the CAT funding model 

and assistance with loans and the CAT 

bank account for CAT funding; 

• Provided support for updating the 

SEC on the progress of the development 

of the CAT; and 

• Provided support for third-party 

vendors for the CAT, including FCAT, 

Anchin and the law firms engaged by 

CAT LLC. 

(h) Insurance 

The insurance costs of $976,098 

represent the fees paid for insurance 

during FAM Period 2. CAT LLC 

continued to maintain cyber security 

liability insurance, directors’ and 

officers’ liability insurance, and errors 

and omissions liability insurance 

offered by USI. After engaging in a 

process for renewing the coverage, CAT 

LLC determined to purchase these 

insurance policies from USI. The annual 

premiums for these policies were 

competitive for the coverage provided. 

The annual premiums were paid by 

CAT LLC to USI. 

(i) Professional and Administration 

Costs 

The professional and administration 

costs of $438,523 represent the fees paid 

to Anchin and Grant Thornton for 

financial services provided during FAM 

Period 2. 

Financial Advisory Firm: Anchin. 

CAT LLC continued to engage Anchin 

during FAM Period 2 based on, among 

other things, their expertise and history 

with the project. The hourly fee rates for 

this firm were in line with market rates 

for these types of financial advisory 

services. The fees for these services 

during FAM Period 2 were paid by CAT 

LLC to Anchin. During FAM Period 2, 

Anchin provided a variety of services, 

including the following: 

• Updated and maintained internal 

controls; 

• Provided cash management and 

treasury functions; 

• Faciliated [sic] bill payments; 

• Provided monthly bookkeeping; 

• Reviewed vendor invoices and 

documentation in support of cash 

disbursements; 

• Provided accounting research and 

consultations on various accounting, 

financial reporting and tax matters; 

• Addressed not-for-profit tax and 

accounting considerations; 

• Prepared tax returns; 

• Addressed various accounting, 

financial reporting and operating 

inquiries from the Participants; 

• Developed and maintained 

quarterly and annual operating and 

financial budgets, including budget to 

actual fluctuation analyses; 

• Supported compliance with the 

CAT NMS Plan; 

• Worked with and provided support 

to the Operating Committee and various 

CAT working groups; 

• Prepared monthly, quarterly and 

annual financial statements; 

• Supported the annual financial 

statement audit by an independent 

auditor; and 

• Reviewed historical costs from 

inception. 

Accounting Firm: Grant Thornton. 

CAT LLC continued to employ the 

accounting firm Grant Thornton during 

FAM Period 2 based on, among other 

things, its expertise and cumulative 

knowledge of CAT LLC. CAT LLC 

continued to believe that Grant 

Thornton was well qualified for its role 

and its fee rates were in line with with 

market rates for these accounting 

services. The fees for these services 

during FAM Period 2 were paid by CAT 

LLC to Grant Thornton. During FAM 

Period 2, Grant Thornton performed a 

financial statement audit for CAT LLC 

as an independent accounting firm. 

(j) Public Relations Costs 

The public relations costs of $41,940 

represent the fees paid to Peak 

Strategies during FAM Period 2. CAT 

LLC continued to employ Peak 

Strategies during FAM Period 2 based 

on, among other things, their expertise 

and history with the project. The fee 

rates for this firm were in line with 

market rates for these types of services. 

The fees for these services during FAM 

Period 2 were paid by CAT LLC to Peak 

Strategies. During FAM Period 2, Peak 

Strategies continued to provide 

professional communications services to 

CAT, including media relations 

consulting, strategy and execution. 

Specifically, the public relations firm 

provided services related to 

communications with the public 

regarding the CAT, including 

monitoring developments related to the 

CAT (e.g., congressional efforts, public 

comments and reaction to proposals, 

press coverage of the CAT), reporting 

such developments to CAT LLC, and 

drafting and disseminating 

communications to the public regarding 

such developments as well as reporting 

on developments related to the CAT 

(e.g., amendments to the CAT NMS 

Plan). As discussed above, such public 

relations services were important for 

various reasons, including monitoring 

comments made by market participants 

about the CAT and understanding issues 

related to the CAT discussed on the 

public record. By engaging a public 

relations firm, CAT LLC was better 

positioned to understand and address 

CAT matters to the benefit of all market 

participants. 

(iv) Historical CAT Costs Incurred in 

Financial Accountability Milestone 

Period 3 

Historical CAT Costs 1 would include 

costs incurred by CAT and already 


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54Section 11.6(a)(i)(C) of the CAT NMS Plan. 

55As discussed above, with respect to certain 

costs that were ‘‘appropriately excluded,’’ such 

excluded costs relate to the amortization of 

capitalized technology costs, which are amortized 

over the life of the Plan Processor Agreement. As 

such costs have already been otherwise reflected in 

the filing, their inclusion would double count the 

capitalized technology costs. In addition, 

amortization is a non-cash expense. 

56See definition of ‘‘Full Availability and 

Regulatory Utilization of Transactional Database 

Functionality’’ in Section 1.1 of the CAT NMS Plan. 

57Note that the volume data described in this 

table does not include CAIS data. 

funded by the Participants during 

Period 3 of the Financial Accountability 

Milestones (‘‘FAM Period 3’’),54 which 

covers the period from January 1, 

2021—December 31, 2021. Historical 

CAT Costs 1 would include costs for 

FAM Period 3 of $144,415,268. The 

Participants would remain responsible 

for one-third of this cost (which they 

have previously paid) ($48,138,423), 

and Industry Members would be 

responsible for the remaining twothirds, with CEBBs paying one-third 

($48,138,423) and CEBSs paying onethird ($48,138,423). The following table 

breaks down Historical CAT Costs 1 for 

FAM Period 3 into the categories set 

forth in Section 11.3(b)(iii)(B)(II) of the 

CAT NMS Plan. 

Operating expense Historical CAT costs for 

FAM period 3 * 

Capitalized Developed Technology Costs ** ....................................................................................................................... $10,763,372 

Technology Costs ................................................................................................................................................................ $123,639,402 

Cloud Hosting Services ................................................................................................................................................ 94,574,759 

Operating Fees ............................................................................................................................................................. 23,106,091 

CAIS Operating Fees ................................................................................................................................................... 5,562,383 

Change Request Fees ................................................................................................................................................. 396,169 

Legal .................................................................................................................................................................................... 6,333,248 

Consulting ............................................................................................................................................................................ 1,408,209 

Insurance ............................................................................................................................................................................. 1,582,714 

Professional and administration .......................................................................................................................................... 595,923 

Public relations .................................................................................................................................................................... 92,400 

Total Operating Expenses ............................................................................................................................................ 144,415,268 

* The costs described in this table of costs for FAM Period 3 were calculated based upon CAT LLC’s review of applicable bills and invoices 

and related financial statements. CAT LLC financial statements are available on the CAT website. 

** The non-cash amortization of these capitalized developed technology costs of $5,108,044 incurred during FAM Period 3 have been appropriately excluded from the above table.55

By the completion of FAM Period 3, 

CAT LLC was required to implement the 

following requirements with regard the 

CAT: 

(a) reporting to the Order Audit Trail 

System (‘‘OATS’’) is no longer required for 

new orders; (b) Industry Member reporting 

for equities transactions and simple 

electronic options transactions, excluding 

Customer Account Information, Customer-ID, 

and Customer Identifying Information, with 

sufficient intra-firm linkage, inter-firm 

linkage, national securities exchange linkage, 

trade reporting facilities linkage, and 

representative order linkages (including any 

equities allocation information provided in 

an Allocation Report) to permit the 

Participants and the Commission to analyze 

the full lifecycle of an order across the 

national market system, from order 

origination through order execution or order 

cancellation, is developed, tested, and 

implemented at a 5% Error Rate or less; (c) 

Industry Member reporting for manual 

options transactions and complex options 

transactions, excluding Customer Account 

Information, Customer-ID, and Customer 

Identifying Information, with all required 

linkages to permit the Participants and the 

Commission to analyze the full lifecycle of an 

order across the national market system, from 

order origination through order execution or 

order cancellation, including any options 

allocation information provided in an 

Allocation Report, is developed, tested, and 

fully implemented; (d) the query tool 

functionality required by Section 

6.10(c)(i)(A) and Appendix D, Sections 8.1.1– 

8.1.3, Section 8.2.1, and Section 8.5 

incorporates the data described in conditions 

(b)–(c) and is available to the Participants 

and to the Commission; and (e) the 

requirements of Section 6.10(a) are met.56

CAT LLC completed the requirements 

of FAM Period 3 by December 31, 2021. 

The following describes the costs for 

each of the categories for FAM Period 3. 

(a) Technology Costs—Cloud Hosting 

Services 

CAT LLC continued to utilize AWS in 

FAM Period 3 to provide a broad array 

of cloud hosting services for the CAT, 

including data ingestion, data 

management, and analytic tools. AWS 

continued to provide storage services, 

databases, compute services and other 

services (such as networking, 

management tools and DevOps tools), as 

well as various environments for CAT, 

such as development, performance 

testing, test, and production 

environments, during the FAM 3 Period. 

Accordingly, the $94,574,759 in 

technology costs for cloud hosting 

services represents costs incurred for 

services provided by AWS, as the cloud 

services provider, during FAM Period 3. 

The fee arrangement for AWS described 

above for the earlier periods continued 

in place during FAM Period 3 pursuant 

to the Plan Processor Agreement. 

The cost for AWS cloud services for 

the CAT continued to be a function of 

the volume of CAT Data. During FAM 

Period 3, the volume of CAT Data 

continued to far exceed the original 

predictions for the CAT as set forth in 

the CAT NMS Plan. During this period, 

data submitted to the CAT included 

options and equities Participant Data, 

Phase 2a, Phase 2b, Phase 2c and Phase 

2d Industry Member Data (including 

certain linkages), SIP Data, Other Data, 

including reference data, and LTID 

account information. The following 

chart provides data regarding the 

average daily volume, cumulative total 

events, total compute hours and storage 

footprint of the CAT during FAM Period 

3.57


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Date Range: 

1/1/21 to 4/25/21 

Date Range: 

4/26/21/to 12/31/ 

21 * 

Average Daily Volume in Billions: 

Participant—Equities ............................................................................................................................ 9 9 

Participant—Options ............................................................................................................................. 135 136 

Industry Member—Equities .................................................................................................................. 20 19 

Industry Member—Options ................................................................................................................... 2 2 

SIP—Options & Equities ...................................................................................................................... 129 137 

Average Total Daily Volume ................................................................................................................. 297 304 

Cumulative Total Events for the Period ...................................................................................................... 7,480 5,310 

Total Compute Hours for the Period ........................................................................................................... 15,860,304 33,487,318 

Storage Footprint at End of Period (Petabytes) .......................................................................................... 180.22 284.62 

* Start of Participant Equities in CAT format and SIP Equities on 4/26/21. 

(b) Technology Costs—Operating Fees 

Pursuant to the Plan Processor 

Agreement discussed above, FCAT 

continued in its role as the Plan 

Processor for the CAT during FAM 

Period 3. Accordingly, the $23,106,091 

in technology costs for operating fees 

represent costs incurred for the services 

provided by FCAT under the Plan 

Processor Agreement during FAM 

Period 3. The fee arrangement for FCAT 

described above with regard to the prior 

Periods continued in place during FAM 

Period 3 pursuant to the Plan Processor 

Agreement. During FAM Period 3, 

FCAT’s activities with respect to the 

CAT included the following: 

• Facilitated Phase 2c and Phase 2d 

testing for Industry Members; 

• Oversaw creation of linkages of the 

lifecycle of order events based on the 

received data through Phase 2d; 

• Addressed compliance items, 

including drafting CAT policies and 

procedures, and addressing Regulation 

SCI requirements; 

• Provided support to the Operating 

Committee, the Compliance 

Subcommittee and CAT working 

groups; 

• Assisted with interpretive efforts 

and exemptive requests regarding the 

CAT NMS Plan; 

• Oversaw the security of the CAT; 

• Monitored the operation of the 

CAT, including with regard to 

Participant and Industry Member 

reporting; 

• Provided support to subcontractors 

under the Plan Processor Agreement; 

• Provided support in discussions 

with the Participants and the SEC and 

its staff; 

• Operated the FINRA CAT Helpdesk; 

• Facilitated communications with 

the industry, including via FAQs, CAT 

Alerts, meetings, presentations and 

webinars; 

• Administered the CAT website and 

all of its content; and 

• Provided technical support and 

assistance with connectivity, data 

access, and user support, including the 

use of CAT Data and query tools, for 

Participants and the SEC staff. 

(c) Technology Costs—CAIS Operating 

Fees 

Pursuant to the Plan Processor 

Agreement with FCAT discussed above, 

Kingland continued in its role as a 

subcontractor for the development and 

implementation of CAIS during FAM 

Period 3. Accordingly, the $5,562,383 in 

technology costs for CAIS operating fees 

represents costs incurred for services 

provided by Kingland during FAM 

Period 3. The fee arrangement for 

Kingland described above with regard to 

the prior Periods continued in place 

during FAM Period 3 pursuant to the 

Plan Processor Agreement. During FAM 

Period 3, Kingland continued the 

development of the CAIS Technical 

Specifications and building of CAIS. In 

addition, Kingland continued to work 

on the CAIS Technical Specifications 

and build related to the CCID 

Alternative, as well as the acceleration 

of the reporting of LTIDs. The full CAIS 

Technical Specifications were 

published during FAM Period 3. 

(d) Technology Costs—Change Request 

Fees 

During FAM Period 3, CAT LLC 

engaged FCAT to pursue certain change 

requests in accordance with the Plan 

Processor Agreement. The change 

request costs were paid by CAT LLC to 

FCAT. Specifically, during FAM Period 

3, CAT incurred costs of $396,169 

related to change requests, including the 

following: (1) the addition of 

functionality for exchange Participants 

to report rejected messages to the CAT; 

(2) the migration of MIRS query engine 

to AWS to reduce operational costs and 

increase resiliency; and (3) updating the 

Participant Technical Specifications to 

allow for two-sided Participant option 

quote reporting. 

(e) Technology Costs—Capitalized 

Developed Technology Costs 

Capitalized developed technology 

costs for FAM Period 3 of $10,763,372 

include capitalizable application 

development costs incurred in the 

development of the CAT by FCAT. Such 

costs include (1) development costs 

incurred during the application 

development stage to meet various 

agreed-upon milestones regarding the 

CAT, as defined in the agreement 

between CAT LLC and the Plan 

Processor, including the transition from 

equity data received by FINRA pursuant 

to various regulatory services 

agreements between FINRA and 

Participant exchanges to the equity CAT 

Data, and the completion of the Industry 

Member Phase 2d options manual and 

complex orders go-live requirements; (2) 

costs related to certain modifications, 

upgrades, or other changes to the CAT 

that were not contemplated by the 

agreement between CAT LLC and the 

Plan Processor, including costs related 

to off-exchange volume concentration, 

Participant 24-hour trading and an 

external metastore; (3) implementation 

fees; and (4) license fees. 

(f) Legal Costs 

The legal costs of $6,333,248 

represent the fees paid for legal services 

provided by three law firms, 

WilmerHale, Pillsbury and Covington & 

Burling LLP (‘‘Covington’’) during FAM 

Period 3. 

Law Firm: WilmerHale. CAT LLC 

continued to employ WilmerHale 

during FAM Period 3 based on, among 

other things, their expertise and long 

history with the project. The hourly fee 

rates for this law firm were in line with 

market rates for specialized legal 

expertise. The legal fees during FAM 

Period 3 were paid by CAT LLC to 

WilmerHale. During FAM Period 3, the 

legal assistance provided by 

WilmerHale included providing legal 

advice regarding the following: 


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58Securities Exchange Act Rel. No. 91487 (Apr. 

6, 2021), 86 FR 19054 (Apr. 12, 2021). 

59Securities Exchange Act Rel. No. 93484 (Oct. 

29, 2021), 86 FR 60933 (Nov. 4, 2021). 

60See Securities Exchange Act Rel. No. 90688 

(Dec. 16, 2020), 85 FR 83634 (Dec. 22, 2020); and 

Securities Exchange Act Rel. No. 90689 (Dec. 16, 

2020), 85 FR 83667 (Dec. 22, 2020) (collectively, the 

‘‘2020 Orders’’). 

61As discussed above with regard to Pillsbury’s 

work on liability matters, liability issues related to 

the CAT are important matters that needed to be 

resolved and clarified. CAT LLC’s efforts to seek 

such resolution and clarity work to the benefit of 

Participants, Industry Members and other market 

participants. Moreover, such activity is a necessary 

part of the operation of the CAT. 

• Assisted with the development of 

the CAT funding model and drafting 

related amendments and rule filings; 

• Drafted exemptive requests from 

CAT NMS Plan requirements, including, 

for example, verbal activity regarding 

Phase 2c cutover, error reports, error 

corrections, Phase 2d Reporting, unique 

Order-ID on internal route events, 

reporting addresses, recordkeeping, and 

unique CCID for foreign customers; 

• Provided interpretations related to 

CAT NMS Plan requirements, including 

with regard to the Financial 

Accountability Milestone amendment, 

FAQs, CAIS requirements, ADF, and 

technical specifications; 

• Provided support for the Operating 

Committee, Compliance Subcommittee, 

working groups and Leadership Team, 

including with regard to meetings with 

the SEC staff; 

• Assisted with the Implementation 

Plan and Quarterly Progress Reports 

required pursuant to Section 6.6(c) of 

the CAT NMS Plan; 

• Drafted SRO rule filings related to 

the CAT Compliance Rule; 

• Provided support for Compliance 

Subcommittee, including with regard to 

responses to OCIE examinations and the 

annual assessment; 

• Provided guidance regarding the 

SEC’s proposed security amendments to 

the CAT NMS Plan; 

• Provided guidance regarding SRO 

rule filings for the retirement of systems; 

• Provided legal support for 

Operating Committee meetings, 

including drafting resolutions and other 

materials and voting advice; 

• Provided assistance with change 

requests; 

• Provided guidance and regulatory 

support for litigation regarding the 

response to the SEC’s exemptive orders; 

• Assisted with communications with 

the industry, including CAT Alerts and 

presentations; 

• Provided guidance regarding the 

confidentiality of CAT Data, including 

third-party information requests; 

• Assisted with cost management 

analysis and proposals; and 

• Provided support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretive and implementation issues. 

Law Firm: Pillsbury. CAT LLC 

continued to employ Pillsbury during 

FAM Period 3 based on, among other 

things, their expertise and history with 

the project. The hourly fee rates for this 

law firm were in line with market rates 

for specialized legal expertise. The legal 

fees during FAM Period 3 were paid by 

CAT LLC to Pillsbury. During FAM 

Period 3, Pillsbury provided legal 

assistance to the CAT regarding the CAT 

Reporter Agreement. During this period, 

Pillsbury advised CAT LLC regarding 

applicable legal matters, reviewed and 

responded to comment letters regarding 

the proposed Plan amendment, 

participated in meetings with senior 

SEC staff, responded to comments 

submitted following the SEC’s April 6, 

2021 order instituting proceedings,58

and assessed legal matters regarding the 

SEC’s October 29, 2021 order denying 

the proposed Plan amendment.59

Law Firm: Covington. CAT LLC hired 

Covington for litigation with the SEC 

regarding certain exemptive orders 

related to the CAT, including orders 

issued in December 2020.60 CAT LLC 

interviewed this law firm as well as 

other potential law firms, considering a 

variety of factors in its analysis for 

choosing legal assistance, including the 

relevant expertise and fees of the 

potential lawyers. CAT LLC approved 

the engagement of Covington in January 

2021. The fee rates for this law firm, 

which were calculated based on hourly 

rates, were in line with market rates for 

specialized services. The legal fees for 

FAM Period 3 for this firm were paid by 

CAT LLC to Covington. 

After Covington was hired in 2021 

through the end of 2021, the firm 

provided legal assistance regarding the 

litigation with the SEC regarding the 

2020 Orders. These services included 

researching, drafting, and filing motions 

to stay the 2020 orders and related 

materials in proceedings before the SEC, 

as well as researching, drafting, and 

filing petitions for judicial review of the 

2020 Orders in proceedings before the 

U.S. Court of Appeals for the D.C. 

Circuit. Covington oversaw ongoing 

litigation proceedings on these matters, 

and also supported WilmerHale with 

respect to settlement negotiations with 

the SEC staff regarding the 2020 Orders. 

In addition to these services, CAT 

LLC engaged Covington in November 

2021 to provide assistance with respect 

to the SEC’s disapproval of CAT NMS 

Plan amendments concerning a 

proposed limitation on liability in the 

event of a data breach or similar event. 

Covington provided advice concerning 

CAT’s response to the SEC’s disapproval 

order. This work accounted for a 

minority of Covington’s fees in 2021.61

(g) Consulting Costs 

The consulting costs of $1,408,209 

represent the fees paid to Deloitte as 

project manager during FAM Period 3. 

CAT LLC continued to employ Deloitte 

during FAM Period 3 based on, among 

other things, their expertise and long 

history with the project. The fee rates 

for Deloitte during FAM Period 3 were 

negotiated and in line with market rates 

for this type of specialized consulting 

work. The consulting fees during FAM 

Period 3 were paid to Deloitte by CAT 

LLC. CAT LLC reviewed the consulting 

fees each month and approved the 

invoices. During FAM Period 3, 

Deloitte’s CAT-related activities 

included the following: 

• Implemented program operations 

for the CAT project; 

• Provided support to the Operating 

Committee, the Chair of the Operating 

Committee and the Leadership Team, 

including project management support, 

coordination and planning for meetings 

and communications, and interfacing 

with law firms and the SEC; 

• Assisted with cost and funding 

matters for the CAT, including the 

development of the CAT funding model 

and assistance with loans and the CAT 

bank account for CAT funding; 

• Provided support for updating the 

SEC on the progress of the development 

of the CAT; and 

• Provided support for third-party 

vendors for the CAT, including FCAT, 

Anchin and the law firms engaged by 

CAT LLC. 

(h) Insurance 

The insurance costs of $1,582,714 

represent the fees paid for insurance 

during FAM Period 3. CAT LLC 

continued to maintain cyber security 

liability insurance, directors’ and 

officers’ liability insurance, and errors 

and omissions liability insurance 

offered by USI. After engaging in a 

process for renewing the coverage, CAT 

LLC determined to purchase these 

insurance policies from USI. The annual 

premiums for these policies were 

competitive for the coverage provided. 

The annual premiums were paid by 

CAT LLC to USI. 

(i) Professional and Administration 

Costs 

The professional and administration 

costs of $595,923 represent the fees paid 

to Anchin and Grant Thornton for 

financial services during FAM Period 3. 


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75866 Federal Register / Vol. 89, No. 179 / Monday, September 16, 2024 / Notices 

62 In approving the CAT Funding Model, the 

Commission states that the proposed exclusion of 

the first two categories of Excluded Costs ‘‘is 

reasonable in the Commission’s view because it 

would not require all costs incurred by the 

Participants to be recovered from Industry Members 

through the Historical CAT Assessment, specifically 

excluding those costs related to the delay in the 

start of reporting to the CAT and costs related to 

the conclusion of the relationship with the Initial 

Plan Processor.’’ CAT Funding Model Approval 

Order at 62663. In addition to the first two 

categories of Excluded Costs, CAT LLC is now 

proposing a third category of Excluded Costs that 

would exclude all costs paid to the Initial Plan 

Processor after November 15, 2018. 

Financial Advisory Firm: Anchin. 

CAT LLC continued to employ Anchin 

during FAM Period 3 based on, among 

other things, their expertise and history 

with the project. The hourly fee rates for 

this firm were in line with market rates 

for these financial advisory services. 

The fees for these services during FAM 

Period 3 were paid by CAT LLC to 

Anchin. During FAM Period 3, Anchin 

provided a variety of services, including 

the following: 

• Updated and maintained internal 

controls; 

• Provided cash management and 

treasury functions; 

• Faciliated [sic] bill payments; 

• Provided monthly bookkeeping; 

• Reviewed vendor invoices and 

documentation in support of cash 

disbursements; 

• Provided accounting research and 

consultations on various accounting, 

financial reporting and tax matters; 

• Addressed not-for-profit tax and 

accounting considerations; 

• Prepared tax returns; 

• Addressed various accounting, 

financial reporting and operating 

inquiries from Participants; 

• Developed and maintained 

quarterly and annual operating and 

financial budgets, including budget to 

actual fluctuation analyses; 

• Supported compliance with the 

CAT NMS Plan; 

• Worked with and provided support 

to the Operating Committee and various 

CAT working groups; 

• Prepared monthly, quarterly and 

annual financial statements; 

• Supported the annual financial 

statement audits by an independent 

auditor; 

• Reviewed historical costs from 

inception; and 

• Provided accounting and financial 

information in support of SEC filings. 

Accounting Firm: Grant Thornton. 

CAT LLC continued to employ the 

accounting firm Grant Thornton during 

FAM Period 3 based on, among other 

things, their expertise and cumulative 

knowledge of CAT LLC. CAT LLC 

determined that Grant Thornton was 

well qualified for its role and that its 

fixed fee rates were in line with market 

rates for these accountant services. The 

fees for these services during FAM 

Period 3 were paid by CAT LLC to Grant 

Thornton. During FAM Period 3, Grant 

Thornton provided audited financial 

statements for CAT LLC. 

(j) Public Relations Costs 

The public relations costs of $92,400 

represent the fees paid to Peak 

Strategies during FAM Period 3. CAT 

LLC continued to employ Peak 

Strategies during FAM Period 3 based 

on, among other things, their expertise 

and history with the project. The fee 

rates for this firm were in line with 

market rates for these types of services. 

The fees for these services during FAM 

Period 3 were paid by CAT LLC to Peak 

Strategies. During FAM Period 3, Peak 

Strategies continued to provide 

professional communications services to 

CAT, including media relations 

consulting, strategy and execution. 

Specifically, the public relations firm 

provided services related to 

communications with the public 

regarding the CAT, including 

monitoring developments related to the 

CAT (e.g., congressional efforts, public 

comments and reaction to proposals, 

press coverage of the CAT), reporting 

such developments to CAT LLC, and 

drafting and disseminating 

communications to the public regarding 

such developments as well as reporting 

on developments related to the CAT 

(e.g., amendments to the CAT NMS 

Plan). As discussed above, such public 

relations services were important for 

various reasons, including monitoring 

comments made by market participants 

about the CAT and understanding issues 

related to the CAT discussed on the 

public record. By engaging a public 

relations firm, CAT LLC was better 

positioned to understand and address 

CAT matters to the benefit of all market 

participants. 

(v) Excluded Costs 

Historical CAT Costs 1 would not 

include three categories of CAT costs 

(‘‘Excluded Costs’’): (1) $14,749,362 of 

costs related to the termination of the 

relationship with the Initial Plan 

Processor; (2) $48,874,937, which are all 

CAT costs incurred from November 15, 

2017 through November 15, 2018; and 

(3) $19,628,791, which are costs paid to 

the the Initial Plan Processor from 

November 16, 2018 through February 

2019 when the relationship with the 

Initial Plan Processor was concluded. 

The Participants would remain 

responsible for 100% of these costs, 

which total $83,253,090. CAT LLC 

determined to exclude these Excluded 

Costs from Historical CAT Costs 1 

because these costs relate to the delay in 

the start of reporting to the CAT and the 

conclusion of the relationship with the 

Initial Plan Processor.62

(a) Costs Related to Conclusion of 

Relationship With Initial Plan Processor 

First, Historical CAT Costs 1 would 

not include $14,749,362 of costs related 

to the conclusion of the relationship 

with the Initial Plan Processor. Such 

costs include costs related to the 

American Arbitration Association, the 

legal assistance of Pillsbury with regard 

to the arbitration with the Initial Plan 

Processor, and the settlement costs 

related to the arbitration with the Initial 

Plan Processor. The Participants would 

remain responsible for 100% of these 

$14,749,362 in costs. 

(b) Costs Incurred From November 15, 

2017 Through November 15, 2018 

Second, Historical CAT Costs 1 would 

not include all CAT costs incurred from 

November 15, 2017 through November 

15, 2018. CAT LLC determined to 

exclude all costs during this one-year 

period of $48,874,937 from fees charged 

to Industry Members due to the delay in 

the start of reporting to the CAT. The 

Participants would remain responsible 

for 100% of these $48,874,937 in costs. 

The following table breaks down these 

costs into the categories set forth in 

Section 11.3(b)(iii)(B)(II) of the CAT 

NMS Plan. 

Operating expense 

Excluded costs for 

November 15, 2017– 

November 15, 2018 * 

Capitalized Developed Technology Costs ........................................................................................................................... $37,852,083 

Technology Costs ................................................................................................................................................................ ........................................

Cloud Hosting Services ................................................................................................................................................ ........................................

Operating Fees ............................................................................................................................................................. ........................................


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Operating expense 

Excluded costs for 

November 15, 2017– 

November 15, 2018 * 

CAIS Operating Fees ................................................................................................................................................... ........................................

Change Request Fees ................................................................................................................................................. ........................................

Legal .................................................................................................................................................................................... 6,143,278 

Consulting ............................................................................................................................................................................ 4,452,106 

Insurance ............................................................................................................................................................................. ........................................

Professional and administration .......................................................................................................................................... 340,145 

Public relations .................................................................................................................................................................... 87,325 

Total Operating Expenses ............................................................................................................................................ 48,874,937 

* The costs described in this table of Excluded Costs were calculated based upon CAT LLC’s review of applicable bills and invoices and related financial statements. CAT LLC financial statements are available on the CAT website. 

The following provides additional 

detail regarding the Excluded Costs. 

(I) Technology Costs—Cloud Hosting 

Services, Operating Fees, CAIS 

Operating Fees and Change Request 

Fees 

CAT LLC did not incur technology 

costs related to the categories of cloud 

hosting services, operating fees, CAIS 

operating fees or change requests during 

the period from November 15, 2017 

through November 15, 2018. 

(II) Technology Costs—Capitalized 

Developed Technology Costs 

Capitalized developed technology 

costs for the period from November 15, 

2017 through November 15, 2018 

include capitalizable application 

development costs of $37,852,083 

incurred in the development of the CAT 

by the Initial Plan Processor. Such costs 

include development costs incurred 

during the application development 

stage to meet various agreed-upon 

milestones regarding the CAT, as 

defined in the agreement between CAT 

LLC and the Initial Plan Processor. Such 

costs include costs related to Industry 

Member technical specifications for 

orders and transactions, the system 

security plan, testing and production for 

Participant CAT reporting, third-party 

security assessment and response, query 

portal, onboarding of the Chief 

Information Security Officer, and 

ingestion of FINRA TRF data and 

FINRA data related to halts and 

corporate actions. 

(III) Legal Costs 

The legal costs of $6,143,278 

represent the fees paid to WilmerHale 

for legal services from November 15, 

2017 through November 15, 2018. 

During this period, WilmerHale 

provided legal assistance to the CAT 

including with regard to the following: 

• Provided legal support for the 

governance of the CAT, including 

governance support for the Operating 

Committee, Advisory Committee, 

Compliance Subcommittee, and CAT 

working groups; 

• Assisted with the development of 

the CAT funding model and drafted 

related amendments of the CAT NMS 

Plan; 

• Provided assistance related to CAT 

security; 

• Drafted exemptive requests, 

including requests related to PII; 

• Assisted with the Implementation 

Plan required pursuant to Section 

6.6(c)(i) of the CAT NMS Plan; 

• Provided interpretations of and 

related to the CAT NMS Plan; 

• Provided advice with regard to 

regulator access to the CAT; 

• Assisted with the Plan Processor 

transition; 

• Provided assistance regarding 

communications with the industry 

regarding the CAT; 

• Provided advice regarding 

Customer Account Information and PII; 

• Provided support for litigation 

related to SEC exemptive orders; and 

• Provided support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretative and implementation 

issues. 

(IV) Consulting Costs 

The consulting costs of $4,452,106 

represent the fees paid to Deloitte for 

their role as project manager for the 

CAT from November 15, 2017 through 

November 15, 2018. During this period, 

Deloitte engaged in the following 

activities with respect to the CAT: 

• Implemented program operations 

for the CAT project; 

• Provided governance support to the 

Operating Committee, including support 

for Subcommittees and working groups 

of the Operating Committee (e.g., 

Compliance Subcommittee, Cost and 

Funding Working Group, Technical 

Working Group, Industry Outreach 

Working Group, Security Working 

Group and Steering Committee); 

• Assisted with cost and funding 

issues for the CAT, including the 

development of the CAT funding model 

and assistance with loans and the CAT 

bank account for CAT funding; 

• Provided support for updating the 

SEC on the progress of the development 

of the CAT; and 

• Provided active planning and 

coordination with and support for the 

Initial Plan Processor with regard to the 

development of the CAT, and reported 

to the Participants on the progress. 

(V) Insurance 

CAT LLC did not incur costs related 

to insurance during the period from 

November 15, 2017 through November 

15, 2018. 

(VI) Professional and Administration 

Costs 

The professional and administration 

costs of $340,145 represent the fees paid 

to Anchin, Exegy and RSM from 

November 15, 2017 through November 

15, 2018. 

Financial Advisory Firm: Anchin. 

From the commencement of its 

engagment [sic] in April 2018 through 

November 15, 2018, Anchin engaged in 

the following activities with respect to 

the CAT: 

• Developed, updated and 

maintained internal controls; 

• Provided cash management and 

treasury functions; 

• Facilitated bill payments; 

• Provided monthly bookkeeping; 

• Reviewed vendor invoices and 

documentation in support of cash 

disbursements; 

• Provided accounting research and 

consultations on various accounting, 

financial reporting and tax matters; 

• Addressed not-for-profit tax and 

accounting considerations; 

• Prepared tax returns; 

• Addressed various accounting, 

financial reporting and operating 

inquiries from Participants; 

• Developed and maintained 

quarterly and annual operating and 

financial budgets, including budget to 

actual fluctuation analyses; 


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63As discussed below, CAT LLC believes that it 

is appropriate to recover costs related to the 

services performed by the Initial Plan Processor 

prior to November 15, 2017. See Section 3(a)(10)(E) 

below. 64The SEC approved the CAT NMS Plan on 

November 15, 2016, and Participant reporting was 

required to begin on the first anniversary of this 

date, November 15, 2017. See Section 6.3 of the 

CAT NMS Plan and CAT NMS Plan Approval 

Order. 65Section 11.3(b)(i)(D)(I) and Section 

11.3(b)(iii)(B)(II) of the CAT NMS Plan. 

66Section 11.3(b)(i)(D)(I) of the CAT NMS Plan. 

In the CAT Funding Model Approval Order, the 

SEC stated that ‘‘[i]n the Commission’s view, it is 

reasonable for the Operating Committee to establish 

the length of the Historical Recovery Period to be 

no less than 24 months and no more than five 

years.’’ CAT Funding Model Approval Order at 

62664. 

67As the SEC noted in the CAT Funding Model 

Approval Order, recent Section 31 fees ranged from 

$0.00009 per share to $0.0004 per share. CAT 

Funding Model at 62682. 

68The total CAT costs for 2022 were 

approximately $186 million and the total CAT costs 

for 2023 were approximately $233 million. 

69Section 11.3(b)(iii)(B)(II)(C) of the CAT NMS 

Plan. 

70Section 11.3(b)(i)(E) of the CAT NMS Plan. 

71CAT Funding Model Approval Order at 62664. 

• Addressed accounting and financial 

matters relating to the transition from 

CAT NMS, LLC to Consolidated Audit 

Trail, LLC, including supporting the 

dissolution of CAT NMS, LLC; 

• Supported compliance with the 

CAT NMS Plan; 

• Worked with and provided support 

to the Operating Committee and various 

CAT working groups; 

• Prepared monthly, quarterly and 

annual financial statements; 

• Supported the annual financial 

statement audits by an independent 

auditor; 

• Reviewed historical costs from 

inception; and 

• Provided accounting and financial 

information in support of SEC filings. 

Market Data Provider: Exegy. From 

July 2018 through November 15, 2018, 

CAT LLC purchased market data from 

Exegy (as described in more detail 

above). 

Security Assessment: RSM. From 

October 2018 through November 15, 

2018, CAT LLC incurred costs for RSM’s 

performance of a security assessment (as 

described in more detail above). 

(VII) Public Relations Costs 

The public relations costs of $87,325 

represent the fees paid to Sloane from 

November 15, 2017 through November 

15, 2018. From the commencement of 

its engagment [sic] in March 2018 

through November 15, 2018, Sloane 

provided professional communications 

services to CAT, including media 

relations consulting, strategy and 

execution. Specifically, Sloane provided 

services related to communications with 

the public regarding the CAT, including 

monitoring developments related to the 

CAT (e.g., congressional efforts, public 

comments and reaction to proposals, 

press coverage of the CAT), reporting 

such developments to CAT LLC, and 

drafting and disseminating 

communications to the public regarding 

such developments as well as reporting 

on developments related to the CAT 

(e.g., amendments to the CAT NMS 

Plan). 

(c) Costs Paid to Initial Plan Processor 

From November 16, 2018 Through 

February 2019 

Third, Historical CAT Costs 1 would 

not include the $19,628,791 in costs 

paid to the Initial Plan Processor from 

November 16, 2018 through February 

2019 when CAT LLC’s relationship with 

the Initial Plan Processor concluded. 

CAT LLC determined that Historical 

CAT Costs 1 would not include any fees 

paid to the Initial Plan Processor after 

November 15, 2017,63 which was the 

date by which Participants were 

required to begin reporting to the 

CAT.64 As discussed above, the 

Participants determined that Historical 

CAT Costs 1 would not include all CAT 

costs incurred from November 15, 2017 

through November 15, 2018, which 

includes $37,852,083 in Initial Plan 

Processor costs incurred from November 

15, 2017 through November 15, 2018 (as 

well as other CAT costs during this 

period). The remaining Initial Plan 

Processor costs incurred after November 

15, 2018 are the $19,628,791 in costs for 

the period from November 16, 2018 

through February 2019 incurred in the 

development of the CAT by the Initial 

Plan Processor, as well as a transition 

fee for the transition from the Initial 

Plan Processor to the successor Plan 

Processor. The Participants would 

remain responsible for 100% of these 

$19,628,791 in costs. 

(C) Historical Recovery Period 1 

Under the CAT NMS Plan, the 

Operating Committee is required to 

reasonably establish the length of the 

Historical Recovery Period used in 

calculating each Historical Fee Rate 

based upon the amount of the Historical 

CAT Costs to be recovered by the 

Historical CAT Assessment, and to 

describe the reasons for its length.65 The 

Historical Recovery Period used in 

calculating the Historical Fee Rate may 

not be less than 24 months or more than 

five years.66 The Operating Committee 

has determined to establish a Historical 

Recovery Period 1 of 24 months for 

Historical CAT Assessment 1. 

The Operating Committee determined 

that the length of Historical Recovery 

Period 1 appropriately weighs the need 

for a reasonable Historical Fee Rate 1 

that spreads the Historical CAT Costs 

over an appropriate amount of time and 

the need to repay the loans to the 

Participants in a timely fashion. The 

Operating Committee determined that 

24 months for Historical Recovery 

Period 1 would establish a fee rate that 

is lower than other transaction-based 

fees, including fees assessed pursuant to 

Section 31.67 In addition, in establishing 

a Historical Recovery Period of 24 

months, the Operating Committee 

recognized that the total costs for 

Historical CAT Assessment 1 were less 

than the total costs for 2022 and 2023,68

and therefore it would be reasonable 

and appropriate to recover costs subject 

to this filing over an approximate twoyear period. 

The length of the Historical Recovery 

Period 1 and the reasons for its length 

are provided in this filing in accordance 

with the requirement in the CAT NMS 

Plan to provide such information in a 

fee filing for a Historical CAT 

Assessment.69

(D) Projected Total Executed Equivalent 

Share Volume 

The calculation of Historical Fee Rate 

1 also requires the determination of the 

projected total executed equivalent 

share volume of transactions in Eligible 

Securities for Historical Recovery Period 

1. Under the CAT NMS Plan, the 

Operating Committee is required to 

‘‘reasonably determine the projected 

total executed equivalent share volume 

of all transactions in Eligible Securities 

for each Historical Recovery Period 

based on the executed equivalent share 

volume of all transactions in Eligible 

Securities for the prior twelve 

months.’’ 70 The Operating Committee is 

required to base its projection on the 

prior twelve months, but it may use its 

discretion to analyze the likely volume 

for the upcoming year. Such discretion 

would allow the Operating Committee 

to use its judgment when estimating 

projected total executed equivalent 

share volume if the volume over the 

prior twelve months was unusual or 

otherwise unfit to serve as the basis of 

a future volume estimate.71

The total executed equivalent share 

volume of transactions in Eligible 

Securities for the 12-month period from 

June 2023 through May 2024 was 

3,980,753,840,905.21 executed 

equivalent shares. The Operating 

Committee has determined to calculate 

the projected total executed equivalent 


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72This projection was calculated by multiplying 

3,980,753,840,905.21 executed equivalent shares by 

two. 

73Section 11.3(b)(iii)(B)(II)(D) of the CAT NMS 

Plan. 

74 In approving the CAT Funding Model, the 

Commission stated that ‘‘[t]he calculation of the 

Historical Fee Rate by dividing the Historical CAT 

Costs by the projected total executed equivalent 

share volume of all transactions in Eligible 

Securities for the Historical Recovery Period is 

reasonable.’’ CAT Funding Model Approval Order 

at 62664. 

75Section 11.3(b)(iii)(B)(II)(A) of the CAT NMS 

Plan. 

76Section 11.3(b)(ii) of the CAT NMS Plan. 

77 Id. In approving the CAT Funding Model, the 

Commission stated that ‘‘[t]he proposed allocation 

of the Historical CAT Assessment solely to CEBSs 

and CEBBs, and ultimately Industry Members, is 

reasonable. The Historical CAT Assessment will 

still be divided into thirds,’’ as the Participants’ 

one-third share of Historical CAT Costs will be paid 

by the cancellation of loans made to the Company. 

CAT Funding Model Approval Order at 62666. 

78See Section 11.3(b)(iii)(A) of the CAT NMS 

Plan. 

79See proposed paragraph (a)(1)(B) of the fee 

schedule. 

80Section 11.3(b)(i)(D)(II) of the CAT NMS Plan. 

81 In approving the CAT Funding Model, the 

Commission stated that, ‘‘[i]n the Commission’s 

view, it is reasonable for Industry Members to be 

charged a Historical CAT Assessment until all 

Historical CAT Costs for the Historical CAT 

Assessment are collected.’’ CAT Funding Model 

Approval Order at 62665. 

82Section 11.3(b)(iii)(A) of the CAT NMS Plan. 

share volume for the 24 months of 

Historical Recovery Period 1 by 

doubling the executed equivalent share 

volume for the prior 12 months. The 

Operating Committee determined that 

such an approach was reasonable as the 

CAT’s annual executed equivalent share 

volume has remained relatively 

constant. For example, the executed 

equivalent share volume for 2021 was 

3,963,697,612,395, the executed 

equivalent share volume for 2022 was 

4,039,821,841,560.31, and the executed 

equivalent share volume for 2023 was 

3,868,940,345,680.6. Accordingly, the 

projected total executed equivalent 

share volume for Historical Recovery 

Period 1 is projected to be 

7,961,507,681,810.42 executed 

equivalent shares.72

The projected total executed 

equivalent share volume of all 

transactions in Eligible Securities for 

Historical Recovery Period 1 and a 

description of the calculation of the 

projection is provided in this filing in 

accordance with the requirement in the 

CAT NMS Plan to provide such 

information in a fee filing for a 

Historical CAT Assessment.73

(E) Historical Fee Rate 1 

Historical Fee Rate 1 would be 

calculated by dividing Historical CAT 

Costs 1 by the reasonably projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for 

Historical Recovery Period 1, as 

described in detail above.74 Specifically, 

Historical Fee Rate 1 would be 

calculated by dividing $318,059,819 by 

7,961,507,681,810.42. As a result, the 

Historical Fee Rate 1 would be 

$0.00003994969693072937 per executed 

equivalent share. Historical Fee Rate 1 

is provided in this filing in accordance 

with the requirement in the CAT NMS 

Plan to provide the Historical Fee Rate 

in a fee filing for a Historical CAT 

Assessment.75

(3) Past CAT Costs and Participants 

Participants would not be required to 

pay any fees associated with Historical 

CAT Assessment 1 as the Participants 

previously have paid all Past CAT Costs. 

The CAT NMS Plan explains that: 

Because Participants previously have paid 

Past CAT Costs via loans to the Company, 

Participants would not be required to pay 

any Historical CAT Assessment. In lieu of a 

Historical CAT Assessment, the Participants’ 

one-third share of Historical CAT Costs and 

such other additional Past CAT Costs as 

reasonably determined by the Operating 

Committee will be paid by the cancellation 

of loans made to the Company on a pro rata 

basis based on the outstanding loan amounts 

due under the loans.76

The CAT NMS Plan further states that 

‘‘Historical CAT Assessments are 

designed to recover two-thirds of the 

Historical CAT Costs.’’ 77

(4) Monthly Fees 

CEBBs and CEBSs would be required 

to pay fees for Historical CAT 

Assessment 1 on a monthly basis for the 

period in which Historical CAT 

Assessment 1 is in effect.78 A CEBB or 

CEBS’s fee for each month would be 

calculated based on the transactions in 

Eligible Securities executed by the 

CEBB or CEBS from the prior month.79

Proposed paragraph (a)(1)(A) of the fee 

schedule would state that each CAT 

Executing Broker would receive its first 

invoice in November 2024, and ‘‘would 

receive an invoice each month thereafter 

in which Historical CAT Assessment 1 

is in effect.’’ Proposed paragraph 

(a)(1)(B) of the fee schedule would state 

that ‘‘Consolidated Audited Trail, LLC 

shall provide each CAT Executing 

Broker with an invoice for Historical 

CAT Assessment 1 on a monthly basis.’’ 

In addition, proposed paragraph (b)(1) 

of the fee schedule states that each 

CEBB and CEBS is required to pay its 

CAT fees ‘‘each month.’’ 

(5) Actual Recovery Period for Historical 

CAT Assessment 1 

The CAT NMS Plan states that, 

‘‘[n]otwithstanding the length of the 

Historical Recovery Period used in 

calculating the Historical Fee Rate, each 

Historical CAT Assessment calculated 

using the Historical Fee Rate will 

remain in effect until all Historical CAT 

Costs for the Historical CAT Assessment 

are collected.’’ 80 Accordingly, 

Historical CAT Assessment 1 will 

remain in effect until all Historical CAT 

Costs 1 have been collected. The actual 

recovery period for Historical CAT 

Assessment 1 may be shorter or longer 

than Historical Recovery Period 1 

depending on the actual executed 

equivalent share volumes during the 

time that Historical CAT Assessment 1 

is in effect.81

(6) Consolidated Audit Trail Funding 

Fees 

To implement Historical CAT 

Assessment 1, a new section would be 

added to the Exchange’s fee schedule for 

‘‘Consolidated Audit Trail Funding 

Fees’’, and it would include the 

proposed paragraphs described below. 

(A) Fee Schedule for Historical CAT 

Assessment 1 

The CAT NMS Plan states that: 

Each month in which a Historical CAT 

Assessment is in effect, each CEBB and each 

CEBS shall pay a fee for each transaction in 

Eligible Securities executed by the CEBB or 

CEBS from the prior month as set forth in 

CAT Data, where the Historical CAT 

Assessment for each transaction will be 

calculated by multiplying the number of 

executed equivalent shares in the transaction 

by one-third and by the Historical Fee Rate 

reasonably determined pursuant to paragraph 

(b)(i) of this Section 11.3.82

Accordingly, based on the factors 

discussed above, the Exchange proposes 

to add paragraph (a)(1) to the 

Consolidated Audit Trail Funding Fees 

section of its fee schedule. Proposed 

paragraph (a)(1) would state the 

following: 

(A) Each CAT Executing Broker shall 

receive its first invoice for Historical CAT 

Assessment 1 in November 2024, which shall 

set forth the Historical CAT Assessment 1 

fees calculated based on transactions in 

October 2024, and shall receive an invoice 

for Historical CAT Assessment 1 for each 

month thereafter in which Historical CAT 

Assessment 1 is in effect. 

(B) Consolidated Audit Trail, LLC shall 

provide each CAT Executing Broker with an 

invoice for Historical CAT Assessment 1 on 

a monthly basis. Each month, such invoices 

shall set forth a fee for each transaction in 

Eligible Securities executed by the CAT 

Executing Broker in its capacity as a CAT 

Executing Broker for the Buyer (‘‘CEBB’’) 

and/or the CAT Executing Broker for the 

Seller (‘‘CEBS’’) (as applicable) from the prior 


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83CAT Funding Model Approval Order at 62658, 

n.658. 

84 Dividing $0.00003994969693072937 by three 

equals $0.00001331656564357646. Rounding 

$0.00001331656564357646 to six decimal places 

equals $0.000013. 

85Section 11.4 of the CAT NMS Plan. 

86The billing process and system are described in 

CAT Alert 2023–02 as well as the CAT FAQs 

related to the billing of CAT fees, the Industry 

Member CAT Reporter Portal User Guide, the FCAT 

Industry Member Onboarding Guide, the FCAT 

Connectivity Supplement for Industry Members and 

the CAT Billing Webinars (dated Sept. 28, 2023, 

and Nov. 7, 2023), each available on the CAT 

website. 

87Section 11.4 of the CAT NMS Plan. 

month as set forth in CAT Data. The fee for 

each such transaction will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by the 

fee rate of $0.000013 per executed equivalent 

share. 

(C) Historical CAT Assessment 1 will 

remain in effect until $212,039,879.34 (twothirds of Historical CAT Costs 1) are 

collected from CAT Executing Brokers 

collectively, which is estimated to be 

approximately two years, but could be for a 

longer or shorter period of time. Consolidated 

Audit Trail, LLC will provide notice when 

Historical CAT Assessment 1 will no longer 

be in effect. 

(D) Each CAT Executing Broker shall 

be required to pay each invoice for 

Historical CAT Assessment 1 in 

accordance with paragraph (b). 

As noted in the Plan amendment for 

the CAT Funding Model, ‘‘as a practical 

matter, the fee filing for a Historical 

CAT Assessment would provide the 

exact fee per executed equivalent share 

to be paid for each Historical CAT 

Assessment, by multiplying the 

Historical Fee Rate by one-third and 

describing the relevant number of 

decimal places for the fee rate.83

Accordingly, proposed paragraph 

(a)(1)(B) of the fee schedule would set 

forth a fee rate of $0.000013 per 

executed equivalent share. This fee rate 

is calculated by multiplying Historical 

Fee Rate 1 of $0.00003994969693072937 

by one-third, and rounding the result to 

6 decimal places.84 The Operating 

Committee determined to use six 

decimal places to balance the accuracy 

of the calculation with the potential 

systems and other impracticalities of 

using additional decimal places in the 

calculation. 

The proposed language in paragraph 

(a)(1)(A) of the fee schedule would 

describe when CAT Executing Brokers 

would receive their first monthly 

invoice for Historical CAT Assessment 

1. Specifically, CAT Executing Brokers 

would receive their first monthly 

invoice for Historical CAT Assessment 1 

in November 2024 and the fees set forth 

in that invoice would be calculated 

based on transactions executed in the 

prior month, that is, transactions 

executed in October 2024. The payment 

for the first invoice would be required 

within 30 days after the receipt of the 

first invoice (unless a longer period is 

indicated), as described in paragraph 

(b)(2) of the fee schedule. 

Proposed paragraph (a)(1)(A) of the 

fee schedule also would describe the 

monthly cadence of the invoices for 

Historical CAT Assessment 1. 

Specifically, after the first invoices are 

provided to CAT Executing Brokers in 

November 2024, invoices will be sent to 

CAT Executing Brokers each month 

thereafter while Historical CAT 

Assessment 1 is in effect. 

Proposed paragraph (a)(1)(B) of the fee 

schedule would describe the invoices 

for Historical CAT Assessment 1. 

Proposed paragraph (a)(1)(B) of the fee 

schedule would state that ‘‘Consolidated 

Audit Trail, LLC shall provide each 

CAT Executing Broker with an invoice 

for Historical CAT Assessment 1 on a 

monthly basis.’’ Proposed paragraph 

(a)(1)(B) of the fee schedule also would 

describe the fees to be set forth in the 

invoices for Historical CAT Assessment 

1. Specifically, it would state that 

‘‘[e]ach month, such invoices shall set 

forth a fee for each transaction in 

Eligible Securities executed by the CAT 

Executing Broker in its capacity as a 

CAT Executing Broker for the Buyer 

(‘‘CEBB’’) and/or the CAT Executing 

Broker for the Seller (‘‘CEBS’’) (as 

applicable) from the prior month as set 

forth in CAT Data. The fee for each such 

transaction will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

the fee rate of $0.000013 per executed 

equivalent share.’’ 

Furthermore, proposed paragraph 

(a)(1)(C) of the fee schedule would 

describe how long Historical CAT 

Assessment 1 would remain in effect. It 

would state that ‘‘Historical CAT 

Assessment 1 will remain in effect until 

$212,039,879.34 (two-thirds of 

Historical CAT Costs 1) are collected 

from CAT Executing Brokers 

collectively, which is estimated to be 

approximately two years, but could be 

for a longer or shorter period of time.’’ 

This proposed paragraph would further 

state that ‘‘Consolidated Audit Trail, 

LLC will provide notice when Historical 

CAT Assessment 1 will no longer be in 

effect.’’ 

Historical CAT Assessment 1 will be 

assessed for all transactions executed in 

each month through the end of the 

month in which two-thirds of Historical 

CAT Costs 1 are assessed, and then CAT 

LLC will provide notice that Historical 

CAT Assessment 1 is no longer in effect. 

Since Historical CAT Assessment 1 is a 

monthly fee based on transaction 

volume from the prior month, Historical 

CAT Assessment 1 may collect more 

than two-thirds of Historical CAT Costs 

1. To the extent that occurs, any excess 

money collected during the final month 

in which Historical CAT Assessment 1 

is in effect will be used to offset future 

fees and/or to fund the reserve for the 

CAT. 

Finally, proposed paragraph (a)(1)(D) 

of the fee schedule sets forth the 

requirement for the CAT Executing 

Brokers to pay the invoices for 

Historical CAT Assessment 1. It would 

state that ‘‘[e]ach CAT Executing Broker 

shall be required to pay each invoice for 

Historical CAT Assessment 1 in 

accordance with paragraph (b).’’ 

(B) Manner of Payment 

Paragraph (b)(1) to the ‘‘Consolidated 

Audit Trail Funding Fees’’ section of its 

fee schedule describes the manner of 

payment of Industry Member CAT fees. 

Paragraph (b)(1) states that ‘‘[e]ach CAT 

Executing Broker shall pay its CAT fees 

as required pursuant to paragraph (a) 

each month to the Consolidated Audit 

Trail, LLC in the manner prescribed by 

the Consolidated Audit Trail, LLC.’’ The 

CAT NMS Plan requires the Operating 

Committee to establish a system for the 

collection of CAT fees.85 The Plan 

Processor has established a billing 

system for CAT fees.86 Therefore, the 

Exchange proposes to require CAT 

Executing Brokers to pay Historical CAT 

Assessment 1 in accordance with such 

system. 

(C) Failure To Pay CAT Fees 

The CAT NMS Plan further states 

that: 

Participants shall require each Industry 

Member to pay all applicable fees authorized 

under this Article XI within thirty (30) days 

after receipt of an invoice or other notice 

indicating payment is due (unless a longer 

payment period is otherwise indicated). If an 

Industry Member fails to pay any such fee 

when due (as determined in accordance with 

the preceding sentence), such Industry 

Member shall pay interest on the outstanding 

balance from such due date until such fee is 

paid at a per annum rate equal to the lesser 

of: (a) the Prime Rate plus 300 basis points; 

or (b) the maximum rate permitted by 

applicable law.87

Accordingly, the Exchange previously 

has added this requirement to the 

Exchange’s fee schedule. Specifically, 

paragraph (b)(2) of the fee schedule 

states: 

Each CAT Executing Broker shall pay the 

CAT fees required pursuant to paragraph (a) 

within thirty days after receipt of an invoice 


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88Section 11.3(a)(iv)(A) of the CAT NMS Plan. 

89 In approving the CAT Funding Model, the 

Commission stated that, ‘‘[i]n the Commission’s 

view, providing CAT Execut[ing] Brokers 

information regarding the calculation of their CAT 

Fees will aid in transparency and permit CAT 

Execut[ing] Brokers to confirm the accuracy of their 

invoices for CAT Fees.’’ CAT Funding Model 

Approval Order at 62667. 

90Section 11.3(a)(iv)(B) of the CAT NMS Plan. In 

approving the CAT Funding Model, the 

Commission stated that ‘‘[t]he publication of the 

aggregate executed equivalent share volume and 

aggregate fee is appropriate because it would allow 

Participants and CAT Executing Brokers a highlevel validation of executed volume and fees.’’ CAT 

Funding Model Approval Order at 62667. 

91Section 11.3(b)(iii)(B)(III) of the CAT NMS 

Plan. 

92Section 11.6(b) of the CAT NMS Plan. 

93Section 11.6 of the CAT NMS Plan. 

94The Quarterly Progress Reports are available at 

https://www.catnmsplan.com/implementationplan. 

or other notice indicating payment is due 

(unless a longer payment period is otherwise 

indicated). If a CAT Executing Broker fails to 

pay any such CAT fee when due, such CAT 

Executing Broker shall pay interest on the 

outstanding balance from such due date until 

such fee is paid at a per annum rate equal 

to the lesser of (i) the Prime Rate plus 300 

basis points, or (ii) the maximum rate 

permitted by applicable law. 

The requirements of paragraph (b)(2) 

would apply to Historical CAT 

Assessment 1. 

(7) Historical CAT Assessment Details 

The CAT NMS Plan states that: 

Details regarding the calculation of a CAT 

Executing Broker’s Historical CAT 

Assessment will be provided upon request to 

such CAT Executing Broker. At a minimum, 

such details would include each CAT 

Executing Broker’s executed equivalent share 

volume and corresponding fee by (1) Listed 

Options, NMS Stocks and OTC Equity 

Securities, (2) by transactions executed on 

each exchange and transactions executed 

otherwise than on an exchange, and (3) by 

buy-side transactions and sell-side 

transactions.88

Such information would provide 

CEBBs and CEBSs with the ability to 

understand the details regarding the 

calculation of their Historical CAT 

Assessment.89 CAT LLC will provide 

CAT Executing Brokers with these 

details regarding the calculation of their 

Historical CAT Assessments on their 

monthly invoice for the Historical CAT 

Assessment. 

In addition, CAT LLC will make 

certain aggregate statistics regarding 

Historical CAT Assessments publicly 

available. Specifically, the CAT NMS 

Plan states that, ‘‘[f]or each Historical 

CAT Assessment, at a minimum, CAT 

LLC will make publicly available the 

aggregate executed equivalent share 

volume and corresponding aggregate fee 

by (1) Listed Options, NMS Stocks and 

OTC Equity Securities, (2) by 

transactions executed on each exchange 

and transactions executed otherwise on 

an exchange, and (3) by buy-side 

transactions and sell-side 

transactions.’’ 90 Such aggregate 

statistics will be available on the CAT 

website. 

Furthermore, CAT LLC will make 

publicly available on the CAT website 

the total amount invoiced each month 

that Historical CAT Assessment 1 is in 

effect as well as the total amount 

invoiced for Historical CAT Assessment 

1 for all months since its 

commencement. CAT LLC also will 

make publicly available on the CAT 

website the total costs to be collected 

from Industry Members for Historical 

CAT Assessment 1. By reviewing 

statistics regarding how much has been 

invoiced and how much remains to be 

invoiced for Historical CAT Assessment 

1, Industry Members would have 

sufficient information to reasonably 

track how much longer Historical CAT 

Assessment 1 is likely to be in place. 

(8) Implementation Assistance 

To assist Industry Members with 

compliance with the commencement of 

Historical CAT Assessment 1, CAT LLC 

has been making available to CAT 

Executing Brokers mock invoices prior 

to the commencement of Historical CAT 

Assessment 1. Specifically, CAT 

Executing Brokers have received mock 

invoices based on transaction data each 

month since November 2023. The mock 

invoices are in the same form as the 

actual, payable invoices, including both 

the relevant transaction data and the 

corresponding fee. However, no 

payments have been required in 

response to such mock invoices; they 

have been used solely to assist CAT 

Executing Brokers with the 

development of their processes for 

paying the CAT fees. Such data has 

provided CAT Executing Brokers with a 

preview of the transaction data used in 

creating the invoices for Historical CAT 

Assessment 1 fees, as the data will be 

the same as data provided in actual 

invoices. Such data preview is intended 

to facilitate the payment of Historical 

CAT Assessment 1. 

(9) Financial Accountability Milestones 

The 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 Historical 

CAT Assessment until any applicable 

Financial Accountability Milestone 

described in Section 11.6 has been 

satisfied.’’ 91 The CAT NMS Plan further 

states that ‘‘in all filings submitted by 

the Participants to the Commission 

under Section 19(b) of the Exchange 

Act, to establish or implement PostAmendment Industry Member Fees 

pursuant to this Article, . . . the 

Participants shall clearly indicate 

whether such fees are related to PostAmendment Expenses incurred during 

Period 1, Period 2, Period 3, or Period 

4.’’ 92 As discussed in detail below, all 

applicable Financial Accountability 

Milestones for Historical CAT 

Assessment 1—that is, Period 1, Period 

2 and Period 3 of the Financial 

Accountability Milestones—have been 

satisfied. Furthermore, as discussed 

below, this filing clearly indicates that 

Historical CAT Assessment 1 relates to 

Post-Amendment Expenses incurred 

during Periods 1, 2 and 3 of the 

Financial Accountability Milestones. 

(A) Period 1 of the Financial 

Accountability Milestones 

In accordance with Section 11.6(b) of 

the CAT NMS Plan, Historical CAT 

Assessment 1 seeks to recover costs that 

are related to ‘‘all fees, costs, and 

expenses (including legal and 

consulting fees, costs, and expenses) 

incurred by or for the Company in 

connection with the development, 

implementation and operation of the 

CAT from the effective date of [Section 

11.6 of the CAT NMS Plan] until such 

time as Full Implementation of CAT 

NMS Plan Requirements has been 

achieved’’ 93 (‘‘Post-Amendment 

Expenses’’) incurred during FAM Period 

1. FAM Period 1 began on June 22, 

2020, the effective date of Section 11.6 

of the CAT NMS Plan, and concluded 

on July 31, 2020, the date of Initial 

Industry Member Core Equity and 

Options Reporting. Section 1.1 of the 

CAT NMS Plan defines ‘‘Initial Industry 

Member Core Equity and Options 

Reporting’’ as: 

The reporting by Industry Members 

(excluding Small Industry Members that 

are not OATS reporters) of both: (a) 

equities transaction data, excluding 

Customer Account Information, 

Customer-ID, and Customer Identifying 

Information; and (b) options transaction 

data, excluding Customer Account 

Information, Customer-ID and Customer 

Identifying Information. 

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.94 As 

indicated by the Participants’ Quarterly 

Progress Report for the third quarter of 


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95See Q3 2020 Quarterly Progress Report (Oct. 30, 

2020) and Updated Q3 2020 Quarterly Progress 

Report (Jan. 29, 2021). 

96See Phased Reporting Exemptive Relief Order. 

Under the CAT NMS Plan as adopted, the 

Participants were required, through their 

Compliance Rules, to require their Large Industry 

Members to commence reporting Industry Member 

Data to the Central Repository by November 15, 

2018, and to require their Small Industry Members 

to commence reporting Industry Member Data to 

the Central Repository by November 15, 2019. 

Sections 6.7(a)(v) and (vi) of the CAT NMS Plan. 

The SEC granted exemptive relief from these 

provisions of the CAT NMS Plan to allow for the 

phased implementation of Industry Member 

reporting via five phases addressing the reporting 

requirements for Phase 2a Industry Member Data, 

Phase 2b Industry Member Data, Phase 2c Industry 

Member Data, Phase 2d Industry Member Data and 

Phase 2e Industry Member Data. 

97Securities Exchange Act Rel. No. 88890 (May 

15, 2020), 85 FR 31322, 31330 n.97 (May 22, 2020) 

(‘‘FAM Adopting Release’’). 

98Phased Reporting Exemptive Relief Order at 

23076–78. 

99FAM Adopting Release at 31330, n.98. 

100Phased Reporting Exemptive Relief Order at 

23078. 

2020,95 Initial Industry Member Core 

Equity and Option Reporting was 

completed on schedule on July 22, 2020, 

which is prior to the July 31, 2020 

deadline. 

Under the FAM Period 1 requirement 

of Initial Industry Member Core Equity 

and Options Reporting, Industry 

Members—excluding Small Industry 

Members that are not OATS reporters— 

were required to report two categories of 

data to the CAT: equites transaction data 

and options transaction data (both 

excluding Customer Account 

Information, Customer-ID, and 

Customer Identifying Information) by 

July 31, 2020. Pursuant to exemptive 

relief provided by the Commission, the 

Commission authorized the 

Participants’ Compliance Rules to allow 

core equity reporting for Industry 

Members (Phase 2a) to begin on June 22, 

2020 and core options reporting for 

Industry Members (Phase 2b) to begin 

on July 20, 2020.96

In adopting the FAMs, the 

Commission stated that the equities 

transaction reporting required for FAM 

Period 1 ‘‘is consistent with the 

functionality that the Participants 

describe on the CAT NMS Plan website 

as ‘Production Go-Live for Equities 2a 

file submission and data integrity 

validations.’ ’’ 97 The Phase 2a Industry 

Member Data is described in detail in 

the SEC’s Phased Reporting Exemptive 

Relief Order, and includes the following 

data related to Eligible Securities that 

are equities: 

• All events and scenarios covered by 

OATS, which includes information 

related to the receipt or origination of 

orders, order transmittal, and order 

modifications, cancellations and 

executions; 

• Reportable Events for: (1) 

proprietary orders, including market 

maker orders, for Eligible Securities that 

are equities; (2) electronic quotes in 

listed equity Eligible Securities (i.e., 

NMS stocks) sent to a national securities 

exchange or FINRA’s Alternative 

Display Facility (‘‘ADF’’); (3) electronic 

quotes in unlisted Eligible Securities 

(i.e., OTC Equity Securities) received by 

an Industry Member operating an 

interdealer quotation system (‘‘IDQS’’); 

and (4) electronic quotes in unlisted 

Eligible Securities sent to an IDQS or 

other quotation system not operated by 

a Participant or Industry Member; 

• Firm Designated IDs (‘‘FDIDs’’), 

which Industry Members must report to 

the CAT as required by Sections 

6.3(d)(i)(A) and 6.4(d)(ii)(C) of the CAT 

NMS Plan; 

• Industry Members would be 

required to report all street side 

representative orders, including both 

agency and proprietary orders and mark 

such orders as representative orders, 

except in certain limited exceptions as 

described in the Industry Member 

Technical Specifications; 

• The link between the street side 

representative order and the order being 

represented when: (1) the representative 

order was originated specifically to 

represent a single order received either 

from a customer or another brokerdealer; and (2) there is (a) an existing 

direct electronic link in the Industry 

Member’s system between the order 

being represented and the representative 

order and (b) any resulting executions 

are immediately and automatically 

applied to the represented order in the 

Industry Member’s system; 

• Manual and Electronic Capture 

Time for Manual Order Events; 

• Special handling instructions for 

the original receipt or origination of an 

order during Phase 2a; and 

• When routing an order, whether the 

order was routed as an intermarket 

sweep order (‘‘ISO’’). 

In Phase 2a, Industry Members were 

not required to report modifications of 

a previously routed order in certain 

limited instances, nor were they 

required to report a cancellation of an 

order received from a Customer after the 

order has been executed.98

The Quarterly Progress Report for the 

third quarter of 2020 states that ‘‘Interim 

Step: Production Go-Live for Equities 2a 

file submission and data integrity 

validation (Large Industry Members and 

Small OATS Reporters)’’ was completed 

on June 22, 2020. Accordingly, the FAM 

Period 1 requirement of reporting by 

Industry Members (excluding Small 

Industry Members that are not OATS 

reporters) of ‘‘equities transaction data, 

excluding Customer Account 

Information, Customer-ID, and 

Customer Identifying Information’’ was 

completed on June 22, 2020. 

In adopting the FAMs, the 

Commission stated that the options 

transaction reporting required for FAM 

Period 1 is ‘‘consistent with the 

functionality that the Participants 

describe on the CAT NMS Plan website 

as ‘Production Go-Live for Options 2b 

file submission and data integrity 

validations.’ ’’ 99 The Phase 2b Industry 

Member Data is described in detail in 

the SEC’s Phased Reporting Exemptive 

Relief Order, and includes the Industry 

Member Data related to Eligible 

Securities that are options and related to 

simple electronic option orders, 

excluding electronic paired option 

orders. A simple electronic option order 

is an order to buy or sell a single option 

that is not related to or dependent on 

any other transaction for pricing and 

timing of execution that is either 

received or routed electronically by an 

Industry Member. Electronic receipt of 

an order is defined as the initial receipt 

of an order by an Industry Member in 

electronic form in standard format 

directly into an order handling or 

execution system. Electronic routing of 

an order is the routing of an order via 

electronic medium in standard format 

from one Industry Member’s order 

handling or execution system to an 

exchange or another Industry Member. 

An electronic paired option order is an 

electronic option order that contains 

both the buy and sell side that is routed 

to another Industry Member or exchange 

for crossing and/or price improvement 

as a single transaction on an exchange. 

Responses to auctions of simple orders 

and paired simple orders would be 

reportable in Phase 2b. Furthermore, 

combined orders in options would be 

treated in Phase 2b in the same way as 

equity representative orders are treated 

in Phase 2a. A combined order would 

mean, as permitted by SRO rules, a 

single, simple order in Listed Options 

created by combining individual, simple 

orders in Listed Options from a 

customer with the same exchange origin 

code before routing to an exchange. 

During Phase 2b, the single combined 

order sent to an exchange must be 

reported and marked as a combined 

order, but the linkage to the underlying 

orders is not required to be reported 

until Phase 2d.100

The Quarterly Progress Report for the 

third quarter of 2020 states that ‘‘Interim 

Step: Production Go-Live for Options 2b 


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101Q4 2020 Quarterly Progress Report (Jan. 29, 

2021). 

102For a description of the requirements of 

Phases 2a, see Phased Reporting Exemptive Relief 

Order. 

103Q3 2020 Quarterly Progress Report (Oct. 20, 

2021). 

104Section 6.10(c)(i)(A) of the CAT NMS Plan 

requires the Plan Processor to ‘‘provide Participants 

and the SEC with access to all CAT Data stored in 

the Central Repository’’ via an ‘‘online targeted 

query tool.’’ Appendix D, Sections 8.1.1–8.1.3 of the 

CAT NMS Plan describes the required functionality 

associated with this regulatory tool. Appendix D, 

Section 8.2.1 describes the required functionality 

associated with a user-defined direct query tool that 

will ‘‘deliver large sets of data that can then be used 

in internal surveillance or market analysis 

applications.’’ 

105See Q3 2020 Quarterly Progress Report (Oct. 

30, 2020); Updated Q3 2020 Quarterly Progress 

Report (Jan. 29, 2021); and Q4 2020 Quarterly 

Progress Report (Jan. 29, 2021). 

106Securities Exchange Act Rel. No. 98848 (Nov. 

2, 2023), 88 FR 77128, 77129 n.13 (Nov. 8, 2023) 

(‘‘Settlement Exemptive Order’’). 

file submission and data integrity 

validations’’ was completed on July 20, 

2020. Accordingly, the FAM Period 1 

requirement of reporting by Industry 

Members (excluding Small Industry 

Members that are not OATS reporters) 

of ‘‘options transaction data, excluding 

Customer Account Information, 

Customer-ID and Customer Identifying 

Information’’ was completed on July 20, 

2020. 

As discussed above, the Historical 

CAT Costs 1 to be recovered via 

Historical CAT Assessment 1 would 

include fees, costs and expenses 

incurred by or for the Company in 

connection with the development, 

implementation and operation of the 

CAT during the period from June 22, 

2020 through July 31, 2020. The total 

costs for this period, as discussed above, 

are $6,377,343. Participants would 

remain responsible for one-third of this 

cost (which they have previously paid), 

and Industry Members would be 

responsible for the remaining twothirds, with CEBBs paying one-third 

($2,125,781) and CEBSs paying onethird ($2,125,781). 

(B) Period 2 of the Financial 

Accountability Milestones 

Historical CAT Assessment 1 seeks to 

recover costs that are related to PostAmendment Expenses incurred during 

FAM Period 2. FAM Period 2 began on 

August 1, 2020, and concluded on 

December 31, 2020, the date of the Full 

Implementation of Core Equity 

Reporting. Section 1.1 of the CAT NMS 

Plan defines ‘‘Full Implementation of 

Core Equity Reporting’’ as: 

the point at which: (a) Industry Member 

reporting (excluding reporting by Small 

Industry Members that are not OATS 

reporters) for equities transactions, excluding 

Customer Account Information, Customer-ID, 

and Customer Identifying Information, is 

developed, tested, and implemented at a 5% 

Error Rate or less and with sufficient intrafirm linkage, inter-firm linkage, national 

securities exchange linkage, and trade 

reporting facilities linkage to permit the 

Participants and the Commission to analyze 

the full lifecycle of an order across the 

national market system, excluding linkage of 

representative orders, from order origination 

through order execution or order 

cancellation; and (b) the query tool 

functionality required by Section 

6.10(c)(i)(A) and Appendix D, Sections 8.1.1– 

8.1.3 and Section 8.2.1 incorporates the 

Industry Member equities transaction data 

described in condition (a) and is available to 

the Participants and to the Commission. This 

Financial Accountability Milestone shall be 

considered complete as of the date identified 

in a Quarterly Progress Report meeting the 

requirements of Section 6.6(c). 

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 fourth quarter of 2020,101

Full Implementation of Core Equity 

Reporting was completed on schedule 

by December 31, 2020. 

Specifically, the Full Implementation 

of Core Equity Reporting requires the 

satisfaction of two prongs. The first 

prong requires Participants to have fully 

implemented the first phase of equities 

transaction reporting for Industry 

Members (excluding Small Industry 

Members that are not OATS reporters) at 

an Error Rate of less than 5%. In 

addition, equities transaction data 

produced by the CAT at this stage must 

also be sufficiently interlinked so as to 

permit full analysis of an order’s 

lifecycle across the national market, 

excluding full linkage of representative 

orders. As CAT LLC reported on its 

Quarterly Progress Reports, Phase 2a 

was fully implemented as of October 26, 

2020, including intra-firm, inter-firm, 

national securities exchange, and trade 

reporting facilities linkages.102 In 

addition to the reporting of Phase 2a 

Industry Member Data as described 

above with regard to FAM Period 1, the 

following linkage data was added to the 

CAT as described in the Quarterly 

Progress Reports for the third and fourth 

quarter of 2020: 

• ‘‘Production Go-Live for Equities 2a 

Intrafirm Linkage validations’’ was 

completed on 7/27/2020; 103

• ‘‘Production Go-Live for Firm to 

Firm Linkage validations for Equities 2a 

(Large Industry Members and Small 

OATS Reporters)’’ was completed on 

October 26, 2020; and 

• ‘‘Production Go-Live for Equities 2a 

Exchange and TRF Linkage validations 

(Large Industry Members and Small 

OATS Reporters)’’ was completed on 

October 26, 2020. 

Furthermore, as CAT LLC reported on 

its Quarterly Progress Report for the 

fourth quarter of 2020, the average 

overall error rate for Phase 2a Industry 

Member Data was less than 5% as of 

December 31, 2020. The average overall 

error rate was calculated by dividing the 

compliance errors by processed records. 

The second prong of this FAM 

requires that the equities transaction 

data collected by the CAT at this stage 

be made available to regulators through 

two basic query tools required by the 

CAT NMS Plan—a targeted query tool 

that will enable regulators to retrieve 

data via an online query screen with a 

variety of predefined selection criteria, 

and a user-defined direct query tool that 

will provide regulators with the ability 

to query data using all available 

attributes and data sources.104 As CAT 

LLC reported on its Quarterly Progress 

Reports, the query tool functionality 

incorporating the data from Phase 2a 

was available to the Participants and the 

Commission as of December 31, 2020.105

The Commission has determined that 

the Participants have sufficiently 

complied with the conditions set forth 

in the 2020 Orders and with the 

technical requirements for Quarterly 

Progress Reports set forth in Section 

6.6(c) of the CAT NMS Plan for 

purposes of determining compliance 

with this FAM.106

As discussed above, Historical CAT 

Costs 1 to be recovered via Historical 

CAT Assessment 1 would include fees, 

costs and expenses incurred by or for 

the Company in connection with the 

development, implementation and 

operation of the CAT during the period 

from August 1, 2020 through December 

31, 2020. The total costs for this period, 

as discussed above, are $42,976,478. 

Participants would remain responsible 

for one-third of this cost (which they 

have previously paid), and Industry 

Members would be responsible for the 

remain [sic] two-thirds, with CEBBs 

paying one-third ($14,325,492.70) and 

CEBSs paying one-third 

($14,325,492.70). 

(C) Period 3 of the Financial 

Accountability Milestones 

Historical CAT Assessment 1 seeks to 

recover costs that are related to PostAmendment Expenses incurred during 

FAM Period 3. FAM Period 3 began on 

January 1, 2021, and concluded on 

December 31, 2021, the date of the Full 

Availability and Regulatory Utilization 

of Transactional Database Functionality. 

Section 1.1 of the CAT NMS Plan 


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107Q4 2021 Quarterly Progress Report (Jan. 17, 

2022). 

108 Id. 

109Securities Exchange Act Rel. No. 92239 (June 

23, 2021), 86 FR 34293 (June 29, 2021). 

110Phase Reporting Exemptive Relief Order at 

23078–79. 

111 Id. at 23079. 

defines ‘‘Full Availability and 

Regulatory Utilization of Transactional 

Database Functionality’’ as: 

the point at which: (a) reporting to the Order 

Audit Trail System (‘‘OATS’’) is no longer 

required for new orders; (b) Industry Member 

reporting for equities transactions and simple 

electronic options transactions, excluding 

Customer Account Information, Customer-ID, 

and Customer Identifying Information, with 

sufficient intra-firm linkage, inter-firm 

linkage, national securities exchange linkage, 

trade reporting facilities linkage, and 

representative order linkages (including any 

equities allocation information provided in 

an Allocation Report) to permit the 

Participants and the Commission to analyze 

the full lifecycle of an order across the 

national market system, from order 

origination through order execution or order 

cancellation, is developed, tested, and 

implemented at a 5% Error Rate or less; (c) 

Industry Member reporting for manual 

options transactions and complex options 

transactions, excluding Customer Account 

Information, Customer-ID, and Customer 

Identifying Information, with all required 

linkages to permit the Participants and the 

Commission to analyze the full lifecycle of an 

order across the national market system, from 

order origination through order execution or 

order cancellation, including any options 

allocation information provided in an 

Allocation Report, is developed, tested, and 

fully implemented; (d) the query tool 

functionality required by Section 

6.10(c)(i)(A) and Appendix D, Sections 8.1.1– 

8.1.3, Section 8.2.1, and Section 8.5 

incorporates the data described in conditions 

(b)–(c) and is available to the Participants 

and to the Commission; and (e) the 

requirements of Section 6.10(a) are met. This 

Financial Accountability Milestone shall be 

considered complete as of the date identified 

in a Quarterly Progress Report meeting the 

requirements of Section 6.6(c). 

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 fourth quarter of 2021,107

Full Availability and Regulatory 

Utilization of Transactional Database 

Functionality was completed on 

schedule by December 31, 2021. 

Specifically, the ‘‘Full Availability 

and Regulatory Utilization of 

Transactional Database Functionality’’ 

requires the satisfaction of five prongs. 

The first prong requires that reporting to 

the Order Audit Trail System (‘‘OATS’’) 

is no longer required for new orders. As 

CAT LLC reported on its Quarterly 

Progress Report for the fourth quarter of 

2021,108 FINRA retired OATS effective 

September 1, 2021.109 Accordingly, after 

the retirement of OATS, reporting to 

OATS was no longer required. 

In addition to Phase 2a and Phase 2b 

Industry Member Data, the second and 

third prongs of ‘‘Full Availability and 

Regulatory Utilization of Transactional 

Database Functionality’’ require 

Industry Member reporting of Phase 2c 

Industry Member Data and Phase 2d 

Industry Member Data. The Phase 2c 

Industry Member Data is described in 

detail in the SEC’s Phased Reporting 

Exemptive Relief Order. That Order 

states that ‘‘Phase 2c Industry Member 

Data’’ is Industry Member Data related 

to Eligible Securities that are equities 

other than Phase 2a Industry Member 

Data, Phase 2d Industry Member Data, 

or Phase 2e Industry Member Data. 

Specifically, the Phase 2c Industry 

Member Data includes Industry Member 

Data that is related to Eligible Securities 

that are equities and that is related to: 

(1) Allocation Reports as required to be 

recorded and reported to the Central 

Repository pursuant to Section 

6.4(d)(ii)(A)(1) of the CAT NMS Plan; (2) 

quotes in unlisted Eligible Securities 

sent to an IDQS operated by a CAT 

Reporter (reportable by the Industry 

Member sending the quotes) (except for 

quotes reportable in Phase 2d, as 

discussed below); (3) electronic quotes 

in listed equity Eligible Securities (i.e., 

NMS stocks) that are not sent to a 

national securities exchange or FINRA’s 

Alternative Display Facility; (4) 

reporting changes to client instructions 

regarding modifications to algorithms; 

(5) marking as a representative order 

any order originated to work a customer 

order in price guarantee scenarios, such 

as a guaranteed VWAP; (6) flagging 

rejected external routes to indicate a 

route was not accepted by the receiving 

destination; (7) linkage of duplicate 

electronic messages related to a Manual 

Order Event between the electronic 

event and the original manual route; (8) 

special handling instructions on order 

route reports (other than the ISO, which 

is required to be reported in Phase 2a); 

(9) quote identifier on trade events; (10) 

reporting of LTIDs (if applicable) for 

accounts with Reportable Events that 

are reportable to CAT as of and 

including Phase 2c; (11) reporting of 

date account opened or Account 

Effective Date (as applicable) for 

accounts and reporting of a flag 

indicating the Firm Designated ID type 

as account or relationship; (12) order 

effective time for orders that are 

received by an Industry Member and do 

not become effective until a later time; 

(13) the modification or cancellation of 

an internal route of an order; and (14) 

linkages to the customer orders(s) being 

represented for representative order 

scenarios, including agency average 

price trades, net trades, aggregated 

orders, and disconnected Order 

Management System (‘‘OMS’’)— 

Execution Management System (‘‘EMS’’) 

scenarios, as required in the Industry 

Member Technical Specifications.110

Phase 2c Industry Member Data also 

includes electronic quotes that are 

provided by or received in a CAT 

Reporter’s order/quote handling or 

execution systems in Eligible Securities 

that are equities and are provided by an 

Industry Member to other market 

participants off a national securities 

exchange under the following 

conditions: (1) an equity bid or offer is 

displayed publicly or has been 

communicated (a) for listed securities to 

the ADF operated by FINRA; or (b) for 

unlisted equity securities to an 

‘‘interdealer quotation system,’’ as 

defined in FINRA Rule 6420(c); or (2) an 

equity bid or offer which is accessible 

electronically by customers or other 

market participants and is immediately 

actionable for execution or routing; i.e., 

no further manual or electronic action is 

required by the responder providing the 

quote in order to execute or cause a 

trade to be executed). With respect to 

OTC Equity Securities, OTC Equity 

Securities quotes sent by an Industry 

Member to an IDQS operated by an 

Industry Member CAT Reporter (other 

than such an IDQS that does not match 

and execute orders) are reportable by 

the Industry Member sending them in 

Phase 2c. Accordingly, any response to 

a request for quote or other form of 

solicitation response provided in a 

standard electronic format (e.g., FIX) 

that meets this quote definition (i.e., an 

equity bid or offer which is accessible 

electronically by customers or other 

market participants and is immediately 

actionable for execution or routing) 

would be reportable in Phase 2c.111

The Phase 2d Industry Member Data 

is described in detail in the SEC’s 

Phased Reporting Exemptive Relief 

Order. ‘‘Phase 2d Industry Member 

Data’’ is Industry Member Data that is 

related to Eligible Securities that are 

options other than Phase 2b Industry 

Member Data, Industry Member Data 

that is related to Eligible Securities that 

are equities other than Phase 2a 

Industry Member Data or Phase 2c 

Industry Member Data, and Industry 

Member Data other than Phase 2e 


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112 Id. 

113 Id. at 23079–80. 

114See Q4 2021 Quarterly Progress Report (Jan. 

17, 2022). 

115See Q2 2021 Quarterly Progress Report (July 

27, 2021); and Q4 2021 Quarterly Progress Report 

(Jan. 17, 2022). 

116See Q4 2021 Quarterly Progress Report (Jan. 

17, 2022). 

117See Q1 2021 Quarterly Progress Report (Apr. 

30, 2021); Q2 2021 Quarterly Progress Report (July 

27, 2021); Q3 2021 Quarterly Progress Report (Nov. 

1, 2021); Q4 2021 Quarterly Progress Report (Jan. 

17, 2022). 

118Settlement Exemptive Order at 77129 n.13. 

Industry Member Data. Phase 2d 

Industry Member Data includes with 

respect to the Eligible Securities that are 

options: (1) simple manual orders; (2) 

electronic and manual paired orders; (3) 

all complex orders with linkages to all 

CAT-reportable legs; (4) LTIDs (if 

applicable) for accounts with Reportable 

Events for Phase 2d; (5) date account 

opened or Account Effective Date (as 

applicable) for accounts with an LTID 

and flag indicating the Firm Designated 

ID type as account or relationship for 

such accounts; (6) Allocation Reports as 

required to be recorded and reported to 

the Central Repository pursuant to 

Section 6.4(d)(ii)(A)(1) of the CAT NMS 

Plan; (7) the modification or 

cancellation of an internal route of an 

order; and (8) linkage between a 

combined order and the original 

customer orders. Phase 2d Industry 

Member Data also would include 

electronic quotes that are provided by or 

received in a CAT Reporter’s order/ 

quote handling or execution systems in 

Eligible Securities that are options and 

are provided by an Industry Member to 

other market participants off a national 

securities exchange under the following 

conditions: a listed option bid or offer 

which is accessible electronically by 

customers or other market participants 

and is immediately actionable (i.e., no 

further action is required by the 

responder providing the quote in order 

to execute or cause a trade to be 

executed). Accordingly, any response to 

a request for quote or other form of 

solicitation response provided in 

standard electronic format (e.g., FIX) 

that meets this definition is reportable 

in Phase 2d for options.112

Phase 2d Industry Member Data also 

includes with respect to Eligible 

Securities that are options or equities (1) 

receipt time of cancellation and 

modification instructions through Order 

Cancel Request and Order Modification 

Request events; (2) modifications of 

previously routed orders in certain 

instances; and (3) OTC Equity Securities 

quotes sent by an Industry Member to 

an IDQS operated by an Industry 

Member CAT Reporter that does not 

match and execute orders. In addition, 

subject to any exemptive or other relief, 

Phase 2d Industry Member Data will 

include verbal or manual quotes on an 

exchange floor or in the over-thecounter market, where verbal quotes 

and manual quotes are defined as bids 

or offers in Eligible Securities provided 

verbally or that are provided or received 

other than via a CAT Reporter’s order 

handling and execution system (e.g., 

quotations provided via email or instant 

messaging).113

The Quarterly Progress Report for the 

fourth quarter of 2021 states that ‘‘Phase 

2a was fully implemented as of October 

26, 2020;’’ ‘‘Phase 2b was fully 

implemented as of January 4, 2021;’’ 

‘‘Phase 2c was implemented as of April 

26, 2021;’’ and ‘‘Phase 2d was fully 

implemented as of December 13, 

2021.’’ 114 The Quarterly Progress 

Reports for 2021 provide additional 

detail regarding the implementation of 

these steps including the following: 

• ‘‘Production Go-Live for Equities 2c 

reporting requirements (Large Industry 

Members)’’ was completed on April 26, 

2021; 

• ‘‘LTID Account Information 

Reporting Go-Live for Phases 2a, 2b and 

2c (Large Industry Members)’’ was 

completed on April 26, 2021; 

• ‘‘FCAT Plan Processor creates 

linkages of the lifecycle of order events 

based on the received data through 

Phase 2d Production Go-Live for 

Options 2d reporting requirements 

(Large Industry Members)’’ was 

completed on December 13, 2021; 

• ‘‘Production Go-Live for Options 2d 

reporting requirements (Large Industry 

Members)’’ was completed on December 

13, 2021; 

• ‘‘Production Go-Live for Options 2b 

reporting requirements (Small OATS 

Reporters and Small Non-OATS 

Reporters)’’ was completed on 

December 13, 2021; 

• ‘‘Production Go-Live for Equities 2c 

reporting requirements (Small OATS 

Reporters and Small Non-OATS 

Reporters)’’ was completed on 

December 13, 2021; 

• ‘‘Production Go-Live for Options 2d 

reporting requirements (Small OATS 

Reporters and Small Non-OATS 

Reporters)’’ was completed on 

December 13, 2021; 

• ‘‘LTID Account Information 

Reporting Go-Live for Phases 2d (Large 

Industry Members)’’ was completed on 

December 13, 2021; and 

• ‘‘LTID Account Information 

Reporting Go-Live for Phases 2a, 2b, 2c 

and 2d (Small Industry Members)’’ was 

completed on December 13, 2021.115

The third prong of ‘‘Full Availability 

and Regulatory Utilization of 

Transactional Database Functionality’’ 

also imposes an Error Rate requirement 

of 5% or less. The Quarterly Progress 

Report for the fourth quarter of 2021 

states the average overall error rate was 

less than 5% as of December 31, 2021. 

The average overall error rate was 

calculated by dividing the compliance 

errors by processed records. 

The fourth prong of ‘‘Full Availability 

and Regulatory Utilization of 

Transactional Database Functionality’’ 

requires that the data collected by the 

CAT at this stage be made available to 

regulators through an online targeted 

query tool and a user-defined direct 

query tool. As CAT LLC reported on its 

Quarterly Progress Report for the fourth 

quarter of 2021, the query tool 

functionality incorporating the data 

from Phases 2a, 2b, 2c and 2d was 

available to the Participants and to the 

Commission as of December 31, 2021.116

The fifth prong requires the 

requirements of Section 6.10(a) of the 

CAT NMS Plan to have been met. 

Section 6.10(a) of the CAT NMS Plan 

requires the Participants to use the tools 

described in Appendix D to ‘‘develop 

and implement a surveillance system, or 

enhance existing surveillance systems, 

reasonably designed to make use of the 

consolidated information contained in 

the Central Repository.’’ The Exchange 

implemented a surveillance system, or 

enhanced existing surveillance systems, 

reasonably designed to make use of the 

consolidated information contained in 

the Central Repository as of December 

31, 2021 in accordance with Section 

6.10(a) of the CAT NMS Plan.117

The Commission has determined that 

the Participants have sufficiently 

complied with the conditions set forth 

in the 2020 Orders and with the 

technical requirements for Quarterly 

Progress Reports set forth in Section 

6.6(c) of the CAT NMS Plan for 

purposes of determining compliance 

with this FAM.118

As discussed above, Historical CAT 

Costs 1 to be recovered via Historical 

CAT Assessment 1 would include fees, 

costs and expenses incurred by or for 

the Company in connection with the 

development, implementation and 

operation of the CAT during the period 

from January 1, 2021 through December 

31, 2021. The total costs for this period, 

as discussed above, are $144,415,268. 

Participants would remain responsible 

for one-third of this cost (which they 

have previously paid), and Industry 

Members would be responsible for the 

remaining two-thirds, with CEBBs 

paying one-third ($48,138,422.70) and 


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119 In May 2020, the Commission adopted 

amendments to the CAT NMS Plan that establish 

four Financial Accountability Milestones and set 

target deadlines by which these milestones must be 

achieved. These amendments also reduce the 

amount of any fees, costs, and expenses that may 

be recovered from Industry Members if the 

Participants fail to meet the target deadlines. FAM 

Adopting Release. 

120See Letter from Brandon Becker, Chair, CAT 

NMS Plan Operating Committee to Vanessa 

Countryman, Secretary, Commission (Feb. 13, 2024) 

at 2. 

121See, e.g., Letter from Howard Meyerson, 

Managing Director, FIF, to Sai Rao, Counsel for 

Trading and Markets, Office of the Chair (Apr. 25, 

2024). 122 Id. 

123Securities Exchange Act Rel. No. 100181 (May 

20, 2024), 89 FR 45715 (May 23, 2024). 

124 Id. at n.11. 

125See Letter from Michael Simon, CAT NMS 

Plan Operating Committee Chair, to Vanessa 

Countryman, Secretary, Commission at 9 (Oct. 28, 

2019). 

126 Id. at 10. 

127Securities Exchange Act Rel. No. 90405, 85 FR 

73544 (Nov. 18, 2020) (the ‘‘2020 Verbal Quotes 

Exemption’’). 

CEBSs paying one-third 

($48,138,422.70). 

(D) Additional Considerations Related 

to the Financial Accountability 

Milestones 

As discussed above, CAT LLC has 

satisfied the Financial Accountability 

Milestones (‘‘FAMs’’) for Periods 1 

through 3.119 As discussed below, none 

of the circumstances related to NIA 

Electronic RFQ Responses, the 2023 

Verbal Quotes Exemption, the 

November 2023 Order, or Executing 

Broker reporting, affect the conclusion 

that the FAMs for Periods 1 through 3 

were satisfied in a timely fashion. 

(i) NIA Electronic RFQ Responses 

CAT LLC does not believe that the 

exemptive relief relating to the reporting 

of electronic responses for quotes 

(‘‘RFQs’’) that are not immediately 

actionable (‘‘NIA Electronic RFQ 

Responses’’) affect the conclusion that 

FAMs 1 through 3 have been satisfied. 

The only reason CAT LLC pursued this 

relief is because certain Industry 

Members introduced concerns that NIA 

Electronic RFQ Responses could be 

considered ‘‘orders’’ reportable pursuant 

to Rule 613(j)(8) and some Industry 

Members were not prepared to report 

such orders to CAT. Thus, the relief was 

requested on behalf of Industry 

Members. CAT LLC itself has not taken 

any position on whether NIA Electronic 

RFQ Responses are ‘‘orders,’’ as the 

definition of ‘‘order’’ is an SEC rule and 

the trading processes for NIA Electronic 

RFQ Responses are the Industry 

Members’, not those of the Participants 

or CAT LLC. Accordingly, CAT LLC 

stated in its letter that ‘‘Industry 

Members must determine whether 

trading interest falls within the 

definition of an ‘order’ for CAT 

purposes. To the extent an NIA 

Electronic RFQ Response is not 

considered an ‘‘order’’ as defined in 

Rule 613(j)(8) and the CAT NMS Plan, 

it would not be reportable to CAT.’’ 120

Only ‘‘orders’’ as defined in SEC Rule 

613(j)(8) are reportable to CAT. There is 

no agreement across the industry or 

among regulators as to whether NIA 

Electronic RFQ Responses are ‘‘orders’’ 

reportable to CAT. Certain Industry 

Members have raised the question as to 

whether NIA Electronic RFQ Responses 

are orders, but others have argued that 

they are not orders under Rule 

613(j)(8).121 Indeed, members of the 

Advisory Committee, which CAT LLC 

relies upon for guidance with regard to 

Industry Member issues, have not had a 

definitive view on whether NIA 

Electronic RFQ Responses are orders. As 

Rule 613(j)(8) is an SEC rule, CAT LLC 

believes that only the SEC can provide 

a definitive determination as to if, and 

under what circumstances, an NIA 

Electronic RFQ Response is considered 

an ‘‘order’’ reportable to CAT. The issue 

has persisted for some time. As a result, 

CAT LLC filed an exemptive request 

regarding NIA Electronic RFQ 

Responses for clarity on the interpretive 

issue. As recently as April 2024, 

Industry Members have re-raised this 

issue stating that the SEC agrees that it 

must provide additional guidance on 

this interpretive issue to resolve the 

CAT reporting issue for NIA Electronic 

RFQ Responses: 

As further discussed in the prior FIF 

letters, even if the Commission had the legal 

authority to require the reporting of NIA RFQ 

responses to CAT without an amendment to 

Rule 613, the Commission has not provided 

guidance to industry members as to the 

conditions under which NIA RFQ responses 

would be reportable to CAT. In subsequent 

discussions with industry members, 

Commission representatives have agreed that, 

prior to NIA RFQ responses being reportable 

to CAT, it would be necessary for the 

Commission to provide further guidance to 

industry members as to the conditions under 

which NIA RFQ responses would be 

reportable to CAT.122

On May 20, 2024, the Commission 

granted CAT LLC’s request for 

exemptive relief from certain CAT 

reporting requirements pertaining to 

NIA Electronic RFQ Responses to the 

extent such responses are considered 

‘‘orders’’ reportable pursuant to Rule 

613(j)(8).123 The Commission, however, 

did not provide additional guidance 

regarding the conditions under which 

NIA Electronic RFQ Responses would 

be reportable to CAT. The Commission 

stated in its exemptive order that ‘‘[t]o 

the extent that the Participants are 

availing themselves of exemptive relief 

from a CAT NMS Plan requirement, 

such requirement shall not be included 

in the requirements for the Financial 

Accountability Milestones, provided 

that any conditions of the exemption are 

satisfied.’’ 124

When the Commission proposed the 

FAMs, the Participants expressed 

concern that, ‘‘by conditioning the 

ability of CAT LLC and the Participants 

to collect Post-Amendment Industry 

Member Fees on factors dependent on 

the efforts of Industry Members, the 

Commission’s proposals inadvertently 

establish a perverse incentive for 

Industry Members to devote less than 

maximum efforts to comply with their 

obligations related to the CAT as they 

will pay less fees in such instances.’’ 125

The Participants further warned that 

‘‘Industry Members may request or 

require unanticipated reporting delays 

to address Industry Member 

implementation issues or concerns,’’ but 

that, ‘‘[f]aced with financial penalties 

for missed deadlines, the Participants 

may not be able to fully address 

legitimate industry concerns or 

accommodate requests for delays with 

respect to future deadlines.’’ 126 CAT 

LLC has engaged in good faith to help 

address NIA Electronic RFQ Responses 

and other concerns relevant to the 

ability of Industry Members to meet 

their CAT reporting obligations. CAT 

LLC should not be penalized financially 

for seeking in good faith to resolve a 

difficult interpretive issue for the 

benefit of Industry Members. 

(ii) 2023 Verbal Quotes Exemption 

CAT LLC does not believe that the 

Commission’s May 19, 2023 order 

granting temporary exemptive relief 

relating to certain verbal floor activity 

and unstructured verbal and electronic 

upstairs activity (the ‘‘2023 Verbal 

Quotes Exemption’’) affects the 

conclusion that FAMs 1 through 3 have 

been satisfied. The 2023 Verbal Quotes 

Exemption, which was issued on May 

19, 2023, is not relevant for purposes of 

FAM Periods 1 through 3, which only 

cover the period through December 31, 

2021. The relevant exemption for this 

time period is the Commission’s 

November 12, 2020 order, which 

granted relief for the same activity 

through July 31, 2023 (the ‘‘2020 Verbal 

Quotes Order’’).127 The Commission has 

stated that, ‘‘to the extent that the 

Participants are availing themselves of 

exemptive relief from a CAT NMS Plan 

requirement, such requirement shall not 


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128See, e.g., Securities Exchange Act Rel. No. 

89051 (June 11, 2020), 85 FR 36631, 36633 (June 17, 

2020). The straightforward reading of the 

Commission’s statement is that compliance with the 

conditions of an exemption will be measured as of 

the deadline for a particular FAM Period. 

129As a condition to the 2020 Verbal Quotes 

Exemption, the Commission required that the 

Participants provide a written status update on the 

reporting of these quotes and orders by July 31, 

2022, including the estimated costs of reporting 

these quotes and orders and an implementation 

plan for the reporting of these quotes and orders. 

As noted, the 2020 Verbal Quotes Order was in 

effect and the conditions of the exemption were 

satisfied as of December 31, 2021, and therefore 

may be relied upon for purposes of determining 

compliance with FAM Periods 1 through 3. In any 

event, on June 3, 2022, the Participants provided 

the required written status update. See Letter from 

Michael Simon, CAT NMS Plan Operating 

Committee Chair, to Vanessa Countryman, 

Secretary, Commission (June 3, 2022). 

130 Id. at 77129 n.12. 

131FAM Adopting Release at 31335 (May 22, 

2020). Section 36 of the Exchange Act grants the 

Commission the authority to ‘‘conditionally or 

unconditionally exempt any person, security, or 

transaction . . . from any provision or provisions 

of [the Exchange Act] or of any rule or regulation 

thereunder, to the extent that such exemption is 

necessary or appropriate in the public interest, and 

is consistent with the protection of investors.’’ 15 

U.S.C. 78mm(a)(1). Under Rule 608(e) of Regulation 

NMS, the Commission may ‘‘exempt from [Rule 

608], either unconditionally or on specified terms 

and conditions, any self-regulatory organization, 

member thereof, or specified security, if the 

Commission determines that such exemption is 

consistent with the public interest, the protection 

of investors, the maintenance of fair and orderly 

markets and the removal of impediments to, and 

perfection of the mechanism of, a national market 

system.’’ 17 CFR 242.608(e). 

132Section 12.3 of the CAT NMS Plan (‘‘[T]o the 

extent the SEC grants exemptive relief applicable to 

any provision of this Agreement, Participants and 

Industry Members shall be entitled to comply with 

such provision pursuant to the terms of the 

exemptive relief so granted at the time such relief 

is granted irrespective of whether this Agreement 

has been amended.’’) 

133See Sections 11.1(a)(i) and 11.3(b)(iii)(B)(II) of 

the CAT NMS Plan. 

134See, e.g., Rule 613(a)(1)(vii)(D) of the CAT 

NMS Plan. 

be included in the requirements for a 

Financial Accountability Milestone, 

provided that the conditions of the 

exemption are satisfied.’’ 128 Here, the 

2020 Verbal Quotes Order was in effect 

and the conditions of the exemption 

were satisfied as of December 31, 2021, 

and therefore may be relied upon for 

purposes of determining compliance 

with FAM Periods 1 through 3.129

(iii) November 2023 Order 

CAT LLC does not believe that the 

Commission’s November 2, 2023 order 

granting relief from certain CAT NMS 

Plan requirements (the ‘‘November 2023 

Order’’) affects the conclusion that 

FAMs 1 through 3 have been satisfied. 

The November 2023 Order is not 

relevant for purposes of FAM Periods 1 

through 3, which only cover the period 

through December 31, 2021. As 

described in the November 2023 Order, 

the relevant exemptive orders for this 

time period were issued on December 

16, 2020, which also states that ‘‘the 

Commission has determined that the 

Participants have sufficiently complied 

with the conditions set forth in the prior 

Orders and with the technical 

requirements for Quarterly Progress 

Reports set forth in section 6.6(c) of the 

CAT NMS Plan, including for purposes 

of determining compliance with any 

applicable Financial Accountability 

Milestones.’’ 130 The November 2023 

Exemption Order is consistent with the 

Commission’s repeated statements in 

the FAM adopting release that it would 

have ‘‘authority to grant exemptive 

relief from any requirement associated 

with a particular Financial 

Accountability Milestone,’’ citing 

Section 36 of the Exchange Act and Rule 

608.131 Similarly, the CAT NMS Plan 

expressly contemplates the 

Commission’s ability to grant exemptive 

relief from any CAT NMS Plan 

requirement.132

(iv) Executing Broker Reporting 

CAT LLC also completed the 

requirements of FAM Period 2, 

including the required linkages, by 

December 31, 2020. Although 

Participant exchanges may report the 

Executing Broker to CAT differently in 

certain situations, these reporting 

differences are irrelevant for linkage 

purposes as the fields used for CAT 

Executing Broker are not used for 

linkage. 

(10) Additional Support for 

Reasonableness of Historical CAT Costs 

The CAT Funding Model approved by 

the Commission permits the recovery of 

reasonable costs in each of the 

categories of CAT costs sought to be 

recovered via Historical CAT 

Assessment 1.133 As described in detail 

above and in further detail below, the 

CAT costs to be recovered for each 

category are reasonable. The following 

discusses in further details how each of 

the following costs are reasonable: (1) 

costs incurred prior to the effective date 

of the CAT NMS Plan; (2) cloud hosting 

services costs; (3) costs related to 

funding model filings; (4) costs related 

to litigation with the SEC regarding the 

CAT NMS Plan; (5) costs related to the 

Initial Plan Processor; (6) CAIS 

implementation costs; (7) public 

relations costs; (8) legal costs related to 

the limitation of liability provision in 

the CAT Reporter agreements; and (9) 

costs for the Chair of CAT Operating 

Committee. As discussed in detail 

below, each of these costs is reasonable 

and should be recoverable in 

accordance with the CAT Funding 

Model. 

(A) Costs Incurred Prior to the Effective 

Date of CAT NMS Plan 

CAT LLC believes that it is reasonable 

to seek recovery of costs incurred prior 

to when the CAT NMS Plan became 

effective in November 2016, such as 

legal and consulting fees incurred to 

create the CAT NMS Plan. Rule 613 

specifically mandates that the CAT be 

created, implemented and maintained, 

and further provides that the CAT NMS 

Plan include a proposed allocation of 

estimated costs to fund the creation, 

implementation and maintenance of the 

CAT among the Participants (referred to 

as ‘‘plan sponsors’’), and between the 

Participants and Industry Members 

(referred to as ‘‘members of the plan 

sponsors’’).134 Consistent with Rule 613, 

the CAT NMS Plan, as approved by the 

Commission, specifically authorizes 

charging Industry Members fees for 

costs reasonably incurred prior to the 

date of the approval of the CAT NMS 

Plan by the Commission in November 

2016, including legal and consulting 

costs. Section 11.1(c) of the CAT NMS 

Plan states that: 

[i]n determining fees on Participants and 

Industry Members the Operating Committee 

shall take into account fees, costs and 

expenses (including legal and consulting fees 

and expenses) reasonably incurred by 

Participants on behalf of the Company prior 

to the Effective Date in connection with the 

creation and implementation of the CAT. 

Accordingly, the CAT NMS Plan 

specifically permits the recovery of 

costs, including legal and consulting 

costs, reasonably incurred prior to 

November 2016 in connection with the 

creation and implementation of the 

CAT. 

Furthermore, the costs incurred to 

create and implement the CAT prior to 

the effective date of the CAT NMS Plan 

(‘‘Pre-Formation Costs’’) were 

reasonable both in scope and amount, in 

accordance with the requirements of 

Section 11.1(c) of the CAT NMS Plan. 

During the four-year period from 2012 

to 2016, a total of $13,842,881 in PreFormation Costs were incurred. This is 

an average of approximately $3.5 

million per year over this period. The 

Pre-Formation Costs fell into three 

categories: legal costs, consulting costs 

and public relations costs. This includes 

legal costs of $3,196,434; consulting 

costs of $10,589,273; and public 

relations costs of $57,174. The legal, 

consulting and public relations services 

were performed by WilmerHale, Deloitte 


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135The Participants described in detail the 

process for drafting the CAT NMS Plan in its 

original filing of the CAT NMS Plan. See Letter 

from Mike Simon, on behalf of the Participants of 

the CAT NMS Plan, to Brent J. Fields, Secretary, 

Commission (Sept. 30, 2014). A non-exclusive list 

of filings and activities associated with CAT, 

including certain pre-2016 filings, are available on 

the SEC’s website: https://www.sec.gov/divisions/ 

marketreg/rule613-info. 

136See detailed discussion of RFP questions in 

Appendix C of the CAT NMS Plan, and 

incorporation of RFP requirements in Appendix D 

at D–2. 

137For example, in its comments on proposed 

Rule 613, FIF suggested ‘‘that the SROs should 

select the processor through a ‘request for 

proposal.’ ’’ Rule 613 Adopting Release at 45785. 

138Rule 613 Adopting Release at 45738–39. 

139Rule 613 Adopting Release at 45739. 

140Securities Exchange Act Rel. No. 71596 (Feb. 

21, 2014), 79 FR 11152, 11152 (Feb. 27, 2014) 

(‘‘Selection Plan Approval Order’’). 

141 Id. 

142 Id. at 11153 

143 Id. at 11159. 

144See Securities Exchange Act Rel. No. 70892 

(Nov. 15, 2013), 78 FR 69910 (Nov. 21, 2013). 

145See Selection Plan Approval Order. 

146Selection Plan Approval Order at 11160. 

and Peppercomm, respectively. The 

selection considerations and fees for 

these three firms are described in detail 

above and are described further below. 

The Pre-Formation Costs are direct costs 

of CAT, which have been funded 

entirely by the Participants through 

non-interest-bearing notes. The PreFormation Costs do not include the 

significant costs incurred by each of the 

individual Participants in responding to 

the adoption of Rule 613. 

The Pre-Formation Costs are 

reasonable and appropriate as they 

reflect the extensive efforts that were 

necessary to create the CAT NMS Plan 

as mandated after the SEC’s adoption of 

Rule 613. As described in more detail 

below, these efforts included, among 

other things, developing a plan for 

selecting the Plan Processor, soliciting 

and evaluating bids, engaging a diverse 

set of market participants and the SEC 

in the development of the Plan, 

interacting with the SEC in their 

oversight of the development of the 

Plan, and seeking appropriate 

exemptive relief to address areas of 

concern in Rule 613.135

(i) Request for Proposal (‘‘RFP’’) 

The Participants determined to utilize 

an RFP to ensure that potential 

alternative solutions for creating the 

Plan could be presented and considered, 

and that a detailed and meaningful costbenefit analysis could be performed. 

The SEC supported the use of an RFP, 

and approved its use as it is described 

in extensive detail in the CAT NMS 

Plan.136

In the context of the SEC’s adoption 

of Rule 613, commenters urged the 

Commission to utilize an RFP process to 

assist in the planning and design of the 

NMS plan.137 Specifically, the 

Commission explained: 

In this regard, several commenters 

suggested that the Commission undergo a 

RFP or request for information (‘‘RFI’’) 

process to create and implement a 

consolidated audit trail. Specifically, FIF 

urged the Commission to perform a RFP 

process ‘‘to determine the best technical 

solution for developing a consolidated audit 

trail.’’ FIF suggested that the Commission 

‘‘should outline a set of goals and guiding 

principles they are striving to achieve as part 

of the adopted CAT filing and leave the 

determination of data elements and other 

technical requirements to [an] industry 

working group.’’ Similarly, Direct Edge 

suggested that Commission staff should form 

and engage in a working group to develop an 

RFP for publication by the Commission. 

DirectEdge explained that an RFP process 

would facilitate the identification of the costs 

and benefits of the audit trail, as well as the 

consideration of a wider range of 

technological solutions. Further, 

commenters, including Broadridge Financial 

Solutions, Inc., a technology provider, also 

requested more specific information about 

the audit trail system to better assess the 

Commission’s initial cost estimates and to 

determine the best approach to the 

consolidated audit trail.138

In response to these comments, the 

Commission modified Rule 613 to 

require the Participants to address 

certain important considerations 

regarding the features and details of the 

NMS plan and to extend the timeframe 

for submission of the CAT NMS Plan by 

the Participants from the 90 days as 

originally proposed to 270 days, in part, 

to accommodate a process that would 

address these considerations.139 As the 

SEC noted, ‘‘[i]n light of the numerous 

specific requirements of Rule 613, the 

Participants concluded that publication 

of a request for proposal (‘RFP’) was 

necessary to ensure that potential 

alternative solutions to creating the 

consolidated audit trail can be 

presented and considered by the 

Participants and that a detailed and 

meaningful cost/benefit analysis can be 

performed, both of which are required 

considerations to be addressed in the 

CAT NMS Plan.’’ 140

The SEC specifically recognized that 

the Participants planned to use an RFP 

when it approved the Selection Plan, 

and stated that the RFP was a reasonable 

approach.141 As the SEC described in its 

approval order for the Selection Plan, 

‘‘[t]he Participants filed the [Selection] 

Plan to govern how the SROs will 

proceed with formulating and 

submitting the CAT NMS Plan—and, as 

part of that process, how to review, 

evaluate, and narrow down the bids 

submitted in response to the RFP 

(‘Bids’)—and ultimately choosing the 

plan processor that will build, operate, 

and maintain the consolidated audit 

trail (‘Plan Processor’).’’ 142 After 

evaluating the Selection Plan, including 

the use of an RFP process, the 

Commission stated that it ‘‘believes the 

[Selection] Plan is reasonably designed 

to govern the process by which the 

SROs will formulate and submit the 

CAT NMS Plan, including the review, 

evaluation, and narrowing down of Bids 

in response to the RFP, and ultimately 

choosing the Plan Processor that will 

build, operate, and maintain the 

consolidated audit trail.’’ 143

On February 26, 2013, the 

Participants published an RFP soliciting 

bids from parties interested in serving as 

the plan processor for the CAT. Initially, 

31 firms submitted intentions to bid. In 

the following months, the Participants 

engaged with potential bidders with 

respect to, among other things, the 

selection process, selection criteria, and 

potential bidders’ questions and 

concerns. On March 21, 2014, the 

Participants received ten bids in 

response to the RFP. 

(ii) Selection Plan 

On September 4, 2013, the 

Participants filed with the Commission 

a national market system plan to govern 

the process for Participant review of the 

bids submitted in response to the RFP, 

the procedures for evaluating the bids, 

and, ultimately, selection of the plan 

processor (the ‘‘Selection Plan’’).144 The 

Commission approved the Selection 

Plan as filed on February 21, 2014.145 In 

approving the Selection Plan, the 

Commission concluded that ‘‘it is 

reasonably designed to achieve its 

objective of facilitating the development 

of the CAT NMS Plan and the selection 

of the Plan Processor.’’ 146

The Selection Plan divided the review 

and evaluation of bids, and the selection 

of the plan processor, into various 

stages. Specifically, pursuant to the 

Selection Plan, a selection committee 

reviewed all bids and determined which 

bids contained sufficient information to 

allow the Participants to meaningfully 

assess and evaluate the bids. The ten 

submitted bids were deemed ‘‘Qualified 

Bids,’’ and so passed to the next stage, 

in which each bidder presented its bids 

to the Participants on a confidential 

basis. On July 1, 2014, after conducting 

careful analysis and comparison of the 

bids, the Selection Committee voted and 

selected a shortlist of six eligible 

bidders. The Selection Committee 


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147See CAT NMS Plan Approval Order at 84737. 

148See Section D(11) of Appendix C of the CAT 

NMS Plan. 

149Securities Exchange Rel. No. 77265 (Mar. 1, 

2016), 81 FR 11856 (Mar. 7, 2016) (‘‘2016 

Exemptive Order’’). 

150Letter from Robert Colby, FINRA, on behalf of 

the SROs, to Brent J. Fields, Secretary, Commission 

(Jan. 30, 2015). 

151See Letter from Robert Colby, FINRA, on 

behalf of the SROs, to Brent J. Fields, Secretary, 

Commission (Apr. 3, 2015); Letter from the SROs 

to Brent J. Fields, Secretary, Commission (Sept. 2, 

2015). 

152See 2016 Exemptive Order. 

153 Id. at 11857. 

154 Id. 

determined which shortlisted bidders 

would be provided the opportunity to 

revise their bids. After the Selection 

Committee assessed and evaluated the 

revised bids, the Selection Committee 

selected the plan processor via two 

rounds of voting by the Participants, as 

described in the Selection Plan. 

The Selection Plan established an 

Operating Committee responsible for 

formulating, drafting, and filing with the 

Commission the CAT NMS Plan and for 

ensuring that the Participants’ joint 

obligations under Rule 613 were met in 

a timely and efficient manner. In 

formulating the CAT NMS Plan, the 

Participants also engaged multiple 

persons across a wide range of roles and 

expertise, engaged the consulting firm 

Deloitte as project manager, and 

engaged the law firm WilmerHale to 

serve as legal counsel in drafting the 

Plan. Within this structure, the 

Participants focused on, among other 

things, comparative analyses of the 

proposed technologies and operating 

models, development of funding models 

to support the building and operation of 

the CAT, and detailed review of 

governance considerations. Given the 

complexity and scope of developing the 

CAT NMS Plan, these efforts were 

extensive. 

When it approved the CAT NMS Plan 

in 2016, the Commission reiterated its 

belief that the Selection Plan remains a 

‘‘reasonable approach,’’ that ‘‘the 

competitive bidding process to select 

the Plan Processor is a reasonable and 

effective way to choose a Plan 

Processor,’’ and that ‘‘the process set 

forth in the Selection Plan should be 

permitted to continue’’: 

In approving the Selection Plan, the 

Commission stated that the Selection Plan is 

reasonably designed to achieve its objective 

of facilitating the development of the CAT 

NMS Plan and the selection of the Plan 

Processor. The Commission also found that 

the Selection Plan is reasonably designed to 

govern the process by which the SROs will 

formulate and submit the CAT NMS Plan, 

including the review, evaluation, and 

narrowing down of Bids in response to the 

RFP, and ultimately choosing the Plan 

Processor that will build, operate, and 

maintain the consolidated audit trail. The 

Commission believes that the process set out 

in the Selection Plan for selecting a Plan 

Processor remains a reasonable approach, 

which will facilitate the selection of Plan 

Processor through a fair, transparent and 

competitive process and that no 

modifications to the Selection Plan are 

required to meet the approval standard. . . . 

In response to the comment that offered 

support for a specific Bidder, the 

Commission agrees with the Participants that 

the competitive bidding process to select the 

Plan Processor is a reasonable and effective 

way to choose a Plan Processor and thus 

believes that the process set forth in the 

Selection Plan should be permitted to 

continue.147

(iii) Engagement With Market 

Participants and SEC 

During the process of developing the 

CAT NMS Plan, the Participants 

engaged in extensive and meaningful 

dialogue with market participants and 

the SEC. To this end, the Participants 

created a website to update the public 

on the progress of the CAT NMS Plan, 

published a request for comment on 

multiple issues related to the Plan, held 

multiple public events to inform the 

industry of the progress of the CAT and 

to address inquiries, and formed, and 

later expanded, a DAG to solicit more 

input from a representative industry 

group.148

The DAG included representatives of 

Participants and Industry Members and 

conducted meetings to discuss, among 

other things, technical and operational 

aspects the Participants were 

considering for the Plan. The 

Participants issued press releases 

soliciting participants for the DAG, and 

a wide spectrum of firms was 

deliberately chosen to provide insight 

from various industry segments affected 

by CAT. The DAG meetings included 

discussions of topics such as option 

market maker quote reporting, 

requirements for capturing Customer 

IDs, timestamps and clock 

synchronization, reporting requirements 

for order handling scenarios, costs and 

funding, error handling and corrections, 

and potential elimination of systems 

made redundant by the CAT. From the 

inception of the DAG through 

September 2014, the DAG participated 

in 36 meetings, as well as a variety of 

DAG subcommittee meetings. 

(iv) Request for Exemption From Certain 

Requirements Under Rule 613 

Following multiple discussions 

between the Participants and both the 

DAG and the bidders, as well as among 

the Participants themselves, the 

Participants recognized that some 

provisions of Rule 613 would not permit 

certain solutions to be included in the 

Plan that the Participants, in 

coordination with the DAG, determined 

advisable to effectuate the most efficient 

and cost-effective CAT. Specifically, 

‘‘the SROs reached the conclusion that 

additional flexibility in certain of the 

minimum requirements specified in 

Rule 613 would allow them to propose 

a more efficient and cost-effective 

approach without adversely affecting 

the reliability or accuracy of CAT Data, 

or its security and confidentiality.’’ 149

Consequently, the Participants 

submitted a request for exemptive relief 

from certain provisions of Rule 613 

regarding: (1) options market maker 

quotes; (2) Customer-IDs; (3) CATReporter-IDs; (4) CAT-Order-IDs on 

allocation reports; and (5) timestamp 

granularity.150 The Participants filed 

two supplements to the request for 

exemptive relief.151

After reviewing the exemptive 

request, the Commission determined 

that it was appropriate in the public 

interest and consistent with the 

protection of investors to grant the 

requested exemptive relief.152 In 

granting the exemptive relief, the 

Commission stated: 

[T]he Commission is persuaded to provide 

flexibility in the discrete areas discussed in 

the Exemption Request so that the alternative 

approaches can be included in the CAT NMS 

Plan and subject to notice and comment. 

Doing so could allow for more efficient and 

cost-effective approaches than otherwise 

would be permitted. The Commission at this 

stage is not deciding whether the proposed 

approaches detailed below are more efficient 

or effective than those in Rule 613. However, 

the Commission believes the proposed 

approaches should be within the permissible 

range of alternatives available to the SROs.153

The Commission further stated that 

the requested exemptive relief is 

consistent with the protection of 

investors. The Commission noted that: 

Doing so will provide the public an 

opportunity to consider and comment on 

whether these proposed alternative 

approaches would indeed be more efficient 

and cost-effective than those otherwise 

required by Rule 613, and whether such 

approaches would adversely affect the 

reliability or accuracy of CAT Data or 

otherwise undermine the goals of Rule 613. 

Moreover, if—as the SROs represent— 

efficiency gains and cost savings would 

result from including the proposed 

approaches in the CAT NMS Plan without 

adverse effects, then the resultant benefits 

could potentially flow to investors (e.g., 

lower broker-dealer reporting costs resulting 

in fewer costs passed on to Customers).154

The Participants incorporated the 

exemptive relief into the proposed CAT 


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155Securities Exchange Act Rel. No. 69060 (Mar. 

7, 2013),78 FR 15771, 15772 (Mar. 12, 2013) 

(‘‘March 2013 Exemptive Order’’). 

156See March 2013 Exemptive Order; Securities 

Exchange Act Rel. No. 71018 (Dec. 6, 2013), 78 FR 

75669 (Dec. 12, 2013) (‘‘December 2013 Exemptive 

Order’’). 

157March 2013 Exemptive Order at 15772; 

December 2013 Exemptive Order at 75670. 

158March 2013 Exemptive Order at 15772. 

159 Id. at 15773. 

160See Securities Exchange Act Rel. No. 77724 

(Apr. 27, 2016), 81 FR 30614 (May 17, 2016). 

161See CAT NMS Plan Approval Order. 

NMS Plan, which was noticed for 

comment, and the Commission 

ultimately approved the CAT NMS Plan 

with the more efficient and costeffective alternative approaches 

described in the exemptive relief. 

Accordingly, the Participants believe 

that the costs incurred in developing the 

exemptive request were critical to the 

creation of a better CAT than was 

originally contemplated by Rule 613, 

and therefore should be recoverable as 

part of Historical CAT Assessment 1. 

(v) Request for Extensions for Filing the 

CAT NMS Plan 

Rule 613(a)(1) under Regulation NMS 

required the Participants to jointly file 

the CAT NMS Plan on or before April 

28, 2013, less than a year after the 

adoption of Rule 613. In recognition of 

the complexity of the project to create 

the CAT NMS Plan as well as industry 

interest in limiting or eliminating 

certain requirements of Rule 613 (e.g., 

addressing the reporting of options 

market maker quotes), the Participants 

requested two extensions of the 

deadline to file the CAT NMS Plan. The 

Participants described the need for 

additional time as follows: 

The SROs stated in their Request Letter 

that they do not believe that the 270-day time 

period provided for in Rule 613(a)(1) 

provides sufficient time for the development 

of the RFP, formulation and submission of 

bids, and review and evaluation of such bids. 

The SROs also stated that they believe 

additional time beyond the 270 days 

provided for in Rule 613(a)(1) is necessary in 

order to provide sufficient time for effective 

consultation with and input from the 

industry and the public on the proposed 

solution chosen by the SROs for the creation 

of the consolidated audit trail at the 

conclusion of the RFP process and the NMS 

plan itself.155

In recognition of the need for 

additional time to refine the technical 

description of and requirements for the 

CAT and to allow for additional 

evaluation of the proposed cost and 

funding considerations, the SEC granted 

two extensions of this deadline.156 The 

SEC determined that both extensions 

were appropriate, in the public interest, 

and consistent with the protection of 

investors.157 In reaching this 

conclusion, the Commission stated that 

‘‘it understands that the creation of a 

consolidated audit trail is a significant 

undertaking and that a proposed NMS 

plan must include detailed information 

and discussion about many things.’’ 158

The SEC also noted the following: 

This additional time to complete the RFP 

process should allow the SROs to engage in 

a more thoughtful and comprehensive 

process for the development of an NMS plan. 

In this regard, the Commission notes that the 

additional time to solicit comment from the 

industry and the public at certain key points 

in the development of the NMS plan could 

identify issues that can be resolved earlier in 

the development of the consolidated audit 

trail and prior to filing the NMS plan with 

the Commission.159

Given the Commission’s recognition 

of the reasonableness and value of the 

extension of the deadline to file the CAT 

NMS Plan, the Participants believe that 

the costs incurred in developing the 

extension request were important to the 

process of developing the CAT NMS 

Plan, and therefore should be 

recoverable as part of Historical CAT 

Assessment 1. 

(vi) Submission and Approval of the 

CAT NMS Plan 

After extensive analyses and 

discussions with the DAG, bidders, 

market participants and the SEC staff, 

the Participants finalized the draft of the 

CAT NMS Plan and filed the CAT NMS 

Plan with the SEC on September 30, 

2014. Following additional discussions, 

the Participants filed several 

amendments to the CAT NMS Plan 

during 2015 and 2016. With these 

additional changes, the SEC published 

the CAT NMS Plan for notice and 

comment in May 2016.160 Following the 

comment period, the SEC approved the 

Plan in November 2016.161

(vii) Legal Costs Incurred Prior to the 

Effective Date of the CAT NMS Plan 

The Pre-Formation Costs include legal 

costs of $3,196,434. The legal services 

were performed by WilmerHale. The 

selection considerations and fees for 

WilmerHale were described in detail 

above. Prior to the creation of CAT LLC, 

WilmerHale was engaged to represent 

the consortium of SROs, not the 

individual Participants. For 

administrative purposes, FINRA agreed 

to receive such legal bills, although such 

costs were shared among the 

Participants. Therefore, the legal costs 

incurred with respect to WilmerHale do 

not include legal costs incurred by the 

individual Participants. These preformation legal costs are described in 

detail above and are further described 

below: 

• Analyzed various legal matters 

associated with the Selection Plan and 

drafted an amendment to Selection 

Plan; 

• Assisted with the RFP and bidding 

process for the CAT Plan Processor; 

• Analyzed legal matters related to 

the DAG; 

• Drafted the CAT NMS Plan, 

analyzed various items related to the 

CAT NMS Plan, and responded to 

comment letters on the CAT NMS Plan; 

• Provided legal support for the 

formation of the legal entity, the 

governance of the CAT, including 

governance support prior to the 

adoption of the CAT NMS Plan, which 

involved support for the full committee 

of exchanges and FINRA as well as 

subcommittees of this group (e.g., Joint 

Subcommittee Group, Technical, 

Industry Outreach, Cost and Funding, 

and Other Products) and the DAG, and 

governance support during the 

transition to the new governance 

structure under the CAT NMS Plan; 

• Drafted exemptive requests; 

• Provided interpretations related to 

the CAT NMS Plan; 

• Provided support with regard to 

discussions among the exchanges, 

FINRA and other third parties, such as 

Deloitte; 

• Provided tax advice with regard to 

CAT’s status as a tax-exempt 

organization; and 

• Provided support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretive and implementation issues. 

(viii) Consulting Costs Incurred Prior to 

the Effective Date of the CAT NMS Plan 

The Pre-Formation Costs include 

consulting costs of $10,589,273. The 

consulting services were performed by 

Deloitte. The selection considerations 

and fees for Deloitte were described in 

detail above. Prior to the creation of 

CAT LLC, for administrative purposes, 

Deloitte was engaged by FINRA to 

provide consulting services related to 

CAT, but the costs were shared by the 

consortium of SROs per agreement. 

Therefore, the consulting costs incurred 

with respect to Deloitte do not include 

consulting costs incurred by the 

individual Participants. The preformation consulting costs include the 

following: 

• Established and implemented 

program operations for the CAT project, 

including the program management 

office and workstream design; 

• Assisted with the Plan Processor 

selection process, including but not 

limited to, the development of the RFP 


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and the bidder evaluation process, and 

facilitation and consolidation of the 

Participants’ independent reviews; 

• Assisted with the development and 

drafting of the CAT NMS Plan, 

including conducting cost-benefit 

studies, reviewing technical 

requirements of other NMS plans, 

analyzing OATS and CAT requirements, 

and drafting appendices to the Plan; 

• Provided governance support to the 

CAT, including governance support 

prior to the adoption of the CAT NMS 

Plan, which involved support for the 

full committee of exchanges and FINRA 

as well as subcommittees of this group 

(e.g., Joint Subcommittee Group, 

Technical, Industry Outreach, Cost and 

Funding, and Other Products) and the 

DAG; 

• Provided support for updating the 

SEC on the progress of the development 

of the CAT; 

• Provided support for industry 

outreach sessions, including with regard 

to program design and agenda 

development, program support and 

logistics and coordination; and 

• Provided support in fact finding, 

drafting content and meeting 

coordination for 

WilmerHale with regard to the CAT 

and the development of the CAT NMS 

Plan. Such Pre-Formation Costs did not 

include costs related to the Chair of the 

CAT NMS Plan Operating Committee, as 

the CAT NMS Plan had not yet been 

adopted. 

(ix) Public Relations Costs Incurred 

Prior to the Effective Date of the CAT 

NMS Plan 

The Pre-Formation Costs include 

public relations costs of $57,174. The 

public relations services were 

performed by Peppercomm. The 

selection considerations and fees for 

Peppercomm are described in detail 

above. The costs related to Peppercomm 

were shared among the SROs. Therefore, 

the public relations costs do not include 

public relations costs incurred by the 

individual Participants. The preformation public relations costs include 

services related to communications with 

the public regarding the CAT, including 

monitoring developments related to the 

CAT (e.g., congressional efforts, public 

comments and reaction to proposals, 

press coverage of the CAT), reporting 

such developments to CAT LLC, and 

drafting and disseminating 

communications to the public regarding 

such developments as well as reporting 

on developments related to the CAT. 

(B) Cloud Hosting Services 

In approving the CAT Funding Model, 

the Commission recognized that it is 

appropriate to recover reasonable costs 

related to cloud hosting services as a 

part of Historical CAT Assessments. 

CAT LLC believes that the costs related 

to cloud hosting services described in 

detail above are reasonable and 

appropriate given the strict data 

processing timelines and storage 

requirements imposed by the 

Commission-approved CAT NMS Plan 

and should be recoverable as a part of 

Historical CAT Assessment 1. 

(i) Reasonableness of AWS Costs Given 

the Requirements of the CAT NMS Plan 

CAT LLC believes that the costs for 

the cloud hosting services are 

reasonable, both in terms of the level of 

the fees paid by CAT LLC for cloud 

hosting services provided by AWS and 

the scope of the services performed by 

AWS for CAT LLC. CAT LLC believes 

that both the scope and amount of the 

costs for cloud hosting services are 

reasonable given the current 

requirements of the CAT NMS Plan 

adopted pursuant to Rule 613, including 

the strict data processing timeline, 

storage and other technical 

requirements under the Commissionapproved CAT NMS Plan. 

CAT LLC believes that the level of 

fees for the cloud hosting services is 

reasonable, taking into consideration a 

variety of factors, including the 

expected volume of data and the 

breadth of services provided and market 

rates for similar services. 

CAT LLC also believes that the scope 

of services provided by AWS for the 

CAT are appropriate given the current 

requirements of the Commissionapproved CAT NMS Plan. As described 

above, the cloud hosting services costs 

reflect a variety of factors including, 

among other things: 

• Breadth of Cloud Activities. AWS 

was engaged by FCAT, the Plan 

Processor, to provide a broad range of 

services to the CAT, including data 

ingestion, data management, and 

analytic tools. Services provided by 

AWS necessary to the CAT include 

storage services, databases, compute 

services, and other services (such as 

networking, management tools and 

development operations (‘‘DevOps’’) 

tools). AWS also was engaged to provide 

the various environments for CAT, such 

as the development, performance 

testing, test and production 

environments, which are required by 

the CAT NMS Plan. 

• High Data Volume. The cost for 

AWS services for the CAT is a function 

of the volume of CAT Data. While it is 

not linear, the greater the amount of 

CAT Data, the greater the cost of AWS 

services to the CAT. The data volume 

handled by AWS now far exceeds the 

original volume estimates for the CAT. 

• Plan Requirements. The cost for 

AWS services also reflects the technical 

requirements necessary to meet the 

stringent performance and other 

requirements for processing CAT Data. 

These Plan-dictated processing 

timelines, storage, testing, security and 

other technical requirements are 

significant drivers of AWS costs. 

• Cost Avoidance Efforts. CAT LLC 

and FCAT have engaged in ongoing 

efforts to seek to avoid and minimize 

AWS costs where permissible under the 

Plan. Accordingly, these cost avoidance 

efforts have limited the extent of AWS 

costs. 

In addition, various requirements of 

the CAT NMS Plan adopted pursuant to 

Rule 613 contribute to the significant 

cloud hosting services costs, and that 

various Plan requirements could be 

amended or removed without affecting 

the regulatory purpose of the CAT. 

Indeed, CAT LLC has repeatedly sought 

exemptive relief and filed amendments 

to the CAT NMS Plan, and has even 

filed suit against the Commission, to 

seek to revise or eliminate certain costly 

requirements related to the CAT. 

However, despite these efforts, absent 

the Commission granting exemptive 

relief or approving cost savings 

amendments to the CAT NMS Plan, 

CAT LLC, the Participants and Industry 

Members are all required to comply 

with such requirements. 

(ii) Effect of CAT Design on CAT Costs 

(a) Efficient CAT Design 

CAT is reasonably designed to 

efficiently and effectively utilize cloud 

computing and storage services, given 

the requirements of the Commissionapproved CAT NMS Plan, including 

requirements related to security, 

operational reliance and quality 

assurance, and maintainability. 

The Plan Processor uses state-of-theart software that meets the strict security 

standards of the CAT NMS Plan. CAT 

utilizes a big data processing framework 

that is extensively used by large data 

processing companies, such as Apple, 

Meta, Netflix, IBM and Google. As such, 

it has substantial commercial support 

and support in the open-source 

community. It is also well suited for use 

with regard to iterative types of 

algorithms and query functions and 

analytics that the CAT requires, and it 

provides the heightened security 

necessary for the CAT. 

The development and implementation 

of the design of CAT is not and has not 

been static. CAT LLC and the Plan 

Processor are always evaluating new 


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162See, e.g., Securities Exchange Act Rel. No. 

99938 (Apr. 10, 2024), 89 FR 26983 (Apr. 16, 2024); 

Letter from Brandon Becker, CAT NMS Plan 

Operating Committee Chair, to Vanessa 

Countryman, Secretary, Commission (Mar. 27, 

2024) (proposing amendments to the CAT NMS 

Plan for $23 million in annual savings). 

163See CAT Industry Member Reporting 

Scenarios v.4.10 (Oct. 21, 2022). 

164Letter from Janet Early, FIF, to Thesys CAT 

(Mar. 29, 2018). 

165Letter from Christopher Bok, FIF, to Jay 

Clayton, Chair, Commission, at 4 (Dec. 11, 2018). 

166Letter from Mary Lou Von Kaenel, Managing 

Director, FIF, to Brent Fields, Secretary, 

Commission at 92 (July 18, 2016), https://

www.sec.gov/comments/4-698/4698-13.pdf. 

innovations and service offerings from 

AWS and other providers to seek to 

maximize efficiency and cost avoidance 

while still satisfying the requirements of 

the CAT NMS Plan. These efforts have 

led to substantial savings to date. The 

cloud hosting costs for 2023 were less 

than the cloud hosting costs for 2022 by 

$8 million despite processing seven 

trillion more events in 2023 due to the 

efficiency and cost avoidance efforts for 

cloud hosting services. For example, 

when AWS introduced new storage 

options, FCAT adopted the cost-efficient 

new storage option after establishing 

that the new offering would satisfy the 

security and other standards of the CAT 

NMS Plan. This change led to millions 

of dollars of savings in storage costs. 

Similarly, when AWS introduced a new 

compute processor, FCAT adopted this 

new compute processor, which lead to 

millions of dollars in savings in 

compute costs. However, in other cases, 

new cloud technology developments 

could not be implemented in CAT 

because they would not satisfy the 

security or other requirements of the 

CAT NMS Plan. 

When evaluating the design of the 

CAT, it must be kept in mind that the 

CAT is not a typical commercial 

technology project. The ability to make 

use of technology approaches that may 

lead to cost avoidance is also subject to 

the restrictive requirements of the CAT 

NMS Plan, such as processing 

timeframes, requirements for retention 

of data versions, query requirements, 

and security standards. Because such 

requirements are set forth in the CAT 

NMS Plan, any modification of such 

requirements are subject to the timeconsuming process of amending the 

CAT NMS Plan or seeking an exemption 

from the relevant requirement. For 

example, CAT LLC recently has filed an 

amendment to address several of these 

expensive Plan requirements.162

(b) CAT Was Designed To Minimize 

Industry Member Effort 

The CAT System also was designed to 

minimize the extent to which Industry 

Members would need to alter their 

systems to report to CAT. During the 

design process, Industry Member groups 

argued that it would make more sense 

financially for the CAT to accommodate 

differences in industry systems, than for 

all Industry Members to change their 

systems. Moreover, such design choices 

would facilitate consistency, uniformity 

and accuracy in reporting. Requiring the 

CAT to make such accommodations 

may increase CAT costs while 

accommodating CAT Reporters. 

Based on the requirements in the CAT 

NMS Plan and/or in response to 

industry requests for functionality to be 

embedded with the Plan Processor to 

streamline or limit Industry Member 

system changes, the CAT has been 

designed to limit the effect on Industry 

Members. The following provides 

examples of such accommodations: 

• Industry Member Reporting. In light 

of the complexity of Industry Member 

market activity, the CAT’s order 

reporting and linkage scenarios 

document for Industry Members is over 

800 pages in length, addressing nearly 

200 scenarios.163 The Industry Member 

Technical Specifications allow for 

dozens of specific event types, which 

drive complexity for the Plan Processor, 

but streamline reporting for Industry 

Members. Furthermore, the Plan 

Processor greatly expanded Industry 

Member linkage requirements to 

support, among other things, child 

events and supplemental events, 

allowing for ‘‘stateless as-you-go’’ and 

‘‘batch end-of-day’’ reporting when all 

data is available. Accordingly, CAT 

takes on the significant cost and effort 

of providing the required linkages 

between CAT events; correspondingly, 

Industry Members are not required to 

perform this costly task. 

• File Submission Process. The CAT 

was designed to accommodate the 

varying needs of CAT Reporters with 

regard to the file submission process. 

For example, in a 2018 letter, FIF stated 

that ‘‘[t]he SFTP-based submission 

process is cumbersome, exposes 

industry members to unnecessary 

complexity, and puts the burden of 

support on the CAT Reporter rather than 

imbedding more functionality into the 

Plan Processor.’’ 164 Currently, FCAT 

provides two mechanisms for 

submitting files: SFTP via a private 

network, and the Web via Reporter Web 

Portal. 

• Error Corrections. The industry also 

emphasized the need for the CAT to 

provide error correction tools and 

functionalities to identify, rectify and 

re-submit corrections within the 

required timeframe. For example, FIF 

stated in a 2018 letter the following: 

To be clear, if OATS-like error correction 

tools are not made available on Day 1, 

hundreds of firms will be required to create 

and test their own tools or obtain vendor 

alternatives prior to the CAT Go-Live Date. 

Proprietary tools will require additional 

system builds, access to and ingestion of CAT 

data to perform system validation, and 

testing which will further stress the limited 

number of subject matter experts (‘‘SMEs’’) 

dedicated to the implementation of CAT 

reporting. Should this occur, inevitably firms 

(especially small firms who lack the 

necessary IT staff to write code and develop 

proprietary systems), may be put in the 

position of passing onto investors the cost 

required to build hundreds of redundant 

systems.165

CAT provides various tools to help 

Industry Members identify and rectify 

errors. 

• Data Ingestion Format. The 

industry also recommended that CAT 

adopt a flexible input format that 

provides an option for Industry 

Members to submit data in formats that 

are already in use to reduce costs and 

potential reporting errors. For example, 

FIF argued the following: 

FIF CAT WG is not proposing a specific 

format; rather, we are proposing flexibility of 

input formats which includes support of 

existing formats (e.g., OATS, FIX) as well as 

a baseline specification where all fields are 

defined, and normalized. The input formats 

must be clearly and thoroughly defined in 

Technical Specifications, including FAQs. 

Mandating a uniform format for reporting 

data to the CAT simplifies the task for the 

Central Repository of consolidating/storing 

data, but it puts the burden on each CAT 

Reporter to accurately translate their current 

(e.g., OATS) reporting information into a 

uniform CAT interface. However, that is 

likely to yield more errors because it is very 

dependent on accurate, complete and timely 

information (Technical Specifications, FAQs, 

meta-data, competent CAT help desk) 

available to CAT Reporters, availability of 

sophisticated CAT test tools to validate 

interface protocols, and the skill levels of the 

estimated 300+ unique CAT Reporters/ 

Submitters during Phase 1 of CAT. 

Concentrating the responsibility of data 

conversions with the Central Repository is a 

reasonable trade-off that should yield fewer 

errors, and greater accuracy.166

CAT provides such a flexible input 

format. 

(c) Effect of Initial Plan Processor Design 

The costs for cloud hosting services 

are appropriate and have not been 

adversely affected by the original design 

and approaches of the Initial Plan 

Processor. FCAT’s design costs are the 

result of the requirements of the 

Commission-approved CAT NMS Plan. 


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167See, e.g., Lydia Leong and Adrian Wong, 

Solution Comparison for Strategic Cloud Integrated 

IaaS and PaaS Providers (July 28, 2023) (‘‘Strategic 

Cloud Assessment Article’’). 

168Strategic Cloud Assessment Article. 

169 Id. 

170Section 11.1(a)(i) of the CAT NMS Plan. 

171Section 11.3(b)(iii)(B)(II) of the CAT NMS 

Plan. 

When FCAT took over as the Plan 

Processor from Thesys, it utilized 

certain aspects of the technical 

specifications created by Thesys in its 

design. However, FCAT has not 

maintained aspects of the original 

design that would not be appropriate for 

the CAT. FCAT revised and enhanced 

the original technical specifications of 

the CAT System to increase its 

efficiency and efficacy, and to ensure its 

compliance with the CAT NMS Plan. 

For example, the Initial Plan Processor’s 

approach utilized many more fields 

than FCAT’s approach, which relies on 

additional linkages. With the additional 

linkages, the CAT System takes on more 

of the CAT-related burdens than the 

Industry Members. Such an approach 

serves to facilitate consistency, 

uniformity and accuracy in reporting. 

Moreover, FCAT did not utilize the 

system built by the Initial Plan 

Processor; it rebuilt the CAT System 

based on revised technical 

specifications. For example, the Initial 

Plan Processor used an on-premises 

processing approach which was not 

geared toward the huge amounts of data 

stored in the CAT, while FCAT adopted 

a cloud-based solution in response to 

such data demands. 

Furthermore, given the very short 

timeframe to develop the CAT System 

and the prior optimization of certain 

query tools (e.g., Diver) for regulatory 

use with significant amounts of data, 

FCAT determined to rely upon certain 

existing FINRA tools and adapt them for 

use with the CAT. 

(iii) Consideration of AWS Alternatives 

CAT LLC continues to support the 

selection of AWS as the cloud hosting 

services provider for CAT given the 

compliance, operational, and security 

requirements of the CAT. Independent 

analyses confirm these conclusions, 

noting that ‘‘AWS is an excellent choice 

for either strategic or tactical use and 

recommends considering AWS for 

almost all cloud IaaS or IaaS+PaaS 

scenarios.’’ 167 AWS provides the 

following benefits to CAT, among 

others: 

• Broad Suitability. AWS has a long 

track record of successfully serving 

cloud customers with mission-critical 

projects. 

• Proven Scalability. AWS has 

demonstrated that it is capable of 

building and delivering services on a 

large scale. 

• Track Record of Innovation. AWS 

continues to rapidly innovate, both in 

terms of new domains of capability and 

at a fundamental level, thereby 

facilitating innovation for its customers. 

• Resiliency/Dependability. Another 

benefit of AWS is its resiliency; it has 

a strong track record of stable services. 

As noted in a review of cloud service 

providers, ‘‘[c]ustomers like to have a 

broad set of options for resilience and 

for their cloud providers to have a 

strong track record of stable services 

(continuously available, without 

operational quirks). Only AWS fulfills 

both desires.’’ 168

• Technical and Customer Support. 

AWS consistently provides high-quality 

technical and customer support and 

engagement. Given the size, scope and 

regulatory importance of CAT, customer 

support and engagement that CAT has 

with the highest levels of AWS are very 

important to the success of the CAT. 

• Scale. AWS is capable of 

supporting large-scale solutions, which 

is critical given the size and magnitude 

of the CAT. 

• Security. AWS provides the security 

features necessary for the CAT. 

In addition, the nature of the CAT, 

including the amount of data it must 

process and the size of its data footprint, 

does not allow for a multi-cloud 

solution as this would be cost 

prohibitive and greatly increase the 

security boundary and associated risk 

profile of the CAT. For example, a 

multi-cloud hosting option would 

increase costs, complexity, and risk for 

operations with regard to, for example, 

DevOps, production support, and 

networking. Similarly, with regard to 

security, a multi-cloud solution would 

increase risk, including with regard to 

the need for data transfers between 

cloud providers and the expansion of 

the security boundary. With regard to 

labor, a multi-cloud solution would lose 

economies of scale due to the need to 

support unique cloud requirements. 

Accordingly, the use of single-cloud 

solution continues to provide 

advantages with regard to cost, 

complexity, and risk. Indeed, ‘‘[t]he best 

practice is to focus on a single primary 

strategic provider.’’ 169

Furthermore, if another cloud service 

provider were determined to be a better 

match for the CAT at some future date, 

switching cloud service providers 

would be a very significant, expensive 

and time-consuming effort. Such an 

effort would likely be a 10-to-15-year 

commitment at a substantial expense. 

Such a move would require the 

replication or redesign of the underlying 

cloud environments (e.g., organizational 

setup, identify management, accounts, 

environments, DevOps tooling likes 

release management/config 

management/network management), as 

the new provider likely would not have 

the same infrastructure and software. 

Once that process has been completed, 

an exabyte of CAT data would need to 

be securely migrated to the new 

platform. 

(C) Funding Model Filings 

CAT LLC believes that the recovery of 

costs related to the development of the 

funding model is appropriate, and that 

the amount and scope of such costs, as 

described above, are reasonable. 

Funding the CAT is a critical aspect 

of Rule 613 and the CAT NMS Plan. 

Article XI of the CAT NMS Plan 

describes in detail the requirements for 

funding the CAT, and the Participants 

are required to comply with and enforce 

compliance with the funding 

requirements of the CAT NMS Plan, just 

as with other aspects of the Plan. 

Accordingly, the development and 

implementation of a funding model for 

the CAT is as much a part of the 

requirements of the CAT NMS Plan as 

the development and operation of the 

CAT System. CAT LLC sees no reason 

to distinguish the efforts to develop a 

funding model from, for example, efforts 

to develop the CAT System, in seeking 

to recover reasonable CAT costs. 

Moreover, in approving the CAT 

Funding Model, the Commission 

recognized that it is appropriate to 

recover reasonable costs for legal 

services as a part of Historical CAT 

Assessments. As approved by the SEC, 

the CAT NMS Plan states that ‘‘the 

reasonably budgeted CAT costs shall 

include . . . legal costs.’’ 170 In addition, 

the CAT NMS Plan also requires 

Participants to include in their fee 

filings ‘‘a brief description of the 

amount and type of the Historical CAT 

Costs, including . . . legal . . . 

costs.’’ 171 In keeping with these 

provisions, this filing provides a brief 

description of reasonably budgeted legal 

costs above. These legal costs include 

costs related to the development of the 

CAT Funding Model. 

In addition, the legal costs incurred 

for the assistance in developing the CAT 

Funding Model are reasonable in both 

amount and scope and should be 

recoverable as a part of Historical CAT 

Assessment 1. As described above, the 

specialized services were performed by 

experienced counsel at negotiated rates 

for such services that reflect both the 


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172See Sections 11.1(a)(i) and 11.3(b)(iii)(B)(II) of 

the CAT NMS Plan. 

173Settlement Exemptive Order at 77129–30. 

174CAT NMS Plan Approval Order at 84737. 

175Letter from the Participants to Brent J. Fields, 

Secretary, SEC (Jan. 18, 2017), https://www.sec.gov/ 

divisions/marketreg/rule613-info-notice-of-planprocessor-selection.pdf. 

176Letter from Kenneth E. Bentsen, Jr., SIFMA, to 

Participants re: Selection of Thesys as CAT 

Processor (Apr. 4, 2017), https://www.sifma.org/wpcontent/uploads/2017/05/SIFMA-SubmitsComment-Letter-to-SRO-on-the-selection-of-Thesysas-the-CAT-Processor.pdf. 

177CAT Funding Model Approval Order at 62650. 

extent of the services and market rates. 

Moreover, the scope of the legal costs 

associated with the development of the 

funding model reflect the complexity of 

the task in satisfying the detailed 

requirements of the CAT NMS Plan, the 

standards of the Exchange Act, and the 

many perspectives of the different 

market constituents potentially affected 

by or interested in the funding model, 

including Industry Members, 

Participants and investors. The many 

and varied comments by market 

participants on CAT funding over the 

years demonstrate the complexity of the 

task. 

(D) Costs Related to Litigation With the 

SEC 

CAT LLC believes that the recovery of 

legal costs related to the litigation with 

the SEC regarding the CAT NMS Plan is 

appropriate, and that the amount and 

scope of such costs, as described above, 

are reasonable. 

As a preliminary matter, as discussed 

above, the Commission recognized that 

it is appropriate to recover reasonable 

costs for legal services as a part of 

Historical CAT Assessments.172

Moreover, CAT LLC initiated such 

litigation, and incurred the related legal 

costs, because it was critical to address 

the Commission’s interpretations of the 

CAT NMS Plan. Among other things, 

such interpretations threatened to 

impose unnecessary costs on the CAT, 

which would be borne by the 

Participants and Industry Members. 

Indeed, in response to the litigation, the 

Commission provided exemptive relief 

that allowed alternative, more costeffective approaches to the 

implementation of the CAT. 

Specifically, in the 2023 exemptive 

order, the Commission stated: 

The conditional exemptive relief in this 

Order allows for the implementation of 

alternative regulatory solutions that continue 

to advance the regulatory goals that Rule 613 

and the CAT NMS Plan were intended to 

promote, while reducing the implementation 

and operational costs, burdens, and/or 

difficulties that would otherwise be incurred 

by the Participants and Industry Members 

that must fund the CAT.173

CAT LLC believes it is reasonable and 

appropriate to incur costs to limit the 

need to incur even greater costs due to 

certain interpretations of the Plan. 

In addition, the legal costs incurred 

during the litigation are reasonable in 

both amount and scope and should be 

recoverable as a part of Historical CAT 

Assessment 1. As described above, the 

specialized services were performed by 

experienced counsel at market rates for 

such services. As such, the legal costs 

related to this litigation incurred during 

the period covered by Historical CAT 

Assessment 1 were reasonable. 

Finally, Industry Members will 

directly benefit from the result of the 

litigation because it has addressed CAT 

NMS Plan requirements that would 

have imposed significantly greater costs 

on the CAT. Accordingly, it is 

reasonable and appropriate that the 

costs of such litigation be included in 

the Historical CAT Costs 1. 

(E) Costs Related to the Initial Plan 

Processor 

CAT LLC believes that it is 

appropriate to recover costs related to 

the services performed by the Initial 

Plan Processor prior to November 15, 

2017, which was the date by which 

Participants were required to begin 

reporting to the CAT, due to the delay 

in the commencement of reporting to 

the CAT. As discussed above, the 

Participants determined to exclude all 

CAT costs incurred from November 15, 

2017 through November 15, 2018, 

which includes $37,852,083 in Thesys 

costs incurred from November 15, 2017 

through November 15, 2018 (as well as 

other CAT costs during this period). The 

remaining Thesys costs incurred after 

November 15, 2018 are the $19,628,791 

in capitalized developed technology 

costs for the period from November 16, 

2018 through February 2019 incurred in 

the development of the CAT by the 

Initial Plan Processor, as well as a 

transition fee for the transition from the 

Initial Plan Processor to the successor 

Plan Processor. The Participants would 

remain responsible for 100% of these 

$19,628,791 in costs. 

CAT LLC believes that it is 

appropriate to recover costs related to 

the services performed by the Initial 

Plan Processor prior to November 15, 

2017. CAT LLC notes that the 

development and implementation of the 

CAT System, while unprecedented in 

scope and design, is like any other large 

and innovative technology project in 

that, inevitably, there were adjustments 

and refinements in the technical 

approach as the project developed, even 

with substantial planning efforts and 

oversight prior to the build. This is even 

more likely when the project faces a 

very tight implementation schedule, 

such as the one imposed by the 

Commission in Rule 613 and the CAT 

NMS Plan. However, an adjusted 

approach does not mean that the funds 

were not valid expenditures and should 

not be recovered. 

The reasonableness of Thesys costs 

should be evaluated by the Commission 

as of the time they were incurred, not 

in hindsight. As detailed above, the 

Commission concluded in 2016 that 

‘‘the competitive bidding process to 

select the Plan Processor is a reasonable 

and effective way to choose a Plan 

Processor,’’ and that ‘‘the process set 

forth in the Selection Plan should be 

permitted to continue.’’ 174 Following 

this process, the Participants notified 

the Commission of the selection of 

Thesys as the Initial Plan Processor on 

January 17, 2017.175 At the time, neither 

the Commission nor the industry argued 

that the selection of the Initial Plan 

Processor was unreasonable or 

otherwise inconsistent with the CAT 

NMS Plan, nor did they predict the 

selection would result in unanticipated 

delays in the implementation of the 

CAT System. On the contrary, on April 

4, 2017, the President of SIFMA wrote 

that ‘‘SIFMA looks forward to 

commencing work with the SROs and 

Thesys.’’ 176

As noted in the CAT Funding Model 

Approval Order, ‘‘[i]n Rule 613, the 

Commission made the determination 

that the costs of the CAT should be 

shared by the Participants and Industry 

Members.’’ 177 If the CAT Funding 

Model had existed on Day 1, the risk of 

any unanticipated costs or challenges 

associated with the Initial Plan 

Processor would have been fairly and 

reasonably shared among the 

Participants and Industry Members on 

an ongoing basis. Given that the 

Commission concluded in 2012 that the 

costs of the CAT would be shared by the 

Participants and Industry Members, it is 

not fair or reasonable to determine in 

hindsight that all of the risk involved in 

developing the CAT should be allocated 

entirely to the Participants. 

(F) CAIS Implementation Costs 

CAT LLC believes that the recovery of 

CAIS-related costs is appropriate, and 

that the amount and scope of such costs, 

as described above, are reasonable, and 

that the reasonableness of historical 

costs should be evaluated by the 

Commission as of the time they were 

incurred, not in hindsight. 


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178Section 11.1(a)(i) of the CAT NMS Plan. 179Section 11.3(b)(iii)(B)(II) of the CAT NMS 

Plan. 180See Phased Reporting Exemptive Relief Order 

at 23079–80. 181 Id. at 23078–79, n.70. 

182The LTID Technical Specifications, including 

original drafts and updated versions, are available 

on the Industry Member Specifications page of the 

CAT website (https://www.catnmsplan.com/ 

specifications/im). 183Such contact points with the industry are 

described in detail on the Events web page of the 

CAT website (https://www.catnmsplan.com/events). 

184The CAIS Technical Specifications, including 

original drafts and updated versions, are available 

on the Industry Member Specifications page of the 

CAT website (https://www.catnmsplan.com/ 

specifications/im). 

185Six updated versions of the CAIS Technical 

Specifications were published during 2021, in 

March, May, June, August, October and December. 

186See, e.g., CAT Q4 2023 Quarterly Progress 

Report (Jan. 30, 2024) (https://

www.catnmsplan.com/sites/default/files/2024-01/ 

CAT-Q4-2023-QPR.pdf). 

In approving the CAT Funding Model, 

the Commission recognized that it is 

appropriate to recover reasonable CAIS 

operating costs as a part of Historical 

CAT Assessments. As approved by the 

SEC, the CAT NMS Plan states that ‘‘the 

reasonably budgeted CAT costs shall 

include . . . CAIS operating fees.’’ 178 In 

addition, the CAT NMS Plan also 

requires Participants to include in their 

fee filings ‘‘a brief description of the 

amount and type of the Historical CAT 

Costs, including . . . CAIS operating 

fees.’’ 179 In keeping with these 

provisions, this filing provides a brief 

description of reasonably budgeted 

CAIS operating fees. 

In addition, CAT LLC determined that 

the CAIS operating fees described above 

are reasonable in both amount and 

scope and should be recoverable as a 

part of Historical CAT Assessment 1. 

The ‘‘CAIS Operating Costs’’ for 

Historical CAT Assessment 1 total 

$9,480,587, with Pre-FAM costs of 

$2,072,908, FAM 1 costs of $254,998, 

FAM 2 costs of $1,590,298, and FAM 3 

costs of $5,562,383. As described above, 

the CAIS operating fees were incurred 

with regard to two categories of CAISrelated efforts: (1) the acceleration of the 

reporting of LTIDs; and (2) the 

development of the CAIS Technical 

Specifications and the building of CAIS. 

These two categories of costs are 

discussed in more detail below. 

(i) LTID Reporting 

During the period covered by 

Historical CAT Assessment 1, the CAIS 

operating costs included costs related to 

the acceleration of the reporting of 

LTIDs earlier than originally 

contemplated during this period at the 

request of the SEC and in accordance 

with exemptive relief granted by the 

SEC.180 As the SEC approved in this 

exemptive relief, the Participants 

proposed ‘‘to require the reporting of 

LTIDs to the CAT in Phases 2c and 2d, 

instead of with the rest of Customer 

Account Information in Phase 2e, which 

potentially could result in an earlier 

elimination of broker-dealer 

recordkeeping, reporting and 

monitoring requirements of the Large 

Trader Rule.’’ 181 To implement the 

reporting of LTIDs to the CAT, the 

following steps were taken during the 

period covered by Historical CAT 

Assessment 1: 

• After FCAT developed the LTID 

Technical Specifications, the LTID 

Technical Specifications were 

published on January 31, 2020, with 

additional updates provided to the LTID 

Technical Specifications through April 

2021.182

• The LTID account information 

testing environment opened on August 

24, 2020. 

• The LTID account information 

reporting production environment 

opened on December 14, 2020. 

• CAT Reporters were required to 

request their production readiness 

certification for account information 

related to LTIDs by the deadline of April 

9, 2021. 

• The LTID account information 

reporting for Phases 2a, 2b and 2c for 

Large Industry Members went live on 

April 26, 2021. 

• The LTID account information 

reporting for Phases 2d for Large 

Industry Members went live on 

December 13, 2021. 

• The LTID account information 

reporting for Phases 2a, 2b, 2c and 2d 

for Small Industry Members went live 

on April 26, 2021. 

Throughout this project, FCAT and 

CAT LLC worked closely with the 

industry on LTID and CAIS reporting. 

Between December 2019 and December 

2021, at least 57 checkpoint calls, 

webinars, and technical working group 

meetings with industry representatives 

were hosted to address issues and to 

educate CAT Reporters regarding LTID 

and CAIS reporting.183

The LTID reporting project was 

successfully completed in a timely 

fashion, and the fees related to the 

project were reasonable. Accordingly, 

CAT LLC appropriately seeks to recover 

such costs via Historical CAT 

Assessment 1. 

(ii) CAIS Reporting 

During the period covered by 

Historical CAT Assessment 1, FCAT 

began the development of the full CAIS 

Technical Specifications and the 

building of CAIS. The CAIS Technical 

Specifications were developed during 

this period as follows: 

• Iterative drafts of the CAIS 

Technical Specifications were 

published on June 30, 2020, December 

1, 2020, and January 1, 2021.184

• The full, final CAIS Technical 

Specifications were published on 

January 29, 2021. 

• Updated versions of the CAIS 

Technical Specifications were 

published throughout 2021.185

As discussed above, FCAT and CAT 

LLC frequently engaged with the 

industry regarding the development of 

CAIS, hosting regular checkpoint calls, 

webinars, and technical working group 

meetings with industry representatives 

to address any issues, including 

addressing the interplay between 

Industry Members’ existing customer 

systems and CAIS, and to educate CAT 

Reporters regarding LTID and CAIS 

reporting. Such engagement was critical 

to the CAIS development process as the 

CAIS project was unprecedented in 

terms of its content, scope and 

complexity. 

During this period, FCAT also 

commenced the building of the CAIS 

system in accordance with the CAIS 

Technical Specifications during the 

period covered by Historical CAT 

Assessment 1. The CAIS system was 

ready for industry testing shortly after 

the end of this period in January 2022. 

The CAIS Technical Specifications 

and the CAIS system, as developed 

during this period, continue to be in use 

today. Industry Members have been 

required to report, and have 

continuously reported, required data to 

CAIS on a daily basis since November 

7, 2022, consistent with interim 

reporting obligations. The CAIS system 

accepts and validates the CAIS data 

submitted by Industry Members and 

provides Industry Members with initial 

feedback on data errors. In light of the 

unprecedented nature of the CAIS 

system, certain changes to the system, 

such as changes related to error 

corrections and the CAIS regulatory 

portal, were necessary to finalize CAIS 

reporting. FCAT worked to address 

these remaining issues,186 and, as of 

May 31, 2024, FCAT indicated that it 

had achieved the final CAIS reporting 

milestone. Accordingly, CAT LLC 

appropriately seeks to recover CAIS 

operating costs via Historical CAT 

Assessment 1. 

(G) Public Relations Costs 

CAT LLC believes that the recovery of 

public relations costs is appropriate and 

that the amount and scope of such costs, 

as described above, are reasonable. 


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187CAT NMS Plan Approval Order at 84917–18. 

188Section 11.1(a)(i) of the CAT NMS Plan. 

189Section 11.3(b)(iii)(B)(II) of the CAT NMS 

Plan. 

190See Sections 11.1(a)(i) and 11.3(b)(iii)(B)(II) of 

the CAT NMS Plan. 

191See, e.g., NASDAQ Equities Rule 4626. 

192FINRA Rule 1013(a)(1)(R) requires all 

applicants for FINRA Membership to acknowledge 

the FINRA Entitlement Program Agreement and 

Terms of Use, which applies to OATS. Industry 

Members click to indicate that they agree to its 

terms—including its limitation of liability 

provision—every time they access FINRA’s OATS 

system to report trade information (i.e., repeatedly 

over the course of a trading day for many Industry 

Members). 

193See Letter from Michael Simon, Chair, CAT 

Operating Committee, to Vanessa Countryman, 

Secretary, Commission (Dec. 18, 2020). 

194Section 11.1(a)(i) of the CAT NMS Plan. 

195Section 11.3(b)(iii)(B)(II) of the CAT NMS 

Plan. 

The Commission has long recognized 

that external public relations costs are 

reasonably associated with creating, 

implementing and maintaining the CAT. 

In the CAT NMS Plan Approval Order, 

the Commission estimated that the 

Participants had collectively spent 

approximately $2,400,000 in 

preparation of the CAT NMS Plan on 

external public relations, legal, and 

consulting costs, and estimated that the 

Participants would continue to incur 

external public relations costs 

associated with maintaining the CAT 

upon approval of the CAT NMS Plan.187

In approving the CAT Funding Model, 

the Commission recognized that it is 

appropriate to recover reasonable costs 

for public relations services as a part of 

Historical CAT Assessments. As 

approved by the SEC, the CAT NMS 

Plan states that ‘‘the reasonably 

budgeted CAT costs shall include . . . 

public relations costs.’’ 188 In addition, 

the CAT NMS Plan also requires 

Participants to include in their fee 

filings ‘‘a brief description of the 

amount and type of the Historical CAT 

Costs, including . . . public relations 

costs.’’ 189 In keeping with these 

provisions, a brief description of 

reasonable public relations costs are 

described above. 

In addition, CAT LLC determined that 

the public relations costs described 

above are reasonable in both amount 

and scope and should be recoverable as 

a part of Historical CAT Assessment 1. 

The services performed by the public 

relations firms through 2021 were 

limited in scope to assist CAT LLC, 

which has no employees of its own, to 

be better positioned to understand and 

address CAT matters to the benefit of all 

market participants and to communicate 

on important CAT topics with the 

public. In addition, the costs for these 

services were appropriately limited. 

During the 10-year period covered by 

Historical CAT Assessment 1, the 

average cost per year for these services 

was approximately $36,000. 

(H) Legal Costs Related to the Limitation 

of Liability Provision in CAT Reporter 

Agreements 

CAT LLC believes that the recovery of 

legal costs related to the limitation of 

liability provision, including costs 

related to the proceedings before the 

SEC and costs related to the proposed 

amendment to the Consolidated Audit 

Trail Reporter Agreement and the 

Consolidated Audit Trail Reporting 

Agent Agreement (the ‘‘Reporting 

Agreements’’) is appropriate and that 

the amount and scope of such costs as 

described above are reasonable. 

As a preliminary matter, as discussed 

above, the Commission recognized that 

it is appropriate to recover reasonable 

costs for legal services as a part of 

Historical CAT Assessments.190 In 

addition, CAT LLC determined that the 

legal costs incurred for the assistance 

with regard to the limitation of liability 

provisions are reasonable in both 

amount and scope and should be 

recoverable as a part of Historical CAT 

Assessment 1. 

Moreover, it is critical that CAT LLC, 

which has no employees of its own, 

have the ability to fund a legal defense 

in litigation and other legal proceedings 

against it. In response to CAT LLC 

requiring Industry Members to agree to 

the limitation of liability provision to 

submit data to the CAT, SIFMA filed an 

application for review of actions taken 

by CAT LLC and the Participants 

pursuant to Sections 19(d) and 19(f) of 

the Exchange Act. Contemporaneously 

with the filing of this proceeding, 

SIFMA moved for a stay of the 

requirement that Industry Members sign 

a Reporter Agreement, or in the 

alternative, asked the Commission to 

further delay the launch of CAT 

reporting on June 22, 2020. CAT LLC 

must have the resources to defend itself 

from litigious actions by others, like 

these. 

Although a limitation of liability 

provision ultimately was not adopted as 

proposed, it was a reasonable provision 

to propose for the CAT Reporter 

Agreements, given that such provisions 

are in accordance with industry norms. 

Limitations of liability are ubiquitous 

within the securities industry and have 

long governed the economic 

relationships between self-regulatory 

organizations and the entities that they 

regulate. For example, U.S. securities 

exchanges have adopted rules to limit 

their liability for losses that Industry 

Members incur through their use of 

exchange facilities.191 Similarly, 

FINRA’s former order audit trail, OATS, 

which has functioned as an integrated 

audit trail of order, quote, and trade data 

for equity securities, required FINRA 

members to acknowledge an agreement 

that includes a limitation of liability 

provision.192 In addition, such a 

provision was intended to ensure the 

financial stability of the CAT. 

Accordingly, it was reasonable for CAT 

LLC to propose the use of such a 

provision.193

Furthermore, as described above, the 

specialized services were performed by 

experienced counsel at market rates for 

such services. Accordingly, the legal 

costs for the efforts related to the 

limitation of liability provision were 

reasonable. 

(I) Costs for the Chair of CAT Operating 

Committee 

CAT LLC believes that the recovery of 

consulting costs related to the Chair of 

the CAT Operating Committee is 

appropriate and that the amount and 

scope of such costs are reasonable. 

As a preliminary matter, the selection 

of the Chair of the Operating Committee 

complies with the requirements of 

Section 4.2 of the CAT NMS Plan. The 

initial Chair that served during the 

period covered by Historical CAT 

Assessment was designated by a 

Participant as the Participant’s alternate 

voting member. Accordingly, the Chair 

is a representative of the Participants, as 

required by the CAT NMS Plan. 

In addition, in approving the CAT 

Funding Model, the Commission 

recognized that it is appropriate to 

recover reasonable costs for consulting 

as a part of Historical CAT Assessments. 

As approved by the SEC, the CAT NMS 

Plan states that ‘‘the reasonably 

budgeted CAT costs shall include . . . 

consulting . . .’’ costs.194 In addition, 

the CAT NMS Plan also requires 

Participants to include in their fee 

filings ‘‘a brief description of the 

amount and type of the Historical CAT 

Costs, including . . . consulting’’ 195

costs. In keeping with these provisions, 

a brief description of reasonable 

consulting costs is included in this 

filing, and such reasonable consulting 

costs include the costs related to the 

Chair position. 

The Participants determined that the 

position of the Chair was a critical role 

for the implementation of the CAT, and 

an independent Chair would 

appropriately consider and address the 

views of each of the Participants. The 

Participants also determined that it was 

important to have a Chair with a strong 


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196See CAT Technical Specifications for Billing 

Trade Details; Trade Details Schema (https://

catnmsplan.com/sites/default/files/2024-02/ 

02.05.24-Billing-Trade-Details-Schema.json); CAT 

Billing Scenarios, Version 1.0 (Nov. 30, 2023) 

(https://www.catnmsplan.com/sites/default/files/

2024-01/01.12.2024-CAT-Billing-Scenariosv1.0.pdf). 

197For years, broker-dealers have faced similar 

reconciliation issues with regard to SRO fees related 

to Section 31. Broker-dealers have responded to this 

issue in the Section 31 context by exercising their 

discretion as to whether and the manner and extent 

to which they pass on those fees (e.g., by rounding 

up its fees to the nearest cent, or decide to charge 

for, or not charge for, certain transactions, or assess 

a specific fee or incorporate the costs into other fee 

programs). See, e.g., Securities Exchange Act Rel. 

No. 49928 (June 28, 2004), 69 FR 41060, 41072 (July 

7, 2004) (noting that broker-dealers may ‘‘overcollect’’ Section 31-related fees charged to their 

clients due to rounding practices, and doublecounting with regard to certain transactions). 

background regarding issues related to 

the regulatory obligations of selfregulatory organizations, including their 

obligations under national market 

system plans. The compensation paid to 

the Chair is appropriate for a person 

with such background and skills. The 

average annual amount paid to the Chair 

from 2017 through the end of FAM 3 

was $292,733.30. Separate from the 

Chair, CAT LLC relies upon a 

Leadership Team of representatives of 

the SROs to oversee the day-to-day 

implementation of the CAT NMS Plan. 

CAT LLC does not compensate any 

member of the Leadership Team. 

(11) Fee Implementation Assistance for 

Industry Members 

(A) Reconciliation of CAT Invoices 

(i) Reconciliation of CAT Invoices to 

Underlying Trades Provided by CAT 

CAT LLC understands that there are 

three types of reconciliation processes 

related to the invoices: 

• Reconciliation of CAT Invoices to 

Underlying Trades: Reconciling the 

CAT invoice amount to the underlying 

trades provided by CAT; 

• Matching Trades to Books and 

Records: Providing the means to match 

the underlying trades provided by CAT 

with CAT invoices to other books and 

records independently maintained by 

individual CAT Reporters (e.g., 

exchange trade journals/ 

acknowledgements) and data sources of 

self-regulatory organizations 

independent of CAT; and 

• Order Originator Identification: 

Providing the ability to identify the 

order originator for the underlying 

trades provided by CAT with CAT 

invoices, which would facilitate firms’ 

ability to pass through CAT Fees to their 

customers. 

As discussed further below, CAT LLC 

only considers the first type of process 

to be a ‘‘reconciliation’’ and the only 

type of process that is required under 

the CAT NMS Plan. CAT LLC provides 

the means to reconcile the CAT invoice 

amount to the underlying trades 

provided by CAT. 

The CAT NMS Plan does not require 

CAT LLC to facilitate the second type of 

process: matching underlying trades for 

a CAT invoice with a firm’s internal 

books and records. CAT LLC has access 

only to the underlying trades provided 

by CAT; it does not have access to a 

firm’s internal books and records. 

Although beyond the requirements of 

the CAT NMS Plan and involving firm 

specific considerations, CAT LLC 

voluntarily has provided guidance and 

processes to assist CAT Reporters in 

their efforts to match the underlying 

trades with their own books and 

records. 

The CAT NMS Plan also does not 

require CAT LLC to provide the ability 

to identify the order originator for the 

underlying trades for the CAT invoices. 

Accordingly, the billing guidance and 

processes do not provide CAT Reporters 

with the ability to identify the order 

originator for the underlying trades 

provided by CAT with CAT invoices. 

CAT LLC has been working closely with 

CAT Reporters to explain its billing 

approach and to address any 

outstanding billing questions. But, it 

should not be lost that CAT LLC 

provides information sufficient to allow 

CAT Reporters to reconcile CAT invoice 

amounts with the underlying trades 

provided by CAT LLC. 

(ii) Match the Underlying Trades 

Provided by CAT With CAT Invoices to 

Firms’ Internal Books and Records 

Independent of CAT 

The CAT NMS Plan does not require 

CAT LLC to facilitate the matching of 

underlying trades for a CAT invoice 

with a firm’s internal books and records, 

which may consist of trading data from 

various sources external to CAT. 

Although beyond the requirements of 

the CAT NMS Plan and involving firm 

specific considerations, CAT LLC 

voluntarily has provided guidance and 

processes to assist CAT Reporters in 

their efforts to match the underlying 

trades with their own books and 

records. 

In this regard, it is important to 

recognize that CAT LLC has developed 

a billing approach that greatly improves 

upon existing billing practices for 

similar regulatory fees (e.g., fees related 

to Section 31). Accordingly, with the 

additional information voluntarily 

provided by CAT LLC, CAT Reporters 

generally will have sufficient 

information to match their underlying 

trades provided by CAT with their own 

internal books and records that are 

independent of CAT or to SRO data that 

is independent of CAT data. However, 

CAT LLC emphasizes that providing 

such additional information is not 

required by the CAT NMS Plan. 

To facilitate the introduction of CAT 

fees, CAT LLC has worked with FCAT 

to develop an approach to CAT billing 

that is consistent with existing billing 

constructs used with regard to Section 

31-related sales values fees, subject to 

certain enhancements. Under this 

billing approach, FCAT is providing 

additional linkage elements, not 

necessarily provided in the Section 31- 

sales value fee context, to facilitate CAT 

Reporters’ ability to match the 

underlying trades provided by CAT 

with their internal books and records 

and to reduce the complexity of that 

process. Specifically, FCAT is providing 

various key elements of the trade itself, 

such as the tradeID and branch 

sequence,196 to CAT Reporters in the 

trade billing details provided with their 

CAT invoices (‘‘Additional Trade 

Details’’). As a result, CAT Reporters 

now have numerous alternative 

methods for matching a trade with their 

internal books and records where they 

previously did not have such matching 

methods in other fee contexts. 

With the Additional Trade Details, 

CAT LLC and FCAT believe that the 

overwhelming majority of underlying 

trades provided by CAT bills can be 

matched with a CAT Reporter’s internal 

books and records. CAT LLC recognizes 

that there may be certain cases in which 

such matching is more difficult given 

various firm-specific considerations, but 

believes that such instances are 

significantly more limited than with 

regard to the SRO fees charged in 

relation to Section 31.197 By providing 

Additional Trade Details that are not 

available in other fee contexts, FCAT 

enhances the Industry Members’ ability 

to match the underlying trades provided 

with CAT invoices with books and 

records and SRO data, both of which are 

independent of CAT data. 

(iii) CAT LLC Is Not Required To 

Facilitate CAT Reporters’ Ability To 

Pass Through Fees to Their Customers 

Similar to other regulatory fees, the 

CAT NMS Plan does not address the 

manner or extent to which CAT 

Executing Brokers may seek to pass any 

CAT fees on to their customers, nor does 

it impose any obligation on CAT LLC or 

the Plan Processor to facilitate firms’ 

ability to do so. Accordingly, Historical 

CAT Assessment 1 does not address the 

process by which any CAT Reporters 

may pass through the fee to their 


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198 ‘‘FINRA charges a Regulatory Transaction Fee 

(‘‘RTF’’) to industry members to reimburse FINRA 

for the Section 31 fees that FINRA pays to the 

Commission. FINRA does not currently provide 

industry members with the data that industry 

members require for proper reconciliation of RTF 

fees. This has been a major problem for the industry 

for many years.’’ Letter from Howard Meyerson, 

Managing Director, FIF, to Robert Cook, Chief 

Executive Officer, FINRA at 2 (Dec. 15. 2023) 

(https://fif.com/index.php/working-groups/ 

category/271-comment-letters?download=2820:fifletter-to-finra-on-pass-through-of-finra-catfees&view=category). 

199CAT Technical Specifications for Billing 

Trade Details, Version 1.0 r1 (Dec. 8. 2023) (https:// 

catnmsplan.com/sites/default/files/2023-12/

12.07.2023-CAT-Techical-Specifications-for-BillingTrade-Details-v1.0r1_CLEAN.pdf). 

200Trade Details Schema (https://

catnmsplan.com/sites/default/files/2024-02/ 

02.05.24-Billing-Trade-Details-Schema.json). 

201CAT Billing Scenarios, Version 1.0 (Nov. 30, 

2023) (https://www.catnmsplan.com/sites/default/

files/2024-01/01.12.2024-CAT-Billing-Scenariosv1.0.pdf). 

202CAT Billing Webinar, Part 1 (Sept. 28, 2023) 

(https://www.catnmsplan.com/events/part-1-catbilling-webinar). 

203CAT Billing Webinar, Part 2 (Nov. 7, 2023) 

(https://www.catnmsplan.com/events/part-2-catbilling-webinar). 

204See CAT Alert 2023–02 (Oct. 12, 2023) 

(https://www.catnmsplan.com/sites/default/files/

2023-10/10.12.23-CAT-Alert-2023-02.pdf). 

customers. Likewise, the CAT billing 

approach provided by the Plan 

Processor is designed to address the 

needs of CAT Reporters with regard to 

the reconciliation of CAT invoices with 

the underlying trades provided by CAT 

LLC with the invoices; they are not 

designed to address issues related to any 

pass-through fees. Accordingly, 

facilitating CAT Reporters’ ability to 

pass through fees to their clients is 

outside the scope of this fee filing. 

Nevertheless, as described below, CAT 

LLC and the Plan Processor have 

expended significant efforts to provide 

technical assistance to Industry 

Members regarding the implementation 

of Historical CAT Assessment 1, 

including providing Additional Trade 

Details that provide significant details 

about each underlying trade. 

(a) Originating Brokers Versus Executing 

Brokers 

In its approval of the CAT Funding 

Model, the Commission approved 

charging CAT fees to the CAT Executing 

Broker, rather than the originating 

broker. This fee filing must comply with 

the requirements of the CAT Funding 

Model, and, therefore, charges the 

Historical CAT Assessment 1 to CAT 

Executing Brokers. 

Moreover, charging originating 

brokers would introduce significant 

complexity to the billing process from 

the CAT’s perspective, and would 

increase the costs of implementing CAT 

fees. Charging the CAT Executing 

Broker is simple and straightforward, 

and leverages a one-to-one relationship 

between billable events (trades) and 

billable parties, similar to other 

transaction-based fees. In contrast, for a 

single trade event, there may be many 

originating brokers, and each trade must 

be broken down on a pro-rata basis, to 

account for one or more layers of 

aggregation, disaggregation, and 

representation of the underlying orders. 

While CAT is indeed designed to 

capture and unwind complex 

aggregation scenarios, the data and 

linkages are structured to facilitate 

regulatory use, and not a billing 

mechanism that assesses fees on a 

distinct set of executed trades; it is not 

simply a matter of using existing CAT 

linkages. Furthermore, charging 

originating brokers would implicate 

issues related to lifecycle linkage rates, 

and issues related to corrections, 

cancellations and allocations, while 

charging CAT Executing Brokers would 

avoid such issues. 

(b) Identification of Order Originator for 

Underlying Trades 

As noted, the CAT NMS Plan does not 

address the manner or extent to which 

CAT Executing Brokers may seek to pass 

any CAT Fees on to their customers, nor 

does it impose any obligation on CAT 

LLC or the Plan Processor to facilitate 

firms’ ability to do so. Nevertheless, the 

Additional Trade Details provided with 

regard to the underlying trades on CAT 

invoices may assist with this process. 

Like with Section 31-related sales value 

fees, however, it is not always possible 

to trace every fee on a transaction back 

to the originating party. Industry 

Members have faced these issues under 

Section 31-related sales values fees for 

many years.198 However, with the 

Additional Trade Details provided 

under the CAT billing approach, in 

many cases, CAT Reporters will be able 

to identify the order originator for the 

underlying trades provided by CAT 

with CAT invoices. In some cases, CAT 

LLC believes that certain issues related 

to certain types of market activity may 

implicate CAT Reporters’ ability to 

identify the order originator for a 

limited set of underlying trades for the 

CAT invoices. Although CAT LLC does 

not believe that it is required to address 

these issues, CAT LLC and FCAT have 

been carefully researching and 

analyzing these types of issues as they 

are identified, and have been working 

voluntarily to assist CAT Reporters with 

these issues as necessary and when 

possible. In addition, CAT LLC intends 

to continue to provide CAT Reporters 

with billing guidance through FAQs, 

CAT Alerts and Helpdesk responses to 

address outstanding billing questions. 

(B) Significant Technical Assistance 

CAT LLC has worked with FCAT to 

provide significant technical assistance 

to Industry Members to allow the 

Industry Members to understand how 

Historical CAT Assessment 1 will be 

implemented and billed, including 

webinars, CAT alerts, mock invoices, 

and responses to questions posed to the 

FCAT Help Desk. 

• Technical Specifications and 

Scenarios. CAT LLC has provided 

detailed technical documentation for 

CAT billing, including (1) technical 

specifications, which describe the CAT 

Billing Trade Details Files associated 

with monthly CAT invoices, including 

detailed information about data 

elements and file formats as well as 

access instructions, network and 

transport options; 199 (2) trade details 

schemas; 200 and (3) CAT billing 

scenarios.201

• Industry Webinars. CAT LLC has 

hosted two industry webinars 

specifically dedicated to CAT billing. 

The first webinar, hosted on September 

28, 2023, discussed the operational 

implementation of the CAT Reporter 

billing process.202 The second webinar, 

hosted on November 7, 2023, provided 

(1) a demonstration of the CAT Reporter 

Portal and how to access CAT billing 

documents, including CAT invoices; 

and (2) additional information on 

underlying trade details in relation to 

the CAT Reporter billing process and an 

overview of the CAT Contact 

Management System.203 485 

participants and 394 participants 

attended the two webinars, respectively. 

• CAT Alert. CAT LLC has published 

a detailed CAT Alert that describes how 

FCAT, as the Plan Processor acting on 

behalf of CAT LLC, will calculate 

applicable fees, issue invoices to and 

collect payment from CAT Executing 

Brokers.204

• Frequently Asked Questions 

(FAQs). CAT LLC also has continued to 

engage with the industry on billing 

issues by making responses to billing 

FAQs available on the CAT website. The 

FAQs address a broad range of 

frequently asked questions, including, 

for example, which Industry Members 

will receive invoices, how fees are 

calculated, when and how fees are 

required to be paid, how to access 

invoices, and how to update the billing 

contact. To date, responses to 27 FAQs 

are available on the CAT website, and 


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205See CAT Billing FAQs, Section V of CAT 

FAQs (https://www.catnmsplan.com/faq?search_

api_fulltext=&field_topics=271&sort_by=field_faq_

number). 

206The CAT NMS Plan requires that the Plan 

Processor ‘‘staff a CAT help desk, as described in 

Appendix D, CAT Help Desk, to provide technical 

expertise.’’ Section 6.10(c)(vi) of the CAT NMS 

Plan. See also Section 10.3 of Appendix D of the 

CAT NMS Plan for a description of the Plan 

requirements for the CAT Help Desk. 

207 15 U.S.C. 78f(b)(6). 

208 15 U.S.C. 78f(b)(4). 

209 15 U.S.C. 78f(b)(8). 

210See Section 6(b)(1) of the Exchange Act. 

211CAT NMS Plan Approval Order at 84697. 

CAT LLC will provide additional 

responses to FAQs as warranted.205

• Mock Invoices. To assist Industry 

Members with compliance with the 

commencement of Historical CAT 

Assessment 1, CAT LLC has been 

making available to CAT Executing 

Brokers mock invoices for Historical 

CAT Assessment 1 since December 2023 

for billable activity occurring in 

November 2023. The mock invoices are 

in the same form as the actual, payable 

invoices, including both the relevant 

transaction data and the corresponding 

fee (as originally contemplated). 

However, no payments are required in 

response to such mock invoices; they 

are to be used solely to assist CAT 

Executing Brokers with the 

development of their processes for 

paying the CAT fees. Such data provides 

CAT Executing Brokers with a preview 

of the transaction data used in creating 

the invoices for Historical CAT 

Assessment 1 fees, as the data will be 

the same as data provided in actual 

invoices. Such data preview is intended 

to facilitate the payment of Historical 

CAT Assessment 1. For the November, 

December, and January billing periods, 

FCAT has generated trade detail files for 

569 distinct firms that are CAT 

Executing Brokers. As such, CAT 

Reporters have actively engaged in the 

billing process via the mock invoices. 

• Help Desk Assistance. CAT LLC 

also provides detailed, individualized 

assistance to Industry Members 

regarding CAT fees and the billing 

process through the FCAT Help Desk.206

For example, the Help Desk has assisted 

with 406 cases related to the billing of 

CAT fees from July 2023 through March 

2024. 

By providing such detailed and 

sustained assistance to Industry 

Members regarding CAT fees and 

billing, CAT LLC has successfully 

addressed questions raised by Industry 

Members regarding the CAT fees and 

billing processes. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

requirements of the Exchange Act. The 

Exchange believes that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,207 which requires, 

among other things, that the Exchange’s 

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 not designed to permit unfair 

discrimination between customers, 

issuers, brokers and dealers. The 

Exchange also believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b)(4) of the 

Act,208 because it provides for the 

equitable allocation of reasonable dues, 

fees and other charges among members 

and issuers and other persons using its 

facilities and does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. The 

Exchange further believes that the 

proposed rule change is consistent with 

Section 6(b)(8) of the Act,209 which 

requires that the Exchange’s rules not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purpose of the 

Exchange Act. These provisions also 

require that the Exchange 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.210

Accordingly, a reasonable reading of the 

Act indicates that it intended that 

regulatory funding be sufficient to 

permit an exchange to fulfill its 

statutory responsibility under the Act, 

and contemplated that such funding 

would be achieved through equitable 

assessments on the members, issuers, 

and other users of an exchange’s 

facilities. 

The Exchange believes that this 

proposal is consistent with the Act 

because it implements provisions of the 

Plan and is designed to assist the 

Exchange 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.’’ 211 To the extent 

that this proposal implements the Plan 

and applies specific requirements to 

Industry Members, the Exchange 

believes that this proposal furthers the 

objectives of the Plan, as identified by 

the SEC, and is therefore consistent with 

the Act. 

The Exchange believes that the 

proposed fees paid by the CEBBs and 

CEBSs are reasonable, equitably 

allocated and not unfairly 

discriminatory. First, the Historical CAT 

Assessment 1 fees to be collected are 

directly associated with the costs of 

establishing and maintaining the CAT, 

where such costs include Plan Processor 

costs and costs related to technology, 

legal, consulting, insurance, 

professional and administration, and 

public relations costs. The Exchange has 

already incurred such development and 

implementation costs and the proposed 

Historical CAT Assessment 1 fees, 

therefore, would allow the Exchange to 

collect certain of such costs in a fair and 

reasonable manner from Industry 

Members, as contemplated by the CAT 

NMS Plan. 

The proposed Historical CAT 

Assessment 1 fees would be charged to 

Industry Members 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 and not to support the 

Exchange’s business operations. The 

proposed fees would not cover 

Exchange services unrelated to the CAT. 

In addition, any surplus would be used 

as a reserve to offset future fees. Given 

the direct relationship between CAT 

fees and CAT costs, the Exchange 

believes that the proposed fees are 

reasonable, equitable and not unfairly 

discriminatory. 

As further discussed below, the SEC 

approved the CAT Funding Model, 

finding it was reasonable and that it 

equitably allocates fees among 

Participants and Industry Members. The 

Exchange believes that the proposed 

fees adopted pursuant to the CAT 

Funding Model approved by the SEC are 

reasonable, equitably allocated and not 

unfairly discriminatory. 

(1) Implementation of CAT Funding 

Model in CAT NMS Plan 

Section 11.1(b) of the CAT NMS Plan 

states that ‘‘[t]he Participants shall file 

with the SEC under Section 19(b) of the 

Exchange Act any such fees on Industry 

Members that the Operating Committee 

approves.’’ Per Section 11.1(b) of the 

CAT NMS Plan, the Exchange has filed 

this fee filing to implement the Industry 

Member CAT fees included in the CAT 

Funding Model. The Exchange believes 

that this proposal is consistent with the 

Exchange Act because it is consistent 


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212CAT NMS Plan Approval Order at 84696. 

213CAT Funding Model Approval Order at 62686. 

214 Id. at 62662–63. 

215Section 11.3(b)(iii)(B)(II)(B)(1) of the CAT 

NMS Plan. 

216For a discussion of the amount and type of 

cloud hosting services fees, see Sections 

3(a)(2)(B)(i)(a), 3(a)(2)(B)(ii)(a), 3(a)(2)(B)(iii)(a) and 

3(a)(2)(B)(iv)(A) above. 

217Appendix D–4 of the CAT NMS Plan at n.262. 

218CAT NMS Plan Approval Order at 84801. 

219See Sections 3(a)(2)(B)(i)(a), 3(a)(2)(B)(ii)(a), 

3(a)(2)(B)(iii)(a) and 3(a)(2)(B)(iv)(A) above. 

with, and implements, the CAT Funding 

Model in the CAT NMS Plan, and is 

designed to assist the Exchange and its 

Industry Members in meeting regulatory 

obligations pursuant to the CAT NMS 

Plan. In approving the CAT NMS 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.’’ 212 Similarly, in approving the 

CAT Funding Model, the SEC 

concluded that the CAT Funding Model 

met this standard.213 As this proposal 

implements the Plan and the CAT 

Funding Model described therein, and 

applies specific requirements to 

Industry Members in compliance with 

the Plan, the Exchange believes that this 

proposal furthers the objectives of the 

Plan, as identified by the SEC, and is 

therefore consistent with the Exchange 

Act. 

(2) Calculation of Fee Rate for Historical 

CAT Assessment 1 Is Reasonable 

The SEC has determined that the CAT 

Funding Model is reasonable and 

satisfies the requirements of the 

Exchange Act. Specifically, the SEC has 

concluded that the method for 

determining Historical CAT 

Assessments as set forth in Section 11.3 

of the CAT NMS Plan, including the 

formula for calculating the Historical 

Fee Rate, the identification of the parties 

responsible for payment and the 

transactions subject to the fee rate for 

the Historical CAT Assessment, is 

reasonable and satisfies the Exchange 

Act.214 In each respect, as discussed 

above, Historical CAT Assessment 1 is 

calculated, and would be applied, in 

accordance with the requirements 

applicable to Historical CAT 

Assessments as set forth in the CAT 

NMS Plan. Furthermore, as discussed 

below, the Exchange believes that each 

of the figures for the variables in the 

SEC-approved formula for calculating 

the fee rate for Historical CAT 

Assessment 1 is reasonable and 

consistent with the Exchange Act. 

Calculation of the Historical Fee Rate for 

Historical CAT Assessment 1 requires 

the figures for the Historical CAT Costs 

1, the executed equivalent share volume 

for the prior twelve months, the 

determination of Historical Recovery 

Period 1, and the projection of the 

executed equivalent share volume for 

Historical Recovery Period 1. Each of 

these variables is reasonable and 

satisfies the Exchange Act, as discussed 

throughout this filing. 

(A) Historical CAT Costs 1 

The formula for calculating a 

Historical Fee Rate requires the amount 

of Historical CAT Costs to be recovered. 

Specifically, Section 11.3(b)(iii)(B)(II) of 

the CAT NMS Plan requires a fee filing 

to provide: 

a brief description of the amount and type of 

the Historical CAT Costs, including (1) the 

technology line items of cloud hosting 

services, operating fees, CAIS operating fees, 

change request fees, and capitalized 

developed technology costs, (2) legal, (3) 

consulting, (4) insurance, (5) professional 

and administration and (6) public relations 

costs. 

In accordance with this requirement, 

the Exchange has set forth the amount 

and type of Historical CAT Costs 1 for 

each of these categories of costs above. 

Section 11.3(b)(iii)(B)(II) of the CAT 

NMS Plan also requires that the fee 

filing provide ‘‘sufficient detail to 

demonstrate that the Historical CAT 

Costs are reasonable and appropriate.’’ 

As discussed below, the Exchange 

believes that the amounts set forth in 

this filing for each of these cost 

categories is ‘‘reasonable and 

appropriate.’’ Each of the costs included 

in Historical CAT Costs 1 are reasonable 

and appropriate because the costs are 

consistent with standard industry 

practice, based on the need to comply 

with the requirements of the CAT NMS 

Plan, incurred subject to negotiations 

performed on an arm’s length basis, 

and/or are consistent with the needs of 

any legal entity, particularly one with 

no employees. 

(i) Technology: Cloud Hosting Services 

In approving the CAT Funding Model, 

the Commission recognized that it is 

appropriate to recover costs related to 

cloud hosting services as a part of 

Historical CAT Assessments.215 CAT 

LLC determined that the costs related to 

cloud hosting services described in this 

filing are reasonable and should be 

included as a part of Historical CAT 

Costs 1. As described above, the cloud 

hosting services costs reflect, among 

other things, the breadth of the CAT 

cloud activities, data volume far in 

excess of the original volume estimates, 

the need for specialized cloud services 

given the volume and unique nature of 

the CAT, the processing time 

requirements of the Plan, and regular 

efforts to seek to minimize costs where 

permissible under the Plan. CAT LLC 

determined that use of cloud hosting 

services is necessary for implementation 

of the CAT, particularly given the 

substantial data volumes associated 

with the CAT, and that the fees for 

cloud hosting services negotiated by 

FCAT were reasonable, taking into 

consideration a variety of factors, 

including the expected volume of data 

and the breadth of services provided 

and market rates for similar services.216

Indeed, the actual costs of the CAT are 

far in excess of the original estimated 

costs of the CAT due to various factors, 

including the higher volumes and 

greater complexity of the CAT than 

anticipated when Rule 613 was 

originally adopted. 

To comply with the requirements of 

the Plan, the breadth of the cloud 

activities related to the CAT is 

substantial. The cloud services not only 

include the production environment for 

the CAT, but they also include two 

industry testing environments, support 

environments for quality assurance and 

stress testing and disaster recovery 

capabilities. Moreover, the cloud storage 

costs are driven by the requirements of 

the Plan, which requires the storage of 

multiple versions of the data, from the 

original submitted version of the data 

through various processing steps, to the 

final version of the data. 

Data volume is a significant driver of 

costs for cloud hosting services. When 

the Commission adopted the CAT NMS 

Plan in 2016, it estimated that the CAT 

would need to receive 58 billion records 

per day 217 and that annual operating 

costs for the CAT would range from 

$36.5 million to $55 million.218

Through 2021, the actual data volumes 

have been five times that original 

estimate. The data volumes for each 

period are set forth in detail above.219

In addition to the effect of the data 

volume on the cloud hosting costs, the 

processing timelines set forth in the 

Plan contribute to the cloud hosting 

costs. Although CAT LLC has 

proactively sought to manage cloud 

hosting costs while complying with the 

Plan, including through requests to the 

Commission for exemptive relief and an 

amendment to the CAT NMS Plan, 

stringent CAT NMS Plan requirements 

do not allow for any material flexibility 

in cloud architecture design choices, 

processing timelines (e.g., the use of 


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220See Securities Exchange Act Rel. No. 97151 

(Mar. 15, 2023), 88 FR 17086, 17117 (Mar. 21, 2023) 

(describing key cost discipline mechanisms for the 

CAT). 

221Section 11.3(b)(iii)(B)(II)(B)(1) of the CAT 

NMS Plan. 

222See Section 3(a)(2)(B)(i)(b) above. 

223See Sections 3(a)(2)(B)(i)(b), 3(a)(2)(B)(ii)(b), 

3(a)(2)(B)(iii)(b) and 3(a)(2)(B)(iv)(b) above. 

224 Id. 

225Section 11.3(b)(iii)(B)(II)(B)(1) of the CAT 

NMS Plan. 

226See Sections 3(a)(2)(B)(i)(c), 3(a)(2)(B)(ii)(c), 

3(a)(2)(B)(iii)(c) and 3(a)(2)(B)(iv)(c) above. 

227 Id. 

228Section 11.3(b)(iii)(B)(II)(B)(1) of the CAT 

NMS Plan. 

229See Sections 3(a)(2)(B)(i)(d), 3(a)(2)(B)(ii)(d), 

3(a)(2)(B)(iii)(d) and 3(a)(2)(B)(iv)(d) above. 

230Section 11.3(b)(iii)(B)(II)(B)(1) of the CAT 

NMS Plan. 

231See Sections 3(a)(2)(B)(i)(e), 3(a)(2)(B)(ii)(e), 

3(a)(2)(B)(iii)(e) and 3(a)(2)(B)(iv)(e) above. 

232 Id. 

non-peak processing windows), or 

lower-cost storage tiers. As a result, the 

required CAT processing timelines 

contribute to the cloud hosting costs of 

the CAT. 

The costs for cloud hosting services 

also reflect the need for specialized 

cloud hosting services given the data 

volume and unique processing needs of 

the CAT. The data volume as well as the 

data processing needs of the CAT 

necessitate the use of cloud hosting 

services. The equipment, power and 

services required for an on-premises 

data model, the alternative to cloud 

hosting services, would be cost 

prohibitive. Moreover, as CAT was 

being developed, there were limited 

cloud hosting providers that could 

satisfy all the necessary CAT 

requirements, including the operational 

and security criteria. Over time more 

providers offering cloud hosting 

services that would satisfy these criteria 

have entered the market. CAT LLC will 

continue to evaluate alternative cloud 

hosting services, recognizing that the 

time and cost to move to an alternative 

cloud provider would be substantial. 

The reasonableness of the cloud 

hosting services costs is further 

supported by key cost discipline 

mechanisms for the CAT—a cost-based 

funding structure, cost transparency, 

cost management efforts (including 

regular efforts to lower compute and 

storage costs where permitted by the 

Plan) and oversight. Together, these 

mechanisms help ensure the ongoing 

reasonableness of the CAT’s costs and 

the level of fees assessed to support 

those costs.220

(ii) Technology: Operating Fees 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover costs related to operating fees 

as a part of Historical CAT 

Assessments.221 CAT LLC determined 

that the costs related to operating fees 

described in this filing are reasonable 

and should be included as a part of 

Historical CAT Costs 1. The operating 

fees include the negotiated fees paid by 

CAT LLC to the Plan Processor to 

operate and maintain the system for 

order-related information and to 

perform business operations related to 

the system, including compliance, 

security, testing, training, 

communications with the industry (e.g., 

management of the FINRA CAT 

Helpdesk, FAQs, website and webinars) 

and program management. CAT LLC 

determined that the selection of FCAT 

as the Plan Processor was reasonable 

and appropriate given its expertise with 

securities regulatory reporting, after a 

process of considering other potential 

candidates.222 CAT LLC also 

determined that the fixed price contract, 

negotiated on an arm’s length basis with 

the goals of managing costs and 

receiving services required to comply 

with the CAT NMS Plan and Rule 613, 

was reasonable and appropriate, taking 

into consideration a variety of factors, 

including the breadth of services 

provided and market rates for similar 

types of activity.223 The services 

performed by FCAT for each period and 

the costs related to such services are 

described above.224

(iii) Technology: CAIS Operating Fees 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover costs related to CAIS 

operating fees as a part of Historical 

CAT Assessments.225 CAT LLC 

determined that the costs related to 

CAIS operating fees described in this 

filing are reasonable and should be 

included as a part of Historical CAT 

Costs 1. The CAIS operating fees 

include the fees paid to the Plan 

Processor to operate and maintain CAIS 

and to perform the business operations 

related to the system, including 

compliance, security, testing, training, 

communications with the industry (e.g., 

management of the FINRA CAT 

Helpdesk, FAQs, website and webinars) 

and program management. CAT LLC 

determined that the FCAT-negotiated 

fees for Kingland’s CAIS-related 

services, negotiated on an arm’s length 

basis with the goals of managing costs 

and receiving services required to 

comply with the CAT NMS Plan, taking 

into consideration a variety of factors, 

including the services to be provided 

and market rates for similar types of 

activity, were reasonable and 

appropriate.226 The services performed 

by Kingland for each period and the 

costs for each period are described 

above.227

(iv) Technology: Change Request Fees 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover costs related to change 

request fees as a part of Historical CAT 

Assessments.228 CAT LLC determined 

that the costs related to change request 

fees described in this filing are 

reasonable and should be included as a 

part of Historical CAT Costs 1. It is 

common practice to utilize a change 

request process to address evolving 

needs in technology projects. This is 

particularly true for a project like CAT 

that is the first of its kind, both in 

substance and in scale. The substance 

and costs of each of the change requests 

are evaluated by the Operating 

Committee, and approved in accordance 

with the requirements for Operating 

Committee meetings. In each case, CAT 

LLC determined that the change 

requests were necessary to implement 

the CAT. As described above, the 

change requests cover various 

technology changes, including, for 

example, changes related to CAT 

reporting, data feeds and exchange 

functionality. CAT LLC also determined 

that the costs for each change request 

were appropriate for the relevant 

technology change. A description of the 

change requests for each FAM Period 

and their total costs are set described 

above.229 As noted above, the total costs 

for change requests through FAM Period 

3 represent a small percentage of 

Historical CAT Costs 1—that is, 0.25% 

of Historical CAT Costs 1. 

(v) Capitalized Developed Technology 

Costs 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover costs related to capitalized 

developed technology costs as a part of 

Historical CAT Assessments.230

Capitalized developed technology costs 

include costs related to certain 

development costs, costs related to 

certain modifications, upgrades and 

other changes to the CAT, CAIS 

implementation fees and license fees. 

The amount and type of costs for each 

period are described in more detail 

above.231 CAT LLC determined that 

these costs are reasonable and should be 

included as a part of Historical CAT 

Costs 1. 

These costs involve the activity of 

both the Initial Plan Processor and 

FCAT, as the successor Plan 

Processor.232 With regard to the Initial 


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233See Section 3(a)(2)(B)(i)(e) above. 234See Section 3(a)(2)(B)(i)(b) above. 235Section 11.3(b)(iii)(B)(II)(B)(2) of the CAT 

NMS Plan. 236See Sections 3(a)(2)(B)(i)(f), 3(a)(2)(B)(ii)(f), 

3(a)(2)(B)(iii)(f) and 3(a)(2)(B)(iv)(f) above. 

237Section 11.3(b)(iii)(B)(II)(B)(3) of the CAT 

NMS Plan. 

238As stated in the filing of the proposed CAT 

NMS Plan, ‘‘[i]t is the intent of the Participants that 

the Company have no employees.’’ Securities 

Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81 FR 

30614, 30621 (May 17, 2016). 

239CAT LLC uses certain third parties to perform 

tasks that may be performed by administrators for 

other NMS Plans. See, e.g., CTA Plan and CQ Plan. 

240See Section 3(a)(2)(B)(i)(g) above. 

241See Sections 3(a)(2)(B)(i)(g), 3(a)(2)(B)(ii)(g), 

3(a)(2)(B)(iii)(g) and 3(a)(2)(B)(iv)(g) above. 

242 Id. 

243Section 11.3(b)(iii)(B)(II)(B)(4) of the CAT 

NMS Plan. 

244Section 4.1.5 of Appendix D of the CAT NMS 

Plan. 

245See Sections 3(a)(2)(B)(i)(h), 3(a)(2)(B)(ii)(h), 

3(a)(2)(B)(iii)(h) and 3(a)(2)(B)(iv)(h) above. 

246 Id. 

247Section 11.3(b)(iii)(B)(II)(B)(5) of the CAT 

NMS Plan. 

248See Section 3(a)(2)(B)(i)(i) above. 

249See Sections 3(a)(2)(B)(i)(i), 3(a)(2)(B)(ii)(i), 

3(a)(2)(B)(iii)(i) and 3(a)(2)(B)(iv)(i) above. 

250 Id. 

Plan Processor, the Participants utilized 

an RFP to seek proposals to build and 

operate the CAT, receiving a number of 

proposals in response to the RFP. The 

Participants carefully reviewed and 

considered each of the proposals, 

including holding in-person meetings 

with each of the Bidders. After several 

rounds of review, the Participants 

selected the Initial Plan Processor in 

accordance with the CAT NMS Plan. 

CAT LLC entered into an agreement 

with the Initial Plan Processor in which 

CAT LLC would pay the Initial Plan 

Processor a negotiated, fixed price 

fee.233 In addition, as described above, 

CAT LLC determined that is was 

appropriate to enter into an agreement 

with FCAT as the successor Plan 

Processor.234

(vi) Legal 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover costs related to legal fees as 

a part of Historical CAT Assessments.235

CAT LLC determined that the legal costs 

described in this filing are reasonable 

and should be included as a part of 

Historical CAT Costs 1. Given the 

unique nature of the CAT, the number 

of parties involved with the CAT 

(including, for example, the SEC, 

Participants, Industry Members, and 

vendors) and the many regulatory issues 

associated with the CAT, the scope of 

the necessary legal services are 

substantial. CAT LLC determined that 

the scope of the legal services is 

necessary to implement and maintain 

the CAT and that the legal rates reflect 

the specialized services necessary for 

such a project. When hiring each law 

firm for a CAT project, CAT LLC 

interviewed multiple firms, and 

determined to hire each firm based on 

a variety of factors, including the 

relevant expertise and fees. In each case, 

CAT LLC determined that the hourly fee 

rates were in line with market rates for 

the specialized legal expertise. In 

addition, CAT LLC determined that the 

total costs incurred for each CAT project 

were appropriate given the breadth of 

services provided. The services 

performed by each law firm for each 

period and the costs related to such 

services are described above.236

(vii) Consulting 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover consulting costs as a part of 

Historical CAT Assessments.237 CAT 

LLC determined that the consulting 

costs described in this filing are 

reasonable and should be included as a 

part of Historical CAT Costs 1. Because 

there are no CAT employees 238 and 

because of the significant number of 

issues associated with the CAT, the 

consultants provided assistance in the 

management of various CAT matters 

and the processes related to such 

matters.239 CAT LLC considered a 

variety of factors in choosing a 

consulting firm and determined to select 

Deloitte after an interview process.240

CAT LLC also determined that the 

consulting services were provided at 

reasonable market rates, as the fees were 

negotiated annually and comparable to 

the rates charged by other consulting 

firms for similar work.241 Moreover, the 

total costs for such consulting services 

were appropriate in light of the breadth 

of services provided by Deloitte. The 

services performed by Deloitte and the 

costs related to such services are 

described above.242

(viii) Insurance 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover insurance costs as a part of 

Historical CAT Assessments.243 CAT 

LLC determined that the insurance costs 

described in this filing are reasonable 

and should be included as a part of 

Historical CAT Costs 1. CAT LLC 

determined that it is common practice 

to have directors’ and officers’ liability 

insurance, and errors and omissions 

liability insurance. CAT LLC further 

determined that it was important to 

have cyber security insurance given the 

nature of the CAT, and such a decision 

is consistent with the CAT NMS Plan, 

which states that the cyber incident 

response plan may include ‘‘[i]nsurance 

against security breaches.’’ 244 In 

selecting the insurance providers for 

these policies, CAT LLC engaged in an 

evaluation of alternative insurers, 

including a comparison of the pricing 

offered by the alternative insurers.245

Based on this analysis, CAT LLC 

determined that the selected insurance 

policies provided appropriate coverage 

at reasonable market rates.246

(ix) Professional and Administration 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover professional and 

administration costs as a part of 

Historical CAT Assessments.247 CAT 

LLC determined that the professional 

and administration costs described in 

this filing are reasonable and should be 

included as a part of Historical CAT 

Costs 1. Because there are no CAT 

employees, all required accounting, 

financial, tax, cash management and 

treasury functions for CAT LLC have 

been outsourced at market rates. In 

addition, the required annual financial 

statement audit of CAT LLC is included 

in professional and administration 

costs, which costs are also at market 

rates. 

CAT LLC determined to hire a 

financial advisory firm, Anchin, to 

assist with financial matters for the 

CAT. CAT LLC interviewed Anchin as 

well as other potential financial 

advisory firms to assist with the CAT 

project, considering a variety of factors 

in its analysis, including the firm’s 

relevant expertise and fees.248 The 

hourly fee rates for this firm were in line 

with market rates for the financial 

advisory services provided.249

Moreover, the total costs for such 

financial advisory services was 

appropriate in light of the breadth of 

services provided by Anchin. The 

services performed by Anchin and the 

costs related to such services are 

described above.250

CAT LLC also determined to engage 

an independent accounting firm, Grant 

Thornton, to complete the audit of CAT 

LLC’s financial statements, in 

accordance with the requirements of the 

CAT NMS Plan. CAT LLC interviewed 

this firm as well as another potential 

accounting firm to audit CAT LLC’s 

financial statements, considering a 

variety of factors in its analysis, 

including the relevant expertise and fees 

of each of the firms. CAT LLC 

determined that Grant Thornton was 

well-qualified for the role given the 


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251See Section 3(a)(2)(B)(i)(i) above. 

252See Sections 3(a)(2)(B)(i)(i), 3(a)(2)(B)(ii)(i), 

3(a)(2)(B)(iii)(i) and 3(a)(2)(B)(iv)(i) above. 

253 Id. 

254See Section 3(a)(2)(B)(i)(i) above. 

255 Id. 

256Section 11.3(b)(iii)(B)(II)(B)(6) of the CAT 

NMS Plan. 

257See Section 3(a)(2)(B)(i)(j) above. 

258See Sections 3(a)(2)(B)(i)(j), 3(a)(2)(B)(ii)(j), 

3(a)(2)(B)(iii)(j) and 3(a)(2)(B)(iv)(j) above. 

259 Id. 

260As the SEC noted in the CAT Funding Model 

Approval Order, recent Section 31 fees ranged from 

$0.00009 per share to $0.0004 per share. CAT 

Funding Model Approval Order at 62682. 

261This projection was calculated by multiplying 

3,980,753,840,905.21 executed equivalent shares by 

two. 

262CAT Funding Model Approval Order at 62658, 

n.658. 

balanace of these considerations.251

Grant Thornton’s fixed fee rate 

compensation arrangement was 

reasonable and appropriate, and in line 

with the market rates charged for these 

types of accounting services.252

Moreover, the total costs for such 

financial advisory services was 

appropriate in light of the breadth of 

services provided by Grant Thornton. 

The services performed by Grant 

Thornton and the costs related to such 

services are described above.253

The professional and administrative 

costs also include costs related to the 

receipt of certain market data from 

Exegy. After performing an analysis of 

the available market data vendors to 

confirm that the data provided met the 

SIP Data requirements of the CAT NMS 

Plan and comparing the costs of the 

vendors providing the required SIP 

Data, CAT LLC determined to purchase 

market data from Exegy. Exegy provided 

the data elements required by the CAT 

NMS Plan, and the fees were reasonable 

and in line with market rates for the 

market data received.254

The professional and administrative 

costs also include costs related to a third 

party security assessment of the CAT 

performed by RSM. The assessment was 

designed to verify and validate the 

effective design, implementation and 

operation of the controls specified by 

NIST Special Publication 800–53, 

Revision 4 and related standards and 

guidelines. Such a security assessment 

is in line with industry practice and 

important given the data included in the 

CAT. CAT LLC determined to engage 

RSM to perform the security assessment, 

after considering a variety of factors in 

its analysis, including the firm’s 

relevant expertise and fees. The fees 

were reasonable and in line with market 

rates for such an assessment.255

(x) Public Relations Costs 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover public relations costs as a 

part of Historical CAT Assessments.256

CAT LLC determined that the public 

relations costs described in this filing 

are reasonable and should be included 

as a part of Historical CAT Costs 1. CAT 

LLC determined that the types of public 

relations services utilized were 

beneficial to the CAT and market 

participants more generally. Public 

relations services were important for 

various reasons, including monitoring 

comments made by market participants 

about CAT and understanding issues 

related to the CAT discussed on the 

public record.257 By engaging a public 

relations firm, CAT LLC was better 

positioned to understand and address 

CAT issues to the benefit of all market 

participants.258 Moreover, CAT LLC 

determined that the rates charged for 

such services were in line with market 

rates.259 As noted above, the total public 

relations costs through FAM Period 3 

represent a small percentage of 

Historical CAT Costs 1—that is, 0.1% of 

Historical CAT Costs 1. 

(B) Total Executed Equivalent Share 

Volume for the Prior 12 Months 

The total executed equivalent share 

volume of transactions in Eligible 

Securities for the 12-month period from 

June 2023 through May 2024 was 

3,980,753,840,905.21 executed 

equivalent shares. CAT LLC determined 

the total executed equivalent share 

volume for the prior twelve months by 

counting executed equivalent shares in 

the same manner as it will count 

executed equivalent shares for CAT 

billing purposes. 

(C) Historical Recovery Period 1 

CAT LLC has determined to establish 

a Historical Recovery Period of 24 

months for Historical CAT Assessment 

1 and that such length is reasonable. 

CAT LLC determined that the length of 

Historical Recovery Period 1 

appropriately weighs the need for a 

reasonable Historical Fee Rate 1 that 

spreads the Historical CAT Costs over 

an appropriate amount of time and the 

need to repay the loans notes to the 

Participants in a timely fashion. CAT 

LLC determined that 24 months for 

Historical Recovery Period 1 would 

establish a fee rate that is lower than 

other transaction-based fees, including 

fees assessed pursuant to Section 31.260

In addition, in establishing a Historical 

Recovery Period of 24 months, CAT LLC 

recognized that the total costs for 

Historical CAT Assessment 1 was less 

than the total costs for 2022 and 2023, 

and therefore it would be appropriate to 

recover those costs in two years. 

(D) Projected Executed Equivalent Share 

Volume for Historical Recovery Period 1 

CAT LLC has determined to calculate 

the projected total executed equivalent 

share volume for the 24 months of 

Historical Recovery Period 1 by 

doubling the executed equivalent share 

volume for the prior 12 months. CAT 

LLC determined that such an approach 

was reasonable as the CAT’s annual 

executed equivalent share volume has 

remained relatively constant in recent 

years. For example, the executed 

equivalent share volume for 2021 was 

3,963,697,612,395, the executed 

equivalent share volume for 2022 was 

4,039,821,841,560.31, and the executed 

equivalent share volume for 2023 was 

3,868,940,345,680.6. Accordingly, the 

projected total executed equivalent 

share volume for Historical Recovery 

Period 1 is projected to be 

7,961,507,681,810.42 executed 

equivalent shares.261

(E) Actual Fee Rate for Historical CAT 

Assessment 1 

(i) Decimal Places 

As noted in the Plan amendment for 

the CAT Funding Model, as a practical 

matter, the fee filing for a Historical 

CAT Assessment would provide the 

exact fee per executed equivalent share 

to be paid for each Historical CAT 

Assessment, by multiplying the 

Historical Fee Rate by one-third and 

describing the relevant number of 

decimal places for the fee rate.262

Accordingly, proposed paragraph 

(a)(1)(B) of the fee schedule would set 

forth a fee rate of $0.000013 per 

executed equivalent share. This fee rate 

is calculated by multiplying Historical 

Fee Rate 1 by one-third, and rounding 

the result to 6 decimal places. CAT LLC 

determined that the use of six decimal 

places is reasonable as it balances the 

accuracy of the calculation with the 

potential systems and other 

impracticalities of using additional 

decimal places in the calculation. 

(ii) Reasonable Fee Level 

The Exchange believes that imposing 

Historical CAT Assessment 1 with a fee 

rate of $0.000013 per executed 

equivalent share is reasonable because it 

provides for a revenue stream for the 

Company that is aligned with Historical 

CAT Costs 1 and such costs would be 

spread out over an appropriate recovery 

period, as discussed above. Moreover, 

the Exchange believes that the level of 


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263CAT Funding Model Approval Order at 62663, 

62682. 

264 Id. 

265See Section 11.3(b) of the CAT NMS Plan. 

266CAT Funding Model Approval Order at 62629. 

267 15 U.S.C. 78f(b)(8). 

268CAT Funding Model Approval Order at 

62676–86. 

the fee rate is reasonable, as it is 

comparable to other transaction-based 

fees. Indeed, Historical CAT Assessment 

1 is significantly lower than fees 

assessed pursuant to Section 31 (e.g., 

$0.0009 per share to 0.0004 per 

share),263 and, as a result, the magnitude 

of Historical CAT Assessment 1 is small, 

and therefore will mitigate any potential 

adverse economic effects or 

inefficiencies.264 Furthermore, the 

reasonable fee rate for Historical CAT 

Assessment 1 further supports CAT 

LLC’s decision to seek to recover all 

Historical CAT Costs prior to 2022, 

rather than establishing separate 

Historical CAT Assessments for preFAM, FAM 1, FAM 2 and FAM 3 costs. 

(3) Historical CAT Assessment 1 

Provides for an Equitable Allocation of 

Fees 

Historical CAT Assessment 1 provides 

for an equitable allocation of fees, as it 

equitably allocates CAT costs between 

and among the Participants and 

Industry Members. The SEC approved 

the CAT Funding Model, finding that 

each aspect of the CAT Funding Model 

satisfied the requirements of the 

Exchange Act, including the formula for 

calculating Historical CAT Assessments 

as well as the Industry Members to be 

charged the Historical CAT 

Assessments.265 In approving the CAT 

Funding Model, the SEC stated that 

‘‘[t]he Participants have sufficiently 

demonstrated that the proposed 

allocation of fees is reasonable.’’ 266

Accordingly, the CAT Funding Model 

sets forth the requirements for allocating 

fees related to Historical CAT Costs 

among Participants and Industry 

Members, and the fee filings for 

Historical CAT Assessments must 

comply with those requirements. 

Historical CAT Assessment 1 provides 

for an equitable allocation of fees as it 

complies with the requirements 

regarding the calculation of Historical 

CAT Assessments as set forth in the 

CAT NMS Plan. For example, as 

described above, the calculation of 

Historical CAT Assessment 1 complies 

with the formula set forth in Section 

11.3(b) of the CAT NMS Plan. In 

addition, Historical CAT Assessment 1 

would be charged to CEBBs and CEBSs 

in accordance with Section 11.3(b) of 

the CAT NMS Plan. Furthermore, the 

Participants would continue to remain 

responsible for their designated share of 

Past CAT Costs through the cancellation 

of loans made by the Participants to 

CAT LLC. 

In addition, as discussed above, each 

of the inputs into the calculation of 

Historical CAT Assessment 1— 

Historical CAT Costs 1 (including 

Excluded Costs), the count for the 

executed equivalent share volume for 

the prior 12 months, the length of the 

Historical Recovery Period, and the 

projected executed equivalent share 

volume for the Historical Recovery 

Period—are reasonable. Moreover, these 

inputs lead to a reasonable fee rate for 

Historical CAT Assessment 1 that is 

lower than other fee rates for 

transaction-based fees. A reasonable fee 

rate allocated in accordance with the 

requirements of the CAT Funding 

Model provides for an equitable 

allocation of fees. 

(4) Historical CAT Assessment 1 Is Not 

Unfairly Discriminatory 

Historical CAT Assessment 1 is not an 

unfairly discriminatory fee. The SEC 

approved the CAT Funding Model, 

finding that each aspect of the CAT 

Funding Model satisfied the 

requirements of the Exchange Act. In 

reaching this conclusion, the SEC 

analyzed the potential effect of 

Historical CAT Assessments 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. Historical 

CAT Assessment 1 complies with the 

requirements regarding the calculation 

of Historical CAT Assessments as set 

forth in the CAT NMS Plan. In addition, 

as discussed above, each of the inputs 

into the calculation of Historical CAT 

Assessment 1 and the resulting fee rate 

for Historical CAT Assessment 1 is 

reasonable. Therefore, Historical CAT 

Assessment 1 does not impose an 

unfairly discriminatory fee on Industry 

Members. 

Finally, the Exchange believes the 

proposed fees established pursuant to 

the CAT Funding Model promote just 

and equitable principles of trade, and, 

in general, protect investors and the 

public interest, and are provided in a 

transparent manner and specificity in 

the fee schedule. The Exchange also 

believes that the proposed fees are 

reasonable because they would provide 

ease of calculation, ease of billing and 

other administrative functions, and 

predictability of a fee based on fixed 

rate per executed equivalent share. Such 

factors are crucial to estimating a 

reliable revenue stream for CAT LLC 

and for permitting Exchange members to 

reasonably predict their payment 

obligations for budgeting purposes. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 6(b)(8) of the Act 267 requires 

that the Exchange’s rules not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Exchange Act. The 

Exchange 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. The 

Exchange notes that Historical CAT 

Assessment 1 implements provisions of 

the CAT NMS Plan that were approved 

by the Commission and is designed to 

assist the Exchange in meeting its 

regulatory obligations pursuant to the 

Plan. 

In addition, all Participants (including 

exchanges and FINRA) are proposing to 

introduce Historical CAT Assessment 1 

on behalf of CAT LLC to implement the 

requirements of the CAT NMS Plan. 

Therefore, this is not a competitive fee 

filing, and, therefore, it does not raise 

competition issues between and among 

the Participants. 

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.268 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. Based on 

this analysis, the SEC approved the CAT 

Funding Model as compliant with the 

Exchange Act. Historical CAT 

Assessment 1 is calculated and 

implemented in accordance with the 

CAT Funding Model as approved by the 

SEC. 

As discussed above, each of the 

inputs into the calculation of Historical 

CAT Assessment 1 is reasonable and the 


lotter on DSK11XQN23PROD with NOTICES4
Federal Register / Vol. 89, No. 179 / Monday, September 16, 2024 / Notices 75895 

269 15 U.S.C. 78s(b)(3)(A)(ii). 

270 17 CFR 240.19b–4(f)(2). 271 17 CFR 200.30–3(a)(12). 

resulting fee rate for Historical CAT 

Assessment 1 calculated in accordance 

with the CAT Funding Model is 

reasonable. Therefore, Historical CAT 

Assessment 1 would not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Exchange Act. 

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 269

and Rule 19b–4(f)(2) thereunder,270

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. 

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– 

SAPPHIRE–2024–27 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–SAPPHIRE–2024–27. 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 the 

Exchange. 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–SAPPHIRE–2024–27 and should be 

submitted on or before October 7, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.271

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–20636 Filed 9–13–24; 8:45 am] 

BILLING CODE 8011–01–P 


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