73150 Federal Register / Vol. 89, No. 174 / Monday, September 9, 2024 / Notices 

1The rule requires a contract with the FCM to 

contain two provisions requiring the FCM to 

comply with existing requirements under the CEA 

and rules adopted thereunder; thus, to the extent 

these provisions could be considered collections of 

information, the hours required for compliance 

would be included in the collection of information 

burden hours submitted by the CFTC for its rules. 

2This estimate is based on the average number of 

funds that reported on Form N–CEN from April 

2021–March 2024, in response to sub-items C.12.6. 

and D.14.6; money market funds are excluded from 

this estimate because exchange-traded futures 

contracts or commodity options are not eligible 

securities for money market funds; the number of 

series and funds that reported on Form N–CEN in 

response these sub-items were: 1,112 series of 150 

funds for the period April 2021–March 2022; 1,180 

series of 152 funds for the period April 2022–March 

2023; and 1,210 series of 151 funds for the period 

April 2023–March 2024 (for filings received 

through June 30, 2024). 

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 

Dated: September 5, 2024. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–20373 Filed 9–5–24; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–392, OMB Control No. 

3235–0447] 

Proposed Collection; Comment 

Request; Extension: Rule 17f–6 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Rule 17f–6 (17 CFR 270.17f–6) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a) permits registered 

investment companies (‘‘funds’’) to 

maintain assets (i.e., margin) with 

futures commission merchants 

(‘‘FCMs’’) in connection with 

commodity transactions effected on 

both domestic and foreign exchanges. 

Before the rule was adopted, funds 

generally were required to maintain 

these assets in special accounts with a 

custodian bank. 

The rule requires a written contract 

that contains certain provisions 

designed to ensure important safeguards 

and other benefits relating to the 

custody of fund assets by FCMs. To 

protect fund assets, the contract must 

require that FCMs comply with the 

segregation or secured amount 

requirements of the Commodity 

Exchange Act (‘‘CEA’’) and the rules 

under that statute. The contract also 

must contain a requirement that FCMs 

obtain an acknowledgment from any 

clearing organization that the fund’s 

assets are held on behalf of the FCM’s 

customers according to CEA provisions. 

Because rule 17f–6 does not impose 

any ongoing obligations on funds or 

FCMs, Commission staff estimates there 

are only costs related to new contracts 

between funds and FCMs. This estimate 

does not include the time required by an 

FCM to comply with the rule’s contract 

requirements because, to the extent that 

complying with the contract provisions 

could be considered ‘‘collections of 

information,’’ the burden hours for 

compliance are already included in 

other PRA submissions.1 Commission 

staff estimates that approximately 1,164 

series of 151 funds report that futures 

commission merchants and commodity 

clearing organizations provide custodial 

services to the fund.2 Based on these 

estimates, the total annual burden hours 

associated with rule 17f–6 is 27 hours. 

The estimated total annual burden 

hours associated with rule 17f–6 have 

decreased 1 hour, from 28 to 27 hours 

and external costs increased from 

$11,900 to $15,534. These changes in 

burden hours and external costs reflect 

changes in the number of affected 

entities and in the external cost 

associated with the information 

collection requirements. These changes 

reflect revised estimates. 

These estimates are made solely for 

the purposes of the Paperwork 

Reduction Act, and are not derived from 

a comprehensive or even a 

representative survey or study of the 

costs of Commission rules and forms. 

Compliance with the collection of 

information requirements of the rule is 

necessary to obtain the benefit of relying 

on the rule. An agency may not conduct 

or sponsor, and a person is not required 

to respond to, a collection of 

information unless it displays a 

currently valid control number. 

Written comments are invited on: (a) 

whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimate of the burden of the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

by November 8, 2024. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

Please direct your written comments 

to: Austin Gerig, Director/Chief Data 

Officer, Securities and Exchange 

Commission, c/o Oluwaseun Ajayi, 100 

F Street NE, Washington, DC 20549 or 

send an email to: PRA_Mailbox@

sec.gov. 

Dated: September 3, 2024. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–20200 Filed 9–6–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–100892; File No. SR–LTSE– 

2024–04] 

Self-Regulatory Organizations: LongTerm Stock Exchange, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Establish 

Fees for Industry Members Related to 

Reasonably Budgeted Costs of the 

National Market System Plan 

Governing the Consolidated Audit Trail 

for the Period From July 16, 2024 

Through December 31, 2024 

September 3, 2024. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 

28, 2024, Long-Term Stock Exchange, 

Inc. (‘‘LTSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposed rule change to 

amend the Fee Schedule to establish 

fees for Industry Members 3 related to 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 174 / Monday, September 9, 2024 / Notices 73151 

national securities association.’’ See LTSE Rule 

11.610 (Consolidated Audit Trail—Definitions). 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 LTSE 

Rule Series 11.600 (Consolidated Audit Trail 

Compliance Rule). 

4Securities Exchange Act Rel. No. 67457 (July 18, 

2012), 77 FR 45722 (Aug. 1, 2012). 

5Securities Exchange Act Rel. No. 79318 (Nov. 

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

Plan Approval Order’’). 

6Section 11.1(b) of the CAT NMS Plan. 

7Securities Exchange Act Rel. No. 98290 (Sept. 6, 

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

Model Approval Order’’). 

8Under the CAT Funding Model, the Operating 

Committee may establish CAT Fees related to CAT 

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

NMS Plan. This filing only establishes CAT Fee 

2024–1 related to reasonably budgeted CAT costs 

for the period from July 16, 2024 through December 

31, 2024 as described herein; it does not address 

any other potential CAT Fees related to CAT costs. 

Any such other CAT Fee will be subject to a 

separate fee filing. In addition, under 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 

does not address any Historical CAT Assessments. 

9Section 11.3(a) of the CAT NMS Plan. 

10 In approving the CAT Funding Model, the 

Commission stated that, ‘‘[t]he proposed recovery of 

Prospective CAT Costs is appropriate.’’ CAT 

Funding Model Approval Order at 62651. 

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

12Section 11.3(a)(ii)(A) of the CAT NMS Plan. 

13Section 11.3(a)(ii) of the CAT NMS Plan. 

14Section 11.3(a)(i)(A)(I) of the CAT NMS Plan. 

15CAT Funding Model Approval Order at 62659. 

16See Section 11.3(a)(ii) and Appendix B of the 

CAT NMS Plan. 

17Section 11.1(b) of the CAT NMS Plan. 

18Section 11.3(a)(i)(A)(I) of the CAT NMS Plan. 

19 In its approval of the CAT Funding Model, the 

Commission determined that charging CAT fees to 

CAT Executing Brokers was reasonable. In reaching 

Continued 

reasonably budgeted CAT costs of the 

National Market System Plan Governing 

the Consolidated Audit Trail (the ‘‘CAT 

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

from July 16, 2024, through December 

31, 2024. The text of the proposed rule 

change is available at the Exchange’s 

website at https://longtermstock

exchange.com/, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement on 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 

self-regulatory organization 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.4 On November 15, 2016, the 

Commission approved the CAT NMS 

Plan.5 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.6 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.7

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 (‘‘CAT 

Fees’’).8

Under the CAT Funding Model, 

Participants, CEBBs and CEBSs are 

subject to fees designed to cover the 

ongoing budgeted costs of the CAT, as 

determined by the Operating 

Committee. ‘‘The Operating Committee 

will establish fees (‘CAT Fees’) to be 

payable by Participants and Industry 

Members with regard to CAT costs not 

previously paid by the Participants 

(‘Prospective CAT Costs’).’’ 9 In 

establishing a CAT Fee, the Operating 

Committee will calculate a ‘‘Fee Rate’’ 

for the relevant period. Then, for each 

month in which a CAT Fee is in effect, 

each CEBB and CEBS would be required 

to pay the 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 fee for 

each transaction will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

one-third and by the Fee Rate.10

The CAT Fees to be paid by CEBBs 

and CEBSs are designed to contribute 

toward the recovery of two-thirds of the 

budgeted CAT costs for the relevant 

period.11 The CAT Funding Model is 

designed to require that the Participants 

contribute to the recovery of the 

remaining one-third of the budgeted 

CAT costs.12 Participants would be 

subject to the same Fee Rate as CEBBs 

and CEBSs.13 While CAT Fees charged 

to Industry Members become effective 

in accordance with the requirements of 

Section 19(b) of the Exchange Act,14

CAT fees charged to Participants are 

implemented via an approval of the 

CAT fees by the Operating Committee in 

accordance with the requirements of the 

CAT NMS Plan.15 Accordingly, this 

filing does not address Participant CAT 

fees as they are described in the CAT 

NMS Plan.16

CAT LLC proposes to charge CEBBs 

and CEBSs (as described in more detail 

below) CAT Fee 2024–1 to recover the 

reasonably budgeted CAT costs for July 

16, 2024 through December 31, 2024, 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.’ ’’ 17 The Plan further states that 

‘‘[o]nce the Operating Committee has 

approved such Fee Rate, the 

Participants shall be required to file 

with the SEC pursuant to Section 19(b) 

of the Exchange Act CAT Fees to be 

charged to Industry Members calculated 

using such Fee Rate.’’ 18 Accordingly, 

the purpose of this filing is to 

implement a CAT Fee on behalf of CAT 

LLC for Industry Members, referred to as 

CAT Fee 2024–1, in accordance with the 

CAT NMS Plan. 

(1) CAT Executing Brokers 

CAT Fee 2024–1 will be charged to 

each CEBB and CEBS for each 

applicable transaction in Eligible 

Securities.19 The CAT NMS Plan defines 

a ‘‘CAT Executing Broker’’ to mean: 


ddrumheller on DSK120RN23PROD with NOTICES1
73152 Federal Register / Vol. 89, No. 174 / Monday, September 9, 2024 / Notices 

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. 

20Section 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. 

21See 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’’). 

22See Table 51, Section 5.2.5.1 (Simple Option 

Trade Event) of the CAT Reporting Technical 

Specifications for Plan Participants. 

23See Table 61, Section 6.1 (TRF/ORF/ADF 

Transaction Data Event) of the CAT Reporting 

Technical Specifications for Plan Participants. 

24Section 11.3(a)(i) of the CAT NMS Plan. 

(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 sellside 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.20

The following fields of the Participant 

Technical Specifications indicate the 

CAT Executing Brokers for the 

transactions executed on an exchange: 

EQUITY ORDER TRADE (EOT) 21

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) 22

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. 

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) 23

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 Fee Rate 2024–1 

The Operating Committee determined 

the Fee Rate to be used in calculating 

CAT Fee 2024–1 (‘‘Fee Rate 2024–1’’) by 

dividing the reasonably budgeted CAT 

costs (‘‘Budgeted CAT Costs 2024–1’’) 

for the period from July 16, 2024 

through December 31, 2024 (‘‘CAT Fee 

2024–1 Period’’) by the reasonably 

projected total executed share volume of 

all transactions in Eligible Securities for 

the four-month recovery period, as 

discussed in detail below.24 Based on 

this calculation, the Operating 

Committee has determined that Fee Rate 

2024–1 would be 

$0.0001043598251997246 per executed 

equivalent share. This rate is then 

divided by three and rounded to 

determine the fee rate of $0.000035 per 

executed equivalent share that will be 

assessed to CEBBs and CEBSs, as also 

discussed in detail below. 

(A) CAT Fee 2024–1 Period 

CAT LLC proposes to implement CAT 

Fee 2024–1 as the first CAT Fee related 

to Prospective CAT Costs. CAT LLC 

proposes to commence CAT Fee 2024– 

1 during the year, rather than at the 

beginning of the year. Accordingly, CAT 

Fee 2024–1 ‘‘would be calculated as 

described in paragraph II’’ of Section 

11.3(a)(i)(A) of the CAT NMS Plan, 

which states that ‘‘[d]uring each year, 

the Operating Committee will calculate 

a new Fee Rate by dividing the 

reasonably budgeted CAT costs for the 

remainder of the year by the reasonably 

projected total executed equivalent 

share volume of all transactions in 

Eligible Securities for the remainder of 


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Federal Register / Vol. 89, No. 174 / Monday, September 9, 2024 / Notices 73153 

25Section 11.3(a)(i)(A)(II) of the CAT NMS Plan. 

26Section 11.3(a)(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. 

27Section 11.3(a)(i)(C) of the CAT NMS Plan. 

28The Original 2024 Budget is available on the 

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

default/files/2024-07/07.09.2024-CAT%20LLC2024-Financial-and-Operating-Budget.pdf). 

29The Updated 2024 Budget is available on the 

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

default/files/2024-08/07.31.24-CAT-LLC-2024- 

Financial_and_Operating-Budget.pdf). 

30Section 11.3(a)(iii)(B) of the CAT NMS Plan. 

31Note that costs and related cost calculations 

provided in this filing may reflect minor variations 

from the budgeted costs due to rounding. 

the year.’’ 25 For CAT Fee 2024–1, the 

reasonably budgeted CAT costs for ‘‘the 

remainder of the year’’ are the 

reasonably budgeted CAT costs from 

July 16, 2024 through December 31, 

2024. This period is referred to as the 

CAT Fee 2024–1 Period. Such costs 

would be recovered over a four-month 

period, where the first invoices are sent 

in October 2024 based on transactions 

in September 2024. 

(B) Executed Equivalent Shares for 

Transactions in Eligible Securities 

Under the CAT NMS Plan, for 

purposes of calculating CAT Fees, 

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 will be counted as 

0.01 executed equivalent share.26

(C) Budgeted CAT Costs 2024–1 

The CAT NMS Plan states that ‘‘[t]he 

budgeted CAT costs for the year shall be 

comprised of all reasonable fees, costs 

and expenses reasonably budgeted to be 

incurred by or for the Company in 

connection with the development, 

implementation and operation of the 

CAT as set forth in the annual operating 

budget approved by the Operating 

Committee pursuant to Section 11.1(a) 

of the CAT NMS Plan, or as adjusted 

during the year by the Operating 

Committee.’’ 27 Section 11.1(a) of the 

CAT NMS Plan describes the 

requirement for the Operating 

Committee to approve an operating 

budget for CAT LLC on an annual basis. 

It requires the budget to ‘‘include the 

projected costs of the Company, 

including the costs of developing and 

operating the CAT for the upcoming 

year, and the sources of all revenues to 

cover such costs, as well as the funding 

of any reserve that the Operating 

Committee reasonably deems 

appropriate for the prudent operation of 

the Company.’’ Section 11.1(a)(i) of the 

CAT NMS Plan further states that: 

[w]ithout limiting the foregoing, the 

reasonably budgeted CAT costs shall include 

technology (including cloud hosting services, 

operating fees, CAIS operating fees, change 

request fees and capitalized developed 

technology costs), legal, consulting, 

insurance, professional and administration, 

and public relations costs, a reserve and such 

other cost categories as reasonably 

determined by the Operating Committee to be 

included in the budget. 

In accordance with the requirements 

under the CAT NMS Plan, the Operating 

Committee approved an annual budget 

for 2024 for CAT LLC in December 2023 

(‘‘Original 2024 Budget’’).28 In August 

2024, the Operating Committee 

approved an updated budget for 2024 

(‘‘Updated 2024 Budget’’).29 The 

Updated 2024 Budget includes actual 

costs for each category for the months of 

January through July 2024, with 

estimated costs for the remaining 

months of 2024. The Operating 

Committee also approved the budgeted 

CAT costs for the CAT Fee 2024–1 

Period (i.e., Budgeted CAT Costs 2024– 

1), which are a subset of the costs set 

forth in the Updated 2024 Budget. 

As described in detail below, the 

Budgeted CAT Costs 2024–1 would be 

$138,476,925. CEBBs collectively will 

be responsible for one-third of the 

Budged [sic] CAT Costs 2024–1 (which 

is $46,158,975), and CEBSs collectively 

will be responsible for one-third of 

Budgeted CAT Costs 2024–1 (which is 

$46,158,975). 

The following describes in detail 

Budgeted CAT Costs 2024–1 for the 

CAT Fee 2024–1 Period. The following 

cost details are provided in accordance 

with the requirement in the CAT NMS 

Plan to provide in the fee filing the 

following: 

the budget for the upcoming year (or 

remainder of the year, as applicable), 

including a brief description of each line 

item in the budget, including (1) 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, 

a reserve and/or such other categories as 

reasonably determined by the Operating 

Committee to be included in the budget, and 

the reason for changes in each such line item 

from the prior CAT fee filing.30

Each of the costs described below are 

reasonable, appropriate and necessary 

for the creation, implementation and 

maintenance of CAT. 

The following table breaks down 

Budgeted CAT Costs 2024–1 into the 

categories set forth in Section 

11.3(a)(iii)(B) of the CAT NMS Plan.31

Budget category Budgeted CAT costs 2024–1 * 

Capitalized Developed Technology Costs ** ............................................................................................................. $4,101,990 

Technology Costs: ..................................................................................................................................................... 99,728,258 

Cloud Hosting Services ...................................................................................................................................... 76,278,426 

Operating Fees ................................................................................................................................................... 14,008,947.50 

CAIS Operating Fees ......................................................................................................................................... 9,278,384.50 

Change Request Fees ....................................................................................................................................... 162,500 

Legal .......................................................................................................................................................................... 4,484,554.50 

Consulting .................................................................................................................................................................. 652,623 

Insurance ................................................................................................................................................................... 1,342,345 

Professional and administration ................................................................................................................................ 428,544.50 

Public relations .......................................................................................................................................................... 43,225 

Subtotal ............................................................................................................................................................... 110,781,540 

Reserve ...................................................................................................................................................................... 27,695,385 


ddrumheller on DSK120RN23PROD with NOTICES1
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32With 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. 

33Appendix D–4 of the CAT NMS Plan at n.262. 

34Appendix D–5 of the CAT NMS Plan. 

35This calculation is ($38,132,441 + 

$43,919,730)¥$5,773,745 = $76,278,426. 

36Appendix D–19 of the CAT NMS Plan states 

that ‘‘[i]f corrections are received after T+5, 

Participants’ regulatory staff and the SEC must be 

notified and informed as to how re-processing will 

be completed. The Operating Committee will be 

involved with decisions on how to re-process the 

data; however, this does not relieve the Plan 

Processor of notifying the Participants’ regulatory 

staff and the SEC.’’ 

37This calculation is $33,217,468 + $38,166,641 

= $71,384,109. 

38This calculation is $30,343,917 + $36,393,893 

= $66,737,810. 

Budget category Budgeted CAT costs 2024–1 * 

Total Budgeted CAT Costs 2024–1 ............................................................................................................ 138,476,925 

* Budgeted CAT Costs 2024–1 described in this table of costs were determined based an analysis of a variety of factors, including historical 

costs/invoices, estimated costs from respective vendors/service providers, contractual terms with vendors/service providers, anticipated service 

levels and needs, and discussions with vendors and Participants. 

** The non-cash amortization of these capitalized developed technology costs to be incurred during the CAT Fee 2024–1 Period have been appropriately excluded from the above table.32

To the extent that CAT LLC enters into 

notes with Participants or others to pay 

costs incurred during the period from 

July 16, 2024 through December 31, 

2024, CAT LLC will use the proceeds 

from the CAT Fee 2024–1 and the 

related Participant CAT fees to repay 

such notes. 

(i) Technology Costs—Cloud Hosting 

Services 

(a) Description of Cloud Hosting 

Services Costs 

Section 11.3(a)(iii)(B)(B)(1) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the cloud hosting services 

costs set forth in the budget. The 

Operating Committee approved an 

operating budget for the CAT pursuant 

to Section 11.1(a) of the CAT NMS Plan 

that included $76,278,426 in technology 

costs for cloud hosting services for the 

CAT Fee 2024–1 Period. The technology 

costs for cloud hosting services 

represent costs reasonably budgeted to 

be incurred for services provided by the 

cloud services provider for the CAT, 

Amazon Web Services, Inc. (‘‘AWS’’), 

during the CAT Fee 2024–1 Period. 

In the agreement between CAT LLC 

and the Plan Processor for the CAT 

(‘‘Plan Processor Agreement’’), FINRA 

CAT, LLC (‘‘FCAT’’), AWS was named 

as the subcontractor to provide cloud 

hosting services. Under the Plan 

Processor Agreement, 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 costs 

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. It is anticipated that 

AWS will provide a broad array of cloud 

hosting services for the CAT, including 

data ingestion, data management, and 

analytic tools during the CAT Fee 2024– 

1 Period. Services provided by AWS 

include 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. AWS 

will perform cloud hosting services for 

both the CAT transaction database as 

well as the CAT Customer and Account 

Information System (‘‘CAIS’’) during the 

CAT Fee 2024–1 Period. 

The cost for AWS cloud 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 CAT LLC. During the CAT 

2024–1 Period, it is expected that AWS 

will provide 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,’’ 33 and that 

‘‘[i]t is expected that the Central 

Repository will grow to more than 29 

petabytes of raw, uncompressed 

data.’’ 34 In contrast with those 

estimates, the Q1 2024 data volumes, 

which averaged 577 billion events per 

day, were up 45% compared to Q1 

2023, which averaged 399 billion events 

per day, with peak volumes recorded on 

April 19, 2024 of 746 billion events. 

Even higher peak volumes were 

recorded in July and August 2024. 

CAT LLC estimates that the budget for 

cloud hosting services costs during the 

CAT Fee 2024–1 Period will be 

approximately $76,278,426. The budget 

for cloud hosting services costs during 

the CAT Fee 2024–1 Period is calculated 

based on the Updated 2024 Budget. 

Specifically, this estimate was 

calculated by adding the budgeted 

amounts for cloud hosting services costs 

for the third and fourth quarter of 2024 

as set forth in the Updated 2024 Budget 

and subtracting one half of the cloud 

hosting services costs incurred in July 

2024 (as CAT Fee 2024–1 Period began 

half way through July, on July 16, 

2024).35

CAT LLC estimated the budget for the 

cost for cloud hosting services for the 

CAT Fee 2024–1 Period based on an 

assumption of 30% annual year-overyear volume growth for the transaction 

database and an assumption of 5% 

annual year-over-year volume growth 

for CAIS. CAT LLC determined these 

growth assumptions in coordination 

with FCAT based on an analysis of a 

variety of existing data and alternative 

growth scenarios. In addition, the 

budget for cloud hosting services for the 

CAT Fee 2024–1 Period includes a 

budget for the cost of re-processing data 

as approved by the CAT Operating 

Committee.36 The budget for reprocessing data was based on 

expenditures for re-processing in prior 

years. This process for estimating the 

budget for cloud hosting services costs 

for the CAT Fee 2024–1 Period is the 

same process by which CAT LLC 

estimated the cloud hosting services 

costs for the Original 2024 Budget. The 

Original 2024 Budget estimated a budget 

for cloud hosting services of 

$71,384,109 for the first two quarters of 

2024.37 The actual costs for cloud 

hosting services for the first two 

quarters of 2024, which are set forth in 

the Updated 2024 Budget, were 

$66,737,810.38 There is only an 

approximate 7% difference between the 

estimate and actuals for cloud hosting 

services costs. Accordingly, CAT LLC 

believes that the process for estimating 

the budgeted cloud hosting services 


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39Securities Exchange Act Rel. No. 98848 (Nov. 

2, 2023), 88 FR 77128 (Nov. 8, 2023). 

40This calculation is $39,961,511 + $43,278,488 

= $83,239,999. 

41This calculation is $38,132,441 + $43,919,730 

= $82,052,171. 

42See Section 6.5(a)(ii) of the CAT NMS Plan. 

43This calculation is ($6,907,383 + $904,664) + 

($6,907,383 + $440,748) ¥ $1,151,230.50 = 

$14,008,947.5. 

44This calculation is $6,726,747 + $6,832,128 = 

$13,558,875. 

45This calculation is $6,702,506 + $5,906,034 = 

$12,608,540. 

costs for the CAT Fee 2024–1 Period is 

reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

cloud hosting services costs from the 

prior CAT Fee filing. CAT LLC’s 

proposed annual budget for cloud 

hosting services costs for 2024 

decreased about 3.5% from the Original 

2024 Budget to the Updated 2024 

Budget, from $154,624,108 to 

$148,789,981. Although there were 

expected cost increases related to data 

volume growth and the associated 

compute and storage of the increased 

data levels, as well as from additional 

capacity for OTQT systems that were 

added to meet the performance 

standards set forth in the requirements 

of the recent SEC exemptive order from 

November 2023,39 these cost increases 

were offset by a variety of cost reduction 

efforts related to compute efficiencies, 

the implementation of single pass linker 

related to options quotes, and the 

implementation of compute and other 

efficiencies related to CAIS. Without 

such cost management efforts, the 

budgeted costs for cloud hosting 

services would have increased by 

approximately 15%, rather than 

decreased. Correspondingly, the 

proposed budget for cloud hosting 

services costs for the third and fourth 

quarters of 2024 did not change in a 

material way from the Original 2024 

Budget to the Updated 2024 Budget. 

There was only an approximate 1% 

decrease from $83,239,999 in the 

Original 2024 Budget 40 to $82,052,171 

in the Updated 2024 Budget for the 

third and fourth quarters of 2024.41

(ii) Technology Costs—Operating Fees 

(a) Description of Operating Fees 

Section 11.3(a)(iii)(B)(B)(1) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the operating fees set 

forth in the budget. The Operating 

Committee approved an operating 

budget for the CAT pursuant to Section 

11.1(a) of the CAT NMS Plan that 

included $14,008,947.50 in technology 

costs for operating fees for the CAT Fee 

2024–1 Period. 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. Operating fees also include 

market data provider costs, as discussed 

below. 

Plan Processor: FCAT. 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. It is 

anticipated that FCAT will provide a 

variety of services to the CAT during the 

CAT Fee 2024–1 Period, including the 

following: 

• Provide the CAT-related functions 

and services as the Plan Processor as 

required by SEC Rule 613 and the CAT 

NMS Plan in connection with the 

operation and maintenance of the CAT; 

• Address compliance items, 

including drafting CAT policies and 

procedures, and addressing Regulation 

SCI requirements; 

• Provide support to the Operating 

Committee, the Compliance 

Subcommittee and CAT working 

groups; 

• Assist with interpretive efforts and 

exemptive requests regarding the CAT 

NMS Plan; 

• Oversee the security of the CAT; 

• Monitor the operation of the CAT, 

including with regard to Participant and 

Industry Member reporting; 

• Provide support to subcontractors 

under the Plan Processor Agreement; 

• Provide support in discussions with 

the Participants and the SEC and its 

staff; 

• Operate the FINRA CAT Helpdesk; 

• Facilitate communications with the 

industry, including via FAQs, CAT 

Alerts, meetings, presentations and 

webinars; 

• Administer the CAT website and all 

of its content; 

• Maintain cyber security insurance 

related to the CAT; and 

• Provide 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. 

CAT LLC calcuated [sic] the budget 

for the FCAT technology costs for 

operating fees for the CAT Fee 2024–1 

Period based on the recurring monthly 

operating fees under the Plan Processor 

Agreement. 

Market Data Provider: Exegy. It is 

anticipated that the operating fees costs 

for the CAT Fee 2024–1 Period will 

include costs related to the receipt of 

certain market data for the CAT 

pursuant to an agreement between 

FCAT and Exegy Incorporated 

(‘‘Exegy’’). CAT LLC determined that 

Exegy would provide market data that 

included all data elements required by 

the CAT NMS Plan,42 and that the fees 

were reasonable and in line with market 

rates for the market data received. All 

costs under the contract would be 

treated as a direct pass through cost to 

CAT LLC. CAT LLC estimated the 

budget for the costs for Exegy for the 

CAT Fee 2024–1 Period based on the 

monthly rate set forth in the agreement 

between Exegy and FCAT. 

Operating Fee Estimates. CAT LLC 

estimates that the budget for operating 

fees during the CAT Fee 2024–1 Period 

will be approximately $14,008,947.50. 

The budget for operating fees during the 

CAT Fee 2024–1 Period is calculated 

based on the Updated 2024 Budget. 

Specifically, this estimate was 

calculated by adding the budgeted 

amounts for operating fees for the third 

and fourth quarter of 2024 as set forth 

in the Updated 2024 Budget and 

subtracting one half of the actual 

operating fees incurred in July 2024 (as 

CAT Fee 2024–1 Period began half way 

through July, on July 16, 2024).43

As discussed above, CAT LLC 

estimated the budget for the operating 

fees during the CAT Fee 2024–1 Period 

based on monthly rates set forth in the 

Plan Processor Agreement and the 

agreement with Exegy. CAT LLC also 

recognized that the operating fees are 

generally consistent throughout the 

year. This process for estimating the 

budget for the operating fees for the 

CAT Fee 2024–1 Period is the same 

process by which CAT LLC estimated 

the operating fees for the Original 2024 

Budget. The Original 2024 Budget 

estimated a budget for operating fees of 

$13,558,875 for the first two quarters of 

2024.44 The actual costs for operating 

fees for the first two quarters of 2024, 

which are set forth in the Updated 2024 

Budget, were $12,608,540.45 There was 


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46This calculation is $26,423,306 + $1,345,412 = 

$27,768,718. 47This calculation is $6,832,128 + $6,832,128 = 

$13,664,256. 

48This calculation is ($6,907,383 + $904,664) + 

($6,907,383 + $440,748) = $15,160,178. 

49For a discussion of the implementation 

timeline for CAIS, see CAT Alert 2023–01. 

50This calculation is ($5,060,937 + $5,060,937) ¥ 

$843,489.50 = $9,278,384.50. 

51This calculation is $5,282,128 + $5,136,538 = 

$10,418,666. 

52This calculation is $5,017,108 + $5,060,937 = 

$10,078,045. 

53This calculation is $5,136,538 + $5,136,538 = 

$10,273,076. 

54This calculation is $5,060,937 + $5,060,937 = 

$10,121,874. 

an approximate 7% decrease from 

estimates to actuals for the first two 

quarters. Accordingly, CAT LLC 

believes that the process for estimating 

the budgeted operating fees for the CAT 

Fee 2024–1 Period is reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

operating fees from the prior CAT Fee 

filing. As this is the first Prospective 

CAT Fee Filing, this filing describes the 

changes in the operating fees from the 

Original 2024 Budget. CAT LLC’s 

proposed annual budget for operating 

fees for 2024 increased from 

$27,223,132 to $27,768,718 46 from the 

Original 2024 Budget to the Updated 

2024 Budget, and the proposed budget 

for operating fees for the third and 

fourth quarters of 2024 increased from 

$13,664,256 in the Original 2024 

Budget 47 to $15,160,178 in the Updated 

2024 Budget.48 This increase is due to 

a cyber insurance adjustment. 

(iii) Technology Costs—CAIS Operating 

Fees 

(a) Description of CAIS Operating Fees 

Section 11.3(a)(iii)(B)(B)(1) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the CAIS operating fees 

set forth in the budget. The Operating 

Committee approved an operating 

budget for the CAT pursuant to Section 

11.1(a) of the CAT NMS Plan that 

included $9,278,384.50 in technology 

costs for CAIS operating fees for the 

CAT Fee 2024–1 Period. CAIS operating 

fees represent the fees paid to FCAT for 

services provided with regard to the 

operation and maintenance of 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. 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-Customer-ID for each Customer. 

As of May 31, 2024, the implementation 

of CAIS was completed.49

During the CAT Fee 2024–1 Period, it 

is anticipated that FCAT will provide 

CAIS-related services. Under the Plan 

Processor Agreement with FCAT, CAT 

LLC is required to pay FCAT for CAISrelated services provided by FCAT on a 

monthly basis. CAT LLC negotiated the 

fees for FCAT’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. During the CAT Fee 

2024–1 Period, it is anticipated that 

FCAT will continue to provide services 

relating to the ongoing operation, 

maintenance and support of CAIS. 

CAT LLC estimates that the budget for 

CAIS operating fees during the CAT Fee 

2024–1 Period will be approximately 

$9,278,384.50. The budget for CAIS 

operating fees during the CAT Fee 

2024–1 Period is calculated based on 

the Updated 2024 Budget. Specifically, 

this estimate was calculated by adding 

the budgeted amounts for CAIS 

operating fees for the third and fourth 

quarter of 2024 as set forth in the 

Updated 2024 Budget and subtracting 

one half of the actual CAIS operating 

fees costs incurred in July 2024 (as CAT 

Fee 2024–1 Period began half way 

through July, on July 16, 2024).50

CAT LLC calculated the budget for 

FCAT’s CAIS-related services for the 

CAT Fee 2024–1 Period based on the 

recurring monthly CAIS operating fees 

under the Plan Processor Agreement. 

This process for estimating the budget 

for the CAIS operating fees for the CAT 

Fee 2024–1 Period is the same process 

by which CAT LLC estimated the CAIS 

operating fees for the Original 2024 

Budget. The Original 2024 Budget 

estimated a budget for CAIS operating 

fees of $10,418,666 for the the [sic] first 

two quarters of 2024.51 The actual costs 

for CAIS operating fees for the first two 

quarters of 2024, which are set forth in 

the Updated 2024 Budget, were 

$10,078,045.52 There is only an 

approximate 3% difference between the 

estimate and actuals. Accordingly, CAT 

LLC believes that the process for 

estimating the budgeted CAIS operating 

fees for the CAT Fee 2024–1 Period is 

reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

CAIS operating fees from the prior CAT 

Fee filing. As this is the first Prospective 

CAT Fee Filing, this filing describes the 

changes in the CAIS operating fees from 

the Original 2024 Budget. CAT LLC’s 

proposed annual budget for CAIS 

operating fees for 2024 had a small 2% 

percent decrease of $491,821 from the 

Original 2024 Budget to the Updated 

2024 Budget, from $20,691,740 to 

$20,199,919. Correspondingly, the 

proposed budget for CAIS operating fees 

for the third and fourth quarters of 2024 

had a small 1% percentage decrease of 

$151,202, from $10,273,076 in the 

Original 2024 Budget 53 to $10,121,874 

in the Updated 2024 Budget.54

(iv) Technology Costs—Change Request 

Fees 

(a) Description of Change Request Fees 

Section 11.3(a)(iii)(B)(B)(1) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the change request fees 

set forth in the budget. The Operating 

Committee approved an operating 

budget for the CAT pursuant to Section 

11.1(a) of the CAT NMS Plan that 

included $162,500 in technology costs 

for change request fees for the CAT Fee 

2024–1 Period. 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 changes 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. 

During the CAT Fee 2024–1 Period, it 

is anticipated that CAT LLC will engage 

FCAT to pursue certain change requests 

in accordance with the Plan Processor 

Agreement. The budget for change 

requests for the CAT Fee 2024–1 Period 

includes a placeholder of $162,500 for 

potential change request fees that may 

be necessary in accordance with the 

Plan Processor Agreement. The 

placeholder amount was determined 


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55This calculation is ($0 + $162,500) ¥ $0 = 

$162,500. 

56This calculation is $0 + $81,250 = $81,250. 

57This calculation is $81,250 + $81,250 = 

$162,500. 

58This calculation is $0 + $162,500 = $162,500. 

59This calculation is ($3,810,990 + $291,000) ¥ 

$0 = $4,101,990. 

60This calculation is $2,300,000 + $0 = 

$2,300,000. 

61This calculation is $2,300,000 + $1,359,490 = 

$3,659,490. 

62This calculation is $2,591,000 + $5,170,480 = 

$7,761,480. 

63This calculation is $0 + $0 = $0. 

64This calculation is $3,810,990 + $291,000 = 

$4,101,990. 

based on prior experience with change 

requests related to the CAT. 

CAT LLC estimates that the budget for 

change requests during the CAT Fee 

2024–1 Period will be approximately 

$162,500. The budget for change 

requests during the CAT Fee 2024–1 

Period is calculated based on the 

Updated 2024 Budget. Specifically, this 

estimate was calculated by adding the 

budgeted amounts for the change 

requests for the third and fourth quarter 

of 2024 as set forth in the Updated 2024 

Budget and subtracting one half of the 

actual change request costs incurred in 

July 2024 (as CAT Fee 2024–1 Period 

began half way through July, on July 16, 

2024).55

CAT LLC estimated the budget for the 

potential change requests for the CAT 

Fee 2024–1 Period based on, among 

other things, a review of past change 

requests and potential future change 

request needs, as well as discussions 

with FCAT. This process for estimating 

the budget for the change requests for 

the CAT Fee 2024–1 Period is the same 

process by which CAT LLC estimated 

the change requests cost for the Original 

2024 Budget. The Original 2024 Budget 

estimated a change request budget of 

$81,250 for the the [sic] first two 

quarters of 2024.56 The actual costs for 

change requests for the first two quarters 

of 2024, which are set forth in the 

Updated 2024 Budget, were $0. 

Although the budget exceeded the 

actual costs of change requests during 

the first two quarters of 2024, CAT LLC 

believes that the process for estimating 

a placeholder amount for potential 

change requests is reasonable given the 

evolving technology needs of the CAT. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

change request fees from the prior CAT 

Fee filing. As this is the first Prospective 

CAT Fee Filing, this filing describes the 

changes in the change request fees from 

the Original 2024 Budget. CAT LLC’s 

proposed annual budget for change 

requests for 2024 decreased by $81,250 

from the Original 2024 Budget to the 

Updated 2024 Budget, from $243,750 to 

$162,500. CAT LLC has reduced the 

annual budget for a placeholder for 

change request fees for 2024 by onethird, as time has passed without 

additional change requests anticipated 

by this placeholder amount. 

Correspondingly, the proposed budget 

for change requests for the third and 

fourth quarters remained the same at 

$162,500 for the Original 2024 Budget 57

and the Updated 2024 Budget.58

(v) Technology Costs—Capitalized 

Developed Technology Costs 

(a) Description of Capitalized Developed 

Technology Costs 

Section 11.3(a)(iii)(B)(B)(1) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the capitalized developed 

technology costs set forth in the budget. 

The Operating Committee approved an 

operating budget for the CAT pursuant 

to Section 11.1(a) of the CAT NMS Plan 

that includes $4,101,990 in technology 

costs for capitalized developed 

technology costs for the CAT Fee 2024– 

1 Period. This category of costs includes 

the budget for capitalizable application 

development costs incurred in the 

development of the CAT. It is 

anticipated that such costs will include 

certain costs related to the software 

license fee for CAIS in accordance with 

the Plan Processor Agreement with 

FCAT, as well as costs related to a set 

of technology changes to be 

implemented by FCAT. 

CAT LLC estimates that the budget for 

capitalized developed technology costs 

during the CAT Fee 2024–1 Period will 

be approximately $4,101,990. The 

budget for capitalized developed 

technology costs during the CAT Fee 

2024–1 Period is calculated based on 

the Updated 2024 Budget. Specifically, 

this estimate was calculated by adding 

the budgeted amounts for capitalized 

developed technology costs for the third 

and fourth quarter of 2024 as set forth 

in the Updated 2024 Budget and 

subtracting one half of the actual 

capitalized developed technology costs 

incurred in July 2024 (as CAT Fee 2024– 

1 Period began halfway through July, on 

July 16, 2024).59

CAT LLC estimated the budget for 

capitalized developed technology costs 

for the CAT Fee 2024–1 Period based on 

an analysis of a variety of factors, 

including information related to 

potential technology costs and related 

contractual and Plan requirements, and 

discussions with FCAT regarding such 

potential technology costs. The Original 

2024 Budget estimated a budget for 

capitalized developed technology costs 

of $2,300,000 for the first two quarters 

of 2024.60 The actual costs for 

capitalized developed technology costs 

for the first two quarters of 2024, which 

are set forth in the Updated 2024 

Budget, were $3,659,490.61 The increase 

was due to a software license fee for 

CAIS. Accordingly, CAT LLC believes 

that the process for estimating the 

budgeted capitalized developed 

technology costs for the CAT Fee 2024– 

1 Period is reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

capitalized developed technology costs 

from the prior CAT Fee filing. As this 

is the first Prospective CAT Fee Filing, 

this filing describes the changes in 

capitalized developed technology costs 

from the Original 2024 Budget. CAT 

LLC’s proposed budget for capitalized 

developed technology costs for 2024 

increased from the Original 2024 Budget 

to the Updated 2024 Budget. The annual 

budget for capitalized developed 

technology costs for 2024 increased by 

$5,461,480 from the Original 2024 

Budget of $2,300,000 to the Updated 

2024 Budget of $7,761,480.62

Correspondingly, the budget for 

capitalized developed technology costs 

for the third and fourth quarters of 2024 

increased from $0 63 in the Original 

2024 Budget to $4,101,990 in the 

Updated 2024 Budget.64 This increase in 

the capitalized developed technology 

costs budget in the Updated 2024 

Budget over the Original 2024 Budget 

was the result of costs related to the 

software license fee for CAIS in 

accordance with the Plan Processor 

Agreement with FCAT, as well as costs 

related to a set of technology changes to 

be implemented by FCAT. 

(vi) Legal Costs 

(a) Description of Legal Costs 

Section 11.3(a)(iii)(B)(B)(2) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the legal costs set forth in 

the budget. The Operating Committee 

approved an operating budget for the 

CAT pursuant to Section 11.1(a) of the 

CAT NMS Plan that includes 

$4,484,554.50 in legal costs for the CAT 

Fee 2024–1 Period. This category of 


ddrumheller on DSK120RN23PROD with NOTICES1
73158 Federal Register / Vol. 89, No. 174 / Monday, September 9, 2024 / Notices 

65American Securities Ass’n v. Securities and 

Exchange Commission, Case No. 23–13396 (11th 

Cir.). 66 Davidson v. Gensler, Case No. 6:24–cv–197 

(W.D. Tex.). 67Securities Exchange Act Rel. No. 100181 (May 

20, 2024), 89 FR 45715 (May 23, 2024). 68Citadel Securities LLC v. United States 

Securities and Exchange Commission, Case No. 24– 

12300 (11th Cir.). 

69This calculation is ($2,647,277 + $2,342,562) ¥ 

$505,284.50 = $4,484,554.50. 70This calculation is $1,220,000 + $1,220,000 = 

$ 2,440,000. 71This calculation is $791,912 + $2,364,850 = 

$3,156,762. 

costs represents budgeted costs for legal 

services for this period. CAT LLC 

anticipates that it will receive legal 

services from two law firms, Wilmer 

Cutler Pickering Hale and Dorr LLP 

(‘‘WilmerHale’’) and Jenner & Block LLP 

(‘‘Jenner’’), during the CAT Fee 2024–1 

Period. 

Law Firm: WilmerHale. It is 

anticipated that legal costs during the 

CAT Fee 2024–1 Period will include 

costs related to the legal services 

performed by WilmerHale. CAT LLC 

anticipates that it will continue to 

employ WilmerHale during the CAT Fee 

2024–1 Period based on, among other 

things, their expertise, long history with 

the project and recognition that the 

hourly fee rates for this law firm are 

anticipated to be in line with market 

rates for specialized legal expertise. 

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. The legal fees will be paid by CAT 

LLC to WilmerHale. 

During the CAT Fee 2024–1 Period, it 

is anticipated that WilmerHale will 

provide legal services related to the 

following: 

• Assist with CAT fee filings and 

related funding issues; 

• Draft exemptive requests from CAT 

NMS Plan requirements and/or 

proposed amendments to the CAT NMS 

Plan; 

• Provide legal interpretations of CAT 

NMS Plan requirements; 

• Provide legal support for the 

Operating Committee, Compliance 

Subcommittee, working groups and 

Leadership Team; 

• Draft SRO rule filings related to the 

CAT Compliance Rule; 

• Manage corporate governance 

matters, including supporting Operating 

Committee meetings and preparing 

resolutions and consents; 

• Assist with communications with 

the industry, including CAT Alerts and 

presentations; 

• Provide guidance regarding the 

confidentiality of CAT Data; 

• Assist with cost management 

analyses and proposals; 

• Assist with commercial contractrelated matters, including change 

orders, Plan Processor Agreement items, 

and subcontract matters; 

• Provide support with regard to 

discussions with the SEC and its staff, 

including with respect to addressing 

interpretive and implementation issues; 

• Assist with CAT budget and FCAT 

costs; 

• Assist other counsel for CAT on 

litigation-related matters; and 

• Assist with legal responses related 

to third-party data requests. 

CAT LLC estimated the budget for the 

legal costs for WilmerHale for the CAT 

Fee 2024–1 Period through an analysis 

of a variety of factors, including 

WilmerHale fee rates, historical legal 

fees, information related to pending 

legal issues and potential future legal 

issues, and discussions with 

WilmerHale. 

Law Firm: Jenner. It is anticipated that 

legal costs during the CAT Fee 2024–1 

Period will include costs related to the 

legal services performed by Jenner. CAT 

LLC anticipates that it will continue to 

employ Jenner during the CAT Fee 

2024–1 Period based on among other 

things, their expertise, history with the 

project and recognition that their hourly 

fee rates are in line with market rates for 

specialized legal expertise. The legal 

fees will be paid by CAT LLC to Jenner. 

During the CAT Fee 2024–1 Period, it 

is anticipated that Jenner will continue 

to provide legal assistance to CAT LLC 

regarding certain litigation matters, 

including: (1) CAT LLC’s defense 

against a lawsuit filed in the Western 

District of Texas against Chair Gensler, 

the SEC and CAT LLC challenging the 

validity of the Rule 613 and the CAT 

and alleging various constitutional, 

statutory, and common law claims 

(‘‘Texas Litigation’’); 65 (2) CAT LLC’s 

intervention in a lawsuit in the Eleventh 

Circuit filed by various parties against 

the SEC challenging the SEC’s approval 

of the CAT Funding Model; 66 and (3) a 

lawsuit in the Eleventh Circuit filed by 

Citadel Securities LLC seeking review of 

the SEC’s May 20, 2024 order 67 granting 

the Participants temporary conditional 

exemptive relief related to the reporting 

of bids and/or offers made in response 

to a request for quote or other form of 

solicitation response provided in 

standard electronic format that is not 

immediately actionable.68 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. 

CAT LLC estimated the budget for the 

legal costs for Jenner for the CAT Fee 

2024–1 Period through an analysis of a 

variety of factors, including Jenner fee 

rates, historical legal fees, and 

information related to pending legal 

issues and potential future legal issues, 

and discussions with Jenner. 

Legal Cost Estimates. CAT LLC 

estimates that the budget for legal 

services during the CAT Fee 2024–1 

Period will be approximately 

$4,484,554.50. The budget for legal 

services during the CAT Fee 2024–1 

Period is calculated based on the 

Updated 2024 Budget. Specifically, this 

estimate was calculated by adding the 

budgeted amounts for the legal services 

for the third and fourth quarter of 2024 

as set forth in the Updated 2024 Budget 

and subtracting one half of the actual 

legal costs incurred in July 2024 (as the 

CAT Fee 2024–1 Period began halfway 

through July, on July 16, 2024).69

CAT LLC estimated the budget for the 

legal services for the CAT Fee 2024–1 

Period based on an analysis of a variety 

of factors, including law firm fee rates, 

historical legal fees, and information 

related to pending legal issues and 

potential future legal issues, and 

discussions with the law firms. This 

process for estimating the budget for the 

legal services for the CAT Fee 2024–1 

Period is the same process by which 

CAT LLC estimated the legal cost for the 

Original 2024 Budget. The Original 2024 

Budget estimated a budget for legal costs 

of $2,440,000 for the first two quarters 

of 2024.70 The actual costs for legal 

services for the first two quarters of 

2024, which are set forth in the Updated 

2024 Budget, were $3,156,762.71

Although there is an increase from the 

budgeted legal costs to the actual legal 

costs for the first two quarters of 2024, 

such increase was due to unanticipated 

issues that required additional legal 

efforts on behalf of CAT LLC that 

developed after the budget was created. 

Such additional costs including costs 

related to (1) the legal defense related to 

the Texas Litigation; and (2) additional 

regulatory and corporate legal issues, 

including (a) additional work for 

commercial contract-related matters, 

including change orders, Plan Processor 

Agreement items, and subcontract 

matters; (b) assistance regarding budget 

and FCAT costs; (c) assistance to other 

counsel for CAT on litigation-related 

matters; and (d) assistance related to 

CAT fee filings and CAT NMS Plan 

amendments. Accordingly, CAT LLC 

believes that the process for estimating 


ddrumheller on DSK120RN23PROD with NOTICES1
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72This calculation is $1,047,500 + $972,500 = 

$2,020,000. 

73This calculation is $2,647,277 + $2,342,560 = 

$4,989,837. 

74This calculation is ($359,926 + $354,495) ¥ 

$61,798 = $652,623. 

75This calculation is $400,000 + $400,000 = 

$800,000. 

76This calculation is $264,101 + $621,479 = 

$885,580. 

77This calculation is $400,000 + $400,000 = 

$800,000. 

78This calculation is $359,925 + $354,495 = 

$714,420. 

the budgeted legal costs for the CAT Fee 

2024–1 Period is reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

legal costs from the prior CAT Fee 

filing. As this is the first Prospective 

CAT Fee Filing, this filing describes the 

changes in the legal costs from the 

Original 2024 Budget. CAT LLC’s 

proposed budget for legal costs for 2024 

increased from the Original 2024 Budget 

to the Updated 2024 Budget. The annual 

budget for legal costs for 2024 increased 

from the Original 2024 Budget to the 

Updated 2024 Budget, from $4,460,000 

to $8,146,599. Correspondingly, the 

proposed budget for legal costs for the 

third and fourth quarters increased from 

$2,020,000 72 in the Original 2024 

Budget to $4,989,837 in the Updated 

2024 Budget.73 This increase in the legal 

budget in the Updated 2024 Budget 

from the Original 2024 Budget was 

primarily due to unanticipated legal 

costs, including costs related to (1) the 

legal defense related to the Texas 

Litigation; and (2) additional regulatory 

and corporate legal issues, including (a) 

additional work for commercial 

contract-related matters, including 

change orders, Plan Processor 

Agreement items, and subcontract 

matters; (b) assistance regarding budget 

and FCAT costs; (c) assistance to other 

counsel for CAT on litigation-related 

matters; and (d) assistance related to 

CAT fee filings and CAT NMS Plan 

amendments. In addition, CAT LLC no 

longer anticipates incurring legal costs 

related to the law firms of Pillsbury 

Winthrop Shaw Pittman LLP and 

Covington & Burling LLP during the 

CAT Fee 2024–1 Period due to the 

conclusion of the relevant prior legal 

matters. 

(vii) Consulting Costs 

(a) Description of Consulting Costs 

Section 11.3(a)(iii)(B)(B)(3) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the consulting costs set 

forth in the budget. The Operating 

Committee approved an operating 

budget for the CAT pursuant to Section 

11.1(a) of the CAT NMS Plan that 

included $652,623 in consulting costs 

for the CAT Fee 2024–1 Period. The 

consulting costs represent the fees 

estimated to be paid to the consulting 

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

as project manager during the CAT Fee 

2024–1 Period. 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. 

It is anticipated that the costs for CAT 

during CAT Fee 2024–1 Period will 

include costs related to consulting 

services performed by Deloitte. CAT 

LLC anticipates that it will continue to 

employ Deloitte during the CAT Fee 

2024–1 Period based on, among other 

things, their expertise, long history with 

the project, and the recognition that it 

is anticipated that the consulting fees 

will remain in line with market rates for 

this type of specialized consulting work. 

Deloitte’s fee rates are negotiated on an 

annual basis. CAT LLC assesses 

Deloitte’s performance and reviews 

prospective budgets and staffing plans 

submitted by Deloitte on an annual 

basis. The consulting fees will be paid 

by CAT LLC to Deloitte. 

It is anticipated that Deloitte will 

provide a variety of consulting services 

to the CAT during the CAT Fee 2024– 

1 Period, including the following: 

• Implement program operations for 

the CAT project; 

• Provide 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; 

• Assist with cost and funding 

matters for the CAT, including 

assistance with loans and the CAT bank 

account for CAT funding; 

• Provide support for updating the 

SEC on the progress of the development 

of the CAT; and 

• Provide support for third party 

vendors for the CAT, including FCAT, 

Anchin and the law firms engaged by 

CAT LLC. 

In addition, the consulting costs include 

the compensation for the Chair of the 

CAT Operating Committee. 

CAT LLC estimates that the budet [sic] 

for consulting costs during the CAT Fee 

2024–1 Period will be approximately 

$652,623. The budget for consulting 

costs during the CAT Fee 2024–1 Period 

is calculated based on the Updated 2024 

Budget. Specifically, this estimate was 

calculated by adding the budgeted 

amounts for consulting services for the 

third and fourth quarter of 2024 as set 

forth in the Updated 2024 Budget and 

subtracting one half of the actual 

consulting costs incurred in July 2024 

(as the CAT Fee 2024–1 Period begain 

[sic] halfway through July, on July 16, 

2024).74

CAT LLC estimates the budget for the 

consulting costs for Deloitte for the CAT 

Fee 2024–1 Period based on the current 

statement of work with Deloitte, which 

took into consideration past consulting 

costs, potential future consulting needs, 

the proposed rates and other contractual 

issues, as well as discussions with 

Deloitte. The Original 2024 Budget 

estimated a budget for consulting cost of 

$800,000 for the first two quarters of 

2024.75 The actual costs for consulting 

services for the first two quarters of 

2024, which are set forth in the Updated 

2024 Budget, were $885,580.76 There is 

only an approximate 10% difference 

between the estimate and actuals. 

Accordingly, CAT LLC believes that the 

process for estimating the budgeted 

consulting costs for the CAT Fee 2024– 

1 Period is reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

consulting costs from the prior CAT Fee 

filing. As this is the first Prospective 

CAT Fee Filing, this filing describes the 

changes in the consulting costs from the 

Original 2024 Budget. CAT LLC’s 

proposed annual budget for consulting 

costs for 2024 has not changed from the 

Original 2024 Budget to the Updated 

2024 Budget; it remains $1,600,000. 

Correspondingly, the proposed budget 

for consulting costs for the third and 

fourth quarters of 2024 decreased by 

$85,580 (which is approximately 11%), 

from $800,000 in the Original 2024 

Budget 77 to $714,420 in the Updated 

2024 Budget.78

(viii) Insurance Costs 

(a) Description of Insurance Costs 

Section 11.3(a)(iii)(B)(B)(4) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the insurance costs set 

forth in the budget. The Operating 

Committee approved an operating 

budget for the CAT pursuant to Section 

11.1(a) of the CAT NMS Plan that 

included $1,342,345 in insurance costs 

for the CAT Fee 2024–1 Period. The 

insurance costs represent the costs to be 


ddrumheller on DSK120RN23PROD with NOTICES1
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79Note that CAT LLC generally pays its USI 

insurance premiums once per year, and such 

payment is scheduled to occur during the third 

quarter of 2024. 80Section 9.2 of the CAT NMS Plan. 

incurred for insurance for CAT during 

the CAT Fee 2024–1 Period. 

It is anticipated that the insurance 

costs for CAT during the CAT Fee 2024– 

1 Period will include costs related to 

cyber security liability insurance, 

directors’ and officers’ liability 

insurance, and errors and omissions 

liability insurance brokered by USI 

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

policies are standard for corporate 

entities, and cyber security liability 

insurance is important for the CAT 

System. CAT LLC anticipates that it will 

continue to maintain this insurance 

during CAT Fee 2024–1 Period, and 

notes that the annual premiums for 

these policies were competitive for the 

coverage provided. CAT LLC estimated 

the budget for the insurance costs for 

the CAT Fee 2024–1 Period based on the 

actual insurance quote from USI for 

2024. The annual premiums would be 

paid by CAT LLC to USI.79

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

insurance costs from the prior CAT Fee 

filing. As this is the first Prospective 

CAT Fee Filing, this filing describes the 

changes in the insurance costs from the 

Original 2024 Budget. CAT LLC’s 

proposed annual budget for insurance 

costs for 2024 decreased by $525,680 

from the Original 2024 Budget, from 

$1,868,025 to $1,342,345. For the 

Original 2024 Budget, CAT LLC 

estimated the budget for the insurance 

costs for the CAT Fee 2024–1 Period 

based on the 2023 insurance premiums 

plus a 15% year-over-year increase. 

However, the budgeted insurance costs 

as set forth in the Updated 2024 Budget 

were based on the actual insurance 

quote from USI for 2024. 

(ix) Professional and Administration 

Costs 

(a) Description of Professional and 

Administration Costs 

Section 11.3(a)(iii)(B)(B)(5) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the professional and 

administration costs set forth in the 

budget. The Operating Committee 

approved an operating budget for the 

CAT pursuant to Section 11.1(a) of the 

CAT NMS Plan that included 

$428,544.50 in professional and 

administration costs for the CAT Fee 

2024–1 Period. In adopting the CAT 

NMS Plan, the Commission amended 

the Plan to add a requirement that CAT 

LLC’s financial statements be prepared 

in compliance with GAAP, audited by 

an independent public accounting firm, 

and made publicly available.80 The 

professional and administration costs 

would 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. The professional and 

administration costs represent the fees 

to be paid to Anchin Block & Anchin 

(‘‘Anchin’’) and Grant Thornton LLP 

(‘‘Grant Thornton’’) for financial 

services during CAT Fee 2024–1 Period. 

Financial Advisory Firm: Anchin. It is 

anticipated that the professional and 

administration costs for the CAT Fee 

2024–1 Period will include costs related 

to financial advisory services performed 

by Anchin. CAT LLC anticipates that it 

will continue to employ Anchin during 

CAT Fee 2024–1 Period based on, 

among other things, the firm’s relevant 

expertise and fees, which are 

anticipated to remain in line with 

market rates for these financial advisory 

services. The fees for these services will 

be paid by CAT LLC to Anchin. 

It is anticipated that Anchin will 

provide a variety of services to the CAT 

during the CAT Fee 2024–1 Period, 

including the following: 

• Update and maintain internal 

controls; 

• Provide cash management and 

treasury functions; 

• Faciliate [sic] bill payments; 

• Provide monthly bookkeeping; 

• Review vendor invoices and 

documentation in support of cash 

disbursements; 

• Provide accounting research and 

consultations on various accounting, 

financial reporting and tax matters; 

• Address not-for-profit tax and 

accounting considerations; 

• Prepare tax returns; 

• Address various accounting, 

financial reporting and operating 

inquiries From Participants; 

• Develop and maintain annual 

operating and financial budgets, 

including budget to actual fluctuation 

analyses; 

• Support compliance with the CAT 

NMS Plan; 

• Work with and provide support to 

the Operating Committee and various 

CAT working groups; 

• Prepare monthly, quarterly and 

annual financial statements; 

• Support the annual financial 

statement audits by an independent 

auditor; 

• Review historical costs from 

inception; 

• Provide accounting and financial 

information in support of SEC filings; 

and 

• Perform additional ad hoc 

accounting and financial advisory 

services, as requested by CAT LLC. 

CAT LLC estimated the annual budget 

for the costs for Anchin based on 

historical costs adjusted for cost of 

living rate increases, and projected 

incremental advisory and support 

services. The budgeted costs for the 

CAT Fee 2024–1 Period are based on the 

estimated annual costs, minus actual 

costs through June and estimated costs 

for July. 

Accounting Firm: Grant Thornton. It 

is anticipated that the professional and 

administration costs for the CAT Fee 

2024–1 Period will include costs related 

to accounting services performed by 

Grant Thornton. CAT LLC anticipates 

that it will continue to employ Grant 

Thornton during CAT Fee 2024–1 

Period based on, among other things, 

the firm’s relevant expertise and fees, 

which are anticipated to remain in line 

with market rates for these financial 

advisory services. It is anticipated that 

Grant Thornton will continue to be 

engaged as an independent accounting 

firm to complete the audit of CAT LLC’s 

financial statements, in accordance with 

the requirements of the CAT NMS Plan. 

The fees for these services will be paid 

by CAT LLC to Grant Thornton. CAT 

LLC estimated the budget for the 

accounting costs for Grant Thornton for 

the CAT Fee 2024–1 Period based on the 

anticipated hourly rates and the 

anticipated services plus an 

administrative fee. 

Professional and Administration Cost 

Estimates. CAT LLC estimates that the 

budget for professional and 

administration services during the CAT 

Fee 2024–1 Period will be 

approximately $428,544.50. The budget 

for professional and administration 

services during the CAT Fee 2024–1 

Period is calculated based on the 

Updated 2024 Budget. Specifically, this 

estimate was calculated by adding the 

budgeted amounts for the professional 

and administration services for the third 

and fourth quarter of 2024 as set forth 

in the Updated 2024 Budget and 

subtracting one half of the actual 

professional and administration costs 


ddrumheller on DSK120RN23PROD with NOTICES1
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81This calculation is ($157,269 + $293,682) ¥ 

$22,406.50 = $428,544.50. 

82This calculation is $213,600 + $182,330 = 

$395,930. 

83This calculation is $110,542 + $262,435 = 

$372,977. 

84This calculation is $150,000 + $275,334 = 

$425,334. 

85This calculation is $157,269 + $293,682 = 

$450,951. 

86This calculation is ($23,450 + $23,625) ¥ 

$3,850 = $43,225. 

87This calculation is $23,100 + $23,100 = 

$46,200. 

88This calculation is $23,100 + $23,100 = 

$46,200. 

89This calculation is $23,100 + $23,100 = 

$46,200. 

incurred in July 2024 (as CAT Fee 2024– 

1 Period began half way through July, 

on July 16, 2024).81

CAT LLC estimated the budget for the 

professional and administration costs 

for the CAT Fee 2024–1 Period based on 

a review of past professional and 

administration costs, potential future 

professional and administration needs, 

the proposed rates and other contractual 

issues, as well as discussions with 

Anchin and Grant Thornton. This 

process for estimating the budget for the 

professional and administration costs 

for the CAT Fee 2024–1 Period is the 

same process by which CAT LLC 

estimated the professional and 

administration costs for the Original 

2024 Budget. The Original 2024 Budget 

estimated a budget for professional and 

administration costs of $395,930 for the 

first two quarters of 2024.82 The actual 

costs for professional and 

administration services for the first two 

quarters of 2024, which are set forth in 

the Updated 2024 Budget, were 

$372,977.83 There is only an 

approximate 6% difference between the 

estimate and actuals. Accordingly, CAT 

LLC believes that the process for 

estimating the budgeted professional 

and administration costs for the CAT 

Fee 2024–1 Period is reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

professional and administration costs 

from the prior CAT Fee filing. As this 

is the first Prospective CAT Fee Filing, 

this filing describes the changes in the 

professional and administration costs 

from the Original 2024 Budget. CAT 

LLC’s proposed annual budget for 

professional and administration costs 

for 2024 had a very minor increase of 

$2,666 from the Original 2024 Budget, 

from $821,264 to $823,930. CAT LLC’s 

proposed annual budget for professional 

and administration costs for 2024 has 

not changed in a material way for 

Anchin and Grant Thornton costs. 

Correspondingly, the proposed budget 

for professional and administration 

costs for the third and fourth quarters of 

2024 increased by $25,617 (which is 

approximately 6%), from $425,334 in 

the Original 2024 Budget 84 to $450,951 

in the Updated 2024 Budget.85

(x) Public Relations Costs 

(a) Desription [sic] of Public Relations 

Costs 

Section 11.3(a)(iii)(B)(B)(6) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the public relations costs 

set forth in the budget. The Operating 

Committee approved an operating 

budget for the CAT pursuant to Section 

11.1(a) of the CAT NMS Plan that 

included $43,225 in public relations 

costs for the CAT Fee 2024–1 Period. 

The public relations costs represent the 

fees paid to a public relations firm for 

professional communications services to 

CAT, including media relations 

consulting, strategy and execution. By 

engaging a public relations firm, CAT 

LLC will be better positioned to 

understand and address CAT matters to 

the benefit of all market participants. 

It is anticipated that the public 

relations costs for the CAT Fee 2024–1 

Period will include costs related to the 

public relations services performed by 

RF|Binder Partners Inc. (‘‘RFF|Binder’’). 

CAT LLC anticipates that it will 

continue to employ RFF|Binder during 

the CAT Fee 2024–1 Period based on, 

among other things, the firm’s relevant 

expertise, history with the project, and 

fees, which are anticipated to remain in 

line with market rates for these public 

relations services. It is anticipated that, 

during the CAT Fee 2024–1 Period, 

RF|Binder will provide 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 are 

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. 

CAT LLC estimates that the budget for 

public relations services during the CAT 

Fee 2024–1 Period will be 

approximately $43,225. The budget for 

public relations services during the CAT 

Fee 2024–1 Period is calculated based 

on the Updated 2024 Budget. 

Specifically, this estimate was 

calculated by adding the budgeted 

amounts for the public relations for the 

third and fourth quarter of 2024 as set 

forth in the Updated 2024 Budget and 

subtracting one half of the actual public 

relations costs incurred in July 2024 (as 

CAT Fee 2024–1 Period began half way 

through July, on July 16, 2024).86 The 

fees for these services will be paid by 

CAT LLC to RF|Binder. 

CAT LLC estimated the budget for the 

public relations costs for the CAT Fee 

2024–1 Period based on a review of past 

public relations costs, potential future 

public relations needs, the proposed 

rates and other contractual issues, as 

well as discussions with RF|Binder. 

CAT LLC also recognized that public 

relations costs are generally consistent 

throughout the year. This process for 

estimating the budget for the public 

relations costs for the CAT Fee 2024–1 

Period is the same process by which 

CAT LLC estimated the public relations 

costs for the Original 2024 Budget. The 

Original 2024 Budget estimated a budget 

for public relations costs of $46,200 for 

the the [sic] first two quarters of 2024.87

The actual costs for public relations for 

the first two quarters of 2024, which are 

set forth in the Updated 2024 Budget, 

were $46,200.88 They are the same. 

Accordingly, CAT LLC believes that the 

process for estimating the budgeted 

public relations costs for the CAT Fee 

2024–1 Period is reasonable. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

public relations costs from the prior 

CAT Fee filing. As this is the first 

Prospective CAT Fee Filing, this filing 

describes the changes in the public 

relations costs from the Original 2024 

Budget. CAT LLC’s proposed annual 

budget for public relations costs for 

2024 had a very minor increase of $875 

from the Original 2024 Budget to the 

Updated 2024 Budget, from $92,400 to 

$93,275. Correspondingly, the proposed 

budget for public relations costs for the 

third and fourth quarters of 2024 

increased by $875, from $46,200 in the 

Original 2024 Budget 89 to $47,075 in 


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90This calculation is $23,450 + $23,625 = 

$47,075. 

91Section 11.3(a)(i)(D) of the CAT NMS Plan. 

92CAT Funding Model Approval Order at 62651. 

93This projection was calculated by multiplying 

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

4/12ths. 

94Section 11.3(a)(iii)(B) of the CAT NMS Plan. 

95 In approving the CAT Funding Model, the 

Commission stated that ‘‘[t]he manner in which the 

Fee Rate for Prospective CAT Costs will be 

calculated (i.e., by dividing the CAT costs 

reasonably budgeted for the upcoming year by the 

reasonably projected total executed equivalent 

share volume of all transactions in Eligible 

Securities for the year) is reasonable.’’ CAT Funding 

Model Approval Order at 62651. 

96Section 11.3(a)(iii)(B) of the CAT NMS Plan. 

97See Section 11.3(a)(iii)(A) of the CAT NMS 

Plan. 

98See proposed paragraph (a)(3)(B) of the fee 

schedule. 

the Updated 2024 Budget.90 The minor 

change was made to reflect updated 

contractual terms. 

(xi) Reserve 

(a) Description of Reserve 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to provide a brief 

description of the reserve costs set forth 

in the budget. The Operating Committee 

approved an operating budget for the 

CAT pursuant to Section 11.1(a) of the 

CAT NMS Plan that includes 

$27,695,385 for a reserve for the CAT 

Fee 2024–1 Period. Section 11.1(a)(i) of 

the CAT NMS Plan states that the 

budget shall include a reserve. Section 

11.1(a)(ii) of the CAT NMS Plan further 

describes the reserve as follows: 

For the reserve referenced in paragraph 

(a)(i) of this Section, the budget will include 

an amount reasonably necessary to allow the 

Company to maintain a reserve of not more 

than 25% of the annual budget. To the extent 

collected CAT fees exceed CAT costs, 

including the reserve of 25% of the annual 

budget, such surplus shall be used to offset 

future fees. For the avoidance of doubt, the 

Company will only include an amount for 

the reserve in the annual budget if the 

Company does not have a sufficient reserve 

(which shall be up to but not more than 25% 

of the annual budget). For the avoidance of 

doubt, the calculation of the amount of the 

reserve would exclude the amount of the 

reserve from the budget. 

In light of the fact that CAT LLC 

currently does not maintain any reserve, 

CAT LLC determined to include a 

reserve in the amount of 25% of 

Budgeted CAT Costs 2024–1 other than 

the reserve. Accordingly, the reserve for 

the CAT Fee 2024–1 Period was 

calculated by multiplying the Budgeted 

CAT Costs 2024–1 other than the 

reserve amount, which is $110,781,540, 

by 25%. 

(b) Changes From Prior Fee Filing 

Section 11.3(a)(iii)(B)(B) of the CAT 

NMS Plan requires the fee filing for a 

Prospective CAT Fee to describe the 

reason for changes in the line item for 

a reserve from the prior CAT Fee filing. 

Prior to July 16, 2024, all CAT costs 

were paid by the Participants via notes. 

Accordingly, to date, CAT LLC has not 

maintained any reserve. With the 

commencement of CAT Fees, CAT LLC 

proposes to include costs for a reserve 

of $27,695,385 in Budgeted CAT Costs 

2024–1. 

(D) Projected Total Executed Equivalent 

Share Volume 

The calculation of Fee Rate 2024–1 

also requires the determination of the 

projected total executed equivalent 

share volume of transactions in Eligible 

Securities for the CAT Fee 2024–1 

Period. 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 relevant period based on the 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

prior twelve months.’’ 91 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.92

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 

share volume for a four-month recovery 

period for CAT Fee 2024–1 by 

multiplying by 4/12ths 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 

the four-month period for CAT Fee 

2024–1 is projected to be 

1,326,917,946,968.403 executed 

equivalent shares.93

The projected total executed 

equivalent share volume of all 

transactions in Eligible Securities for the 

four-month recovery period for CAT Fee 

2024–1 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 CAT Fee.94

(E) Fee Rate 2024–1 

Fee Rate 2024–1 would be calculated 

by dividing Budgeted CAT Costs 2024– 

1 by the reasonably projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

four-month recovery period for CAT Fee 

2024–1, as described in detail above.95

Specifically, Fee Rate 2024–1 would be 

calculated by dividing $138,476,925 by 

1,326,917,946,968.403 executed 

equivalent shares. As a result, Fee Rate 

2024–1 would be 

$0.0001043598251997246 per executed 

equivalent share. Fee Rate 2024–1 is 

provided in this filing in accordance 

with the requirement in the CAT NMS 

Plan to provide the Fee Rate in a fee 

filing for a CAT Fee.96

(3) Monthly Fees 

CEBBs and CEBSs would be required 

to pay fees for CAT Fee 2024–1 on a 

monthly basis for four months, from 

November 2024 until February 2025.97

A CEBB’s 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.98 Proposed paragraph 

(a)(3)(A) of the fee schedule would state 

that each CAT Executing Broker would 

receive its first invoice for CAT Fee 

2024–1 in October 2024, and would 

receive an invoice for CAT Fee 2024–1 

each month thereafter until January 

2025. Proposed paragraph (a)(3)(B) of 

the fee schedule would state that 

‘‘Consolidated Audited Trail, LLC shall 

provide each CAT Executing Broker 

with an invoice for CAT Fee 2024–1 on 

a monthly basis.’’ In addition, paragraph 

(b)(1) of the fee schedule states that each 

CEBB and CEBS is required to pay its 

CAT fees ‘‘each month.’’ 

(4) Consolidated Audit Trail Funding 

Fees 

To implement CAT Fee 2024–1, the 

Exchange proposes to add a new 


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99Section 11.3(a)(iii)(A) of the CAT NMS Plan. 

100CAT Funding Model Approval Order at 62658, 

n.658. 

101 Dividing $0.0001043598251997246 by three 

equals $0.00003478660839990821. Rounding 

$0.00003478660839990821 to six decimal places 

equals $0.000035. 

102Section 11.4 of the CAT NMS Plan. 

103The 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 

Continued 

paragraph to ‘‘Consolidated Audit Trail 

Funding Fees’’ section of the Exchange’s 

fee schedule, to include the proposed 

paragraphs described below. 

(A) Fee Schedule for CAT Fee 2024–1 

The CAT NMS Plan states that: 

Each Industry Member that is the CAT 

Executing Broker for the buyer in a 

transaction in Eligible Securities (‘‘CAT 

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

and each Industry Member that is the CAT 

Executing Broker for the seller in a 

transaction in Eligible Securities (‘‘CAT 

Executing Broker for the Seller’’ or ‘‘CEBS’’) 

will be required to pay a CAT Fee for each 

such transaction in in Eligible Securities in 

the prior month based on CAT Data. The 

CEBB’s CAT Fee or CEBS’s CAT Fee (as 

applicable) for each transaction in Eligible 

Securities will be calculated by multiplying 

the number of executed equivalent shares in 

the transaction by one-third and by the Fee 

Rate reasonably determined pursuant to 

paragraph (a)(i) of this Section 11.3.99

Accordingly, based on the factors 

discussed above, the Exchange proposes 

to add paragraph (a)(3) to the 

Consolidated Audit Trail Funding Fees 

section of its fee schedule. Proposed 

paragraph (a)(3) would state the 

following: 

(A) Each CAT Executing Broker shall 

receive its first invoice for CAT Fee 2024–1 

in October 2024, which shall set forth the 

CAT Fee 2024–1 fees calculated based on 

transactions in September 2024, and shall 

receive an invoice for CAT Fee 2024–1 for 

each month thereafter until January 2025. 

(B) Consolidated Audit Trail, LLC shall 

provide each CAT Executing Broker with an 

invoice for CAT Fee 2024–1 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 

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 $0.000035 per executed equivalent 

share. 

(C) Notwithstanding the last invoice date of 

January 2025 for CAT Fee-2024–1 in 

paragraph 3(A), CAT Fee 2024–1 shall 

continue in effect after January 2025, with 

each CAT Executing Broker receiving an 

invoice for CAT Fee 2024–1 each month, 

until a new subsequent CAT Fee is in effect 

with regard to Industry Members in 

accordance with Section 19(b) of the 

Exchange Act. Consolidated Audit Trail, LLC 

will provide notice when CAT Fee 2024–1 

will no longer be in effect. 

(D) Each CAT Executing Broker shall be 

required to pay each invoice for CAT Fee 

2024–1 in accordance with paragraph (b). 

As noted in the Plan amendment for 

the CAT Funding Model, ‘‘[a]s a 

practical matter, the fee filing would 

provide the exact fee per executed 

equivalent share to be paid for the CAT 

Fees, by multiplying the Fee Rate by 

one-third and describing the relevant 

number of decimal places for the 

fee.’’ 100 Accordingly, proposed 

paragraph (a)(3)(B) of the fee schedule 

would set forth a fee rate of $0.000035 

per executed equivalent share. This fee 

rate is calculated by multiplying Fee 

Rate 2024–1 of 

$0.0001043598251997246 by one-third, 

and rounding the result to six decimal 

places.101 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)(3)(A) of the fee schedule would 

describe when CAT Executing Brokers 

would receive their first monthly 

invoice for CAT Fee 2024–1. 

Specifically, CAT Executing Brokers 

would receive their first monthly 

invoice for CAT Fee 2024–1 in October 

2024 and the fees set forth in that 

invoice would be calculated based on 

transactions executed in September 

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)(3)(A) of the 

fee schedule also would describe the 

monthly cadence of the invoices for 

CAT Fee 2024–1. Specifically, after the 

first invoices are provided to CAT 

Executing Brokers in October 2024, 

invoices will be sent to CAT Executing 

Brokers each month thereafter until 

January 2025. 

Proposed paragraph (a)(3)(B) of the fee 

schedule would describe the invoices 

for CAT Fee 2024–1. Proposed 

paragraph (a)(3)(B) of the fee schedule 

would state that ‘‘Consolidated Audit 

Trail, LLC shall provide each CAT 

Executing Broker with an invoice for 

CAT Fee 2024–1 on a monthly basis.’’ 

Proposed paragraph (a)(3)(B) of the fee 

schedule also would describe the fees to 

be set forth in the invoices for CAT Fee 

2024–1. 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 $0.000035 per executed 

equivalent share.’’ 

Since CAT Fee 2024–1 is a monthly 

fee based on actual transaction volume 

from the prior month, CAT Fee 2024–1 

may collect more or less than two-thirds 

of Budgeted CAT Costs 2024–1. To the 

extent that CAT Fee 2024–1 collects 

more than two-thirds of Budgeted CAT 

Costs 2024–1, any excess money 

collected will be used to offset future 

fees and/or to fund the reserve for the 

CAT. To the extent that CAT Fee 2024– 

1 collects less than two-thirds of 

Budgeted CAT Costs 2024–1, the budget 

for the CAT in the ensuing months will 

reflect such shortfall. 

Furthermore, proposed paragraph 

(a)(3)(C) of the fee schedule would 

describe how long CAT Fee 2024–1 

would remain in effect. It would state 

that ‘‘[n]otwithstanding the last invoice 

date of January 2025 for CAT Fee 2024– 

1 in paragraph 3(A), CAT Fee 2024–1 

shall continue in effect after January 

2025, with each CAT Executing Broker 

receiving an invoice for CAT Fee 2024– 

1 each month, until a new subsequent 

CAT Fee is in effect with regard to 

Industry Members in accordance with 

Section 19(b) of the Exchange Act. 

Consolidated Audit Trail, LLC will 

provide notice when CAT Fee 2024–1 

will no longer be in effect.’’ 

Finally, proposed paragraph (a)(3)(D) 

of the fee schedule would set forth the 

requirement for the CAT Executing 

Brokers to pay the invoices for CAT Fee 

2024–1. It would state that ‘‘[e]ach CAT 

Executing Broker shall be required to 

pay each invoice for CAT Fee 2024–1 in 

accordance with paragraph (b).’’ 

(B) Manner of Payment 

The Exchange proposes to add 

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

Audit Trail Funding Fees’’ section of its 

fee schedule to describe the manner of 

payment of Industry Member CAT fees. 

The CAT NMS Plan requires the 

Operating Committee to establish a 

system for the collection of CAT fees.102

The Plan Processor has established a 

billing system for CAT fees.103


ddrumheller on DSK120RN23PROD with NOTICES1
73164 Federal Register / Vol. 89, No. 174 / Monday, September 9, 2024 / Notices 

Connectivity Supplement for Industry Members and 

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

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

104Section 11.4 of the CAT NMS Plan. 

105Section 11.3(a)(iv)(A) of the CAT NMS Plan. 

106 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. 

107Section 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. 

108Section 11.3(a)(iii)(C) of the CAT NMS Plan. 

109Q2 & Q3 2024 Quarterly Progress Report (July 

29, 2024). 110The SEC granted exemptive relief from certain 

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. Securities 

Exchange Rel. No. 88702 (Apr. 20, 2020), 85 FR 

23075 (Apr. 24, 2020) (‘‘Phased Reporting 

Exemptive Relief Order’’). 

111See, e.g., Q1 2024 Quarterly Progress Report 

(Apr. 30, 2024). 

Therefore, the Exchange proposes to 

require CAT Executing Brokers to pay 

CAT Fee 2024–1 in accordance with 

such system. Accordingly, proposed 

paragraph (b)(1) would state 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.’’ 

(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.104

Accordingly, the Exchange proposes 

to add this requirement to the 

Exchange’s fee schedule. Proposed 

paragraph (b)(2) of the fee schedule 

would state: 

Each CAT Executing Broker shall pay the 

CAT fees required pursuant to paragraph (a) 

within thirty days after receipt of an invoice 

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 CAT Fee 2024–1. 

(5) CAT Fee Details 

The CAT NMS Plan states that: 

Details regarding the calculation of a 

Participant or CAT Executing Broker’s CAT 

Fees will be provided upon request to such 

Participant or CAT Executing Broker. At a 

minimum, such details would include each 

Participant or 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.105

Such information would provide 

CEBBs and CEBSs with the ability to 

understand the details regarding the 

calculation of their CAT Fee.106 CAT 

LLC will provide CAT Executing 

Brokers with these details regarding the 

calculation of their CAT Fees on their 

monthly invoice for the CAT Fees. 

In addition, CAT LLC will make 

certain aggregate statistics regarding 

CAT Fees publicly available. 

Specifically, the CAT NMS Plan states 

that, ‘‘[f]or each CAT Fee, 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 than on 

an exchange, and (3) by buy-side 

transactions and sell-side 

transactions.’’ 107 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 CAT Fee 2024–1 is in effect as well 

as the total amount invoiced for CAT 

Fee 2024–1 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 CAT Fee 

2024–1. 

(6) 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 CAT Fee 

related to Prospective CAT Costs until 

the Financial Accountability Milestone 

related to Period 4 described in Section 

11.6 has been satisfied.’’ 108 The 

substantive requirements of the 

Financial Accountability Milestones 

related to Period 4 have been satisfied, 

as the CAT has completed the 

requirements for the ‘‘Full 

Implementation of CAT NMS Plan 

Requirements.’’ Section 1.1 of the CAT 

NMS Plan defines ‘‘Full Implementation 

of CAT NMS Plan Requirements’’ as: 

the point at which the Participants have 

satisfied all of their obligations to build and 

implement the CAT, such that all CAT 

system functionality required by Rule 613 

and the CAT NMS Plan has been developed, 

successfully tested, and fully implemented at 

the initial Error Rates specified by Section 

6.5(d)(i) or less, including functionality that 

efficiently permits the Participants and the 

Commission to access all CAT Data required 

to be stored in the Central Repository 

pursuant to Section 6.5(a), including 

Customer Account Information, Customer-ID, 

Customer Identifying Information, and 

Allocation Reports, and to analyze the full 

lifecycle of an order across the national 

market system, from order origination 

through order execution or order 

cancellation, including any related allocation 

information provided in an Allocation 

Report. 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 second and third quarter 

of 2024,109 Full Implementation of CAT 

NMS Plan Requirements was completed 

on July 15, 2024. 

(A) Transaction Reporting and 

Regulatory Access 

The CAT system functionality 

required by Rule 613 and the CAT NMS 

Plan related to order and transaction 

data has been developed, successfully 

tested, and fully implemented, 

including the requirements related to 

regulatory access. The implementation 

of CAT requirements related to order 

and transaction data occurred over four 

phases: Phases 2a, 2b, 2c and 2d.110 As 

described in the Quarterly Progress 

Reports and summarized below, each of 

these phases has been fully 

implemented.111

(i) Phase 2a 

The Quarterly Progress Reports state 

that ‘‘Phase 2a was fully implemented 


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112See, e.g., Q1 2024 Quarterly Progress Report 

(Apr. 30, 2024). 

113Phased Reporting Exemptive Relief Order at 

23076–78. 

114See, e.g., Q1 2024 Quarterly Progress Report 

(Apr. 30, 2024). 

115Phased Reporting Exemptive Relief Order at 

23078. 

116See, e.g., Q1 2024 Quarterly Progress Report 

(Apr. 30, 2024). 

as of October 26, 2020.’’ 112 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.113

(ii) Phase 2b 

The Quarterly Progress Reports state 

that ‘‘Phase 2b was fully implemented 

as of January 4, 2021.’’ 114 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.115

(iii) Phase 2c 

The Quarterly Progress Reports state 

that ‘‘Phase 2c was implemented as of 

April 26, 2021.’’ 116 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 order(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’’) 


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117Phase Reporting Exemptive Relief Order at 

23078–79. 

118 Id. at 23079. 

119See, e.g., Q1 2024 Quarterly Progress Report 

(Apr. 30, 2024). 

120Phase Reporting Exemptive Relief Order at 

23079. 

121 Id. at 23079–80. 

122See, e.g., Q1 2024 Quarterly Progress Report 

(Apr. 30, 2024). 123 Id. 124Q2 & Q3 2024 Quarterly Progress Report (July 

29, 2024). 125 Id. 126Phase Reporting Exemptive Relief Order at 

23080. 

scenarios, as required in the Industry 

Member Technical Specifications.117

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.118

(iv) Phase 2d 

The Quarterly Progress Reports state 

that ‘‘Phase 2d was fully implemented 

as of December 13, 2021.’’ 119 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 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.120

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 

includes 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).121

(v) Regulatory Access To Order and 

Transaction Data 

The Financial Accountability 

Milestone related to Period 4 requires 

that CAT provide functionality that 

permits the Participants and the 

Commission to access Phase 2a, 2b, 2c 

and 2d data and to analyze the full 

lifecycle of an order across the national 

market system, from order origination 

through order execution or order 

cancellation, including any related 

allocation information provided in an 

Allocation Report. As CAT LLC reported 

on its Quarterly Progress Reports, 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, 

2021.122

(B) CAIS Reporting and Regulatory 

Access 

The CAT System functionality 

required by Rule 613 and the CAT NMS 

Plan related to Customer information 

has been developed, successfully tested, 

and fully implemented, including the 

requirements related to regulatory 

access. The implementation of CAT 

requirements related to Customer 

information occurred during Phase 2e. 

As described in the Quarterly Progress 

Reports and summarized below, Phase 

2e has been fully implemented as of 

May 31, 2024.123 Furthermore, because 

a month of customer and account 

information data is necessary to create 

report cards with regard to such data, 

the publication of monthly report cards 

with respect to customer and account 

information commenced on July 15, 

2024.124 Accordingly, the Financial 

Accountability Milestone related to 

Period 4 was completed on July 15, 

2024. 

(i) Phase 2e 

The Q2 & Q3 2024 Quarterly Progress 

Report indicates that Phase 2e was fully 

implemented as of May 31, 2024.125

Phase 2e Industry Member Data is 

described in detail in the SEC’s Phased 

Reporting Exemptive Relief Order. 

‘‘Phase 2e Industry Member Data’’ 

includes ‘‘Customer Account 

Information and Customer Identifying 

Information, other than LTIDs, date 

account opened/Account Effective Date 

and Firm Designated ID type flag 

previously reported to the CAT.’’ 126


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127Q2 & Q3 2024 Quarterly Progress Report (July 

29, 2024). 128Section 11.3(a)(i)(A)(I) of the CAT NMS Plan. 129CAT Funding Model Approval Order at 62659. 130See Section 11.3(a)(ii) and Appendix B of the 

CAT NMS Plan. 

131 15 U.S.C. 78f(b)(6). 

132 15 U.S.C. 78f(b)(4). 

133 15 U.S.C. 78f(b)(8). 

134See Section 6(b)(1) of the Exchange Act. 

LTIDs and Account Effective Date are 

both provided in Phases 2c and 2d in 

certain circumstances, as discussed 

above. Section 1.1 of the CAT NMS Plan 

defines the term ‘‘Customer Account 

Information’’ to 

include, but not be limited to, account 

number, account type, customer type, date 

account opened, and large trader identifier (if 

applicable); except, however, that (a) in those 

circumstances in which an Industry Member 

has established a trading relationship with an 

institution but has not established an account 

with that institution, the Industry Member 

will (i) provide the Account Effective Date in 

lieu of the ‘‘date account opened’’; (ii) 

provide the relationship identifier in lieu of 

the ‘‘account number’’; and (iii) identify the 

‘‘account type’’ as a ‘‘relationship’’; (b) in 

those circumstances in which the relevant 

account was established prior to the 

implementation date of the CAT NMS Plan 

applicable to the relevant CAT Reporter (as 

set forth in Rule 613(a)(3)(v) and (vi)), and no 

‘‘date account opened’’ is available for the 

account, the Industry Member will provide 

the Account Effective Date in the following 

circumstances: (i) where an Industry Member 

changes back office providers or clearing 

firms and the date account opened is 

changed to the date the account was opened 

on the new back office/clearing firm system; 

(ii) where an Industry Member acquires 

another Industry Member and the date 

account opened is changed to the date the 

account was opened on the post-merger back 

office/clearing firm system; (iii) where there 

are multiple dates associated with an account 

in an Industry Member’s system, and the 

parameters of each date are determined by 

the individual Industry Member; and (iv) 

where the relevant account is an Industry 

Member proprietary account. 

The term ‘‘Customer Identifying 

Information’’ is defined in Section 1.1 of 

the CAT NMS Plan to mean 

information of sufficient detail to identify a 

Customer, including, but not limited to, (a) 

with respect to individuals: name, address, 

date of birth, individual tax payer 

identification number (‘‘ITIN’’)/social 

security number (‘‘SSN’’), individual’s role in 

the account (e.g., primary holder, joint 

holder, guardian, trustee, person with the 

power of attorney); and (b) with respect to 

legal entities: name, address, Employer 

Identification Number (‘‘EIN’’)/Legal Entity 

Identifier (‘‘LEI’’) or other comparable 

common entity identifier, if applicable; 

provided, however, that an Industry Member 

that has an LEI for a Customer must submit 

the Customer’s LEI in addition to other 

information of sufficient detail to identify a 

Customer. 

(ii) Regulatory Access to Customer 

Information 

The Financial Accountability 

Milestone related to Period 4 requires 

that CAT provide functionality that 

permits the Participants and the 

Commission to access Phase 2e Industry 

Member Data (in addition to the Phase 

2a, 2b, 2c and 2d Industry Member Data, 

as discussed above). As CAT LLC 

reported on its Q2 & Q3 Quarterly 

Progress Report, regulators had efficient 

access to Phase 2e Industry Member 

Data via the query tool functionality 

required under the CAT NMS Plan by 

July 15, 2024.127

(C) Error Rate 

The Financial Accountability 

Milestones related to Period 4 require 

the implementation of the CAT System 

‘‘at the initial Error Rates specified by 

Section 6.5(d)(i) or less.’’ The average 

overall error rate as of July 15, 2024, was 

less than 5%, which is the initial Error 

Rate specified by Section 6.5(d)(i) of the 

CAT NMS Plan. The average overall 

error rate was calculated by dividing the 

compliance errors by processed records. 

(7) Participant Invoices 

While CAT Fees charged to Industry 

Members become effective in 

accordance with the requirements of 

Section 19(b) of the Exchange Act,128

CAT fees charged to Participants are 

implemented via an approval of the 

CAT fees by the Operating Committee in 

accordance with the requirements of the 

CAT NMS Plan.129 On July 31, 2024, the 

Operating Committee approved the 

Participant fee related to CAT Fee 2024– 

1. Specifically, pursuant to the 

requirements of CAT NMS Plan,130 each 

Participant would be required to pay a 

CAT fee calculated using the fee rate of 

$0.000035, which is the same fee rate 

that applies to CEBBs and CEBSs. Like 

CEBBs and CEBSs, each Participant 

would be required to pay such CAT fees 

on a monthly basis for four months, 

from November 2024 until February 

2025, and each Participant’s fee for each 

month would be calculated based on the 

transactions in Eligible Securities 

executed on the applicable exchange 

(for the Participant exchanges) or 

otherwise than on the exchange (for 

FINRA) in the prior month. 

Accordingly, each Participant will 

receive its first invoice in October 2024, 

and would receive an invoice each 

month thereafter until January 2025. 

Like with the CAT Fee 2024–1 

applicable to CEBBs and CEBSs as 

described in proposed paragraph 

(a)(3)(C) of the fee schedule, 

notwithstanding the last invoice date of 

January 2025, Participants will continue 

to receive invoices for this fee each 

month until a new subsequent CAT Fee 

is in effect with regard to Industry 

Members. Furthermore, Section 11.4 of 

the CAT NMS Plan states that each 

Participant is required to pay such 

invoices as required by Section 3.7(b) of 

the CAT NMS Plan. Section 3.7(b) 

states, in part, that 

[e]ach Participant shall pay all fees or other 

amounts required to be paid under this 

Agreement within thirty (30) days after 

receipt of an invoice or other notice 

indicating payment is due (unless a longer 

payment period is otherwise indicated) (the 

‘‘Payment Date’’). The Participant shall pay 

interest on the outstanding balance from the 

Payment Date until such fee or amount is 

paid at a per annum rate equal to the lesser 

of: (i) Prime Rate plus 300 basis points; or (ii) 

the maximum rate permitted by applicable 

law. 

(b) 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,131 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,132 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,133 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.134

Accordingly, a reasonable reading of the 

Act indicates that it intended that 

regulatory funding be sufficient to 


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135CAT NMS Plan Approval Order at 84697. 

136 Id. at 84696. 

137CAT Funding Model Approval Order at 62686. 

138 Id. at 62662–63. 

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.’’ 135 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 to be paid by the CEBBs 

and CEBSs are reasonable, equitably 

allocated and not unfairly 

discriminatory. First, the CAT Fee 

2024–1 fees to be collected are directly 

associated with the budgeted 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 proposed CAT Fee 2024–1 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 

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.’’ 136 Similarly, in approving the 

CAT Funding Model, the SEC 

concluded that the CAT Funding Model 

met this standard.137 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 CAT Fee 

2024–1 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 CAT Fees as set forth in 

Section 11.3 of the CAT NMS Plan, 

including the formula for calculating the 

Fee Rate, the identification of the parties 

responsible for payment and the 

transactions subject to the fee rate for 

CAT Fees, is reasonable and satisfies the 

Exchange Act.138 In each respect, as 

discussed above, CAT Fee 2024–1 is 

calculated, and would be applied, in 

accordance with the requirements 

applicable to CAT Fees 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 CAT Fee 

2024–1 is reasonable and consistent 

with the Exchange Act. Calculation of 

Fee Rate 2024–1 for CAT Fee 2024–1 

requires the figures for Budgeted CAT 

Costs 2024–1, the executed equivalent 

share volume for the prior twelve 

months, the determination of CAT Fee 

2024–1 Period, and the projection of the 

executed equivalent share volume for 

CAT Fee 2024–1 Period. Each of these 

variables is reasonable and satisfies the 

Exchange Act, as discussed throughout 

this filing. 

(A) Budgeted CAT Costs 2024–1 

The formula for calculating a Fee Rate 

requires the amount of Budgeted CAT 

Costs to be recovered. Specifically, 

Section 11.3(a)(iii)(B) of the CAT NMS 

Plan requires a fee filing to provide: 

The budget for the upcoming year (or 

remainder of the year, as applicable), 

including a brief description of each line 

item in the budget, 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, a reserve and/or such other categories 

as reasonably determined by the Operating 

Committee to be included in the budget, and 

the reason for changes in each such line item 

from the prior CAT fee filing. 

In accordance with this requirement, 

the Exchange has set forth the amount 

and type of Budgeted CAT Costs 2024– 

1 for each of these categories above. 

Section 11.3(a)(iii)(B) of the CAT 

NMS Plan also requires that the fee 

filing provide ‘‘sufficient detail to 

demonstrate that the budget for the 

upcoming year, or part of year, as 

applicable, is reasonable and 

appropriate.’’ As discussed below, the 

Exchange believes that the budget for 

the CAT Fee 2024–1 Period is 

‘‘reasonable and appropriate.’’ Each of 

the costs included in CAT Fee 2024–1 

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 budgeted costs 

related to cloud hosting services as a 


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139Section 11.3(a)(iii)(B)(B)(1) of the CAT NMS 

Plan. 

140For a discussion of the amount and type of 

cloud hosting services fees, see Section 3(a)(2)(C)(i) 

above. 

141Appendix D–4 of the CAT NMS Plan at n.262. 

142CAT NMS Plan Approval Order at 84801. 

143See Securities Exchange Act Rel. No. 97151 

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

(describing key cost discipline mechanisms for the 

CAT). 

144Section 11.3(a)(iii)(B)(B)(1) of the CAT NMS 

Plan. 

145See Section 3(a)(2)(C)(ii) above. 

146 Id. 

147 Id. 

148 Id. 

149Section 11.3(a)(iii)(B)(B)(1) of the CAT NMS 

Plan. 

part of CAT Fees.139 CAT LLC 

determined that the budgeted costs 

related to cloud hosting services 

described in this filing are reasonable 

and should be included as a part of 

Budgeted CAT Costs 2024–1. As 

described above, the cloud hosting 

services costs reflect, among other 

things, the breadth of the CAT cloud 

activities, data volumes 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.140 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 141 and that annual operating 

costs for the CAT would range from 

$36.5 million to $55 million.142

Through 2023, the actual data volumes 

have been five times that original 

estimate. The data volumes to date for 

2024 have continued this trend. 

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 

amendments 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 

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.143

(ii) Technology: Operating Fees 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted costs related to 

operating fees as a part of CAT Fees.144

CAT LLC determined that the budgeted 

costs related to operating fees described 

in this filing are reasonable and should 

be included as a part of Budgeted CAT 

Costs 2024–1. 

The operating fees would 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.145 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.146 The services to be 

performed by FCAT for CAT Fee 2024– 

1 Period and the budgeted costs related 

to such services are described above.147

The operating costs also include costs 

related to the receipt of market data. 

CAT LLC anticipates continuing to 

receive certain market data from Exegy 

during the CAT Fee 2024–1 Period. CAT 

LLC anticipates that Exegy will continue 

to provide data that meets the SIP Data 

requirements of the CAT NMS Plan and 

that the fees are reasonable and in line 

with market rates for market data 

received.148

(iii) Technology: CAIS Operating Fees 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted costs related to 

CAIS operating fees as a part of CAT 

Fees.149 CAT LLC determined that the 

budgeted costs related to CAIS operating 

fees described in this filing are 

reasonable and should be included as a 

part of Budgeted CAT Costs 2024–1. The 

CAIS operating fees would include the 

fees paid to the Plan Processor to 

operate and maintain CAIS and to 


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150See Section 3(a)(2)(C)(iii) above. 

151 Id. 

152Section 11.3(a)(iii)(B)(B)(1) of the CAT NMS 

Plan. 

153See Section 3(a)(2)(C)(iv) above. 

154Section 11.3(a)(iii)(B)(B)(1) of the CAT NMS 

Plan. 

155See Section 3(a)(2)(C)(v) above. 

156Section 11.3(a)(iii)(B)(B)(2) of the CAT NMS 

Plan. 

157See Section 3(a)(2)(B)(vi) above. 

158Section 11.3(b)(iii)(B)(B)(3) of the CAT NMS 

Plan. 

159As 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). 

160CAT 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. 

161Section 3(a)(2)(C)(vii) of the CAT NMS Plan. 

162Section 11.3(b)(iii)(B)(B)(4) of the CAT NMS 

Plan. 

163Section 4.1.5 of Appendix D of the CAT NMS 

Plan. 

164See Section 3(a)(2)(C)(viii) above. 

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 fees for FCAT’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, are reasonable and 

appropriate.150 The services to be 

performed by FCAT for the CAT Fee 

2024–1 Period and the budgeted costs 

for such services are described above.151

(iv) Technology: Change Request Fees 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted costs related to 

change request fees as a part of CAT 

Fees.152 CAT LLC determined that the 

budgeted costs related to change request 

fees described in this filing are 

reasonable and should be included as a 

part of Budgeted CAT Costs 2024–1. 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 forecasts that the change requests 

will be necessary to implement the 

CAT. As described above,153 CAT LLC 

has included a reasonable placeholder 

budget amount for potential change 

requests that may arise during the CAT 

Fee 2024–1 Period. As noted above, the 

total budgeted costs for change requests 

during the CAT Fee 2024–1 Period 

represent a small percentage of 

Budgeted CAT Costs 2024–1—that is, 

approximately 0.12% of Budgeted CAT 

Costs 2024–1. 

(v) Capitalized Developed Technology 

Costs 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted costs related to 

capitalized developed technology costs 

as a part of CAT Fees.154 In general, 

capitalized developed technology costs 

would include costs related to, for 

example, 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 budgeted 

capitalized developed technology costs 

for the CAT Fee 2024–1 Period, which 

relate to the CAIS software license fee 

and technology changes to be 

implemented by FCAT, are described in 

more detail above.155 CAT LLC 

determined that these budgeted costs 

are reasonable and should be included 

as a part of Budgeted CAT Costs 2024– 

1. 

(vi) Legal 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted costs related to legal 

fees as a part of CAT Fees.156 CAT LLC 

determined that the budgeted legal costs 

described in this filing are reasonable 

and should be included as a part of 

Budgeted CAT Costs 2024–1. 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, 

contractual and other issues associated 

with the CAT, the scope of the 

necessary legal services is substantial. 

CAT LLC determined that the scope of 

the proposed legal services is necessary 

to implement and maintain the CAT and 

that the legal rates reflect the 

specialized services necessary for such 

a project. CAT LLC determined to hire 

and continue to use each law firm based 

on a variety of factors, including their 

relevant expertise and fees. In each case, 

CAT LLC determined that the fee rates 

were in line with market rates for 

specialized legal expertise. In addition, 

CAT LLC determined that the budgeted 

costs for the legal projects were 

appropriate given the breadth of the 

services provided. The services to be 

performed by each law firm for the CAT 

Fee 2024–1 Period and the budgeted 

costs related to such services are 

described above.157

(vii) Consulting 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted consulting costs as 

a part of CAT Fees.158 CAT LLC 

determined that the budgeted consulting 

costs described in this filing are 

reasonable and should be included as a 

part of Budgeted CAT Costs 2024–1. 

Because there are no CAT employees 159

and because of the significant number of 

issues associated with the CAT, the 

consultants are budgeted to provide 

assistance in the management of various 

CAT matters and the processes related 

to such matters.160 CAT LLC determined 

the budgeted consulting costs were 

appropriate, as the consulting services 

were to be provided at reasonable 

market rates that were comparable to the 

rates charged by other consulting firms 

for similar work. Moreover, the total 

budgeted costs for such consulting 

services were appropriate in light of the 

breadth of services provided by Deloitte. 

The services budgeted to be performed 

by Deloitte and the budgeted costs 

related to such services are described 

above.161

(viii) Insurance 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted insurance costs as 

a part of CAT Fees.162 CAT LLC 

determined that the budgeted insurance 

costs described in this filing are 

reasonable and should be included as a 

part of Budgeted CAT Costs 2024–1. 

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.’’ 163 As discussed above,164

CAT LLC determined that the budgeted 

insurance costs were appropriate given 

its prior experience with this market 

and an analysis of the alternative 

insurance offerings. Based on this 

analysis, CAT LLC determined that the 

selected insurance policies provided 


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165 Id. 

166Section 11.3(a)(iii)(B)(B)(5) of the CAT NMS 

Plan. 

167See Section 3(a)(2)(C)(ix) above. 

168 Id. 

169 Id. 

170Section 11.3(a)(iii)(B)(B)(6) of the CAT NMS 

Plan. 

171See Section 3(a)(2)(C)(x) above. 

172 Id. 

173 Id. 

174Section 11.3(a)(iii)(B)(B) of the CAT NMS 

Plan. 

175CAT Funding Model Approval Order at 62657. 

176 Id. 

177 Id. 

178 Id. 

179See Section 3(a)(2)(C)(xi) above. 

180Section 11.3(a)(iii)(B)(C) of the CAT NMS 

Plan. 

181See Section 3(a)(2)(D) above. 

appropriate coverage at reasonable 

market rates.165

(ix) Professional and Administration 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted professional and 

administration costs as a part of CAT 

Fees.166 CAT LLC determined that the 

budgeted professional and 

administration costs described in this 

filing are reasonable and should be 

included as a part of Budgeted CAT 

Costs 2024–1. 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. The services performed by Anchin 

and Grant Thornton and the costs 

related to such services are described 

above.167

CAT LLC anticipates continuing to 

make use of Anchin, a financial 

advisory firm, to assist with financial 

matters for the CAT. CAT LLC 

determined that the budgeted costs for 

Anchin were appropriate, as the 

financial advisory services were to be 

provided at reasonable market rates that 

were comparable to the rates charged by 

other such firms for similar work. 

Moreover, the total budgeted costs for 

such financial advisory services were 

appropriate in light of the breadth of 

services provided by Anchin. The 

services budgeted to be performed by 

Anchin and the budgeted costs related 

to such services are described above.168

CAT LLC anticipates continuing to 

make use of Grant Thornton, an 

independent accounting firm, to 

complete the audit of CAT LLC’s 

financial statements, in accordance with 

the requirements of the CAT NMS Plan. 

CAT LLC determined that the budgeted 

costs for Grant Thornton were 

appropriate, as the accounting services 

were to be provided at reasonable 

market rates that were comparable to the 

rates charged by other such firms for 

similar work. Moreover, the total 

budgeted costs for such accounting 

services were appropriate in light of the 

breadth of services provided by Grant 

Thornton. The services budgeted to be 

performed by Grant Thornton and the 

budgeted costs related to such services 

are described above.169

(x) Public Relations Costs 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted public relations 

costs as a part of CAT Fees.170 CAT LLC 

determined that the budgeted public 

relations costs described in this filing 

are reasonable and should be included 

as a part of Budgeted CAT Costs 2024– 

1. CAT LLC determined that the types 

of public relations services to be utilized 

were beneficial to the CAT and market 

participants more generally. Public 

relations services are 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.171 By continuing to 

engage a public relations firm, CAT LLC 

will be better positioned to understand 

and address CAT issues to the benefit of 

all market participants.172 Moreover, 

CAT LLC determined that the budgeted 

rates charged for such services were in 

line with market rates.173 As noted 

above, the total budgeted public 

relations costs for the CAT Fee 2024–1 

Period represent a small percentage of 

Budgeted CAT Costs 2024–1—that is, 

approximately 0.03% of Budgeted CAT 

Costs 2024–1. 

(xi) Reserve 

In approving the CAT Funding Model, 

the SEC recognized that it is appropriate 

to recover budgeted reserve costs as a 

part of CAT Fees.174 CAT LLC 

determined that the inclusion of a 

reserve in the amount of 25% of 

Budgeted CAT Costs 2024–1 complies 

with the requirements of the CAT NMS 

Plan related to a reserve, is a reasonable 

amount and should be included as a 

part of Budgeted CAT Costs 2024–1. 

In its approval order for the CAT 

Funding Model, the Commission stated 

that it would be reasonable for the 

annual operating budget for the CAT to 

‘‘include a reserve of not more than 25% 

of the annual budget.’’ 175 In making this 

statement, the Commission noted the 

following: 

Because the CAT is a critical regulatory 

tool/system, the CAT needs to have a stable 

funding source to build financial stability to 

support the Company as a going concern. 

Funding for the CAT, as noted in Section 

11.1(b), is the responsibility of the 

Participants and the industry. Because CAT 

fees are charged based on the budget, which 

is based on anticipated volume, it is 

reasonable to have a reserve on hand to 

prevent a shortfall in the event there is an 

unexpectedly high volume in a given year. A 

reserve would help to assure that the CAT 

has sufficient resources to cover costs should 

there be unanticipated costs or costs that are 

higher than expected.176

The SEC also recognized that that [sic] 

a reserve would help address the 

difficulty in predicting certain variable 

CAT costs, like trading volume.177 The 

SEC also recognized that CAT fees will 

be collected approximately three 

months after trading activity on which 

a CAT fee is based, or 25% of the year, 

and that the reserve would be available 

to address funding needs related to this 

three-month delay.178 The inclusion of 

the proposed reserve in Budgeted CAT 

Costs 2024–1 would provide each of 

these benefits to the CAT. The reserve 

is discussed further above.179

(B) Reconciliation of Budget to the 

Collected Fees 

The CAT NMS Plan also requires fee 

filings for Prospective CAT Fees to 

include ‘‘a discussion of how the budget 

is reconciled to the collected fees.’’ 180

To date, CAT LLC has not collected any 

CAT fees. Accordingly, there are no 

collected fees to be reconciled with the 

budget. 

(C) Total Executed Equivalent Share 

Volume for the Prior 12 Months 

The total executed equivalent share 

volume of transactions in Eligible 

Securities for the 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 counts executed 

equivalent shares for CAT billing 

purposes.181

(D) Projected Executed Equivalent Share 

Volume for the CAT Fee 2024–1 Period 

CAT LLC has determined to calculate 

the projected total executed equivalent 

share volume for the four months in 

which CAT Fee 2024–1 Period would be 

payable by multiplying by 4/12ths (i.e., 

one-third) the executed equivalent share 


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182 Id. 

183This projection was calculated by multiplying 

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

4/12ths. 

184CAT Funding Model Approval Order at 62658, 

n.658. 

185See Section 3(a)(4)(A) above. 

186 Id. at 62663, 62682. In explaining the 

comparison of Section 31 fees to CAT fees in the 

CAT Funding Model Approval Order, the SEC 

noted that ‘‘Section 31 fees are expressed per dollar 

volume traded. Translating this to a per share range 

involves identifying reasonable high and low trade 

sizes. The lower end of this range comes from the 

25th percentile in $ trade size of 1,200 and share 

trade size of 71 from the first quarter of 2021. The 

higher end of this range comes from the 75th 

percentile in $ trade size of 5,200 and share trade 

size of 300 from the first quarter of 2021. Section 

31 fees have ranged from $5.10 per $Million to 

$23.10 per $Million from Oct. 1, 2016 to Mar. 1, 

2023.’’ Id. at 62682., n.1100. In 2024, Section 31 

fees were raised further to $27.80 per million 

dollars. 

187 Id. 

188See Section 11.3(b) of the CAT NMS Plan. 

189CAT Funding Model Approval Order at 62629. 

volume for the prior 12 months.182 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 executed equivalent 

shares, the executed equivalent share 

volume for 2022 was 

4,039,821,841,560.31 executed 

equivalent shares, and the executed 

equivalent share volume for 2023 was 

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

projected total executed equivalent 

share volume for the four-month period 

for CAT Fee 2024–1 is 

1,326,917,946,968.403 executed 

equivalent shares.183

(E) Actual Fee Rate for CAT Fee 2024– 

1 

(i) Decimal Places 

As noted in the approval order for the 

CAT Funding Model, as a practical 

matter, the fee filing for a CAT Fee 

would provide the exact fee per 

executed equivalent share to be paid for 

each CAT Fee, by multiplying the Fee 

Rate by one-third and describing the 

relevant number of decimal places for 

the fee rate.184 Accordingly, proposed 

paragraph (a)(3)(B) of the fee schedule 

would set forth a fee rate of $0.000035 

per executed equivalent share. This fee 

rate is calculated by multiplying Fee 

Rate 2024–1 by one-third and rounding 

the result to six 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.185

(ii) Reasonable Fee Level 

The Exchange believes that imposing 

CAT Fee 2024–1 with a fee rate of 

$0.000035 per executed equivalent 

share is reasonable because it provides 

for a revenue stream for the Company 

that is aligned with Budgeted CAT Costs 

2024–1 and such budgeted costs would 

be spread out over a four-month period. 

Moreover, the Exchange believes that 

the level of the fee rate is reasonable, as 

it is comparable to other transactionbased fees. Indeed, CAT Fee 2024–1 is 

significantly lower than fees assessed 

pursuant to Section 31 (e.g., $0.0009 per 

share to 0.0004 per share),186 and, as a 

result, the magnitude of CAT Fee 2024– 

1 is small, and therefore will mitigate 

any potential adverse economic effects 

or inefficiencies.187

(3) CAT Fee 2024–1 Provides for an 

Equitable Allocation of Fees 

CAT Fee 2024–1 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 CAT Fees as well as the 

Industry Members to be charged the 

CAT Fees.188 In approving the CAT 

Funding Model, the SEC stated that 

‘‘[t]he Participants have sufficiently 

demonstrated that the proposed 

allocation of fees is reasonable.’’ 189

Accordingly, the CAT Funding Model 

sets forth the requirements for allocating 

fees related to Budgeted CAT Costs 

among Participants and Industry 

Members, and the fee filings for CAT 

Fees must comply with those 

requirements. 

CAT Fee 2024–1 provides for an 

equitable allocation of fees as it 

complies with the requirements 

regarding the calculation of CAT Fees as 

set forth in the CAT NMS Plan. For 

example, as described above, the 

calculation of CAT Fee 2024–1 complies 

with the formula set forth in Section 

11.3(a) of the CAT NMS Plan. In 

addition, CAT Fee 2024–1 would be 

charged to CEBBs and CEBSs in 

accordance with Section 11.3(a) of the 

CAT NMS Plan. Furthermore, the 

Participants would be charged for their 

designated share of Budgeted CAT Costs 

2024–1 through a fee implemented via 

the CAT NMS Plan, which would have 

the same fee rate as CAT Fee 2024–1. 

In addition, as discussed above, each 

of the inputs into the calculation of CAT 

Fee 2024–1—Budgeted CAT Costs 

2024–1, the count for the executed 

equivalent share volume for the prior 12 

months, and the projected executed 

equivalent share volume for the CAT 

Fee 2024–1 Period—are reasonable. 

Moreover, these inputs lead to a 

reasonable fee rate for CAT Fee 2024– 

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) CAT Fee 2024–1 Is Not Unfairly 

Discriminatory 

CAT Fee 2024–1 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 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. CAT Fee 

2024–1 complies with the requirements 

regarding the calculation of CAT Fees as 

set forth in the CAT NMS Plan. In 

addition, as discussed above, each of the 

inputs into the calculation of CAT Fee 

2024–1 and the resulting fee rate for 

CAT Fee 2024–1 is reasonable. 

Therefore, CAT Fee 2024–1 does not 

impose an unfairly discriminatory fee 

on Industry Members. 

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 with 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. 


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190 15 U.S.C. 78f(b)(8). 

191CAT Funding Model Approval Order at 

62676–86. 

192 15 U.S.C. 78s(b)(3)(A)(ii). 

193 17 CFR 240.19b–4(f)(2). 194 17 CFR 200.30–3(a)(12). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 6(b)(8) of the Act 190 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 CAT Fee 2024–1 

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 CAT Fee 2024–1 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.191 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. CAT Fee 2024–1 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 CAT Fee 

2024–1 is reasonable and the resulting 

fee rate for CAT Fee 2024–1 calculated 

in accordance with the CAT Funding 

Model is reasonable. Therefore, CAT 

Fee 2024–1 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 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

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 192

and Rule 19b–4(f)(2) thereunder,193

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– 

LTSE–2024–04 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–LTSE–2024–04. 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–LTSE–2024–04 and should be 

submitted on or before September 30, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.194

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–20165 Filed 9–6–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–221, OMB Control No. 

3235–0232] 

Proposed Collection; Comment 

Request; Extension: Form 1–E, 

Regulation E 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information of the Office of 

Management and Budget for extension 

and approval. 

Form 1–E (17 CFR 239.200) under the 

Securities Act of 1933 (15 U.S.C. 77a et 

seq.) (‘‘Securities Act’’) is the form that 

a small business investment company 


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