`[Federal Register Volume 90, Number 12 (Tuesday, January 21, 2025)]
[Rules and Regulations]
[Pages 7250-7426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30433]



[[Page 7249]]

Vol. 90

Tuesday,

No. 12

January 21, 2025

Part II





Securities and Exchange Commission





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17 CFR Parts 202, 232, 240, et al.





Electronic Submission of Certain Materials Under the Securities 
Exchange Act of 1934; Amendments Regarding the FOCUS Report; Final Rule

  Federal Register / Vol. 90 , No. 12 / Tuesday, January 21, 2025 / 
Rules and Regulations  

[[Page 7250]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 202, 232, 240, 249, and 249b

[Release Nos. 33-11342; 34-101925; IC-35420; File No. S7-08-23]
RIN 3235-AL85


Electronic Submission of Certain Materials Under the Securities 
Exchange Act of 1934; Amendments Regarding the FOCUS Report

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'' or 
``SEC'') is amending its rules to require electronic filing or 
submission of certain forms and other filings or submissions that are 
required to be filed with or submitted to the Commission under the 
Securities Exchange Act of 1934 (``Exchange Act'') and the rules and 
regulations under the Exchange Act. The amendments require the 
electronic filing or submission on the Commission's Electronic Data 
Gathering, Analysis, and Retrieval (``EDGAR'') system, using structured 
data where appropriate, for certain forms filed or submitted by self-
regulatory organizations (``SROs''). The amendments require the 
information currently contained in Form 19b-4(e) to be publicly posted 
on the SRO's website and remove the manual signature requirements for 
SRO proposed rule change filings. The Commission is also requiring that 
a clearing agency post supplemental material to its website. In 
addition, the Commission is amending rules under the Exchange Act and 
the Securities Act of 1933 (``Securities Act'') to require the 
electronic filing or submission on EDGAR, using structured data where 
appropriate, of certain forms, reports, and notices provided by broker-
dealers, security-based swap dealers, and major security-based swap 
participants. The amendments also require withdrawal in certain 
circumstances of notices filed in connection with an exception to 
counting certain dealing transactions toward determining whether a 
person is a security-based swap dealer. Finally, the Commission is 
allowing electronic signatures in certain broker-dealer filings, and 
amending the Financial and Operational Combined Uniform Single Report 
(``FOCUS Report'') to harmonize with other rules, make technical 
corrections, and provide clarifications.

DATES: 
    Effective date: March 24, 2025.
    Compliance dates: The compliance dates for the rule amendments are 
discussed in section VIII of this release.

FOR FURTHER INFORMATION CONTACT: For Form 1--Justin Pica, Assistant 
Director, and David Remus, Special Counsel; for Form 1-N--David 
Dimitrious, Senior Special Counsel, and Michou Nguyen, Special Counsel; 
for Form 15A--Molly Kim, Assistant Director, and David Michehl, Special 
Counsel; for Form CA-1--Matthew Lee, Assistant Director, and Claire 
Noakes, Senior Special Counsel; for Form 19b-4(e) and technical 
amendment to Form 19b-4--Cristie March, Senior Special Counsel, and 
Edward Cho, Special Counsel; for Rule 17a-22--Matthew Lee, Assistant 
Director, and Susan Petersen, Special Counsel; for Rule 17a-5, Rule 
17a-12, Rule 18a-7, Form X-17A-5 Part III and related annual filings, 
Form X-17A-5 Parts II, IIA, and IIC, Form 17-H, and Form X-17A-19--
Raymond A. Lombardo, Assistant Director, and Valentina Minak Deng, 
Special Counsel; for notices provided pursuant to Rule 3a71-3(d)(1)(vi) 
and Rule 15fi-3(c)--Carol McGee, Associate Director; John Guidroz, 
Assistant Director, and Israel Goodman, Senior Counsel; and for reports 
submitted pursuant to Rule 15fk-1(c)(2)(ii)(A), Kelly Shoop, Branch 
Chief, and Patrick Bloomstine, Attorney-Adviser, Division of Trading 
and Markets, at (202) 551-5500, Securities and Exchange Commission, 100 
F Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is amending its rules to 
require the electronic filing or submission, using structured data 
where appropriate, of certain forms and other filings,\1\ which are 
currently filed with or submitted to the Commission in paper or via 
email or are new filing requirements. This release is divided into five 
parts: (1) forms that are filed or submitted by or otherwise made 
available electronically by SROs (``Covered SRO Forms''); (2) 
supplementary materials (``Covered Supplementary Materials'') required 
to be posted on the internet websites of clearing agencies; (3) forms 
and related filings filed or submitted by broker-dealers and over-the-
counter derivatives dealers (``OTC derivatives dealers''), as well as 
security-based swap dealers (``SBSDs'') and major security-based swap 
participants (``MSBSPs'') (each SBSD and each MSBSP also referred to as 
an ``SBS Entity'' and together referred to as ``SBS Entities''); (4) 
other notices, filings, and reports consisting of (a) Form X-17A-19; 
(b) 17 CFR 240.3a71-3(d)(1)(vi) (``Rule 3a71-3(d)(1)(vi)'') Notices; 
(c) 17 CFR 240.15Fi-3(c) (``Rule 15fi-3(c)'') Notices; and (d) 17 CFR 
240.15Fk-1(c)(2)(ii)(A) (``Rule 15fk-1(c)(2)(ii)(A)'') Compliance 
Reports; and (5) amendments regarding the FOCUS Report, that, among 
other things, would modernize signature requirements in Exchange Act 
Rules 17a-5, 17a-12, and 18a-7.\2\ The Commission is adopting 
amendments to or relating to the following rules:
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    \1\ For purposes of this release, the term ``form'' means any 
Commission-created document labeled as a ``Form'' that is required 
to be submitted or filed electronically, and the term ``filing'' 
means any form, notice, report, or material required to be submitted 
or filed electronically or required to be posted on an internet 
website in lieu of being submitted or filed.
    \2\ The Commission's release also includes amendments to CFR 
designations in order to ensure regulatory text conforms more 
consistently with section 2.13 of the Document Drafting Handbook. 
See Office of the Federal Register, Document Drafting Handbook (Aug. 
2018 Edition, Revision 2.1, dated Oct. 2023), available at https://www.archives.gov/files/federal-register/write/handbook/ddh.pdf. For 
rules being amended in this release that contain an uppercase letter 
in their CFR citations (other than temporary rules like 17 CFR 
240.17h-2T), the Commission is amending their CFR section 
designations to replace each such uppercase letter with the 
corresponding lowercase letter, and, in one case, to also 
redesignate the rule numbering. For example, 17 CFR 240.15Fi-3 is 
being redesignated as 17 CFR 240.15fi-3, 17 CFR 240.15Fk-1 is being 
redesignated as 17 CFR 240.15fk-1, 17 CFR 240.15Aa-1 is being 
redesignated as 17 CFR 240.15aa-1, and 17 CFR 240.15Aj-1 is being 
redesignated as 17 CFR 240.15aa-2.

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[GRAPHIC] [TIFF OMITTED] TR21JA25.000

    Finally, the Commission is rescinding:
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    \3\ See 15 U.S.C. 77a through 77mm.
    \4\ See 15 U.S.C. 78a through 78qq.

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[GRAPHIC] [TIFF OMITTED] TR21JA25.001

    In developing this release with regard to SBS Entities, the 
Commission has consulted and coordinated with the CFTC and the 
prudential regulators in accordance with the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (``Dodd-Frank Act'').\5\
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    \5\ See Public Law 111-203, 124 Stat. 1376 (2010). Section 
712(a)(2) of the Dodd-Frank Act provides in part that the Commission 
shall ``consult and coordinate to the extent possible with the 
Commodity Futures Trading Commission and the prudential regulators 
for the purposes of assuring regulatory consistency and 
comparability, to the extent possible.''
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Table of Contents

I. Introduction
    A. Experience With Targeted Regulatory Assistance During the 
COVID-19 Pandemic
    B. Covered SRO Forms
    C. Covered Supplementary Materials
    D. Filings by Broker-Dealers, OTC Derivatives Dealers, SBSDs, 
and MSBSPs
    E. Other Forms, Reports, or Notices
    F. Structured Data Requirements
    G. Amendments Regarding the FOCUS Report and Signature 
Requirements in Rule 17a-5, 17a-12, and 18a-7 Filings
II. Requirements to Electronically File Covered SRO Forms
    A. Form 1
    1. Relevant Statutory Framework
    2. Previous Requirements for Filing Form 1
    3. Requirement to Electronically File Form 1
    B. Form 1-N
    1. Relevant Statutory Framework
    2. Previous Requirements for Filing Form 1-N
    3. Requirement to Electronically File Form 1-N
    C. Form 15A
    1. Relevant Statutory Framework
    2. Previous Requirements for Filing Forms X-15AA-1, X-15AJ-1, 
and X-15AJ-2
    3. Requirements to Electronically File on Form 15A Information 
Previously Filed on Forms X-15AA-1, X-15AJ-1, and X-15AJ-2
    D. Form CA-1
    1. Relevant Statutory Framework
    2. Pre-Existing Requirements for Filing Form CA-1
    3. Comment Regarding Proposed Changes to Rule 17ab2-1 and Form 
CA-1
    4. Requirement to Electronically File Form CA-1
    5. Amendments to Rule 17ab2-1
    6. Amendments to Form CA-1 and the Form CA-1 Instructions
    E. Form 19b-4(e)
    1. Relevant Statutory Framework
    2. Background of Rule 19b-4(e)
    3. Previous Requirements for Filing Form 19b-4(e)
    4. Rescission of Form 19b-4(e)
    F. Rule 19b-4(j) and Form 19b-4
    1. Relevant Statutory Framework
    2. Rule Change
    G. Conforming Technical Amendment to Rule 202.3(b) Under the 
Exchange Act
III. Requirements for Clearing Agencies to Electronically File 
Covered Supplemental Materials
    A. Preexisting Rule 17a-22
    B. Amended Rule 17a-22
    1. Two-Day Timeframe for Compliance
    2. Scope of Supplemental Materials
    3. Meaning of ``Generally Available''
    4. Requirement to ``Prominently Post''
IV. Requirements to Electronically File Broker-Dealer, OTC 
Derivatives Dealer, and SBS Entity Reports
    A. Rules 17a-5, 18a-7, and 17a-12
    B. Rule 17h-2T and Form 17-H
V. Other Forms, Reports, or Notices
    A. Notices Pursuant to Rule 17a-19 and Form X-17A-19
    B. Notice (and Any Withdrawal of a Notice) Filed Pursuant to 
Rule 3a71-3(d)(1)(vi)
    1. Proposed Rule
    2. Amended Rule
    C. Notice (and Any Amendment, including Notice of Dispute 
Termination) Provided Pursuant to Rule 15fi-3(c)
    1. Proposed Rule
    2. Amended Rule
    D. Compliance Reports Submitted to the Commission pursuant to 
Rule 15fk-1(c)(2)(ii)(A)
    1. Proposed Rule
    2. Final Rule
VI. Amendments Regarding the FOCUS Report and Signature Requirements 
in Rule 17a-5, 17a-12, and 18a-7 Filings
    A. Corrective and Clarifying Amendments to the FOCUS Report
    B. Harmonizing FOCUS Report Part IIC With the Call Report
    C. OTC Derivatives Dealer FOCUS Report Filing Requirement
    D. Signature Requirements in Rule 17a-5, 17a-12, and 18a-7 
Filings
    1. Number of Signatures on FOCUS Report
    2. Electronic Signatures in Rule 17a-5, 17a-12, and 18a-7 
Filings
VII. Amendments to Regulation S-T (Including Structured Data 
Requirements) and Rule 24b-2
    A. Amendments to Regulation S-T (Including Structured Data 
Requirements)
    B. Amendments to Rule 24b-2
VIII. Compliance Dates
IX. Paperwork Reduction Act
    A. Summary of Collection of Information
    1. Form ID
    2. Rules 6a-1, 6a-2, 6a-3, and Form 1
    3. Rule 6a-4 and Form 1-N
    4. Rules 15aa-1 and 15aa-2; Form 15A
    5. Rule 17ab2-1 and Form CA-1
    6. Rule 19b-4(e) and Form 19b-4(e)
    7. Rule 19b-4(j) and Form 19b-4
    8. Rule 17a-22
    9. Rules 17a-5, 18a-7, and 17a-12
    10. Rule 17h-2T
    11. Rule 17a-19 and Form X-17A-19
    12. Rule 3a71-3(d)(1)(vi)
    13. Rule 15fi-3(c)
    14. Rule 15fk-1(c)(2)(ii)(A)
    B. Use of Information
    1. Form ID
    2. Rules 6a-1, 6a-2, 6a-3, and Form 1
    3. Rule 6a-4 and Form 1-N
    4. Rules 15aa-1 and 15aa-2; Form 15A
    5. Rule 17ab2-1 and Form CA-1
    6. Rule 19b-4(e) and Form 19b-4(e)
    7. Rule 19b-4(j) and Form 19b-4
    8. Rule 17a-22
    9. Rules 17a-5, 18a-7, and 17a-12
    10. Rule 17h-2T
    11. Rule 17a-19 and Form X-17A-19
    12. Rule 3a71-3(d)(1)(vi)
    13. Rule 15fi-3(c)
    14. Rule 15fk-1(c)(2)(ii)(A)
    C. Respondents
    1. Form ID
    2. Rules 6a-1, 6a-2, 6a-3, and Form 1
    3. Rule 6a-4, Form 1-N
    4. Rules 15aa-1 and 15aa-2; Form 15A
    5. Rule 17ab2-1, Form CA-1
    6. Rule 19b-4(e), Form 19b-4(e)
    7. Rule 19b-4(j), Form 19b-4
    8. Rule 17a-22
    9. Rules 17a-5, 18a-7, and 17a-12
    10. Rule 17h-2T
    11. Rule 17a-19 and Form X-17A-19
    12. Rule 3a71-3(d)(1)(vi)
    13. Rule 15fi-3(c)
    14. Rule 15fk-1(c)(2)(ii)(A)
    D. Total Initial and Annual Reporting and Recordkeeping Burdens
    1. Form ID
    2. Rules 6a-1, 6a-2, 6a-3 and Form 1
    3. Rule 6a-4, Form 1-N
    4. Rules 15aa-1 and 15aa-2; Form 15A
    5. Rule 17ab2-1, Form CA-1
    6. Rule 19b-4(e), Form 19b-4(e)
    7. Rule 19b-4(j), Form 19b-4
    8. Rule 17a-22
    9. Rules 17a-5, 18a-7, and 17a-12
    10. Rule 17h-2T
    11. Rule 17a-19 and Form X-17A-19
    12. Rule 3a71-3(d)(1)(vi)
    13. Rule 15fi-3(c)
    14. Rule 15fk-1(c)(2)(ii)(A)
    E. Collection of Information is Mandatory
    F. Confidentiality of Responses to Collection of Information
    G. Retention Period for Recordkeeping Requirements
X. Economic Analysis
    A. Broad Economic Considerations

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    B. Baseline
    1. Affected Entities
    2. Paper and Limited Electronic Submission
    3. Structured Data
    C. Economic Effects
    1. Benefits
    2. Costs
    D. Efficiency, Competition, and Capital Formation
    E. Reasonable Alternatives
    1. Exempt Certain Entities or Disclosures From Structured Data 
Requirements
    2. Require Structured Data on Form 1-N, Form 15A, and ANE 
Exception Notices to Same Extent as Structured Documents
    3. Replace Inline XBRL Requirements With Custom XML Requirements 
or Vice Versa
    4. Require Structured Data Languages Other Than Inline XBRL and 
Custom XML
    5. Permit, Not Require, Structured Data for Affected Documents
    6. Exempt Smaller Entities from Electronic Submission or Posting 
Requirements
    7. Require SROs To Submit Form 19b-4(e) via EDGAR
    8. Require the Use of Dedicated Mailbox
XI. Final Regulatory Flexibility Act Analysis
    A. Regulatory Flexibility Act Certification
    B. Regulatory Flexibility Act Analysis
    1. Need for, and Objectives of, the Final Amendments
    2. Significant Issues Raised by Public Comments
    3. Small Entities Subject to Final Amendments
    4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    5. Significant Alternatives
XII. Other Matters
Statutory Authority

I. Introduction

A. Experience With Targeted Regulatory Assistance During the COVID-19 
Pandemic

    As part of its response to the COVID-19 pandemic, the Commission 
and its staff provided assistance and regulatory relief to market 
participants, as appropriate, to facilitate the continued orderly and 
fair functioning of the securities markets.\6\ As part of these 
efforts, Division of Trading and Markets (``Division'') staff issued a 
statement providing that the staff would not recommend enforcement 
action if filers and registrants made alternative arrangements, as 
detailed in the statement, for delivery, execution, and notarization of 
certain paper filings.\7\ More specifically, the staff stated that it 
would not recommend that the Commission take enforcement action with 
respect to any failure to comply with the paper format submission 
requirement or manual signature requirement of certain ``Impacted Paper 
Submissions'' (as defined in the Updated Staff Statement), which 
included, but were not limited to, broker-dealer audited annual 
reports, Form 1 filings for national securities exchanges, and Form CA-
1 filings for clearing agencies.
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    \6\ See generally, e.g., An Update on the Commission's Targeted 
Regulatory Relief to Assist Market Participants Affected by COVID-19 
and Ensure the Orderly Function of our Markets (public statement by 
Chairman Jay Clayton, William Hinman, Director, Division of 
Corporation Finance, Dalia Blass, Director, Division of Investment 
Management, Brett Redfearn, Director, Division of Trading and 
Markets (Jan. 26, 2020, updated Jan. 5, 2021)), available at https://www.sec.gov/news/public-statement/update-commissions-targeted-regulatory-relief-assist-market-participants.
    \7\ See generally Division Updated Staff Statement Regarding 
Certain Paper Submissions in Light of COVID-19 Concerns (``Updated 
Staff Statement''), available at https://www.sec.gov/tm/paper-submission-requirements-covid-19-updates-061820. Staff reports, 
Investor Bulletins, and other staff documents cited in this release 
represent the views of Commission staff and are not a rule, 
regulation, or statement of the Commission. The Commission has 
neither approved nor disapproved the content of these documents and, 
like all staff statements, they have no legal force or effect, do 
not alter applicable law, and create no new or additional 
obligations for any person.
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    In general, electronic filing of Impacted Paper Submissions has 
been practical and efficient. It also has been the Commission's 
experience that electronic filing has been positively received by the 
various registrants that have used it. Based in part on these positive 
experiences with electronic filing during the COVID-19 pandemic, and as 
part of its efforts to modernize the methods by which it collects and 
analyzes information from registrants, the Commission proposed to amend 
certain rules and forms to require that a number of the filings be 
submitted to the Commission electronically on EDGAR using structured 
data where appropriate.\8\ The Commission received comment letters in 
response to the Proposing Release \9\ and, as set forth in more detail 
below, is adopting the proposed amendments with certain modifications 
in response to comments.
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    \8\ See Electronic Submission of Certain Materials Under the 
Securities Exchange Act of 1934; Amendments Regarding the FOCUS 
Report; Exchange Act Release No. 97182 (Mar. 22, 2023), 88 FR 23920 
(Apr. 18, 2023) (``Proposing Release'').
    \9\ The comments on the Proposing Release (File No. S7-08-23) 
are available at https://www.sec.gov/comments/s7-08-23/s70823.htm.
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B. Covered SRO Forms

    The Commission is requiring, as proposed, that the following forms 
be filed electronically on EDGAR:

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[GRAPHIC] [TIFF OMITTED] TR21JA25.002

    Prior to these amendments, the Commission's regulatory framework 
required an entity seeking to be registered as a national securities 
exchange (or seeking an exemption from such registration based on 
limited volume), a national securities association, a clearing agency 
(or seeking an exemption from such registration), and a national 
securities exchange solely for the purpose of trading futures on 
individual stocks or on narrow-based stock indexes \11\ (``Security 
Futures Product Exchange'') to file, in a paper-based format, certain 
forms that are mandated by rules under the Exchange Act. Registered 
national securities exchanges, registered national securities 
associations, registered clearing agencies, and registered Security 
Futures Product Exchanges (collectively, SROs), as well as exempt 
exchanges and exempt clearing agencies (together with prospective SROs, 
``Filers''), were also required to submit paper-based amendments to 
their respective forms. The Commission's amendments modernize the 
filing process for these various forms by requiring that the forms and 
information contained therein be submitted to the Commission 
electronically, thereby removing the burden of preparing and submitting 
paper forms by the Filers, and of receiving, acting upon, and 
maintaining the paper forms by the Commission and its staff.
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    \10\ See 17 CFR 249.802 and 803. The forms and instructions to 
the form are incorporated by reference into the Code of Federal 
Regulations.
    \11\ Futures on individual stocks or on narrow-based stock 
indexes are hereinafter referred to as ``security futures 
products.''
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    In particular, as required by Rule 6a-1, Rule 6a-2, and Rule 6a-3 
under the Exchange Act, a prospective exchange must file on Form 1 an 
application for registration as a national securities exchange (or for 
an exemption from the requirement to register as a national securities 
exchange based on limited volume), and, once registered, the exchange 
must file as an amendment to its Form 1 certain updating information, 
as well as certain supplemental material and reports. In addition, as 
required by Rule 6a-4 under the Exchange Act, a

[[Page 7255]]

prospective exchange may register as a Security Futures Product 
Exchange by filing Form 1-N (``notice registration'') if it satisfies 
certain prerequisites and must file amendments to its initial filing 
and certain supplemental materials on Form 1-N as well. An applicant 
for registration as a national securities association must file a 
registration statement with the Commission on Form X-15AA-1, and every 
association applying for registration or registered as a national 
securities association must file amendments and supplements to its 
registration statement with the Commission on Form X-15AJ-1 and annual 
supplements to its registration statement with the Commission on Form 
X-15AJ-2. Moreover, as required by Rule 17ab2-1 under the Exchange Act, 
a prospective clearing agency must file on Form CA-1 an application for 
registration as a clearing agency (or for an exemption from such 
registration), and both registered and exempt clearing agencies must 
file amendments to their Form CA-1 as necessary. In each of the 
foregoing situations, these forms were required to be submitted to the 
Commission in a paper-based format. As a result, the prospective and 
existing SROs, exempt exchanges, and exempt clearing agencies have 
incurred the costs of completing their respective paper-based forms, 
making the requisite number of copies, and submitting the original 
version and copies to the Commission.
    The Commission also is rescinding the following form, as proposed, 
and instead requiring that the information currently contained in the 
form be publicly posted on the relevant SRO's internet website:
[GRAPHIC] [TIFF OMITTED] TR21JA25.003

    Previously, Rule 19b-4(e) under the Exchange Act required an SRO to 
submit to the Commission reports regarding the listing and trading of 
new derivative securities products on Form 19b-4(e) in a paper-based 
format. As with the forms discussed above in this section, SROs 
incurred the costs of completing the paper-based form, making the 
requisite number of copies, and submitting the original version and 
copies to the Commission.

C. Covered Supplementary Materials

    Rule 17a-22 requires a registered clearing agency to file with the 
Commission three copies of any material within 10 days after issuing, 
or making generally available, such materials to its participants or to 
other entities with whom it has a significant relationship.\12\ A 
registered clearing agency for which the Commission is not the 
appropriate regulatory agency is required at the same time to file one 
copy of such material with its ``appropriate regulatory agency'' 
(``ARA'').\13\ While the rule continues to support the Commission's 
oversight of clearing agencies, the rule is being modernized to better 
reflect the ways in which the registered clearing agencies now 
generally distribute the supplemental materials required under the 
rule, as discussed further below.
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    \12\ See 17 CFR 240.17a-22. Such materials are hereinafter 
referred to as ``supplementary materials.''
    \13\ See id. When used with respect to a clearing agency, the 
term ``appropriate regulatory authority'' is defined under section 
3(a)(34)(B) of the Exchange Act to mean broadly the Comptroller of 
the Currency, the Board of Governors of the Federal Reserve System 
(``Federal Reserve''), or the Federal Deposit Insurance Corporation, 
depending on the type of bank that is acting as a registered 
clearing agency. See 15 U.S.C. 78c(a)(34).
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    Since the Commission adopted Rule 17a-22 in 1980, technology has 
evolved significantly and the internet has played an increasingly vital 
role in information distribution.\14\ During this period, the 
Commission has encouraged the dissemination of information 
electronically via the internet, as well as through the use of 
automated systems and other services provided by clearing agencies.\15\ 
In general, transitioning from a requirement to file paper with the 
Commission to an electronic filing requirement can help improve 
efficiency and transparency in the securities markets for registered 
clearing agencies, their participants, and the general public. Most 
recently, under the Updated Staff Statement described above,\16\ 
registered clearing agencies have established alternate arrangements to 
satisfy the requirements of Rule 17a-22 that do not require the 
submission of paper filings.
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    \14\ See, e.g., The Impact of Recent Technological Advances on 
the Securities Market (Sept. 1997), available at https://www.sec.gov/news/studies/techrp97.htm. In this report, the 
Commission stated that it was mindful of the benefits of increasing 
use of new technologies, such as the internet, to access information 
more efficiently.
    \15\ Id. See also, e.g., Commission Interpretation: Confirmation 
and Affirmation of Securities Trades; Matching, Exchange Act Release 
No. 39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 18, 1998), available at 
https://www.sec.gov/rule-release/34-39829; Commission 
Interpretation: Use of Electronic Media, Exchange Act Release No. 
42728 (Apr. 28, 2000), 65 FR 25843 (May 4, 2000), available at 
https://www.sec.gov/rules/interp/34-42728.htm; Press Release: SEC 
Provides Guidance to Open Up Use of Corporate websites for 
Disclosures to Investors (July 30, 2008), available at https://www.sec.gov/news/press/2008/2008-158.htm.
    \16\ See supra note 7.
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    The Commission is now amending Rule 17a-22 to eliminate the paper 
filing requirement altogether and require a registered clearing agency 
to post any supplementary materials to its internet website, as 
discussed further below.\17\ The amended rule increases efficiency in 
the distribution of supplementary materials required under the rule and 
promotes transparency regarding their contents, as these supplementary 
materials are intended to be made generally available to participants 
in the clearing agency or other categories of market participants with 
whom the clearing agency has a significant relationship.
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    \17\ See generally infra section III.
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D. Filings by Broker-Dealers, OTC Derivatives Dealers, SBSDs, and 
MSBSPs

[[Page 7256]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.004

    Certain forms and other filings that the Commission is requiring to 
be filed on EDGAR by broker-dealers, OTC derivatives dealers, SBSDs, 
and MSBSPs are appropriate for electronic filing because many of them 
are voluminous (in number, size, or both) and some of them contain 
certain information that must be disclosed publicly.\18\ Electronic 
conversion and/or publication of these filings by Commission staff, to 
make them available to the public and/or Commission staff, can be labor 
intensive and time consuming. Requiring submission of these filings on 
the Commission's established EDGAR filing system will facilitate more 
efficient transmission, analysis, dissemination, storage, and retrieval 
of information, and will benefit the Commission, the submitting 
entities, investors, and other market participants.
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    \18\ See generally infra section IV.
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    The Commission is requiring the existing EDGAR system to be used 
for certain filings because Form X-17A-5 Part III and Form 17-H are 
already permitted to be filed on EDGAR. In turn, this will minimize the 
burden of transitioning to mandatory filing on EDGAR.

E. Other Forms, Reports, or Notices

[[Page 7257]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.005

    The Commission is adopting amendments requiring the EDGAR system to 
be used for the following notices, reports, and filings: (1) notices 
made pursuant to Rule 17a-19 under the Exchange Act and on accompanying 
Form X-17A-19; (2) notices made pursuant to Rule 3a71-3(d)(1)(vi); (3) 
notices made to the Commission pursuant to Rule 15fi-3(c); and (4) 
reports made pursuant to Rule 15fk-1(c)(2)(ii)(A) under the Exchange 
Act. Previously, the notices made pursuant to Rule 17a-19 under the 
Exchange Act and on accompanying Form X-17A-19 were submitted via 
paper.\19\ The notices made pursuant to Rule 3a71-3(d)(1)(vi) were 
previously filed via email.\20\ The notices made to the Commission 
pursuant to Rule 15fi-3(c) were previously submitted either via email 
or EDGAR, at the SBS Entity's option, and the reports required under 
Rule 15fk-1(c)(2)(ii)(A) were previously submitted via email, mail, or 
EDGAR, at the SBS Entity's option.\21\
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    \19\ See infra section V.A.
    \20\ See infra section V.B.
    \21\ See infra section V.C. and V.D. Rule 15fi-3(c) requires 
that SBS Entities ``notify the Commission'' (emphasis added). See 
infra section V.C.1. Requiring these notices and amendments to be 
submitted to the Commission via EDGAR does not cause them to be 
deemed filed for purposes of the Exchange Act. See, e.g., 15 U.S. 
Code 78r. 17 CFR 240.15fk-1(c) (``Rule 15fk-1(c)'') requires that 
the chief compliance officer of an SBS Entity prepare and sign an 
annual compliance report that ``shall [b]e submitted to the 
Commission.'' 17 CFR 240.15fk-1(c) (emphasis added). Requiring these 
reports to be submitted via EDGAR does not cause the report to be 
deemed filed for purposes of the Exchange Act.
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F. Structured Data Requirements

    The Commission is requiring, as proposed, certain of the 
disclosures required by the following filings to be provided in a 
structured, machine-readable data language: (1) the Covered SRO Forms; 
(2) the information required under Rule 19b-4(e); (3) Form X-17A-19; 
(4) the annual reports (and related annual filings) filed by broker-
dealers (including OTC derivatives dealers) and

[[Page 7258]]

SBS Entities on Form X-17A-5 Part III; (5) the risk assessment reports 
filed by certain broker-dealers on Form 17-H; and (6) the notices and 
reports provided to the Commission by SBS Entities under Exchange Act 
Rules 15fi-3(c) and 15fk-1(c)(2)(ii)(A), respectively (together, the 
``Structured Documents'').\22\
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    \22\ For certain affected documents, as proposed, only some 
aspects are required to be provided in a structured data language. 
For example, only the execution pages of Form 1-N and Form 15A are 
required to be provided in a structured data language. See infra 
section VII.A.
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    Specifically, the Commission is requiring, as proposed, the report 
required by Exchange Act Rule 15fk-1(c)(2)(ii)(A) and portions of Form 
1, Form CA-1, Form 17-H, and Form X-17A-5 Part III and related annual 
filings to be provided in the Inline XBRL structured data language. The 
Commission is also requiring, as proposed, Form X-17A-19, the notice to 
the Commission (and any amendments to the notices) required by Exchange 
Act Rule 15fi-3(c), and portions of Form 1-N, Form 15A, Form 1, Form 
CA-1, Form 17-H, and Form X-17A-5 Part III and related annual filings 
to be provided in machine-readable, eXtensible Markup Language 
(``XML'')-based data languages specific to those documents (``custom 
XMLs''). As proposed, these structured documents will be filed or 
submitted, as appropriate to each document, on EDGAR.\23\
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    \23\ The details of the structured data requirements, including 
the specific portions of affected documents that will be structured 
in Inline XBRL versus custom XML, are discussed in section VII.A 
below.
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    In addition, the Commission is requiring, as proposed, SROs to 
electronically post the information required under Rule 19b-4(e) using 
a custom XML-based data language (also referred to as a ``schema'') 
that the Commission will create and publish on its website for SROs to 
use.\24\ The Commission is also requiring, as proposed, SROs to post a 
rendered Portable Document Format (``PDF'') version of the custom XML 
document using a PDF renderer that the Commission will also create and 
publish on its website for SROs to use.\25\
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    \24\ This requirement will mirror the existing requirement for 
registered broker-dealers to electronically post reports containing 
order routing information using the most recent versions of the XML 
schema and the associated PDF renderer as published on the 
Commission's website. See 17 CFR 242.606. The custom XML schema and 
PDF renderer for Rule 606 reports are available at https://www.sec.gov/structureddata/dera_taxonomies.
    \25\ See id.
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    As discussed in further detail below, the structured data 
requirements will facilitate access to the disclosures by users (e.g., 
investors, market participants, analysts, and the Commission), enabling 
more efficient retrieval, aggregation, and comparison across different 
filers and time periods, as compared to an unstructured PDF, HyperText 
Markup Language (``HTML''), or American Standard Code for Information 
Interchange (``ASCII'') requirement.\26\
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    \26\ See infra sections VII.A and X.C.
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    The Commission is requiring, as proposed, some disclosures to be 
structured in Inline XBRL and other disclosures to be structured in 
custom XML. While Inline XBRL is well-suited for certain types of 
content--such as financial statements and extended narrative 
discussions--other types of content can be readily captured using 
custom XML data languages that yield smaller file sizes than Inline 
XBRL and thus facilitate more streamlined data processing. Such custom 
XML languages also enable EDGAR to generate fillable web forms that 
permit affected entities to input disclosures into form fields rather 
than encode their disclosures in custom XML themselves, thus easing 
compliance burdens on affected entities.\27\ Finally, certain of the 
structured documents--Form X-17A-5 Part III and Form 17-H--were 
previously partially subject to custom XML structured data requirements 
when voluntarily filed on EDGAR. For these forms, the Commission is 
requiring, as proposed, the same custom XML requirements to minimize 
the associated burdens on registrants that were previously using these 
languages for these forms.
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    \27\ See infra section X.E.3 (discussing and responding to one 
commenter's statement that XBRL should be used for all Structured 
Documents).
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    One commenter stated that the Commission ``should make clear that 
the [Proposing Release] would not modify the content and format of 
reports that substituted compliance firms are required to submit.'' 
\28\ The Commission's orders granting substituted compliance 
(``substituted compliance orders'') \29\ condition substituted 
compliance for the requirements of certain Exchange Act rules in part 
on a non-U.S. SBS Entity providing information to the Commission, 
including reports and other information required by foreign law. The 
substituted compliance orders do not, however, address how an SBS 
Entity relying on substituted compliance should provide such 
information to the Commission (e.g., via EDGAR or in structured data 
format).\30\ Rather, the Commission's website provides information 
regarding submitting notices and amendments under Rule 15fi-3(c) \31\ 
and the annual report required by Rule 15fk-1(c) \32\ as well as filing 
with the Commission annual audited reports required under local law 
when applying substituted compliance with respect to paragraph (c) of 
Rule 18a-7.\33\ Prior to the amendments adopted in this release, SBS 
Entities have been using this information on the Commission's website 
when providing filings and submissions required under the relevant 
Exchange Act rules and substituted compliance orders. Therefore, the 
amendments requiring submission or filing on EDGAR or in structured 
data

[[Page 7259]]

format do not modify the terms of the substituted compliance orders and 
eligible SBS Entities may continue to rely on existing substituted 
compliance orders regarding the requirements of a relevant rule. 
However, the instructions on the Commission's website regarding the 
submission or filing of reports and other information that SBS Entities 
provide to the Commission pursuant to a substituted compliance order 
will be updated to specify how an SBS Entity must provide such 
information to the Commission in a manner consistent with the 
electronic filing and submission and structured data amendments being 
made in this release. This release does not change the substituted 
compliance orders.\34\
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    \28\ See Letter from Kyle Brandon, Managing Director and Head of 
Derivatives Policy, Securities Industry and Financial Markets 
Association (May 22, 2023) (``SIFMA 5/22/2023 Letter'') at 3. See 
also SIFMA 5/22/2023 Letter at 7. Exchange Act Rule 3a71-6 (17 CFR 
240.3a71-6) provides a framework whereby non-U.S. SBS Entities may 
satisfy certain requirements under Exchange Act section 15F by 
complying with comparable regulatory requirements of a foreign 
jurisdiction. Because substituted compliance does not constitute 
exemptive relief, but instead provides an alternative method by 
which non-U.S. SBS Entities may comply with applicable Exchange Act 
requirements, the non-U.S. SBS Entities remain subject to section 
15F and the rules thereunder. See, e.g., Amended and Restated Order 
Granting Conditional Substituted Compliance in Connection With 
Certain Requirements Applicable to Non-U.S. Security-Based Swap 
Dealers and Major Security-based Swap Participants Subject to 
Regulation in the Federal Republic of Germany; Amended Orders 
Addressing Non-U.S. Security-Based Swap Entities Subject to 
Regulation in the French Republic or the United Kingdom; and Order 
Extending the Time To Meet Certain Conditions Relating to Capital 
and Margin, Exchange Act Release No. 93411 (Oct. 22, 2021), 86 FR 
59797, 59798 (Oct. 28, 2021).
    \29\ The Commission's current substituted compliance orders are 
available on the Commission's website at https://www.sec.gov/tm/Jurisdiction-Specific-Apps-Orders-and-MOU.
    \30\ To the extent the substituted compliance orders include a 
requirement regarding the manner or format of reports or information 
to be provided to the Commission, the substituted compliance orders 
only require that the report or information should be provided to 
the Commission in (1) the manner specified on the Commission's 
website; or (2) in the manner and format required by Commission rule 
or order. Either way, the specific manner or format for such reports 
and information to be delivered to the Commission is outside of the 
substituted compliance orders.
    \31\ See Staff Statement on Submitting Security-Based Swap 
Valuation Dispute Notices (available at https://www.sec.gov/tm/Security-Based-Swap-Valuation-Dispute-Notices).
    \32\ See Frequently Asked Questions Regarding Chief Compliance 
Officer Annual Reports Submitted by Security-Based Swap Dealers and 
Major Security-Based Swap Participants (available at https://www.sec.gov/tm/faqs-cco-annual-reports-sbsd).
    \33\ See Staff Statement on Submitting Notices, Statements, 
Applications, and Reports for Security-Based Swap Dealers and Major 
Security-Based Swap Participants Pursuant to the Financial 
Responsibility Rules (Exchange Act Rules 18a-1 through 18a-10) 
(available at https://www.sec.gov/tm/staff-statement-on-submissions).
    \34\ A commenter asked the Commission to confirm that the 
amendments to the FOCUS Report in this rulemaking would not affect 
the Manner and Format Order. See SIFMA 5/22/2023 Letter at 8. The 
order that specifies the manner and format of filing the FOCUS 
Report for firms relying on a Commission substituted compliance 
order will also be amended. See Order Specifying the Manner and 
Format of Filing Unaudited Financial and Operational Information by 
Security-Based Swap Dealers and Major Security-Based Swap 
Participants That Are Not U.S. Persons and Are Relying on 
Substituted Compliance Determinations With Respect to Rule 18a-7, 
Exchange Act release no. 93335 (Oct. 14, 2021), 86 FR 59208 (Oct. 
26, 2021) (``Manner and Format Order''). In particular, the Manner 
and Format Order will be amended to specify the following: (1) Firms 
will complete new lines 1F-1H (commissions on commodity 
transactions, all other commissions, total commissions) in the 
Statement of Income section of FOCUS Report Part II. (2) Because box 
1754b is being renumbered box JJ34b, firms will complete box JJ34b 
instead of box 1754b. (3) Firms will complete box 2143b (intangible 
assets) instead of boxes 3163b (goodwill) and 0426b (other 
intangible assets) since this release replaces boxes 3163b and 0426b 
(which are subtypes of intangible assets) with box 2143b. (4) Firms 
will complete new boxes P793b (common equity tier 1 capital ratio--
column A) and P793bb (common equity tier 1 capital ratio--column B), 
as applicable, due to the addition of this capital ratio to Basel 
III regulations.
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    Certain Structured Documents also include requirements to attach 
copies of existing documents, such as copies of bylaws, written 
agreements, user manuals, and listing applications. The Commission is 
requiring, as proposed, affected entities to file these copies of 
documents as unstructured PDF attachments to the otherwise structured 
forms. Requiring affected entities to retroactively structure such 
existing documents, which were prepared for purposes outside of 
fulfilling the Commission's disclosure requirements, would have imposed 
compliance burdens on affected entities that would not have been 
justified in light of the informational benefits that would have arisen 
from having such documents in structured form.\35\
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    \35\ See infra sections II.A.3, II.D.5, IV.B, and VII.A.
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    Similarly, Forms 1-N and 15A (other than the cover pages--i.e., 
execution pages--of those Forms) are, as proposed, not subject to 
structured data requirements, given that the very limited number of 
Form 1-N and Form 15A filers and filings limits the benefit that would 
have accrued from machine-readability of the disclosures contained 
therein.\36\ Notices filed pursuant to Rule 3a71-3(d)(1)(vi) (``ANE 
Exception Notices'') also are not subject to structured data 
requirements, as the very limited number of data points in such notices 
would have lessened the utility of any functionality enabled by 
structured data (such as efficient retrieval of individual data points 
from structured documents).\37\
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    \36\ See infra sections II.B.3, II.C.3, and VII.A.
    \37\ See infra sections V.B.2 and VII.A.
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    The Commission received several comments regarding the structured 
data requirements for the Structured Documents.\38\ These included 
comments related to structured data requirements for specific filings 
or submissions, comments related to structured data requirements more 
generally, comments related to the particular structured data languages 
specified for the Structured Documents, and comments related to the 
costs, benefits, and burdens arising from the structured data 
requirements.\39\ Each of these comments is discussed subsequently in 
the appropriate subsection or subsections of the release.\40\
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    \38\ See SIFMA 5/22/2023 Letter; Letter from Campbell Pryde, 
President and Chief Executive Officer, XBRL US (May 22, 2023) 
(``XBRL Letter''); Letter from Howard Spindel, Senior Managing 
Director, Integrated Solutions (May 22, 2023) (``Integrated 
Solutions Letter'').
    \39\ See SIFMA 5/22/2023 Letter at 1-7, 9, 11, and 14; XBRL 
Letter; Integrated Solutions Letter at 1, 2, and 4.
    \40\ For comments related specifically to structured data 
requirements for Form 1, Form CA-1, Rule 19b-4(e) information, Form 
X-17A-5 Part III, Form 17-H, Form X-17A-19, Rule 15fi-3(c) notices, 
and Rule 15fk-1 reports, see infra sections II.A.3 and II.D.5, 
II.E.4, IV.A, IV.B, V.A, V.C.2, and V.D.2, respectively. For 
comments related more generally to structured data requirements, see 
infra section VII.A. For comments related to the economic 
implications of the structured data requirements, see infra sections 
X.B.3, X.C.1.b, X.C.1.C., and X.E. A specific discussion of a 
comment related to substituted compliance and data is contained 
earlier in this section. See supra notes 28 to 34.
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G. Amendments Regarding the FOCUS Report and Signature Requirements in 
Rule 17a-5, 17a-12, and 18a-7 Filings

    Finally, the Commission is adopting amendments regarding the FOCUS 
Report to harmonize with other rules, make technical changes, and 
provide clarifications. In addition, the Commission is adopting 
amendments to allow electronic signatures in Rule 17a-5, 17a-12, and 
18a-7 filings, including the FOCUS Report.

II. Requirements to Electronically File Covered SRO Forms

    The Commission is amending certain Exchange Act rules and the 
Covered SRO Forms, including their instructions, to eliminate the 
current paper copy filing method and instead require electronic 
submission of the Covered SRO Forms. Changing from the current method 
of paper filing to electronic submission of the Covered SRO Forms 
ultimately will increase efficiencies and decrease costs for Filers 
with respect to their filing obligations.\41\ In addition the 
electronic filing of the Covered SRO Forms will facilitate the 
Commission's oversight of SROs by streamlining the process of tracking 
and reviewing the filings made on the Covered SRO Forms.
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    \41\ See infra section X.
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    The amendments require the Covered SRO Forms to be filed on EDGAR. 
The Commission is requiring the use of the existing EDGAR system for 
the Covered SRO Forms because these filings are similar to other 
filings that are currently submitted on EDGAR. Furthermore, many of the 
Covered SRO Forms contain information that must be disclosed publicly, 
and electronic conversion and/or publication of these filings by 
Commission staff is labor intensive and time consuming. Requiring the 
submission of these filings on EDGAR will facilitate more efficient 
transmission, analysis, dissemination, storage, and retrieval of 
information, and will benefit the Commission, the submitting entities, 
investors, and other market participants. As a result of the amendments 
to relevant Commission rules and forms as described below, any Filer of 
the Covered SRO Forms who has not previously made an electronic filing 
on EDGAR will need to apply for EDGAR access pursuant to the EDGAR 
Filer Manual \42\ in order to file documents on EDGAR.\43\
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    \42\ See EDGAR Filer Manual, available at https://www.sec.gov/edgar/filermanual (``EDGAR Filer Manual'').
    \43\ As discussed in more detail in the Paperwork Reduction Act 
section of this release, filers of Covered SRO Forms have not 
previously made electronic filings on EDGAR. See infra section 
IX.C.1 (1. Form ID).
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    For each of the Covered SRO Forms, the Commission is adding 
technical requirements to the form's general instructions to specify 
when a form is considered incomplete or deficient when filed. 
Specifically, each Filer is required to provide all the information 
required by the form, including the

[[Page 7260]]

exhibits, and a filing that is incomplete or otherwise deficient may be 
returned to the Filer. The general instructions for each form also set 
forth what composes a complete filing. For instance, the general 
instructions for Form 1 now state that a completed form filed with the 
Commission shall consist of Form 1, responses to all applicable items, 
and any exhibits required in connection with the filing.
    For each of the Covered SRO Forms, the general instructions require 
some or all of the information reported on the forms (including, where 
applicable, the exhibits to the forms) to be provided in a structured, 
machine-readable data language.\44\ For Form 1 and Form CA-1, the 
general instructions require the submissions to be provided in part 
using Inline XBRL and in part using custom XML data languages specific 
to those Forms, with certain submissions that constitute copies of 
existing documents of a Filer (such as copies of governing documents or 
copies of contracts) to be included as text-searchable PDF attachments 
rather than structured data.\45\ For Form 1-N and Form 15A, only the 
cover page (i.e., execution page) of each form is required to be 
structured in a custom XML data language, while the remainder of each 
form remains unstructured. Finally, the information under Rule 19b-
4(e)(2)(ii) is required to be provided on the listing SRO's website 
using a custom XML data language, thus making the information machine-
readable.
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    \44\ See also infra section V.A (discussing structured data 
requirements for Form X-17A-19, which is also filed by SROs).
    \45\ For example, the copies of governing documents that are 
required to be attached as Exhibit A to Form 1 and as part of 
Exhibit E to Form CA-1 are required to be included as a PDF 
attachment, rather than being structured in Inline XBRL or custom 
XML. See infra sections II.A.3 and II.D.5.
[GRAPHIC] [TIFF OMITTED] TR21JA25.006

    For Form CA-1, Schedule A and Exhibits C, F, H, J, K, L, M, O, R, 
and S must be filed in Inline XBRL.\46\ The execution page and Exhibits 
A (in part), B, D, E (in part), I, N, and Q must be filed in custom 
XML.\47\ Exhibits A (in part), E (in part), G, P, and T must be filed 
as unstructured PDF documents.\48\
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    \46\ Schedule A to the execution page requires certain 
descriptive responses to complement the clearing agency's execution 
page disclosures. Exhibit C requires a description of the clearing 
agency's organizational structure. Exhibit F requires a description 
of material pending legal proceedings involving the clearing agency. 
Exhibit H requires the clearing agency's financial statements. 
Exhibit J requires a description of the clearing agency's services 
and functions. Exhibit K requires a description of the clearing 
agency's security measures and procedures. Exhibit L requires a 
description of the clearing agency's safeguarding measures and 
procedures. Exhibit M requires a description of the clearing 
agency's backup systems. Exhibit O requires a description of 
criteria governing access to the clearing agency's services and a 
description of the reasons for imposing such criteria. Exhibit R 
requires a schedule of prohibitions and limitations on access to the 
clearing agency's services. Exhibit S requires, if applicable, a 
statement explaining why the clearing agency should be exempt.
    \47\ The execution page requires identifying information about 
the filer and the document being filed. Exhibit A requires, in 
relevant part, a list of persons controlling or directing the 
management or policies of the clearing agency, and descriptions of 
any unwritten agreements or arrangements through which such persons 
may exercise control or direction. Exhibit B requires a list of the 
clearing agency's officers, managers, and individuals occupying 
similar positions. Exhibit D requires a list of persons who are 
controlled by, or are under common control with, the clearing 
agency, as well as a description of each control relationship. 
Exhibit E requires, in relevant part, a list of dues, fees, and 
other charges imposed by the clearing agency for its clearing 
activities. Exhibit I requires the addresses of all offices in which 
the clearing agency conducts its activities, and an identification 
of the activities that are performed in each listed office. Exhibit 
N requires a list of participants, or applicants for participation, 
in the clearing agency. Exhibit Q requires a schedule of fees fixed 
by the clearing agency for services rendered by its participants.
    \48\ Exhibit A requires, in relevant part, copies of written 
agreements with persons who may control or direct the management or 
policies of the clearing agency. Exhibit E requires, in relevant 
part, a copy of the currently effective constitution, articles of 
incorporation or association, bylaws, rules, procedures and 
instruments corresponding thereto, of the clearing agency. Exhibit G 
requires copies of all contracts with any national securities 
exchange, national securities association or clearing agency or 
securities market for which the clearing agency acts as a clearing 
agency or performs clearing agency functions. Exhibit P requires 
copies of any forms of contracts governing the terms on which 
persons may subscribe to clearing agency services provided by the 
registrant. Exhibit T requires any conditions, reports, notices or 
other submissions to the Commission required as directed in any 
order approving applications for exemption from registration as a 
clearing agency.
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    For Form 1, Exhibits D, E (in part), and I must be filed in Inline 
XBRL.\49\

[[Page 7261]]

The execution page, Exhibits C (in part), H (in part), J, K, L, M, N, 
and the 17 CFR 240.6a-3(b) (``Rule 6a-3(b)'') volume reports must be 
filed in custom XML.\50\ Exhibits A, B, C (in part), E (in part), F, G, 
H (in part), and the 17 CFR 240.6a-3(a)(1) (``Rule 6a-3(a)(1)'') 
supplemental materials must be filed as unstructured PDF documents.\51\ 
For Forms 15A and 1-N, only the execution page must be filed using a 
structured data language (custom XML).\52\
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    \49\ Exhibit D requires the unconsolidated financial statements 
for the latest fiscal year for each of the exchange's subsidiaries 
and affiliates. Exhibit E requires, in relevant part, a description 
of the manner of operation of the electronic trading system that the 
exchange uses to effect transactions. Exhibit I requires audited 
financial statements for the exchange's latest fiscal year.
    \50\ The execution page requires identifying information about 
the filer and the document being filed. Exhibit C requires, in 
relevant part, information regarding each subsidiary or affiliate of 
the exchange, and each entity with whom the exchange has an 
agreement relating to the operation of an electronic trading system 
to be used to effect transactions on the exchange (such as the name 
and address of the organization, a brief description of the nature 
and extent of the affiliation, and a brief description of the 
business or functions of the organization). Exhibit H requires, in 
relevant part, a schedule of listing fees and a brief description of 
the criteria governing which securities may be traded on the 
exchange. Exhibit J requires a list of the exchange's officers, 
governors, standing committee members, or persons performing similar 
functions. Exhibit K requires a list of the exchange's significant 
owners, shareholders, or partners. Exhibit L requires descriptions 
of the criteria, conditions, and procedures governing membership in 
the exchange. Exhibit M requires a list of members, participants, 
subscribers, or other users of the exchange, as well as a 
description of each user's activities. Exhibit N requires schedules 
of securities traded on the exchange. Rule 6a-3(b) of the Exchange 
Act requires a report concerning the securities sold on the exchange 
during the previous calendar month. See 17 CFR 240.6a-3(b).
    \51\ Exhibit A requires copies of the constitution, articles of 
incorporation or association with all subsequent amendments, and of 
existing bylaws or corresponding rules or instruments, whatever the 
name, of the exchange. Exhibit B requires copies of all written 
rulings, settled practices having the effect of rules, and 
interpretations of the Governing Board or other committee of the 
exchange in respect of any provisions of the constitution, bylaws, 
rules, or trading practices of the exchange which are not included 
in Exhibit A. Exhibit C requires, in relevant part, copies of the 
constitution, a copy of the articles of incorporation or association 
including all amendments, and copies of the existing bylaws or 
corresponding rules or instruments for each of the exchange's 
subsidiaries or affiliates and for each entity with whom the 
exchange has an agreement relating to the operation of an electronic 
trading system to be used to effect transactions on the exchange. 
Exhibit E requires, in relevant part, a copy of the exchange's 
users' manual. Exhibit F requires a complete set of all forms 
pertaining to membership, participation, or subscription to the 
exchange, application for approval as a person associated with a 
member, participant, or subscriber of the exchange, or any other 
similar materials. Exhibit G requires a complete set of all forms of 
financial statements, reports, or questionnaires required of 
members, participants, subscribers, or any other users relating to 
financial responsibility or minimum capital requirements for such 
members, participants, or any other users. Exhibit H requires, in 
relevant part, a complete set of documents composing the exchange's 
listing applications, including any agreements required to be 
executed in connection with listing. Rule 6a-3(a)(1) of the Exchange 
Act requires any material (including notices, circulars, bulletins, 
lists, and periodicals) issued or made generally available to 
members of, or participants or subscribers to, the exchange. See 17 
CFR 240.6a-3(a)(1).
    \52\ The execution page requires identifying information about 
the filer and the document being filed.
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    Similarly, the information under Rule 19b-4(e)(2)(ii) is required 
to be provided on the listing SRO's website using a custom XML data 
language, thus making the information machine-readable.
[GRAPHIC] [TIFF OMITTED] TR21JA25.007

    The requirement that the Covered SRO Forms be filed, and 
information pursuant to Rule 19b-4(e) be posted, using structured data 
languages allows the Commission and, if applicable, investors, market 
participants, and other interested parties, to efficiently review and 
analyze the information.\53\ In addition, the requirement to file 
Covered SRO Forms on EDGAR in a structured data language enables EDGAR 
to perform technical validations (i.e., programmatic checks to ensure 
the documents are appropriately standardized, formatted, and complete) 
upon intake of the documents, which will improve the quality of the 
filed data by decreasing the incidence of non-substantive errors (such 
as the omission of values from fields that should always be populated).
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    \53\ For more detailed discussions of the anticipated benefits 
associated with structured data requirements, see infra sections 
VII.A. and X.C.1.b.
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    Based on the Commission's experience in reviewing the Covered SRO 
Forms and information posted pursuant to Rule 19b-4(e), the requirement 
to electronically file the Covered SRO Forms and electronically post 
the information required pursuant to Rule 19b-4(e) allows for more 
efficient use of Commission resources related to reviewing, assessing, 
and processing these filings and postings. In addition, information 
provided on the Covered SRO Forms will be captured automatically by 
EDGAR and is text-searchable or machine-readable. The information 
posted pursuant to Rule 19b-4(e) will be machine-readable as well. As a 
result, these features will facilitate the Commission's oversight of 
SROs.
    The amendments include no substantive changes to the information 
required to be filed on the Covered SRO Forms or the information 
required to be posted pursuant to Rule 19b-4(e). Rather, the amendment 
is intended simply to require and facilitate the electronic filing of 
the Covered SRO Forms and the disclosure of the information required 
under Rule 19b-4(e), which the SROs currently are required to provide 
to the Commission.

A. Form 1

1. Relevant Statutory Framework
    Section 6(a) of the Exchange Act states, ``[a]n exchange may be 
registered as a national securities exchange . . . by filing with the 
Commission an application for registration in such form as the 
Commission, by rule, may prescribe containing the rules of the exchange 
and such other information and documents as the Commission, by rule, 
may prescribe as necessary or appropriate in the public interest or for 
the protection of investors.'' \54\ Rules 6a-1, 6a-2, and 6a-3 \55\ 
under the Exchange Act and Form 1 \56\ set forth the filing 
requirements for registration as a national securities exchange and for

[[Page 7262]]

exempt exchanges, as well as requirements for the filing of 
supplemental material and reports.
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    \54\ See 15 U.S.C. 78f(a).
    \55\ See 17 CFR 240.6a-1; 17 CFR 240.6a-2; 17 CFR 240.6a-3.
    \56\ See 17 CFR 249.1.
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2. Previous Requirements for Filing Form 1
    Rule 6a-1 under the Exchange Act generally requires that an entity 
seeking to register as a national securities exchange, or seeking an 
exemption from such registration based on limited volume, file an 
application on Form 1 and correct any inaccuracy therein upon 
discovery.\57\ Form 1 contains an execution page as well as 14 exhibits 
that must be filed by the exchange.\58\ The Form 1 execution page 
requires certain basic information from the exchange, such as the name 
and street and mailing addresses of the exchange; the name, title, and 
telephone number of the exchange's contact employee; and the legal 
status of the exchange (e.g., corporation or limited liability 
company). The Form 1 exhibits require the exchange to provide, among 
other things: its audited financial statements and unconsolidated 
financial statements for each subsidiary or affiliate; its governing 
documents and rules; the names of its members, participants, 
subscribers, and users; information regarding its non-member owners, 
shareholders, or partners; and the securities it lists or trades. The 
instructions to Form 1 require that one original and two copies of all 
the Form 1 materials be filed with the Commission in paper form.\59\
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    \57\ See 17 CFR 240.6a-1.
    \58\ For purposes of this section relating to Form 1, these 
entities are collectively referred to as ``exchanges.''
    \59\ See 17 CFR 249.1.
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    Rule 6a-2 requires a registered national securities exchange or an 
exempt exchange \60\ to amend its Form 1 as specified therein. 
Specifically, pursuant to 17 CFR 240.6a-2(a) (``Rule 6a-2(a)''), an 
exchange must file an amendment to its Form 1 within 10 days after it 
takes any action that renders any part of its Form 1 execution page or 
the information provided in its Form 1 Exhibits C, F, G, H, J, K, or M 
inaccurate or incomplete.\61\
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    \60\ For purposes of this paragraph, these entities are 
collectively referred to as ``exchanges.''
    \61\ See 17 CFR 240.6a-2(a).
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    Pursuant to 17 CFR 240.6a-2(b) (``Rule 6a-2(b)''), on or before 
June 30 of each year, a national securities exchange or an exempt 
exchange \62\ must file amendments to Exhibits D, I, K, M, and N with 
the Commission.\63\ Pursuant to 17 CFR 240.6a-2(c) (``Rule 6a-2(c)''), 
on a triennial basis, an exchange must file complete Exhibits A, B, C, 
and J with the Commission.\64\ Further, 17 CFR 240.6a-2(d) (``Rule 6a-
2(d)'') provides alternative means for satisfying the requirements to 
file amendments to certain exhibits.\65\ These alternative means 
require that the exchange: (i) on an annual or more frequent basis 
publish the information required by the pertinent exhibits, or 
cooperate in its publication; \66\ (ii) keep the information up to date 
and make it available to the Commission and the public upon request; 
\67\ or (iii) make the required information available continuously on 
an internet website controlled by the exchange.\68\ As with Form 1 
filings pursuant to Rule 6a-1, all amendments to Form 1 pursuant to 
Rule 6a-2 currently are submitted in paper form in accordance with the 
instructions to Form 1.\69\
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    \62\ For purposes of this paragraph, these entities are 
collectively referred to as ``exchanges.''
    \63\ See 17 CFR 240.6a-2(b).
    \64\ See 17 CFR 240.6a-2(c).
    \65\ See 17 CFR 240.6a-2(d). Rule 6a-2(d) applies to information 
required to be filed pursuant to paragraphs (b)(2) and (c) of Rule 
6a-2. Rule 6a-2(d) sets forth alternative means of providing access 
to the information contained in Exhibits A, B, C, J, K, M, and N in 
lieu of filing the information with the Commission.
    \66\ The exchange would need to: (i) identify the publication in 
which the information is available, the name, address, and telephone 
number of the person from whom such publication may be obtained, and 
the price of the publication; and (ii) certify the accuracy of such 
information as of its publication date. 17 CFR 240.6a-2(d)(1).
    \67\ The exchange would need to certify that the information is 
kept up to date and is available to the Commission and the public 
upon request. 17 CFR 240.6a-2(d)(2).
    \68\ The exchange would need to: (i) indicate the location of 
the internet website where such information may be found; and (ii) 
certify that the information available at such location is accurate 
as of its date. 17 CFR 240.6a-2(d)(3).
    \69\ See 17 CFR 249.1.
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    Pursuant to Rule 6a-3, a national securities exchange or an exempt 
exchange also must file certain supplemental material and reports with 
the Commission.\70\ Specifically, Rule 6a-3(a)(1) requires an exchange 
to file with the Commission any material issued or made generally 
available to members of, or participants or subscribers to, the 
exchange within 10 days after issuing or making such material available 
to such members, participants or subscribers.\71\ 17 CFR 240.6a-3(a)(2) 
(``Rule 6a-3(a)(2)'') provides that, if information required by Rule 
6a-3(a)(1) is available continuously on a website controlled by the 
exchange, in lieu of filing such information, the exchange may indicate 
the location of the website where the information can be found, and 
certify that the information is accurate as of its date.\72\ Rule 6a-
3(b) requires an exchange to file, within 15 days after the end of each 
calendar month, a volume report of securities transactions on the 
exchange during the calendar month. As with filings pursuant to Rules 
6a-1 and 6a-2, all filings pursuant to Rule 6a-3 were previously 
submitted in paper form.\73\
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    \70\ See 17 CFR 240.6a-3.
    \71\ See 17 CFR 240.6a-3(a)(1).
    \72\ See 17 CFR 240.6a-3(a)(2).
    \73\ See 17 CFR 240.6a-3(b). This report must set forth: (i) the 
number of shares of stock sold and the aggregate dollar amount of 
such stock sold; (ii) the principal amount of bonds sold and the 
aggregate dollar amount of such bonds sold; and (iii) the number of 
rights and warrants sold and the aggregate dollar amount of such 
rights and warrants sold. Id.
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    Form 1 filings are made available to the public.\74\ Form 1 filings 
made pursuant to pre-existing Rule 6a-1 are scanned and the resulting 
PDF documents are posted on the Commission's website. Form 1 filings 
made pursuant to pre-existing Rule 6a-2 are scanned and the resulting 
PDF documents are uploaded to EDGAR. Form 1 filings made pursuant to 
pre-existing Rule 6a-3 are available for inspection in paper form in 
the Commission's public reading room.
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    \74\ When the Commission previously amended Form 1 and Rules 6a-
1, 6a-2, and 6a-3, it stated that ``[t]he information collected, 
retained, and/or filed pursuant to the rules for registration as a 
national securities exchange will not be confidential and will be 
available to the public.'' Exchange Act Release No. 40760 (Dec. 8, 
1998), 63 FR 70844, 70912 (Dec. 22, 1998) (Regulation of Exchanges 
and Alternative Trading Systems Adopting Release). Consistent with 
this statement, the Instructions to Form 1 specify that ``[n]o 
assurance of confidentiality is given by the Commission with respect 
to the responses made in Form 1. The public has access to the 
information contained in Form 1.''
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3. Requirement to Electronically File Form 1
    The Commission is amending Rules 6a-1, 6a-2, and 6a-3 under the 
Exchange Act, as well as Form 1 and the instructions to Form 1, to 
require the electronic filing on EDGAR of all submissions required by 
the rules.\75\ As explained in section II above, among other benefits, 
these amendments should increase efficiencies related to the filing of 
these forms and the review and analysis of the filed forms by the 
Commission and its staff as well as by investors, market participants, 
and other interested parties. In addition, the Commission is adopting 
conforming changes to Rule 3(b)(2) of its Informal and Other 
Procedures,\76\ discussed below,\77\ to clarify that defective

[[Page 7263]]

applications on Form 1 will be returned to the applicant and, although 
permitted as an option under the current rule, defective applications 
no longer will be held by the Commission. A description of the 
Commission's amendments to Rules 6a-1, 6a-2, and 6a-3, Form 1, and the 
instructions to Form 1 to implement the electronic filing requirement 
is provided below.
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    \75\ The Commission is also making a technical modification, not 
included in the Proposing Release, to Rule 232.101 (17 CFR 
232.101(a)(1)) to include Form 1 in the list of filings required to 
be filed electronically.
    \76\ See 17 CFR 202.3(b)(2).
    \77\ See infra section II.G.
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a. Amendments to Rules 6a-1, 6a-2, and 6a-3
    The Commission is adding a new paragraph (e) to Rule 6a-1 to 
require the electronic filing on EDGAR of all Form 1 filings and 
amendments to such filings. The Commission also is amending Rules 6a-
2(a), (b), and (c) to mandate the electronic filing on EDGAR of the 
Form 1 amendments under those paragraphs by requiring the electronic 
filing of those amendments, in accordance with 17 CFR 240.6a-1(e) 
(``Rule 6a-1(e)'').\78\ Moreover, the Commission is updating in Rule 
6a-2(c) the due date for the next filings due pursuant to Rule 6a-2(c), 
from June 30, 2001, to June 30, 2025.
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    \78\ The Commission also is making a technical amendment to 
remove two extraneous commas from the text of Rule 6a-2(a). The 
Commission further is amending paragraph (d) of Rule 6a-2 to clarify 
that any certifications and other information permitted under that 
paragraph in lieu of filing the required documents as exhibits to 
Form 1 must be provided using Form 1. This change should facilitate 
compliance with the Rule 6a-2 requirements by exchanges and exempt 
exchanges by clarifying and standardizing the means to file any 
certifications and other information submitted pursuant to paragraph 
(d) of Rule 6a-2.
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    As stated earlier in this section, Rule 6a-3 requires national 
securities exchanges and exempt exchanges to file certain supplemental 
material and reports with the Commission after registration or being 
granted an exemption from registration. The Commission is amending Rule 
6a-3 to require national securities exchanges and exempt exchanges to 
file on EDGAR such supplemental material and reports electronically on 
Form 1, in accordance with Rule 6a-1(e).
b. Amendments to Form 1 and the Form 1 Instructions
    In addition to the revisions to Rules 6a-1, 6a-2, and 6a-3, the 
Commission is revising and reformatting Form 1, and the instructions 
thereto, to accommodate the electronic filing on EDGAR of initial 
applications, subsequent amendments, supplemental material, and reports 
that are made on Form 1. The changes to Form 1 to permit electronic 
submission to the Commission require minimal modifications to the form, 
as described below. The Commission also is revising the Form 1 
instructions to facilitate the electronic filing and machine-
readability of Form 1.\79\ As discussed below, these revisions to Form 
1 facilitate the filing and use of the information mandated by Form 1 
and related Rules 6a-1, 6a-2, and 6a-3.\80\
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    \79\ In addition, the Commission is removing the definition of 
the word ``applicant'' from the Form 1 instructions and replacing 
the word ``applicant'' with the word ``exchange'' on Form 1. 
Currently, Form 1 uses both the words ``exchange'' and ``applicant'' 
to refer to the entity filing the Form 1. The Commission is making 
this technical, change to make consistent the terminology used in 
Form 1.
    \80\ The Commission is also making some technical amendments to 
what was proposed for Form 1 and Rules 6a-2 and 6a-3. In particular, 
the Commission is: (1) in Rules 6a-2 and 6a-3, removing the 
redundant qualifier ``of this chapter'' from the cross-references to 
Rule 6a-1(e); (2) in Section I of Form 1, adding the parenthetical 
``if any'' next to ``Facsimile''; (3) in Section V of Form 1, 
capitalizing certain words in the headings of the table of exhibits; 
(4) in Section V of Form 1, replacing ``by-laws'' with ``bylaws''; 
(5) in Section V of Form 1 and in the Form 1 General Instructions, 
replaced ``comprising'' with ``composing''; (6) in the Form 1 
General Instructions, updating the estimated hourly burden of 
completing an initial Form 1 application from the old estimate of 
891 hours to the new estimate of 901 hours; (7) in the Form 1 
General Instructions, clarifying that the estimated hourly burden of 
26 hours to prepare a Form 1 amendment refers to Form 1 amendments 
filed pursuant to Rules 6a-2(a) and 6a-2(c); and (8) in the Form 
General Instructions, specifying that the estimated hourly burden to 
prepare a Form 1 amendment pursuant to Rule 6a-2(b) is 40 hours.
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    Electronic Form 1 solicits information through prompts on the form. 
Electronic Form 1 also requires an exchange to attach exhibits via a 
new exhibit table that is part of electronic Form 1. Where Rule 6a-2 
allows for alternative means of filing the information required under 
certain exhibits, the new exhibit table permits an exchange to 
electronically provide the certifications and details necessary for an 
exchange to avail itself of those alternative means. The information 
required to be filed with the exhibits is not changing. Currently, Rule 
6a-2 provides that in lieu of filing certain exhibits as part of a 
paper Form 1 submission, an exchange may: (i) identify where such 
information is published and certify its accuracy as of its publication 
date; (ii) certify that the information is available to the Commission 
and the public upon request; or (iii) indicate the location of the 
internet website where such information may be found and certify that 
the information available at such location is accurate as of its 
date.\81\ The amendments do not change the availability of these 
alternative means, only the method of providing the necessary 
certifications and details. As described above, instead of attaching 
paper exhibits, the amendments require the exhibits to be submitted 
electronically on EDGAR. Similarly, instead of providing on paper the 
certifications and details required for an exchange to avail itself of 
these alternative means, the amendments require those certifications 
and details to be provided via the electronic Form 1. In the event an 
exchange indicates on Form 1 an internet website where such information 
may be found, where applicable, the Commission is requiring the 
exchange to provide on Form 1 the Uniform Resource Locator(s) 
(``URL(s)'') of the location(s) on the internet website where such 
information may be found, and to certify that information posted on 
such a website is accurate as of its date and is free and accessible 
(without any encumbrances or restrictions) by the general public.
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    \81\ See 17 CFR 240.6a-2(d).
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    For electronic Form 1, the Commission is adding prompts prior to 
section I that require the exchange to identify the basis for 
submitting the form. Specifically, electronic Form 1 requires the 
exchange to check a box stating one of the following: (i) whether the 
filing is an initial Form 1 application and if it is, whether the 
exchange is applying to be a national securities exchange or an exempt 
exchange; (ii) whether the filing is an amendment to an initial Form 1 
application prior to Commission action to grant registration or an 
exemption based on limited volume; (iii) whether the filing is to 
provide the exchange's consent to an extension of the time period 
within which the Commission must take action on an initial Form 1 
application; \82\ (iv) whether the filing is to withdraw an initial 
Form 1 application prior to the Commission taking action on the 
application; (v) whether the filing is an amendment to Form 1 pursuant 
to Rule 6a-2 following the Commission's granting of registration or an 
exemption; or (vi) whether the filing is supplemental material or 
reports pursuant to Rule 6a-3.\83\ Previously, there was no place on 
Form 1 for an exchange to indicate the type of filing that it is 
submitting. For example, previously Form 1 did not provide an exchange 
the ability to indicate whether an initial Form 1 filing is an 
application to be a national

[[Page 7264]]

securities exchange or an exempt exchange. Accordingly, capturing 
information regarding the type of Form 1 filing facilitates the 
exchange's communication with the Commission and helps the Commission 
more efficiently review Form 1 submissions.
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    \82\ Such consents to an extension of the time period within 
which the Commission must act currently are submitted as letters in 
paper form. Adding the ability to indicate that the exchange 
consents to an extension of time on electronic Form 1 will 
streamline the process for making such a submission. See 15 U.S.C. 
78s(a)(1)(B).
    \83\ The Commission also is amending the instructions to Form 1 
to add a new section titled ``When to Use the Form,'' which explains 
when Form 1 filings are required.
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    Electronic Form 1 also captures contact information for the 
exchange and certain individuals. Consistent with the previous version 
of Form 1, electronic Form 1 requires the exchange to identify contact 
information for the exchange, a contact employee, and counsel for the 
exchange. Unlike previous Form 1, electronic Form 1 additionally 
requires an email address for the contact employee, which could take 
the form of an email to a specific contact employee or a general email 
to a group of contact employees. The requirement to provide an email 
address for the exchange contact employee expedites communications 
between Commission staff and the relevant exchange.
    Electronic Form 1 requires an exchange to electronically attach 
exhibits by using an exhibit table. The exhibit table contains columns 
for the name of the exhibit, information required by the exhibit, 
whether alternative means of satisfying the filing of an exhibit are 
available for that particular exhibit (e.g., URL(s)), if permitted by 
applicable Commission rule, and checkboxes to indicate whether such 
alternative means are being used.\84\ The information required by the 
exhibits to electronic Form 1 remains the same as previous Form 1. In 
addition, to facilitate the electronic filing of the supplemental 
materials required under 17 CFR 240.6a-3(a) (``Rule 6a-3(a)'') and the 
volume reports required under Rule 6a-3(b), the Commission is adding 
new sections III and IV, respectively, to Form 1. Sections III and IV 
do not add new requirements beyond those currently included in Rules 
6a-3(a) and (b). Rule 6a-3(a) requires exchanges to file certain 
information with the Commission or, in the alternative, to indicate 
where such information can be found on an internet website controlled 
by the exchange. The amendments require the filing of this information 
through section III of electronic Form 1 or, in the alternative, to 
provide through section III of electronic Form 1 the URL(s) of the 
location(s) on the internet website where such information can be 
found. If an exchange chooses this latter option and provides URL(s) of 
an internet website where such information can be found, section III 
also clarifies that such website must be free and accessible (without 
any encumbrances or restrictions) by the general public. Likewise, 
section IV does not change the substance of what must be filed; it 
merely requires the filing of the volume reports required under Rule 
6a-3(b) to be made on electronic Form 1 instead of in paper format.
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    \84\ See supra notes 66-68.
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    Furthermore, electronic Form 1 continues to require an exchange to 
consent to service of any civil action brought by, or notice of any 
proceeding before, the Commission in connection with its activities. 
The existing language under which the exchange consents to service via 
registered or certified mail at the main or mailing address provided on 
Form 1 continues to be included in the electronic form.\85\
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    \85\ The Commission also is deleting the outdated provision 
allowing for service of any civil action pursuant to confirmed 
telegram.
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    In addition, electronic Form 1 requires the individual who is 
submitting the form to check a box on behalf of the exchange to 
represent that the information and statements contained in the Form 1, 
including exhibits, schedules, or other documents, are current, true, 
and complete. The previous requirement to sign and notarize the form is 
being eliminated because it is unnecessary, not compatible with, and 
not required for electronic filing on EDGAR.
    Finally, electronic Form 1 requires exchanges to structure Exhibits 
D (unconsolidated financial statements of each of the exchange's 
subsidiaries or affiliates), E (description of the electronic trading 
system's manner of operation, except for the attached copy of the 
users' manual), and I (audited financial statements of the exchange) in 
Inline XBRL. The execution page, Exhibits C (information regarding each 
of the exchange's subsidiaries, affiliates, and entities with whom the 
exchange has an agreement relating to the operation of the exchange's 
electronic trading system, except for the copies of existing documents 
listed below), H (listing fee schedule and brief description of the 
criteria governing which securities may be traded on the exchange, 
except for the copies of existing documents listed below), J (list of 
officers, governors, standing committee members, or persons performing 
similar functions), K (list of significant shareholders or partners), L 
(description of criteria, conditions, and procedures governing 
membership in the exchange), M (list of members, participants, 
subscribers, or other users of the exchange and description of each 
user's activities), N (schedules of securities traded on the exchange), 
and the information required under Rule 6a-3(b) (reports regarding the 
securities sold on the exchange over the previous calendar month) must 
also be structured, albeit in a custom XML data language specific to 
Form 1 rather than in Inline XBRL.
    Attached copies of existing documents, including those filed with 
Exhibits A (constitution, articles of incorporation or association, and 
existing bylaws or corresponding rules or instruments of the exchange), 
B (written rulings, settled practices having the effect of rules, and 
interpretations of the Governing Board or other committee of the 
exchange in respect of any provisions of the constitution, bylaws, 
rules, or trading practices of the exchange), C (written rulings, 
settled practices having the effect of rules, and interpretations of 
the Governing Board or other committee of the exchange in respect of 
any provisions of the constitution, bylaws, rules, or trading practices 
of the exchange's affiliates, subsidiaries, or entities with whom the 
exchange has an agreement related to the operation of the exchange's 
electronic trading system), E (listing applications and required 
agreements), F (forms pertaining to membership, participation, or 
subscription, application for approval as a person associated with a 
member, participant, or subscriber of the exchange, or any other 
similar materials), G (forms of financial statements, reports, or 
questionnaires required of members, participants, subscribers, or any 
other users relating to financial responsibility or minimum capital 
requirements for such members, participants, or any other users), H 
(listing applications and agreements required to be executed in 
connection with listing), and the information required under Rule 6a-
3(a)(1) (supplemental materials issued or made available to members of, 
or participants or subscribers to, the exchange), must be filed as 
unstructured PDF documents.

[[Page 7265]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.008

    The structuring requirements will facilitate access to the 
exchange's disclosures (such as by enabling efficient retrieval of only 
those disclosures filed by a subset of exchanges over particular 
reporting periods) and their analysis (such as by enabling efficient 
comparisons of individual disclosures or sets of disclosures across 
different exchanges and reporting periods). This will benefit market 
participants through enhanced oversight of the exchanges. For example, 
Commission staff will be able to leverage the machine-readability of 
Exhibit I to automatically flag any atypical fluctuations in particular 
financial line items across every exchange's financial statements, and 
assess whether closer examination of any such fluctuations is 
warranted. Similarly, Commission staff will be able to leverage the 
machine-readability of Exhibit E by retrieving automated redline 
comparisons of the manner of operations description disclosed by 
exchanges from prior reporting periods to the current reporting period, 
thus pinpointing any widespread operational changes for further 
assessment.
    Market participants (such as issuers, analysts, and other 
exchanges) will also benefit from direct use of the machine-readable 
disclosures on Form 1. For example, the structuring requirement for 
Exhibit I will allow analysts to more quickly and efficiently compare 
the audited financial statements of exchanges as they determine the 
exchange on which they list their securities. Without the structured 
data requirements, these analyses, to the extent they are done, need to 
be performed manually, such as by gathering the current and former 
financial statements for each exchange and entering all financial line 
items of interest into databases, resulting in a less efficient and 
precise process. In addition, the structured data requirement enables 
EDGAR to perform technical validations (i.e., programmatic checks to 
ensure the documents are appropriately standardized, formatted, and 
complete) upon intake of the Form 1 disclosures, thus improving the 
quality of the filed data by decreasing the incidence of non-
substantive errors (such as the omission of values from fields that 
should always be populated).
    The nature and extent of such benefits may vary based on the 
content of each Form 1 Exhibit. As discussed in the subsequent economic 
analysis, studies of XBRL requirements for public operating company 
financial statements indicate a number of benefits for investors and 
market participants.\86\ The probability that, and extent to which, 
these particular benefits arise from structured Form 1 disclosures 
could be heightened for Exhibits D and I, which likewise include 
structured financial statements under the rule amendments. In addition, 
the particular benefits of structuring data will vary based on the type 
of disclosures included in each particular Exhibit. Structured 
numerical disclosures, such as those included on Exhibit I, lend 
themselves to mathematical functionality, such as the calculation of 
key ratios or the identification of extreme statistical outliers. 
Structured textual disclosures, such as those included on Exhibit E, 
lend themselves to targeted keyword searching and more sophisticated 
sentiment analysis.
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    \86\ See infra section X.C.1.b.
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    After consideration, the Commission, as proposed, is requiring 
Inline XBRL for certain exhibits to Form 1 and custom XML for others 
because each data language is better suited for particular types of 
disclosures. Exhibits D and I require disclosure of financial 
statements, and Inline XBRL was designed to accommodate financial 
statement information, including the particular metadata (e.g., the 
relevant fiscal period, whether the line item is on the balance sheet, 
and whether the line item is a credit or debit) that must be linked to 
each data point within the financial statements to fully convey its 
semantic meaning to a machine reader. Exhibit E requires narrative 
disclosure regarding the trading system's manner of operations, and 
whereas custom XML data languages only have the capacity to accommodate 
brief narrative descriptions, Inline XBRL can accommodate longer 
narrative descriptions with presentation capabilities that preserve 
human-readability and maintain machine-readability.\87\
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    \87\ Compare, for example, the Inline XBRL requirement for the 
description of investment strategies that open-end funds disclose on 
Form N-1A to the custom XML requirement for the brief description of 
the applicant's business that SBS Entities disclose on Form SBSE. 
See Item 4 of Form N-1A; Item 7 of Form SBSE.
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    The execution page of Form 1, Exhibits C (in part), H (in part), J, 
K, L, M, and N to Form 1, and the Rule 6a-3(b) reports filed on Form 1 
do not require such content. For these disclosures, the use of custom 
XML data languages is preferable to Inline XBRL, because it yields 
smaller file sizes and therefore enables more streamlined processing of 
the information.\88\
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    \88\ See also infra section X.E.4 (discussing other structured 
data languages that would result in smaller file sizes than Inline 
XBRL).
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    Requiring custom XML rather than Inline XBRL for these disclosures 
is also preferable because it enables EDGAR to generate fillable web 
forms that permit exchanges to input their disclosures into form fields 
rather than structure their disclosures in custom XML themselves. This 
added flexibility could ease the burden of compliance on exchanges in 
some instances, although exchanges may have the requisite 
sophistication to encode the disclosures in custom XML themselves 
without relying on fillable web forms.\89\
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    \89\ See infra sections IX.D.2 and X.C.2.b.
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    The Commission is requiring exchanges to file copies of existing 
documents, such as copies of bylaws, written agreements, and listing 
applications, as unstructured PDF attachments. An unstructured PDF 
requirement is preferable to a structured data requirement for these 
documents, because requiring exchanges to retroactively structure these 
existing documents, which were prepared for purposes outside of 
fulfilling the Commission's disclosure requirements, is likely to 
impose costly compliance burdens on exchanges that may not be justified 
in light of the commensurate

[[Page 7266]]

informational benefits associated with more efficient disclosure use. 
Thus, the structured data requirements are not warranted for these 
copies of existing documents.
    One commenter suggested that all items in Form 1 should be 
submitted in XBRL, except for copies of existing documents which could 
be submitted in PDF and linked via tags in an XBRL document.\90\ The 
commenter stated that there were different ``flavors'' of XBRL such as 
XML, XHTML (i.e., Inline XBRL), JSON, and CSV, each appropriate for 
slightly different reporting needs, and that requiring Inline XBRL for 
Form 1 would be advisable due to the financial and narrative data that 
Form 1 elicits.\91\ The Commission agrees with the commenter that 
Inline XBRL is suitable for financial and narrative data, and is 
therefore requiring Inline XBRL for those Form 1 exhibits with 
financial disclosures (i.e., Exhibits D and I) and extended narrative 
disclosures (i.e., Exhibit E except for the copy of the users' manual). 
However, the Commission disagrees with the commenter that an Inline 
XBRL requirement would be more suitable than a custom XML requirement 
for the other structured Form 1 disclosures.
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    \90\ See XBRL Letter at 3-4. The commenter agreed that requiring 
exchanges to retroactively structure existing documents is likely to 
be overly burdensome. See id. at 4.
    \91\ See id. at 4.
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    In that regard, the commenter stated that requiring a custom XML 
schema designed to fit a single reporting situation--in contrast with 
XBRL, which is designed for many reporting situations and for which 
there is a large competitive marketplace of tools to support reporting 
preparation--must be managed with custom applications, and using such 
applications will likely be more expensive for filers than using 
existing XBRL applications.\92\ However, the Commission disagrees that 
the preparation of custom XML Form 1 exhibits must be managed with 
custom applications, because exchanges will have means of complying 
with Form 1 custom XML requirements that do not entail the use of such 
applications. First, exchanges are sophisticated entities and likely 
have experience encoding disclosures using custom XML schemas without 
the use of custom applications. Exchanges are likely able to leverage 
that experience to create custom XML Form 1 exhibits without the need 
to incur additional expense. Second, exchanges will have the option to 
forgo creating structuring custom XML Form 1 exhibits altogether, and 
instead input their disclosures into a fillable web form that EDGAR 
will make available to Form 1 filers. Exchanges that use the fillable 
form option will similarly not need to create custom commercial 
applications to prepare the custom XML exhibits. In either case above, 
exchanges will be able to comply with the custom XML Form 1 
requirements without needing to incur additional expense by creating 
any application specifically designed to prepare data using the custom 
XML schema for Form 1 exhibits.
---------------------------------------------------------------------------

    \92\ See id.
---------------------------------------------------------------------------

    The commenter also stated that it would be more efficient for data 
users to extract data from Form 1 if all the data were structured in 
Inline XBRL, because software applications would be more easily able to 
extract data from documents if everything contained in the document 
were identically structured. The Commission agrees with the commenter 
that using different structured data languages for Form 1 will make it 
more difficult to incorporate the Inline XBRL disclosures filed on Form 
1 into the same datasets and applications as the custom XML disclosures 
filed on Form 1 and run analyses across the differently formatted Form 
1 disclosures, without undertaking data conversion processes that are 
frequently burdensome and imprecise. Nonetheless, the streamlined data 
processing associated with the smaller sizes of the custom XML exhibits 
and execution page, as described earlier in this section, justifies the 
use of custom XML structuring for some Form 1 exhibits rather than 
Inline XBRL structuring for all Form 1 exhibits.
    With respect to the copies of existing documents proposed to be 
submitted as PDF documents, the commenter stated that retroactively 
structuring such documents is likely to be overly burdensome, but that 
the information could be made more accessible by requiring reporting 
entities to prepare a single XBRL document with tagged and 
appropriately labeled links to the various PDF documents.\93\ The 
Commission agrees with the commenter that retroactive structuring of 
such documents is not justified in light of the burdens on exchanges. 
The Commission does not agree that requiring exchanges to prepare an 
XBRL document with tagged and labeled links to the various PDF exhibits 
is appropriate, because the exhibit table requirement in electronic 
Form 1 will already provide sufficient accessibility and clarity as to 
the exhibits contained in Form 1 (including allowing for PDF exhibits) 
without requiring exchanges to prepare a separate XBRL document. 
Specifically, the Commission is requiring an exchange filing Form 1 to 
electronically attach PDF exhibits, identify the name of each PDF 
exhibit, the information required by each PDF exhibit, whether 
alternative means of satisfying the filing of an exhibit are available 
for that particular PDF exhibit, and whether such alternative means are 
being used to file that particular PDF exhibit. Because this set of 
requirements will facilitate Form 1 data users finding and accessing 
PDF exhibits, the Commission disagrees with the commenter that 
exchanges should be required to prepare a single XBRL document with 
tagged links to the various PDF documents with appropriate labels.
---------------------------------------------------------------------------

    \93\ See id. at 2 and 4.
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B. Form 1-N

1. Relevant Statutory Framework
    Section 6 of the Exchange Act \94\ sets out a framework for the 
registration and regulation of national securities exchanges. The 
Exchange Act was amended by the Commodity Futures Modernization Act of 
2000 (``CFMA'') \95\ to allow the trading of security futures products. 
Under the CFMA, markets that wish to trade security futures products 
are regulated jointly by the Commission and the CFTC. The Exchange Act, 
as amended by the CFMA, provides that futures exchanges that meet 
certain criteria and that wish to trade security futures products may 
file notice with the Commission to become a ``Security Futures Product 
Exchange.'' \96\
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    \94\ See 15 U.S.C. 78f.
    \95\ See Public Law 106-554, Appendix E, 114 Stat. 2763.
    \96\ See 15 U.S.C. 78f(g).
---------------------------------------------------------------------------

2. Previous Requirements for Filing Form 1-N
    Rule 6a-4 under the Exchange Act \97\ sets forth the notice 
registration procedures for Security Futures Product Exchanges and 
permits futures exchanges to submit a notice registration on Form 1-
N.\98\ Form 1-N requires information regarding how the futures exchange 
operates, its rules and procedures, corporate governance, its criteria 
for membership, its subsidiaries and affiliates, and the security 
futures products it intends to trade. Rule 6a-4 also requires entities 
that have submitted an initial Form 1-N to file: (1) amendments to Form 
1-N in the event any information provided in the initial Form 1-N is 
rendered inaccurate or incomplete; (2) periodic updates of certain 
information provided in the initial Form 1-N; (3) certain information

[[Page 7267]]

that is provided to the Security Futures Product Exchange's members; 
and (4) a monthly report summarizing the Security Futures Product 
Exchange's trading of security futures products. The information 
required to be filed with the Commission pursuant to Rule 6a-4 is 
designed to enable the Commission to carry out its statutorily mandated 
oversight functions and to ensure that Security Futures Product 
Exchanges continue to be in compliance with the Exchange Act.
---------------------------------------------------------------------------

    \97\ See 17 CFR 240.6a-4.
    \98\ See 17 CFR 249.10.
---------------------------------------------------------------------------

3. Requirement to Electronically File Form 1-N
    The Commission is amending Rule 6a-4 under the Exchange Act, as 
well as Form 1-N and the instructions to Form 1-N, to require the 
electronic filing on EDGAR of all submissions required by the rule and 
form.\99\ As explained in the introduction to this section,\100\ among 
other benefits, these amendments will increase efficiencies and 
decrease overall costs \101\ related to the filing of these forms and 
the review of the filed forms by the Commission and its staff. A 
description of the Commission's amendments to Rule 6a-4, Form 1-N, and 
the instructions to Form 1-N to implement this electronic filing 
requirement is provided below.
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    \99\ The Commission is also making a technical modification, not 
included in the Proposing Release, to Rule 232.101 (17 CFR 
232.101(a)(1)) to include Form 1-N in the list of filings required 
to be filed electronically.
    \100\ See supra introductory text to section II.
    \101\ As discussed in more detail in the Economic Analysis, some 
entities that currently do not use EDGAR may incur relatively small 
initial costs to submit filings on EDGAR and there are some 
potential costs associated with structuring certain information. 
However, savings from filing these forms electronically rather than 
in paper is expected to be greater than the costs. See infra 
X.C.1.a.
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a. Amendments to Rule 6a-4
    The Commission is adding a new paragraph (d) to Rule 6a-4 to 
require the electronic filing of Form 1-N on EDGAR for exchange notice 
registrations and amendments made under Rule 6a-4 in accordance with 
the requirements of Regulation S-T.\102\
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    \102\ Regulation S-T governs the electronic submission of 
documents filed or otherwise submitted to the Commission and 
encompasses the general rules and regulations for electronic filing 
via the EDGAR system. See 17 CFR 232.10 through 232.501.
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    The Commission also is amending the text of Rule 6a-4 to 
accommodate electronic filing, as well as to make minor corrections and 
clarifications. Specifically, the Commission is modifying Rules 6a-
4(a)(1) and 6a-4(c)(2) to resolve existing typographical errors and 
Rule 6a-4(b)(1)(i) to refer to the appropriate section of Form 1-N, 
rather than the ``Execution Page,'' to reflect the shift to electronic 
filing. The Commission is amending Rules 6a-4(b)(5)(i), (ii) and (iii) 
to delete the phrase ``satisfy this filing requirement by'' because the 
language is superfluous. The Commission is making conforming changes to 
Rules 6a-4(b)(5)(i)(A) and (B), and 6a-4(b)(5)(ii) and (iii)(A) and (B) 
to clarify that certain certifications by the exchange and listing of 
websites containing information required by Rule 6a-4 are required to 
be made on electronic Form 1-N. The Commission further is updating the 
due dates in Rules 6a-4(b)(3) and (4) for the next annual and triennial 
filings from June 30, 2002, and June 30, 2004, to June 30, 2025. 
Finally, the Commission is making non-substantive changes to Rules 6a-
4(a)(1)(i), 6a-4(a)(1)(i)(B), and 6a-4(a)(1)(ii)(B) to update cross-
references in those rules to the Commodities Exchange Act to reflect 
changes to the Commodities Exchange Act resulting from the Dodd-Frank 
Act.
b. Amendments to Form 1-N and the Form 1-N Instructions
    In addition to the revisions to Rule 6a-4, the Commission is 
revising and reformatting Form 1-N, and the instructions thereto, to 
accommodate the electronic filing of initial notices, subsequent 
amendments, supplemental material, and reports that are made on Form 1-
N. The changes to Form 1-N to permit electronic filing to the 
Commission require minimal modifications to the form, as described 
below. The Commission also is revising the Form 1-N instructions to 
facilitate the electronic filing of Form 1-N on EDGAR. As explained in 
the introduction to this section,\103\ these revisions address when a 
form is considered incomplete or deficient when filed and use of a 
custom XML data language for the cover page. These revisions to Form 1-
N and the Form 1-N instructions will facilitate the filing of the 
information mandated by Form 1-N and Rule 6a-4.
---------------------------------------------------------------------------

    \103\ See supra introductory text to section II.
---------------------------------------------------------------------------

    Electronic Form 1-N solicits information through prompts on the 
form that are expected to better organize the information collected. 
Electronic Form 1-N also requires an exchange to attach exhibits (or 
provide website URL(s) where applicable) via a new exhibit table that 
is part of electronic Form 1-N. The exhibit table contains columns for 
the name of the exhibit, information required by the exhibit, whether 
alternative means of satisfying the filing of an exhibit are available 
for that particular exhibit (e.g., URL(s)), if permitted by applicable 
Commission rule, and checkboxes to indicate whether such alternative 
means are being used. Where Rule 6a-4 allows for alternative means of 
filing the information required under certain exhibits, the new exhibit 
table permits an exchange to electronically provide the certifications 
and details necessary for an exchange to avail itself of these 
alternative means. The information required to be filed with the 
exhibits is not changing. Rule 6a-4 provides that in lieu of filing 
certain exhibits as part of a paper Form 1-N submission, an exchange 
may either: (i) identify where such information is published and 
certify its accuracy as of its publication date; (ii) certify that the 
information is available to the Commission and the public upon request; 
or (iii) indicate the location of the internet website where such 
information may be found and certify that the information available at 
such location is accurate as of its date.\104\ The amended rule does 
not change the availability of these alternative means, only the method 
of providing the necessary certifications and details. As described 
above, instead of attaching paper exhibits, those exhibits need to be 
submitted electronically. Similarly, instead of providing on paper the 
certifications and details required for an exchange to avail itself of 
these alternative means, those certifications and details need to be 
provided via the electronic Form 1-N. In the event an exchange 
indicates on Form 1-N the location(s) of an internet website where such 
information may be found, where applicable, the Commission is requiring 
the exchange to provide the URL(s) of the location(s) on the internet 
website where such information may be found, to certify that the 
information posted on such website(s) is accurate as of its date and is 
free and accessible (without any encumbrances or restrictions) to the 
general public, as an alternative to filing certain exhibits required 
by electronic Form 1-N.
---------------------------------------------------------------------------

    \104\ See 17 CFR 240.6a-2(b)(5).
---------------------------------------------------------------------------

    For electronic Form 1-N, the Commission is adding prompts prior to 
section I that require the exchange to identify the basis for 
submitting Form 1-N. Specifically, electronic Form 1-N requires the 
exchange to check a box stating one of the following: (i) whether the 
filing is an initial notice of registration; (ii) whether the filing is 
an amendment to the notice of registration; (iii) whether the exchange 
is providing its annual filing for the year; (iv) whether the exchange 
is providing a triennial filing; (v) whether the

[[Page 7268]]

exchange is providing supplemental materials; or (vi) whether the 
exchange is providing a report of security futures products traded 
during the prior calendar month.
    The Commission also is amending the instructions to Form 1-N to add 
a new section titled ``When to Use the Form,'' which explains when Form 
1-N filings are required, and which of the six types of Form 1-N filing 
is required (e.g., initial registration, supplemental material). 
Currently, there is no place on Form 1-N for an exchange to indicate 
the type of filing that it is submitting, other than whether it is an 
application or an amendment. Capturing information regarding the type 
of Form 1-N filing: (1) enhances the exchange's communication with the 
Commission; (2) helps the Commission more efficiently review Form 1-N 
submissions; and (3) facilitates the searching and sorting through of 
Form 1-N submissions by other potential users such as market 
participants and investors.
    Electronic Form 1-N also captures contact information for the 
exchange and certain individuals. Consistent with previous Form 1-N, 
electronic Form 1-N requires the exchange to identify contact 
information for the exchange, a contact employee, and counsel for the 
exchange. Unlike previous Form 1-N, electronic Form 1-N additionally 
requires an email address for the contact employee and an email address 
for the exchange's counsel. The requirement to provide an email address 
for the exchange contact employee and the exchange's counsel expedites 
any subsequent communications between Commission staff and the relevant 
exchange.
    In addition, to facilitate the electronic filing of the 
supplemental materials and monthly reports required under Rule 6a-4(c), 
the Commission is adding new sections III and IV, respectively, to Form 
1-N.\105\ Sections III and IV require such materials and reports to be 
attached to Form 1-N via the new exhibit table in the same manner as 
exhibits to Form 1-N, and section III provides the exchange with the 
ability to enter URL(s) to the website location of the supplemental 
materials in lieu of its filing the supplemental materials via Form 1-
N. Sections III and IV do not add new requirements beyond those 
previously included in Rule 6a-4(c). Rule 6a-4(c)(1) requires exchanges 
to file certain information with the Commission or in the alternative 
to indicate where such information can be found on an internet website 
controlled by the exchange. The amended rule requires the filing of 
this information through section III of electronic Form 1-N or, in the 
alternative, to provide through section III of electronic Form 1-N the 
URL(s) of the location(s) on the internet website where such 
information can be found. Section III also clarifies that such website 
must be free and accessible (without any encumbrances or restrictions) 
by the general public. Likewise, section IV does not change the 
substance of what must be reported; it merely requires the reporting of 
information required under Rule 6a-4(c) to be made on electronic Form 
1-N instead of in paper format.
---------------------------------------------------------------------------

    \105\ The Commission is not including a question mark 
inadvertently introduced into Section III of Form 1-N when proposed. 
The Commission is also making technical amendments to Rule 6a-
4(a)(1)(ii) to change the words ``market place'' to ``marketplace'' 
and Rule 6a-4(c)(1)(ii) to change the word ``Internet'' to 
``internet.''
---------------------------------------------------------------------------

    Furthermore, electronic Form 1-N continues to require an exchange 
to consent to service of any civil action brought by, or notice of any 
proceeding before, the Commission in connection with its activities. 
The previous language under which the Security Futures Product Exchange 
consents to service via registered or certified mail at the main or 
mailing address provided on Form 1-N continues to be included in the 
electronically filed form.\106\
---------------------------------------------------------------------------

    \106\ The Commission also is deleting the outdated provision 
allowing for service of any civil action pursuant to confirmed 
telegram.
---------------------------------------------------------------------------

    In addition, electronic Form 1-N requires the individual who is 
submitting the form to check a box on behalf of the Security Futures 
Product Exchange to represent that the information and statements 
contained in the Form 1-N, including exhibits, schedules, or other 
documents, are current, true, and complete. The previous requirement to 
sign and notarize the form is being eliminated because it is 
unnecessary, not compatible with, and not required for electronic 
filing through EDGAR.\107\
---------------------------------------------------------------------------

    \107\ The Commission is making a technical amendment to Section 
I of electronic Form 1-N to add the words ``(if any)'' after Item 4 
``Facsimile.'' The Commission is making a technical amendment to 
Section V of electronic Form 1-N under the column for ``information 
Required by the Exhibit'' relating to Exhibit H, changing the words 
``primarily engage'' to ``primarily engaged.'' The Commission is 
making a technical amendment to Section V of electronic Form 1-N to 
replace the words ``by-laws'' with ``bylaws.'' The Commission is 
making a technical amendment to Section V of electronic Form 1-N by 
capitalizing certain words in the headings of the table of exhibits. 
Lastly, the Commission is making a technical amendment to the Form 
1-N General Instructions to replace ``comprising'' with 
``composing.''
---------------------------------------------------------------------------

    Finally, electronic Form 1-N requires filers to submit the 
execution page in a custom XML data language specific to Form 1-N. As 
with the other Covered SRO Forms, filers are able to input their 
execution page disclosures into a fillable web form that EDGAR 
subsequently converts to custom XML. Structuring the execution page in 
custom XML improves the ability to sort, filter, and otherwise organize 
Form 1-N filings without creating significant additional burden on Form 
1-N filers. The remainder of Form 1-N is not structured, however, 
because the very limited number of Form 1-N filers and filings could 
mitigate much of the benefit derived from machine-readability of the 
disclosures contained therein.\108\
---------------------------------------------------------------------------

    \108\ See infra section IX.C.3.
---------------------------------------------------------------------------

C. Form 15A

1. Relevant Statutory Framework
    Section 15A of the Exchange Act sets forth the statutory standards 
for registration as a national securities association or as an 
affiliated securities association.\109\ Section 15A(b) states that the 
Commission shall not approve registration as a national securities 
association unless the Commission determines that the applicant meets 
specified statutory criteria.\110\ Under Exchange Act Rule 15Aa-1, an 
applicant for registration as a national securities association must 
file a registration statement with the Commission on Form X-15AA-
1.\111\ The information required to be provided on Form X-15AA-1 
includes, among other things, lists of officers, governors, and 
committee members, as well as membership lists.\112\ The Commission 
reviews the completed Form X-15AA-1 to evaluate whether the applicant 
meets the standards set forth in section 15A(b) for registration as a 
national securities association.
---------------------------------------------------------------------------

    \109\ See 15 U.S.C. 78o-3.
    \110\ See 15 U.S.C. 78o-3(b).
    \111\ See Exchange Act Rule 15Aa-1 (17 CFR 240.15Aa-1) and Form 
X-15AA-1 (17 CFR 249.801). Currently, FINRA is the only national 
securities association registered with the Commission. The National 
Futures Association (``NFA''), as specified in section 15A(k) of the 
Exchange Act, is also registered as a national securities 
association, but only for the limited purpose of regulating the 
activities of NFA members that are registered as brokers or dealers 
in security futures products under section 15(b)(11) of the Exchange 
Act.
    \112\ See 17 CFR 249.801.
---------------------------------------------------------------------------

    Furthermore, under Exchange Act Rule 15Aj-1(a), every association 
applying for registration or registered as a national securities 
association must file with the Commission an amendment to its 
registration statement or any amendment or supplement thereto promptly 
after discovering any inaccuracy therein. Similarly, under

[[Page 7269]]

Exchange Act Rule 15Aj-1(b), every association applying for 
registration or registered as a national securities association, 
promptly after any change which renders no longer accurate any 
information contained or incorporated in its registration statement or 
in any amendment or supplement thereto, must file with the Commission a 
current supplement to its registration statement setting forth such 
change.\113\
---------------------------------------------------------------------------

    \113\ See Exchange Act Rule 15Aj-1(a) and (b), 17 CFR 240.15Aj-
1(a) and (b). These filings were submitted on Form X-15AJ-1, 17 CFR 
249.802. See 17 CFR 240.15Aj-1(d) (requiring that such filings be 
made on Form X-15Aj-1).
---------------------------------------------------------------------------

    Finally, under Exchange Act Rule 15Aj-1(c), every association 
applying for registration or registered as a national securities 
association must file annual amendments to its registration statement 
with the Commission.\114\
---------------------------------------------------------------------------

    \114\ See Exchange Act Rule 15Aj-1(c), 17 CFR 240.15Aj-1(c). 
These filings were submitted on Form X-15AJ-2, 17 CFR 249.803. See 
17 CFR 240.15Aj-1(d) (requiring that such filings be made on Form X-
15Aj-2). Rule 15Aj-1(c)(1)(ii) also requires the filing of complete 
sets of the constitution, bylaws, rules, and related documents of 
the association, once every three years.
---------------------------------------------------------------------------

2. Previous Requirements for Filing Forms X-15AA-1, X-15AJ-1, and X-
15AJ-2
    Prior to these amendments, an applicant for registration as a 
national securities association was required to file a registration 
statement and exhibits with the Commission on Form X-15AA-1 in 
triplicate.\115\ Every association applying for registration or 
registered as a national securities association was required to file 
with the Commission an amendment or supplement to its registration 
statement on Form X-15AJ-1 and an annual consolidated supplement to its 
registration statement on Form X-15AJ-2. These filings also had to be 
made in triplicate, at least one copy of which had to be signed and 
attested in the same manner as was required in the case of the original 
registration statement.\116\ Every association applying for 
registration or registered as a national securities association was 
required to file Form X-15AJ-2 with the Commission promptly after March 
1 of each year.\117\
---------------------------------------------------------------------------

    \115\ See 17 CFR 240.15Aa-1.
    \116\ See 17 CFR 240.15Aj-1.
    \117\ See 17 CFR 240.15Aj-1(c).
---------------------------------------------------------------------------

    The information collected by these forms was substantially similar: 
Form X-15AA-1, the registration statement for registration as a 
national securities association, requests 29 items of information and 
includes 3 exhibits; \118\ Form X-15AJ-1, for filing any amendments or 
supplements to the registration statement, requests no information 
beyond that requested by Form X-15AA-1; \119\ and Form X-15AJ-2, for 
filing the annual consolidated supplement to the registration 
statement, only requires one additional item of information, the 
inclusion of the date of the filing, which was not required by Form X-
15AA-1.\120\
---------------------------------------------------------------------------

    \118\ See 17 CFR 249.801.
    \119\ See 17 CFR 249.802. Form X-15AJ-1 and Form X-15AA-1 both 
require that if the association is registered, or applying for 
registration, as an affiliated securities association, the 
respondent list the registered national securities association with 
which the applicant or reporting association is affiliated. In 
addition, Form X-15AA-1 asked the applicant to state its reasons for 
believing that such affiliation will be granted. Form X-15AA-1 also 
required the applicant to estimate the annual dollar volume of 
transactions effected by members of the applicant association.
    \120\ See 17 CFR 249.803. Form 15A requires the inclusion of the 
date of the filing. Capturing the date (in a structured manner) will 
assist the Commission in determining compliance with the rule 
requirement that annual supplements be filed promptly after Mar. 1 
of each year (17 CFR 240.15Aj-1(c)).
---------------------------------------------------------------------------

3. Requirements to Electronically File on Form 15A Information 
Previously Filed on Forms X-15AA-1, X-15AJ-1, and X-15AJ-2
a. Amendments to Rules 15Aa-1 and 15Aj-1
    As discussed in detail below, the Commission is amending Rule 15Aa-
1 and redesignating it as Rule 15aa-1,\121\ redesignating Rule 15Aj-1 
\122\ as Rule 15aa-2, redesignating Form X-15AA-1 as Form 15A, amending 
the instructions to new Form 15A, and repealing Forms X-15AJ-1 and X-
15AJ-2 in connection with the Commission's requirement that applicants 
and national securities associations electronically file on a duly 
executed Form 15A the information currently filed on Forms X-15AA-1, X-
15AJ-1, and X-15AJ-2.\123\ As stated above in the introduction to this 
section II, among other benefits, revising the forms relating to 
registration as a national securities association will increase 
efficiencies and decrease costs incurred by applicants for registration 
as a national securities association and by national securities 
associations.\124\ In addition, the amendments will facilitate 
Commission review of the information to be provided on Form 15A.
---------------------------------------------------------------------------

    \121\ See 17 CFR 240.15Aa-1.
    \122\ See 17 CFR 240.15Aj-1.
    \123\ The Commission is also making a technical modification to 
17 CFR 232.101(a)(1) to include Form 15A in the list of filings 
required to be filed electronically. The Commission is making 
technical amendments to hyphenate ``up-to-date'' in three locations 
within Rule 15aa-2(c)(1)(ii), capitalize ``Items'' in Rule 15aa-
2(b)(3) and on Form 15A, and to replace ``comprising'' with 
``composing'' in the Form 15A General Instructions.
    \124\ See supra section II.
---------------------------------------------------------------------------

    To facilitate electronic filing of Form 15A, the Commission is 
amending Rule 15Aa-1 to require electronic filing. The amendments to 
Rule 15Aa-1 require that filings submitted pursuant to Rule 15Aa-1 be 
filed electronically on EDGAR in accordance with the requirements of 
Regulation S-T (17 CFR part 232). The amendments to Rule 15Aa-1 align 
the electronic filing requirements with changes being adopted under 
Rule 6a-1 (regarding Form 1 submissions) as well as the amendments to 
Rule 17ab2-1, which set forth the electronic filing requirements for 
Form CA-1 submissions.\125\ As stated above, the Commission further is 
redesignating Rule 15Aj-1 \126\ as Rule 15aa-2.
---------------------------------------------------------------------------

    \125\ See also amendments to Rule 6a-4.
    \126\ See 17 CFR 240.15Aj-1. The amendments to Rule 15Aj-1 will 
include updated references to relevant forms as well as updates to 
take into account electronic filing.
---------------------------------------------------------------------------

b. Form 15A
    The Commission is redesignating Form X-15AA-1 as Form 15A and is 
incorporating in Form 15A information related to amendments and 
supplements to the registration statement currently filed on Form X-
15AJ-1 and information related to the annual consolidated supplement to 
the registration statement currently filed on Form X-15AJ-2. New Form 
15A solicits information through prompts on the form that better 
organize the information that is currently collected through Forms X-
15AA-1, X-15AJ-1, and X-15AJ-2, which should make it easier for 
respondents to comply with the filing requirements. Furthermore, 
exhibits are required to be electronically uploaded to EDGAR. Among 
other benefits as detailed in the Economic Analysis,\127\ the 
amendments will increase efficiencies and decrease costs by 
consolidating substantially similar information currently filed on 
three paper forms into one electronic form. Because the information 
currently filed on the three forms will be captured entirely on Form 
15A, the Commission also is repealing Forms X-15AJ-1 and X-15AJ-2.\128\
---------------------------------------------------------------------------

    \127\ See infra section X.C.1 (discussing benefits such as 
reducing the risk that non-electronic submissions are delayed and 
increasing the ability to run comparisons across reporting periods).
    \128\ The Commission proposed in 2004 to simplify and streamline 
the disclosure process for national securities associations by, 
among other things, redesignating Form X-15AA-1 and combining it 
with Forms X-15AJ-1 and X-15AJ-2. See Exchange Act Release No. 50699 
(Nov. 18, 2004), See 69 FR 71126, 71155 (Dec. 8, 2004). The 
Commission did not adopt any final rule based on that proposal.
---------------------------------------------------------------------------

    New Form 15A contains eleven sections. Preceding section I of Form 
15A, the new form contains prompts

[[Page 7270]]

that require the association to note the basis for submitting the form. 
The prompts indicate whether the submission is an initial application 
filed pursuant to Rule 15aa-1 or an amendment or supplement--which 
currently are filed on Form X-15AJ-1 or X-15AJ-2, respectively--
pursuant to new Rule 15aa-2. Section I is titled ``Organization,'' and 
it solicits the following information about the association: (i) its 
name; (ii) its statutory address, principal executive office address, 
and the addresses of its branch or district offices (or if there are no 
such branch or district offices, the association would check the ``Not 
Applicable'' box); (iii) the contact information of each person 
authorized to receive service of process and notices on behalf of the 
association from the Commission; (iv) the contact information for the 
association's counsel; (v) the association's form of organization 
(e.g., corporation, sole proprietorship), date of organization, and 
name of State and reference to any statute thereof under which the 
association is organized; and (vi) information about its directors, 
officers, and certain other persons, and information about the members 
of its standing committees, or, in lieu of providing such information 
on new Form 15A, the association could provide a certification that the 
information can be obtained in a publication.\129\ The information 
solicited in section I is the same as that solicited in Items 1 through 
6 on current Form X-15AA-1.
---------------------------------------------------------------------------

    \129\ See 17 CFR 240.15aa-2(c)(1)(ii)(A), as amended.
---------------------------------------------------------------------------

    Section I also requires the association to attach Exhibits A 
through D. Exhibit A requires the association to attach copies of its 
corporate governance documents (e.g., constitution, bylaws), or in lieu 
of filing such documents, the association could provide a certification 
that the information may be obtained in a publication \130\ or that the 
information is kept up to date and available to the Commission and the 
public upon request.\131\ Exhibit A of new Form 15A solicits the same 
information as Exhibit A of current Form X-15AA-1 but reflects 
additional ways that the association could satisfy its filing 
obligation. Exhibit B requires the association to attach a balance 
sheet of the association as of a date within 30 days of the filing of 
an initial application, or promptly after the close of each fiscal year 
if the filing is a supplement, together with an income and expense 
statement for the year preceding such date or, if the association was 
organized during such year, for the period from the date of such 
organization to the date of such balance sheet. Exhibit B of new Form 
15A solicits the same information as Exhibit B of current Form X-15AA-
1. Exhibit C requires the association to provide a list, as of the 
latest practical date, of all of its members, and in lieu of 
supplementing the disclosed information regarding the names of members 
and their principal places of business when there is a change to that 
information--as is required under current Rule 15Aj-1(b)--the 
association is able to certify that changes in that information are 
reported in a record which is published at least once a month and 
promptly filed with the Commission, reflecting an additional way that 
the association could satisfy its filing obligation.\132\ Exhibit C of 
new Form 15A solicits the same information as Exhibit C of current Form 
X-15AA-1, and adds the requirement that the association set forth the 
date of election to membership for each member elected to membership 
after December 31, 1994, which is currently required on Exhibit C of 
Form X-15Aj-2. Exhibit D of new Form 15A solicits the same information 
as Exhibit D of current Form X-15AA-1, requiring the association to 
electronically file any notices, reports, circulars, loose-leaf 
insertions, riders, new additions, lists or other records of changes 
when, as, and if such records are made available to members of the 
association, as required by new Rule 15aa-2(d)(2).
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    \130\ See id.
    \131\ See 17 CFR 240.15aa-2(c)(1)(ii)(B), as amended.
    \132\ See 17 CFR 240.15aa-2(b)(3), as amended.
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    Sections II through IX of new Form 15A solicits information about 
specific association rules and other information that is currently 
solicited on Form X-15AA-1. Section II is titled ``Membership'' and 
requires the association to cite the specific rule(s) of the 
association addressing membership requirements, such as any rule 
restricting membership. Section II poses the same questions about the 
association's membership rules as Items 7 through 10 of current Form X-
15AA-1. Section III is titled ``Representation of Membership'' and 
requires the association to cite the specific rule(s) of the 
association that assures fair representation of its members, which 
information is currently solicited in Item 11 of Form X-15AA-1. Section 
IV is titled ``Dues and Expenses'' and requires the association to cite 
the specific rule(s) of the association that provides for the equitable 
allocation of dues among its members to defray reasonable expenses of 
administration, which information is currently solicited in Item 12 of 
Form X-15AA-1.
    Section V is titled ``Business Conduct and Protection of Members.'' 
This section requires the association to cite specific rule(s) of the 
association addressing the protection of members and member conduct 
with regard to principles of fair trade and dealing, such as the 
association rule(s) designed to prevent fraudulent and manipulative 
acts and practices and the rule(s) designed to provide safeguards 
against unreasonable profits or unreasonable rates of commissions or 
other charges. Section V also solicits information about association 
rule(s) addressing the disclosure of financial information or other 
business conduct requirements, such as the types of financial 
statements the association requires from its members, rules with 
respect to member insolvency, and rules requiring the keeping and 
preserving of books and records. Section V poses the same questions 
about business conduct and the protection of members as Items 13 
through 23 of current Form X-15AA-1.
    Section VI is titled ``Disciplining of Members'' and requires the 
association to cite the specific rule(s) of the association that 
addresses member discipline. Section VI poses the same questions about 
member discipline as Items 24 and 25 of current Form X-15AA-1. Section 
VII is titled ``Affiliated Associations'' and requires the association 
to cite the specific rule(s) of the association that provide for the 
admission of registered affiliated securities associations. Section VII 
poses the same question as Item 26 of current Form X-15AA-1. Section 
VIII is titled ``Miscellaneous'' and requires the association to cite 
the specific rule(s) of the association that (i) regulate the dealings 
of a member with any nonmember broker or dealer and (ii) provide a 
method for enforcing compliance on the part of its members with the 
rules of the association. Section VIII of new Form 15A poses the same 
questions as Items 27 and 28 of current Form X-15AA-1. Section IX is 
titled ``Additional Information for Registration as an Affiliated 
Securities Association'' and applies only to applications submitted for 
registration as an affiliated securities association. Section IX 
requires the applicant to provide the registered national securities 
association with which it seeks to be affiliated, its reasons for 
believing that such affiliation will be granted, and the estimated 
dollar volume of transactions effected by members of the applicant. 
Section IX of new Form 15A poses the

[[Page 7271]]

same questions as Items 29 and 30 of current Form X-15AA-1.
    Section X requires the association to provide the contact 
information for its contact employee, and section XI provides the 
signature block and attestation. Consistent with the amendments to Form 
1, Form 1-N, and Form CA-1, the entity filing new Form 15A consents to 
service of process to the individuals listed in section I, Item 3, 
which service of process could be via registered or certified mail. 
Section XI also requires the filer to represent that the information 
and statements contained in the form, including exhibits, schedules, or 
other documents, are current, true, and complete.
    In addition, the Commission is amending the instructions for new 
Form 15A to include general directions for preparing and filing the 
form, describe the seven types of submissions that may be made under 
new Rules 15aa-1 and 15aa-2, and set forth the items, exhibits, and 
schedules required to be filed for each type of submission.
    Finally, Form 15A requires the execution page to be filed in a 
custom XML data language specific to Form 15A. As with the other 
Covered SRO Forms, filers are able to input their execution page 
disclosures into a fillable web form that EDGAR will subsequently 
convert to custom XML. Structuring the execution page in custom XML 
should improve the ability to sort, filter, and otherwise organize Form 
15A filings, enhancing the ability of the Commission to compare filings 
from year to year without creating significant additional burden on 
filers. The remainder of new Form 15A is not structured, however, 
because the very limited number of Form 15A filers and filings could 
mitigate the benefit derived from machine-readability of the 
disclosures contained therein.\133\ The Commission did not receive 
comment on these proposals and for the reasons discussed above is 
adopting them as proposed.
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    \133\ See infra section IX.C.4.
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D. Form CA-1

1. Relevant Statutory Framework
    Section 17A of the Exchange Act governs the establishment of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions.\134\ Section 17A(b)(2) of the Exchange Act 
\135\ states that a clearing agency may be registered under the terms 
and conditions provided thereunder and in accordance with the 
provisions of section 19(a) of the Exchange Act \136\ by filing with 
the Commission an application for registration in such forms as the 
Commission, by rule, may prescribe containing the rules of the clearing 
agency and such other information and documents as the Commission, by 
rule, may prescribe as necessary or appropriate in the public interest 
or for the prompt and accurate clearance and settlement of securities 
transactions.
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    \134\ See 15 U.S.C. 78q-1.
    \135\ See 15 U.S.C. 78q-1(b)(2).
    \136\ See 15 U.S.C. 78s(a).
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2. Pre-existing Requirements for Filing Form CA-1
    Previously, the Commission adopted Rule 17ab2-1 \137\ and Form CA-
1,\138\ pursuant to section 17A(b)(2) of the Exchange Act, in order to 
set forth the requirements for registration as a clearing agency or for 
an exemption from registration as a clearing agency under section 17A. 
Rule 17ab2-1(a) states that an application for registration or for 
exemption from registration as a clearing agency or an amendment to any 
such application shall be filed with the Commission on Form CA-1, in 
accordance with the instructions thereto.\139\
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    \137\ See 17 CFR 240.17ab2-1.
    \138\ See 17 CFR 249b.200.
    \139\ See 17 CFR 240.17ab2-1(a).
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    Form CA-1 contains general instructions for preparing and filing 
Form CA-1 and instructions relating to the filing of amendments to a 
Form CA-1. It also includes an execution page and 19 exhibits. The Form 
CA-1 execution page requests general information from the applicant, as 
well as information regarding whether the clearing agency is exposed to 
loss if a participant fails to perform its obligations to the clearing 
agency. The exhibits to Form CA-1 also require an applicant clearing 
agency to provide information regarding business organization, 
financial position, operational capacity, access to its services, and, 
for those seeking an exemption from registration, a statement 
demonstrating why granting an exemption from registration would be 
consistent with the public interest, the protection of investors, and 
the purposes of section 17A, including the prompt and accurate 
clearance and settlement of securities transactions and the 
safeguarding of securities and funds.
3. Comment Regarding Proposed Changes to Rule 17ab2-1 and Form CA-1
    The Commission received one comment specifically addressing the 
proposed changes to Rule 17ab2-1 and Form CA-1 \140\ which was 
generally supportive of the proposal and described it as ``an effort[ ] 
to reduce the burden on registrants by modernizing filing requirements 
and forms to make submission more streamlined and cost-effective.'' 
\141\ The commenter focused on how the proposed Form CA-1 changes, 
inclusive of Rule 17ab2-1, would impact its requirements to make 
periodic amendments as a registered clearing agency. The commenter 
stated that it does not anticipate that the proposed structured data 
requirements will present obstacles or be burdensome for registered 
clearing agencies filing routine amendments to Form CA-1, but it did 
seek clarification on the requirement under Item 2 for submission of an 
email address. Specifically, the commenter sought to clarify whether a 
registrant may provide a dedicated (i.e., general) email account in 
lieu of an individual person's email account in order to comply with 
this requirement. The commenter stated several benefits to the use of a 
dedicated email account, including allowing for routing to multiple 
individuals, uninterrupted monitoring even during personnel 
transitions, and protection from spamming.
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    \140\ See Letter from Megan Malone Cohen, General Counsel and 
Corporate Secretary, Options Clearing Corporation (May 22, 2023) 
(``OCC 5/22/2023 Letter'').
    \141\ See id. at 1.
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    The amendments permit either an individual or dedicated email 
account to be used. The email address requirement for the person in 
charge of the registrant's clearing agency activities is to facilitate 
communication with the person who is able to furnish information about 
the clearing agency activities. As long as the person in charge of the 
registrant's clearing agency activities is able to receive and send 
information at that email address, such an email address meets the 
purposes of that requirement. The change does not impose any 
requirements on how an applicant, registrant, or exempt clearing agency 
chooses to structure its internal email account system to follow a 
naming convention, manage access, or contain forwarding rules for 
emails to one or more persons. If the person who is in charge of the 
registrant's clearing agency activities can receive and send 
information through all the contact information provided on the Form 
CA-1, including the email account, this requirement will be met.
    Consistent with the general support by the commenter for the 
benefits of the proposed changes to Rule 17Ab2-1 and Form CA-1, and the 
acknowledgement by the commenter that it does not create obstacles, for 
the reasons discussed in this section, the Commission is adopting

[[Page 7272]]

these changes as proposed, as further described below, because of their 
benefits.
4. Requirement to Electronically File Form CA-1
    The Commission is revising certain aspects of Rule 17ab2-1, Form 
CA-1, and the instructions to Form CA-1 to require electronic filing of 
applications on Form CA-1 and subsequent amendments thereto by 
applicants, registered clearing agencies, and exempt clearing agencies. 
The revisions therefore require: (i) an applicant to file 
electronically its initial application on Form CA-1 for registration or 
for an exemption from registration and any subsequent amendments 
thereto; (ii) a registered clearing agency to file electronically any 
amendments to its Form CA-1 after being granted registration as a 
clearing agency; and (iii) an exempt clearing agency to file 
electronically any amendments to its Form CA-1 after being granted an 
exemption from registration as a clearing agency. As explained above in 
the introduction to section II, the revised rule and form revisions 
increase efficiencies and decrease costs related to the filing of Form 
CA-1 and amendments thereto by both registered and exempt clearing 
agencies, and the Commission's review of filed Forms CA-1 and 
amendments thereto.\142\ In addition, while exempt clearing agencies 
are not subject to the SRO rule filing process under section 19(b) of 
the Exchange Act,\143\ certain exempt clearing agencies are currently 
subject to electronic filing requirements under Regulation SCI.\144\ 
Consequently, requiring these entities to file electronically Form CA-1 
and amendments thereto is consistent with existing requirements for 
these entities under Regulation SCI.
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    \142\ See supra section I.B.
    \143\ See 15 U.S.C. 78s(a) and (b).
    \144\ See 17 CFR 242.1006. See also Exchange Act Release No. 
73639 (Nov. 19, 2014), 79 FR 72251, 72258 (Dec. 5, 2014) (listing 
categories of SCI entities under Regulation SCI).
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5. Amendments to Rule 17ab2-1
    The Commission is revising Rule 17ab2-1 to require electronic 
filing of Form CA-1. Specifically, the Commission is revising 
paragraphs (a), (d), (e), and (f) to reference the method of filing as 
being electronic, and is adding paragraph (g) to provide specific 
instructions on the method of filing electronically, including a 
requirement for an electronic signature (defined as an electronic entry 
in the form of a magnetic impulse or other form of computer data 
compilation of any letter or series of letters or characters composed 
of a name, executed, adopted or authorized as a signature). 
Additionally, paragraph (g) specifies a cutoff time of 5:30 p.m. 
eastern standard time or eastern daylight saving time for purposes of 
deeming which business day (defined to exclude certain days of the 
week, holidays, and closures) that a filing occurred. It also specifies 
that a filing would be deemed timely filed if it is required to be 
filed on a day that is not a business day and is filed on the next 
available business day. As stated above in the introduction to section 
II, among other benefits, revising the forms relating to registration 
as a clearing agency increases efficiencies and decreases costs 
incurred by applicants for registration as a clearing agency.
6. Amendments to Form CA-1 and the Form CA-1 Instructions
    Electronic Form CA-1 solicits information through prompts on the 
form that should better structure the information collected. In 
addition, electronic Form CA-1 requires exhibits to be attached through 
a new exhibit table that is part of electronic Form CA-1. Further, all 
information posted on a website pursuant to electronic Form CA-1 must 
be free and accessible (without any encumbrances or restrictions) by 
the general public. Prompts are being added prior to section I of the 
form that require the registrant to note the basis for submitting Form 
CA-1. Specifically, electronic Form CA-1 requires the registrant to 
check a box stating one of the following: (i) whether the filing is an 
application pursuant to Rule 17ab2-1(a) and if it is, whether the 
registrant is applying for registration as a clearing agency \145\ or 
requesting an exemption from registration as a clearing agency; (ii) 
whether the filing is an amendment to an initial Form CA-1 application 
pursuant to Rule 17ab2-1(d) prior to the Commission's grant of 
registration or an exemption from registration, or an update to an 
initial Form CA-1 application correcting information that is 
inaccurate, misleading, or incomplete, pursuant to Rule 17ab2-1(e); 
(iii) whether the filing is to provide the registrant's consent to an 
extension of the time period within which the Commission must take 
action on an initial Form CA-1 application and the date the extension 
expires; \146\ (iv) whether the filing is to withdraw an initial Form 
CA-1 application prior to the Commission taking action on the 
application; (v) whether the filing is an amendment to Form CA-1 
pursuant to Rule 17ab2-1(e) following Commission action to grant 
registration or an exemption; or (vi) whether the filing is required by 
a Commission order approving an application for exemption from 
registration as a clearing agency pursuant to section 17A(b)(1) of the 
Exchange Act. The Commission is requiring a registrant to indicate the 
type of filing to help facilitate the electronic filing of, and the 
Commission's review of, Form CA-1 submissions, including information 
required of an exempt clearing agency by an exemptive order.
---------------------------------------------------------------------------

    \145\ If the registrant is applying for registration as a 
clearing agency, the changes to Form CA-1 require the registrant to 
indicate whether it requests the Commission to consider granting 
exemption from specified clearing agency requirements during a 
temporary registration period, in accordance with paragraph (c)(1) 
of Rule 17ab2-1 under the Exchange Act.
    \146\ See 15 U.S.C. 78s(a)(1)(B).
---------------------------------------------------------------------------

    The Commission also is modifying Form CA-1 to add a requirement for 
information about a contact employee. Amended Form CA-1 requires the 
name, title, email address, and telephone number of an employee 
prepared to respond to questions about the Form CA-1 submission.\147\ 
The Commission is requiring information about a contact employee to 
facilitate communication between the registrant and the Commission. 
Similarly, the Commission is requiring the email address of the person 
in charge of the registrant's clearing agency activities to facilitate 
communication between the registrant and the Commission. As described 
above, the amendments permit the use of dedicated, general email 
accounts as long as the person in charge can send and receive 
information from the email provided to the Commission on the Form CA-
1.\148\
---------------------------------------------------------------------------

    \147\ The Commission is making the following technical changes: 
(1) capitalizing ``Item'' in the General Instructions to Form CA-1, 
Form CA-1, and in Rule 17ab2-1(e); (2) replacing ``comprising'' with 
``composing'' and ``comprised'' with ``composed'' in the General 
Instructions to Form CA-1 and Form CA-1; (3) replacing 
``comprising'' with ``composed of'' in Rule 17ab2-1(g)(2); and (4) 
in Section B of the General Instructions to Form CA-1, replacing the 
phrase ``The full middle name is required'' with ``The full middle 
name, if one exists, is required'' to be clear that a full name can 
be provided without a middle name when an individual does not have a 
middle name.
    \148\ See supra note 140 and accompanying text.
---------------------------------------------------------------------------

    In addition, revised Form CA-1 requires a registrant to 
electronically attach exhibits by using an exhibit table for all of the 
exhibits required by the current form, broken down into sections.\149\ 
There are also sections that may be applicable to only certain

[[Page 7273]]

filings, with section VIII covering requests for an exemption from 
registration under Exhibit S, and section IX covering submission of any 
conditions, reports, notices or other submissions to the Commission 
required as directed in any order approving an application for 
exemption from registration as a clearing agency, under Exhibit T. 
Furthermore, adopted Form CA-1 preserves the current ability for a 
registrant to indicate that it is requesting confidential treatment 
with respect to certain of the disclosed information, and make a 
request for confidential treatment, under section X. In addition, as 
discussed further below in section VII, the Commission is adopting new 
paragraph (j) to Rule 24b-2 to require that a filer not omit the 
confidential portion from the material filed in electronic format on 
Form CA-1, but rather request confidential treatment of information 
provided in electronic format by completing section X of Form CA-1.
---------------------------------------------------------------------------

    \149\ Sections III through VII of Form CA-1, as amended, consist 
of exhibits relating to General Information, Business Organization, 
Financial Information, Operational Capacity, and Access to Services, 
respectively.
---------------------------------------------------------------------------

    The Commission also is omitting Item 7(b) from the current Form CA-
1. Item 7(b) solicits the following information: as of September 30, 
1975, the dollar amount of the potential exposure of registrant, if 
any, as a result of differences (without offsetting long differences 
against short differences and without offsetting any suspense account 
items) in its clearing agency activities not resolved after 20 business 
days. On December 1, 1975, it became unlawful for any clearing agency--
not subject to temporary exemptive relief under paragraph (b) of Rule 
17ab2-1 that has since expired--to perform the functions of a clearing 
agency unless registered or exempt.\150\ Before December 1, 1975, 
however, applicant clearing agencies may have performed the functions 
of a clearing agency prior to registering with the Commission or 
obtaining an exemption from registration. Therefore, to facilitate 
review by the Commission of applications on Form CA-1 by such clearing 
agencies, Item 7(b) of Form CA-1 requires disclosure, as of September 
30, 1975, of the dollar amount of the potential exposure of the 
clearing agency from differences in its clearing agency activities not 
resolved after 20 business days. Information provided pursuant to this 
provision is no longer useful to the Commission because information on 
potential exposures to the clearing agency as of September 30, 1975, is 
stale data. Accordingly, it is no longer necessary to include Item 7(b) 
on Form CA-1.
---------------------------------------------------------------------------

    \150\ Paragraph (b) of Rule 17ab2-1 provides any clearing agency 
that filed an application with the Commission on or before Nov. 24, 
1975, with a temporary exemption from the registration provisions of 
section 17A(b) of the Exchange Act and the rules and regulations 
thereunder until the Commission either grants registration, denies 
registration, or grants an exemption from registration. See 17 CFR 
240.17ab2-1(b).
---------------------------------------------------------------------------

    The Commission also is revising the instructions to Form CA-1 to 
facilitate the electronic filing of Form CA-1. The revised form 
instructions do not contain the language in paragraph 2 under Part I of 
the current form stating that clearing agencies are required to file 
four completed copies of Form CA-1 with the Commission, or the language 
in paragraph 4 under Part I of the current form providing instructions 
relating to the requirements for copies of Form CA-1. Further, the 
revised instructions do not contain the language of paragraph 3 under 
Part I of the current form, which states that ``[t]he date on which a 
Form CA-1 is received by the Commission shall be the date of filing 
thereof if all the requirements with respect to filing have been 
complied with.'' This language would be inconsistent with the date-of-
filing provision being added to Rule 17ab2-1, which provides for a 5:30 
p.m. eastern standard time or eastern daylight saving time, whichever 
is currently in effect, on a business day, cutoff for a filing to be 
deemed filed on the day on which it is submitted.
    In addition, existing paragraph 13 under Part III of the current 
form states that, if an item is amended, the registrant must repeat all 
unamended items as they last appeared on the page on which the amended 
item appears and must file four copies of the new page, each with 
updated and properly completed cover and execution pages. The 
requirement to repeat unamended items on certain pages relates solely 
to the filing of amended paper copies and, therefore, it is not 
relevant to the electronic filing process. The Commission is requiring 
a registered or exempt clearing agency to electronically file a full 
exhibit to help facilitate the performance of the Commission's 
regulatory functions because the Commission is able to review an 
amended exhibit to Form CA-1 in its entirety and more easily compare 
the revised exhibit against the prior version, particularly if 
numerous, non-consecutive pages are being amended. The Inline XBRL 
requirement for certain Form CA-1 exhibits further facilitates this 
comparison process, because Inline XBRL allows reviewers to create 
automated redline comparisons of an exhibit (or specific portion 
thereof) to a prior version of the same exhibit (or specific portion 
thereof). Accordingly, the Commission is deleting the reference to 
pagination that is currently in Item III, paragraph 13.
    In addition, Form CA-1 and the instructions to Form CA-1 continue 
to require a registered or exempt clearing agency to consent to the 
service of notice of a proceeding under sections 17A or 19 of the 
Exchange Act involving the registrant. The language under which the 
registrant consents to service via registered or certified mail at the 
address provided on Form CA-1 would continue to be included in the 
electronically filed form.\151\
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    \151\ The provision on page 3 of the Form CA-1 allowing for 
service of any civil action pursuant to confirmed telegram is 
deleted.
---------------------------------------------------------------------------

    Finally, Form CA-1 requires a registered or exempt clearing agency 
to structure Schedule A (descriptive responses complementing the 
clearing agency's execution page disclosures) and Exhibits C 
(description of organizational structure), F (description of material 
pending legal proceedings), H (financial statements), J (description of 
services and functions), K (description of security measures and 
procedures), L (description of safeguarding measures and procedures), M 
(description of backup systems), O (description of, and reasons for, 
criteria governing access to services), R (prohibitions and limitations 
on access to services), and S (explanation of requested exemption) in 
Inline XBRL. The execution page and Exhibits A (persons controlling 
management or policies, but not the copies of written agreements with 
such persons), B (officers, managers, and individuals occupying similar 
positions), D (persons controlled by or under common control with the 
clearing agency, and description of control relationship), E (dues, 
fees, and other charges for clearing activities, but not the copies of 
the constitution, articles of incorporation or association, bylaws, 
rules procedures, and instruments corresponding thereto), I (office 
addresses and activities performed in each office), N (participants or 
applicants for participation), and Q (schedule of fees for services 
rendered by participants) also must be structured, albeit in a custom 
XML data language specific to Form CA-1 rather than in Inline XBRL.
    The copies of existing documents filed with Exhibits A (copies of 
written agreements with control persons), E (copies of the 
constitution, articles of incorporation or association, bylaws, rules, 
procedures, and instruments corresponding thereto), G (copies of 
contracts with exchanges, national securities associations, and 
securities

[[Page 7274]]

markets), P (copies of contracts governing subscription terms), and T 
(submissions to the Commission required as directed in any approval 
order) are filed as unstructured PDF documents.
[GRAPHIC] [TIFF OMITTED] TR21JA25.009

    The structuring requirements should facilitate access to the 
clearing agency's disclosures (enabling, for example, more efficient 
retrieval of only those disclosures filed by a subset of clearing 
agencies over particular reporting periods) and analysis (such as by 
comparing individual disclosures or sets of disclosures across clearing 
agencies and time periods). This will benefit market participants 
through enhanced oversight of clearing agencies. Market participants 
(such as broker-dealers, analysts, and other clearing agencies) will 
also benefit from direct use of the machine-readable disclosures on 
Form CA-1. For example, institutional investors could leverage the 
machine-readability of Exhibit J to run automated redlines of a 
clearing agency's safeguarding procedure descriptions from prior 
periods, thereby detecting any significant procedural changes that 
could raise concern.
    Without the structured data requirements, these types of analyses 
would need to be performed manually, such as by gathering the current 
and former descriptions of safeguarding procedures for each exchange 
and entering them all into databases, resulting in a significantly less 
efficient and precise process. In addition, the structured data 
requirement enables EDGAR to perform technical validations (i.e., 
programmatic checks to ensure the documents are appropriately 
standardized, formatted, and complete) upon intake of the Form CA-1 
disclosures, thus potentially improving the quality of the filed data 
by decreasing the incidence of non-substantive errors (such as the 
omission of values from fields that should always be populated).
    The nature and extent of such benefits may vary based on the 
content of each Form CA-1 Exhibit. As discussed in the Economic 
Analysis, studies of XBRL requirements for public operating company 
financial statements indicate a number of benefits for investors and 
market participants.\152\ The probability that, and extent to which, 
these particular benefits arise from structured Form CA-1 disclosures 
could be heightened for Exhibit H, which likewise includes structured 
financial statements. In addition, the particular benefits of 
structuring data likely vary based on the type of disclosures included 
in each particular Exhibit. Structured numerical disclosures, such as 
those included on Exhibit H, lend themselves to mathematical 
functionality, such as the calculation of key ratios or the 
identification of extreme statistical outliers. Structured textual 
disclosures, such as those that included on Exhibit K, lend themselves 
to period-over-period redline comparisons, targeted keyword searching, 
and more sophisticated sentiment analysis.
---------------------------------------------------------------------------

    \152\ See infra section X.C.1.b.
---------------------------------------------------------------------------

    After consideration, the Commission, as proposed, is requiring 
Inline XBRL for certain exhibits to Form CA-1 and custom XML for 
others, because each data language is better suited for particular 
types of disclosures. Exhibit H requires disclosure of financial 
statements, and Inline XBRL was designed to accommodate financial 
statement information, including the particular metadata (e.g., the 
relevant fiscal period, whether the line item is on the balance sheet, 
whether the line item is a credit or debit) that must be linked to each 
data point within the financial statements to fully convey its semantic 
meaning to a machine reader. Exhibits C, F, J, K, L, M, O, R, and S 
require narrative disclosures on topics such as the clearing agency's 
services, security, backup systems, and criteria governing access to 
services; whereas custom XML data languages only have the capacity to 
accommodate brief narrative descriptions, Inline XBRL can accommodate 
longer narrative descriptions with presentation capabilities that 
preserve human-readability while maintaining machine-readability.
    The execution page of Form CA-1, Exhibits A (in part), B, D, E (in 
part), I, N, and Q do not require such content. For these disclosures, 
the use of custom XML is preferable to Inline XBRL, because it yields 
smaller file sizes and therefore enables more streamlined processing of 
the information.\153\ Requiring custom XML rather than Inline XBRL for 
these disclosures is also preferable because it will enable EDGAR to 
generate fillable web forms that permit clearing agencies to manually 
input their disclosures into the form fields, rather than structure 
their disclosure in the custom XML data language themselves. This added 
flexibility could ease the burden of compliance on clearing agencies in 
some instances, although clearing agencies may have the requisite 
sophistication to encode the disclosures in custom XML themselves 
without relying on fillable web forms.
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    \153\ See also infra section X.E.4 (discussing other structured 
data languages that would result in smaller file sizes than Inline 
XBRL, and the reasons why the Commission has not required the use of 
such data languages under the rule amendments).
---------------------------------------------------------------------------

    The Commission is requiring clearing agencies to file copies of 
existing documents, such as copies of bylaws, written agreements, and 
contracts governing subscription terms, as unstructured PDF 
attachments. The Commission is not requiring clearing agencies to 
retroactively structure these existing documents, which were prepared 
for purposes outside of fulfilling the Commission's disclosure 
requirements, because such a requirement will likely impose costly 
compliance burdens on clearing agencies that may not be justified in 
light of the commensurate informational benefits associated with more 
efficient disclosure use. Thus, structured data requirements are not 
warranted for these copies of existing documents.
    One commenter agreed that the proposed structured data requirements 
for Form CA-1 would not present obstacles or be burdensome for clearing 
agencies.\154\ Another commenter recommended that all items in Form CA-
1 be submitted in Inline XBRL, except for copies of existing documents 
which could then be submitted in PDF format and linked via tags in an 
XBRL

[[Page 7275]]

document.\155\ The commenter stated that requiring a single data 
language would lead to efficiencies in both reporting and data 
extraction and identified Inline XBRL as the most suitable option for 
the information reported on Form CA-1, because much of it is financial 
and narrative.\156\ The Commission agrees with the commenter that 
Inline XBRL is suitable for financial and narrative data, and is 
therefore requiring Inline XBRL for those Form CA-1 exhibits with 
financial disclosures (i.e., Exhibit H) and extended narrative 
disclosures (i.e., Schedule A and Exhibits C, F, J, K, L, M, O, R, and 
S). However, the Commission disagrees with the commenter that an Inline 
XBRL requirement would be more suitable than a custom XML requirement 
for the other structured Form CA-1 disclosures.
---------------------------------------------------------------------------

    \154\ See OCC 5/22/2023 Letter at 2.
    \155\ See XBRL Letter at 4-5. The commenter agreed that there 
would not be sufficient value in retroactively structuring existing 
documents.
    \156\ See id.
---------------------------------------------------------------------------

    In that regard, the commenter stated that, whereas there is a large 
competitive marketplace of tools to support XBRL preparation which can 
be leveraged for any reporting application, use of a custom XML schema 
for some Form CA-1 disclosures will require the creation of a new 
application specifically designed for a 2-step data extraction process 
that involves preparing and extracting data using a custom XML 
schema.\157\ The Commission disagrees with the characterization by the 
commenter that a new application would need to be specifically designed 
to prepare data using that schema. Clearing agencies will have means of 
complying with Form CA-1 custom XML requirements that do not involve 
the creation of a new application. First, clearing agencies will be 
able to create custom XML CA-1 documents internally without the use of 
custom applications; because, similar to exchanges as discussed above, 
clearing agencies are sophisticated entities that likely have 
experience encoding disclosures using custom XML schemas without 
needing to create new custom applications. Second, clearing agencies 
(like exchanges) will have the option to forgo creating structured 
custom XML Form CA-1 exhibits altogether, and instead input their 
disclosures into a fillable web form that EDGAR will make available to 
Form CA-1 filers. Clearing agencies that use the fillable form option 
will similarly not need to procure or pay for custom commercial 
applications to prepare the custom XML data required by those Form CA-1 
exhibits. In either of the above cases, clearing agencies will be able 
to comply with the custom XML Form CA-1 requirements without any need 
for creation of a new application specifically designed to prepare data 
using the custom XML schema for Form CA-1 exhibits.
---------------------------------------------------------------------------

    \157\ See id.
---------------------------------------------------------------------------

    The commenter also stated that it would be more efficient for data 
users to extract data from Form CA-1 if all the data were structured in 
Inline XBRL, because this would result in a one-step extraction process 
rather than a two-step extraction process. The Commission agrees with 
the commenter that using different structured data languages for Form 
CA-1 will add an additional step to the extraction of the structured 
data (making it a one-step extraction process rather than a two-step 
extraction process), because data users will need to run conversion 
processes to incorporate the Inline XBRL disclosures on Form CA-1 into 
the same datasets and applications as the custom XML disclosures filed 
on Form CA-1. Nonetheless, the streamlined data processing associated 
with the smaller sizes of the custom XML exhibits and execution page, 
as described earlier in this section, justify any such drawbacks.
    With respect to the execution page, the commenter referenced the 
Commission's existing requirements for public companies to tag cover 
page information in periodic reports in Inline XBRL, and questioned why 
the Commission has chosen not to follow that precedent for Form CA-
1.\158\ Several other existing Commission disclosure forms, such as 
electronic Form X-17A-5 Part III, electronic Form 17-H, and the SBSE 
Forms, use custom XML execution pages.\159\ The Commission is similarly 
requiring custom XML rather than Inline XBRL for the Form CA-1 
execution page because while Inline XBRL is particularly suitable for 
financial statements or extended narrative disclosures, custom XML is 
comparably suitable for the checkboxes, brief text strings, and limited 
numeric disclosures included on the Form CA-1 execution page (much like 
the execution pages for electronic Form X-17A-5 Part III, electronic 
Form 17-H, and the SBSE Forms). Given the comparable technical 
suitability of custom XML and Inline XBRL for the disclosures in the 
Form CA-1 execution page, the smaller file sizes and more streamlined 
processing of custom XML data compared to Inline XBRL data, the custom 
XML requirement for the Form CA-1 execution page is appropriate.\160\
---------------------------------------------------------------------------

    \158\ See XBRL Letter at 5; 17 CFR 232.406.
    \159\ See EDGAR Filer Manual, Volume II at 8.2.20, 8.2.21, and 
8.2.22.
    \160\ See also supra section II.A.3 and infra section X.E.4 
(discussing other structured data languages that would result in 
smaller file sizes than Inline XBRL, and the reasons why the 
Commission has not required the use of such data languages under the 
rule amendments).
---------------------------------------------------------------------------

E. Form 19b-4(e)

1. Relevant Statutory Framework
    Section 19(b) of the Exchange Act, as amended, requires each SRO to 
file with the Commission, in accordance with such rules as the 
Commission may prescribe, copies of any proposed rule, or any proposed 
change in, addition to, or deletion from the rules of such SRO 
(collectively, a ``proposed rule change'') accompanied by a concise 
general statement of the basis and purpose of such proposed rule 
change.\161\ Rule 19b-4(e)(1) provides that the listing and trading of 
a new derivative securities product by an SRO shall not be deemed a 
proposed rule change under the Exchange Act if the Commission has 
approved, pursuant to section 19(b) of the Exchange Act,\162\ the SRO's 
trading rules, procedures, and listing standards for the product class 
that include the new derivative securities product, and the SRO has a 
surveillance program in place for such product class.\163\
---------------------------------------------------------------------------

    \161\ See 15 U.S.C. 78s(b).
    \162\ See 15 U.S.C. 78s(b).
    \163\ See 17 CFR 240.19b-4(e)(1).
---------------------------------------------------------------------------

2. Background of Rule 19b-4(e)
    As discussed above, Rule 19b-4(e)(1) under the Exchange Act 
provides that the listing and trading of a new derivative securities 
product \164\ by an SRO shall not be deemed a proposed rule change 
subject to certain conditions. The Commission determined that, when it 
has approved an SRO's trading rules, procedures, and listing standards 
for the product class that include the new derivative securities 
product, and the SRO has an adequate surveillance program in place for 
such product class, the listing and trading of the new derivative 
securities product would be ``reasonably and fairly implied'' by the 
SRO's existing trading rules, procedures, and listing standards, and 
therefore, would not be deemed a proposed rule change under Rule 19b-
4(c)(1).\165\
---------------------------------------------------------------------------

    \164\ Rule 19b-4(e) defines a new derivative securities product 
as ``any type of option, warrant, hybrid securities product or any 
other security, other than a single equity option or a security 
futures product, whose value is based, in whole or in part, upon the 
performance of, or interest in, an underlying instrument.'' See 17 
CFR 240.19b-4(e).
    \165\ See Exchange Act Release No. 40761 (Dec. 8, 1998), 63 FR 
70952 (Dec. 22, 1998) (``Rule 19b-4(e) Adopting Release''). See also 
17 CFR 240.19b-4(c)(1).

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[[Page 7276]]

    For purposes of Rule 19b-4(e)(1), SROs have submitted, and the 
Commission has approved pursuant to section 19(b)(2) of the Exchange 
Act, trading rules, procedures, and listing standards for several types 
of new derivative securities products including, for example, exchange-
traded funds, index-linked securities and other exchange-traded 
structured products, and narrow and broad-based index options.\166\
---------------------------------------------------------------------------

    \166\ See, e.g., Exchange Act Release Nos. 42787 (May 15, 2000), 
65 FR 33598 (May 24, 2000) (SR-Amex-2000-14) (approving generic 
listing standards for exchange traded funds called Portfolio 
Depositary Receipts and Index Fund Shares); 45718 (Apr. 9, 2002), 67 
FR 18965 (Apr. 17, 2002) (SR-NYSE-2002-07) (approving generic 
listing standards for Trust Issued Receipts); 55687 (May 1, 2007), 
72 FR 25824 (May 7, 2007) (SR-NYSE-2007-27) (approving generic 
listing standards for Index-Linked Securities); 48405 (Aug. 25, 
2003), 68 FR 52257 (Sept. 2, 2003) (SR-ISE-2003-05) (approving 
generic listing standards for narrow-based index options); 78397 
(June 22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEArca-2015-110) 
(approving generic listing standards for Managed Fund Shares); and 
88566 (Apr. 6, 2020), 85 FR 20312 (Apr. 10, 2020) (SR-CboeBZX-2019-
097) (approving generic listing standards for Exchange-Traded Fund 
Shares).
---------------------------------------------------------------------------

    As expressed in the Rule 19b-4(e) Adopting Release, the Commission 
adopted Form 19b-4(e) in order for the Commission to maintain an 
accurate record of all new derivative securities products traded on the 
SROs in order to notify the Commission when an SRO begins to trade a 
new derivative securities product not required to be submitted as a 
proposed rule change to the Commission for approval.\167\ The 
Commission also stated that it would make Forms 19b-4(e) public.\168\ 
At the time of the adoption of Rule 19b-4(e), the Commission estimated 
the new rule would eliminate approximately 45 SRO rule filings each 
year,\169\ and the information regarding new derivative securities 
products required pursuant to Rule 19b-4(e) was required to be 
submitted using a paper Form 19b-4(e).
---------------------------------------------------------------------------

    \167\ See Rule 19b-4(e) Adopting Release, 63 FR at 70963.
    \168\ See id. at 70964 n.139 (``Form 19b-4(e) will be publicly 
available through the Commission's Public Reference Room. In 
addition, the Commission will endeavor to make the Forms available 
on the Commission's website.'').
    \169\ See Rule 19b-4(e) Adopting Release, 63 FR at 70964.
---------------------------------------------------------------------------

3. Previous Requirements for Filing Form 19b-4(e)
    Under Rule 19b-4(e)(2)(ii) prior to these amendments, SROs were 
required to submit Form 19b-4(e) \170\ to the Commission within five 
business days after commencement of trading a new derivative securities 
product.\171\ In addition, pursuant to the instructions for completing 
Form 19b-4(e), SROs were required to submit an original and nine paper 
copies of a duly executed Form 19b-4(e) with the Commission.\172\
---------------------------------------------------------------------------

    \170\ See 17 CFR 249.820.
    \171\ See Rule 19b-4(e)(2)(ii). Although Rule 19b-4(e) relates 
to the listing and trading of new derivative securities products by 
SROs, the only SROs that list and trade new derivative securities 
products and file Forms 19b-4(e) to the Commission are national 
securities exchanges.
    \172\ See Items II and III of the Instructions for Completing 
Form 19b-4(e), 17 CFR 249.820.
---------------------------------------------------------------------------

4. Rescission of Form 19b-4(e)
    The Commission is amending Rule 19b-4 to rescind Form 19b-4(e) and 
instead require SROs to post on their internet websites the information 
previously included on Form 19b-4(e) as proposed. More specifically, an 
SRO will be required to post on its public internet website, within 
five business days after commencing the trading of a new derivative 
securities product, the information required in current Part I, Items 2 
through 9 of Form 19b-4(e) for that product: \173\ (a) type of issuer 
of new derivative securities product (e.g., clearinghouse, broker-
dealer, corporation, etc.); (b) class of new derivative securities 
product; (c) name of underlying instrument; (d) if the underlying 
instrument is an index, state whether it is broad-based or narrow-
based; (e) ticker symbol(s) of new derivative securities product; (f) 
market(s) upon which securities composing the underlying instrument 
trade; (g) settlement methodology of new derivative securities product; 
and (h) position limits of new derivative securities product (if 
applicable). This information must be provided using the most recent 
versions of an XML schema and the associated PDF renderer that will be 
published on the Commission's website.\174\ This information generally 
should be available at a prominently posted hyperlink on the SRO's 
website that is free and accessible (without any encumbrances or 
restrictions) by the general public.
---------------------------------------------------------------------------

    \173\ Part I, Item 1, ``Name of Self-Regulatory Organization 
Listing New Derivative Securities Product,'' will not be necessary 
to include because the table of new derivative securities products 
will be on the website of the SRO that has listed and is trading the 
new derivative securities product, so the identity of the listing 
SRO will be self-evident. The Commission also is making technical 
amendments to remove an extraneous ``s'' at the end of ``trade'' and 
to replace ``comprising'' with ``composing'' in the text of Rule 
19b-4(e)(2)(ii)(F).
    \174\ See 17 CFR 240.19b-4(e)(2)(ii), as amended.
---------------------------------------------------------------------------

    As was previously required in Part II of Form 19b-4(e), an SRO is 
required to provide on its website a representation by a duly 
authorized SRO official that the governing body of the SRO has duly 
approved, or has duly delegated its approval to such official for, the 
listing and trading of the new derivative securities product according 
to its relevant trading rules, procedures, surveillance programs, and 
listing standards to assure that such products are being listed and 
traded in accordance with the SRO's obligations under Rule 19b-4(e), as 
well as an email address to contact that official. The requirement to 
provide an email address for the SRO contact employee should expedite 
communications between Commission staff and the relevant SRO. Any SRO 
that relies on Rule 19b-4(e) to list and trade a new derivative 
securities product continues to be subject to Rule 19b-4(e)(2)(i), 
which requires the SRO to maintain at its principal place of business a 
file, available to Commission staff for inspection, of all relevant 
records and information pertaining to each new derivative securities 
product traded pursuant to Rule 19b-4(e) for a period of not less than 
five years, the first two years in an easily accessible place, as 
prescribed in Rule 17a-1 under the Exchange Act.\175\ Thus, the SRO 
trading a new derivative securities product needs to maintain the 
relevant records and information regarding the new derivative 
securities product to comply with the recordkeeping and reporting 
requirements of Rule 19b-4(e). As under the previous rule, and as 
contemplated in the adoption of the current rule, the Commission will 
review SRO compliance through its routine inspections of SROs.\176\
---------------------------------------------------------------------------

    \175\ See 17 CFR 240.17a-1.
    \176\ See Rule 19b-4(e) Adopting Release, 63 FR at 70963.
---------------------------------------------------------------------------

    The electronic filing requirement should provide the same 
information for the Commission and the public as was previously 
provided by Form 19b-4(e) without necessitating the additional steps of 
submitting a paper form containing that information with the 
Commission. Among other benefits, electronic filing should increase 
efficiencies and decrease costs related to both the submission of Form 
19b-4(e) by an SRO and the Commission's processing of submitted Forms 
19b-4(e). As discussed above, since the Commission adopted Rule 19b-
4(e), technology has evolved significantly and the internet has played 
an increasingly vital role in information distribution.\177\ During 
this period, the Commission has encouraged the dissemination of 
information electronically via the internet and other automated systems 
and services.\178\ In

[[Page 7277]]

addition, the Commission now receives thousands of Forms 19b-4(e) per 
year from the SROs, rather than the 45 per year as stated in the Rule 
19b-4(e) Adopting Release, each of which is submitted to the Commission 
and then must be made public individually by the Commission,\179\ and 
therefore the submissions require, in the aggregate, additional time to 
process before the information contained in those Forms becomes 
available for Commission review and also publicly available.\180\ 
Requiring SROs to post the information contained in the current Form 
19b-4(e) on their websites accomplishes the goal outlined in the Rule 
19b-4(e) Adopting Release, for the Commission to maintain accurate 
information regarding these new derivative securities products, while 
ensuring that information remains publicly available.\181\ In addition, 
requiring SROs to post that information within 5 business days after 
commencement of trading a new derivative securities product, as the 
previous rule required, will continue to allow the Commission to 
determine that an SRO has properly relied on the rule and continue to 
do so in a timely fashion.\182\ This is appropriate given the large 
number of Forms 19b-4(e) that are submitted currently as well as the 
nature of the information contained in those Forms, which is highly 
standardized. Providing that information on the relevant SRO's publicly 
available website renders that information more readily accessible to 
both the Commission and the public than submitting numerous Forms 19b-
4(e) had done previously and has the added benefit of eliminating the 
two-step process of an SRO submitting a Form 19b-4(e) and then that 
Form being made public through the Commission. In addition, because 
that information is subject to the relevant SRO's books and records 
obligations \183\ and subject to the Commission's examination and 
inspection authority,\184\ the accuracy of the records for Commission 
review is commensurate with the accuracy of the information on the 
Forms 19b-4(e) submitted to the Commission under the previous rule.
---------------------------------------------------------------------------

    \177\ See supra note 14.
    \178\ Id. See also supra note 15.
    \179\ See id. at 70964 n.139.
    \180\ See FR Doc. 2022-17308, 87 FR 49894 (Aug. 12, 2022) 
(Request to OMB for extension of Rule 19b-4(e) and Form 19b-4(e); 
SEC File No. 270-447; OMB Control No. 3235-0504) (identifying 2,331 
Forms 19b-4(e) submitted to the Commission based on the average 
annual number of Forms 19b-4(e) submitted in 2019, 2020, and 2021).
    \181\ See Rule 19b-4(e) Adopting Release, 63 FR at 70963, 70964 
n.139.
    \182\ See 17 CFR 240.19b-4(e)(2)(ii).
    \183\ See 17 CFR 240.17a-1.
    \184\ See Rule 19b-4(e) Adopting Release, 63 FR at 70963.
---------------------------------------------------------------------------

    One commenter, who agreed with requiring Form 19b-4(e) to be 
prepared in machine-readable form, stated that Forms 19b-4(e) should 
instead be submitted to EDGAR (or, alternatively, that the Commission 
or another party should create a registry where links to these 
documents can be posted).\185\ The commenter stated that this would 
facilitate use for market participants, who would be able to collect 
all needed data in one location rather than set up mechanisms to track 
new form postings on multiple websites.\186\ The commenter stated that 
such an approach would be unlikely to increase the reporting burden for 
SROs.\187\
---------------------------------------------------------------------------

    \185\ See XBRL Letter at 6.
    \186\ See id.
    \187\ See id.
---------------------------------------------------------------------------

    The Commission disagrees that the 19b-4(e) information should be 
submitted to EDGAR rather than posted to SRO websites. The Commission 
receives thousands of Forms 19b-4(e) per year from the SROs and expects 
that the products subject to Rule 19b-4(e) will continue to number in 
the thousands going forward. In addition, the information to be 
provided under Rule 19b-4(e) is limited to no more than eight basic 
information items, including ticker symbol, type of issuer, and whether 
the underlying instrument is a broad or narrow-based index. Given the 
quantity of these products and the limited set of information required 
to be provided under Rule 19b-4(e) for each new product, requiring 
EDGAR submission for each of these products would be an unduly 
burdensome process compared to SRO website posting, which will provide 
a readily accessible interface for market participants to access this 
data without necessitating submission to EDGAR. Similarly, a registry 
of links would add an unnecessary layer of complexity in making the 
information publicly available when many market participants are 
already familiar with accessing SROs' public websites, such as those 
the SROs would have in place under the amended rule. For these reasons, 
the amended rules do not include a requirement to centrally submit Rule 
19b-4(e) information to EDGAR, nor do they require the creation of a 
registry of links to Rule 19b-4(e) postings.
    The same commenter also stated that XBRL should be used in place of 
custom XML for the Rule 19b-4(e) information.\188\ According to the 
commenter, an XBRL requirement for the Rule 19b-4(e) information would 
improve accessibility to the data because it can be extracted by the 
same tools used for other reported data prepared in XBRL, and where 
derivatives are reported in other filings by SEC reporting entities, 
the data (which includes facts that are already defined as concepts in 
other taxonomies) may be easily linked and interoperable.\189\ The 
Commission disagrees with the commenter that XBRL is more suitable than 
custom XML for the Rule 19b-4(e) information. While XBRL is 
particularly suitable for financial statements and extended narrative 
disclosures, custom XML is comparably suitable for the discrete set of 
brief text strings that Rule 19b-4(e) requires, and results in smaller 
file sizes and therefore more efficient data processing than XBRL does. 
The rule amendments require custom XML rather than XBRL for the Rule 
19b-4(e) information because the more efficient data processing enabled 
by custom XML justifies forgoing the XBRL interoperability benefit that 
the commenter describes.
---------------------------------------------------------------------------

    \188\ See id.
    \189\ See id.
---------------------------------------------------------------------------

    Finally, the same commenter encouraged the use of the Legal Entity 
Identifier (``LEI'') for the entity responsible for the derivative 
product and a Financial Instruments Global Identifier (``FIGI'') for 
the derivative identifier.\190\ The commenter stated that these two 
identifiers are both open, non-proprietary identifiers (for legal 
entities and securities, respectively), and would be extremely helpful 
for data users in evaluating business and investment risk.\191\ The 
Commission does not disagree that the LEI and the FIGI would provide 
benefits for the open and precise identification of legal entities and 
securities disclosed pursuant to Rule 19b-4(e). However, the Commission 
is not modifying the content of Form 19b-4(e) to include an LEI or FIGI 
requirement under the amended rules because such changes are beyond the 
scope of the amendments which are intended to provide for eliminating 
paper submission of the information provided

[[Page 7278]]

on Form 19b-4(e), rather than making changes to information required to 
be disclosed such as the replacement or supplementation of SRO names 
and ticker symbols for new derivatives securities products with LEI or 
FIGI requirements.
---------------------------------------------------------------------------

    \190\ See id.
    \191\ See id. Another commenter specifically stated that the 
Commission should require LEI to be disclosed on the notices that 
Exchange Act Rule 15fi-3(c) requires, because structured data is 
more useful when it contains a consistent identifier, like the LEI, 
instead of varying names or identifiers. According to the commenter, 
the absence of an LEI requirement on the notices will lead to 
inconsistent submissions that lack comparability. See Letter from 
Stephan Wolf, CEO GLEIF (May 22, 2023) (``GLEIF Letter''). The 
Commission responds to this comment in a subsequent section of this 
release. See infra section V.C.2.
---------------------------------------------------------------------------

    Thus, for the reasons discussed above, the Commission is rescinding 
Form 19b-4(e) and is adopting the amendments to Rule 19b-4(e) as 
proposed.

F. Rule 19b-4(j) and Form 19b-4

1. Relevant Statutory Framework
    Section 19(b) of the Exchange Act, as amended, requires each SRO to 
file with the Commission, in accordance with such rules as the 
Commission may prescribe, copies of any proposed rule, or any proposed 
change in, addition to, or deletion from the rules of such SRO 
(collectively, a ``proposed rule change'') accompanied by a concise 
general statement of the basis and purpose of such proposed rule 
change.\192\ Rule 19b-4, subject to certain exceptions, requires an SRO 
to submit each proposed rule change by electronically filing Form 19b-
4.\193\
---------------------------------------------------------------------------

    \192\ See 15 U.S.C. 78s.
    \193\ See 17 CFR 240.19b-4(b).
---------------------------------------------------------------------------

2. Rule Change
    The Commission is adopting the rule change as proposed to remove 
the requirement under 17 CFR 240.19b-4(j) (``Rule 19b-4(j)'') that the 
signatory to an electronically submitted Form 19b-4 manually sign a 
signature page or other document authenticating, acknowledging, or 
otherwise adopting his or her signature that appears in typed form 
within the electronic filing, execute that document before or at the 
time the rule filing is electronically submitted, and retain that 
document for its records in accordance with Rule 17a-1. The Commission 
also is removing the related language in Form 19b-4 and the 
instructions to Form 19b-4 that a duly authorized officer of the SRO 
manually sign one copy of the completed Form 19b-4 and that the 
manually signed signature page be maintained pursuant to section 17 of 
the Exchange Act.\194\ These amendments are appropriate because the 
manual signature requirement under Rule 19b-4 is redundant and 
therefore unnecessary given that Form 19b-4, which is filed 
electronically, already requires an electronic signature.\195\ The 
comments the Commission received on these amendments to Rule 19b-4, 
Form 19b-4, and the related instructions were generally supportive of 
these amendments.\196\
---------------------------------------------------------------------------

    \194\ This amendment is for purposes of filing with the 
Commission only and does not affect the requirements with which 
certain SROs subject to oversight by other regulatory agencies must 
continue to comply. Currently, under Section F of the instructions 
to Form 19b-4, a registered clearing agency for which the Commission 
is not the appropriate regulatory agency also shall file with its 
appropriate regulatory agency three copies of the form, one of which 
shall be manually signed, including exhibits. A clearing agency that 
also is a designated clearing agency shall file with the Federal 
Reserve three copies of any form containing an advance notice, one 
of which shall be manually signed, including exhibits; provided, 
however, that this requirement may be satisfied instead by providing 
the copies to the Federal Reserve in an electronic format as 
permitted by the Federal Reserve. The Municipal Securities 
Rulemaking Board (``MSRB'') also shall file copies of the form, 
including exhibits, with the Federal Reserve, the Comptroller of the 
Currency, and the Federal Deposit Insurance Corporation. These 
requirements, all promulgated pursuant to 15 U.S.C. 78q(c)(1), 
remain in effect.
    \195\ The Commission also is making a technical amendment to 
replace ``comprising'' with ``composing'' in the text of Rule 19b-
4(j).
    \196\ See, e.g., Letter from Michael Wichkoski (June 17, 2023) 
(``Wichkoski Letter''); OCC 5/22/2023 Letter; Letter from Lars 
Wohlfahrt (Apr. 17, 2023) (``Wohlfahrt Letter'').
---------------------------------------------------------------------------

G. Conforming Technical Amendment to Rule 202.3(b) Under the Exchange 
Act

    As discussed above, the Commission is making a technical amendment 
to conform its Informal and Other Procedures to the changes herein to 
Rules 6a-1, 6a-2, and 6a-3 with respect to Form 1 filings and to Rule 
6a-4 with respect to Form 1-N filings, as proposed. Specifically, the 
Commission is making conforming changes to Rules 202.3(b)(2) and (b)(3) 
of its Informal and Other Procedures \197\ to clarify that defective 
applications on Form 1 and notices on Form 1-N, respectively, must be 
returned to the Filer,\198\ and must not be held by the 
Commission.\199\ While Rules 202.3(b)(2) and (b)(3) currently permit 
the Commission to hold defective applications on Form 1 and defective 
notices on Form 1-N, holding such applications or notices serves no 
purpose, as defective Form 1 and Form 1-N filings do not contain 
sufficient information for the Commission and its staff to review such 
applications and notices.\200\ In such situations, it is appropriate to 
return the defective filings to the Filers so that the Filers may 
correct the defective filings. Additionally, Rules 202.3(b)(2) and 
(b)(3) \201\ are being amended to update the name of the Division of 
Trading and Markets from the previously used Division of Market 
Regulation.
---------------------------------------------------------------------------

    \197\ See 17 CFR 202.3(b)(2) and (3).
    \198\ For purposes of this Rule, the Commission would return 
Form 1 and Form 1-N filings to Filers by deleting the application or 
notice from EDGAR and sending an email to the contact person 
notifying the Filer: (i) that the application or notice was deleted 
from EDGAR and thus is considered as being returned under Rule 
202.3(b)(2) or Rule 202.3(b)(3), respectively, of the Commission's 
Informal and Other Procedures, as applicable; (ii) of the reason(s) 
for such return; and (iii) that, therefore, the application or 
notice is not considered filed with the Commission.
    \199\ For purposes of this rule, an application on Form 1 or a 
notice on Form 1-N is deemed defective if: (i) it was not properly 
signed; (ii) it did not contain the required information, including 
exhibits; or (iii) the information provided was presented in a 
manner that would make it difficult for the Commission and its staff 
to conduct its review of the application or notice. See 17 CFR 249.1 
and 249.10.
    \200\ Id.
    \201\ See 17 CFR 202.3(b)(2) and (3).
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III. Requirements for Clearing Agencies To Electronically File Covered 
Supplemental Materials

A. Preexisting Rule 17a-22

    Prior to the amendments adopted in this release, preexisting 
Exchange Act Rule 17a-22 required that within 10 days after issuing, or 
making generally available, to its participants or to other entities 
with whom it has a significant relationship, such as pledgees, transfer 
agents, or SROs, any material (including, for example, manuals, 
notices, circulars, bulletins, lists or periodicals), a registered 
clearing agency shall file three copies of such material with the 
Commission.\202\ A registered clearing agency for which the Commission 
is not the ARA at the same time had to file one copy of such material 
with its ARA.\203\ Since the Updated Staff Statement was issued, 
registered clearing agencies have been submitting electronic copies of 
filings required under Rule 17a-22 to the Commission through a 
dedicated email inbox, rather than submitting paper copies.\204\
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    \202\ See 17 CFR 240.17a-22.
    \203\ See id.
    \204\ See supra note 7.
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B. Amended Rule 17a-22

    The Commission is amending Rule 17a-22, as proposed, to: (i) 
replace the requirement to file supplementary materials with the 
Commission or an ARA in paper form with a requirement to prominently 
post such materials on the clearing agency's internet website; and (ii) 
reduce the timeframe for compliance with the rule from 10 days to 2 
business days for the posting requirement.\205\ By replacing the paper

[[Page 7279]]

filing requirement for registered clearing agencies with an electronic 
posting requirement via the clearing agency's internet website, the 
amendment aligns with the Commission's larger-scale objective tied to 
its mission of enhancing the efficiency and effectiveness of its 
regulatory regime for registered clearing agencies under the Exchange 
Act.
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    \205\ In consultation with the Federal Reserve, the Commission 
is removing the obligation to send an additional paper copy to a 
clearing agency's ARA from Rule 17a-22. If the supplemental 
materials are prominently posted on the clearing agency's internet 
website, all its regulatory authorities will have access to them, 
removing the need to file an additional paper copy. Separate from 
any requirements in Rule 17a-22, certain provisions in section 17A 
of the Exchange Act require notice to the ARA, and the amendments to 
Rule 17a-22 do not affect those provisions. See, e.g., 15 U.S.C. 
78q-1(b)(5)(C).
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    Rule 17a-22, as amended, requires that within 2 business days after 
issuing, or making generally available, to its participants or other 
entities with whom it has a significant relationship, any material 
(including, for example, manuals, notices, circulars, bulletins, lists 
or periodicals) that is not otherwise required to be posted on its 
internet website pursuant to any requirement under section 19(b) of the 
Exchange Act or the rules thereunder, a registered clearing agency 
shall prominently post such material on its internet website.
    The Commission received one comment letter specifically addressing 
the proposed amendments to Rule 17a-22.\206\ In that comment letter, an 
equity derivatives clearing agency registered with the Commission, OCC, 
stated that it supports the proposed amendments to Rule 17a-22 because 
the rule, as amended, removes duplicative and administratively 
burdensome requirements. However, OCC suggests clarification on the 
scope of supplemental materials that are made ``generally available.'' 
\207\ As discussed in more detail in the relevant sections below, the 
Commission is not making further changes to Rule 17a-22, as proposed, 
but is providing certain clarification to address OCC's concern.
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    \206\ See OCC 5/22/2023 Letter.
    \207\ In its comment letter, OCC suggested that the Commission 
clarify certain language in order to avoid ambiguity on the scope of 
supplemental materials made ``generally available.'' OCC 5/22/2023 
Letter at 4. This comment is discussed in more detail below in 
Section III.C.3 below.
---------------------------------------------------------------------------

1. Two-Day Timeframe for Compliance
    Reducing the notice timeframe from 10 days to 2 business days is 
reasonable and appropriate for three reasons. First, the timeframe of 2 
business days helps ensure the timely dissemination of information to 
affected market participants and is consistent with a registered 
clearing agency's obligation under Rule 19b-4(m) to update its internet 
website to post any rule changes filed pursuant to Exchange Act Rule 
19b-4 within two business days.\208\ As discussed above, supplementary 
materials required by Rule 17a-22 are important to the Commission's 
ongoing supervision of clearing agencies, and the timely posting of 
such materials ensures that Commission supervision is effectively 
considering the most current information available to the clearing 
agency and its participants.\209\ Clearing agencies should already have 
established internal policies and procedures in place to meet these 
posting requirements for proposed rule changes, and these procedures 
could be reasonably replicated to meet the timeframes under the 
amendments to Rule 17a-22. Second, by replacing the requirement to file 
paper copies with a requirement to post the materials on the clearing 
agency's internet website, the time required to comply with the amended 
rule (when compared to the current rule) should be significantly 
reduced. By eliminating the paper filing requirement, clearing agencies 
should no longer have to expend the time and resources associated with 
copying, packaging, and mailing three copies of supplemental materials 
to the Commission and, where applicable, the ARA, which should in turn 
allow for shorter compliance timeframes. Third, 2 business days for 
posting is reasonable because the supplemental materials will have 
already been prepared for distribution to its participants or other 
entities with whom it has a significant relationship, and as such, 
should be readily available for posting to the clearing agency's 
internet website within the 2 business days.
---------------------------------------------------------------------------

    \208\ See 17 CFR 240.19b-4(m).
    \209\ See supra section I.C.
---------------------------------------------------------------------------

2. Scope of Supplemental Materials
    Rule 17a-22, as amended, does not change the scope of supplemental 
materials to which the rule previously applied. Accordingly, the 
amended rule retains the language that any supplemental material issued 
or made generally available to a clearing agency's participants or 
other entities with whom it has a significant relationship is subject 
to Rule 17a-22. The amended rule retains the list of illustrative 
examples of types of supplemental materials. In addition, copies of any 
material issued or made generally available to participants or other 
entities with whom the clearing agency has significant relationships 
(e.g., issuers, transfer agents, custodian, service providers, other 
non-participant entities that avail themselves of clearing agency 
services, etc.) are, under the current rule, required to be filed, 
where applicable.
    Because the significant relationships vary across clearing 
agencies, the Commission is deleting the list of examples of such 
relationships from the rule text. However, the removal of these 
examples from the text of the rule is not an indication that these 
entities are no longer considered within the scope of the rule. Rather, 
the Commission is eliminating this list to ensure that clearing 
agencies consider appropriately the universe of entities with whom they 
have a significant relationship, which varies by registered clearing 
agency because they serve different markets or offer different services 
and may also change over time as market practices evolve. Issuers, 
transfer agents, custodians, service providers, and other non-
participant entities that use the clearing agency's services continue 
to be examples of the types of entities to whom a clearing agency may 
provide supplementary materials under the rule, and the revisions are 
intended to avoid confusion because certain types of relationships, 
such as issuers and transfer agents, exist in some markets but not 
others. A clearing agency generally should consider the markets it 
serves, the services it offers, and the universe of entities with whom 
it has a significant relationship when addressing its compliance with 
the rule.
    While the scope of supplemental materials subject to the rule 
remains unchanged under the amended rule, the Commission is adding new 
rule text to expressly exclude any materials subject to section 19(b) 
of the Exchange Act or rules thereunder from the supplemental materials 
posting requirement, and thereby specify that the materials subject to 
Rule 17a-22, as amended, are distinct from any posting requirements 
under section 19(b) and Rule 19b-4 thereunder. This added text is 
consistent with the Commission's stated purpose of Rule 17a-22 when it 
was adopted in 1980,\210\ and this change is intended to avoid the 
imposition of duplicative posting requirements.
---------------------------------------------------------------------------

    \210\ See generally Rule 17a-22 Adopting Release.
---------------------------------------------------------------------------

    Specifically, in the original Rule 17a-22 Adopting Release, the 
Commission also amended, among other things, the requirements 
applicable to the filing by SROs of proposed rule changes and certain 
other materials under Rule 19b-4 and Form 19b-4.\211\ There, the 
Commission revoked a provision on Form 19b-4B requiring SROs to file 
notice of stated policies, practices, and interpretations not deemed to 
be rules because, in part, the provision duplicated the filing 
requirements in

[[Page 7280]]

Rules 6a-3, 15Aj-1, and 17a-21.\212\ These rules required national 
securities exchanges, registered securities associations, and the MSRB, 
respectively, to submit to the Commission any material they made 
generally available. Accordingly, in conjunction with its revocation of 
the above-noted provision of Form 19b-4B, the Commission adopted Rule 
17a-22, which established a filing requirement for registered clearing 
agencies parallel to the filing requirement under Rules 6a-3, 15Aj-1, 
and 17a-21. In so doing, the Commission distinguished between materials 
subject to Rule 19b-4 and those subject to the supplemental material 
rules. The inclusion of new text relating to Rule 19b-4 is meant to 
specify clearing agencies' obligations under Rule 17a-22 as being 
separate and distinct from the obligation under Rule 19b-4. In general, 
a clearing agency should consider within the scope of Rule 17a-22 
policies, procedures, and other documents that help explain to affected 
parties the rules of the clearing agency but are not also required to 
be filed under Rule 19b-4.
---------------------------------------------------------------------------

    \211\ Id.
    \212\ Id. See also 17 CFR 240.6a-3; 17 CFR 240.15Aj-1; and 17 
CFR 240.17a-21. Rule 6a-3 was amended in 2001 to allow a national 
securities exchange the option of posting supplementary information 
to its website and certifying that the information available on its 
website is accurate as of its date. See Exchange Act Release No. 
44692 (Aug. 13, 2001), 66 FR 43721 (Aug. 20, 2001). Since the 
adoption of this amendment, usage of and familiarity with the 
internet among affected market participants has increased 
substantially, and so in amending Rule 17a-22, it is appropriate to 
transition the requirement in Rule 17a-22 for clearing agencies 
solely to internet posting.
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3. Meaning of ``Generally Available''
    The existing requirement under Rule 17a-22 to post only those 
materials that the clearing agency is ``making generally available'' 
remains unchanged from the original rule and as proposed. Any document 
that is made ``generally available'' to a wide or diverse group of 
individuals or entities should be considered supplemental material and 
as such, posted to the clearing agency's website. In the Commission's 
experience, most, if not all, of the filings required by Rule 17a-22 
are already being posted on a registered clearing agency's website. 
Moreover, as stated in the Proposing Release, the Commission does not 
envision that those documents of a confidential or sensitive nature, or 
that would cause harm if publicly disclosed, fall within the scope of 
the rule.
    OCC requested that the Commission clarify Rule 17a-22's text 
relating to the scope of certain supplemental materials made 
``generally available'' to certain wide groups of entities with whom 
the clearing agency has a significant relationship, particularly as it 
relates to materials that may be considered confidential or sensitive. 
In particular, OCC stated that the amended rule could be interpreted to 
mean that any materials provided to a clearing agency's members or 
other entities (i.e., a wide or diverse group of entities) could be 
considered ``generally available'' and therefore necessarily not 
confidential or sensitive.\213\ OCC stated that, while some of the 
information a clearing agency may provide to clearing members or other 
entities to whom it has a significant relationship is appropriate to 
post publicly on its website, other materials provided to entities with 
whom it has a significant relationship are not appropriate for public 
disclosure. Examples of such materials include, according to OCC, 
instructions and technical information relating to connectivity, 
security practices, the operation of systems that only participating 
exchanges may access, or directories with direct contact information 
for employees within the clearing agency.\214\ Consequently, OCC 
suggested that the Commission clarify that materials do not become 
``generally available'' solely because such materials are provided to a 
wide or diverse group of entities.\215\
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    \213\ OCC 5/22/2023 Letter at 5.
    \214\ Id.
    \215\ Id.
---------------------------------------------------------------------------

    Some of the ambiguity, OCC explained, is created by Rule 17a-22 
rule text that refers to ``issuing, or making generally available'' 
materials to relevant entities.\216\ OCC states that neither the 
existing rule nor the proposed rule defines the text ``issuing or 
making generally available'' to exclude documents of a confidential or 
sensitive nature that a clearing agency may provide to its clearing 
members or other participants as a group, even if those documents could 
cause harm if publicly disclosed.\217\ The commenter also proposes that 
the Commission consider revising the text to remove the reference to 
``issuing,'' which appears to OCC to be duplicative to the reference to 
``making.'' \218\ OCC states that the inclusion of ``service 
providers'' in the Commission's discussion of entities with whom a 
clearing agency has a significant relationship for purposes of Rule 
17a-22 provides further support for its ``understanding.'' \219\ Such 
service providers could include, among many others, cybersecurity and 
cloud services providers, ``with whom the Commission would presumably 
expect the clearing agency to have sensitive and confidential 
communications.'' \220\ For such communications to fall outside of Rule 
17a-22, OCC asserts that there must therefore be a category of 
communications with even a wide group of service providers or other 
relevant entities that are not considered ``generally available.'' The 
Commission, OCC suggests, should therefore clarify that not all 
documents provided to entities with whom a clearing agency has a 
significant relationship are, through such provisions, made ``generally 
available,'' even when provided to those entities as a group. That is, 
the Commission should clarify that only those materials provided to 
entities with whom a clearing agency has a significant relationship 
that the clearing agency also makes generally available are subject to 
Rule 17a-22.\221\
---------------------------------------------------------------------------

    \216\ Id.
    \217\ Id. at 5-6.
    \218\ Id.
    \219\ OCC 5/22/2023 Letter at 6. As discussed in the proposing 
release, clearing agencies must make an assessment as to whether any 
type of entity, including service providers, is the type of entity 
with whom the clearing agency has a significant relationship and 
whether materials provided to that type of entity are made 
``generally available.'' See Proposing Release at 23945-23946.
    \220\ Id.
    \221\ Id. at 6.
---------------------------------------------------------------------------

    As previously discussed above and stated in the Proposing Release, 
any document made ``generally available'' to a wide or diverse group of 
individuals or entities should be considered supplemental materials and 
as such posted to the clearing agency's website. However, documents of 
a confidential or sensitive nature, or those that would cause harm if 
publicly disclosed, fall outside the scope of both preexisting Rule 
17a-22 and amended Rule 17a-22 because such documents would not be sent 
to a wide or diverse group of individuals.\222\ Clearing agencies often 
send certain documents that relate to sensitive or confidential 
information, such as security systems, sensitive trade or financial 
data, and surveillance methods, to a large number of persons or 
entities with whom the clearing agency has a significant relationship, 
such as participants or service providers, or to a smaller group of 
diverse persons or entities, such as technology companies that 
interface with clearing agency. However, distributions of this kind are 
not ``generally available'' because they are not intended for public 
viewing. To avoid causing harm to the clearing agency, markets, or 
participants, clearing agencies have a vested interest in ensuring that 
such sensitive or confidential material is distributed to

[[Page 7281]]

the least number of persons or entities that have a need to know the 
information contained in the sensitive or confidential materials. This 
approach thereby ensures a limited distribution of the documents. In 
other words, by their nature, documents which are sensitive or 
confidential would not be considered documents made ``generally 
available'' and therefore would not be supplementary material. 
Therefore, such documents also would be beyond the scope of the rule's 
requirements.
---------------------------------------------------------------------------

    \222\ See Proposing Release at 23945-23946.
---------------------------------------------------------------------------

    In determining whether supplemental materials should be considered 
``generally available'' and thus, subject to the posting requirements 
of Rule 17a-22, clearing agencies generally should consider all the 
facts and circumstances related to making public supplementary 
materials to a specific group or groups of persons or entities. For 
example, a clearing agency generally could consider the number and type 
of persons or entities to whom the supplemental materials are 
distributed in determining whether materials are ``generally 
available.'' A clearing agency generally could also consider the nature 
of the group to whom the distribution is made and the nature of the 
materials being distributed, particularly as it relates to harm that 
would result if publicly disclosed, and whether the limited 
distribution is consistent with its rules or policies for the treatment 
of confidential or sensitive information.
    With regard to OCC's suggestion to revise the rule text to remove 
the reference in the rule text to ``issuing'' because it is ambiguous 
or duplicative with the reference to ``making generally available,'' 
the Commission does not agree.\223\ The Commission is retaining the 
terminology as proposed to ensure that supplementary materials are 
within scope of the rule regardless of the particular mechanism a 
clearing agency may choose or use to distribute them.\224\
---------------------------------------------------------------------------

    \223\ OCC 5/22/2023 Letter at 5-6.
    \224\ In the release proposing Rule 17a-22 in 1979, the 
Commission intended to establish for registered clearing agencies a 
filing requirement that generally paralleled the filing requirements 
imposed under Rules 6a-3, 15Aj-1, and 17a-21 (requiring national 
securities exchanges, registered securities associations, and the 
MSRB to make certain materials available to the Commission), thus 
requiring clearing agencies to file with the Commission material 
that they ``distribute or make generally available'' to their 
participants, pledgees or transfer agents. Exchange Act Release No. 
15838 (May 18, 1979), 44 FR 30924, 30929 (May 29, 1979). The rule 
text, as proposed in 1979 and then adopted in 1980, refers to 
``issuing or making generally available.'' Id. at 30934; Exchange 
Act Release No. 17258, 45 FR 73914 (Nov. 7, 1980).
---------------------------------------------------------------------------

4. Requirement to ``Prominently Post''
    Finally, in the amendment to Rule 17a-22 that requires the clearing 
agency to ``prominently post'' any supplemental material subject to the 
amended rule on the clearing agency's website, the Commission is 
interpreting, as proposed, ``prominently'' to mean that the 
supplemental materials are readily identifiable and accessible on the 
website for as long as the information remains applicable to affected 
parties. If access to the supplemental materials requires in-depth 
familiarity with the website or is not readily apparent because it 
requires searching through multiple layers to access the information, 
the supplemental materials generally would not be considered 
prominently posted. A clearing agency generally should make 
supplemental materials available at a prominently posted hyperlink on 
the clearing agency's website that is free and accessible (without any 
encumbrances or restrictions) by the general public. To the extent such 
a link does not already exist, a registered clearing agency could 
consider creating a specific web page that identifies and catalogues 
(such as through a list of hyperlinks) the supplemental materials that 
it maintains pursuant to Rule 17a-22.

IV. Requirements to Electronically File Broker-Dealer, OTC Derivatives 
Dealer, and SBS Entity Reports

    The Commission is requiring the following forms and reports to be 
filed in electronic format on EDGAR:

[[Page 7282]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.010

A. Rules 17a-5, 18a-7, and 17a-12

    The Commission proposed to amend Rules 17a-5, 18a-7, and 17a-12 to 
require that the annual reports and related annual filings that firms 
must file under Rules 17a-5, 18a-7, and 17a-12 be filed with the 
Commission electronically on EDGAR in a structured data language.\225\ 
Specifically, the Commission proposed to amend paragraphs (d)(6) and 
(k) of Rule 17a-5, paragraph (c)(6) of Rule 18a-7, and paragraphs 
(b)(6), (k), (l), and (m) of Rule 17a-12 to provide that the annual 
reports and related annual filings must be filed with the Commission 
electronically on EDGAR in accordance with the EDGAR Filer Manual, as 
defined in Rule 11 of Regulation S-T, and must be filed in accordance 
with the requirements of Regulation S-T.\226\ The proposed paragraphs 
also provide that the annual reports must be submitted in Inline XBRL 
(i.e., as an Interactive Data File in accordance with Rule 405 of 
Regulation S-T).\227\ The EDGAR Filer Manual would be updated to 
reflect these amendments to Rules 17a-5, 18a-7, and 17a-12.\228\ First-
time EDGAR filers would need to obtain EDGAR access credentials.\229\
---------------------------------------------------------------------------

    \225\ See Proposing Release at 23948-50. For further discussion 
of the structured data requirements, including Inline XBRL 
requirements, see infra section VII.A.
    \226\ See Proposing Release at 23948.
    \227\ See id.; see also Rule 405(a)(3) of Regulation S-T, which 
specifies Inline XBRL as the data language to be used for the 
Interactive Data File. See 17 CFR 232.405(a)(3).
    \228\ See Proposing Release at 23949.
    \229\ Instructions for obtaining EDGAR access credentials are on 
the Commission's website at https://www.sec.gov/divisions/marketreg/broker-dealer-edgar-access-credentials.htm.
---------------------------------------------------------------------------

    As discussed in section VII of this release, most commenters 
supported filing the annual reports and related filings electronically 
on EDGAR,\230\ although one commenter encouraged the Commission to 
address EDGAR's technical deficiencies, stating that ``[h]over-over 
definitions and links to relevant rules should [] be standard.'' \231\ 
The Commission has stated that it has ``engaged in a multi-year, multi-
phase effort to modernize the EDGAR system, including both internal and 
public-facing components. Security and modernization enhancements were 
deployed in June 2020, focusing on technology upgrades internal to the 
system.'' \232\ The two changes the commenter requested have been 
included in prior updates to the EDGAR system.\233\ Given the benefits 
of electronic filing discussed in the Proposing Release, commenter 
support for electronic filing, and the fact that the issues identified 
by this commenter have already been addressed, the Commission is 
adopting as proposed the requirement to file broker-dealers' and SBS 
Entities' annual audits electronically on EDGAR.
---------------------------------------------------------------------------

    \230\ See, e.g., SIFMA 5/22/2023 Letter at 13; Wohlfahrt Letter.
    \231\ See Letter from John Sage (Apr. 18, 2023) (``Sage 
Letter'').
    \232\ See Annual Report on SEC website Modernization Pursuant to 
Section 3(d) of the 21st Century Integrated Digital Experience Act 
(Dec. 2022), available at https://www.sec.gov/files/21st-century-idea-act-report-2022-12.pdf.
    \233\ See, e.g., Annual Report on SEC website Modernization 
Pursuant to Section 3(d) of the 21st Century Integrated Digital 
Experience Act (Dec. 2022), available at https://www.sec.gov/files/21st-century-idea-act-report2022-12.pdf.
---------------------------------------------------------------------------

    The Commission also proposed to require firms filing annual reports 
or annual supplemental reports with the Commission under Rules 17a-5, 
18a-7, and 17a-12 to apply machine-readable Inline XBRL data ``tags'' 
to the disclosures contained in those documents before filing them 
through EDGAR.\234\ These data tags can include numerical detail tags 
(which are used for tagging individual data points) for

[[Page 7283]]

individual reported numeric values, such as line items on a financial 
statement, or text block tags for textual narratives, such as the 
discussions in the notes to financial statements.\235\ In complying 
with the Inline XBRL requirements, filers could use Inline XBRL tagging 
software to apply Inline XBRL tags to their reports before submitting 
them to EDGAR, or could employ a tagging service provider to apply the 
Inline XBRL tags to their reports on their behalf.\236\
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    \234\ See Proposing Release at 23949.
    \235\ See id.
    \236\ See id.
---------------------------------------------------------------------------

    The proposed Inline XBRL requirement applies to all disclosures 
required by Form X-17A-5 Part III other than disclosures required on 
the facing page.\237\ The facing page of Form X-17A-5 Part III is 
currently a fillable form that EDGAR converts into a custom XML data 
language and would remain so.\238\
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    \237\ See id. at 23950.
    \238\ See id.
---------------------------------------------------------------------------

    After considering commenters' concerns discussed below, the 
Commission is adopting as proposed the requirement that annual reports 
or supplemental reports filed under Rules 17a-5, 18a-7, and 17a-12 
utilize machine-readable Inline XBRL data tags with respect to the 
disclosures contained in such annual reports or annual supplemental 
reports.
    As the Commission explained in the Proposing Release,\239\ there 
will be substantial benefits to having firms file these reports in a 
machine-readable format.\240\ Specifically, the structuring 
requirements will make the information included on the reports more 
readily accessible for retrieval, aggregation, and comparison across 
different broker-dealers, OTC derivatives dealers, SBSDs, and MSBSPs, 
and across different time periods, as compared to an unstructured PDF, 
HTML, or ASCII format requirement for the reports.\241\ This will 
benefit investors and markets by enabling more timely and detailed 
supervision of filers, and by providing public users with a more 
efficient means of accessing and analyzing the publicly disclosed 
portion of the reports (such as the Statement of Financial Condition 
and the notes thereto). For example, Commission staff could leverage 
the machine-readability of the computational schedules to automatically 
flag any mathematical inconsistencies or calculation errors therein. In 
addition, the structured data requirement will enable EDGAR to perform 
technical validations (i.e., programmatic checks to ensure the 
documents are appropriately standardized, formatted, and complete) upon 
intake of the reports, thus improving the quality of the filed data by 
decreasing the incidence of non-substantive errors, such as the 
omission of required disclosures that should always be present).\242\
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    \239\ See id. at 23949-50.
    \240\ See id.
    \241\ See id.
    \242\ For additional discussion of benefits arising from 
structured data requirements, including responses to public comments 
that specifically address the topic, see infra section X.C.1.b.
---------------------------------------------------------------------------

    Further, the Commission estimated the compliance costs associated 
with machine-readable format to be relatively modest for many Form X-
17A-5 Part III filers, including smaller broker-dealers and filers 
affiliated with public companies that already have experience 
structuring data.\243\ One commenter asserted that the Commission's 
structured data cost estimates in the proposing release were too low, 
and conveyed one firm's estimates that it would cost $20,000 to $40,000 
per year per registrant to retain an XBRL tagging service provider and 
$20,000 to $30,000 per year per entity to purchase the tagging 
software.\244\ The commenter described multiple fundamental operational 
changes that, in its view, firms will need to undergo as a result of 
the structured data requirements, including hiring additional personnel 
that are proficient in XBRL and XML, developing processes for 
converting the relevant data into XBRL and XML and uploading that data 
to EDGAR, training new and existing personnel on these processes, and 
overhauling systems and operations to integrate the XBRL/XML production 
and processing.\245\ Based on the Commission's experience with firms 
submitting structured disclosures in other contexts (e.g., operating 
company periodic reports and fund prospectus risk/return summaries), 
the Commission disagrees that the structured data requirements will 
require every firm to both license XBRL tagging software and contract 
the services of a third-party XBRL tagging service provider. Firms that 
have submitted structured disclosures to the Commission by fully 
outsourcing XBRL tagging requirements to a third-party service provider 
have likely not needed to also license XBRL tagging software as a 
result of the decision to outsource.\246\ By the same token, the 
Commission disagrees that the structured data requirements under the 
rule amendments will obligate every filer or submitter to undergo each 
of the fundamental operational changes the commenter describes. Firms 
that outsource compliance with structured data requirements to a third-
party service provider rather than comply with the structured data 
requirements in-house will not need to hire additional personnel that 
are proficient in XBRL and XML, develop processes for converting the 
relevant data into XBRL and XML and uploading that data to EDGAR, train 
new and existing personnel on these processes, or overhaul systems and 
operations to integrate the XBRL/XML production, because the third-
party service provider would take such actions as necessary.
---------------------------------------------------------------------------

    \243\ See Proposing Release at 23995.
    \244\ See SIFMA 5/22/2023 Letter at 5.
    \245\ See id. at 4.
    \246\ C.f., Yu Cong, Ayishat Omar, Huey-Lian Sun; Does IT 
Outsourcing Affect the Accuracy and Speed of Financial Disclosures? 
Evidence from Preparer-Side XBRL Filing Decisions, Journal of 
Information Systems, 1 Jun 2019; 33 (2): 45-61 (explaining that ``to 
comply with the SEC's XBRL mandate, firms have been using in-house 
resources or outsourcing to third-party vendors to create their XBRL 
formatted financial statements'' and that `` . . . many firms, 
especially smaller firms that lack extensive resources, have 
outsourced the creation and filing process . . . '').
---------------------------------------------------------------------------

    Firms that choose not to outsource compliance with Inline XBRL 
requirements will incur some, but not all, of the costs that the 
commenter describes. These firms will not be required to hire 
additional personnel that are proficient in XBRL, because firms can 
instead license Inline XBRL software tools that allow staff without 
XBRL proficiency to apply Inline XBRL tags to regulatory disclosures 
without any need to overhaul the firm's systems or operations. These 
firms will, however, likely need to implement processes for the use of 
such software tools (i.e., applying Inline XBRL tags and validating the 
tagged regulatory disclosures), and will need to train their staff on 
these processes.\247\
---------------------------------------------------------------------------

    \247\ The Commission includes these process and training costs 
in its estimates of initial structured data implementation costs and 
burdens in the Economic Analysis and Paperwork Reduction Act 
Analysis sections of this release. See infra section X.C.2.b 
(describing and quantifying initial implementation costs arising 
from the structured data requirements); see also infra sections 
IX.D.2, IX.D.5, IX.D.9.a, and IX.D.15 (estimating higher structured 
data burdens for the first year of compliance compared to subsequent 
years).
---------------------------------------------------------------------------

    Also, while the Commission estimates that some clearing agencies 
and exchanges will incur costs within the $20,000 to $30,000 range to 
structure Form CA-1 and Form 1, the Commission does not expect all 
broker-dealers (especially smaller broker-dealers) will incur the same 
level of costs to structure the annual audited report, in part because 
many broker-dealers are comparable to smaller reporting companies that 
file structured Commission filings and that incur significantly less 
than that range to

[[Page 7284]]

comply with such structuring obligations. More specifically, the 
Commission estimates larger broker-dealers will incur approximately 
$6,000 to $18,000 to structure Form X-17A-5 Part III in the first year 
and $4,000 to $12,000 to structure Form X-17A-5 Part III in subsequent 
years, while smaller broker-dealers will incur approximately $500 to 
$1,300 to structure Form X-17A-5 Part III in the first year and $300 to 
$1,000 to structure Form X-17A-5 Part III in subsequent years.\248\ 
While the Commission is mindful of imposing significant additional 
costs, especially on smaller broker-dealers, for which an added 
compliance cost comprises a higher proportion of overall compliance 
costs than an equivalent cost for larger broker-dealers, the Commission 
does not believe structured data compliance costs in the estimated 
range of $300 to $1,300 for a report filed once per year will impose 
significant hardships on smaller broker-dealers.
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    \248\ See infra section X.C.2.b (describing these estimated cost 
ranges in greater specificity). The Commission estimates some larger 
broker-dealers that are affiliated with public reporting companies 
will incur approximately $2,000 to $6,000 to structure Form X-17A-5 
Part III. See id.
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    The Commission estimated at proposal that (1) all respondents 
affiliated with public reporting companies already subject to Inline 
XBRL requirements would incur reduced burdens and costs because such 
respondents would be able to leverage the licenses or service 
agreements as well as the Inline XBRL tagging experiences of those 
affiliates; (2) respondents choosing to outsource Inline XBRL tagging 
to a third-party service provider would not incur initial 
implementation costs or burdens; and (3) respondents complying with 
Rule 18a-7 under a substituted compliance order pursuant to Exchange 
Act Rule 3a71-6 would not incur any additional costs related to 
structured data.
    With respect to the first estimate, one commenter stated that this 
burden and cost reduction is dependent on the contractual arrangements 
that firms have with third-party providers, and on the internal 
staffing structure for each company.\249\ In response to this comment, 
the Commission is now estimating that only half of the affiliated 
respondents will incur reduced burdens and costs.\250\
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    \249\ See XBRL Letter at 11.
    \250\ See infra sections IX.D.9 and section X.C.2.b.
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    With respect to the second estimate, one commenter stated that 
structured data requirements will impose burdens associated with the 
process of diligencing, negotiating with, and onboarding third 
parties.\251\ The Commission agrees, and because these burdens apply to 
respondents that outsource Inline XBRL tagging to third-party service 
providers, the Commission has increased the number of respondents it 
estimates will incur initial structured data implementation 
burdens.\252\
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    \251\ See SIFMA 5/22/2023 Letter at 4.
    \252\ See infra section IX.D.9.
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    With respect to the third estimate, one commenter stated that the 
Commission should allow firms relying on substituted compliance to 
continue submitting home-country reports in their current form, 
explaining that the organization and requirements of these reports is 
often different from U.S. reports.\253\ The Commission agrees that the 
first time a respondent relying on substituted compliance (or its 
third-party tagging service provider) applies Inline XBRL tags to its 
home country report, it will incur the additional burden of determining 
which disclosures within its home country report are responsive to U.S. 
disclosure requirements and must therefore be tagged.\254\ To capture 
this additional step, the Commission is increasing the estimated 
initial Inline XBRL tagging burdens and costs compared to the estimates 
in the proposing release.
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    \253\ See SIFMA 5/22/2023 Letter at 7. Although the comment 
referred specifically to home-country equivalents to CCO reports, 
home-country equivalents to Rule 18a-7 annual reports and related 
filings can also vary from U.S. reports in their organization and 
requirements.
    \254\ See infra section IX.D.9.
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    The Commission more fully explains the bases for these estimated 
cost ranges--which are generally consistent with those in the Proposing 
Release because the cost considerations relevant to Form X-17A-5 Part 
III structuring have not materially changed since the publication of 
the Proposing Release.\255\ The Commission is also phasing in the 
machine readability requirements of the rule amendments, as discussed 
in section VIII below, to further ameliorate compliance concerns with 
respect to smaller broker-dealers.
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    \255\ See id. As explained further in the Economic Analysis 
section, the Commission is making several changes to its Form X-17A-
5 Part III structured data cost and burden estimates compared to the 
proposal. First, whereas the proposed estimates assumed all larger 
broker-dealer affiliates of public reporting companies would incur 
reduced structured data costs and burdens, the revised estimates 
assume only some of these broker-dealers will incur reduced costs 
and burdens. Second, whereas the proposed estimates assumed that 
broker-dealers which fully outsource XBRL compliance to third-party 
service providers would not incur initial implementation costs in 
the first year of compliance, the revised estimates assume that 
outsourcing broker-dealers will incur some initial implementation 
costs (specifically, the cost of negotiating, diligencing, and 
onboarding the third-party tagging service provider) in the first 
year of compliance. Third, whereas the proposed estimates did not 
assume firms relying on substituted compliance would incur different 
costs to structure Form X-17A-5 Part III than other broker-dealers 
would, the revised estimates include an additional initial 
implementation cost for firms relying on substituted compliance to 
structure Form X-17A-5 Part III.
---------------------------------------------------------------------------

    The Commission also proposed to add a new paragraph (e)(2)(iii) to 
Rule 17a-5, new paragraph (d)(1)(iii) to Rule 18a-7, and new paragraph 
(c)(3) to Rule 17a-12, which would require the notarized oath or 
affirmation to be kept ``for a period of not less than six years, the 
first two years in an easily accessible place and in accordance with 
the requirements of'' Rule 17a-4, 18a-6, or 17a-12, as applicable.\256\ 
The Commission also proposed to redesignate current paragraph (c)(3) of 
Rule 17a-12 as paragraph (c)(4) due to the insertion of new paragraph 
(c)(3). The Commission did not receive comment on the proposal to keep 
the oath or affirmation for at least six years, the first two years in 
an easily accessible place. The Commission is adopting this requirement 
as proposed.
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    \256\ See paragraph (e)(2)(iii) of Rule 17a-5, as proposed to be 
amended; paragraph (d)(1)(iii) of Rule 18a-7, as proposed to be 
amended; paragraph (c) of Rule 17a-12, as proposed to be amended.
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    However, the Commission received comment asking to remove the 
requirement for the annual audit's oath or affirmation to be 
notarized.\257\ The Commission has considered the comment and agrees 
that the notarization requirement can be eliminated because the 
Commission is adopting amendments to ensure that electronic signatures 
are genuine. More specifically, as discussed in section VI.D.2. of this 
release, the Commission is amending its signature requirements in Rules 
17a-5, 17a-12, and 18a-7 so that electronic signatures are permitted, 
but only if they are authenticated. Given the Commission's desire to 
modernize its intake of these forms to an electronic format and the 
safeguards it is adopting to ensure that electronic signatures are 
genuine, the notarization requirement can be eliminated to be 
consistent with other filings the Commission receives electronically, 
such as Form 10-K, which is also not notarized.\258\ For these reasons, 
the Commission is amending Part III of Form X-17A-5 (i.e., the annual 
audit's cover page) to remove the signature line for the notary public, 
and is adopting the six year record retention requirement, but is not 
adopting the word ``notarized'' originally included in

[[Page 7285]]

the six year record retention requirement in paragraph (e)(2)(iii) of 
Rule 17a-5, paragraph (d)(1)(iii) of Rule 18a-7, and paragraph (c)(3) 
of Rule 17a-12, as proposed to be amended.\259\ Finally, SBS Entities 
relying on a Commission substituted compliance order also will continue 
to not be required to provide a notarized oath or affirmation with 
their annual audit submission to the Commission.\260\
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    \257\ See SIFMA 5/22/2023 Letter at 9-10; see also Integrated 
Solutions Letter at 3.
    \258\ See Commission Form 10-K, available at https://www.sec.gov/files/form10-k.pdf.
    \259\ See Part III of Form X-17A-5, as amended; paragraph 
(e)(2)(iii) of Rule 17a-5, as amended; paragraph (d)(1)(iii) of Rule 
18a-7, as amended; paragraph (c)(3) of Rule 17a-12, as amended. The 
compliance date for this amendment to Form X-17A-5 Part III will 
take effect before the EDGAR system can be updated to remove the 
checkbox to acknowledge that the oath or affirmation has been 
notarized. A firm's oath or affirmation is not required to be 
notarized after the compliance date for this amendment to Form X-
17A-5 Part III, even though the EDGAR system may continue to ask 
firms to check a box if the oath or affirmation is notarized in the 
interim period until the EDGAR system receives the required update.
    \260\ See SIFMA 5/22/2023 Letter at 10 (asking the Commission to 
confirm that firms relying on substituted compliance continue to not 
be required to submit a notarized oath or affirmation with their 
annual audit submission to the Commission).
---------------------------------------------------------------------------

    Another commenter requested that the Commission permit a firm's 
Financial and Operations Principal (``FinOp'') to sign the oath or 
affirmation on its behalf.\261\ Under Financial Industry Regulatory 
Authority (``FINRA'') rules, persons engaged in the investment banking 
or securities business of a FINRA member must register with FINRA and 
pass exams administered by FINRA to help ensure competence in specific 
areas of a broker-dealer's business.\262\ One such category is 
Financial and Operations Principal.\263\ Accordingly, while a FinOp 
plays an important role for a broker-dealer, under FINRA rules, the 
FinOp need not be an officer or owner of the broker-dealer. It is 
important the person signing the oath or affirmation be an officer or 
an owner to ensure that a person with responsibility for the affairs of 
the broker-dealer signs such oath or affirmation. However, nothing 
would prevent a FinOp who is also an officer or owner of the broker-
dealer from signing the oath or affirmation in the person's capacity as 
an officer or owner.
---------------------------------------------------------------------------

    \261\ See Integrated Solutions Letter at 3.
    \262\ See FINRA Qualification Exams available at https://www.finra.org/registration-exams-ce/qualification-exams; See also 
FINRA Rule 1210 (stating that each person engaged in the investment 
banking or securities business of a member must be registered with 
FINRA as a representative or principal in each category of 
registration appropriate to the person's functions and 
responsibilities as set forth in FINRA Rule 1220, unless exempt from 
registration under FINRA Rule 1230).
    \263\ See FINRA Rules 1220(a)(4) and 1210.01.
---------------------------------------------------------------------------

    In light of the requirement that the annual reports and related 
annual filings under Rules 17a-5 and 18a-7 be filed electronically on 
EDGAR, the Commission is amending the confidentiality provisions of the 
first sentence of paragraphs (e)(3) of Rule 17a-5 and (d)(2) of Rule 
18a-7. Those sentences contain requirements that certain parts of the 
reports be ``bound separately'' and that certain pages be ``stamped 
confidential,'' which do not apply to the process of designating 
portions of the annual reports confidential when filing them 
electronically on EDGAR.\264\ Therefore, the Commission proposed to 
amend the confidentiality provisions to conform to the electronic 
process for filing on EDGAR. The Commission proposed to amend the first 
sentence of paragraph (e)(3) of Rule 17a-5 and paragraph (d)(2) of Rule 
18a-7 to state that the annual reports ``may be filed as: (i) One 
public document; or (ii) Two documents: (A) A document consisting of 
the Statement of Financial Condition, the notes to the Statement of 
Financial Condition, and the report of the independent public 
accountant covering the Statement of Financial Condition, which is not 
confidential; and (B) A document containing the balance of the annual 
reports for which confidential treatment may be requested and which 
will be deemed confidential for the purposes of section 24(b) of the 
Act.'' \265\ The Commission received no comment on the proposal to 
amend these provisions to conform to the electronic process for filing 
on EDGAR and is adopting them as proposed.\266\
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    \264\ At present, a broker-dealer filing its annual reports on 
EDGAR designates the portions of the reports for which it is 
requesting confidentiality by checking a ``Request Confidentiality'' 
box when it uploads the relevant documents. As with the other 
aspects of the current voluntary filing program, this aspect of the 
EDGAR filing process will not change.
    \265\ See paragraph (e)(3) of Rule 17a-5, as proposed to be 
amended; paragraph (d)(2) of Rule 18a-7, as proposed to be amended.
    \266\ See paragraph (e)(3) of Rule 17a-5, as amended; paragraph 
(d)(2) of Rule 18a-7, as amended.
---------------------------------------------------------------------------

    The Commission also proposed to replace ``deemed confidential to 
the extent permitted by law'' with ``deemed confidential for the 
purposes of section 24(b) of the Act'' in Rules 17a-5 and 18a-7 for 
consistency with the language used in other rules (e.g., paragraph 
(c)(4) of Rule 17h-2T) and to clarify the legal basis of the rule.\267\ 
The Commission also proposed this change in paragraph (a)(2) of Rule 
17a-5 regarding FOCUS Report filings so that the language in Rule 17a-5 
is internally consistent.\268\ The Commission proposed analogous 
changes to the first sentence of paragraph (d)(2) of Rule 18a-7.\269\ 
Rule 17a-12 does not contain an analogous provision relating to 
separately binding the public portion of the report from the portion 
for which confidential treatment will be requested, but the Commission 
proposed to amend pre-existing paragraph (c)(3) of Rule 17a-12 (which 
is being re-designated as paragraph (c)(4)) \270\ to add language to 
state that an EDGAR filer may request confidential treatment.\271\ The 
Commission also proposed to amend paragraph (a)(2) of Rule 17a-12 to 
replace ``deemed to be confidential'' with ``deemed to be confidential 
for the purposes of section 24(b) of the Act'' for consistency with the 
language used in other rules (e.g., paragraph (c)(4) of Exchange Act 
Rule 17h-2T) and to clarify the legal basis of the rule.\272\ The 
Commission received no comment on these proposals and is adopting them 
as proposed.\273\
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    \267\ See paragraph (e)(3) of Rule 17a-5, as proposed to be 
amended; paragraph (d)(2) of Rule 18a-7, as proposed to be amended.
    \268\ See paragraphs (a)(2) and (e)(3)(ii)(B) of Rule 17a-5, as 
proposed to be amended.
    \269\ See paragraph (d)(2) of Rule 18a-7, as proposed to be 
amended.
    \270\ See paragraph (c)(4) of Rule 17a-12, as proposed to be 
amended.
    \271\ See 17 CFR 240.24b-2.
    \272\ See paragraph (a)(2) of Rule 17a-12, as proposed to be 
amended.
    \273\ See paragraphs (a)(2) and (e)(3)(ii)(B) of Rule 17a-5, as 
amended; paragraph (d)(2) of Rule 18a-7, as amended; paragraphs 
(a)(2) and (c)(4) of Rule 17a-12, as amended.
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B. Rule 17h-2T and Form 17-H

    Under section 17(h) of the Exchange Act and Rule 17h-2T, broker-
dealers that are part of a holding company structure and that maintain 
capital of at least $20 million must file quarterly and annual risk 
assessment reports with the Commission.\274\ The reports are filed 
using Form 17-H.\275\
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    \274\ On June 29, 2020, the Commission exempted from the 
requirements of Rules 17h-1T and 17h-2T broker-dealers that do not 
hold funds or securities for, or owe money or securities to, 
customers and do not carry customer accounts, or that are exempt 
from Rule 15c3-3 pursuant to paragraph (k)(2) of that rule, and that 
maintain total assets of less than $1 billion and capital, including 
debt subordinated in accordance with Rule 15c3-1d, of less than $50 
million. See Order Under Section 17(h)(4) of the Securities Exchange 
Act of 1934 Granting Exemption from Rule 17h-1T and Rule 17h-2T for 
Certain Broker-Dealers Maintaining Capital, Including Subordinated 
Debt of Greater than $20 Million but Less than $50 Million, Exchange 
Act Release No. 89184 (June 29, 2020), 85 FR 40356 (July 6, 2020).
    \275\ See 17 CFR 249.328T. Form 17-H is available at https://www.sec.gov/about/forms/form17-h.pdf.
---------------------------------------------------------------------------

    The Commission proposed to amend paragraph (a)(2) of Rule 17h-2T to 
require that the quarterly and annual risk assessment reports be filed 
with the Commission electronically through EDGAR, using the same 
process used by broker-dealers currently voluntarily

[[Page 7286]]

using EDGAR to file Form 17-H.\276\ The proposed amendments also 
provide that the financial statements required by Item 4 of Form 17-H 
would be required to be submitted in Inline XBRL. With respect to the 
Inline XBRL requirement, the process would mirror the process described 
above for broker-dealers filing annual reports in Inline XBRL.\277\ 
Under the amendments being adopted, broker-dealers would be required to 
apply machine-readable Inline XBRL tags to the financial statements 
included in the quarterly and annual risk assessment reports. The 
existing custom XML requirement for the facing page and Part II of Form 
17-H would remain in place, as would the PDF requirement for Item 1, 2, 
and 3 of Form 17-H (which require copies of organizational charts, risk 
management procedures, and descriptions of pending legal proceedings 
that the broker-dealer maintains pursuant to paragraph (a)(1) of Rule 
17h-1T).\278\
---------------------------------------------------------------------------

    \276\ See Proposing Release at 23951.
    \277\ See supra section IV.A.
    \278\ See 17 CFR 240.17h-1T(a)(1).
    [GRAPHIC] [TIFF OMITTED] TR21JA25.011
    
    The Commission received one comment specific to Form 17-H. The 
commenter, an XBRL standards association, advocated that the Commission 
require more of Form 17-H be filed in XBRL format.\279\ The Commission 
proposed to utilize XBRL for the financial statements in Item 4 of Form 
17-H, for which XBRL is well-suited.\280\ The Commission proposed to 
retain the existing custom XML requirement for the facing page and for 
Part II, even though it acknowledged certain drawbacks to this 
approach, given the compliance burden associated with changing the 
facing page and Part II from a custom XML schema to XBRL.\281\ 
Ultimately, the Commission disagrees with the commenter that expanding 
the XBRL requirements to cover more of Form 17-H would be appropriate 
because, while the Commission acknowledges the commenter's contention 
that greater use of XBRL would promote ease and efficiency of 
processing the data contained within Form 17-H, such advantages would 
not justify the compliance burdens and implementation costs that would 
be incurred to expand the use of XBRL in Form 17-H.\282\ For these 
reasons, the Commission is adopting the amendments to Rule 17h-2T and 
the structured data amendments to Form 17-H as proposed.
---------------------------------------------------------------------------

    \279\ See XBRL Letter at 7.
    \280\ See Proposing Release at 23951.
    \281\ See id.
    \282\ See id.
---------------------------------------------------------------------------

V. Other Forms, Reports, or Notices

    The Commission is requiring the following forms, reports and 
notices (and instructions thereto) to be filed or submitted on EDGAR:

[[Page 7287]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.012

A. Notices Pursuant to Rule 17a-19 and Form X-17A-19

    Rule 17a-19 requires every national securities exchange and 
registered national securities association to file a Form X-17A-19 with 
the Commission at its principal office in Washington, DC and with the 
Securities Investor Protection Corporation (``SIPC'') within five 
business days of the initiation, suspension, or termination of any 
member and, when terminating the membership interest of any member, to 
notify that member of its obligation to file financial reports as 
required by paragraph (b) of Rule 17a-5.\283\
---------------------------------------------------------------------------

    \283\ 17 CFR 240.17a-5(b).
---------------------------------------------------------------------------

    Prior to these amendments, the instructions to Form X-17A-19 
provided that the original of the form must be mailed to the Commission 
at its principal office and a copy of the form must be mailed to SIPC. 
The Commission proposed to amend this requirement to provide that Form 
X-17A-19 must be filed with the Commission electronically on EDGAR in 
accordance with the EDGAR Filer Manual, as defined in Rule 11 of 
Regulation S-T, and in accordance with the requirements of Regulation 
S-T.\284\ Accordingly, Form X-17A-19 would be filed in a custom XML-
based data language.\285\ As is the case with most of the Commission's 
other XML-based forms, such as the aforementioned facing page to Form 
X-17A-5 Part III,\286\ national securities exchanges and registered 
national securities associations would comply with the custom XML 
requirement by either inputting the information into a fillable web 
form that EDGAR would then

[[Page 7288]]

convert into the custom XML-based data language, or submitting the 
information directly to EDGAR in the custom XML-based data 
language.\287\ The Commission did not receive any comments specific to 
Form X-17A-19, other than the general structured data concerns 
discussed in sections VII.A. and X.C. below, and so to achieve the 
benefits of electronic submission and structuring described in section 
X.C.1, is adopting as proposed the requirement to file Form X-17A-19 
electronically on EDGAR using structured data format.\288\
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    \284\ See 17 CFR 240.17a-19, as proposed to be amended.
    \285\ Requirements to submit forms on EDGAR in custom XML 
structured data languages are set forth in the EDGAR Filer Manual, 
Volume II, Chapter 9, and the specific XML requirements for Form X-
17A-19 would be included in an updated version of the EDGAR Filer 
Manual, Volume II, Chapter 8.
    \286\ See supra section IV.A.
    \287\ See Proposing Release at 23953.
    \288\ See 17 CFR 240.17a-19, as amended.
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    The Commission also proposed making conforming amendments to the 
``General Instructions'' to Form X-17A-19. Instruction 2 was proposed 
to be amended to replace the instruction to mail the original of the 
form to the Division with an instruction to file the original 
``electronically on EDGAR in accordance with the EDGAR Filer Manual, as 
defined in Rule 11 of Regulation S-T (Sec.  232.11) and in accordance 
with the requirements of Regulation S-T.'' Instruction 2 was also 
proposed to be amended to instruct filers to send copy number 1 of Form 
X-17A-19 to SIPC at SIPC's updated address. Instruction 3 was proposed 
to be amended to replace the words ``shall be executed with a manual 
signature'' with the words ``shall be signed.'' Instruction 4 was 
proposed to be deleted (and subsequent instructions would be renumbered 
accordingly), because the instruction about what to do if there is 
insufficient space in the form is unnecessary if the filing is 
submitted on EDGAR. Renumbered instruction 6 (formerly instruction 7) 
was proposed to be amended to provide that copies of the form may be 
obtained ``on the Commission's website'' instead of ``from the main 
office of the Securities and Exchange Commission in Washington, DC'' 
The Commission did not receive comment on these proposals and is 
adopting them as proposed.
    In addition, the Commission proposed a technical amendment to lines 
1, 4, and 5 of Form X-17A-19. These lines ask the filer to check off 
one of the listed exchanges or associations but the list is not up-to-
date. Therefore, the Commission proposed to amend lines 1, 4, and 5 of 
Form X-17A-19 to include an ``other'' field for exchanges or 
associations that are not listed on the form, so that the listing of 
exchanges and associations would be complete. The Commission did not 
receive comment on this proposal and for the reason discussed above, is 
adopting it as proposed.

B. Notice (and Any Withdrawal of a Notice) Filed Pursuant to Rule 3a71-
3(d)(1)(vi)

1. Proposed Rule
    The Commission proposed to amend Rule 3a71-3(d)(1)(vi) \289\ to 
change the method of filing ANE Exception Notices.\290\ Prior to these 
amendments, Rule 3a71-3(d)(1)(vi) required a Registered Entity to file 
an ANE Exception Notice by submitting it to the electronic mailbox 
described on the Commission's website at www.sec.gov at the ``ANE 
Exception Notices'' section,\291\ and the Commission was required to 
publicly post the notice on the same section of its website.\292\ A 
Relying Entity is able to review publicly posted ANE Exception Notices 
to determine whether its affiliated Registered Entity's ANE Exception 
Notice has been filed in accordance with Rule 3a71-3(d)(1)(vi).
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    \289\ 17 CFR 240.3a71-3(d)(1)(vi).
    \290\ See Proposing Release, 88 FR at 23954-56. Rule 3a71-3(d) 
provides a conditional exception (``ANE Exception'') to Rule 3a71-
3(b)(1)(iii)(C), 17 CFR 240.3a71-3(b)(1)(iii)(C), which itself 
provides that, for purposes of determining whether the dealing 
activity of a non-U.S. person that is not a conduit affiliate 
exceeds the applicable de minimis threshold (set forth in 17 CFR 
240.3a71-2(a)(1)) below which a person is generally not within the 
SBSD definition, non-U.S. persons generally must count their 
security-based swap transactions connected with their dealing 
activity that are arranged, negotiated, or executed by personnel 
located in a U.S. branch or office, or by personnel of an agent of 
such non-U.S. person located in a U.S. branch or office (``ANE 
Activity''). See 17 CFR 240.3a71-3(d). One of the conditions to the 
ANE Exception is that all ANE Activity for which the non-U.S. person 
is relying on the exception (the ``Relying Entity'') be conducted by 
the U.S. personnel in their capacity as persons associated with a 
majority-owned affiliate (as defined in 17 CFR 240.3a71-3(a)(10)) of 
the Relying Entity that is either a registered SBSD or a registered 
broker that meets certain capital and other requirements (such a 
registered majority-owned affiliate, the ``Registered Entity''). See 
17 CFR 240.3a71-3(d)(1). In addition, before an associated person of 
the Registered Entity commences this ANE Activity, the Registered 
Entity must file with the Commission an ANE Exception Notice. See 17 
CFR 240.3a71-3(d)(1)(vi).
    \291\ See https://www.sec.gov/tm/ane-exception-notices.
    \292\ See 17 CFR 240.3a71-3(d)(1)(vi).
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    The proposed amendments to Rule 3a71-3(d)(1)(vi) would require an 
ANE Exception Notice to be filed electronically on, and publicly 
disseminated through, the EDGAR system. The Commission did not propose 
changes to the content of an ANE Exception Notice, which consists of 
the name of the Registered Entity whose associated persons may conduct 
activity covered by the ANE Exception, the fact that those associated 
persons may conduct such activity, and the date. ANE Exception Notices 
filed electronically on EDGAR also would be permitted, but not 
required, to include contact details of a person or department at the 
Registered Entity that counterparties may contact regarding the ANE 
Exception. Each ANE Exception Notice thus contains a minimal amount of 
information.\293\
---------------------------------------------------------------------------

    \293\ See Proposing Release, 88 FR at 23954. As of Dec. 31, 
2023, three Registered Entities had filed an ANE Exception Notice.
---------------------------------------------------------------------------

    The Commission also proposed to amend Rule 3a71-3(d)(1)(vi) to: (1) 
provide that withdrawals of ANE Exception Notices shall be made 
electronically via EDGAR, and (2) require a Registered Entity to 
promptly withdraw its ANE Exception Notice if it becomes unregistered 
or otherwise ineligible to serve as the Registered Entity for purposes 
of the ANE Exception.\294\ The latter requirement is intended to help 
ensure that ANE Exception Notices published on EDGAR remain accurate 
for market participants and other users of the information.\295\
---------------------------------------------------------------------------

    \294\ See Proposing Release, 88 FR at 23955. Regardless of 
whether a required withdrawal is promptly filed by the Registered 
Entity (or filed at all), each condition of Rule 3a71-3(d)(1) must 
be satisfied in order for the Relying Entity to rely on the ANE 
Exception, and the Relying Entity may not rely on the exception if 
the Registered Entity is no longer registered or otherwise no longer 
satisfies the conditions described in 17 CFR 240.3a71-3(d)(1).
    \295\ See Proposing Release, 88 FR at 23955. The ANE Exception 
also is subject to a cap on the amount of certain inter-dealer 
security-based swaps positions. See 17 CFR 240.3a71-3(d)(1)(vii). 
Positions subject to the cap include security-based swaps between a 
Relying Entity and a non-U.S. person that is, or is an affiliate of, 
any Registered Entity that has filed an ANE Exception Notice with 
the Commission. See 17 CFR 240.3a71-3(a)(13). All such positions 
connected with dealing activity of the Relying Entity and certain of 
its affiliates are counted toward the cap. See 17 CFR 240.3a71-
3(d)(6). Currently, the Relying Entity and its affiliates can review 
the ANE Exception Notices published on the Commission's website to 
determine whether any of the filed ANE Exception Notices are 
relevant to the Relying Entity's or any of its affiliates' progress 
toward the cap on inter-dealer security-based swaps. See Exchange 
Act Release No. 87780 (Dec. 18, 2019), 85 FR 6270, 6280-84 (Feb. 4, 
2020) (``Cross-Border Adopting Release'').
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    Prior to these amendments, a Registered Entity could, but was not 
required to, withdraw an ANE Exception Notice by contacting the 
Commission to request that the notice be manually removed from the ANE 
Exception Notices web page.\296\ Upon removal of the notice from the 
web page, the ANE Exception Notice would be withdrawn and a Relying 
Entity would no longer be able to rely on the ANE Exception unless 
another relevant ANE Exception Notice is filed.
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    \296\ See Cross-Border Adopting Release, 85 FR at 6283 n.138.
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    Under the proposed rule, an ANE Exception Notice withdrawal request 
via EDGAR would result in EDGAR

[[Page 7289]]

identifying the relevant ANE Exception Notice as no longer active (as 
opposed to removal of the notice from EDGAR).\297\ The withdrawal would 
also be publicly disseminated through EDGAR.
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    \297\ See Proposing Release, 88 FR at 23955. Consistent with 
current Rule 3a71-3(d)(1)(vi), the EDGAR system also would not allow 
amendments to an ANE Exception Notice. To report a name change or 
change of contact details on an ANE Exception Notice via EDGAR, a 
Registered Entity must file a new notice with the updated 
information.
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    In the Proposing Release,\298\ the Commission explained that as a 
result of the amendments to Rule 3a71-3(d)(1)(vi), EDGAR users would 
have the ability to search for ANE Exception Notices that have not been 
withdrawn, i.e., the notices that remain eligible to satisfy the ANE 
Exception's notice condition. These filed and not withdrawn ANE 
Exception Notices would also help identify the Registered Entities who, 
together with their affiliates, could cause a transaction to fall under 
the ANE Exception's cap on certain inter-dealer security-based 
swaps.\299\ The Commission further stated that the inclusion of ANE 
Exception Notices submitted on EDGAR and withdrawn in EDGAR's publicly 
available data would aid Relying Entities and their affiliates in 
determining their progress toward the ANE Exception's cap at a 
particular point in the past.\300\ This functionality is not available 
under the email-based filing system, as the Commission retains only 
currently active notices on the ``ANE Exception Notices'' web page.
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    \298\ See Proposing Release, 88 FR at 23955-56.
    \299\ See supra note 295.
    \300\ Subject to Rule 3a71-3(d)(6)(ii), security-based swap 
positions that counted toward the cap before withdrawal of an ANE 
Exception Notice continue to count toward the cap after such 
withdrawal. See Proposing Release, 88 FR at 23955-56.
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2. Amended Rule
    After considering the public comments, the Commission has 
determined to adopt the amendments to Rule 3a71-3(d)(1)(vi) as 
proposed. Requiring ANE Exception Notices to be filed electronically 
and publicly disseminated via EDGAR will, among other things, 
facilitate more efficient and timely transmission and dissemination of 
information and will benefit the Commission, Registered Entities, 
Relying Entities, and other market participants. Electronic filing of 
ANE Exception Notices on EDGAR will enhance the ability of Relying 
Entities and their affiliates to access and use the filed ANE Exception 
Notices to determine their progress toward the ANE Exception's cap on 
inter-dealer security-based swaps. Other members of the public also 
will be able to access and review ANE Exception Notices more 
efficiently. Instead of reviewing each notice individually, users would 
be able to access the public-facing portion of the Commission's EDGAR 
system to search for a specific filer, for ANE Exception Notices and 
for withdrawals of ANE Exception Notices. Further, electronic 
submission and display of the ANE Exception Notices on EDGAR will 
provide market participants and the public with access to such notices 
and their withdrawals, including the names of filing Registered 
Entities and the date of each filing promptly after submission on 
EDGAR, without the need for manual Commission staff processing and the 
associated delays and demands on Commission resources.\301\
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    \301\ Following the compliance date of the amended rule, ANE 
Exception Notices will no longer be posted on the Commission's 
website, including notices filed prior to the compliance date. The 
Commission will transfer to EDGAR any ANE Exception Notice filed 
(and not withdrawn) prior to the compliance date. Such ANE Notices 
will retain their pre-compliance date filing date. Security-based 
swap positions that counted toward the cap in 17 CFR 240.3a71-
3(d)(1)(vii) prior to the compliance date will continue to count 
toward the cap after the transfer of the ANE Exception Notices. Upon 
the compliance date, Registered Entities will become subject to the 
new withdrawal requirements under the amended rule with respect to 
their ANE Exception Notices already on file with the Commission.
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    One commenter stated that EDGAR's search functionality is extremely 
limited, and, as a result, firms would not be able to access and use 
ANE Exception Notices on EDGAR in an efficient manner.\302\ 
Accordingly, the commenter asserts, even if the Commission requires 
firms to submit ANE Exception Notices via EDGAR, the Commission must 
continue to publish such notices on the Commission's website.\303\ The 
Commission disagrees. Although in the past EDGAR's search function may 
have been more limited, EDGAR's current functionalities will facilitate 
the objectives of the amendments to Rule 3a71-3(d)(1)(vi). In 
particular, EDGAR's ``Full-Text Search'' functionality, launched in 
2021, includes options to access the full text of electronic filings 
since 2001 to the present by date, company name, person, Central Index 
Key (``CIK''), and filing type.\304\
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    \302\ SIFMA 5/22/2023 Letter at 12.
    \303\ Id.
    \304\ See https://www.sec.gov/edgar/search/#. Resources for 
using this functionality, including a series of FAQs, are available 
on the Commission's website. See https://www.sec.gov/edgar/search-and-access and https://www.sec.gov/edgar/search/efts-faq.html. As an 
example, once updates to EDGAR are made to accommodate submission 
(and withdrawal) of ANE Exception Notices via EDGAR, a firm should 
be able to go to https://www.sec.gov/edgar/search/#, and, using the 
``Browse filing types'' option, select the designated category to 
search for ANE Exception Notices.
---------------------------------------------------------------------------

    As discussed in the Proposing Release, because of the nature and 
minimal amount of information included in ANE Exception Notices, users 
of ANE Exception Notices would be unlikely to benefit from structured 
data tools to analyze the data therein, as these tools typically would 
assist in analyzing large data sets more efficiently, and using an 
unstructured data format for ANE Exception Notices would make better 
use of the resources of the Commission and market participants. 
Accordingly, the amendments do not require the submission and 
withdrawal of ANE Exception Notices to be made in a structured data 
format.
    A Registered Entity that has not previously made an electronic 
filing on EDGAR would need to obtain EDGAR access credentials pursuant 
to the EDGAR Filer Manual in order to file an ANE Exception Notice 
electronically via EDGAR.\305\ Requiring submission of ANE Exception 
Notices electronically through EDGAR is appropriate because most 
Registered Entities already have access to and familiarity with EDGAR 
through registering or filing information with the Commission.\306\ For 
those Registered Entities, the Commission does not expect there to be 
additional burdens associated with mandating EDGAR filing of ANE 
Exception Notices.
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    \305\ A small number of Registered Entities may be first-time 
EDGAR filers; for example, a party that succeeds to the registration 
of a Registered Entity in a merger, conversion, or other corporate 
transaction may not yet have EDGAR access credentials.
    \306\ A Registered Entity that is an SBSD must file its 
application for registration on EDGAR. See 17 CFR 240.15Fb2-1(c). 
Additionally, pursuant to amendments being adopted in this release, 
a Registered Entity that is a broker will be required to file on 
EDGAR certain annual reports, and many brokers already do so 
voluntarily under existing Commission rules. See infra sections VIII 
and XI.B.
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    As discussed in the Proposing Release, it would not be appropriate 
or necessary for a Registered Entity to have available a temporary or 
continuing hardship exemption \307\ from the requirement to file ANE 
Exceptions Notices on EDGAR. For one, reliance on the ANE Exception, 
which requires the filing of an ANE Exception Notice, is voluntary, and 
the ANE Exception is only available for Relying Entities whose 
affiliated Registered Entity is operationally capable of complying with

[[Page 7290]]

certain disclosure, communication, and recordkeeping conditions.\308\ 
Further, the ANE Exception is premised in part on the public 
availability of the ANE Exception Notice to Relying Entities. For these 
reasons, as well as the simplicity of the expected filings and the 
sophistication of the filers, the Commission is amending Regulation S-T 
to exclude ANE Exception Notices and withdrawals from temporary 
hardship exemptions under Rule 232.201(a) and continuing hardship 
exemptions under Rule 232.202(a).
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    \307\ See, respectively, 17 CFR 232.201(a), addressing temporary 
hardship exemptions, and 17 CFR 232.202(a), addressing continuing 
hardship exemptions.
    \308\ An inability to file an ANE Exception Notice using the 
Commission's EDGAR system may indicate that a Registered Entity's 
operational conditions would present undue risk if the ANE Exception 
were available to permit Relying Entities to defer registration as 
SBSDs.
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C. Notice (and Any Amendment, Including Notice of Dispute Termination) 
Provided Pursuant to Rule 15fi-3(c)

1. Proposed Rule
    The Commission proposed to amend Rule 15fi-3(c) to require that the 
submission of valuation dispute notices and amendments to such notices 
to the Commission (``VDNs'') be made in EDGAR in a custom XML-based 
structured data language.\309\ Under Rule 15fi-3(c), each SBS Entity 
must promptly notify the Commission and any applicable prudential 
regulator \310\ of any security-based swap valuation dispute in excess 
of $20,000,000 (or its equivalent in any other currency), at either the 
transaction or portfolio level, if not resolved within: (1) three 
business days, if the dispute is with a counterparty that is an SBS 
Entity; or (2) five business days, if the dispute is with a 
counterparty that is not an SBS Entity.\311\ Rule 15fi-3(c) also 
requires SBS Entities to notify the Commission and any applicable 
prudential regulator if the amount of any security-based swap valuation 
dispute that was the subject of a previous notice increases or 
decreases by more than $20,000,000 (or its equivalent in any other 
currency), at either the transaction or portfolio level.\312\
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    \309\ See Proposing Release, 88 FR at 23957.
    \310\ The term ``prudential regulator'' is defined in 17 CFR 
240.15fi-1(m) to have the same meaning as in section 1a of the 
Commodity Exchange Act (7 U.S.C. 1a) and includes the Federal 
Reserve, the Office of the Comptroller of the Currency, the Federal 
Deposit Insurance Corporation, the Farm Credit Association, and the 
Federal Housing Finance Agency, as applicable to the SBS Entity.
    \311\ See 17 CFR 240.15fi-3(c).
    \312\ Id. Such amendments are required to be provided to the 
Commission and any applicable prudential regulator no later than the 
last business day of the calendar month in which the applicable 
security-based swap valuation dispute increases or decreases by the 
applicable dispute amount. Id.
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    Prior to these amendments, Rule 15fi-3(c) required SBS Entities to 
submit VDNs ``in a form and manner acceptable to the Commission.'' 
\313\ SBS Entities had two options for submitting VDNs: (1) an 
electronic submission in PDF format via EDGAR; or (2) submission in PDF 
format to a dedicated Commission email address.
---------------------------------------------------------------------------

    \313\ In proposing Rule 15fi-3(c), the Commission explained that 
this phrase was intended to provide SBS Entities with flexibility to 
determine the most efficient and cost-effective means of making such 
submissions, so long as it is deemed to be acceptable by the 
Commission. See Risk Mitigation Techniques for Uncleared Security-
Based Swaps, Exchange Act Release No. 84861 (Dec. 19, 2018), 84 FR 
4614, 4621, n.47 (Feb. 15, 2019).
---------------------------------------------------------------------------

    Under the proposed amendments, Rule 15fi-3(c) would continue to 
provide flexibility to SBS Entities regarding the information to be 
included in a VDN, but the Commission would encourage--not require--SBS 
Entities to disclose specific categories of information in VDNs, as 
discussed more fully below. In addition, the custom XML-based data 
language for VDN submissions and a fillable EDGAR-based web form would 
include XML elements reflecting those encouraged disclosures.\314\ SBS 
Entities would be permitted to leave one or more fields in the EDGAR-
based fillable web form unpopulated and provide their own description 
of the dispute in a dedicated general field in the fillable form.\315\ 
SBS Entities may opt not to use the fillable web form to satisfy the 
structured data submission requirement and, instead, may generate a VDN 
using the custom XML-based data language and upload the VDN to 
EDGAR.\316\
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    \314\ See Proposing Release, 88 FR at 23958.
    \315\ See id.
    \316\ See id.
---------------------------------------------------------------------------

2. Amended Rule
    Based on the reasons discussed in the Proposing Release, and after 
considering the public comments, the Commission is adopting the 
amendments to Rule 15fi-3(c) as proposed. Accordingly, amended Rule 
15fi-3(c) requires SBS Entities to submit VDNs electronically in EDGAR 
using a custom XML-based data language specific to VDNs.\317\ This 
requirement applies to initial VDNs and amendments to VDNs, including 
notices of termination of a dispute.\318\ Under the amended rule, SBS 
Entities will no longer be able to submit VDNs to the Commission via 
email or in PDF format on EDGAR.\319\
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    \317\ SBS Entities relying on Commission orders granting 
substituted compliance pursuant to 17 CFR 240.3a71-6 may be required 
to provide the Commission reports regarding disputes between 
counterparties, among other conditions in the orders. See, e.g., 
Exchange Act Release No. 93411 (Oct. 22, 2021), 86 FR 59797, 59815 
(Oct. 28, 2021) (File No. S7-08-21). Beginning on the compliance 
date for the amendments to Rule 15fi-3(c), the only method available 
for SBS Entities to provide the dispute reports required by the 
Commission's existing substituted compliance orders will be 
electronically in EDGAR using the custom XML-based data language 
specific to VDNs. The flexibility provided by a fillable web form 
and by the custom XML-based data language's elements--including an 
XML element to capture any information that does not fall within any 
of the other elements--will facilitate submission of dispute reports 
required by the Commission's orders with minimal modification.
    \318\ Under amended Rule 15fi-3(c)(2), an SBS Entity will be 
required to submit VDN amendments electronically in EDGAR using the 
custom XML-based data language, as required by the rule, regardless 
of the method the SBS Entity used to submit the original VDN or 
previous amendments. For a VDN submitted after the compliance date 
that amends a VDN submitted via email prior to the compliance date, 
the SBS Entity may indicate in its submission that the VDN amends a 
VDN previously submitted via email.
    \319\ Under amended Rule 15fi-3(c), SBS Entities with a U.S. 
prudential regulator must notify the prudential regulator ``in a 
form and manner acceptable to the prudential regulator.'' Prior to 
the amendments, Rule 15fi-3(c) did not specify how SBS Entities must 
notify the prudential regulator. The additional specificity in the 
amended rule will provide guidance to SBS Entities along with the 
flexibility to notify any applicable U.S. prudential regulator in a 
form and manner acceptable to that regulator.
---------------------------------------------------------------------------

    As discussed in the Proposing Release, SBS Entities should already 
have obtained access to EDGAR in connection with their registration 
with the Commission in such capacity and should therefore be familiar 
with how to use the EDGAR system.\320\ As such, the Commission does not 
expect there to be any additional burden associated with expressly 
mandating submission of VDNs on EDGAR.
---------------------------------------------------------------------------

    \320\ See Proposing Release, 88 FR at 23958.
---------------------------------------------------------------------------

    One commenter stated that requiring submission of VDNs via a 
fillable web form on EDGAR would introduce inefficiencies and 
opportunities for human error; specifically, that firms would need an 
individual to copy and paste the text from the relevant data output 
into the Commission's web form, which would likely necessitate a second 
individual to watch the first individual input the data.\321\ According 
to the commenter, this type of ``over the shoulder'' observation is 
needed to minimize (but will not entirely eliminate) the risk of error 
and would create inefficiency for no corresponding benefit. The 
commenter requests that the Commission allow firms ``to continue 
submitting their [VDNs] (and subsequent amendments and terminations) in 
PDF, and, at the very least, allow firms to submit a structured data 
file as the [VDN] rather than filling in a web form.'' \322\
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    \321\ See SIFMA 5/22/2023 Letter at 11.
    \322\ Id.

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[[Page 7291]]

    The Commission disagrees with the commenter's statement that the 
amendments to Rule 15fi-3(c) provide no corresponding benefit. Using 
EDGAR--as opposed to a dedicated email inbox--provides a more efficient 
and secure way to submit and process VDNs. As discussed in the 
Proposing Release, the submission of VDNs in a structured data language 
will enable the Commission to analyze the information therein more 
efficiently and effectively, as compared to the current methods of 
submission, for purposes such as identifying trends in disclosed 
valuation disputes or performing technical validations (i.e., 
programmatic checks) upon intake to ensure VDNs are appropriately 
standardized and formatted.\323\ These benefits justify the amendments 
notwithstanding the potential need for an over-the-shoulder review, as 
described by the commenter.
---------------------------------------------------------------------------

    \323\ See Proposing Release, 88 FR at 23958.
---------------------------------------------------------------------------

    The amended rule provides that each SBS Entity is required to 
submit VDNs ``electronically through the Commission's EDGAR system, in 
accordance with the EDGAR Filer Manual . . . .'' While, beginning on 
the compliance date for the amendments to Rule 15fi-3(c), an SBS Entity 
will no longer be able to submit VDNs in PDF format for the reasons 
discussed above, in response to the comment, the Commission is 
confirming that, as provided for under the current EDGAR Filer 
Manual,\324\ an SBS Entity will have the option to submit to the 
Commission via EDGAR a VDN that the SBS Entity has constructed in the 
custom XML-based data language instead of using the fillable web form.
---------------------------------------------------------------------------

    \324\ See EDGAR Filer Manual, Volume II, Chapter 9, Filer-
Constructed XML Submissions (providing instructions regarding 
constructing a submission using the Filer-Constructed XML Filing 
Specification documents (available at https://www.sec.gov/info/edgar/tech-specs) and providing step by step instructions for 
transmitting such submissions via EDGAR to the Commission).
---------------------------------------------------------------------------

    One commenter stated that the Proposing Release was incomplete 
because it did not ``identify the specific elements that will need to 
be included on the XML valuation dispute reports.'' \325\ The same 
commenter stated that ``if the Commission does adopt a fillable web 
form requirement or another requirement to submit reports using 
structured data language, it must provide firms with an opportunity to 
review and comment on the structure and content of the requirement.'' 
The commenter stated that ``the [Proposing Release] is not entirely 
clear whether firms will be required to simply type in data or to 
submit a file when submitting [VDNs]'' and ``there may be data elements 
that need to be clarified or that should not be included at all.'' 
\326\
---------------------------------------------------------------------------

    \325\ See SIFMA 5/22/2023 Letter at 2.
    \326\ See SIFMA 5/22/2023 Letter at 11.
---------------------------------------------------------------------------

    As discussed above, the proposed rule would not amend the content 
requirements for VDNs. Rather, the Proposing Release encouraged SBS 
Entities to include certain categories of information in their VDNs, 
and those categories were detailed in the Proposing Release. While the 
Proposing Release did not include an accompanying XML schema for that 
XML-based data language, as discussed above, under the amended rule, 
SBS Entities will have flexibility in submitting VDNs in structured 
data, with a choice of using the EDGAR-based fillable form (with 
additional flexibility as to what to disclose in the form) or uploading 
a VDN in the XML-based data language. Additionally, the Proposing 
Release did specify that the data language would include discrete XML 
elements for each of the encouraged disclosures,\327\ as well as a 
separate XML element to capture any information provided by SBS 
Entities that does not fall within the encouraged disclosures.
---------------------------------------------------------------------------

    \327\ See Proposing Release, 88 FR at 23958. See also infra 
section VII.A (discussing taxonomies and the public feedback 
process).
---------------------------------------------------------------------------

    As discussed in the Proposing Release, one of the primary 
objectives of Rule 15fi-3(c) is to inform the Commission and its staff 
that a valuation dispute has arisen, allowing the Commission and staff 
to consider whether additional follow-up is warranted. While Rule 15fi-
3(c) is intended to provide SBS Entities with flexibility to submit the 
required information to the Commission in a manner that is most 
efficient for each SBS Entity,\328\ the Commission is encouraging--but 
is not requiring--SBS Entities to include in a VDN basic information 
about the security-based swap valuation dispute, including: (1) 
identifying information about both counterparties (including each 
party's LEI); (2) the date of the dispute (or the termination date, if 
applicable); (3) the type of dispute; (4) disclosure about which 
counterparty is the receiver and which is the payer; and (5) the 
disputed amount, in U.S. Dollars.\329\ The Commission is also 
encouraging SBS Entities to provide any applicable identifier about the 
relevant security-based swap (such as the product ID), the notional 
amount of the security-based swap, and disclosure about which 
counterparty is calling the dispute (i.e., the direction of the 
dispute). In amendments to previously submitted VDNs, including notices 
of termination of a dispute, SBS Entities are encouraged to provide 
information to assist the Commission in understanding the purpose of 
the amendment or the circumstances of termination of a dispute.\330\ 
The inclusion of such information (``basic information'') in VDNs will 
assist Commission staff in focusing the scope of any follow-up 
inquiries and thus reduce both Commission and SBS Entity resources used 
in connection with valuation dispute reports.
---------------------------------------------------------------------------

    \328\ See also Risk Mitigation Techniques for Uncleared 
Security-Based Swaps, Exchange Act Release No. 87782 (Dec. 18, 
2019), 85 FR 6359, 6368 (Feb. 4, 2020) (``Risk Mitigation Adopting 
Release''); Security-Based Swap Valuation Dispute Notices, available 
at https://www.sec.gov/tm/Security-Based-Swap-Valuation-Dispute-Notices (where the staff states that, ``In terms of the contents of 
the notice, the Commission explained when it adopted Rule 15fi-3(c) 
that the notice is not required to include specific fields, `in 
order to provide SBS Entities with the flexibility to submit the 
required information to the Commission in a manner that is most 
efficient for each SBS Entity.' '').
    \329\ As discussed in the Proposing Release, this information is 
consistent with the notices that swap dealers and major swap 
participants are required to provide to the NFA, which receives 
notices from Swap Entities pursuant to CFTC Regulation 23.502(c) 
regarding swap valuation disputes. See NFA Interpretive Notice 9072 
to Compliance Rule 2-49: Swap Valuation Dispute Filing Requirements 
(May 18, 2017), available at https://www.nfa.futures.org/rulebook/rules.aspx?Section=9&RuleID=9072, and Effective date of Interpretive 
Notice to NFA Compliance Rule 2-49: Swap Valuation Dispute Filing 
Requirements, Notice I-17-13 (July 20, 2017), available at https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=4827. See 
Proposing Release, 88 FR at 23957.
    \330\ One commenter stated that ``it would be quite difficult 
and, in some cases, sensitive for firms to provide this 
information.'' The commenter therefore ``[agreed] with the 
Commission that it should not require SBS entities to provide such 
information in the [VDNs].'' See SIFMA 5/22/2023 Letter at 12.
---------------------------------------------------------------------------

    Consistent with this approach, the Commission's custom XML-based 
data language for VDNs will include discrete XML elements for each 
category of the basic information listed above, and the associated 
fillable web form on EDGAR will contain discrete fields mirroring those 
XML elements. However, to maintain the flexibility inherent to the 
Commission's approach to VDNs, the custom XML data language (and 
associated fillable web form) will also contain an XML element (and 
fillable field) to capture any information provided by SBS Entities 
that does not fall within the categories of basic information listed 
above. SBS Entities may use this XML element (and associated fillable 
field) to submit their VDN information, as appropriate, and may refrain 
from using any number (or all) of the other XML data elements and 
associated fillable fields if such information is not needed to report 
the

[[Page 7292]]

dispute. In addition, as the Commission proposed, SBS Entities may opt 
not to use the fillable form altogether and instead generate a VDN 
using the custom XML-based language and upload it to EDGAR.
    One commenter recommended that the Commission require SBS Entities 
to submit LEIs with VDNs, stating that ``[s]tructured data is more 
useful when it contains a consistent identifier, like the LEI,'' and 
that ``[r]eporting of non-standardized data . . . will lead to 
inconsistent submissions and in terms of comparability, ultimately more 
work on behalf of the Commission.'' \331\ The Commission does not 
disagree that LEIs are beneficial in that they provide consistent and 
comparable identification of entities, and indeed, as discussed above 
in this section, the Commission encourages SBS Entities to include LEIs 
when submitting VDNs. However, the scope of the rule amendments is 
focused on the manner of transmitting VDNs (e.g., from email or 
unstructured submission to structured EDGAR submission), and not on 
adding new specific content requirements for VDNs. Therefore, the 
Commission is encouraging, but not mandating, the inclusion of LEIs in 
VDNs.
---------------------------------------------------------------------------

    \331\ See GLEIF Letter.
---------------------------------------------------------------------------

    One commenter stated that the Commission must continue to allow SBS 
Entities to submit terminations or amendments \332\ to VDNs via email 
due to limitations in EDGAR's functionalities. Specifically, this 
commenter states that firms do not have a mechanism to associate 
terminations or amendments with an original VDN on EDGAR if the dispute 
lasts longer than 30 days due to a lack of an archival function for 
VDNs. According to the commenter, for this reason, firms currently 
submit amendments and terminations via email using the accession number 
associated with the original report, and upending this process would 
``make it virtually impossible for firms to associate reports with 
subsequent amendments or terminations.'' \333\
---------------------------------------------------------------------------

    \332\ While the commenter references the submission of 
``terminations'' and amendments, Rule 15fi-3 does not impose 
requirements specific to terminations of a valuation dispute. 
Rather, the termination of a dispute may require an SBS Entity to 
submit an amended VDN under Rule 15fi-3(c) if the criteria of the 
rule are met.
    \333\ See SIFMA 5/22/2023 Letter at 12.
---------------------------------------------------------------------------

    While the Commission acknowledges that EDGAR does not currently 
have an archival function with respect to VDNs, SBS Entities currently 
do, in fact, have a means to associate amendments (including 
terminations) with an original VDN on EDGAR, and will continue to have 
the ability to do so upon implementation of the amended rule. 
Specifically, upon submitting a VDN on EDGAR, the submitter receives an 
email with data that includes the file number associated with the VDN. 
This emailed information regarding the submission is also available to 
the submitter on EDGAR for 30 days. A VDN submitter can retain this 
information. If a submitter needs to submit a VDN amendment, the 
submitter would enter the file number associated with the VDN being 
amended. The EDGAR system will associate the file number on the 
amendment with the common file number on the original VDN. Therefore, 
the Commission does not agree with the commenter that the Commission 
must continue to allow VDN amendments to be submitted via email in 
order to be able to associate terminations or amendments with an 
original VDN.
    Finally, as discussed in the Proposing Release, the Commission 
understands that VDNs may contain information that is sensitive to one 
or both of the counterparties. If a VDN submitted to the Commission 
includes confidential information, the SBS Entity can request 
confidential treatment of the information.\334\ If such a confidential 
treatment request is made, the Commission anticipates that it would 
keep the information confidential, subject to the provisions of 
applicable law; \335\ whether any material is confidential is 
determined pursuant to applicable law, including but not limited to the 
Freedom of Information Act and Commission rules governing requests for 
confidential treatment.
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    \334\ See 17 CFR 200.83.
    \335\ See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing 
the public availability of information obtained by the Commission). 
See also Risk Mitigation Adopting Release, 85 FR at 6389-90.
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D. Compliance Reports Submitted to the Commission Pursuant to Rule 
15fk-1(c)(2)(ii)(A)

1. Proposed Rule
    Rule 15fk-1(c) requires that the chief compliance officer (``CCO'') 
of an SBS Entity prepare and sign an annual compliance report (``CCO 
report'') \336\ that must be submitted to the Commission within 30 days 
following the deadline for filing the SBS Entity's annual financial 
report with the Commission pursuant to section 15F of the Exchange Act 
and the rules and regulations thereunder.\337\ Rule 15fk-1(c) does not 
specify the manner in which the CCO report must be submitted, whether 
in paper or electronic format.\338\ Accordingly, prior to these 
amendments, an SBS Entity could submit its CCO report as a paper or 
electronic submission. To facilitate electronic submission of CCO 
reports, the Commission updated the EDGAR system to receive the reports 
electronically. In 2023, approximately 50% of registrants submitted 
their CCO reports electronically through EDGAR in PDF format.
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    \336\ For purposes of this release, the term ``CCO report,'' 
when used with respect to an SBS Entity relying on substituted 
compliance pursuant to a Commission order regarding the requirements 
of Exchange Act section 15F(k) and Rule 15fk-1, refers to, as 
applicable, reports that must be provided by the SBS Entity to the 
Commission as a condition to the SBS Entity relying on substituted 
compliance orders regarding the requirements of Exchange Act section 
15F(k) and Rule 15fk-1.
    \337\ 17 CFR 240.15fk-1(c).
    \338\ See id.
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    The Commission proposed to amend Rule 15fk-1(c)(2)(ii)(A) to 
require CCO reports to be submitted electronically through EDGAR in 
Inline XBRL (i.e., as an Interactive Data File in accordance with Rule 
405 of Regulation S-T).\339\ As proposed, the required electronic 
submission of these reports through EDGAR would specify the manner of 
submission, streamline and simplify the filing process for an SBS 
Entity and the Commission, eliminate the need to establish manual 
processes that may introduce error, and make submissions available 
immediately to Commission staff.\340\ As explained in the Proposing 
Release, requiring CCO reports to be submitted in Inline XBRL format 
would allow Staff to better utilize CCO reports to gauge the soundness 
of SBS Entity compliance programs, as well as to, among other things, 
enable EDGAR to perform technical validations upon intake of the 
reports, thus potentially improving the quality of the submitted data 
by decreasing the incidence of non-substantive errors.\341\
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    \339\ See Proposing Release, 83 FR at 23959.
    \340\ See id.
    \341\ See id.
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2. Final Rule
    Based on the Commission's experience over the course of 
implementing Rule 15fk-1(c), and after considering the public comments, 
the Commission is adopting the amendments to Rule 15fk-1(c) as 
proposed. Accordingly, final Rule 15fk-1(c) requires SBS Entities to 
submit CCO reports electronically in Inline XBRL through EDGAR.\342\ 
Under the final rule, SBS Entities will no longer be able to submit CCO 
reports to the Commission via email, in PDF format on EDGAR, or

[[Page 7293]]

in paper. This includes SBS Entities relying on Commission orders 
granting substituted compliance pursuant to Exchange Act Rule 3a71-
6.\343\
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    \342\ The amendment does not change what is required to be 
included in the CCO report under Exchange Act Rule 15fk-1(c). See 17 
CFR 240.15fk-1(c).
    \343\ Rule 3a71-6 under the Exchange Act permits the Commission 
to determine that registered non-U.S. major security-based swap 
participants may satisfy certain requirements under the Exchange Act 
section 15F and the rules and regulations thereunder by complying 
with comparable non-U.S. requirements. 17 CFR 240.3a71-6. SBS 
Entities that elect to fulfill the requirements of Rule 15fk-1 
through substituted compliance must provide home country report(s) 
described in the relevant Order Granting Substituted Compliance, in 
English. See, e.g., Order Granting Conditional Substituted 
Compliance in Connection With Certain Requirements Applicable to 
Non-U.S. Security-Based Swap Dealers Subject to Regulation in the 
Swiss Confederation, Exchange Act Rel. No. 93284, 86 FR 57455, 
57466. See also discussion supra at section I.F.
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Requirement To Submit CCO Reports Through EDGAR
    With respect to the requirement to submit CCO reports through 
EDGAR, one commenter supported the proposal, urging the Commission to 
require a single process for the reporting of all CCO reports.\344\ 
According to the commenter, allowing reporting entities to report in 
different formats, using different standards, will lead to confusion 
and added expense to the marketplace.\345\ Another commenter objected 
generally to requiring firms to submit any forms, including but not 
limited to CCO reports, on EDGAR until EDGAR's perceived technical 
deficiencies are addressed, including, as relevant here, assurances 
that EDGAR has adequate processes in place to ensure that CCO reports 
and other confidential reports are, and remain, confidential.\346\
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    \344\ See XBRL Letter at 9.
    \345\ See id.
    \346\ See SIFMA 5/22/2023 Letter at 13.
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    It is appropriate to require SBS Entities to submit CCO reports on 
EDGAR. First, as the Commission stated in the Proposing Release, using 
EDGAR as opposed to permitting each registrant to decide on its own 
submission format--whether that be in paper, via email to the 
Commission, or on EDGAR--provides a more streamlined and simplified 
submission process, eliminates the need to establish manual processes 
that may introduce error, and provides a way for the Commission staff 
to receive CCO reports immediately. Approximately half of SBS Entities 
already submit their CCO reports in PDF format via EDGAR, and the 
remainder should easily be able to utilize EDGAR because those entities 
should already have obtained access to EDGAR in connection with their 
registration with the Commission. Second, with respect to the concerns 
about confidentiality, as a general matter, the CCO reports are non-
public, and the amendments we are adopting today do not change existing 
rules and processes with respect to confidential treatment of materials 
submitted to the Commission.\347\
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    \347\ See Rule 83, 17 CFR 200.83. The commenter also requested 
that the Commission revise its Rules, specifically, Exchange Act 
Rule 24b-2 to allow firms to request confidential treatment when 
submitting the CCO report in EDGAR, rather than submitting a 
separate request under Commission Rule 83, which provides a process 
for requesting that information not be disclosed in response to 
Freedom of Information Act requests. See id. at 10. However, Rule 
24b-2 applies when the Commission needs to decide whether 
information will be disseminated to the public upon the filing of 
the information. 17 CFR 240.24b-2. CCO reports are not provided to 
the public upon submission. See 17 CFR 240.15fk-1(c)(ii). The 
Commission's website provides information for security-based swap 
dealers seeking to request confidential treatment for CCO reports, 
including the email address for submitting email requests for 
confidentiality under Rule 83. See Requesting Confidential Treatment 
for CCO Annual Reports, SEC.gov [verbar] Frequently Asked Questions 
Regarding Chief Compliance Officer Annual Reports Submitted by 
Security-Based Swap Dealers and Major Security-Based Swap 
Participants. See also infra section VII.A (discussing, among other 
things, security enhancements to EDGAR).
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Inline XBRL Structured Data Requirement
    With respect to the proposed requirement to submit CCO reports in 
Inline XBRL structured data format, one commenter stated that 
``preparing this data in an unambiguously machine-readable format will 
improve accessibility to the data for retrieval, data aggregation, and 
analysis.'' \348\ That same commenter stated that Inline XBRL can 
render both human- and machine-readable data from CCO reports.\349\ 
That commenter added that unstructured data would require Commission 
staff to process each file individually and vet them for accuracy. 
Structured, machine-readable data, alternatively, can be processed in 
seconds using Inline XBRL software.\350\
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    \348\ See XBRL Letter at 9.
    \349\ See id.
    \350\ See id at 10.
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    Another commenter stated that the structured data requirement would 
place a burden on SBS Entities that are not affiliated with companies 
already familiar with structured data taxonomies. That same commenter 
added that the structured data requirement would require firms to hire 
additional personnel and expend substantial resources to comply.\351\ 
This commenter stated that the result of XBRL tagging could be achieved 
through lower cost means, such as PDF documents which ``can be searched 
and redlined with ease.'' \352\ The commenter stated that XBRL 
requirements will require firms to overhaul their entire timelines for 
preparing and submitting reports because firms will need to provide 
service providers and vendors with time (often three-to-four business 
days) to conduct XBRL tagging, rendering, and processing.\353\ That 
same commenter stated that the primary benefits of Inline XBRL tagging 
involve review of numerical submissions and that tagging is not 
necessary given the narrative format of CCO reports.\354\
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    \351\ See SIFMA 5/22/2023 Letter at 4.
    \352\ See id. at 6.
    \353\ See id. at 5.
    \354\ See id. at 6.
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    Requiring CCO reports to be submitted in Inline XBRL structured 
data format facilitates access to the information included on the CCO 
reports, enabling Commission staff to perform more efficient retrieval, 
aggregation, and comparison across different SBS Entities and time 
periods, as compared to an unstructured PDF, HTML, or ASCII format 
requirement for the reports.\355\ One commenter disagreed that an 
Inline XBRL requirement provides benefits for the CCO report.\356\ This 
commenter characterized the CCO report as an unstructured, narrative-
based report, and stated that an Inline XBRL requirement does not 
facilitate analysis or comparison because narrative reports do not 
contain standardized, easily comparable elements.\357\
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    \355\ For further discussion of the structured data 
requirements, see infra section VII.A.
    \356\ See SIFMA 5/22/2023 Letter at 7.
    \357\ See id.
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    The Commission disagrees with this point. While CCO reports were 
not previously ``structured'' in the machine-readable sense, there are 
clearly delineated regulatory subparagraphs (specifically, Rule 15fk-
1(c)(2)(i)(A) through (E) under the Exchange Act) that designate the 
minimum content which CCO reports must contain.\358\ The Inline XBRL 
requirement under the amended rules will involve the creation of a 
taxonomy including specific tags that map onto each of these 
subparagraphs. SBS Entities' use of these tags to identify each 
particular disclosure in the CCO report will enable staff to analyze 
all (or subsets of) SBS Entities' disclosures in response to any 
particular subparagraph of interest, including to determine whether SBS 
Entities have complied with each substantive component of the CCO 
report required under Rule 15fk-1(c)(2)(i). This will make it easier 
for staff to retrieve, sort, filter, compare, or aggregate the 
disclosures on CCO reports, which frequently contain

[[Page 7294]]

lengthy narratives, to gauge the soundness of SBS Entity compliance 
programs (e.g., by enabling staff to broadly identify any areas for 
improvement that were widely cited by SBS Entities in their CCO reports 
in one reporting period, and then identify whether SBS Entities 
generally made changes to their policies and procedures to implement 
that improvement in the subsequent reporting period).\359\ The 
application of specific tags to narratives in the CCO reports will also 
enable to staff to create customized reports that will facilitate a 
more comprehensive approach to risk identification and analysis. In 
this manner, staff will be better able to assess compliance with the 
Exchange Act and rules and regulations thereunder applicable to SBS 
Entities.\360\
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    \358\ See 17 CFR 240.15fk-1(c)(2)(i)(A) through (E).
    \359\ See 17 CFR 240.15fk-1(c)(2)(i)(B) and (C).
    \360\ See Business Conduct Standards for Security-Based Swap 
Dealers and Major Security-Based Swap Participants, Exchange Act 
Release No. 77617 (Apr. 14, 2016), 81 FR 29959, 30054 (May 13, 2016) 
(stating that the proposed (and subsequently adopted) requirements 
for Rule 15fk-1, including the requirement for the chief compliance 
officer to prepare an annual compliance report that is submitted 
with the Commission, ``underscore[s] the central role that sound 
compliance programs play to ensure compliance with the Exchange Act 
and rules and regulations thereunder applicable to security-based 
swaps''); see also Business Conduct Standards for Security-Based 
Swap Dealers and Major Security-Based Swap Participants, Exchange 
Act Release No. 64766 (June 29, 2011), 76 FR 42395, 42435 (July 18, 
2011).
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    As discussed elsewhere in this release, the Commission also 
disagrees that the structured data requirement would require firms to 
hire additional personnel and expend substantial resources to 
comply.\361\ That said, if SBS Entities encounter unreasonable effort 
or expense complying with this aspect of the rule, the Commission 
encourages those entities to consult with Commission staff or request 
an extension of time under the existing standard and process set forth 
in Rule 15fk-1(c)(2)(iii).\362\
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    \361\ For further discussion of costs related to Inline XBRL 
requirements, see infra section VII. and section X.C.2.
    \362\ 17 CFR 240.15fk-1(c)(2)(iii). Extensions of the deadline 
to submit CCO reports will be granted at the discretion of the 
Commission. Id.
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Substituted Compliance Considerations
    One commenter stated that ``SBS Entities that rely on substituted 
compliance pursuant to Exchange Act Rule 3a71-6 would face particularly 
undue timing pressures, as substituted compliance orders generally 
require these firms to submit their home country CCO Reports no later 
than 15 days from submission to the entity's management body.'' \363\ 
That commenter added that if the Commission does require ``firms to use 
specific tags in their CCO Report [. . .] it should allow substituted 
compliance firms to continue submitting home-country reports in their 
current form.'' \364\ Another commenter stated that the Commission 
should require a single process for all CCO reports, because 
``[a]llowing reporting entities to report in different formats, using 
different standards, will lead to confusion and added expense in the 
marketplace.'' \365\ That commenter continued that ``[p]rocessing data 
in structured, machine-readable XBRL format takes seconds'' compared to 
much-longer processing times for HTML, PDF, and image files.\366\ As 
stated previously, requiring CCO reports to be submitted in Inline XBRL 
structured data format facilitates access to the information included 
on the CCO reports, enabling automated data retrieval and aggregation, 
which allows Commission staff to perform more efficient analysis and 
comparison of the disclosures across different SBS Entities and time 
periods.\367\ These benefits apply equally whether an SBS Entity is 
complying directly with Rule 15fk-1 or relying on a substituted 
compliance order.\368\ With respect to the comment raised about undue 
timing pressure, that same commenter acknowledged that any actual 
timing challenge was unknown and based on an assumption about the 
``number of tags typically associated with Inline XBRL reports'' and 
expectation that the required changes would be quite broad.\369\
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    \363\ See SIFMA 5/22/2023 Letter at 5.
    \364\ See id. at 7.
    \365\ See XBRL Letter at 9.
    \366\ See id. at 10.
    \367\ For further discussion of the structured data 
requirements, see infra section VII.A.
    \368\ For further discussion of structured data requirements for 
firms relying on substituted compliance, see supra section I.F.
    \369\ See SIFMA 5/22/2023 Letter at 5.
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    The Commission disagrees with the commenter. The substance of the 
commenter's objection is about the perceived burden and costs 
associated with the anticipated taxonomy, which we address below,\370\ 
rather than an identified timing concern. Permitting SBS Entities 
relying on substituted compliance to avoid the structuring requirement, 
while requiring SBS Entities complying directly with Rule 15fk-1 to 
submit structured CCO reports, would decrease the staff's ability to 
inspect, examine, and supervise the compliance of those SBS 
Entities.\371\ It would also hamper the staff's ability to perform more 
efficient retrieval, aggregation, and comparison across different SBS 
Entities and time periods.\372\ Finally, permitting SBS Entities 
relying on substituted compliance to avoid the structuring requirement 
for home country reports would result in an uneven framework that 
imposes additional requirements on SBS Entities complying directly with 
Rule 15fk-1.
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    \370\ See infra sections X.C.2.b, IX.D.9 and IX.D.15. As further 
explained in the Economic Analysis and Paperwork Reduction Act, the 
Commission revised its estimates in the initial compliance year to 
account for the additional burden of determining which narrative 
descriptions within its home country report correspond to 
descriptions addressed in Rule 15fi-1(c)(2) and must therefore be 
tagged. However, on an ongoing basis firms that rely on substituted 
compliance will incur the same costs to tag home country reports as 
firms that do not rely on substituted compliance, because in each 
case, the firm will incur the cost of applying Inline XBRL tags to 
the same information required by the Exchange Act. See infra note 
685 (outlining that the total annual hour burden is 98 hours per 
respondent in the initial year, 5 hours of which is structuring, and 
96 hours per respondent in subsequent years, 3 hours of which is 
structuring).
    \371\ See, e.g., Order Granting Conditional Substituted 
Compliance in Connection with Certain Requirements Applicable to 
Non-U.S. Security-Based Swap Dealers Subject to Regulation in the 
Swiss Confederation, 86 FR 57455, at 57456 (Oct. 15, 2021).
    \372\ See Proposing Release at 23959. See also infra section 
X.C.2.b.
---------------------------------------------------------------------------

    SBS Entities, including those relying on substituted compliance, 
will not be required to submit CCO reports in Inline XBRL format until 
January 1, 2026, which will give SBS Entities sufficient time to adapt 
to the new Inline XBRL requirements and enable the development of 
systems or tools that can generate Inline XBRL tagging of those 
reports, including home country reports submitted by SBS Entities 
relying on substituted compliance. SBS Entities will also have an 
opportunity to provide technical feedback on the proposed taxonomies 
once they are published (prior to January 1, 2026), including whether 
SBS Entities relying on substituted compliance anticipate specific 
technical difficulties as a result of those proposed taxonomies.\373\ 
While technical feedback on the proposed taxonomies will be welcomed 
and considered, the fundamental requirement to provide CCO reports 
using structured data will not change during that process. Any input on 
confusion raised by the tagging process can be provided as technical 
feedback after the proposed taxonomies are published. finally, to the 
extent SBS Entities relying on substituted compliance can demonstrate 
difficulty submitting structured home country

[[Page 7295]]

reports within the 15-day time frame without incurring unreasonable 
effort or expense, the Commission will consider requests for an 
extension of time in order to satisfy the structuring requirement.
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    \373\ See infra sections VII.A (discussing the draft taxonomy 
publication process) and X.C.2.b (specifying estimated cost ranges 
for the structuring of CCO reports and home country reports, with 
expected costs ranging from approximately $1,200 to $6,200 in the 
first year of compliance).
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VI. Amendments Regarding the FOCUS Report and Signature Requirements in 
Rule 17a-5, 17a-12, and 18a-7 Filings

    This release adopts a number of amendments to the FOCUS Report to 
correct technical errors and provide clarifications, with the goal of 
improving the accuracy of the information the Commission collects on 
the FOCUS Report. In addition, the Commission is allowing electronic 
signatures in Rule 17a-5, 17a-12, and 18a-7 filings, including the 
FOCUS Report. The amendments are described in more detail below.

A. Corrective and Clarifying Amendments to the FOCUS Report

1. Computation of Minimum Regulatory Capital Requirements
    Rule 15c3-1 instructs a broker-dealer that is also a futures 
commission merchant (``FCM'') to report the greater of the broker-
dealer ratio requirement or ``4 percent of the funds required to be 
segregated'' pursuant to the CFTC rules.\374\ However, the Calculation 
of Minimum Net Capital Requirement subsection in the broker-dealer 
Computation of Minimum Regulatory Capital Requirements section of the 
FOCUS Report Part II does not include a reference to the 4% of 
segregated funds ratio even though this section of the form is intended 
to document a firm's Rule 15c3-1 calculation. To align the FOCUS 
Report's net capital computation with Rule 15c3-1, the Commission 
proposed to add a line for the reporting of 4% of segregated funds and 
to renumber other lines to clarify in the FOCUS Report when certain 
computations should be made as set forth in Rule 15c3-1's net capital 
computation. These changes were intended to conform the FOCUS Report to 
Rule 15c3-1, with no substantive impact on the broker-dealer's required 
capital computation under Rule 15c3-1.\375\ The Commission received no 
comment on renumbering lines to clarify at what point in the net 
capital computation to compute the percentage of the risk margin amount 
(if applicable) and the 10% addition for broker-dealers engaged in 
reverse repurchase agreements, and for the reasons discussed above, is 
adopting these changes as proposed.
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    \374\ See 17 CFR 240.15c3-1(a)(1)(iii).
    \375\ The Commission proposed the following changes to the 
Calculation of Minimum Net Capital Requirement subsection in the 
Computation of Minimum Regulatory Capital Requirements section of 
FOCUS Report Part II: (1) delete old Line 5Bi; (2) add new Line 5C; 
(3) add a subtotal line as new Line 5D and renumber subsequent lines 
and line references accordingly; and (4) move old Line 5D to new 
Line 7 and renumber subsequent lines and line references 
accordingly.
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    The Proposing Release requested comment on whether to amend Rule 
15c3-1, as well as Rule 15c3-1d which also cross-references the CFTC's 
segregated funds requirement in identifying conditions for satisfactory 
subordination agreements, and solicited comment on whether the 
Commission should amend Rules 15c3-1 and 15c3-1d to remove references 
to these requirements that are no longer in effect under the CFTC's 
rules. The Commission received comment stating that the Commission 
should remove references to the CFTC's segregated funds requirement 
from Rules 15c3-1 and 15c3-1d. The commenter stated that the 4% of 
segregated funds requirement ``is an outdated, irrelevant requirement, 
as the CFTC has not imposed the 4% requirement for nearly two 
decades.'' \376\ In light of the comments received, which merit further 
consideration, the Commission is not amending Rules 15c3-1 and 15c3-1d 
to remove references to the CFTC's segregated funds requirement at this 
time.
---------------------------------------------------------------------------

    \376\ See Letter from Kyle Brandon, Managing Director and Head 
of Derivatives Policy, Securities Industry and Financial Markets 
Association (Nov. 21, 2023) (``SIFMA 11/21/2023 Letter'') at 1-2.
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2. Statement of Income (Loss) or Statement of Comprehensive Income, as 
Applicable
    The Commission also proposed to amend FOCUS Report Part II's income 
statement. Prior to these amendments, the income statement only 
provided fields for reporting revenue from securities commissions, even 
though firms may generate revenue from other types of commissions 
(e.g., commodity transactions and insurance products). Because it is 
important for the Commission to receive comprehensive data on all types 
of commission revenue to ensure compliance with relevant rules and 
properly supervise firms, the Commission proposed to revise the revenue 
section of the income statement to account for these other types of 
commission revenue.\377\
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    \377\ The Commission proposed to revise Line 1E and add new 
Lines 1F-1H in the Revenue subsection in the Income Statement 
section of FOCUS Report Part II.
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    One commenter generally requested that the Commission update the 
FOCUS Report for consistency with generally accepted accounting 
principles (``GAAP'') and coordinate more closely with the FINRA and 
other regulators when updating the FOCUS Report, pointing out as an 
example that FOCUS Report Part II's income statement is missing 
information found in FINRA's Form SSOI.\378\ The changes to FOCUS 
Report Part II have been coordinated with FINRA and CFTC staff, and are 
intended to align this section of the form to be more consistent with 
FINRA's Form SSOI's key revenue and expense categories but is not an 
exact mirror of FINRA's Form SSOI, as Form SSOI will continue to be a 
source of detailed income statement information. Further, the 
Commission has endeavored to keep the FOCUS Report consistent with 
current accounting principles including GAAP.\379\ The Commission 
received no other comment on this proposal and for the reasons 
discussed above, is adopting it as proposed with unique line-item 
numbers assigned to the new lines, and one correction to the formula in 
line 1H.\380\
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    \378\ See Integrated Solutions Letter at 1-2.
    \379\ See, e.g., Recordkeeping and Reporting Requirements for 
Security-Based Swap Dealers, Major Security-Based Swap Participants, 
and Broker-Dealers, Exchange Act Release No. 87005 (Dec. 16, 2019), 
84 FR 68550, 68676 (Dec. 16, 2019) (amending FOCUS Report Part II to 
incorporate the concept of LLC interests in the Ownership Equity 
subsection); Disclosure Update and Simplification, Exchange Act 
Release No. 83875 (Aug. 17, 2018), 83 FR 50148, 50227 (Oct. 4, 2018) 
(amending FOCUS Report Part II to incorporate the concept of 
comprehensive income).
    \380\ The formula in line 1H is being corrected so that it now 
reads ``(sum of Lines 1E, 1F, and 1G)'' instead of ``(sum of Lines 
1E and 1H)''.
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3. Computation of CFTC Minimum Capital Requirements
    CFTC rules permit a firm that is registered with the CFTC as an 
introducing broker, an FCM, or a swap dealer, and also registered with 
the Commission as a broker-dealer or SBS Entity, to file the FOCUS 
Report in lieu of the unaudited financial reports required under the 
CFTC regulations.\381\ Because the CFTC is not receiving its own form 
from these dual registrants and relies upon the Commission's FOCUS 
Report as a source of data for these firms, the Commission's FOCUS 
Report includes several sections or schedules set forth in the CFTC's 
Form 1-FR that address the segregation of customer funds and the 
calculation of CFTC minimum capital requirements to ensure the CFTC 
receives complete information about these firms.\382\
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    \381\ See 17 CFR 1.10(h); 17 CFR 23.105(d)(3).
    \382\ See FOCUS Report Part II's Computation of CFTC Minimum 
Capital Requirements, Statement of Segregation Requirements and 
Funds in Segregation for Customers Trading on U.S. Commodity 
Exchanges, Statement of Cleared Swaps Customer Segregation 
Requirements and Funds in Cleared Swaps Customer Accounts under 
Section 4d(f) of the Commodity Exchange Act, Statement of 
Segregation Requirements and Funds in Segregation for Customers' 
Dealer Options Accounts, Statement of Secured Amounts and Funds Held 
in Separate Accounts for Foreign Futures and Foreign Options 
Customers Pursuant to CFTC Regulation 30.7.

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[[Page 7296]]

    While FCMs are required to complete the Computation of CFTC Minimum 
Capital Requirements section of FOCUS Report Part II, the FOCUS Report 
fails to instruct CFTC-registered introducing brokers or swap dealers 
not also registered as an FCM (``stand-alone introducing brokers'' or 
``stand-alone swap dealers,'' respectively) to complete this section of 
the form. Therefore, the Commission proposed to require CFTC-registered 
introducing brokers and swap dealers that are also registered with the 
Commission as a broker-dealer or SBS Entity to complete the Computation 
of CFTC Minimum Capital Requirements section of FOCUS Report Part II. 
The Commission received no comment on this change and for the reasons 
discussed above, is adopting it as proposed with unique line-item 
numbers assigned to the new lines.
4. Technical Corrections to FOCUS Report Parts IIA and II
    The Commission is making two technical corrections to FOCUS Report 
Part IIA. First, lines 11 and 15 of the Computation of Net Capital 
Requirement are being updated to replace the incorrect cross-reference 
to line 19 with a corrected cross-reference to line 18 so that the form 
matches the requirements of Rule 15c3-1.\383\ Second, in response to 
comment received during a meeting with FINRA representatives,\384\ the 
Commission is amending FOCUS Report Part IIA to require broker-dealers 
using the alternative method to compute net capital to report the 
percentage of debt to debt-equity total.\385\ This amendment is 
appropriate because it correctly conforms the FOCUS Report Part IIA to 
paragraph (d) of Rule 15c3-1, which requires that all broker-dealers 
compute the percentage of debt to debt-equity total.
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    \383\ See lines 11 and 15 of the Computation of Net Capital 
Requirement section of FOCUS Report Part IIA.
    \384\ See Memorandum to file number S7-08-23 from Valentina 
Minak Deng regarding meeting with representatives of FINRA (Oct. 4, 
2023), available at https://www.sec.gov/comments/s7-08-23/s70823-267599-644062.pdf.
    \385\ See new line 26 of the Computation of Alternate Net 
Capital Requirement section of FOCUS Report Part IIA.
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    The Commission is making one technical correction to FOCUS Report 
Part II to add a new line item in the Computation for Determination of 
Customer Reserve Requirements and the Computation for Determination of 
PAB Requirements sections to align these sections of the FOCUS Report 
Part II with the amendments to Rule 15c3-3a that the Commission adopted 
in December 2023.\386\ The same release amended Rule 15c3-3a to permit 
margin required and on deposit at a covered clearing agency for U.S. 
Treasury securities to be included as a debit item in the customer and 
PAB reserve formulas, subject to certain conditions.\387\ The technical 
amendment to the FOCUS Report Part II reflects the update of the 
schedules to reflect adoption of the new debit item.\388\
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    \386\ See 17 CFR 240.15c3-3a; Standards for Covered Clearing 
Agencies for U.S. Treasury Securities and Application of the Broker-
Dealer Customer Protection Rule with Respect to U.S. Treasury 
Securities, Final Rule, Exchange Act Release No. 99149 (Dec. 13, 
2023), 89 FR 2714 (Jan. 16, 2024) (``Treasury Clearing Adopting 
Release''). The technical amendment to Rule 15c3-3a inserted a new 
Line 17 in both the customer and PAB reserve formulas as a new debit 
item for margin required and on deposit with a clearing agency 
registered with the Commission under section 17A of the Exchange Act 
(15 U.S.C. 78q-1) resulting from the following types of transactions 
in U.S. Treasury securities in customer accounts that have been 
cleared, settled, and novated by the clearing agency: (1) purchases 
and sales of U.S. Treasury securities; and (2) U.S. Treasury 
securities repurchase and reverse repurchase agreements. See 
Treasury Clearing Adopting Release, 89 FR at 2826. See also Note H 
to Rule 15c3-3a. As a result of the new line items, the remaining 
line items in the computations of the customer and PAB reserve 
formulas are renumbered to reflect the addition of the new debit 
item.
    \387\ See Treasury Clearing Adopting Release, 89 FR at 2826.
    \388\ The Commission is adding Line 17 and renumbering the 
subsequent lines and cross-references to those lines in the 
Computation for Determination of Customer Reserve Requirements and 
Computation for Determination of PAB Requirements sections of FOCUS 
Report Part II.
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B. Harmonizing FOCUS Report Part IIC With the Call Report

    FOCUS Report Part IIC requires SBS Entities that are dually 
registered with a prudential regulator (``bank SBS Entities'') to 
report certain information domestic banks already report on Federal 
Financial Institutional Examination Council (``FFIEC'') Form 031 (also 
known as the ``Call Report''),\389\ in an effort to reduce the 
administrative burden of completing FOCUS Report Part IIC. The FOCUS 
Report Part IIC is closely modelled on FFIEC Form 031, and when the 
same information is solicited in both FFIEC Form 031 and FOCUS Report 
Part IIC, the same line-item number is used in both forms, except that 
the FOCUS Report Part IIC line item ends with an additional ``b'' 
character.\390\
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    \389\ See Federal Financial Institutions Examination Council, 
Consolidated Reports of Condition and Income for a Bank with 
Domestic and Foreign Offices--FFIEC 031, available at https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_202203_f.pdf.
    \390\ See Form X-17A-5 Part IIC.
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    However, as discussed in the Proposing Release, since FOCUS Report 
Part IIC was adopted, FFIEC Form 031 has been updated resulting in 
inconsistencies between FOCUS Report Part IIC and FFIEC Form 031. 
Therefore, the Commission proposed to amend the assets and liabilities 
subsections of the Balance Sheet section,\391\ the Regulatory Capital 
section,\392\ and the Income Statement section \393\ of FOCUS Report 
Part IIC to harmonize FOCUS Report Part IIC with FFIEC Form 031. The 
Commission received comment supporting these proposed changes and 
encouraging further amendments to conform FOCUS Report Part IIC to 
additional changes made to FFIEC Form 031 since the date of the 
Proposing Release.\394\ The Commission agrees that FOCUS Report Part 
IIC should align with FFIEC Form 031. Therefore, in addition to 
adopting its proposed changes to FOCUS Report Part IIC, in response to 
the comments the Commission is also amending the assets subsection of 
the Balance Sheet section \395\ and the Income Statement section \396\ 
of FOCUS Report Part IIC to match the current version of FFIEC Form 
031.
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    \391\ The Commission proposed the following changes to the 
Balance Sheet section of FOCUS Report Part IIC: (1) add new Line 2C; 
(2) revise Lines 4B, 4D, 10, 15, and 16; and (3) delete Lines 10A 
and 10B.
    \392\ The Commission proposed the following changes to the 
Regulatory Capital section of FOCUS Report Part IIC: (1) delete Line 
4 and renumber subsequent lines; (2) revise renumbered Lines 4, 9, 
and 10, and parenthetical note after Capital Ratios subheading; and 
(3) add new Line 8.
    \393\ The Commission proposed the following changes to the 
Income Statement section of FOCUS Report Part IIC: (1) revise Line 
7; and (2) add new Lines F.i, F.ii, G.i, and G.ii, and delete Lines 
F and G's fill-in fields due to addition of sublines.
    \394\ See SIFMA 5/22/2023 Letter at 8.
    \395\ The Commission is revising Lines 2A and 2B of the Balance 
Sheet section of FOCUS Report Part IIC.
    \396\ The Commission is revising Lines 6, 9.F., 9.G., 9.G.i., 
and 9.G.ii. of the Income Statement section of FOCUS Report Part 
IIC.
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    One commenter asked the Commission to require FOCUS Report Part IIC 
to be filed in XBRL format since FFIEC Form 031 is already required to 
be prepared in XBRL format.\397\ While this would make FOCUS Report 
Part IIC more consistent with FFIEC Form 031, this change would make 
the format of FOCUS Report Part IIC inconsistent with the format of 
FOCUS Report Parts

[[Page 7297]]

IIA and II. More specifically, there is already a long-standing system 
in place for receiving, distributing, and using FOCUS Report data, and 
converting FOCUS Report Part IIC to a separate format would be 
disruptive to both filers and regulators who are already familiar with 
the current process in the context of the FOCUS Report and use the 
current system to compare historical and current data. Finally, the 
Commission did not receive comment from any bank SBS Entities 
indicating that such a change would ameliorate or otherwise further 
reduce the burden associated with filing FOCUS Report Part IIC. 
Therefore, the Commission is not requiring FOCUS Reports Part II, IIA, 
and IIC to be filed in XBRL format.
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    \397\ See XBRL Letter at 10.
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C. OTC Derivatives Dealer FOCUS Report Filing Requirement

    Most broker-dealers file the FOCUS Report electronically on the 
FINRA eFOCUS system. These broker-dealers file the FOCUS Report 
pursuant to a plan established by the broker-dealer's SRO, the 
procedures and provisions of which have been submitted to and declared 
effective by the Commission pursuant to paragraph (a)(3) of Exchange 
Act Rule 17a-5. SBS Entities that are not dually registered as broker-
dealers are subject to a Commission order that requires these firms to 
file the FOCUS Report electronically on the system developed by the 
Commission, the ``SEC eFOCUS system.'' \398\
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    \398\ See Order Designating Financial Industry Regulatory 
Authority, Inc., to Receive Form X-17A-5 (FOCUS Report) from Certain 
Security-Based Swap Dealers and Major Security-Based Swap 
Participants, Exchange Act Release No. 88866 (May 14, 2020), 85 FR 
29993 (May 19, 2020).
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    OTC derivatives dealers are a type of broker-dealer that engages in 
limited securities activities and is exempt from SRO membership.\399\ 
OTC derivatives dealers are required to file FOCUS Report Part II, but 
unlike broker-dealers and non-broker-dealer SBS Entities, OTC 
derivatives dealers were required, prior to these amendments, to file 
FOCUS Report Part II in paper ``at the Commission's principal office in 
Washington, DC.'' \400\ Given the similarities between OTC derivatives 
dealers and the broker-dealers and non-broker-dealer SBS Entities 
filing FOCUS Report Part II, the Commission proposed to amend paragraph 
(a)(2) of Rule 17a-12 to require OTC derivatives dealers to file FOCUS 
Report Part II on the SEC eFOCUS system maintained by FINRA. The 
Commission received comment supporting this amendment \401\ and for the 
reasons discussed above, is adopting it as proposed.\402\
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    \399\ See 17 CFR 240.3b-12.
    \400\ See 17 CFR 240.17a-12(a).
    \401\ See XBRL Letter at 10.
    \402\ See paragraph (a)(2) of Rule 17a-12, as amended.
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D. Signature Requirements in Rule 17a-5, 17a-12, and 18a-7 Filings

1. Number of Signatures on FOCUS Report
    The cover pages of Parts II, IIA, and IIC of the FOCUS Report 
include signature lines for the filer's principal executive officer, 
principal financial officer, and principal operations officer (or their 
comparable officers).\403\ The Commission proposed requiring only two 
of the three principal officers' signatures in an effort to balance the 
Commission's desire for individual accountability with the burden on 
the filer.
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    \403\ FOCUS Report Part IIA uses slightly different wording: 
Principal Executive Officer or Managing Partner, Principal Financial 
Officer or Partner, and Principal Operations Officer or Partner.
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    One commenter responded with a request that the Commission require 
no signatures on the FOCUS Report since FOCUS Reports filed through 
FINRA's eFOCUS system do not contain signatures at all.\404\ The fact 
that FINRA's eFOCUS system does not allow signatures in the uploaded 
filing does not make it unnecessary for firms to retain the signed 
FOCUS Report in their books and records as is required by the 
form.\405\ Requiring an electronic signature on the related cover pages 
of the FOCUS Report is appropriate because it helps ensure that the 
broker-dealer's senior executives are reviewing the FOCUS Report. In 
addition, the amendment to require fewer signatures appropriately 
minimizes the burden associated with the benefit of this requirement.
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    \404\ See Integrated Solutions Letter at 1-2.
    \405\ See FOCUS Report Part II cover page; FOCUS Report Part IIA 
cover page; FOCUS Report Part IIC cover page. See also 17 CFR 240.0-
1(a)(4) (stating that the Commission's rules and regulations include 
``reports and the accompanying instructions thereto'').
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    Another commenter requested that the Commission require only one 
signature on the FOCUS Report since reviewing a firm's FOCUS Report may 
not fall within the responsibilities of that firm's principal 
operations officer, and it is unnecessary to obtain the signature of 
both the principal executive officer and principal financial 
officer.\406\ After further consideration, the Commission agrees with 
the commenter that obtaining two such signatures is unnecessary because 
any individuals that substantially contribute to or cause violations of 
these rules may be subject to potential liability for aiding and 
abetting or causing violations by the firm even if they do not sign the 
audit documents.\407\ In addition, the Commission agrees that a firm's 
principal operations officer's responsibilities may not include the 
FOCUS Report. Therefore, the Commission is modifying the proposed 
signature requirement so that the instructions to Parts II, IIC, and 
IIA of the FOCUS Report require the signature of only the firm's 
principal executive officer or principal financial officer (or their 
comparable officers), instead of requiring the signature of two 
principal officers.\408\
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    \406\ See SIFMA 5/22/2023 Letter at 9.
    \407\ See, e.g., 15 U.S.C. 78t(e); 15 U.S.C. 78u-3(a).
    \408\ See instructions to Form X-17A-5 Part II, Form X-17A-5 
Part IIC, and Form X-17A-5 Part IIA, as amended.
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2. Electronic Signatures in Rule 17a-5, 17a-12, and 18a-7 Filings
    The Commission proposed to allow signatories on Rule 17a-5, 17a-12, 
and 18a-7 filings to choose between providing either manual or 
electronic signatures.\409\ The Commission proposed that the signing 
process for an electronic signature needs to, at a minimum: ``(1) 
Require the signatory to present a physical, logical, or digital 
credential that authenticates the signatory's individual identity; (2) 
Reasonably provide for non-repudiation of the signature; (3) Provide 
that the signature be attached, affixed, or otherwise logically 
associated with the signature page or document being signed; and (4) 
Include a timestamp to record the date and time of the signature.'' 
\410\ These requirements, which were first identified in the 
Commission's Electronic Signatures Release, are needed so that the 
Commission can verify the authenticity of the electronic signature, but 
are intended to be technologically neutral and allow for different 
types and forms of electronic signatures, provided that the signing 
process satisfies the aforementioned conditions that relate to the 
validity and enforceability of an electronic signature.\411\
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    \409\ See amendments to paragraphs (f)(3)(v)(B), (i)(1)(ii), and 
(p) of Rule 17a-5; paragraphs (g)(2), (j)(1), and new paragraph (q) 
of Rule 17a-12; paragraphs (e)(3)(v)(B), (h)(1)(ii), and (j) of Rule 
18a-7; FOCUS Report Part IIA and instructions; FOCUS Report Part II 
instructions; FOCUS Report Part IIC instructions.
    \410\ See amendment to instructions for FOCUS Report Parts II, 
IIA, and IIC.
    \411\ See Electronic Signatures Release, 85 FR at 78225.
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    Commenters unanimously supported electronic signatures,\412\ and 
for the reasons discussed above, the Commission is adopting these

[[Page 7298]]

amendments as proposed. However, one commenter asked the Commission to 
identify an example that satisfies its electronic signature 
requirements.\413\ An example of an electronic signature using this 
signing process is Adobe Acrobat's digitally signed certificate, when 
the document is locked after signing.\414\ The same commenter asked the 
Commission to confirm that bank SBS Entities can use electronic 
signatures in the FOCUS Report, which the Commission indeed 
confirms.\415\
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    \412\ See, e.g., Integrated Solutions Letter at 3; SIFMA 5/22/
2023 Letter at 9.
    \413\ See SIFMA 5/22/2023 Letter at 9.
    \414\ See Proposing Release at 23962 n. 314.
    \415\ See instructions to FOCUS Report Part IIC, as amended.
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VII. Amendments to Regulation S-T (Including Structured Data 
Requirements) and Rule 24b-2

A. Amendments to Regulation S-T (Including Structured Data 
Requirements)

    The Commission proposed to amend Rule 101(a) of Regulation S-T to 
designate Form X-17A-5 Part III, broker-dealer supplemental reports 
filed pursuant to paragraph (k) of Rule 17a-5, OTC derivatives dealer 
supplemental reports filed pursuant to paragraphs (k), (l), and (m) of 
Rule 17a-12, Form 17-H, Form X-17A-19, notices (and withdrawals of 
notices) filed pursuant to Rule 3a71-3(d)(1)(vi), notices (and 
amendments, including notices of dispute termination) submitted to the 
Commission pursuant to Rule 15fi-3(c), and compliance reports submitted 
with the Commission pursuant to Rule 15fk-1(c)(2)(ii)(A) (``Covered 
EDGAR Documents'') as mandated electronic submissions.\416\ These 
amendments would incorporate the new electronic submission requirements 
into the existing structure of Regulation S-T and would ensure that the 
EDGAR rules in Regulation S-T apply to the forms and other documents 
required to be submitted electronically on EDGAR. The filings would be 
added as mandatory electronic submissions under Regulation S-T; 
however, pursuant to the existing procedures in Rules 201 and 202 of 
Regulation S-T, filers of these filings (except for notices and 
withdrawals of notices filed pursuant to Rule 3a71-3(d)(1)(vi)) could 
request temporary or continuing hardship exemptions if they experience 
unanticipated technical difficulties that prevent the timely submission 
of an electronic filing.\417\ For example, a filer could request 
temporary and continuing hardship exemptions for the inability to 
timely prepare and submit the Interactive Data File (i.e., the 
inability to timely structure the filing or submission in Inline 
XBRL).\418\
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    \416\ The Commission is also adopting a technical update to Rule 
100(c) of Regulation S-T, 17 CFR 232.100(c), to update the name of 
the Division of Trading and Markets from the previously used 
Division of Market Regulation.
    \417\ See 17 CFR 232.201 and 202.
    \418\ See 17 CFR 232.201(c) and 17 CFR 232.202.
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    Most commenters supported filing the annual reports and related 
filings electronically on EDGAR,\419\ although one commenter encouraged 
the Commission to address EDGAR's technical deficiencies, stating that 
``[h]over-over definitions and links to relevant rules should [ ] be 
standard.'' \420\ The Commission has stated that it has ``engaged in a 
multi-year, multi-phase effort to modernize the EDGAR system, including 
both internal and public-facing components. Security and modernization 
enhancements were deployed in June 2020, focusing on technology 
upgrades internal to the system.'' \421\ Thus, individuals can hover 
over each field on an EDGAR form for additional information, and EDGAR 
provides a link to the instructions for the applicable SEC form. Given 
the benefits of electronic filing discussed in the Proposing Release, 
commenters' ample support for electronically filing, and the fact that 
the deficiencies identified by this commenter have already been 
addressed, the Commission adopts as proposed the requirement to file 
these documents electronically on EDGAR.
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    \419\ See, e.g., SIFMA 5/22/2023 Letter at 13.
    \420\ See Sage Letter.
    \421\ See Annual Report on SEC website Modernization Pursuant to 
Section 3(d) of the 21st Century Integrated Digital Experience Act 
(Dec. 2022), available at https://www.sec.gov/files/21st-century-idea-act-report-2022.pdf.
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    The Commission also proposed to amend Rule 101(d) of Regulation S-T 
to require that all documents, including any information with respect 
for which confidential treatment is requested, filed pursuant to 
paragraphs (d) or (k) of Rule 17a-5, paragraphs (b), (k), (l), or (m) 
of Rule 17a-12, Rule 17a-19, Rule 17h-2T, or paragraph (c) of Rule 18a-
7, and all VDNs submitted pursuant to paragraph (c) of Rule 15fi-
3,\422\ be filed or submitted in electronic format. This is intended to 
ensure that electronically submitted filings are incorporated into the 
existing structure of Regulation S-T. The Commission received no 
specific comment on this proposal and for the reason discussed above, 
is adopting it as proposed, but with one additional technical 
modification. As stated above, the Commission is amending Rule 101(a) 
to include Compliance Reports submitted to the Commission pursuant to 
Rule 15fk-1(c)(2)(ii)(A) (``Covered EDGAR Documents'') as mandated 
electronic submissions. The proposing release explained that the EDGAR 
rules in Regulation S-T would apply to the forms and other documents 
proposed to be submitted electronically on EDGAR; the proposed rule 
text, however, did not include a related amendment to Rule 101(d) 
adding the reports submitted pursuant to Rule 15fk-1(c)(2)(ii)(A). 
Consistent with the proposing release's discussion, the Commission is 
making that technical modification to add that language to the rule 
text so that reports submitted pursuant to Rule 15fk-1(c)(2)(ii)(A) are 
included in Rule 101(d).\423\
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    \422\ The Commission is modifying the lead-in sentence of final 
Rule 101(d) of Regulation S-T to reflect that some of the items 
listed in the amended rule are submissions (e.g., VDNs) rather than 
filings. Additionally, the amendments to Rule 101(d) of Regulation 
S-T incorporate changes from the proposal to address revisions to 
Rule 101(d) regarding Form N-PX that became effective on July 1, 
2024. See Securities Act Release No. 11131 (Nov. 2, 2022), 87 FR 
78770, 78787 n. 204 (Dec. 22, 2022).
    \423\ We note that one commenter stated that the Commission must 
have adequate processes in place to ensure that compliance reports 
submitted pursuant to Rule 15fk-1(c)(2)(ii)(A) remain confidential. 
See SIFMA 5/22/2023 Letter at 13. As stated above, these reports are 
non-public, and the amendments do not change existing rules and 
processes with respect to confidential treatment of materials 
submitted to the Commission.
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Structured Data Requirements
    The Commission is also amending Rule 405 of Regulation S-T to 
implement the Inline XBRL requirements.\424\ Rule 405 sets forth the 
Interactive Data File requirements for Commission filings, and 
specifies that Inline XBRL is the structured data language that must be 
used for Interactive Data Files.\425\ The Commission's amendments 
expand Rule 405 of Regulation S-T to add Inline XBRL requirements for 
CCO reports and for portions of Form X-17A-5 Part III

[[Page 7299]]

and related annual filings, Form 17-H, Form 1, and Form CA-1.\426\
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    \424\ The amendments to Rule 405 of Regulation S-T mirror the 
proposed amendments to Rule 405 of Regulation S-T, except for 
changes that have been made to: (i) preserve amended rule text from 
rules that were adopted after the Proposing Release was published; 
and (ii) correct two typographical errors. Specifically, the 
amendments to Rule 405 of Regulation S-T retain references to 
filings made by special purpose acquisition companies, security-
based swap execution facilities, and unit investment trusts. See 
Securities Act Release No. 11265 (Jan. 24, 2024), 89 FR 14158 (Feb. 
26, 2024); Exchange Act Release No. 98845 (Nov. 2, 2023), 88 FR 
87156 (Dec. 15, 2023); Securities Act Release No. 11238 (Sept. 20, 
2023), 88 FR 70436 (Oct. 11, 2023). The final amendments also 
correct the reference in proposed Rule 405(b)(5)(i) from ``Sec.  
249.517 of this chapter'' to ``Sec.  249.617 of this chapter,'' and 
remove an extraneous reference to ``15fk-1'' in proposed Rule 
405(a)(4).
    \425\ See 17 CFR 232.405. See also Proposing Release at 23964 
(discussing the history of XBRL and Inline XBRL requirements for 
Commission filings).
    \426\ See supra sections II, IV.A, and V.D.
    [GRAPHIC] [TIFF OMITTED] TR21JA25.013
    
    For Form CA-1, Schedule A and Exhibits C, F, H, J, K, L, M, O, R, S 
will be filed in Inline XBRL.\427\ For Form 1, Exhibits D, E (in part), 
and I will be filed in Inline XBRL.\428\ For Form X-17A-5 Part III, all 
disclosures except the facing page will be filed in Inline XBRL. For 
Form 17-H, Item 4 (the filer's financial statements) will be filed in 
Inline XBRL. Finally, for CCO reports, all of the required information 
will be submitted in Inline XBRL.\429\
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    \427\ Schedule A to the execution page requires certain 
descriptive responses to complement the clearing agency's execution 
page disclosures. Exhibit C requires a description of the clearing 
agency's organizational structure. Exhibit F requires a description 
of material pending legal proceedings involving the clearing agency. 
Exhibit H requires the clearing agency's financial statements. 
Exhibit J requires a description of the clearing agency's services 
and functions. Exhibit K requires a description of the clearing 
agency's security measures and procedures. Exhibit L requires a 
description of the clearing agency's safeguarding measures and 
procedures. Exhibit M requires a description of the clearing 
agency's backup systems. Exhibit O requires a description of 
criteria governing access to the clearing agency's services and a 
description of the reasons for imposing such criteria. Exhibit R 
requires a schedule of prohibitions and limitations on access to the 
clearing agency's services. Exhibit S requires, if applicable, a 
statement explaining why the clearing agency should be exempt.
    \428\ Exhibit D requires the financial statements of the 
exchange's subsidiaries and affiliates. Exhibit E requires, in 
relevant part, a description of the manner of operation of the 
electronic trading system that the exchange uses to effect 
transactions (however, the structuring requirement would not include 
the copy of the users' manual). Exhibit I requires the exchange's 
financial statements.
    \429\ CCO reports must contain the specific narrative 
descriptions that Exchange Act Rule 15fk-1(c) requires. These 
descriptions must be tagged in Inline XBRL. Additionally, SBS 
Entities that provide the Commission home country reports in 
reliance on a Commission substituted compliance order related to the 
requirements under Section 15F(k) and Rule 15Fk-1 will need to tag 
any portions of the report that contain information corresponding to 
the descriptions required by Rule 15fk-1(c)(2)(i). If a firm relying 
on substituted compliance provides Rule 15fk-1(c) information in a 
report separate from, and in addition to, its home country report, 
it will only have to tag that separate report in Inline XBRL. 
Similarly, firms relying on substituted compliance for filing Form 
X-17A-5 Part III will only need to tag the information that Exchange 
Act Rule 18a-7(c) requires.
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    The Commission is requiring some or all of each Covered SRO Form, 
the information required by Exchange Act Rule 19b-4(e), Form X-17A-19, 
Form X-17A-5 Part III, Form 17-H, and the VDNs to be provided in custom 
XML-based data languages rather than in Inline XBRL.\430\ While the 
majority of EDGAR filings are filed or submitted in HTML or ASCII, 
certain EDGAR filings are filed or submitted using machine-readable, 
XML-based languages each of which is specific to the particular EDGAR 
document type being submitted.\431\ For these custom XML filings in 
EDGAR, filers or submitters are typically provided the option to either 
submit the filing directly to EDGAR in the XML-based data language, or 
manually input their disclosures in an online web application and/or 
web form developed by the Commission that converts the completed form 
into an EDGAR-specific XML document.\432\
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    \430\ The Commission is not adding a structured data requirement 
for the Covered Supplementary Materials or the notices required by 
Exchange Act Rule 3a71-3(d)(1)(vi). See supra sections III and V.B.
    \431\ Unlike the Inline XBRL requirements, the custom XML 
requirements for EDGAR documents are not explicitly set forth in a 
separate rule within Regulation S-T; instead, they are set forth in 
the EDGAR Filer Manual. As such, the amendments that expand 
Regulation S-T to require electronic filing or submission of the 
affected documents in accordance with the EDGAR Filer Manual also 
implement the custom XML requirements. See 17 CFR 232.101(a); 17 CFR 
232.301. See also EDGAR Filer Manual, Volume II, Chapter 8. Current 
and Draft Technical Specifications, available at https://www.sec.gov/edgar/filer-information/current-edgar-technical-specifications.
    \432\ See EDGAR Filer Manual, Volume II, Chapters 8 and 9.
---------------------------------------------------------------------------

    In addition to the custom XML documents that the Commission 
currently requires registrants to file on EDGAR, the Commission 
separately requires broker-dealers to post reports on order routing and 
execution on their own websites (i.e., not on EDGAR) using an XML-based 
language specific to those reports.\433\ In doing so, broker-dealers 
must use the custom XML schema (i.e., data language) and associated PDF 
renderer that the Commission has published on its website. The 
Commission is amending Exchange Act Rule 19b-4(e) to require SROs 
similarly to post the information required under the rule on their own 
websites using the most recent versions of the related custom XML 
schema and the associated PDF renderer that the Commission will publish 
on its website.
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    \433\ See 17 CFR 242.606; 2020 Order Handling Data Schema and 
Report Renderer for Broker-Dealers, available at https://www.sec.gov/structureddata/dera_taxonomies.
---------------------------------------------------------------------------

    Several commenters specifically addressed the proposed structured 
data requirements. One commenter supported the inclusion of structured 
data requirements, stating that processing data is significantly faster 
when the data is structured than when data is unstructured.\434\ 
Another commenter stated that the use of structured data where 
appropriate for forms, reports, and notices provided by broker-dealers 
and SBS Entities, coupled with the required electronic filing or 
submission on EDGAR, would promote greater standardization and 
consistency in reporting and facilitate investor comparison and 
analysis of information across different entities.\435\ By contrast, 
two commenters opposed the inclusion of structured data requirements, 
stating that such requirements would not provide benefits that justify 
the attendant burdens on filers.\436\ These commenters' objections, and 
the Commission's

[[Page 7300]]

responses thereto, are discussed in further detail later in this 
section.
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    \434\ See XBRL Letter at 11.
    \435\ See Wohlfahrt Letter.
    \436\ See SIFMA 5/22/2023 Letter; Integrated Solutions Letter.
---------------------------------------------------------------------------

    Requiring the Structured Documents to be filed or submitted in a 
structured data language will provide the same benefits to data users 
that have been observed from other structured data requirements in 
Commission rules. For example, structured data requirements for the 
aforementioned broker-dealer order routing disclosures have been 
leveraged by financial academics to compare execution quality across 
broker-dealers.\437\ As another example, the Commission has used 
structured order execution disclosures to inform its rulemaking 
efforts.\438\ Structured data language requirements for the Structured 
Documents will similarly make the reported disclosures more readily 
available, accessible, and comparable for investors, other market 
participants, and the Commission, as applicable. In addition, for those 
Structured Documents that will be filed or submitted on EDGAR (i.e., 
all except for the Rule 19b-4(e) postings), the structured data 
requirements enable EDGAR to perform technical validations (i.e., 
programmatic checks to ensure the documents are appropriately 
standardized, formatted, and complete) upon intake of the documents. 
This will improve the quality of the filed or submitted data by 
decreasing the incidence of errors (such as the omission of values from 
fields that should always be populated).
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    \437\ See, e.g., Schwarz, Christopher and Barber, Brad M. and 
Huang, Xing and Jorion, Philippe and Odean, Terrance, The ``Actual 
Retail Price'' of Equity Trades (Sept. 14, 2022), available at 
https://ssrn.com/abstract=4189239 (retrieved from SSRN Elsevier 
database).
    \438\ See Regulation Best Execution, Release No. 96496 (Dec. 15, 
2022), 88 FR 5440, 5477 (Jan. 27, 2023).
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    Structuring each Structured Document will enable functionality that 
would vary based on the type of disclosures included in each document. 
As discussed elsewhere in the release, structured numeric disclosures 
lend themselves to mathematical functionality, such as the 
identification of statistical outliers within a given disclosed metric 
to screen for potential areas of greater scrutiny.\439\ Structured 
textual disclosures, on the other hand, lend themselves to period-over-
period redline comparisons, targeted keyword searching, and more 
sophisticated sentiment analysis.\440\
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    \439\ Structured Documents that contain numeric disclosures 
include Form X-17A-5 Part III, Form 17-H, Form CA-1, Form 1, Rule 
19b-4(e) information (in some cases), VDNs, and CCO reports required 
by Rule 15fk-1(c)(2)(ii)(A) (in some cases). See supra sections 
II.A, II.D, II.E, IV.A, IV.B, V.A, V.B, V.D, and infra section 
X.C.1.b.
    \440\ Structured Documents that contain textual disclosures 
include Form X-17A-5 Part III, Form 17-H, Form CA-1, Form 1, Form 1-
N (execution page only), Form X-17A-19, VDNs, and CCO reports. See 
id.
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    One commenter opposed the structured data requirements on a general 
level and with respect to specific points.\441\ The commenter stated 
that the structured data requirements would impose significant costs on 
market participants without providing a clear benefit.\442\ The 
commenter stated further that the XBRL and custom XML requirements 
would require firms to expend substantial additional resources and 
undergo fundamental operational changes.\443\ The commenter listed 
several specific changes that, in its view, the XBRL and XML 
requirements would require firms to undergo, including the hiring of 
additional personnel that are proficient in XBRL and XML, the 
development of processes for converting the relevant data into XBRL and 
XML and uploading that data to EDGAR, the training of new and existing 
personnel on these processes, and the overhauling of systems and 
operations to integrate the XBRL/XML production and processing.\444\
---------------------------------------------------------------------------

    \441\ See SIFMA 5/22/2023 Letter at 1-7, 9, 11, and 14.
    \442\ See id. at 1.
    \443\ See id. at 4.
    \444\ See id.
---------------------------------------------------------------------------

    As the Commission explains in the discussion of structured data for 
Rules 17a-5, 18a-7, and 17a-12 above and the discussion of structured 
data costs in the Economic Analysis below, the Commission disagrees 
with the commenter that the structured data requirements will require 
firms to undergo all the described changes. Most firms will comply with 
custom XML requirements by completing fillable web forms on EDGAR; 
other firms will have the requisite sophistication to encode 
disclosures using custom XML schemas without the need for substantial 
additional training or hiring of personnel.\445\ For Inline XBRL 
requirements, firms that outsource compliance with the structured data 
requirements to a third-party service provider will not need to hire 
additional personnel proficient in XBRL and XML, develop processes for 
converting data into XBRL and XML and uploading that data to EDGAR, 
train new and existing personnel on such processes, or overhaul systems 
and operations to integrate XBRL or XML production.
---------------------------------------------------------------------------

    \445\ See infra section X.B.1.
---------------------------------------------------------------------------

    The commenter also stated that, in order to submit forms in XBRL, 
firms will generally need to hire third-party training providers, since 
firms often do not have these resources in-house.\446\ The Commission 
disagrees because, as stated above, some firms will outsource XBRL 
compliance altogether, while other firms will use software tools that 
enable staff to apply Inline XBRL tags to regulatory documents. Firms 
that outsource compliance with structured data requirements to a third-
party service provider rather than comply with the structured data 
requirements in-house will not need to hire additional personnel that 
are proficient in XBRL and XML, develop processes for converting the 
relevant data into XBRL and XML and uploading that data to EDGAR, train 
new and existing personnel on these processes, or overhaul systems and 
operations to integrate the XBRL/XML production, because the third-
party service provider would take such actions as necessary.\447\ Firms 
that instead comply with structured data requirements internally will 
not need to hire additional personnel that are proficient in XBRL, 
because these firms can license software tools that allow staff without 
XBRL proficiency to apply Inline XBRL tags to regulatory disclosures 
without any need to overhaul the firm's systems or operations. These 
firms will, however, likely need to implement processes for the use of 
such software tools and train staff on these processes. The Commission 
includes these process implementation and training costs in its 
estimates of initial structured data costs and burdens.\448\ 
Accordingly, firms will not need to hire third-party training providers 
to teach staff how to encode data in XBRL.
---------------------------------------------------------------------------

    \446\ See SIFMA 5/22/2023 Letter at 4.
    \447\ See infra section X.C.2.b.
    \448\ Specific cost ranges for initial structured data 
implementation costs are set forth in section X.C.2.b. See also 
infra sections IX.D.2, IX.D.5, IX.D.9.a, and IX.D.15 (estimating 
higher structured data burdens for the first year of compliance 
compared to subsequent years).
---------------------------------------------------------------------------

    The commenter further stated that many firms will need to purchase 
XBRL rendering and validation software and either purchase Inline XBRL 
tagging software or hire a third-party tagging service provider, and 
that the process of diligencing, negotiating with, and onboarding the 
numerous third-party vendors necessary to implement the structured data 
requirements would be very time-consuming and expensive.\449\ The 
Commission agrees that firms will need to purchase Inline XBRL tagging 
software or hire a third-party tagging

[[Page 7301]]

service provider.\450\ However, because Inline XBRL tagging software 
includes rendering and validation functions, the Commission disagrees 
with the commenter that firms will also need to purchase XBRL rendering 
and validation software. For firms that engage third-party tagging 
service providers, the Commission disagrees with the commenter that 
numerous third-party vendors are necessary for a firm to implement the 
structured data requirements but agrees with the commenter that firms 
which outsource compliance to a third-party service provider will 
undergo initial implementation costs associated with diligencing, 
negotiating with, and onboarding that service provider. The Commission 
has therefore revised the proposed structured data cost and burden 
estimates to add these initial costs for firms that outsource 
structured data compliance to third-party service providers.\451\
---------------------------------------------------------------------------

    \449\ See SIFMA 5/22/2023 Letter at 4.
    \450\ The burden and cost estimates for structured data 
requirements in this release include service provider and software 
licensing costs. See infra sections IX.D.2, IX.D.5, IX.D.9.a, and 
IX.D.15, and X.C.2.b.
    \451\ See infra sections IX.D.9.a and X.C.2.b.
---------------------------------------------------------------------------

    The commenter stated that structured data burdens would be 
especially great for firms that are not affiliates of public reporting 
companies, since these firms do not currently submit EDGAR filings in 
XBRL or XML, and that the XBRL resources the public filers have 
developed for purposes of their 10-K and 10-Q filings are of minimal 
utility for other kinds of reports, such as the CCO report, because 
these reports rely on different systems, personnel, divisions, 
processes, and timelines, and would be subject to different tagging 
taxonomies.\452\ The Commission agrees with the commenter that some 
firms affiliated with public reporting companies will incur lower 
burdens and costs to structure filings in XBRL.\453\ The Commission 
disagrees with the commenter that resources developed for Form 10-K and 
10-Q filings are of minimal utility for other types of reports (such as 
the CCO report), because whether firms comply with the structured data 
requirements by outsourcing compliance to a third-party service 
provider or by licensing Inline XBRL tagging software to use 
internally, the types of content (numeric, narrative, Boolean, etc.) 
included within the CCO report and the other Structured Documents are 
the same as the types of content included within filings that are 
currently tagged in Inline XBRL (such as Form 10-Q and Form 10-K). 
Because the Structured Documents do not include novel types of content, 
the functionality included in existing Inline XBRL services and 
software available on the market will be able to accommodate the Inline 
XBRL tagging of disclosures in the CCO report and the other Structured 
Documents.
---------------------------------------------------------------------------

    \452\ See id.
    \453\ See infra section X.C.2.b.
---------------------------------------------------------------------------

    The commenter also stated that there are mechanisms to achieve the 
Commission's objectives that would be substantially less costly and 
burdensome for firms than those proposed by the Commission, such as 
allowing firms to submit PDFs via email or private file transfer 
service.\454\ The Commission disagrees. To the extent firms are 
manually entering data, inputting values into a fillable form would not 
incur substantially higher costs and burdens compared to inputting the 
same information and submitting the form via other means such as email. 
Additionally, to the extent firms automatically populate PDF forms by 
using their own existing systems, as the commenter suggested it does, 
similar processes can be used to generate filings in a custom XML-based 
data language, which can then be submitted and validated in EDGAR. 
Furthermore, as discussed in further detail in the economic analysis 
below, the structured data requirements under the rule amendments will 
increase the accessibility and usability of the disclosures in the 
Structured Documents in ways that cannot be achieved by PDF documents. 
For example, Structured Documents enable more efficient retrieval, 
sorting, filtering, comparison, aggregation, and other analysis of the 
disclosures, thereby increasing transparency and insight into the 
operations, governance, management, financial condition, and other 
characteristics of the affected entities.\455\
---------------------------------------------------------------------------

    \454\ See SIFMA 5/22/2023 Letter at 2. The commenter also stated 
that the requirement to submit fillable web forms on EDGAR in lieu 
of PDFs would actually undermine the rule amendments' goals by 
introducing inefficiencies and opportunities for human error. See 
id. The Commission's response to this comment regarding fillable web 
forms and human error is included above in Section V.C.2.
    \455\ See infra section X.C.1.b.
---------------------------------------------------------------------------

    The commenter further stated that, in the absence of XBRL 
taxonomies at the proposal phase, neither registrants nor other 
constituencies could have provided the Commission with robust feedback 
on the rule amendments, so the Commission should submit proposed XBRL 
tagging taxonomies and XML fillable web forms to notice and comment so 
the public can identify potential costs, benefits, and ambiguities with 
these proposals. The commenter stated that a key consideration in 
determining the cost of preparing reports in XBRL is the number of 
required tags, which depends on the granularity of the taxonomy (which 
can, in some cases, have 15,000 to 20,000 tags), but the rule 
amendments do not specify a taxonomy or number of tags.\456\
---------------------------------------------------------------------------

    \456\ See SIFMA 5/22/2023 Letter at 2-3, 5. The commenter made a 
similar comment stating that the rule amendments do not identify 
specific elements to be included on the VDNs. See SIFMA 5/22/2023 
Letter at 2. Earlier in this release we addressed the need to 
identify the specific elements for inclusion on the VDNs, see supra 
section V.C.2., but this section's discussion of taxonomies and the 
public feedback process is also relevant to that comment on VDNs.
---------------------------------------------------------------------------

    The Commission disagrees. XBRL taxonomies and XML schemas are not 
rule requirements and do not themselves impose a substantive obligation 
on affected filers or submitters; rather, taxonomies and schemas 
provide a hierarchical list of elements that affected filers or 
submitters will use when complying with the structured data 
requirements.\457\ The legal obligations to structure certain affected 
documents are contained within the Exchange Act rules, the Exchange Act 
forms, and within Regulation S-T (including through cross-references to 
the EDGAR Filer Manual), and were all set forth in the Proposing 
Release.\458\ The number of tags in a taxonomy or schema is driven by 
the nature and granularity of the legal disclosure requirements, since 
each tag in a taxonomy or schema is derived from a particular 
disclosure requirement. The extent of compliance costs arising from 
Inline XBRL requirements or custom XML requirements derives from the 
legal disclosure requirements themselves, not the data model of the 
taxonomy to be used for structuring those disclosures.\459\
---------------------------------------------------------------------------

    \457\ See Commission, ``XBRL Glossary of Terms,'' available at 
https://www.sec.gov/page/osd_xbrlglossary (last visited May 27, 
2024).
    \458\ See Proposing Release at 24006-24008, 24011-24015, 24022, 
24043, and 24054.
    \459\ See infra section X.C.2.b (discussing the costs associated 
with structured data obligations under the rule amendments).
---------------------------------------------------------------------------

    Accordingly, we think it appropriate for these draft taxonomies and 
schemas to be posted after adoption of the final rule rather than at an 
earlier point in time.\460\ However, there is an

[[Page 7302]]

opportunity for public feedback on the XBRL taxonomies and XML schemas. 
In keeping with past practice, Commission staff will post draft 
versions of the XBRL taxonomies and XML schemas (from which fillable 
web forms on EDGAR are derived) associated with the rulemaking for 
technical feedback from the public following adoption of the rule 
amendments.\461\ This practice allows registrants and other interested 
parties to provide the Commission staff with feedback on the technical 
design of those taxonomies and schemas in advance of the compliance 
date for structured data requirements.
---------------------------------------------------------------------------

    \460\ Although staff will develop taxonomies specific to the 
required disclosures under the adopted rule, XBRL also uses and 
implements existing accounting and reporting standards such as U.S. 
GAAP. Accordingly, certain tagging elements specific to financial 
statements prepared in accordance with U.S. GAAP are available for 
review. See Fin. Acct. Stds. Bd., XBRL: What Is it? Why the FASB? 
Who Uses It?, available at https://www.fasb.org/page/PageContent?pageId=/staticpages/what-is-xbrl.html&isstaticpage=true; 
see also SEC, ``2024 XBRL Taxonomies Update,'' available at https://www.sec.gov/newsroom/whats-new/2403-2024-xbrl-taxonomies-update 
(last visited Aug. 14, 2024) (stating that U.S. GAAP Financial 
Reporting taxonomy and the 2024 SEC Reporting Taxonomy reflect the 
same taxonomy versions that the Financial Accounting Standards Board 
made available on its website on December 14, 2023).
    \461\ Currently posted draft taxonomies and XML schemas are 
available on the Commission's website. See Commission, ``DERA 
Taxonomies,'' available at https://www.sec.gov/structured-data/dera-taxonomies (last visited May 27, 2024); Commission, ``EDGAR 
Technical Specifications'', available at https://www.sec.gov/edgar/filer/technical-specifications (last visited May 27, 2024).
---------------------------------------------------------------------------

    The commenter also stated that instead of mandating that firms use 
specific structured data languages for particular reports, the 
Commission should adopt a principles-based approach that requires firms 
to submit reports in a machine-readable form.\462\ The commenter stated 
that, given the pace of technological change, it is quite likely that a 
prescriptive requirement to use a particular structured data language 
will become obsolete or impractical within a short period of time.\463\ 
According to the commenter, experience demonstrates that such 
obsolescence can create significant challenges for market participants 
as well as undue costs and confusion.\464\
---------------------------------------------------------------------------

    \462\ See SIFMA 5/22/2023 Letter at 3.
    \463\ See id. at 6.
    \464\ See id.
---------------------------------------------------------------------------

    The Commission disagrees with the commenter. Specifying a single 
structured data language for all filers or submitters to use for a 
particular disclosure requirement is beneficial because it will assist 
with efficient, interoperable analysis of those disclosures across 
different filers or submitters. By contrast, an open-ended data 
language requirement would have allowed different filers or submitters 
of the same disclosure to provide that disclosure in different 
structured data languages. This would render data users such as 
Commission staff and market participants unable to incorporate 
disclosures from filers or submitters using one data language into the 
same datasets and applications as disclosures of other filers or 
submitters using different data languages without undertaking data 
conversion processes that can be burdensome and imprecise. XBRL and XML 
are industry standards that are maintained by standard-setting bodies 
(XBRL International and the World Wide Web Consortium, respectively) 
and have been in use for decades. The Commission believes the current 
benefits of efficient and interoperable analysis of XBRL and XML 
structured data by the Commission and market participants justify the 
use of these standards over a principles-based approach that, although 
it could accommodate unknown future developments, would make it more 
difficult for Commission staff and market participants to compare 
disclosures across differing data languages.\465\
---------------------------------------------------------------------------

    \465\ See W3 Schools, Introduction to XML, available at https://www.w3schools.com/XML/xml_whatis.asp (last accessed Apr. 18, 2024); 
XBRL International, XBRL Essentials, available at https://specifications.xbrl.org/xbrl-essentials.html (last accessed Apr. 18, 
2024).
---------------------------------------------------------------------------

    The commenter specifically questioned the Commission's 
characterization of benefits for narrative-based reports (e.g., the CCO 
report).\466\ The commenter stated that adding Inline XBRL requirements 
for those reports would not facilitate analysis or comparison, because 
those reports do not contain standardized, easily comparable elements. 
However, all narrative reports must include disclosure responsive to 
applicable disclosure requirements set forth in the Commission's rules 
and regulations (e.g., the disclosure requirements set forth in the 
subparagraphs of Rule 15fk-1(c)(2)(i) under the Exchange Act). While 
there may be variation in how different filers or submitters of those 
reports respond to those disclosure requirements, Inline XBRL 
structuring will facilitate efficient assessment of such variations and 
will also enable efficient comparisons of a single filer or submitter's 
narrative disclosure over multiple time periods, allowing data users to 
determine how that filer's or submitter's narrative disclosure has 
evolved over time. For example, Commission staff will be able to 
efficiently retrieve all disclosures identifying material non-
compliance matters in response to Exchange Act Rule 15fk-1(c)(2)(i)(D) 
across CCO reports and compare how different CCO report submitters 
identified and explained such matters. An analysis like this is useful 
and appropriate in the Commission's fulfillment of its mission, because 
the Commission can more effectively oversee firms' compliance with the 
mandate in section 15F of the Exchange Act to conform with business 
conduct standards relating to diligent supervision of the business of 
each registered security-based swap dealer and major security-based 
swap participant.\467\
---------------------------------------------------------------------------

    \466\ See SIFMA 5/22/2023 Letter at 7.
    \467\ See Section 15F(h)(1)(B) of the Exchange Act.
---------------------------------------------------------------------------

    The same commenter also questioned why the Commission cited 
sentiment analysis as a benefit of Inline XBRL requirements.\468\ 
According to the commenter, sentiment analysis is typically used for 
marketing purposes, and thus it was not clear to the commenter why such 
analysis would be necessary or beneficial for narrative reports. 
However, sentiment analysis is often used for purposes beyond 
marketing, including in assessment of regulatory disclosures such as 
disclosures in Commission filings, in order to assess the usefulness of 
disclosures to end users in the market. Thus, sentiment analysis is 
relevant to our assessment of the benefit of requiring narrative 
reports to be structured under the rule amendments.\469\
---------------------------------------------------------------------------

    \468\ See id.
    \469\ See infra section X.C.1.b (discussing the use of sentiment 
analysis to assess disclosures in Commission filings).
---------------------------------------------------------------------------

    Another commenter specifically disagreed with the Commission's view 
that structuring broker-dealer reports in XBRL would provide benefits 
that justify compliance burdens.\470\ This commenter stated that, 
because regulators receive periodic FOCUS reports that are encoded as 
they have been for decades, regulators do not need encoded (i.e., 
machine-readable) broker-dealer financial statements.\471\ The 
Commission disagrees with the commenter's point, because the amended 
rules include Inline XBRL requirements for the annual broker-dealer 
audited reports (Form X-17A-5 Part III), and those reports include more 
disclosure--such as the notes to the financial statements and the 
exemption reports--than the periodic FOCUS reports do.\472\ Because 
regulators will be able to analyze this additional information much 
more efficiently when provided in a structured, machine-readable format 
rather than in

[[Page 7303]]

paper or in PDF format, regulators--and ultimately the markets--will 
derive a significant benefit from the Inline XBRL requirement for Form 
X-17A-5 Part III.
---------------------------------------------------------------------------

    \470\ See Integrated Solutions Letter at 2-3.
    \471\ See id. at 4.
    \472\ See supra section IV.A. See also infra section X.C.1.b for 
additional discussion of the anticipated benefits arising from the 
structured data requirements.
---------------------------------------------------------------------------

    The same commenter also stated that customers of broker-dealers do 
not read Form X-17A-5 Part III, and investors in broker-dealers do not 
need Form X-17A-5 Part III.\473\ The Commission disagrees with this 
statement--there are multiple examples of public market participants 
using Form X-17A-5 Part III information to the benefit of broker-dealer 
investors and customers.\474\
---------------------------------------------------------------------------

    \473\ See Integrated Solutions Letter at 4.
    \474\ See, e.g., Alphacution, ``Goldman, Morgan, Deutsche: 
Comparing Bank-Owned Broker-Dealers in Equities'' (Aug. 30, 2019) 
(retrieved from Factiva database) (using Form X-17A-5 Part III 
disclosure to assess the condition of several large bank-owned 
broker-dealer subsidiaries); Arun Gupta, ``The Internal Capital 
Markets of Global Dealer Banks,'' Finance and Economics Discussion 
Series 2021-036, Washington: Board of Governors of the Federal 
Reserve System (Apr. 25, 2021), https://www.federalreserve.gov/econres/feds/the-internal-capital-markets-of-global-dealer-banks.htm 
(Federal Reserve Board staff research paper using balance sheet data 
from Form X-17A-5 Part III to examine the internal capital markets 
that played a central role in the financing of dealer banks during 
the 2008 Global Financial Crisis).
---------------------------------------------------------------------------

    Finally, the commenter suggested that, should the Commission 
nonetheless include a structuring requirement for Form X-17A-5 Part III 
under the rule amendments, the filing period for annual financial 
statement filers be extended by fifteen days to allow for XBRL encoding 
to be accomplished. In light of the estimated hourly burdens for 
broker-dealers subject to Inline XBRL tagging requirements, the 
Commission believes broker-dealers will be able to meet the existing 
filing period for Form X-17A-5 Part III.\475\ Nonetheless, if broker-
dealers encounter unanticipated technical difficulties, they can extend 
the deadline by up to six days with a temporary hardship exception 
under Rule 232.201 and if they experience undue burdens or expenses, 
can request a continuing hardship exemption under Rule 232.202.\476\
---------------------------------------------------------------------------

    \475\ In the Economic Analysis and Paperwork Reduction Act 
sections of this release, the Commission describes and quantifies 
the specific costs and burdens that broker-dealers will incur in 
complying with Inline XBRL requirements for Form X-17A-5 Part III 
under the amended rules. On average, respondents are estimated to 
incur 7 burden hours for the first response to be tagged in Inline 
XBRL, and incur 4.5 burden hours to tag subsequent responses in 
Inline XBRL. See infra sections IX.D.9.a and X.C.2.b.
    \476\ 17 CFR 232.201(c), 232.202. A continuing hardship 
exception is not deemed granted until the applicant is notified by 
the Commission or the staff. Id.
---------------------------------------------------------------------------

    The same commenter stated that the proposal's lack of clarity 
around the structured data requirements and XBRL taxonomies created 
difficulty in determining compliance costs. The Commission disagrees 
that the proposal, which specified exactly which portions of each 
affected document would be structured in which data language, lacked 
clarity around the structured data requirements.\477\
---------------------------------------------------------------------------

    \477\ See Proposing Release at 23964-66. Furthermore, XBRL 
taxonomies themselves do not impose substantive obligations on 
filers; instead, an XBRL taxonomy is a technical glossary of tags 
that can be used when tagging an Inline XBRL document, including 
those prepared in accordance with Commission regulations. Section 
X.C.2.b below discusses the compliance costs with respect to the 
structured data requirements.
---------------------------------------------------------------------------

    Notwithstanding the above, the Commission agrees with the commenter 
that making draft versions of appropriate XBRL taxonomies available for 
technical feedback from the public is a beneficial step in ensuring the 
taxonomies will be as useful as possible.\478\ In keeping with past 
practice, a draft version of each taxonomy and schema necessary to 
implement the structuring requirements for the Structured Documents 
will be made available for public feedback, and final versions of each 
taxonomy and schema (which will take into account any feedback 
received) will be compatible with an updated version of EDGAR before 
each related structuring compliance date.\479\
---------------------------------------------------------------------------

    \478\ See SIFMA 5/22/2023 Letter at 14.
    \479\ See Securities and Exchange Commission, Taxonomies, 
available at https://www.sec.gov/structureddata/dera_taxonomies">https://www.sec.gov/structureddata/dera_taxonomies 
(last accessed Apr. 19, 2024) (including a section with draft 
taxonomies); Securities and Exchange Commission, EDGAR Technical 
Specifications, available at https://www.sec.gov/edgar/filer/technical-specifications (last accessed Apr. 19, 2024) (including a 
section with draft XML technical specifications).
---------------------------------------------------------------------------

    The Commission is requiring Inline XBRL for certain affected 
documents and portions or portions thereof, rather than requiring 
Inline XBRL for all affected documents, because Inline XBRL is more 
suitable for certain types of content than other types. Specifically, 
Inline XBRL is most suitable for financial statement disclosures 
(including footnotes and schedules thereto), for narrative disclosures 
(other than brief descriptions), and for disclosures of numeric details 
nested within narrative disclosures. From a technical standpoint, 
Inline XBRL was designed to accommodate financial statement 
information, including the particular metadata (e.g., the relevant 
fiscal period, whether the line item is located on the balance sheet, 
whether the line item is a credit or debit) that must be linked to each 
data point within the financial statements to fully convey its semantic 
meaning to a machine reader. Inline XBRL is also well suited from a 
technical standpoint of accommodating lengthier narrative disclosures, 
including those with numeric values nested within narrative 
disclosures, while providing presentation capabilities that preserve 
human-readability and maintain machine-readability. For other types of 
disclosures, requiring custom XML data languages would be more suitable 
due to the smaller file sizes of custom XML documents and the 
availability of fillable web forms on EDGAR that permit filers or 
submitters to input their disclosures into the form rather than 
structure the disclosures in custom XML.\480\
---------------------------------------------------------------------------

    \480\ See also infra section X.E.4 (discussing other structured 
data languages that would result in smaller file sizes than Inline 
XBRL).
---------------------------------------------------------------------------

    One commenter disagreed with the Commission's use of a mix of 
Inline XBRL and custom XML requirements under the rule amendments, and 
instead stated that the Commission should use XBRL requirements rather 
than custom XML requirements because the former greater provides 
significantly greater benefit than the latter.\481\ According to the 
commenter, a fillable web form that automatically generates XBRL files 
can be created just as easily as one that creates a custom XML 
file.\482\ While the Commission agrees that this is technically 
feasible, the EDGAR system is (with limited exception) currently built 
to provide fillable web forms for custom XML filings, not for XBRL 
filings, and changing the system would incur costs and burdens that 
would not justify the related benefit.
---------------------------------------------------------------------------

    \481\ See XBRL Letter at 2.
    \482\ See id. at 2.
---------------------------------------------------------------------------

    For those affected documents where filers are required to attach 
copies of existing materials (such as copies of constitutions, bylaws, 
written agreements, applications, and other documents) rather than 
disclosures provided pursuant to the Commission's disclosure 
requirements, the Commission is requiring filers to upload those copies 
as unstructured PDF documents. Requiring filers to retroactively 
structure these existing documents, which were prepared for purposes 
outside of fulfilling the Commission's disclosure requirements, would 
impose costly compliance burdens on filers without commensurate 
informational benefit associated with more efficient disclosure use. 
Thus, structured data requirements are not warranted for these copies 
of existing documents.
    Because the very limited number of Form 1-N and Form 15A filers and 
filings mitigates the benefit derived

[[Page 7304]]

from machine-readability of the disclosures contained therein, 
structured data are not required for Forms 1-N and 15A (other than the 
execution pages of those Forms). Similarly, structured data for ANE 
Exception Notices are not required, because the limited number of data 
points on such notices lessens the utility of any functionality enabled 
by structured data (such as efficient retrieval of individual data 
points from structured documents).

B. Amendments to Rule 24b-2

    Rule 24b-2 provides procedures that are the exclusive means for 
requesting confidential treatment of information required to be filed 
under the Exchange Act and that allow the Commission to decide whether 
information will be disseminated to the public upon the filing of the 
information.\483\ Paragraph (b) of Rule 24b-2 provides that, except as 
provided in paragraphs (g) and (h) of the Rule, a person seeking 
confidential treatment shall omit from materials filed with the 
Commission the confidential portion.\484\ Paragraphs (g) and (h) state 
that certain entities, as specified in those paragraphs, shall not omit 
the confidential portion from the materials such entities file with the 
Commission. The Commission proposed to add a new paragraph (j) to Rule 
24b-2 to render it consistent with Rules 17a-5, 17a-12, and 18a-7, 
which require firms to file the portion of the annual audit subject to 
a confidential treatment request to be filed with the public portion. 
The new paragraph is subdivided into two parts. The first sub-paragraph 
provides that a broker-dealer shall not omit the confidential portion 
from the materials filed in electronic format pursuant to paragraphs 
(d) and (k) of Rule 17a-5, Rule 17a-12, or Rule 17h-2T. The second sub-
paragraph states that an SBS Entity shall not omit the confidential 
portion of materials filed in electronic format pursuant to Rule 18a-7. 
The Commission received no comment on this proposal and for the reason 
discussed above, is adopting it as proposed.
---------------------------------------------------------------------------

    \483\ 17 CFR 240.24b-2(a). However, with regard to Rule 15fi-
3(c) security-based swap valuation dispute notices, see supra note 
334 and accompanying text.
    \484\ 17 CFR 240.24b-2(b).
---------------------------------------------------------------------------

    The Commission also proposed to add a new paragraph (k) to Rule 
24b-2. The new paragraph provides that an entity shall not omit the 
confidential portion from the material filed in electronic format on 
Form CA-1 pursuant to Rule 17ab2-1, but rather may request confidential 
treatment of information provided on Form CA-1 by completing section X 
of Form CA-1. The Commission received no comment on this proposal and 
is adopting it as proposed because requesting confidential treatment is 
an appropriate method of providing complete information to regulators 
without disclosing confidential information to the public.

VIII. Compliance Dates

    The Commission received comments regarding the compliance dates of 
the final rules and rule amendments.\485\ One commenter stated that the 
Commission should only require compliance once the Commission has 
implemented and tested the necessary infrastructure for electronic 
submission and should stage any requirements.\486\ The commenter also 
stated that the Commission should not require firms to comply until no 
less than two years after the Commission makes the necessary updates to 
EDGAR and finalizes any taxonomies.\487\
---------------------------------------------------------------------------

    \485\ With respect to the compliance date, commenters requested 
that the Commission consider interactions between the proposed rule 
and other recent Commission rules. See infra note 862. In 
determining compliance dates, the Commission considers the benefits 
of the rules as well as the costs of delayed compliance dates, and 
potential overlapping compliance dates. For the reasons discussed 
throughout the release, to the extent that there are costs from 
overlapping compliance dates, the benefits of the rule justify the 
costs. See infra sections X.B.1. and X.C.2.c in the Economic 
Analysis for a discussion of the interaction of the final rule with 
certain other Commission rules.
    \486\ SIFMA 5/22/2023 Letter at 3.
    \487\ SIFMA 5/22/2023 Letter at 14.
---------------------------------------------------------------------------

    The Commission regularly considers the implementation and 
effectiveness of regulatory filing requirements. As discussed above, 
the structured data requirements will improve the accessibility and 
usability of disclosures by market participants. Consistent with its 
mission to protect investors, maintain fair, orderly, and efficient 
markets, and facilitate capital formation, the Commission plans to 
monitor the implementation of these requirements. Specifically, with 
regard to the amendments adopted herein, by March 31, 2028, Commission 
staff will complete a review of the implementation of structured data 
requirements by those firms required to apply machine-readable Inline 
XBRL data ``tags'' to their annual reports and annual supplemental 
reports due on or after June 30, 2026, and the Commission use of the 
data. Finally, the Commission is adopting phased compliance dates for 
the rule amendments. This staging is intended to provide sufficient 
time for testing, consistent with the commenter's concern. In addition, 
the phased compliance dates will give regulated entities time to 
incorporate changes to their policies, procedures, systems, and 
practices made for individual new requirements.
    All firms filing annual reports or supplemental reports under Rules 
17a-5, 18a-7, and 17a-12, or quarterly and annual risk assessment 
reports on Form 17-H pursuant to Rule 17h-2T, on or after June 30, 
2025, are required to file such reports on EDGAR (in a PDF format). The 
Commission has prepared EDGAR to receive broker-dealer annual reports 
electronically, and Commission staff issued a no-action letter not 
objecting to broker-dealers voluntarily filing their annual reports 
electronically on EDGAR in accordance with instructions posted on the 
Commission's website instead of filing them in paper form. 
Approximately half of broker-dealers have filed the reports 
electronically consistent with the staff no-action letter.\488\ In 
practical terms, with respect to annual reports or supplemental reports 
filed on or after December June 30, 2025, the filing method outlined in 
the staff no-action letter will be used by all firms filing such 
reports under Rules 17a-5, 18a-7, and 17a-12.
---------------------------------------------------------------------------

    \488\ See Proposing Release at 23947; see also id. at 23947 
n.179.
---------------------------------------------------------------------------

    With respect to the requirement that these annual reports and 
supplemental reports under Rules 17a-5, 18a-7, and 17a-12 be provided 
in a structured, machine-readable data language, the Commission is 
adopting phased compliance dates. First, firms with a minimum fixed 
dollar net capital requirement greater than or equal to $250,000 as of 
December 31, 2024, will be required to apply machine-readable Inline 
XBRL data ``tags'' to their annual reports and annual supplemental 
reports due on or after June 30, 2026. Firms with a minimum fixed 
dollar net capital requirement less than $250,000 as of December 31, 
2024 will be required to apply machine-readable Inline XBRL data 
``tags'' to their annual reports and annual supplemental reports due on 
or after June 30, 2028. Rule 17h-2T's requirement that the quarterly 
and annual risk assessment reports be filed with the Commission using 
Inline XBRL will apply to filings due on or after March 31, 2026. These 
compliance timeframes will provide registrants with adequate time to 
prepare, consistent with the commenter's concern.
    The phased-in approach will help ensure that market participants 
receive machine readable annual reports and supplemental reports from 
the largest firms as soon as practicable, while

[[Page 7305]]

giving other, smaller filers, that may need to incur proportionately 
higher costs, additional time to develop related expertise, as well as 
the opportunity to benefit from the experience of larger filers with 
Inline XBRL. The phase-in will also provide software vendors and 
service providers with additional time to develop related expertise and 
scale up their businesses.\489\
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    \489\ See infra section X.C.2.b.
---------------------------------------------------------------------------

    The Commission is amending Rule 17a-19 and Form X-17A-19 to require 
that Form X-17A-19 filings be made on EDGAR, in a custom XML-based data 
language. This requirement applies to Form X-17A-19 filings due on or 
after December 31, 2026. As of February 15, 2024, there are a total of 
25 national securities exchanges and associations, none of which files 
Form X-17A-19 electronically on EDGAR. This December 31, 2026 
compliance date should provide national securities exchanges and 
associations time to prepare to comply with the electronic filing 
requirement.
    The compliance date for the amendments to FOCUS Report Parts II, 
IIA, and IIC is March 1, 2026, to allow broker-dealers and SBS Entities 
opportunity to become familiar with the changes and make any necessary 
updates to their policies, procedures, systems, and practices. In 
addition, it allows FINRA to develop and test these updates to its 
eFOCUS system.
    OTC derivatives dealers are required to file FOCUS Report Part II 
due on or after June 30, 2025, electronically on the SEC eFOCUS system. 
SBS Entities that are not dually registered as broker-dealers are 
already filing FOCUS Report Part II on the SEC eFOCUS system. Although 
OTC derivatives dealers will need to obtain access to the SEC eFOCUS 
system, OTC derivatives dealers are affiliated with broker-dealers that 
are already familiar with the FINRA eFOCUS system used by broker-
dealers to file their FOCUS Reports. Given the close similarity between 
the SEC eFOCUS system and the FINRA eFOCUS system, the Commission does 
not expect OTC derivatives dealers would need additional time to 
prepare for making these submissions in the SEC eFOCUS system.
    SROs will be required to begin posting the information required 
under Rule 19b-4(e) on their public internet websites on September 1, 
2025, but may begin posting that information earlier once the XML 
schema and the associated PDF renderer are published on the 
Commission's website. This early compliance approach is relevant to 
Rule 19b-4(e) information under the rule amendments because such 
information is required to be posted on SRO websites, rather than 
through EDGAR, so SROs will not need to wait to comply with the amended 
Rule 19b-4(e) requirement. If an SRO begins posting information 
required under Rule 19b-4(e) on its website earlier than September 1, 
2025, it generally should continue to do so for all new derivative 
securities products under Rule 19b-4(e) and generally should cease 
filing any Forms 19b-4(e) with the Commission. SROs will be required to 
file other forms electronically. Accordingly, the compliance date for 
the amendments related to Form 1 is March 2, 2026, the compliance date 
for the amendments related to Form CA-1 is April 30, 2026, and the 
compliance date for the amendments related to Forms 1-N and 15A is July 
1, 2026. Each of these compliance dates will allow filers the 
opportunity to become familiar with the changes to the forms and make 
any necessary updates to their policies, procedures, systems, and 
practices.
    The compliance date for the amendments to Rule 15fi-3(c) with 
respect to the submission of VDNs is January 1, 2026. The deferred 
compliance date is intended to enable SBS Entities to incorporate 
changes to their policies, procedures, systems, and practices prior to 
the applicability of the new requirements to file VDNs on EDGAR and in 
structured data. Between the effective date of the amendments and 
January 1, 2026, SBS Entities generally should continue to submit VDNs 
using the two methods made available to them prior to the effective 
date of the amended rule: (1) electronic submission in PDF format via 
EDGAR; or (2) submission in PDF format to a dedicated Commission email 
address.
    The compliance date for the amendments to Rule 3a71-3(d)(1)(vi) is 
January 1, 2026. Accordingly, an entity seeking to file an ANE 
Exception Notice on or after January 1, 2026, will be required to do so 
via EDGAR. Similarly, an entity required to withdraw an ANE Exception 
Notice under the amended rule will not be required to do so until 
January 1, 2026. Between the effective date of the amended rule and 
January 1, 2026, entities seeking to file an ANE Exception Notice 
should submit it to the electronic mailbox described on the 
Commission's website at www.sec.gov at the ``ANE Exception Notices'' 
section.\490\ The deferred compliance date is intended to enable 
entities to incorporate changes to their policies, procedures, systems, 
and practices prior to the applicability of the new requirements. SBS 
Entities will be required to submit CCO reports as required by Rule 
15fk-1(c) through EDGAR in Inline XBRL format beginning on January 1, 
2026. The deferred compliance date is intended to enable SBS Entities 
to incorporate changes to their policies, procedures, systems, and 
practices prior to the applicability of the new requirements to submit 
CCO reports on EDGAR and in Inline XBRL format. Between the effective 
date of the amendments and January 1, 2026, SBS Entities should 
continue to submit CCO reports using the methods currently available to 
them: (1) electronic submission on EDGAR in PDF format; (2) submission 
to a dedicated Commission email address; or (3) mail.
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    \490\ See www.sec.gov/tm/ane-exception-notices.
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    The compliance date for all other amended rules will be the 
effective date of this release. It is feasible for the regulated 
entities subject to these amended rules to be able to comply by the 
required compliance date without imposing unreasonable cost burdens.
    The following chart sets forth the compliance dates for the rule 
amendments:
BILLING CODE 8011-P

[[Page 7306]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.014


[[Page 7307]]


[GRAPHIC] [TIFF OMITTED] TR21JA25.015

BILLING CODE 8011-C

IX. Paperwork Reduction Act

    Certain provisions of the rules and rule amendments contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995 (``PRA'').\491\ The titles of these 
requirements are:
---------------------------------------------------------------------------

    \491\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

     Form ID (OMB Control No. 3235-0328); \492\
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    \492\ See 17 CFR 249.446.
---------------------------------------------------------------------------

     Rules 6a-1 and 6a-2, Form 1 (OMB Control No. 3235-0017); 
\493\
---------------------------------------------------------------------------

    \493\ See 17 CFR 249.1; 17 CFR 240.6a-1; 17 CFR 240.6a-2.
---------------------------------------------------------------------------

     Rule 6a-3 (OMB Control No. 3235-0021); \494\
---------------------------------------------------------------------------

    \494\ See 17 CFR 240.6a-3.
---------------------------------------------------------------------------

     Rule 6a-4, Form 1-N (OMB Control No. 3235-0554); \495\
---------------------------------------------------------------------------

    \495\ See 17 CFR 249.10, 17 CFR 240.6a-4; 17 CFR 249.10.
---------------------------------------------------------------------------

     Rules 15aa-1 and 15aa-2, Form 15A (OMB Control No. 3235-
0030); \496\
---------------------------------------------------------------------------

    \496\ See 17 CFR 240.15aa-1; 17 CFR 240.15aa-2. Form 15A, as 
adopted, would apply only to one SRO out of a total of 44 SROs. 
Although this form is expected to impact fewer than 10 entities, the 
Commission is including this PRA analysis. The Commission is 
revising and reinstating collections of information that were 
previously approved under Control Nos. 3235-0030 and 3235-0044. 
Because the Commission is consolidating the collections in amended 
and re-designated forms, all collections would be under Control No. 
3235-0030 and Control Number 3235-0044 would remain inactive. In 
addition, because of the length of time since these control numbers 
were last active, the Commission is providing completely new burden 
estimates.
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     Rule 17ab2-1, Form CA-1 (OMB Control No. 3235-0195); \497\
---------------------------------------------------------------------------

    \497\ See 17 CFR 240.17ab2-1; 17 CFR 249b.200.
---------------------------------------------------------------------------

     Rule 19b-4(e), Form 19b-4(e) (OMB Control No. 3235-0504); 
\498\
---------------------------------------------------------------------------

    \498\ See 17 CFR 240.19b-4(e); 17 CFR 249.820.
---------------------------------------------------------------------------

     Rule 19b-4, Form 19b-4 (OMB Control No. 3235-0045); \499\
---------------------------------------------------------------------------

    \499\ See 17 CFR 249.819; 17 CFR 240.19b-4.
---------------------------------------------------------------------------

     Rule 17a-22 (OMB Control No. 3235-0196); \500\
---------------------------------------------------------------------------

    \500\ See 17 CFR 240.17a-22.
---------------------------------------------------------------------------

     Rule 3a71-3(d) (OMB Control No. 3235-0771); \501\
---------------------------------------------------------------------------

    \501\ See 17 CFR 240.3a71-3(d).
---------------------------------------------------------------------------

     Rules 15fi-3 to 15Fi-5 (OMB Control No. 3235-0777); \502\
---------------------------------------------------------------------------

    \502\ See 17 CFR 240.15fi-3, 17 CFR 240.15Fi-4 (``Rule 15Fi-
4''), and 17 CFR 240.15Fi-5 (``Rule 15Fi-5''). The Commission is 
only modifying Rule 15fi-3, which relates to the requirement that 
SBS Entities reconcile outstanding security-based swaps with 
applicable counterparties on a periodic basis. Rule 15fi-3 is 
included in the same collection of information as Rule 15Fi-4, which 
requires SBS Entities to engage in certain forms of portfolio 
compression exercises with their counterparties, as appropriate, and 
Rule 15Fi-5, which requires SBS Entities to execute written 
security-based swap trading relationship documentation with its 
counterparties, and to periodically audit the policies and 
procedures governing such documentation. The Commission is not 
changing Rules 15Fi-4 and 15Fi-5 pursuant to this rulemaking. 
Accordingly, those two rules are not included in the sections that 
follow.
---------------------------------------------------------------------------

     Rule 15fk-1(c)(2)(ii)(A) (OMB Control No. 3235-0732); 
\503\
---------------------------------------------------------------------------

    \503\ See 17 CFR 240.15fk-1(c)(2)(ii)(A).
---------------------------------------------------------------------------

     Rule 17a-5 (OMB Control No. 3235-0123); \504\
---------------------------------------------------------------------------

    \504\ See 17 CFR 240.17a-5.
---------------------------------------------------------------------------

     Rule 17a-12 (OMB Control No. 3235-0498); \505\
---------------------------------------------------------------------------

    \505\ See 17 CFR 240.17a-12.
---------------------------------------------------------------------------

     Rule 17a-19 and Form X-17A-19 (OMB Control No. 3235-0133); 
\506\
---------------------------------------------------------------------------

    \506\ See 17 CFR 240.17a-19; 17 CFR 249.635.
---------------------------------------------------------------------------

     Rule 17h-2T (OMB Control No. 3235-0410); \507\ and
---------------------------------------------------------------------------

    \507\ See 17 CFR 240.17h-2T.
---------------------------------------------------------------------------

     Rule 18a-7 (OMB Control No. 3235-0749).\508\
---------------------------------------------------------------------------

    \508\ See 17 CFR 240.18a-7.
---------------------------------------------------------------------------

    The Commission is submitting these requirements to the Office of 
Management and Budget (``OMB'') for review and approval in accordance 
with the PRA and its implementing regulations.\509\ Responses to the 
new collections of information are mandatory, or mandatory except to 
the extent an exception is available. 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 OMB control 
number.\510\
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    \509\ 44 U.S.C. 3507; 5 CFR 1320.11.
    \510\ 5 CFR 1320.11(l).
---------------------------------------------------------------------------

A. Summary of Collection of Information

1. Form ID
    Form ID must be completed and filed with the Commission by all 
individuals, companies, and other organizations who seek access to file 
electronically on EDGAR.\511\ Accordingly, a filer that does not 
already have access to EDGAR must submit a Form ID, along with the 
notarized signature of an authorized individual, to obtain an EDGAR 
identification number and access codes to file on EDGAR.
---------------------------------------------------------------------------

    \511\ 17 CFR 249.446.
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2. Rules 6a-1, 6a-2, 6a-3, and Form 1
    Rule 6a-1 under the Exchange Act generally requires that an 
applicant seeking to register as a national securities exchange, or 
seeking an exemption from such registration based on limited volume, 
file an application on Form 1 and correct any inaccuracy therein upon 
discovery of such

[[Page 7308]]

inaccuracy.\512\ Form 1 contains an execution page as well as 14 
exhibits that must be filed by the applicant.\513\ Rule 6a-2 requires a 
registered national securities exchange or an exempt exchange to: (1) 
amend its Form 1 if there are any changes to the information provided 
in the initial Form 1; and (2) submit periodic updates of certain 
information provided in the initial Form 1, whether such information 
has changed or not.\514\ Rule 6a-3 requires a national securities 
exchange or an exempt exchange to file certain supplemental material 
with the Commission.\515\ Specifically, Rule 6a-3(a)(1) requires an 
exchange to file with the Commission any material issued or made 
generally available to members of, or participants or subscribers to, 
the exchange within 10 days after issuing or making such material 
available to such members, participants or subscribers.\516\ Rule 6a-
3(a)(2) provides that, if information required by Rule 6a-3(a)(1) is 
available continuously on a website controlled by the exchange, in lieu 
of filing such information, the exchange may provide on Form 1 the 
URL(s) of the location(s) on the website where the information can be 
found, and certify that the information is accurate as of its date and 
is free and accessible (without any encumbrances or restrictions) by 
the general public.\517\ Rule 6a-3(b) requires an exchange to file, 
within 15 days after the end of each calendar month, a report 
concerning the securities sold on the exchange during the calendar 
month.\518\
---------------------------------------------------------------------------

    \512\ See 17 CFR 240.6a-1.
    \513\ 17 CFR 249.1.
    \514\ See 17 CFR 240.6a-2.
    \515\ See 17 CFR 240.6a-3.
    \516\ 17 CFR 240.6a-3(a)(1).
    \517\ 17 CFR 240.6a-3(a)(2).
    \518\ 17 CFR 240.6a-3(b).
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    The Commission is amending Rules 6a-1, 6a-2, and 6a-3 under the 
Exchange Act, as well as Form 1 and the instructions to Form 1, to make 
certain changes and to require the electronic filing of all filings 
required by Rules 6a-1, 6a-2, and 6a-3.
3. Rule 6a-4 and Form 1-N
    Rule 6a-4 \519\ sets forth the notice registration procedures for 
Security Futures Product Exchanges and permits futures exchanges to 
submit a notice registration on Form 1-N.\520\ Form 1-N requires 
information regarding how the futures exchange operates, its rules and 
procedures, corporate governance, its criteria for membership, its 
subsidiaries and affiliates, and the security futures products it 
intends to trade. Rule 6a-4 also requires entities that have submitted 
an initial Form 1-N to file: (1) amendments to Form 1-N in the event 
any information provided in the initial Form 1-N is be rendered 
inaccurate or incomplete; (2) periodic updates of certain information 
provided in the initial Form 1-N; (3) certain information that is 
provided to the Security Futures Product Exchange's members; and (4) a 
monthly report summarizing the Security Futures Product Exchange's 
trading of security futures products.
---------------------------------------------------------------------------

    \519\ 17 CFR 240.6a-4.
    \520\ 17 CFR 249.10.
---------------------------------------------------------------------------

    The Commission is amending Rule 6a-4 under the Exchange Act, Form 
1-N and the instructions to Form 1-N, as well as making clarifying 
changes to Rule 202.3(b)(3) to the Commission's Informal and Other 
Procedures, to make certain changes and to require the electronic 
filing of all submissions required by Rule 6a-4.
4. Rules 15aa-1 and 15aa-2; Form 15A
    Under Exchange Act Rule 15Aa-1, an applicant for registration as a 
national securities association must file a registration statement with 
the Commission on Form X-15AA-1.\521\ Exchange Act Rule 15Aj-1(a) 
requires every association applying for registration or registered as a 
national securities association to file with the Commission an 
amendment to its registration statement or any amendment or supplement 
thereto promptly after discovering any inaccuracy therein. Under 
Exchange Act Rule 15Aj-1(b), every association applying for 
registration or registered as a national securities association must 
file with the Commission a supplement to its registration statement or 
any amendment or supplement thereto promptly after discovering any 
inaccuracy or any change which renders no longer accurate any 
information contained or incorporated therein.\522\ Under Exchange Act 
Rule 15Aj-1(c), every association applying for registration or 
registered as a national securities association must file annual and 
triennial amendments to its registration statement with the 
Commission.\523\
---------------------------------------------------------------------------

    \521\ See Exchange Act Rule 15Aa-1, 17 CFR 240.15Aa-1 and 17 CFR 
249.801. Currently, FINRA is the only national securities 
association registered with the Commission. The NFA, as specified in 
Section 15A(k) of the Exchange Act, is also registered as a national 
securities association, but only for the limited purpose of 
regulating the activities of NFA members that are registered as 
brokers or dealers in security futures products under section 
15(b)(11) of the Exchange Act. There are no burden estimates 
currently approved by OMB for Exchange Act Rule 15Aa-1. See supra 
note 501.
    \522\ See Exchange Act Rule 15Aj-1(a) and (b), 17 CFR 240.15Aj-
1(a) and (b). These filings are currently submitted on Exchange Act 
Form X-15AJ-1, 17 CFR 249.802. See 17 CFR 240.15Aj-1(d).
    \523\ See Exchange Act Rule 15Aj-1(c), 17 CFR 240.15Aj-1(c). 
These filings are currently submitted on Exchange Act Form X-15AJ-2, 
17 CFR 249.803. See 17 CFR 240.15Aj-1(d). Rule 15Aj-1(c)(1)(ii) also 
requires the filing of complete sets of the constitution, bylaws, 
rules, and related documents of the association, once every three 
years.
---------------------------------------------------------------------------

    The Commission is amending Rule 15aa-1 and redesignating it as Rule 
15aa-1,\524\ redesignating Rule 15Aj-1 \525\ as Rule 15aa-2, 
redesignating Form X-15AA-1 as Form 15A, amending the instructions to 
Form 15A, and repealing Forms X-15AJ-1 and X-15AJ-2 in connection with 
the Commission's requirement that applicants and national securities 
associations electronically file on a duly executed Form 15A the 
information currently filed on Forms X-15AA-1, X-15AJ-1, and X-15AJ-2. 
The Commission is also revising Rule 15aa-1 to require electronic 
filing and an electronic signature.
---------------------------------------------------------------------------

    \524\ 17 CFR 240.15Aa-1.
    \525\ 17 CFR 240.15Aj-1.
---------------------------------------------------------------------------

    The Commission is redesignating Form X-15AA-1 as Form 15A and 
incorporating in Form 15A information related to amendments and 
supplements to the registration statement currently filed on Form X-
15AJ-1 and information related to the annual consolidated supplement to 
the registration statement currently filed on Form X-15AJ-2. New Form 
15A would solicit information through prompts on the form that would 
better organize the information that is currently collected through 
Forms X-15AA-1, X-15AJ-1, and X-15AJ-2.
    New Form 15A contains eleven sections. Preceding section I of new 
Form 15A, the new form contains prompts that require the association to 
note the basis for submitting Form 15A. The prompts indicate whether 
the submission is an initial application filed pursuant to Rule 15aa-1 
or an amendment or supplement. Section I is titled ``Organization,'' 
and it solicits information about the association itself and requires 
the association to attach Exhibits A through D. Sections II through IX 
of new Form 15A solicit information about specific association rules 
and other information.
    Section X requires the association to provide the contact 
information for its contact employee, and section XI provides the 
consent to service and attestation.
5. Rule 17ab2-1 and Form CA-1
    Rule 17ab2-1(a) states that an application for registration or for 
exemption from registration as a

[[Page 7309]]

clearing agency or an amendment to any such application shall be filed 
with the Commission on Form CA-1, in accordance with the instructions 
thereto.\526\ Form CA-1 includes an execution page and 19 exhibits. 
Rule 17ab2-1(e) requires an applicant, a registered clearing agency, or 
an exempt clearing agency to file an amendment to correct any 
information reported in Items 1-3 of Form CA-1 if such information is, 
or becomes, inaccurate, misleading or incomplete for any reason.\527\ 
The instructions to Form CA-1 require an applicant clearing agency to 
file four completed copies of Form CA-1 with the Commission. In 
addition, if an item is amended, the instructions to Form CA-1 require 
a registered clearing agency or an exempt clearing agency to repeat all 
unamended items as they last appeared on the page on which the amended 
item appears and to file four copies of the new page with the 
Commission.
---------------------------------------------------------------------------

    \526\ 17 CFR 240.17ab2-1(a).
    \527\ 17 CFR 240.17ab2-1(e).
---------------------------------------------------------------------------

    The Commission is revising certain aspects of Rule 17ab2-1, Form 
CA-1, and the instructions to Form CA-1 to make certain changes and to 
require electronic filing of applications on Form CA-1 and subsequent 
amendments thereto submitted by applicants, registered clearing 
agencies, and exempt clearing agencies.
6. Rule 19b-4(e) and Form 19b-4(e)
    Rule 19b-4(e) provides that the listing and trading of a new 
derivative securities product by an SRO shall not be deemed a proposed 
rule change if the Commission has approved, pursuant to section 19(b) 
of the Exchange Act,\528\ the SRO's trading rules, procedures, and 
listing standards for the product class that would include the new 
derivative securities product, and the SRO has a surveillance program 
in place for such product class. Under Rule 19b-4(e)(2)(ii), SROs are 
required to submit Form 19b-4(e) \529\ to the Commission within five 
business days after commencement of trading a new derivative securities 
product.\530\ In addition, Rule 19b-4(e)(2)(i) requires an SRO to 
maintain, on-site, a copy of Form 19b-4(e) for a prescribed period of 
time.\531\
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    \528\ 15 U.S.C. 78s(b).
    \529\ See 17 CFR 249.820.
    \530\ See 17 CFR 240.19b-4(e)(2)(ii).
    \531\ See 17 CFR 240.19b-4(e)(2)(i).
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    The Commission is amending Rule 19b-4(e) \532\ to rescind Form 19b-
4(e) and instead require the information currently contained in Form 
19b-4(e) to be publicly posted on the listing SRO's internet website.
---------------------------------------------------------------------------

    \532\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

7. Rule 19b-4(j) and Form 19b-4
    Section 19(b) of the Exchange Act, as amended, requires each SRO to 
file with the Commission, in accordance with such rules as the 
Commission may prescribe, copies of any proposed rule, or any proposed 
change in, addition to, or deletion from the rules of such SRO 
(collectively, a ``proposed rule change'') accompanied by a concise 
general statement of the basis and purpose of such proposed rule 
change.\533\ Rule 19b-4 requires an SRO to submit each proposed rule 
change on Form 19b-4.\534\ Form 19b-4 currently requires a description 
of the terms of a proposed rule change, the proposed rule change's 
impact on various market segments, and the relationship between the 
proposed rule change and the SRO's existing rules.\535\ Form 19b-4 also 
requires an accurate statement of the authority and statutory basis 
for, and purpose of, the proposed rule change, the proposal's impact on 
competition, and a summary of any written comments received by the 
SRO.\536\ An SRO is required to submit Form 19b-4 to the Commission 
electronically, post a copy of the proposed rule change on its public 
website within two business days of its filing, and post and maintain a 
current and complete set of its rules on its website.\537\
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    \533\ 15 U.S.C. 78s(b).
    \534\ 17 CFR 240.19b-4(b).
    \535\ 17 CFR 249.819.
    \536\ Id.
    \537\ 17 CFR 240.19b-4(b)(1), (l), (m)(1).
---------------------------------------------------------------------------

    Rule 19b-4(j) requires that the signatory to an electronically 
submitted rule filing manually sign a signature page or other document 
authenticating, acknowledging, or otherwise adopting his or her 
signature that appears in typed form within the electronic document, 
execute that document before or at the time the rule filing is 
electronically submitted, and retain that document for its records in 
accordance with Rule 17a-1.\538\ Form 19b-4 and the instructions to 
Form 19b-4 require that a duly authorized officer of the SRO manually 
sign one copy of the completed Form 19b-4 and that the manually signed 
signature page be maintained pursuant to section 17 of the Exchange 
Act.\539\ The Commission is removing these manual signature 
requirements from Rule 19b-4(j), Form 19b-4, and the instructions to 
Form 19b-4.
---------------------------------------------------------------------------

    \538\ 17 CFR 240.19b-4(j).
    \539\ 17 CFR 249.819.
---------------------------------------------------------------------------

8. Rule 17a-22
    Rule 17a-22 previously required a registered clearing agency to 
file with the Commission three paper copies of any material (including, 
for example, manuals, notices, circulars, bulletins, lists, or 
periodicals) issued, or made generally available, to its participants 
or other entities with whom it has a significant relationship, such as 
pledgees, transfer agents, or self-regulatory organizations, within 10 
days after issuing, or making generally available, such material.\540\ 
Under pre-existing Rule 17a-22, when the Commission is not a registered 
clearing agency's ARA, the clearing agency must at the same time file 
one paper copy of the material with its ARA.\541\
---------------------------------------------------------------------------

    \540\ 17 CFR 240.17a-22.
    \541\ Id.
---------------------------------------------------------------------------

    The amendments to Rule 17a-22 do not change the scope of 
supplemental materials that are currently subject to the rule. However, 
the amendments replace the requirement to file multiple copies of 
supplemental materials with the Commission and, where applicable, the 
ARA in paper form with a requirement to prominently post such materials 
on a registered clearing agency's internet website.\542\ In addition, 
the amendments reduce the timeframe for registered clearing agencies to 
comply with the rule from 10 days to 2 business days. As discussed 
above, the two business day timeframe is consistent with a registered 
clearing agency's obligation under Rule 19b-4(m) to update its website 
to post any rule changes filed pursuant to section 19(b) of the 
Exchange Act.\543\ Because the supplemental materials that are subject 
to Rule 17a-22 will have already been prepared for distribution to a 
registered clearing agency's participants or other entities with whom 
it has a significant relationship, those documents should be readily 
available for the clearing agency to post on its website within the two 
business day timeframe.\544\
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    \542\ By replacing the paper filing requirement for supplemental 
materials with an internet posting requirement, Rule 17a-22, as 
amended, would allow all of a registered clearing agency's 
regulatory authorities to access the materials; thereby eliminating 
the need to file an additional paper copy with the clearing agency's 
ARA. For this reason, with respect to a registered clearing agency 
for which the Commission is not the ARA, the amendments would remove 
the requirement to also file one paper copy of the supplemental 
materials with the clearing agency's ARA.
    \543\ See 17 CFR 240.19b-4(m).
    \544\ See supra section III.B.1.
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9. Rules 17a-5, 18a-7, and 17a-12
    The Commission is amending Rules 17a-5, 18a-7, and 17a-12 to 
require

[[Page 7310]]

broker-dealers, SBS Entities, and OTC derivatives dealers to 
electronically file with the Commission in Inline XBRL through the 
Commission's EDGAR system annual audited reports and related annual 
filings. The filings were previously made either in paper, via email, 
or voluntarily on the EDGAR system as PDF documents. In addition, the 
Commission is amending Rule 17a-12 to require OTC derivatives dealers 
to file the unaudited FOCUS Report Part II electronically through the 
SEC eFOCUS system instead of in paper. The Commission is also allowing 
electronic signatures in Rule 17a-5, 17a-12, and 18a-7 filings, which 
includes the FOCUS Report.
    Broker-dealers, SBS Entities, and OTC derivatives dealers file 
FOCUS Reports Part II, IIA, or IIC, which are periodic unaudited 
reports about their financial and operational condition. The Commission 
is amending the instructions to Parts II, IIC, and IIA of the FOCUS 
Report to allow only one named officer's signature when the signature 
belongs to the firm's principal executive officer or principal 
financial officer (or their comparable officers). The Commission is 
also making corrective and clarifying amendments to FOCUS Report Part 
II, technical amendments to FOCUS Report Part IIA and amendments to 
FOCUS Report Part IIC for consistency with FFIEC Form 031. Finally, the 
Commission is amending Rules 17a-5, 18a-7, and Form X-17A-5 Part III to 
eliminate the requirement to notarize the oath or affirmation 
associated with broker-dealers' and SBS Entities' annual reports.
10. Rule 17h-2T
    The Commission is amending paragraph (a)(2) of Rule 17h-2T to 
require that the quarterly and annual risk assessment reports be filed 
with the Commission electronically through EDGAR as an Interactive Data 
File in accordance with Rule 405 of Regulation S-T. The reports are 
filed using Form 17-H. The materials filed under the rule will not 
change, but the materials will be filed on EDGAR, and the financial 
statements required by Item 4 of the Form will be structured in Inline 
XBRL.
11. Rule 17a-19 and Form X-17A-19
    In general, Rule 17a-19 requires national securities exchanges and 
associations to file with the Commission certain information required 
on Form X-17A-19 within five business days of the occurrence of the 
initiation of membership, change in membership, or termination of 
membership of any member. The Commission is amending Rule 17a-19 and 
Form X-17A-19 to require that filings providing such notifications be 
made on EDGAR, in a custom XML-based data language.
12. Rule 3a71-3(d)(1)(vi)
    The ANE Exception is conditioned in part on the Registered Entity 
filing with the Commission an ANE Exception Notice. Prior to these 
amendments, Rule 3a71-3(d)(1)(vi) required a Registered Entity to file 
the ANE Exception Notice by submitting it to the electronic mailbox 
specified on the Commission's website. The Registered Entity could, but 
was not required to, withdraw an ANE Exception Notice by contacting the 
Commission to request that the notice be manually removed from the ANE 
Exception Notices web page.
    The Commission is amending Rule 3a71-3(d)(1)(vi) to require the ANE 
Exception Notices to be filed electronically through EDGAR, but the 
Commission is not changing the information required in an ANE Exception 
Notice. The Commission also is amending Rule 3a71-3(d)(1)(vi) to: (1) 
provide that withdrawals of ANE Exception Notices shall be made 
electronically via EDGAR, and (2) require a Registered Entity to 
promptly withdraw its ANE Exception Notice if it becomes unregistered 
or otherwise ineligible to serve as the Registered Entity for purposes 
of the ANE Exception.
13. Rule 15fi-3(c)
    Rule 15fi-3(c) requires an SBS Entity to promptly notify the 
Commission, and any applicable prudential regulator, of any security-
based swap valuation dispute in excess of $20,000,000 (or its 
equivalent in any other currency) if not resolved within: (1) three 
business days, if the dispute is with a counterparty that is an SBS 
Entity; or (2) five business days, if the dispute is with a 
counterparty that is not an SBS Entity.\545\ Rule 15fi-3(c) also 
requires SBS Entities to notify the Commission and any applicable 
prudential regulator, if the amount of any security-based swap 
valuation dispute that was the subject of a previous notice increases 
or decreases by more than $20,000,000 (or its equivalent in any other 
currency), at either the transaction or portfolio level.\546\
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    \545\ See 17 CFR 240.15fi-3(c)(1).
    \546\ Each amended notice is required to be provided to the 
Commission and any applicable prudential regulator no later than the 
last business day of the calendar month in which the applicable 
security-based swap valuation dispute increases or decreases by the 
applicable dispute amount. See 17 CFR 240.15fi-3(c)(2).
---------------------------------------------------------------------------

    Prior to the amendments, Rule 15fi-3(c) required that VDNs be 
submitted to the Commission ``in a form and manner acceptable to the 
Commission.'' SBS Entities had two options for submitting VDNs: (1) an 
electronic submission in PDF format via EDGAR; or (2) submission in PDF 
format to a dedicated Commission email address.
    The Commission is amending Rule 15fi-3(c) to affirmatively require 
SBS Entities to submit VDNs to the Commission electronically in EDGAR 
using a custom XML-based data language. This includes both the initial 
VDN and any subsequent amendments. Under these amendments, SBS Entities 
will no longer be able to submit VDNs to the Commission using a 
dedicated email address or in PDF format on EDGAR.
14. Rule 15fk-1(c)(2)(ii)(A)
    Rule 15fk-1(c) requires that the CCO of an SBS Entity prepare and 
sign a CCO report. The CCO report must be submitted to the Commission 
within 30 days following the filing deadline for the SBS Entity's 
annual financial report with the Commission.\547\ Rule 15fk-1(c) does 
not specify the manner in which the CCO report must be submitted. 
Accordingly, pursuant to the rule, an SBS Entity may submit its CCO 
report as a paper or electronic submission.
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    \547\ 17 CFR 240.15fk-1(c)(2)(ii)(A).
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    The amendment to Rule 15fk-1(c)(2)(ii)(A) does not change what the 
report must include. Rather, the amendment requires that the CCO report 
be submitted electronically in Inline XBRL through EDGAR. As with other 
entities that make submissions through EDGAR, these submissions are 
subject to the provisions of Regulation S-T and the EDGAR Filer Manual, 
as defined in Rule 11 of Regulation S-T.\548\
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    \548\ 17 CFR 232.11.
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B. Use of Information

1. Form ID
    The information required to be filed electronically on Form ID 
allows the Commission staff to review applications for EDGAR access 
and, if the application is approved, assign CIKs (if the applicant does 
not already have a CIK) and provide instructions to generate EDGAR 
access codes to permit filing on EDGAR. Form ID is essential to EDGAR 
security.
2. Rules 6a-1, 6a-2, 6a-3, and Form 1
    The information required pursuant to Rules 6a-1, 6a-2, and 6a-3 is 
necessary to enable the Commission to receive accurate and complete 
information from applicants seeking registration as

[[Page 7311]]

national securities exchanges or an exemption from such registration 
(``exempt exchanges'') and from national securities exchanges and 
exempt exchanges, which enables the Commission to exercise its 
statutory oversight functions. Without the information submitted 
pursuant to Rule 6a-1 on Form 1, the Commission would not be able to 
determine whether the applicant has met the criteria for registration 
(or an exemption from registration) set forth in section 6 of the 
Exchange Act. The amendments, periodic updates of information, 
supplemental materials, and monthly reports submitted pursuant to Rules 
6a-2 and 6a-3 are necessary to assist the Commission in its oversight 
of national securities exchanges and exempt exchanges.
3. Rule 6a-4 and Form 1-N
    The information obtained under Rule 6a-4 and Form 1-N provides the 
Commission with basic information about Security Futures Product 
Exchanges. This information enables the Commission to carry out its 
statutorily mandated oversight functions and helps ensure that Security 
Futures Product Exchanges continue to be in compliance with the 
Exchange Act.
4. Rules 15aa-1 and 15aa-2; Form 15A
    The information required pursuant to Rule 15aa-1 is necessary to 
enable the Commission to receive accurate and complete information from 
applicants seeking registration as national securities association 
which would enable the Commission to exercise its statutory oversight 
functions. Without the information submitted pursuant to Rule 15aa-1 on 
Form 15A, the Commission would not be able to determine whether the 
applicant has met the criteria for registration set forth in section 
15A of the Exchange Act. The amendments, periodic updates of 
information, and supplemental materials submitted pursuant to Rule 
15Aa-2 are necessary to assist the Commission in its oversight of 
national securities associations.
5. Rule 17ab2-1 and Form CA-1
    The Commission uses the information disclosed on Form CA-1 to: (i) 
determine whether an applicant for registration as a clearing agency or 
for an exemption from such registration meets the standards for 
registration set forth in the Exchange Act; (ii) enforce compliance 
with the Exchange Act's registration requirements; and (iii) use as a 
reference for specific registered clearing agencies or exempt clearing 
agencies for compliance and investigatory purposes. The information 
required under Rule 17ab2-1 is essential for the Commission to perform 
its statutorily required duties.
6. Rule 19b-4(e) and Form 19b-4(e)
    The information collected pursuant to Rule 19b-4(e) is designed to 
maintain an accurate record of all new derivative securities products 
by SROs, the listing and trading of which are not deemed to be proposed 
rule changes. The Commission reviews compliance with Rule 19b-4(e) 
through its routine inspections of the SROs.
7. Rule 19b-4(j) and Form 19b-4
    The information collected pursuant to Rule 19b-4 is designed to 
provide the Commission with the information necessary to determine, as 
required by the Exchange Act, whether the proposed rule change is 
consistent with the Exchange Act and the rules thereunder. The 
information is used to determine if the proposed rule change should be 
approved, disapproved, suspended, or if proceedings should be 
instituted to determine whether to approve or disapprove the proposed 
rule change. The Commission reviews compliance with Rule 19b-4 through 
its routine inspections of the SROs. The Commission is removing a 
manual signature requirement in the existing collection of information 
under Rule 19b-4 and on Form 19b-4 because it is unnecessary given the 
electronic signature already required by Form 19b-4.
8. Rule 17a-22
    The information required to be posted on a registered clearing 
agency's website under the amendments to Rule 17a-22 is expected to 
assist the Commission in carrying out its statutorily mandated 
oversight functions with respect to clearing agencies. The Commission 
uses this information to determine: (i) whether a clearing agency is 
implementing procedural or policy changes and, if so, whether such 
changes are consistent with the purposes of section 17A of the Exchange 
Act; and (ii) whether a clearing agency has changed its rules without 
filing the actual or prospective change to the Commission as required 
by section 19(b) of the Exchange Act. The posting of such information 
on a registered clearing agency's website would improve transparency of 
a clearing agency's actions and communications to a larger group of 
potentially interested persons, including non-member entities that 
directly or indirectly use the clearing agency's services, investors, 
and the general public.
9. Rules 17a-5, 18a-7, and 17a-12
    Reports required to be made under Rules 17a-5, 18a-7, and 17a-12 
are used, among other things, to monitor the financial and operational 
condition of broker-dealers, SBS Entities, and OTC derivatives dealers 
by Commission staff and, to the extent applicable to the entity, by its 
designated examining authority (``DEA''). The reports required under 
Rules 17a-5, 18a-7, and 17a-12 are also one of the primary means of 
ensuring compliance with the Commission's financial responsibility 
rules (e.g., Rule 15c3-1). A firm's failure to comply with these rules 
would severely impair the ability of the Commission (and the firm's 
DEA, if applicable) to protect investors, including customers and 
counterparties of the registrant.
10. Rule 17h-2T
    The information required to be filed with the Commission under Rule 
17h-2T is used by the Commission to monitor the activities of a covered 
broker-dealer's affiliates whose business activities are reasonably 
likely to have a material impact on the financial and operational 
condition of the broker-dealer.
11. Rule 17a-19 and Form X-17A-19
    Upon the Commission's receipt of a Form X-17A-19 filing, the 
information is entered into a database, which is regularly shared with 
the SROs. Commission staff use the information contained in Form X-17A-
19 to assign the appropriate SRO as DEA for the member firms. This 
information is also used by SIPC in determining which SRO is the 
collection agent for the SIPC Fund.
12. Rule 3a71-3(d)(1)(vi)
    The information provided by a Registered Entity in connection with 
the filing of an ANE Exception Notice pursuant to Rule 3a71-
3(d)(1)(vi), and any subsequent withdrawal, assists the Commission in 
evaluating market participants' compliance with the limitations on use 
of the ANE Exception, as well as assists Relying Entities and their 
affiliates in determining whether they have satisfied the ANE 
Exception's notice requirement and in monitoring their progress toward 
the ANE Exception's cap on inter-dealer security-based swaps. The 
amendment to Rule 3a71-3(d)(1)(vi) to move the filing of the ANE 
Exception Notice, and any subsequent withdrawal, to the Commission's 
EDGAR filing system should facilitate more efficient and timely 
transmission, dissemination, and analysis of this information.

[[Page 7312]]

13. Rule 15fi-3(c)
    The information shared by counterparties to a security-based swap 
transaction during the portfolio reconciliation process, as 
contemplated by Rule 15fi-3, plays an important role in assisting those 
counterparties in identifying and resolving discrepancies involving key 
terms of their transactions on an ongoing basis. This information also 
allows those counterparties to improve their management of internal 
risks related to the enforcement of their rights and the performance of 
their obligations under a security-based swap. Moreover, requiring SBS 
Entities to agree in writing with each of their counterparties on the 
terms of the portfolio reconciliation (including, if applicable, 
agreement on the selection of any third-party service provider who may 
be performing the reconciliation) helps to minimize any discrepancies 
regarding the portfolio reconciliation process itself, thereby 
facilitating efficient and cost-effective operation. The requirement to 
report certain unresolved valuation disputes to the Commission assists 
the Commission in identifying potential issues with respect to an SBS 
Entity's internal valuation methodology and also could serve as an 
indication of a widespread market disruption in cases where the 
Commission receives a large number of such notices from multiple firms. 
The amendment to Rule 15fi-3(c) to require submission of the VDNs using 
the Commission's EDGAR system is intended to facilitate more efficient 
and secure transmission and efficient and effective analysis of this 
information.
14. Rule 15fk-1(c)(2)(ii)(A)
    The information collected under Rule 15fk-1(c) assists the 
Commission staff's oversight and examination of SBS Entities compliance 
with the business conduct requirements for such entities.

C. Respondents

1. Form ID
    The respondents to the collection of information required under 
Form ID are all entities that are required to file electronically on 
EDGAR under this release and that do not already have access to EDGAR. 
Such respondents must submit a Form ID, along with the notarized 
signature of an authorized individual, to obtain an EDGAR 
identification number (``CIK'') and access codes to file on EDGAR. The 
Commission estimates that these respondents would include the following 
entities not currently registered on EDGAR: 25 national securities 
exchanges and registered national securities associations as of 
February 15, 2024; 1,498 broker-dealers as of December 31, 2023; two 
Security Futures Product Exchanges as of April 1, 2024; 11 operational 
registered and exempt clearing agencies as of April 1, 2024; \549\ and 
24 Registered Entities.\550\
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    \549\ As of Apr. 1, 2024, there are eight registered clearing 
agencies, six of which are operational, and five exempt clearing 
agencies.
    \550\ See Cross-Border Adopting Release, 85 FR at 6336 n.642; 
the Commission continues to estimate that up to 24 entities that 
engage in security-based swap dealing activity may rely on the ANE 
Exception.
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2. Rules 6a-1, 6a-2, 6a-3, and Form 1
    The respondents to the collection of information required under 
Rule 6a-1 are new applicants applying to register as a national 
securities exchange or seeking an exemption from such registration. The 
Commission estimates that it would receive approximately one initial 
Form 1 filing per year.
    The respondents to the collection of information required under 
Rules 6a-2 and 6a-3 are national securities exchanges and exempt 
exchanges. As of February 15, 2024, there are a total of 24 entities 
registered as national securities exchanges. These respondents file 
annual, triennial, and periodic amendments to their Form 1 under Rule 
6a-2. These respondents also file supplemental materials and monthly 
reports under Rule 6a-3. There are no exempt exchanges that currently 
submit amendments under Rule 6a-2 or supplemental materials and monthly 
reports under Rule 6a-3.
3. Rule 6a-4, Form 1-N
    The respondents to the collection of information required under 
Rule 6a-4 are futures exchanges that trade security futures products. 
Currently, there are two Security Futures Product Exchanges. These 
respondents file annual, triennial, and periodic amendments to their 
Form 1-N under Rule 6a-4(b). These respondents also file supplemental 
materials and monthly reports under Rule 6a-4(c). The Commission 
estimates that it will not receive any initial Form 1-N filings.\551\
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    \551\ The Commission is basing its estimate on its historical 
experience with Form 1-N filings. In particular, since the adoption 
of the form in 2001, six initial Form 1-N filings have been made by 
futures exchanges. Based on the infrequent occurrence of filings, 
zero is a reasonable estimate.
---------------------------------------------------------------------------

4. Rules 15aa-1 and 15aa-2; Form 15A
    The respondents to the collection of information required under 
Rule 15aa-1 are new applicants applying to register as a national 
securities association. The Commission estimates that it would receive 
one initial Form 15A filing per year.\552\
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    \552\ The Commission notes that since the adoption of section 
15A of the Exchange Act as part of the Maloney Act in 1938, only two 
national securities associations have registered with the 
Commission. Currently, FINRA is the only national securities 
association registered with the Commission whereas the NFA is 
registered as a national securities association only for the limited 
purpose of regulating the activities of NFA members that are 
registered as brokers or dealers in security futures products under 
section 15(b)(11) of the Exchange Act.
---------------------------------------------------------------------------

    The respondents to the collection of information required under 
Rule 15aa-2 are national securities associations currently registered 
with the Commission. Currently, there is only one entity that will be 
required to file annual, triennial, and periodic amendments to its Form 
15A under Rule 15aa-2.
5. Rule 17ab2-1, Form CA-1
    The respondents to the collection of information required under 
Rule 17ab2-1 are registered and exempt clearing agencies, as well as 
applicants seeking to register as a clearing agency or seeking an 
exemption from such registration. As of April 1, 2024, there are eight 
registered clearing agencies, only six of which are operational,\553\ 
and five exempt clearing agencies. The Commission estimates that it 
would receive one new Form CA-1 application filed each year.
---------------------------------------------------------------------------

    \553\ The Boston Stock Exchange Clearing Corporation and Stock 
Clearing Corporation of Philadelphia are currently registered with 
the Commission as clearing agencies but conduct no clearance or 
settlement operations. See Exchange Act Release No. 6329 (Jan. 3, 
2011), 76 FR 1473 (Jan. 10, 2011); Exchange Act Release No. 63268 
(Nov. 8, 2010), 75 FR 69730 (Nov. 15, 2010).
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6. Rule 19b-4(e), Form 19b-4(e)
    The respondents to the collection of information required under 
Rule 19b-4(e) are SROs that list and trade new derivative securities 
products--national securities exchanges. As of February 15, 2024, there 
are 24 entities registered as national securities exchanges.
7. Rule 19b-4(j), Form 19b-4
    The respondents to the collection of information required under 
Rule 19b-4(j) and Form 19b-4 are SROs (as defined by section 3(a)(26) 
of the Exchange Act), including national securities exchanges, national 
securities associations, registered clearing agencies, notice 
registered securities future product exchanges, and the MSRB. The 
Commission's current approved estimated number of respondents is 46 
SROs.\554\
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    \554\ See FR Doc. 2023-01613, 88 FR 5387 (Jan. 27, 2023) 
(Request to OMB for extension of Rule 19b-4 and Form 19b-4; SEC File 
No. 270-38; OMB Control No. 3235-0045).

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[[Page 7313]]

8. Rule 17a-22
    The respondents to the collection of information required under 
Rule 17a-22 are registered clearing agencies. As of April 1, 2024, 
there are eight registered clearing agencies, only six of which are 
operational.\555\
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    \555\ See supra note 560560.
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9. Rules 17a-5, 18a-7, and 17a-12
    The respondents to file the annual reports required under Rule 17a-
5 are broker-dealers. For the 12 months ended December 31, 2023, the 
Commission received 1,498 broker-dealer annual reports in paper form 
and 1,769 electronically via EDGAR. The Commission therefore estimates 
that approximately 3,267 broker-dealers are required to file annual 
reports with the Commission. As of December 31, 2023, five of those 
broker-dealers are ANC broker-dealers required to file supplemental 
reports under Rule 17a-5. The respondents to the annual reports 
collection of information required under Rule 18a-7 are SBS Entities 
that are not prudentially regulated. As of June 30, 2024, there are 18 
SBS Entities, including nine foreign firms relying on substituted 
compliance, that are not prudentially regulated. The respondents to the 
annual reports collection of information under Rule 17a-12 are OTC 
derivatives dealers. There are three OTC derivatives dealers subject to 
Rule 17a-12 as of December 31, 2023.
    There are 486 broker-dealers or non-broker-dealer SBS Entities that 
filed FOCUS Report Part II as of December 31, 2023. Of those Part II 
filers, 4 firms are domestic stand-alone swap dealers and 67 firms are 
domestic stand-alone introducing brokers. Bank SBS Entities file FOCUS 
Report Part IIC. As of June 30, 2024, there are 30 bank SBS Entities, 
including 21 foreign firms relying on substituted compliance. There are 
2,946 broker-dealers that filed FOCUS Report Part IIA as of December 
31, 2023.
10. Rule 17h-2T
    The respondents to the collection of information required under 
Rule 17h-2T are broker-dealers. As of December 31, 2023, there are 241 
broker-dealers that must file quarterly and annual risk assessment 
reports with the Commission under Rule 17h-2T.
11. Rule 17a-19 and Form X-17A-19
    The respondents to the collection of information required under 
Rule 17a-19 are national securities exchanges and registered national 
securities associations. As of February 15, 2024, there are a total of 
25 national securities exchanges and registered national securities 
associations.
12. Rule 3a71-3(d)(1)(vi)
    The Commission estimates that up to 24 entities that engage in 
security-based swap dealing activity may rely on the ANE 
Exception.\556\ To satisfy the ANE Exception, each of those up to 24 
entities will make use of an affiliated Registered Entity that will be 
required to file an ANE Exception Notice and may subsequently decide to 
or may be required to file a withdrawal of the ANE Exception Notice. 
The amendment to Rule 3a71-3(d)(1)(vi) does not affect Commission's 
estimate of the number of respondents.
---------------------------------------------------------------------------

    \556\ See Cross-Border Adopting Release, 85 FR at 6336 n.642.
---------------------------------------------------------------------------

13. Rule 15fi-3(c)
    The respondents to the collection of information under Rule 15fi-
3(c) are registered SBS Entities. In the Proposing Release and a number 
of prior releases, including the release adopting the rules by which 
SBS Entities can register (and withdraw from registration) with the 
Commission, the Commission estimated that approximately 50 entities may 
meet the definition of SBSD, and up to five entities may meet the 
definition of MSBSP.\557\ Accordingly, in the Proposing Release, the 
Commission preliminarily estimated that approximately 55 entities will 
be required to register under either category.\558\ Since issuing the 
Proposing Release, the Commission received three additional 
applications for registration as an SBSD, for a total of 53,\559\ but 
otherwise the Commission continues to believe that these estimates are 
appropriate. Thus, the Commission estimates that approximately 58 
entities will be required to register with the Commission under either 
category, and will therefore be subject to Rule 15fi-3. When the 
Commission initially adopted Rule 15fi-3, it stated that, until SBS 
Entities were registered with the Commission, it was difficult for the 
Commission to determine the typical number of valuation disputes 
meeting the applicable thresholds that SBS Entities would be required 
to submit on an annual basis.\560\ Because SBS Entities have been 
required to submit VDNs under Rule 15fi-3(c) for a limited time, it 
remains difficult for the Commission to determine the typical number of 
VDNs that an SBS Entity will submit annually.
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    \557\ See Registration Process for Security-Based Swap Dealers 
and Major Security-Based Swap Participants, Exchange Act Release No. 
75611 (Aug. 5, 2015), 80 FR 48964, 48990 (Aug. 14, 2015). See also 
Risk Mitigation Adopting Release, 85 FR at 6383; Trade 
Acknowledgment and Verification of Security-Based Swap Transactions, 
Exchange Act Release No. 78011 (June 8, 2016), 81 FR 39807, 39830 
(June 17, 2016); Capital, Margin, and Segregation Requirements for 
Security-Based Swap Dealers and Major Security-Based Swap 
Participants and Capital and Segregation Requirements for Broker-
Dealers, Exchange Act Release No. 86175 (June 21, 2019), 84 FR 
43872, 43960 (Aug. 22, 2019).
    \558\ See Proposing Release, 88 FR at 23973-74.
    \559\ See List of Security-Based Swap Dealers and Major 
Security-Based Swap Participants, available at https://www.sec.gov/tm/List-of-SBS-Dealers-and-Major-SBS-Participants. The respondent 
registered SBSDs include 21 SBSDs that, as of June 21, 2024, 
notified the Commission of their intent to rely on substituted 
compliance with respect to one more Exchange Act rules pursuant to a 
Commission order granting substituted compliance. See https://www.sec.gov/tm/Substituted-compliance-Notices.
    \560\ See Risk Mitigation Adopting Release 85 FR at 6385-86.
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14. Rule 15fk-1(c)(2)(ii)(A)
    The respondents to the collection of information under Rule 15fk-
1(c) are registered SBS Entities. As of June 21, 2024, there were 53 
SBS Entities registered with the Commission.\561\ Of these entities, 
the Commission estimates that none will be first-time EDGAR users 
needing to obtain EDGAR access credentials in order to submit its CCO 
report because they have already registered as SBS Entities through 
EDGAR.
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    \561\ There are currently no MSBSPs registered with the 
Commission.
---------------------------------------------------------------------------

D. Total Initial and Annual Reporting and Recordkeeping Burdens

1. Form ID
Currently Approved Burden Estimate
    Form ID (OMB Control No. 3235-0328) must be completed and filed 
with the Commission by all individuals, companies, and other 
organizations who seek access to file electronically on EDGAR. 
Accordingly, a filer that does not already have access to EDGAR must 
submit a Form ID, along with the notarized signature of an authorized 
individual, to obtain an EDGAR identification number (``CIK'') and 
access codes to file on EDGAR. The Commission currently estimates that 
Form ID would take 0.30 hours to prepare, resulting in an annual 
industry-wide burden of 17,199 hours.\562\
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    \562\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Form ID (Dec. 20 2021), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202112-3235-0328.
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Revision to Burden Estimate
    The Commission estimates that each filer that currently does not 
have access to EDGAR would incur an initial, one-time burden of 0.30 
hours to complete

[[Page 7314]]

and submit a Form ID.\563\ Therefore, the one-time industrywide 
reporting burden associated with the requirements to file on EDGAR 
pursuant to this release is 7.5 hours for national securities exchanges 
and registered national securities associations; \564\ 0.6 hours for 
security futures product exchanges; \565\ 3.3 hours for registered and 
exempt clearing agencies; \566\ 449.4 hours for broker-dealers not 
already filing their annual audits on EDGAR; \567\ 0 hours for OTC 
derivatives dealers not already filing their annual audits on EDGAR; 
\568\ and 7.2 hours for Registered Entities.\569\
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    \563\ The Commission does not estimate a burden for SBS Entities 
since these firms have already filed Form ID so they can file Form 
SBSE on EDGAR.
    \564\ 0.30 hours x 25 national securities exchanges and 
registered national securities associations = 7.5 hours.
    \565\ 0.30 hours x 2 security futures product exchanges = 0.6 
hours.
    \566\ 0.30 hours x 11 operational registered and exempt clearing 
agencies = 3.3 hours.
    \567\ 0.30 hours x 1,498 broker-dealers not already filing on 
EDGAR = 449.4 hours.
    \568\ 0.30 hours x 0 OTC derivatives dealers not already filing 
on EDGAR = 0 hours.
    \569\ 0.30 hours x 24 Registered Entities = 7.2 hours. The 
Commission conservatively estimates that none of the Registered 
Entities will have EDGAR access at the time of filing an ANE 
Exception Notice or withdrawing an ANE Exception Notice, even though 
most, if not all, Registered Entities will have accessed EDGAR to 
file other information with the Commission. A Registered Entity that 
is an SBSD must file its application for registration electronically 
on EDGAR, and this requirement has been in place from the original 
compliance date for registration of SBSDs. See 17 CFR 240.15Fb2-
1(c). Additionally, pursuant to amendments being adopted in this 
release, a Registered Entity that is a broker will be required to 
file electronically on EDGAR certain annual reports, and many 
brokers already do so voluntarily under existing Commission rules. 
See infra Sections VIII and XI.B.
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2. Rules 6a-1, 6a-2, 6a-3 and Form 1
Currently Approved Burden Estimate \570\
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    \570\ For an explanation of the collection of information under 
these rules and Form 1, see supra section IX.A.2.
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    Initial filings on Form 1 by applicants seeking registration as a 
national securities exchange or an exemption from such registration are 
made on a one-time basis. The Commission estimates that it would 
receive approximately one initial Form 1 filing per year. The 
Commission also estimates that each respondent who submits an initial 
Form 1 filing would incur an average burden of 880 hours to complete 
and file an initial Form 1.\571\ With respect to amendments to Form 1, 
the Commission estimates that each registered or exempt exchange would 
file 11 amendments or periodic updates to Form 1 per year.\572\ Hours 
required for amendments to Form 1 that must be submitted to the 
Commission can vary, depending upon the nature and extent of the 
amendment, the exchange's corporate structure, and the exchange's 
business activities. The Commission estimates that each exchange would 
incur an average burden of 25 hours per filing to comply with Rule 6a-
2.\573\ Accordingly, the estimated average annual burden to update and 
amend Form 1 is 275 hours per exchange \574\ and the estimated 
aggregate annual burden for all national securities exchanges is 6,600 
hours.\575\
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    \571\ See FR Doc. 2022-01616, 87 FR 4297 (Jan. 27, 2022) 
(Submission for OMB Review; Comment Request, Extension: Rules 6a-1 
and 6a-2, Form 1; SEC File 270-0017; OMB Control No. 3235-0017) 
(hereinafter ``Rules 6a-1 and 6a-2 PRA Update'').
    \572\ See Rules 6a-1 and 6a-2 PRA Update.
    \573\ See Rules 6a-1 and 6a-2 PRA Update.
    \574\ 11 Form 1 Amendments annually x 25 burden hours per Form 1 
Amendment = 275 burden hours per exchange.
    \575\ 275 burden hours per exchange x 24 national securities 
exchanges = 6,660 aggregate burden hours.
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    With respect to supplemental information and monthly reports, the 
Commission estimates that each exchange would file such materials 12 
times per year. The Commission estimates that each exchange would incur 
an average burden of 0.5 hours per filing to comply with Rule 6a-
3.\576\ Accordingly, the estimated average annual burden to submit 
supplemental information and monthly reports is six hours per exchange 
\577\ and the estimated aggregate annual burden for all exchanges is 
144 hours.\578\ Thus, the Commission estimates that the total aggregate 
annual burden to comply with Rules 6a-2 and 6a-3 is 6,744 hours.\579\
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    \576\ See FR Doc. 2022-07060, 87 FR 19541 (Apr. 4, 2022) 
(Submission for OMB Review; Comment Request; Extension: Rule 6a-3; 
SEC File 270-0015; OMB Control No. 3235-0021).
    \577\ 12 filings annually x 0.5 hours per filing = 6 burden 
hours per exchange.
    \578\ 6 burden hours per exchange x 24 national securities 
exchanges = 144 aggregate burden hours.
    \579\ 6,600 burden hours to comply with Rule 6a-2 + 144 burden 
hours to comply with Rule 6a-3 = 6,744 aggregate burden hours.
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Revision to Burden Estimate
    The Commission recognizes that the amendments to Rules 6a-1, 6a-2, 
and 6a-3 impose certain burdens on respondents. Although the 
information to be provided on filings made pursuant to Rules 6a-1, 6a-
2, and 6a-3 will not change, respondents will be required to submit 
documents electronically. The instructions to Form 1 will be amended to 
no longer require respondents to make and submit multiple copies of the 
Form 1 submission. Currently, respondents must make two copies of each 
filing to be submitted pursuant to Rules 6a-1 and 6a-2. Generally, the 
time spent making such copies instead is expected to be spent uploading 
documents on EDGAR. Where a filing could include multiple exhibits, the 
time required to upload documents should be less than the time required 
to make two copies of each exhibit, particularly when the exhibit 
contains numerous pages. Accordingly, the Commission estimates that, on 
average, filing an initial Form 1 application electronically will 
require two fewer hours of clerical work from the current baseline. The 
aggregate initial burden on all respondents submitting an initial Form 
1 application electronically will be two hours less than the current 
baseline. Accordingly, the aggregate initial burden on all respondents 
to complete and submit an initial Form 1 application is expected to be 
878 hours.\580\ In addition, the Commission estimates that, on average, 
filing amendments to Form 1 electronically will require 1 fewer hour of 
clerical work from the current baseline, as the amount of material 
filed pursuant to Rule 6a-2 may be less than an initial Form 1 
application. The aggregate ongoing burden on all exchanges submitting a 
periodic amendment electronically will be 264 hours less than the 
current baseline.\581\ Accordingly, the aggregate ongoing burden on all 
exchanges to submit periodic amendments to Form 1 electronically is 
expected to be 6,336 hours.\582\
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    \580\ 878 burden hours per initial application x 1 initial 
application per year = 878 burden hours.
    \581\ Reduction of 1 hour per response x 264 responses per year 
= 264 fewer burden hours.
    \582\ 264 burden hours per exchange x 24 national securities 
exchanges = 6,336 aggregate burden hours.
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    With respect to material filed under Rule 6a-3, while in some 
instances there may be a marginal reduction in burden hours associated 
with submitting these materials electronically as a result of a 
reduction in printing requirements, for purposes of making a PRA burden 
estimate on average, the most recently approved baseline is expected to 
represent a reasonable estimate of the burden hours associated with 
submitting supplemental information and monthly reports. The time 
required to compile copies of these materials is expected, on average, 
to be equivalent to the time required to upload those filings 
electronically. The Commission estimates that, on average, filing 
supplemental information and monthly reports electronically will not 
increase or decrease burden hours from the current baseline of 0.5 
hours. Therefore, the aggregate burden associated with filing 
supplemental information and monthly reports will be

[[Page 7315]]

180 hours.\583\ Thus, the total aggregate annual burden to comply with 
Rules 6a-2 and 6a-3 will be 7,212 hours.\584\
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    \583\ 0.5 burden hours x 360 responses per year = 180 burden 
hours.
    \584\ 7,032 burden hours to comply with Rule 6a-2 + 180 burden 
hours to comply with Rule 6a-3 = 7,212 aggregate burden hours.
---------------------------------------------------------------------------

    The Commission also recognizes that the requirement to tag certain 
disclosures (specifically, the financial statements and the manner of 
operations description) on the initial Form 1 in Inline XBRL would 
impose burdens on respondents. To file reports in Inline XBRL, a filer 
must purchase Inline XBRL tagging software to apply Inline XBRL tags to 
the reports before filing them on EDGAR, or employ a tagging service 
provider to apply the Inline XBRL tags on its behalf. As discussed in 
further detail below, this burden will be mitigated for some exchanges 
that are affiliated with public reporting companies subject to existing 
Inline XBRL structuring requirements, and thus may be able to leverage 
the compliance software and experience of their reporting 
affiliates.\585\
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    \585\ See infra section X.C.2.b. As explained further in the 
discussion of structured data costs, the Commission is now 
estimating that only half of affiliated respondents (i.e., 8 out of 
the 17 affiliated exchanges) will experience reduced burdens, and is 
therefore increasing the burden estimates for Inline XBRL tagging of 
Form 1 and annual amendments thereto compared to the proposal.
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    The Commission estimates respondents will incur an average of 20 
burden hours to tag the initial Form 1 in Inline XBRL (a total annual 
industry-wide burden of 20 hours), and an average of 14 burden hours to 
tag financial statements included in annual amendments to Form 1 in 
Inline XBRL (a total annual industry-wide burden of 336 hours).\586\ 
With respect to the external monetary costs (e.g., the costs of 
purchasing and renewing the necessary software to tag filings in Inline 
XBRL) that are incurred in addition to the internal time burden, the 
Commission estimates an annual average cost of $5,000 to tag Form 1 
(including initial and subsequent filings) in Inline XBRL (a total 
annual industry-wide cost of $125,000).\587\
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    \586\ 20 burden hours to tag Exhibits D, E (in part), and I in 
initial Form 1 in Inline XBRL x 1 response per year = 20 burden 
hours. 14 burden hours to tag financial statements in annual 
amendments to Form 1 in Inline XBRL x 24 responses per year = 336 
burden hours.
    \587\ $5,000 per year x (24 exchanges + 1 exchange filing an 
initial Form 1 application) = $125,000. See infra section X.C.2.b 
for further detail on structured data (Inline XBRL and custom XML) 
compliance costs, including estimated cost ranges and factors 
underlying expected variance in structured data costs across 
different filers. We have accounted for this expected variance in 
the calculations of average burden and cost figures presented in 
this section.
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    The Commission also recognizes the requirement to structure certain 
other disclosures on Form 1 in a custom XML data language would impose 
burdens on respondents.\588\ The Commission estimates respondents will 
incur an average of 3 burden hours to structure disclosures in initial 
Form 1 filings in custom XML (a total annual industrywide burden of 3 
hours), and an average of 2 burden hours to structure disclosures in 
subsequent Form 1 filings in custom XML (a total annual industrywide 
burden of 528 hours).\589\
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    \588\ This does not include the monthly volume reports that 
exchanges must file under Rule 6a-3(b) of the Exchange Act, as we 
assume exchanges would file those disclosures, which comprise a very 
limited number of data points, using a fillable form that EDGAR 
would convert to custom XML. See 17 CFR 240.6a-3(b).
    \589\ 3 burden hours to structure disclosures in initial Form 1 
filings in custom XML x 1 response per year = 3 burden hours. 2 
burden hours to structure disclosures in subsequent Form 1 filings 
in custom XML x 264 responses per year = 528 burden hours. Our 
estimates assume exchanges would choose to encode the disclosures in 
the Exhibits to Form 1 in custom XML and submit the custom XML 
documents directly to EDGAR, rather than manually completing 
fillable EDGAR forms to be converted into custom XML documents. See 
infra section X.C.2.b.
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    To summarize, the current estimated annual burden to submit filings 
pursuant to Rules 6a-1, 6a-2, and 6a-3 is 7,624 hours.\590\ The 
Commission estimates that the annual burden to submit these filings 
will be 8,281 hours.\591\ In addition, the Commission estimates that 
the total annual industry-wide external cost of the Inline XBRL 
requirements related to Form 1 will be $125,000.\592\
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    \590\ 880 burden hours for Rule 6a-1 + 6,600 burden hours for 
Rule 6a-2 + 144 burden hours for Rule 6a-3 = 7,624 burden hours.
    \591\ 901 burden hours for Rule 6a-1 (878 burden hours to file 
electronically + 20 burden hours to tag in Inline XBRL + 3 burden 
hours to tag in custom XML) + 7,200 burden hours for Rule 6a-2 
(6,336 burden hours to file electronically + 336 burden hours to tag 
Exhibits in Inline XBRL + 528 burden hours to structure Exhibits in 
custom XML) + 180 burden hours for Rule 6a-3 = 8,281 burden hours.
    \592\ $5,000 industry-wide cost for Rule 6a-1 (to tag in Inline 
XBRL an initial Form 1 filing) + $120,000 industry-wide cost for 
Rule 6a-2 (to tag in Inline XBRL periodic updates to Form 1) = 
$125,000.
[GRAPHIC] [TIFF OMITTED] TR21JA25.016


[[Page 7316]]


3. Rule 6a-4, Form 1-N
Currently Approved Burden Estimate \593\
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    \593\ For an explanation of the collection of information under 
Rule 6a-4 and Form 1-N, see supra section IX.A.3.
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    Initial filings on Form 1-N by futures exchanges submitting notice 
registration as a national securities exchange solely for the purpose 
of trading security futures products are made on a one-time basis. The 
Commission estimates that it would receive zero initial Form 1-N 
filings per year.\594\ The Commission estimates that the total burden 
for all respondents to file initial Form 1-N filings per year would be 
0 hours (31 hours/respondent/year x 0 respondents). The Commission 
estimates that the total annual burden for all respondents to provide 
periodic amendments \595\ to keep the Form 1-N accurate and up to date 
as required under Rule 6a-4(b)(1) would be 30 hours (15 hours/
respondent per year x 2 respondents). The Commission estimates that the 
total annual burden for all respondents to provide annual amendments 
under Rule 6a-4(b)(3) would be 30 hours (15 hours/respondent/year x 2 
respondents). The Commission estimates that the total annual burden for 
all respondents to provide triennial amendments \596\ under Rule 6a-
4(b)(4) would be 13 hours (20 hours/response x 2 responses every three 
years). The Commission estimates that the total annual burden for the 
filing of the supplemental information \597\ and the monthly reports 
required under Rule 6a-4(c) would be 12 hours (6 hours/respondent per 
year x 2 respondents). Thus, the Commission estimates the total annual 
burden for complying with Rule 6a-4 is 86 hours.
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    \594\ The Commission is basing its estimate on its historical 
experience with Form 1-N filings. In particular, since the adoption 
of the form in 2001, six initial Form 1-N filings have been made by 
futures exchanges. Based on the infrequent occurrence of filings, 
zero is a reasonable estimate.
    \595\ 17 CFR 240.6a-4(b)(1).
    \596\ 17 CFR 240.6a-4(b)(3) and (4).
    \597\ 17 CFR 240.6a-4(c).
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Revision to Burden Estimate
    The Commission recognizes that the amendments to Rule 6a-4 impose 
certain burdens on respondents. Although the information to be provided 
on filings made pursuant to Rule 6a-4 will not change, respondents will 
be required to submit documents electronically. The instructions to 
Form 1-N are amended to no longer require respondents to make and 
submit multiple copies of the Form 1-N submission. Currently, 
respondents must make two copies of each filing in addition to the 
original Form 1-N to be submitted pursuant to Rule 6a-4. Generally, the 
time spent making such copies instead will be spent uploading documents 
through EDGAR. Where a filing could include multiple exhibits, 
generally, the time required to upload documents will be less than the 
time required to make two copies of each exhibit, particularly when the 
exhibit contains numerous pages.
    The Commission estimates that, on average, filing an initial Form 
1-N filing electronically will require, generally, two fewer hours of 
clerical work from the current baseline. Therefore, instead of 31 
hours, an initial filing will require 29 hours. However, because the 
Commission estimates that there will be zero respondents submitting 
initial filings, the burden would remain zero hours (29 hours/
respondent/year x 0 respondents/year).
    The Commission estimates that, on average, periodic amendments to 
Form 1-N electronically will require 1 fewer hour of clerical work from 
the current baseline. The aggregate ongoing burden on all respondents 
submitting periodic amendments electronically will be two hours fewer 
than the current baseline. Accordingly, the Commission estimates that 
the aggregate burden on all respondents to submit periodic amendments 
to Form 1-N will be 28 hours (14 hours/respondent/year x 2 
respondents).
    Similarly, the Commission estimates that, on average filing annual 
amendments to Form 1-N electronically will require 1 fewer hour of 
clerical work from the current baseline. The aggregate burden on all 
respondents submitting annual amendments electronically will be two 
hours fewer than the current baseline. Accordingly, the Commission 
estimates that the aggregate burden on all respondents to provide 
annual amendments to Form 1-N will be 28 hours (14 hours/respondent/
year x 2 respondents).
    The Commission estimates that, on average, filing triennial 
amendments to Form 1-N will require 1 fewer hour of clerical work from 
the current baseline. Accordingly, the Commission estimates that the 
total annual burden for all respondents to provide triennial amendments 
to Form 1-N will be 13 hours \598\ (19 hours/response x 2 respondents 
per year x .33 responses per year).
---------------------------------------------------------------------------

    \598\ Even with the one hour per response reduction, the annual 
total burden would still be 13 hours due to rounding. The annual 
burden will be reduced from 13.33 to 12.67, which both round to 13 
hours.
---------------------------------------------------------------------------

    With respect to supplemental material filed under Rule 6a-4, while 
in some instances there may be a marginal reduction in burden hours 
associated with submitting these materials electronically as a result 
of a reduction in printing requirements, for purposes of making a PRA 
burden estimate, on average, the most recently approved baseline is 
expected to represent an appropriate estimate of the burden hours 
associated with submitting supplemental information and monthly 
reports. The time required to compile copies of these materials would, 
on average, be equivalent to the time required to upload those filings 
electronically. The Commission estimates that, on average, filing 
supplemental information and monthly reports electronically will not 
increase or decrease burden hours from the current baseline of six 
hours/respondent/year. Accordingly, the aggregate burden associated 
with filing supplemental information and monthly reports will continue 
to be 12 hours. Thus, the total aggregate annual burden to comply with 
Rule 6a-4 will be 81 hours.\599\
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    \599\ The Commission currently estimates that compliance with 
Form 1-N and Rule 6a-4 results in $304 of annual clerical costs 
(i.e., mailing forms and copying forms etc.). The Commission 
estimates that these costs will be eliminated with the electronic 
filing of Form 1-N.

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[[Page 7317]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.017

4. Rules 15aa-1 and 15aa-2; Form 15A
Currently Approved Burden Estimate
    As is noted above, due to the length of time since Control Nos. 
3235-0030 and 3235-0044 were last active, there are no currently 
approved burdens for Rules 15Aa-1 and 15Aj-1 (redesignated as Rules 
15aa-1 and 15aa-2, respectively) and Form 15A.\600\
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    \600\ See supra note 501.
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Revision to Burden Estimate
    Initial filings on new Form 15A by an applicant seeking 
registration as a national securities association are made on a one-
time basis.\601\ The Commission estimates that it will receive one 
initial Form 15A filing per year.\602\ Because the filing of an initial 
Form 15A is expected to be substantially similar to an initial Form 1 
filing, the Commission estimates that each respondent will incur an 
average burden of 878 hours to complete and file an initial Form 
15A.\603\
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    \601\ For an explanation of the collection of information under 
Rules 15Aa-1 and 15Aj-1 that are being redesignated as Rules 15aa-1 
and 15aa-2 and Forms X-15AA-1, X-15AJ-1, and X-15AJ-2 that are being 
redesignated as Form 15A, see supra section IX.A.4.
    \602\ See Exchange Act Rule 15aa-1, 17 CFR 240.15aa-1 and 17 CFR 
249.801.
    \603\ See FR Doc. 2019-04007, 84 FR 8138 (Mar. 6, 2019) (Request 
to OMB for Extension of Rule 6a-1, Rule 6a-2 and Form 1; SEC File 
270-0017; OMB Control No. 3235-0017) (hereinafter ``Rules 6a-1 and 
6a-2 PRA Update''). The Commission currently estimates that an 
initial Form 1 filing would incur an average burden of 880 hours, 
less the efficiencies contemplated in this release that no longer 
require the submission of duplicate paper copies (a reduction of 2 
burden hours per respondent). See supra section IX.D.2.
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    Based on the number of applications for registration as a national 
securities association the Commission has received, the Commission 
estimates that it will receive not more than one initial Form 15A 
filing per year. The Commission estimates that a respondent will incur 
an average burden of 878 hours to file an initial Form 15A.
    With respect to the amendments to new Form 15A, the Commission 
estimates that each registered association will file 11 amendments or 
periodic updates to Form 15A per year.\604\ The number of hours 
required for amendments to Form 15A (that must be submitted to the 
Commission) can vary depending upon the nature and extent of the 
amendment, the association's corporate structure, and the association's 
business activities. The Commission estimates that an association will 
incur an average burden of 24 hours per filing to comply with Rule 
15aa-2.\605\ Accordingly, the estimated average annual burden to update 
and amend Form 15A is 264 hours per association \606\ for an estimated 
aggregate annual burden for all national securities associations of 264 
hours.\607\
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    \604\ The requirements of Rule 15aa-2 are substantively similar 
to the requirements of Rules 6a-1 and 6a-2. As a result, the 
Commission relies on the past history of amendments and periodic 
updates submitted under those rules in determining its estimate of 
the number of amendments the Commission will receive under Rule 15A. 
The Commission estimates that each registered or exempt exchange 
will file 11 amendments or periodic updates to Form 1 per year.
    \605\ Attorney at 10 hours + Accountant at 10 hours + Compliance 
Clerk at 4 hours = 24 burden hours. The instructions to Form 15A 
will be amended to no longer require respondents to make and submit 
multiple copies of the Form 15A submission. Currently, respondents 
must make two copies of each filing to be submitted pursuant to Rule 
15Aa-1 and 15Aaj-1. The time spent making such copies instead is 
expected to be spent uploading documents through EDGAR. Where a 
filing could include multiple exhibits, the time required to upload 
documents is expected to be less than the time required to make two 
copies of each exhibit, particularly when the exhibit contains 
numerous pages. The Commission estimates that, on average, filing 
amendments to Form 15A electronically will require 1 fewer hour of 
clerical work compared to the submission of physical copies as 
contained in the most recent PRA updates for Rule 6a-1 and 6a-2.
    \606\ 11 Form 15Aa-2 amendments annually x 24 burden hours per 
Form 15A amendment = 264 burden hours per association.
    \607\ 264 burden hours per association x 1 national securities 
association = 264 aggregate burden hours.
[GRAPHIC] [TIFF OMITTED] TR21JA25.018


[[Page 7318]]


5. Rule 17ab2-1, Form CA-1
Currently Approved Burden Estimate
    The Commission has previously discussed the requirements of Rule 
17ab2-1 and Form CA-1 above in IX.A.5.
    The Commission estimates that, on average, each initial Form CA-1 
requires approximately 340 hours to complete and submit for approval, 
and that, on average, the Commission receives one application each 
year.\608\ This burden is composed primarily of a one-time reporting 
burden that reflects the applicant's staff time to prepare and submit 
the Form CA-1 to the Commission.\609\ With respect to amendments to 
Form CA-1, the Commission estimates that, on average, an amendment 
requires 60 hours of the exempt or registered clearing agency's staff 
time,\610\ although the time burden related to preparing and submitting 
an amendment widely varies depending on the nature of the information 
that needs to be updated. The Commission estimates that, on average, it 
receives one amendment per year. Accordingly, the Commission estimates 
that the aggregate annual burden associated with compliance with Rule 
17ab2-1 and Form CA-1 is 400 hours.
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    \608\ See FR Doc. 2020-18498, 85 FR 52178 (Aug. 24, 2020) 
(Request to OMB for Extension of Rule 17Ab2-1 and Form CA-1; SEC 
File No. 270-203; OMB Control No. 3235-0195).
    \609\ Compliance Attorney at 300 hours + Chief Compliance 
Officer at 40 hours = 340 burden hours.
    \610\ Compliance Attorney at 40 hours + Chief Compliance Officer 
at 20 hours = 60 burden hours.
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Revision to Burden Estimate
    The Commission recognizes that the amendments to Rule 17ab2-1 
impose certain burdens on respondents. Although the information to be 
provided on filings made pursuant to Rule 17ab2-1 would not change, 
respondents would be required to submit documents electronically. The 
instructions to Form CA-1 would be amended to no longer require 
respondents to make and submit multiple copies of the same form. 
Currently, respondents must make four copies of Form CA-1. The time 
spent making such copies is expected to now be spent uploading 
documents through EDGAR. Where a filing may include multiple exhibits, 
the time required to upload documents is expected to be slightly less 
than the time required to make copies of each exhibit. As the number of 
exhibits required to be submitted with Form CA-1 is roughly equivalent 
to the number of exhibits required by an initial Form 1 application, 
the overall burden is expected to be two hours less (for either an 
initial application or an amendment) to make an electronic filing, 
compared to making the paper copies. Thus, the aggregate annual burden 
associated with compliance with Rule 17ab2-1 and Form CA-1, other than 
the structuring requirement discussed below, is expected to be 
approximately 396 hours.
    The Commission also recognizes that the requirement to file Form 
CA-1 in Inline XBRL (in part) and in custom XML (in part) would impose 
burdens on respondents.\611\ The Commission estimates respondents would 
incur an average of 18 burden hours to structure financial statements 
and narrative disclosures in initial applications on Form CA-1 in 
Inline XBRL (resulting in a total annual industry-wide burden of 18 
hours) and an average of 12 burden hours to structure financial 
statements and narrative disclosures in subsequent amendments on Form 
CA-1 in Inline XBRL (resulting in a total annual industry-wide burden 
of 12 hours).\612\ The Commission further estimates respondents would 
incur average annual external monetary costs (e.g., the cost of 
purchasing and renewing the necessary Inline XBRL tagging software) of 
$3,500 to structure financial statements and narrative disclosures 
included in Form CA-1 in Inline XBRL (resulting in a total annual 
industry-wide burden of an average of $3,500).\613\ The Commission 
estimates respondents would incur an average of 3 burden hours to 
structure other disclosures in initial applications on Form CA-1 in a 
custom XML data language (resulting in a total annual industry-wide 
burden of 3 hours) and an average of 2 burden hours to structure those 
disclosures in subsequent amendments on Form CA-1 in custom XML 
(resulting in a total annual industry-wide burden of 2 hours).\614\ The 
structured data requirements for Form CA-1 would thus entail an 
estimated total annual industry-wide burden of 21 burden hours and 
$3,500 in external monetary costs for initial applications, and an 
estimated total annual industry-wide burden of 14 burden hours and 
$3,500 in external monetary costs for subsequent amendments.\615\
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    \611\ The amendments would require Schedule A and Exhibits C, F, 
H, J, K, L, M, O, R, and S of Form CA-1 to be structured in Inline 
XBRL, and would require the execution page and Exhibits A (in part), 
B, D, E (in part), I, N, and Q to be structured in custom XML. See 
supra section II.D.5; see also supra section VII.A.
    \612\ 18 hours per initial application x 1 initial application 
per year = 18 aggregate burden hours. 12 hours per subsequent 
amendment x 1 subsequent amendment per year = 12 aggregate burden 
hours.
    \613\ $3,500 per initial application x 1 initial application per 
year = $3,500 aggregate cost per year. $3,500 per subsequent 
amendment x 1 subsequent amendment per year = $3,500 aggregate cost 
per year.
    \614\ 3 hours per initial application x 1 initial application 
per year = 3 aggregate burden hours per year. 2 hours per subsequent 
amendment x 1 subsequent amendment per year = 2 aggregate burden 
hours per year. Our estimates assume clearing agencies would choose 
to encode their disclosures in custom XML and submit the custom XML 
documents directly to EDGAR, rather than manually completing 
fillable EDGAR forms to be converted into custom XML documents. See 
infra section X.C.2.b. Consistent with burden estimates in prior 
Commission releases, the burden estimates here assume Inline XBRL 
tagging would be done by a compliance attorney, while custom XML 
structuring would be done by a programmer. See Shortening the 
Securities Transaction Settlement Cycle, Release No. 34-94196 (Feb. 
9, 2022), 87 FR 10436, 10491 (Feb. 24, 2022); Money Market Fund 
Reforms, Release No. IC-34441 (Dec. 15, 2021), 87 FR 7248, 7332 
(Feb. 8, 2022).
    \615\ 18 hours and $3,500 for Inline XBRL structuring + 3 hours 
for custom XML structuring = 21 hours and $3,500 per initial 
application) x 1 initial application per year = 21 aggregate burden 
hours per year and $3,500 in aggregate external monetary cost per 
year. 12 hours and $3,500 for Inline XBRL structuring + 2 hours for 
custom XML structuring per subsequent amendment = 14 hours and 
$3,500 per subsequent amendment x 1 subsequent amendment per year = 
14 aggregate burden hours per year and $3,500 in aggregate external 
monetary cost per year. See infra section X.C.2.b for further detail 
on structured data (Inline XBRL and custom XML) compliance costs, 
including estimated cost ranges and factors underlying expected 
variance in structured data costs across different filers.
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6. Rule 19b-4(e), Form 19b-4(e)
Currently Approved Burden Estimate
    The Commission's currently approved estimate to complete and submit 
one Form 19b-4(e) is 1 hour, for an aggregate annual burden of 2,331 
hours.\616\
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    \616\ See FR Doc. 2022-17308, 87 FR 49894 (Aug. 12, 2022) 
(Request to OMB for extension of Rule 19b-4(e) and Form 19b-4(e); 
SEC File No. 270-447; OMB Control No. 3235-0504).
---------------------------------------------------------------------------

Revision to Burden Estimate
    The amendment to Rule 19b-4(e) rescinding Form 19b-4(e) and instead 
requiring an SRO to publicly report the information currently provided 
in Forms 19b-4(e) on its internet website will impose certain burdens 
on respondents. Respondents will be required to use the most recent 
versions of the XML schema (i.e., data language) and the associated PDF 
renderer as published on the Commission's website to post the 
information required under Rule 19b-4(e) for each new derivative 
securities product. Currently, respondents must make nine copies of 
Form 19b-4(e); however, the form consists of a single page and does not 
require respondents to submit exhibits. In some instances, there may be 
a marginal change in burden hours associated with posting the same

[[Page 7319]]

information as is required on current Form 19b-4(e) on a respondent's 
website. However, given the relatively small amount of data to be 
structured, rendered, and posted for each new derivative securities 
product, for purposes of making a PRA burden estimate the Commission 
estimates that, on average, the requirement to structure the 
information in a custom XML data language, render it using the 
associated PDF renderer, and post it on a respondent's website continue 
to be 1 burden hour for each new derivative securities product, and 
that the time to structure, render and post the first new derivative 
securities product per respondent is an additional 0.5 hours. 
Accordingly, the Commission estimates that the total additional initial 
hour burden will be 12 hours, and the total annual hour burden will 
continue to be 2,331 hours per year associated with the structuring, 
rendering, and posting of information under Rule 19b-4(e).\617\ The 
Commission does not estimate respondents will incur external monetary 
costs under Rule 19b-4(e).
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    \617\ 0.5 burden hours per first response for structuring, 
rendering, and posting x 24 respondents) = 12 hours. 1 burden hour 
per response for structuring, rendering, and posting in subsequent 
years x 2,331 responses) = 2,331 hours. See also infra Section 
X.C.2.b, (discussing estimated cost ranges related to the 
structuring requirement for Rule 19b-4(e) information). Consistent 
with structured data burden estimates in prior Commission releases, 
the burden estimates here assume the custom XML structuring will be 
done by a programmer. See supra section IX.D.5.
[GRAPHIC] [TIFF OMITTED] TR21JA25.019

7. Rule 19b-4(j), Form 19b-4
Currently Approved Burden Estimate
    The Commission's currently approved estimated response burden 
pursuant to Rule 19b-4 and Form 19b-4 for 46 respondents is an 
aggregate burden of 69,259 hours.\618\
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    \618\ See FR Doc. 2023-01613, 88 FR 5387 (Jan. 27, 2023) 
(Request to OMB for extension of Rule 19b-4 and Form 19b-4; SEC File 
No. 270-38; OMB Control No. 3235-0045).
---------------------------------------------------------------------------

Revision to Burden Estimate
    The Commission estimates that, on average, the removal of the 
manual signature and retention requirement will not increase or 
decrease the burden hours associated with continuing to file Form 19b-4 
electronically because the manual signature and retention requirement 
is only a small component of the filing requirement. Accordingly, the 
Commission estimates that the ongoing aggregate burden for SROs 
associated with complying with Rule 19b-4 and filing Form 19b-4 will 
continue to be 69,259 hours.\619\
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    \619\ See id. for an itemized discussion of specific one-time 
and ongoing hourly burdens for respondents.
[GRAPHIC] [TIFF OMITTED] TR21JA25.020

8. Rule 17a-22
Currently Approved Burden Estimate \620\
---------------------------------------------------------------------------

    \620\ The Commission has previously discussed the requirements 
of Rule 17a-22 in section IX.A.8, supra.
---------------------------------------------------------------------------

    The Commission estimates that it receives, on average, 
approximately 840 filings per year pursuant to Rule 17a-22.\621\ 
Although the frequency of filings made by registered clearing agencies 
pursuant to Rule 17a-22 varies, the Commission estimates that, on 
average, each registered clearing agency submits approximately 120 
filings per year.\622\ The Commission estimates that, on average, each 
filing requires approximately 0.25 hours (fifteen minutes).\623\ This 
figure represents the time it takes for a staff person at a registered 
clearing agency to: (i) properly identify a document subject to the 
rule; (ii) print and make copies of the document; and (iii) mail the 
copies to the Commission and, where applicable, the ARA.\624\ 
Accordingly, the Commission estimates that the aggregate annual burden 
to comply with Rule 17a-22 is 210 hours.\625\ Further, the Commission 
estimates that each

[[Page 7320]]

registered clearing agency will expend a total of 30 hours per year to 
comply with Rule 17a-22.\626\
---------------------------------------------------------------------------

    \621\ This figure is based on the number of aggregate filings 
received by the Commission in 2017, which was the last year for 
which the Commission had compiled data at the time of the Rule 17a-
22 PRA update in 2020.
    \622\ See FR Doc. 2020-08336, 85 FR 21910 (Apr. 20, 2020) 
(Request to OMB for Extension of Rule 17a-22; SEC File No. 270-202; 
OMB Control No. 3235-0196). Given the variability in the number of 
filings per clearing agency received each year, the Commission 
estimated an average of 120 annual filings per clearing agency by 
averaging the approximate number of filings received in the most 
recent year for which the Commission has obtained data (840 filings) 
by the number of registered clearing agencies (7 clearing agencies).
    \623\ See id.
    \624\ Although current Rule 17a-22 requires duplicate filings 
when the Commission is not a registered clearing agency's ARA, the 
additional burden of making a duplicate filing is expected to be 
minimal because the rule applies only to materials that have already 
been published by the registered clearing agency.
    \625\ 7 registered clearing agencies x 120 responses per 
clearing agency x .25 hours = 210 burden hours.
    \626\ 840 total responses x .25 hours/7 active clearing agencies 
= 30 burden hours.
---------------------------------------------------------------------------

Revision to Burden Estimate
    The Commission recognizes that the amendments to Rule 17a-22 impose 
certain burdens on respondents. Although the scope of supplemental 
materials subject to Rule 17a-22 would not change, respondents would be 
required to prominently post certain supplemental materials on their 
internet websites within two business days after issuing, or making 
generally available, such materials to their participants or other 
entities with whom they have a significant relationship. Currently, 
respondents must file with the Commission three paper copies of certain 
supplemental materials issued, or made generally available, to their 
participants or other entities with whom they have a significant 
relationship within 10 days after issuing, or making generally 
available, such materials. In addition, when the Commission is not a 
respondent's ARA, the respondent must file at the same time one paper 
copy of the materials with its ARA.
    While there may be a marginal reduction in burden hours associated 
with replacing the paper filing requirement under Rule 17a-22 with an 
electronic filing requirement via a registered clearing agency's 
website, for purposes of making a PRA burden estimate, the current 
baseline is expected to represent a reasonable estimate of the burden 
hours associated with filing supplemental materials. The time required 
to compile and mail copies of supplemental materials is expected, on 
average, to be equivalent to the time required to post these materials 
on a clearing agency's website such that they would be readily 
identifiable and accessible on the website.\627\ Moreover, reducing the 
timeframe under Rule 17a-22 from 10 days to 2 business days is not 
expected to increase the burden hours associated with compliance with 
Rule 17a-22. On average, filing supplemental materials electronically 
via a registered clearing agency's internet website is not expected to 
increase or decrease burden hours from the current baseline of 0.25 
hours. Accordingly, each registered clearing agency is expected to 
continue to expend a total of 30 hours per year to comply with Rule 
17a-22.\628\ Thus, the aggregate annual burden associated with 
compliance with Rule 17a-22 is expected to continue to be 210 
hours.\629\
---------------------------------------------------------------------------

    \627\ See Section III.B.4. (explaining the Commission's 
interpretation of the requirement to ``prominently post'' 
supplemental materials on a clearing agency's website pursuant to 
the amendments to Rule 17a-22).
    \628\ 840 total responses x .25 hours/7 active clearing agencies 
= 30 burden hours.
    \629\ 7 registered clearing agencies x 120 responses per 
clearing agency x .25 hours = 210 burden hours.
---------------------------------------------------------------------------

9. Rules 17a-5, 18a-7, and 17a-12
a. Requirement To File Annual Reports on EDGAR Using Structured Data
Currently Approved Burden Estimate
    Rules 17a-5, 17a-12, and 18a-7 require broker-dealers, OTC 
derivatives dealers, and SBS Entities that are not prudentially 
regulated, respectively, to file annual reports, including financial 
statements and supporting schedules that must be audited by a PCAOB-
registered independent public accountant in accordance with PCAOB 
standards. Under Rule 17a-5, each broker-dealer is estimated to have an 
annual reporting burden of 12 hours, resulting in an annual industry 
burden of 38,616 hours.\630\ Under Rule 17a-12, each OTC derivatives 
dealer is estimated to have an annual reporting burden of 100 hours, 
resulting in an annual industry burden of 200 hours.\631\ Under Rule 
18a-7, each SBSD is estimated to have an annual reporting burden of 17 
hours, resulting in an annual industry burden of 136 hours.\632\
---------------------------------------------------------------------------

    \630\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 17a-5 (June 7, 2023), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202304-3235-019.
    \631\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 17a-12 (Jan. 11, 2022), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202110-3235-010.
    \632\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 18a-7 (Mar. 30, 2024), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202403-3235-002. Each MSBSP is estimated to 
have an annual reporting burden of 10 hours; however, as of Dec. 31, 
2023, there were no MSBSPs registered with the Commission.
---------------------------------------------------------------------------

Revision to Burden Estimate
    In the context of Nationally Recognized Statistical Rating 
Organizations (``NRSROs''), the Commission estimated that it would take 
an NRSRO, on average, sixteen hours on a one-time basis to become 
familiar with the EDGAR system.\633\ This estimate would also apply to 
entities that are new filers on EDGAR under the amendments to Rules 
17a-5, 18a-7, and 17a-12.
---------------------------------------------------------------------------

    \633\ See Nationally Recognized Statistical Rating 
Organizations, Release No. 72936 (Aug. 27, 2014), 79 FR 55077, 
55235-6 (Sept. 15, 2014).
---------------------------------------------------------------------------

    For the 12 months ended December 31, 2023, the Commission received 
1,498 filings of the annual reports required by paragraph (d) of Rule 
17a-5 in paper. Based on this estimate, the Commission estimates that 
approximately 1,498 broker-dealers that are required to file annual 
reports with the Commission will be new EDGAR filers. The broker-
dealers that have filed annual reports on EDGAR have EDGAR access 
credentials and are familiar with the mechanics of filing on EDGAR. The 
Commission estimates the one time industry-wide burden for broker-
dealers to acquire EDGAR access and familiarize themselves with EDGAR 
will be approximately 23,968 hours.\634\ ANC broker-dealers must also 
file annual reports under the amendments to Rule 17a-5, so there would 
be no additional burden attributable to requiring the electronic filing 
on EDGAR of ANC broker-dealer supplemental reports under paragraph (k) 
of Rule 17a-5.
---------------------------------------------------------------------------

    \634\ 1,498 broker-dealers x 16 hours = 23,968 hours.
---------------------------------------------------------------------------

    In addition, as stated above, the Commission estimates that 18 non-
bank SBS Entities would be required to electronically file on EDGAR 
annual reports under paragraph (c) of Rule 18a-7, as amended. However, 
since these firms are already filing Form SBSE on EDGAR, the Commission 
does not estimate any burden for these firms to familiarize themselves 
with EDGAR.
    The Commission estimates that the one-time burden for an OTC 
derivatives dealer to familiarize itself with EDGAR would be 
approximately 16 hours. However, because all three OTC derivatives 
dealers already voluntarily file their annual reports on EDGAR, the 
Commission estimates that the one-time industry-wide burden would be 
zero hours.
    The current PRA burden for paragraph (d) of Rule 17a-5 includes an 
annual industry-wide cost of approximately $31,022 in postage costs to 
mail the annual reports to the Commission. Rule 17a-5 is being amended 
to require these reports to be filed electronically, so there should be 
no more postage costs associated with these requirements. Under the 
rule amendments, broker-dealers will no longer incur these costs.
    Under the rule amendments, broker-dealers, OTC derivatives dealers, 
SBSDs, and MSBSPs filing their annual reports electronically must keep 
the original oath or affirmation for a period of not less than six 
years, the first two years in an easily accessible place. The 
requirement to keep the oath or affirmation should not materially 
increase a broker-dealer's recordkeeping burden.

[[Page 7321]]

    Under the rule amendments, broker-dealers, OTC derivatives dealers, 
SBSDs, and MSBSPs are required to file their annual reports and related 
filings (including compliance reports, exemption reports, accountant's 
reports, and supplemental reports) in Inline XBRL. To file reports in 
Inline XBRL, a filer must purchase Inline XBRL tagging software to 
apply Inline XBRL tags to the reports before submitting them to EDGAR, 
or employ a tagging service provider to apply the Inline XBRL tags to 
the reports on its behalf. As described in further detail in the 
economic analysis and above, the burdens associated with tagging the 
annual reports and related filings in Inline XBRL will vary based on 
the size of the respondent and whether the respondent is affiliated 
with a public reporting company that is already subject to Inline XBRL 
requirements, and the initial implementation of Inline XBRL 
requirements entails additional burdens (e.g., establishing new 
processes for the use of Inline XBRL tagging software) that do not 
apply on an ongoing basis.\635\
---------------------------------------------------------------------------

    \635\ See infra sections X.C.2.b and IX.D.2. We have accounted 
for this expected variance in the calculations of average burden and 
cost figures presented in this section. Consistent with structured 
data burden estimates in prior Commission releases, the burden 
estimates here assume internal Inline XBRL tagging would be done by 
a compliance attorney. See supra section IX.D.5.
---------------------------------------------------------------------------

    Compared to the proposing release, the Commission has increased the 
burden and cost estimates for Inline XBRL tagging of the annual reports 
and related filings for several reasons. First, the Commission 
estimated at proposal that all respondents affiliated with public 
reporting companies already subject to Inline XBRL requirements would 
incur reduced burdens and costs, because such respondents would be able 
to leverage the Inline XBRL compliance software licenses and/or service 
agreements, as well as the Inline XBRL tagging processes and 
experience, of those affiliates. One commenter stated that this burden 
and cost reduction is dependent on the contractual arrangements that 
firms have with third-party providers, and on the internal staffing 
structure for each company.\636\ To account for this variation, the 
Commission is now estimating that only half of affiliated respondents 
will incur reduced burdens and costs.\637\
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    \636\ See XBRL Letter at 11.
    \637\ As stated in the structured data cost section of the 
economic analysis, the Commission has identified 226 respondents 
affiliated with public reporting companies. See infra section 
X.C.2.b. The Commission is now estimating that only half, or 113, of 
those affiliated respondents will incur reduced Inline XBRL burdens.
---------------------------------------------------------------------------

    Second, the Commission estimated at proposal that respondents 
choosing to tag annual reports and related filings internally, rather 
than outsourcing the Inline XBRL tagging to a third-party service 
provider, would incur initial implementation burdens and costs in 
addition to ongoing Inline XBRL tagging burdens and costs. The 
Commission estimated at proposal that outsourcing respondents would not 
incur any initial implementation burdens. One commenter stated that 
structured data requirements will impose burdens associated with 
diligencing, negotiating with, and onboarding third parties.\638\ The 
Commission agrees, and because these burdens apply to respondents that 
outsource Inline XBRL tagging to third-party service providers, the 
Commission has increased the number of respondents it estimates will 
incur initial structured data implementation burdens.
---------------------------------------------------------------------------

    \638\ See SIFMA 5/22/2023 Letter at 4.
---------------------------------------------------------------------------

    However, as discussed above in sections IV.A. and VII.A., the 
Commission disagrees that the structured data requirements under the 
rule amendments will obligate every filer or submitter to undergo 
multiple fundamental operational changes. Firms that outsource 
compliance with structured data requirements to a third-party service 
provider rather than comply with the structured data requirements in-
house would not undergo these operational changes because the third-
party service provider would take such actions as necessary. For the 
custom XML requirements, most firms will comply with those requirements 
by completing fillable web forms on EDGAR; other firms will have the 
requisite sophistication to encode disclosures using custom XML schemas 
without the need for substantial additional training or hiring of 
personnel.\639\ Firms that comply with Inline XBRL structured data 
requirements internally will likely need to implement processes for 
their staff to apply Inline XBRL tags and validate such tags. The 
Commission includes these implementation and training costs in its 
estimates of initial structured data costs and burdens.
---------------------------------------------------------------------------

    \639\ See infra section X.C.2.b. As explained below in the 
Economic Analysis, firms that comply with XBRL requirements 
internally do not need to hire additional personnel that are 
proficient in XBRL because they can license software tools that 
allow staff without XBRL proficiency to apply Inline XBRL tags 
without needing to overhaul the firm's systems or operations.
---------------------------------------------------------------------------

    Third, the Commission's proposed structured data burden estimates 
did not include any additional burden for respondents complying with 
Rule 18a-7 under a substituted compliance order pursuant to Exchange 
Act Rule 3a71-6. One commenter stated that the Commission should allow 
firms relying on substituted compliance to continue submitting home-
country reports in their current form, explaining that the organization 
and requirements of these reports is often different from U.S. 
reports.\640\ On an ongoing basis, the Commission estimates that the 
Inline XBRL burdens for respondents relying on substituted compliance 
are equal to the Inline XBRL burdens for other respondents, because in 
each case, the respondent will need to apply Inline XBRL tags to 
disclosures in financial statements and supplemental filings that Rule 
18a-7 requires, whether those disclosures are provided in the U.S. 
report or included within the corresponding home country report 
alongside other disclosures that only the home country regulator 
requires. However, the first time a respondent relying on substituted 
compliance (or its third-party tagging service provider) applies Inline 
XBRL tags to its home country report, it will incur the additional 
burden of determining which disclosures within its home country report 
are responsive to U.S. disclosure requirements and must therefore be 
tagged. To capture this additional step, the Commission is increasing 
the estimated initial Inline XBRL tagging burdens and costs from 50% in 
the proposing release, by an additional 25% for SBS Entities relying on 
substituted compliance.
---------------------------------------------------------------------------

    \640\ See id. at 7. Although the comment referred specifically 
to home-country equivalents to CCO reports, home-country equivalents 
to Rule 18a-7 annual reports and related filings can also vary from 
U.S. reports in their organization and requirements.
---------------------------------------------------------------------------

    On average, respondents are estimated to incur 7 burden hours and 
$1,600 in external cost for the first response to be tagged in Inline 
XBRL, and incur 4.5 burden hours and $1,000 in external cost to tag 
subsequent responses in Inline XBRL. Therefore, the Commission 
estimates the total initial industry-wide internal burden and external 
cost would be 22,869 hours and $5,227,200 for broker-dealers, 21 hours 
and $4,800 for OTC derivative dealers, and 126 hours and $28,800 for 
SBSDs and MSBSPs.\641\ The Commission estimates the total ongoing 
annual industry-wide internal

[[Page 7322]]

burden and external cost would be 14,702 hours and $3,267,000 for 
broker-dealers, 14 hours and $3,600 for OTC derivative dealers, and 81 
hours and $18,000 for SBSDs and MSBSPs.\642\
---------------------------------------------------------------------------

    \641\ 3,267 broker-dealers x 7 hours = 22,869 hours; 3,267 
broker-dealers x $1,600 = $5,227,200. 3 OTC derivative dealers x 7 
hours = 21 hours; 3 OTC derivative dealers x $1,600 = $4,800. 18 
SBSDs and MSBSPs x 7 hours = 126 hours; 18 SBSDs and MSBSPs x $1,600 
= $28,800. These estimates include SBSDs and MSBSPs that rely on 
substituted compliance pursuant to a Commission order with respect 
to reporting obligations under Rule 18a-7(c).
    \642\ 3,267 broker-dealers x 4.5 hours = 14,701.5 hours; 3,267 
broker-dealers x $1,000 = $3,267,000. 3 OTC derivative dealers x 4.5 
hours = 13.5 hours; 3 OTC derivative dealers x $1,000 = $3,000. 18 
SBSDs and MSBSPs x 4.5 hours = 81 hours; 18 SBSDs and MSBSPs x 
$1,000 = $18,000.
---------------------------------------------------------------------------

b. Amendments Relating to the FOCUS Report
Currently Approved Burden Estimate
    Rules 17a-5, 17a-12, and 18a-7 require broker-dealers, OTC 
derivatives dealers, and SBS Entities, respectively, to file unaudited 
financial information on the FOCUS Report (Form X-17A-5 Part II, IIA, 
or IIC) on a monthly or quarterly basis.\643\ Under Rule 17a-5, each 
broker-dealer is estimated to have an annual reporting burden of 12 
hours, resulting in an annual industry burden of 38,616 hours.\644\ 
Under Rule 17a-12, each OTC derivatives dealer is estimated to have an 
annual reporting burden of 80 hours, resulting in an annual industry 
burden of 160 hours.\645\ Under Rule 18a-7, each SBSD that is not 
prudentially regulated is estimated to have an annual reporting burden 
of 192 hours, resulting in an annual industry burden of 1,536 hours, 
and each SBSD that is prudentially regulated is estimated to have an 
annual reporting burden of 16 hours, resulting in an annual industry 
burden of 464 hours.\646\
---------------------------------------------------------------------------

    \643\ See 17 CFR 240.17a-5; 17 CFR 240.17a-12; 17 CFR 240.18a-7.
    \644\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 17a-5 (June 7, 2023), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202304-3235-019.
    \645\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 17a-12 (Jan. 11, 2022), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202110-3235-010.
    \646\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 18a-7 (Mar. 30, 2024), 
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202403-3235-002.
---------------------------------------------------------------------------

Revision to Burden Estimate
    The Commission is making a number of amendments to the FOCUS 
Report. First, it is making corrective and clarifying amendments to 
FOCUS Report Part II. The Commission estimates that the amendments will 
result in an initial burden of five hours on each Part II filer so 
firms can familiarize themselves with the amendments to FOCUS Report 
Part II. These amendments will generally either have no impact on or 
reduce the ongoing burden on the vast majority of filers because they 
will generally reduce questions about where and how to report items on 
the form. However, because the amendments require stand-alone swap 
dealers and stand-alone introducing brokers to complete a new section 
of FOCUS Report Part II that these types of firms were not previously 
required to complete (i.e., Computation of CFTC Minimum Capital 
Requirements), the Commission estimates that the amendments would 
result in an ongoing annual burden of 1 hour per stand-alone swap 
dealer or stand-alone introducing broker.
    The Commission estimates that there are 466 broker-dealers filing 
FOCUS Report Part II under Rule 17a-5, resulting in an estimated 
industry-wide initial burden of 2,375 hours.\647\ The Commission 
estimates that there are three OTC derivatives dealers filing FOCUS 
Report Part II under Rule 17a-12, resulting in an estimated industry-
wide initial burden of 15 hours.\648\ The Commission estimates that 
there are 18 non-broker-dealer SBS Entities filing FOCUS Report Part II 
under Rule 18a-7, resulting in an estimated industry-wide initial 
burden of 90 hours.\649\ The Commission estimates that for Part II 
filers that are not stand-alone swap dealers, the amendments generally 
will not change the estimated ongoing burden imposed by FOCUS Report 
Part II, as amended. The Commission estimates that there are 4 domestic 
stand-alone swap dealers and 67 domestic stand-alone introducing 
brokers filing FOCUS Report Part II under Rule 17a-5, resulting in an 
estimated industry-wide ongoing burden of 71 hours per year.\650\
---------------------------------------------------------------------------

    \647\ 5 hours x 466 Part II filers under Rule 17a-5 = 2,330 
hours. These internal hours likely will be performed by a compliance 
manager.
    \648\ 5 hours x 3 Part II filers under Rule 17a-12 = 15 hours. 
These internal hours likely will be performed by a compliance 
manager.
    \649\ 5 hours x 18 Part II filers under Rule 18a-7 = 90 hours. 
These internal hours likely will be performed by a compliance 
manager.
    \650\ 1 hour x 71 Part II filers that are domestic stand-alone 
swap dealers or stand-alone introducing brokers = 71 hours. These 
internal hours likely will be performed by a compliance manager. 
This burden estimate may be duplicative since the CFTC estimates 
that swap dealers and introducing brokers elect to file the CFTC's 
Form 1-FR instead of electing to file the SEC's FOCUS Report. See 
Supporting Statement for Revised Information Collections--OMB 
Control Number 3038-0024 (Jan. 16, 2024), available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202401-3038-001.
---------------------------------------------------------------------------

    Second, the Commission is aligning the text in FOCUS Report Part 
IIC with the text in FFIEC Form 031, including additional amendments to 
FOCUS Report Part IIC to match additional changes made to FFIEC Form 
031 since the date of the Proposing Release. These amendments are 
expected to result in an initial burden of five hours on each bank SBS 
Entity so that firms can compare the revised FOCUS Report Part IIC with 
FFIEC Form 031. However, these amendments are expected to generally 
either have no impact on or reduce the ongoing burden on bank SBS 
Entities because they will generally reduce questions about how to 
complete FOCUS Report Part IIC consistently with FFIEC Form 031. The 
Commission estimates that there are 30 bank SBS Entities filing FOCUS 
Report Part IIC, resulting in an estimated industry-wide initial burden 
of 150 hours.\651\ The Commission estimates that the amendments will 
not change the estimated ongoing annual burden imposed by FOCUS Report 
Part IIC.
---------------------------------------------------------------------------

    \651\ 5 hours x 30 Part IIC filers = 150 hours. These internal 
hours likely will be performed by a compliance manager.
---------------------------------------------------------------------------

    Third, the Commission is requiring only the CEO or CFO's signature 
lines to be signed on the FOCUS Report's cover page, and allows these 
signatures to be signed either manually or electronically. This 
amendment is expected to result in an initial burden of 1 hour on each 
filer so that the firm can review the standards for an electronic 
signature on the FOCUS Report Part II, IIA, or IIC, as applicable. 
However, this amendment is expected to generally either have no impact 
on or reduce the ongoing burden on FOCUS Report filers, because they 
will not be required to furnish as many signatures as before the 
amendment, and it may be easier to prepare electronic signatures rather 
than manual signatures since firms will already be familiar with the 
process and can easily obtain these signatures while working remotely. 
The Commission estimates that there are 3,463 broker-dealers, non-
broker-dealer SBS Entities, and bank SBS Entities filing FOCUS Report 
Parts II, IIA, or IIC, resulting in an estimated industry-wide initial 
burden of 3,463 hours.\652\ The Commission estimates that the 
amendments will not change the estimated ongoing annual burden imposed 
by FOCUS Report Parts II, IIA, and IIC, as amended.
---------------------------------------------------------------------------

    \652\ 1 hour x 3,412 Part II or Part IIA filers under Rule 17a-5 
= 3,412 hours. 1 hour x 48 Part II or Part IIC filers under Rule 
18a-7 = 48 hours. 1 hour x 3 Part II filers under Rule 17a-12 = 3 
hours. These internal hours likely will be performed by a compliance 
manager.
---------------------------------------------------------------------------

    Fourth, the Commission is making two technical amendments to FOCUS 
Report Part IIA.\653\ The Commission

[[Page 7323]]

estimates that the amendments will result in an initial burden of five 
hours on each Part IIA filer so firms can familiarize themselves with 
the amendments. These amendments will generally either have no impact 
on or reduce the ongoing burden on the vast majority of filers because 
they align FOCUS Report Part IIA with the requirements of Rule 15c3-1 
and will reduce questions about how to complete FOCUS Report Part IIA 
consistently with Rule 15c3-1. The Commission estimates that there are 
2,946 FOCUS Report Part IIA filers, resulting in an estimated industry-
wide initial burden of 14,730 hours.\654\
---------------------------------------------------------------------------

    \653\ Lines 11 and 15 of the Computation of Net Capital 
Requirement are being updated to replace the incorrect cross-
reference to line 19 with a corrected cross-reference to line 18. In 
addition, the Commission is amending FOCUS Report Part IIA to 
require broker-dealers using the alternative method to compute net 
capital to report the percentage of debt to debt-equity total.
    \654\ 5 hours x 2,946 Part IIA filers = 14,730 hours. These 
internal hours likely will be performed by a compliance manager.
---------------------------------------------------------------------------

    Finally, the Commission is requiring OTC derivatives dealers to 
file the FOCUS Report electronically on the SEC eFOCUS system instead 
of in paper. The Commission estimates that this amendment will result 
in an initial burden of 15 hours on each OTC derivatives dealer so that 
the firm can familiarize itself with the SEC eFOCUS system. However, 
this amendment is expected to generally either have no impact on or 
reduce the ongoing burden on OTC derivatives dealers, because filing 
the FOCUS Report electronically is an automated process as compared to 
filing by paper. Therefore, the Commission estimates that there are 3 
OTC derivatives dealers, resulting in an estimated industry-wide 
initial burden of 45 hours.\655\ The Commission estimates that the 
amendment will not change the estimated ongoing annual burden imposed 
by Rule 17a-12.
---------------------------------------------------------------------------

    \655\ 15 hours x 3 OTC derivatives dealers = 45 hours. These 
internal hours likely will be performed by a compliance manager.
---------------------------------------------------------------------------

    c. Notarization of Annual Reports
    The Commission is amending Part III of Form X-17A-5 (i.e., the 
annual audit's cover page) to remove the signature line for the notary 
public. The current supporting statements for Rules 17a-5, 17a-12, and 
18a-7 do not attribute a specified portion of the burden to the 
notarization requirement. The Commission estimates that the amendment 
will result in an initial burden of five hours on each firm required to 
file annual reports and related annual filings under Rules 17a-5, 17a-
12, and 18a-7, so firms can familiarize themselves with the change. The 
Commission estimates that there are 3,288 broker-dealers, SBS Entities 
and OTC derivatives dealers filing annual reports, resulting in an 
estimated industry-wide initial burden of 16,440 hours.\656\ This 
amendment will generally either have no impact on or reduce the ongoing 
burden on the filers because they will no longer need to obtain 
notarization of the annual reports.
---------------------------------------------------------------------------

    \656\ 3,267 broker-dealers filing under Rule 17a-5 x 5 hours = 
16,335 hours. 18 non-broker-dealer SBS Entities filing under Rule 
18a-7 x 5 hours = 90 hours. 3 OTC derivatives dealers filing under 
Rule 17a-12 x 5 hours = 15 hours. These internal hours likely will 
be performed by a compliance manager.
---------------------------------------------------------------------------

    The estimated hourly burdens and dollar costs associated with the 
amendments to Rules 17a-5, 18a-7, and 17a-12 are summarized in the 
below tables:
BILLING CODE 8011-P
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[[Page 7324]]


[GRAPHIC] [TIFF OMITTED] TR21JA25.022


[[Page 7325]]


[GRAPHIC] [TIFF OMITTED] TR21JA25.023

BILLING CODE 8011-C
10. Rule 17h-2T
    The current supporting statement for Rule 17h-2T does not identify 
a burden for sending the risk assessment reports to the Commission. As 
broker-dealers that are required to file reports under Rule 17h-2T are 
also required to file annual reports under Rule 17a-5,\657\ the 
Commission is not estimating an additional burden for becoming familiar 
with the EDGAR system and for monitoring changes in EDGAR filing 
requirements attributable to the amendments to Rule 17h-2T.
---------------------------------------------------------------------------

    \657\ See supra section IX.D.9.
---------------------------------------------------------------------------

    Under the rule amendments, broker-dealers that are required to file 
reports under Rule 17h-2T will be required to tag the financial 
statements included with the report in Inline XBRL. Because these 
broker-dealers are also required to tag annual reports under Rule 17a-5 
in Inline XBRL, the Inline XBRL requirement for reports under Rule 17h-
2T would represent additional (quarterly) iterations of that compliance 
process, as abbreviated to reflect that Form 17-H requires only 
financial statements (and not any supplemental reports or other related 
filings) to be tagged in Inline XBRL, and that Form 17-H filers may 
omit the statement of cash flows and the footnotes to the financial 
statements. Thus, the Commission estimates an average additional burden 
of 2 hours per response and a total industrywide burden of 1,928 hours 
per year for Form 17-H filers to structure their financial statements 
in Inline XBRL.\658\
---------------------------------------------------------------------------

    \658\ 2 hours per response x 4 responses per year x 241 
respondents (as of Dec. 31, 2023) = 1,928 hours. Rule 17h-2T 
requires fourth quarter financial statements in addition to 
cumulative annual financial statements. See 17 CFR 240.17h-1. The 
Commission has not added burden hours associated with the custom XML 
requirements for the facing page and Part II of Form 17-H, because 
those requirements are currently in effect for Form 17-Hs that are 
filed on EDGAR, and nearly all Form 17-H filers (99% as of Dec. 31, 
2023) file Form 17-H on EDGAR. See infra section X.C.2.b for further 
detail on structured data compliance costs, including estimated cost 
ranges and factors underlying expected variance in structured data 
costs across different filers. For example, as we discuss in that 
section, we expect some Form 17-H filers are larger broker-dealers 
affiliated with public companies that are also subject to Inline 
XBRL requirements for Form X-17A-5 Part III, which requires Inline 
XBRL tagging of annual financial statements. These larger broker-
dealers will incur lower structured data costs than other Form 17-H 
filers. We have accounted for this expected variance in the 
calculation of average burden figures presented in this section. The 
estimated burdens here are higher than at proposal because, as the 
Commission explains in section X.C.2.b, the Commission now estimates 
that only half of respondents affiliated with public companies 
(here, 40 out of 81 affiliated Form 17-H filers) will experience a 
reduced XBRL tagging burden. Consistent with structured data burden 
estimates in prior Commission releases, the burden estimates here 
assume Inline XBRL tagging would be done by a compliance attorney. 
See supra section IX.D.5.

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[[Page 7326]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.024

11. Rule 17a-19 and Form X-17A-19
Currently Approved Burden Estimate
    Rule 17a-19 requires every national securities exchange and 
registered national securities association to file a Form X-17A-19 with 
the Commission and SIPC within five business days of the initiation, 
suspension, or termination of any member. The Commission currently 
estimates that Form X-17A-19 would take 0.25 hours to prepare, 
resulting in an annual industry-wide burden of 105 hours.\659\
---------------------------------------------------------------------------

    \659\ See Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for Rule 17A-19 and Form X-17A-19 
(July 25, 2023), available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202307-3235-021.
---------------------------------------------------------------------------

Revision to Burden Estimate
    The 25 respondents who file Form X-17A-19 would need to familiarize 
themselves with the EDGAR system. As stated above with respect to Rule 
17a-5, 17a-12, and 18a-7, the Commission estimates the one-time 
reporting burden of becoming familiar with the EDGAR system is 
approximately 16 hours.\660\ Accordingly, the Commission estimates that 
the one-time industry-wide reporting burden would be approximately 400 
hours.\661\
---------------------------------------------------------------------------

    \660\ See supra section IX.D.9.a.
    \661\ 16 hours x 25 respondents = 400 hours. The Commission 
assumes all respondents would use fillable web forms on EDGAR to 
input their Form X-17A-19 disclosures (which EDGAR would 
subsequently convert into a custom XML data language). This estimate 
reflects time for respondents to familiarize themselves with the 
forms and does not include any added burden hours associated with 
the custom XML requirement for Form X-17A-19.
[GRAPHIC] [TIFF OMITTED] TR21JA25.025

12. Rule 3a71-3(d)(1)(vi)
Currently Approved Burden Estimate
    Currently, Rule 3a71-3(d)(1)(vi) requires the Registered Entity to 
file the ANE Exception Notice by submitting it to the electronic 
mailbox specified on the Commission's website. When the Commission 
originally adopted the ANE Exception Notice requirement, it estimated 
that each Registered Entity would file one ANE Exception Notice with 
the Commission and that it would take 30 minutes to file each ANE 
Exception Notice, resulting in an industry-wide initial one-time burden 
of 12 hours.\662\
---------------------------------------------------------------------------

    \662\ See Cross-Border Adopting Release, 85 FR at 6340-41. See 
also Supporting Statement for the Paperwork Reduction Act 
Information Collection Submission for the Rule 3a71-3 Security-Based 
Swap Dealer De Minimis Counting Exception for Certain Transactions 
Arranged, Negotiated or Executed in the United States (Jan. 7, 2020) 
note 23 and accompanying text and section 15.d, available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201912-3235-011.
---------------------------------------------------------------------------

Revision to Burden Estimate
    The Commission does not expect that changing the manner of filing 
the ANE Exception Notice from an email filing to an EDGAR filing will 
change this estimated one-time burden. The ability to withdraw an ANE 
Exception Notice via EDGAR as adopted in this release will result in an 
additional one-time

[[Page 7327]]

burden. The Commission estimates that withdrawing an ANE Exception 
Notice electronically on EDGAR will incur the same burden as filing the 
initial ANE Exception Notice electronically on EDGAR. If each 
Registered Entity files one withdrawal of its ANE Exception Notice, the 
Commission estimates that would result in an industry-wide initial one-
time burden of 12 hours.\663\
---------------------------------------------------------------------------

    \663\ 24 Registered Entities x \1/2\ hour = 12 hours.
    [GRAPHIC] [TIFF OMITTED] TR21JA25.026
    
13. Rule 15fi-3(c)
Currently Approved Burden Estimate
    When the Commission originally adopted Rule 15fi-3, it expected 
there to be only a minimal, if any, initial burden of designing a 
system for submitting VDNs.\664\ The Commission also believed that the 
associated ongoing hourly burden of preparing and submitting VDNs would 
be minimal.\665\ The Commission stated that, until SBS Entities were 
registered with the Commission, it was difficult for the Commission to 
determine the typical number of valuation disputes meeting the 
applicable thresholds that SBS Entities would be required to submit on 
an annual basis.\666\ The Commission had estimated that each SBS Entity 
will spend an average of 24 hours each year complying with the 
requirement to prepare and submit VDNs, for an estimated average annual 
burden of 1,320 hours in the aggregate for all 55 SBS Entities.\667\
---------------------------------------------------------------------------

    \664\ See Risk Mitigation Adopting Release, 85 FR at 6385.
    \665\ Id. at 6385-86.
    \666\ Id.
    \667\ This 1,320-hour annual burden reflects the currently 
approved information collection burden estimate for Rule 15fi-3(c); 
see Supporting Statement for the Paperwork Reduction Act Information 
Collection Submission for Rules 15Fi-3 through 15Fi-5--Risk 
Mitigation Techniques for Uncleared Security-Based Swaps (Aug. 18, 
2021), available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202108-3235-011. Additionally, when the 
Commission adopted Rule 15fi-3(c) it stated that, although it 
believed that the time required to submit amendments to existing 
notices is likely included in the 24 hour estimate, it was 
``conservatively increasing that estimate by 25% to account for the 
submission of amended notices. As such, [the Commission estimated 
that] SBS Entities will spend on average of 30 hours each year 
complying with this requirement, for an estimated average annual 
burden of 1,650 hours in the aggregate for all 55 respondents.'' See 
Risk Mitigation Adopting Release, 85 FR at 6386.

---------------------------------------------------------------------------
Revision to Burden Estimate

    The amendments to Rule 15fi-3 related to EDGAR submission do not 
have an impact on the burdens associated with the existing collection 
of information. In particular, prior to the amendments, Rule 15fi-3(c) 
required SBS Entities to submit security-based swap VDNs to the 
Commission ``in a form and manner acceptable to the Commission,'' and 
staff made available to SBS Entities two options for submitting VDNs 
which includes either: (1) an electronic submission using EDGAR or (2) 
submission to a dedicated Commission email address. The Commission is 
amending Rule 15fi-3(c) to affirmatively require SBS Entities to submit 
VDNs to the Commission electronically in EDGAR in a custom XML data 
language.
    SBS Entities will already have access to EDGAR by virtue of using 
the system to submit their applications for registration on either 
Forms SBSE, SBSE-A, or SBSE-BD, and to submit their certification for 
registration on Form SBSE-C. As a result, SBS Entities would not incur 
any additional burden associated with obtaining access to EDGAR for 
purposes of submitting VDNs given that all such filers should already 
have an active CIK. With respect to the custom XML structuring 
requirement for VDNs, SBS Entities would be able to comply by inputting 
their disclosures into a fillable web form on EDGAR rather than 
structuring their disclosures in custom XML themselves. As a result, 
SBS Entities would not incur any additional burden associated with the 
custom XML structuring requirement for VDNs.\668\ The Commission is, 
however, revising the total burden estimate based on the three 
additional applications for registration as an SBSD it received since 
issuing the Proposing Release. Based on its estimate that each SBS 
Entity will spend an average of 30 hours \669\ each year complying with 
the Rule 15fi-3(c) requirement, the Commission estimates an average 
annual burden of 90 hours in the aggregate for three additional SBS 
Entities. Accordingly, the Commission estimates an average annual 
burden of 1,740 hours in the aggregate for 58 SBS Entities.
---------------------------------------------------------------------------

    \668\ See infra section X.C.2.b. SBS Entities relying on 
substituted compliance pursuant to a Commission order with respect 
to the requirements of Rule 15fi-3 would also be able to comply by 
inputting their dispute reports into the fillable web form on EDGAR 
rather than structuring those reports in the custom XML themselves. 
See supra section V.C.2.
    \669\ See supra note 676.

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[[Page 7328]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.027

14. Rule 15fk-1(c)(2)(ii)(A)
Currently Approved Burden Estimate
    Under current Rule 15fk-1(c), the CCO of a SBS Entity is required 
to prepare and submit a CCO report to the Commission. The Commission 
previously estimated that these reports would require on average 93 
hours per respondent per year for an ongoing annual burden of 5,115 
hours.\670\
---------------------------------------------------------------------------

    \670\ See Business Conduct Standards for Security-Based Swap 
Dealers and Major Security-Based Swap Participants, Exchange Act 
Release No. 77617 (Apr. 14, 2016), 81 FR 29960, 30096 (May 13, 2016) 
(``Business Conduct Release'').
---------------------------------------------------------------------------

Revision to Burden Estimate
    The Commission recognizes that the amendments to Rule 15fk-1(c) may 
potentially impose certain burdens on respondents. Although the 
information to be included in the CCO report pursuant to Rule 15fk-1(c) 
would not change, the amendment requires respondents to submit the CCO 
report electronically with the Commission through EDGAR in Inline XBRL.
    The Commission estimates that no SBS Entities would be first-time 
EDGAR users needing to obtain EDGAR access credentials. Thus, the 
internal time burden associated with completing a Form ID application 
to gain access to EDGAR would not apply to SBS Entities.\671\
---------------------------------------------------------------------------

    \671\ See supra section IX.D.1.
---------------------------------------------------------------------------

    SBS Entities would incur a burden to submit the CCO report in 
Inline XBRL. Because the CCO reports consist of a limited number of 
textual narrative sections (compared to the various sets of numerical 
values that comprise financial statements, which take significantly 
longer to tag), the Commission estimates that, on average, an SBS 
Entity would spend 5 internal burden hours and $1,500 in external costs 
(e.g., the cost to license and renew Inline XBRL compliance software 
and/or services) to tag its CCO report in Inline XBRL in the initial 
year of compliance, and 3 internal burden hours and $500 in external 
costs in subsequent years.\672\
---------------------------------------------------------------------------

    \672\ This is also the case with respect to any SBS Entities 
relying on substituted compliance pursuant to a Commission order 
with respect to the requirements of Exchange Act section 15F(k) and 
Rule 15fk-1 because in each case, the SBS Entity will incur the cost 
of applying Inline XBRL tags to the information addressed in Rule 
15fk-1(c)(2)(i) (whether that information is provided in a report 
required by Rule 15fk-1(c) or included within the home country 
report required to be provided to the Commission by a substituted 
compliance order). See infra section X.C.2.b for further detail on 
structured data compliance costs, including estimated cost ranges 
and factors underlying expected variance in structured data costs 
across different filers. We have accounted for this expected 
variance in the calculations of average burden and cost figures 
presented in this section. Consistent with structured data burden 
estimates in prior Commission releases, the burden estimates here 
assume Inline XBRL tagging would be done by a compliance attorney. 
See supra section IX.D.5.
---------------------------------------------------------------------------

    The Commission has increased the burden and cost estimates for 
Inline XBRL tagging of CCO reports compared to the proposing release 
for two reasons. First, as discussed in an earlier section, the 
Commission estimated at proposal that all respondents affiliated with 
public reporting companies already subject to Inline XBRL requirements 
would incur reduced burdens and costs, because such respondents would 
be able to leverage the Inline XBRL compliance software licenses and/or 
service agreements, as well as the Inline XBRL tagging processes and 
experience, of those affiliates.\673\ One commenter stated that this 
burden and cost reduction is dependent on the contractual arrangements 
that firms have with third-party providers, and on the internal 
staffing structure for each company.\674\ To account for this 
variation, the Commission is now estimating that only half of 
affiliated respondents (i.e., 21 out of the 43 affiliated SBS Entities) 
will experience reduced burdens and costs.
---------------------------------------------------------------------------

    \673\ See supra section IX.D.9.a.
    \674\ See XBRL Letter at 11.
---------------------------------------------------------------------------

    Second, the Commission's proposed structured data burden and cost 
estimates did not differentiate between SBS Entities relying on 
substituted compliance orders with respect to the requirements of Rule 
15fk-1 and other SBS Entities. One commenter, in recommending the 
Commission allow firms relying on substituted compliance to continue 
submitting home-country reports in their current form, stated that the 
organization and requirements of these reports is often different from 
U.S. reports.\675\ The Commission estimates on an ongoing basis, the 
Inline XBRL tagging burdens and costs incurred by SBS Entities relying 
on substituted compliance will be equal to those incurred by other SBS 
Entities, because in each case, the SBS Entity will need to apply 
Inline XBRL tags to the narrative descriptions addressed in Exchange 
Act Rule 15fk-1(c)(2)(i), whether those narrative descriptions are 
provided in a report required by Rule 15fk-1(c) or included within the 
home country report required to be provided to the Commission by a 
substituted compliance order. However, the first time an SBS Entity 
relying on substituted compliance (or its third-party tagging service 
provider) applies Inline XBRL tags to its home country report, it will 
incur the additional burden of determining which narrative descriptions 
within its home country report correspond to the descriptions addressed 
in Exchange Act Rule 15fk-1(c)(2)(i) and must therefore be tagged. To 
capture this additional step, the Commission is increasing the 
estimated initial Inline XBRL tagging burdens and costs compared to the 
proposing release.
---------------------------------------------------------------------------

    \675\ See SIFMA 5/22/2023 letter at 7.
---------------------------------------------------------------------------

    Accordingly, the Commission estimates that the total burden 
associated with compliance with Rule 15fk-1(c) would be an annual hour 
burden of 98 hours per respondent in the initial year (up from 94.5 
hours) and 96 hours per respondent in subsequent years (up from 94 
hours), and an annual cost burden of $1,500 per respondent in the 
initial year (up from $600) and $500 per respondent in subsequent years 
(up from $400), yielding an industry-wide annual burden of 5,194 hours 
and $79,500 in the first year and 5,088 hours and $26,500 in subsequent 
years.\676\
---------------------------------------------------------------------------

    \676\ The annual aggregate burden hour estimate for the initial 
year of compliance is based on the following calculation: (93 hours 
+ 5 hours) x (53 SBS Entities) = 5,194 hours. The annual aggregate 
burden hour estimate for the subsequent years of compliance is based 
on the following calculation: (93 hours + 3 hours) x (53 SBS 
Entities) = 5,088 hours. The annual aggregate external cost estimate 
for the initial year of compliance is based on the following 
calculation: $1,500 x (53 SBS Entities) = $79,500. The annual 
aggregate external cost estimate for subsequent years of compliance 
is based on the following calculation: $500 x (53 SBS Entities) = 
$26,500.

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[[Page 7329]]

E. Collection of Information Is Mandatory

    All collections of information pursuant to the rules are mandatory, 
or mandatory except to the extent an exception is available.

F. Confidentiality of Responses to Collection of Information

    For all Covered SRO Forms, no assurance of confidentiality is given 
by the Commission with respect to responses made on such forms. While 
Rule 24b-2 allows entities to seek confidential treatment, the 
Commission expects that all information will be public and that 
confidential treatment will not be available. Any person may make 
written objection to the public disclosure of any information contained 
in such forms in accordance with the procedures set forth in Rule 24b-
2(b).\677\
---------------------------------------------------------------------------

    \677\ 17 CFR 240.24b-2(b).
---------------------------------------------------------------------------

    The information collected pursuant to Rule 3a71-3(d)(1)(vi) is 
public information to assist Relying Entities and their affiliates in 
determining whether they have satisfied the ANE Exception's notice 
requirement and in monitoring their progress toward the ANE Exception's 
cap on inter-dealer security-based swaps. The amendment to Rule 3a71-
3(d)(1)(vi) provides that notices and withdrawals shall be publicly 
disseminated through the Commission's EDGAR system. Because reliance on 
the ANE Exception which requires filing of an ANE Exception Notice is 
voluntary, the Commission does not expect that a Registered Entity 
seeking to facilitate the exception would include information that 
could not be publicly disclosed in the notices or withdrawals required 
by the amendment to Rule 3a71-3(d)(1)(vi) or would object to the public 
disclosure of information contained in such notices or withdrawals.
    Rule 15fi-3(c) requires an SBS Entity to promptly notify the 
Commission and any applicable prudential regulator of any security-
based swap valuation dispute in excess of $20,000,000 (or its 
equivalent in any other currency) if not resolved within: (1) three 
business days, if the dispute is with a counterparty that is an SBS 
Entity; or (2) five business days, if the dispute is with a 
counterparty that is not an SBS Entity. The rule also requires SBS 
Entities to notify the Commission and any applicable prudential 
regulator, if the amount of any security-based swap valuation dispute 
that was the subject of a previous notice increases or decreases by 
more than $20,000,000 (or its equivalent in any other currency), at 
either the transaction or portfolio level. These amendments are 
required to be provided to the Commission, and any applicable 
prudential regulator, no later than the last business day of the 
calendar month in which the applicable security-based swap valuation 
dispute increases or decreases by the applicable dispute amount. To the 
extent that the Commission receives confidential information pursuant 
to this collection of information that is otherwise not publicly 
available, including in connection with examinations or investigations, 
the SBS Entity can request the confidential treatment of the 
information.\678\ If such a confidential treatment request is made, the 
Commission anticipates that it would keep the information confidential, 
subject to the provisions of applicable law; \679\ whether any material 
is confidential is determined pursuant to applicable law, including but 
not limited to the Freedom of Information Act and Commission rules 
governing requests for confidential treatment.
---------------------------------------------------------------------------

    \678\ See 17 CFR 200.83.
    \679\ See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing 
the public availability of information obtained by the Commission). 
See also Risk Mitigation Adopting Release 85 FR at 6389-90.
---------------------------------------------------------------------------

    With respect to the other information collected under the rule 
amendments and new rules, the firm can request the confidential 
treatment of the information.\680\ If such a confidential treatment 
request is made, the Commission anticipates that it would keep the 
information confidential, subject to the provisions of applicable law; 
\681\ whether any material is confidential is determined pursuant to 
applicable law, including but not limited to the Freedom of Information 
Act and Commission rules governing requests for confidential treatment.
---------------------------------------------------------------------------

    \680\ See 17 CFR 200.83; 17 CFR 240.24b-2. For Rule 15fk-
1(c)(2)(ii)(A), SBS Entities may request confidential treatment for 
their CCO reports pursuant to Exchange Act Rule 83.
    \681\ See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing 
the public availability of information obtained by the Commission).
---------------------------------------------------------------------------

G. Retention Period for Recordkeeping Requirements

    For all Covered SRO Forms and for Rule 19b-4(e), records of these 
collections of information must be retained for at least five years, 
the first two years in an easily accessible place, pursuant to Rule 
17a-1.\682\
---------------------------------------------------------------------------

    \682\ 17 CFR 240.17a-1.
---------------------------------------------------------------------------

    Rule 17a-4 specifies the required retention periods for a broker-
dealer, including an OTC derivatives dealer.\683\ Rule 18a-6 specifies 
the required retention periods for non-broker-dealer SBSDs and non-
broker-dealer MSBSPs.\684\ Under these two rules, many of the required 
records must be retained for three years, while certain other records 
must be retained for longer periods.
---------------------------------------------------------------------------

    \683\ 17 CFR 240.17a-4.
    \684\ 17 CFR 240.18a-6.
---------------------------------------------------------------------------

X. Economic Analysis

    The Commission is mindful of the costs imposed by and the benefits 
obtained from our rules. Section 2(b) of the Securities Act,\685\ 
section 3(f) of the Exchange Act,\686\ and section 2(c) of the 
Investment Company Act of 1940 \687\ require us, when engaging in 
rulemaking that requires us to consider or determine whether an action 
is necessary or appropriate in or consistent with the public interest, 
to consider, in addition to the protection of investors, whether the 
action will promote efficiency, competition and capital formation. In 
addition, section 23(a)(2) of the Exchange Act requires us, when 
adopting rules under the Exchange Act, to consider the impact that any 
new rule would have on competition and to not adopt any rule that would 
impose a burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Exchange Act.\688\
---------------------------------------------------------------------------

    \685\ 15 U.S.C. 77b(b).
    \686\ 15 U.S.C. 78c(f).
    \687\ 15 U.S.C. 80a-2(c).
    \688\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    Where possible, we have attempted to quantify the costs and 
benefits expected to result from the amendments to the submission or 
posting requirements. However, in some cases we have been unable to 
quantify the economic effects because we lack the information necessary 
to provide an estimate. For example, we do not quantify the benefit to 
the general public of improved access to public filings made available 
in structured format.
    This section discusses the benefits and costs of the amendments, as 
well as their potential effects on efficiency, competition, and capital 
formation. Some of the amendments are, however, technical, so they will 
likely not have significant economic effects.\689\
---------------------------------------------------------------------------

    \689\ As stated in section II.G. above, the Commission is 
adopting a technical amendment to conform its Informal and Other 
Procedures to the changes adopted herein to Rules 6a-1, 6a-2, and 
6a-3 with respect to Form 1 filings and to Rule 6a-4 with respect to 
Form 1-N filings required to be submitted to the Commission 
electronically. The Commission is also adopting a number of 
amendments to the FOCUS Report that will generally have no impact on 
or reduce the ongoing burden on filers because they will generally 
reduce questions about where and how to report items on the form.

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[[Page 7330]]

A. Broad Economic Considerations

    Commission rules require or provide the option for the filing in 
paper of certain forms and filings, including applications of entities 
seeking to register with the Commission as a national securities 
exchange (or seeking an exemption from such registration based on 
limited volume) or as a national securities association as well as 
amendments to these initial applications, reports regarding the listing 
and trading of new derivative securities products, clearing agency 
registration and updates, annual broker-dealer audited reports and risk 
assessment reports, and certain clearing agency supplemental materials. 
Other Commission rules require submission by email or do not specify 
the format in which a requirement should be satisfied, such as notices 
of changes in SRO membership.
    By requiring the electronic submission on the Commission's EDGAR 
system or website posting of: (1) the Covered SRO Forms; (2) the 
information posted under Rule 19b-4(e); (3) the annual reports and 
related annual filings filed by broker-dealers, OTC derivatives 
dealers, SBSDs, and MSBSPs; and (4) other notices and reports from 
broker-dealers, SBSDs, MSBSPs, and Registered Entities (including Forms 
17-H and Form X-17A-19) (``the affected documents''), and by requiring 
certain of the affected documents to be provided, where appropriate, in 
a structured, machine-readable data language, the amendments seek to 
streamline the submission process, and facilitate the transmission and 
effective use of submitted information. The amendments to certain 
Exchange Act rules and the affected documents are expected to increase 
the efficiency of, and remove certain costs related to ongoing 
compliance with, the existing requirements. The discussion below 
addresses the potential economic effects of the amendments, including 
their likely costs and benefits as well as the likely effects of the 
amendments on efficiency, competition, and capital formation, relative 
to the economic baseline, which consists of the filing practices in 
existence today.
    We anticipate that the amendments that require electronic 
submission or posting of documents that are currently filed in paper 
would not result in an increase in filing costs, and in some cases 
result in cost savings to reporting entities on an ongoing basis as a 
result of overall reduction in internal time burdens and the 
elimination of the printing and mailing expenses associated with paper 
filing. We recognize that entities that do not presently use EDGAR to 
comply with other reporting obligations would incur an incremental cost 
of initial transition to electronic submission on EDGAR.\690\ However, 
notwithstanding these initial transition costs, we anticipate that 
reporting entities would realize cost savings from electronic 
submission on EDGAR. With respect to the structured data requirements, 
and specifically the Inline XBRL reporting requirements, entities 
subject to Inline XBRL reporting requirements under the rules will 
incur ongoing costs associated with the requirement to encode and 
report information in Inline XBRL, and entities that do not presently 
use Inline XBRL will incur additional costs associated with the initial 
implementation of Inline XBRL compliance processes and/or the purchase 
of third-party Inline XBRL filing preparation services or 
software.\691\
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    \690\ See supra section IX.
    \691\ See infra section X.C.2.b. Similar structured data 
implementation costs will not result from most of the custom XML 
requirements, because affected entities will have the option of 
inputting their information in fillable forms, which EDGAR will then 
convert into the custom XML data language. However, structured data 
implementation costs will arise in connection with the custom XML 
requirement for information posted under Rule 19b-4(e), because the 
SRO will post the information on its website rather than on the 
EDGAR system (and its fillable form capabilities), and in connection 
with the custom XML requirements on Forms 1 and CA-1. The Commission 
expects exchanges and clearing agencies will have the requisite 
sophistication to encode their disclosures in custom XML and submit 
the custom XML documents to EDGAR directly (rather than manually 
completing lengthy fillable forms to be converted into custom XML 
documents). See infra section X.C.2.b; see also supra section 
IX.D.6.
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    Compared to paper filing, electronic submission or posting 
information directly to a website can expedite the availability of 
public disclosures. Improving the speed of disclosure to the public 
improves the price efficiency of markets by improving the timeliness of 
information available to market participants. Electronic submission or 
posting will also facilitate the Commission's ability to oversee 
compliance with the securities laws and its oversight of securities 
markets making this information available to the Commission quicker, 
with added and more accessible functionality for Commission staff to 
review, analyze, and respond to, as necessary. The structured data 
requirements under the amendments will augment these effects, allowing 
the Commission--and, where applicable, the public--to draw upon 
comparable information from other reporting periods and from other 
disclosing entities in assessing the reported disclosures.\692\
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    \692\ As discussed further in section X.B.1, the affected 
documents could be subject to requests for confidential treatment. 
Whether any filed material is confidential is determined pursuant to 
applicable law, including but not limited to the Freedom of 
Information Act and Commission rules governing requests for 
confidential treatment. The public would not directly use any 
confidential information contained in these documents.
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    To implement the structured data requirements, the Commission must 
indicate particular data languages for filers to use. XBRL is an open-
source data language that allows data elements to be stored and then 
read by machine, leading to an order of magnitude increase in process 
efficiencies. Similarly, custom XML-based data languages, which are 
more appropriate for simpler forms, are built on the open-source XML 
format and also enable machine readability. Both data languages are 
subject to continuous evolution and are sufficiently flexible to allow 
such evolution. Technology continuously evolves, so that any method of 
file storage--whether paper, or any electronic file format--eventually 
may become obsolete. Data languages, too, can be subject to 
obsolescence, though this is rarer. Once information is in a format 
that is machine readable, however, it can generate a variety of 
different file formats as those options evolve. As a result, should 
future data languages arise, the Commission and registrants will be in 
a better position to make use of them because certain data is already 
structured.

B. Baseline

    The baseline against which the costs, benefits, and the effects on 
efficiency, competition, and capital formation of the amendments are 
measured consists of current requirements and practices for structuring 
data. The economic analysis appropriately considers existing regulatory 
requirements, including recently adopted rules, as part of the economic 
baseline against which the costs and benefits of the final amendments 
are measured.\693\
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    \693\ See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111-15 (D.C. 
Cir. 2022). This approach also follows SEC staff guidance on 
economic analysis for rulemaking. See SEC Staff, Current Guidance on 
Economic Analysis in SEC Rulemaking (Mar. 16, 2012), available at 
https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf (``The economic 
consequences of proposed rules (potential costs and benefits 
including effects on efficiency, competition, and capital formation) 
should be measured against a baseline, which is the best assessment 
of how the world would look in the absence of the proposed 
action.''); id. at 7 (``The baseline includes both the economic 
attributes of the relevant market and the existing regulatory 
structure.''). The best assessment of how the world would look in 
the absence of the proposed or final action typically does not 
include recently proposed actions, because that would improperly 
assume the adoption of those proposed actions.

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[[Page 7331]]

    One commenter expressed concern about the need to concurrently 
comply with the final amendments and ``other Commission initiatives 
that firms are implementing.'' \694\ Although no commenter pointed to 
specific rules affecting the benefits and costs of these amendments, we 
have considered the potential effects on entities that are implementing 
other recently adopted rules during the compliance period for these 
amendments. Recently adopted rules that may place compliance 
obligations on some of the same entities with obligations under these 
amendments include the Settlement Cycle Adopting Release,\695\ the 
Beneficial Ownership Adopting Release,\696\ the Rule 10c-1a Adopting 
Release,\697\ the Short Position Reporting Adopting Release,\698\ 
Clearing Agency Governance Adopting Release,\699\ the Treasury Clearing 
Adopting Release,\700\ the Rule 605 Adopting Release,\701\ the Customer 
Notification Adopting Release,\702\ the Tick Size and Access Fee

[[Page 7332]]

Adopting Release,\703\ and the Recovery/Wind-Down Adopting 
Release.\704\
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    \694\ See SIFMA 5/22/2023 Letter at 14 (commenting on ``the time 
it will take firms to hire and train staff, identify and retain 
service providers and software, overhaul their systems, and engage 
in robust testing with the Commission, as well as attend to the 
numerous other Commission initiatives that firms are implementing 
(e.g., T+1)''). Although the date of the T+1 transition has passed, 
see infra note 704 for relevant compliance and filing dates, we 
consider it and other recently adopted rules in this analysis. See 
also supra section IV.A. for a discussion of phased compliance 
dates.
    \695\ Shortening the Securities Transaction Settlement Cycle, 
Release No. 34-96930 (Feb. 15, 2023) [88 FR 13872 (Mar. 6, 2023)] 
(``Settlement Cycle Adopting Release''). The rules and rule 
amendments adopted in the Settlement Cycle Adopting Release shorten 
the standard settlement cycle for most broker-dealer transactions 
from two business days after the trade date to one business day 
after the trade date. To facilitate an orderly transition to a 
shorter settlement cycle, a new rule also establishes requirements 
related to completing allocations, confirmations, and affirmations 
no later than the end of trade date for the processing of 
institutional transactions subject to the rule; requires registered 
investment advisers to make and keep records of each confirmation 
received, and of any allocation and each affirmation sent or 
received, with a date and time stamp for each allocation and 
affirmation indicating when it was sent or received; and requires 
clearing agencies that provide a central matching service to 
establish, implement, and enforce policies and procedures reasonably 
designed to facilitate straight-through processing and to file an 
annual report regarding progress with respect to straight-through 
processing. With certain exceptions, the rule had a compliance date 
of May 28, 2024. See Settlement Cycle Adopting Release, sections 
VII.
    \696\ Modernization of Beneficial Ownership Reporting, Release 
No. 33-11253 (Oct. 10, 2023) [88 FR 76896 (Nov. 7, 2023)] 
(``Beneficial Ownership Adopting Release''). Among other things, the 
amendments generally shorten the filing deadlines for initial and 
amended beneficial ownership reports filed on Schedules 13D and 13G, 
and require that Schedule 13D and 13G filings be made using a 
structured, machine-readable data language. The amendments became 
effective Feb. 5, 2024. Compliance with the new filing deadlines for 
Schedule 13G was not required before Sept. 30, 2024, and the rule's 
structured data requirements have a one-year implementation period 
ending Dec. 18, 2024. Beneficial Ownership Adopting Release, section 
II.G.
    \697\ Reporting of Securities Loans, Release No. 34-98737 (Oct. 
13, 2023) [88 FR 75644 (Nov. 3, 2023)] (``Rule 10c-1a Adopting 
Release''). This rule requires any covered person who agrees to a 
covered securities loan on behalf of itself or another person to 
report specified information about the covered securities loan to a 
registered national securities association (currently FINRA is the 
only registered national securities association)--or rely on a 
reporting agent to do so--and requires the registered national 
securities association to make certain information it receives 
available to the public. Covered persons will include market 
intermediaries securities lenders, and broker-dealers, while 
reporting agents include certain brokers, dealers, or registered 
clearing agencies. The rule's compliance dates require that the 
registered national securities association propose rules pursuant to 
Rule 10c-1a(f) by May 2, 2024, and the proposed rules shall be 
effective no later than Jan. 2, 2025; that covered persons report 
Rule 10c-1a information to a registered national securities 
association on or by Jan. 2, 2026 (which requires that the 
registered national securities association have implemented data 
retention and availability requirements such for reporting); and 
that the registered national securities association publicly report 
Rule 10c-1a information by Apr. 2, 2026. Rule 10c-1a Adopting 
Release, section VIII.
    \698\ Short Position and Short Activity Reporting by 
Institutional Investment Managers, Release No. 34-98738 (Oct. 13, 
2023), [88 FR 75100 (Nov. 1, 2023)] (``Short Position Reporting 
Adopting Release''). Under the new rule, institutional investment 
managers that meet or exceed certain specified reporting thresholds 
are required to report, on a monthly basis using the related form, 
specified short position data and short activity data for equity 
securities. The compliance date is Jan. 2, 2025. See Short Position 
Reporting Adopting Release, section VI. In addition, the Commission 
adopted an amendment to the national market system (``NMS'') plan 
governing the consolidated audit trail (``CAT'') created pursuant to 
the Exchange Act to require the reporting of reliance on the bona 
fide market making exception in the Commission's short sale rules. 
The Commission published the text of the amendment to the NMS plan 
governing the CAT (``CAT NMS Plan'') in a separate notice. The 
compliance date for the amendment to the CAT NMS Plan is July 1, 
2025. See Notice of the Text of the Amendment to the National Market 
System Plan Governing the Consolidated Audit Trail for Purposes of 
Short Sale-Related Data Collection, Release No. 34-98739 (Oct. 13, 
2023) [88 FR 75079 (Nov. 1, 2023)].
    \699\ Clearing Agency Governance and Conflicts of Interest, 
Exchange Act Release No. 34-98959 (Nov. 16, 2023) [88 FR 84454 (Dec. 
5, 2023)] (``Clearing Agency Governance Adopting Release''). The 
Clearing Agency Governance Adopting Release establishes Rule 17Ad-25 
for new governance requirements for registered clearing agencies. 
These include requirements for independent directors and for the 
composition of a registered clearing agency's board of directors, 
nominating committee, and risk management committee; requirements to 
identify and document existing or potential conflicts of interest 
involving directors or senior managers, and mitigate or eliminate 
and document the mitigation or elimination of such conflicts; and 
requirements for policies and procedures obligating directors to 
report conflicts of interest, managing risks from relationships with 
service providers, and requiring boards to solicit, consider, and 
document their consideration of the views of participants and other 
relevant stakeholders. The compliance date for Rule 17Ad-25 is Dec. 
5, 2024, except that the compliance date for the independence 
requirements of the board and board committees in Rules 17Ad-
25(b)(1), (c)(2), and (e) is Dec. 5, 2025. See Clearing Agency 
Governance Adopting Release, section III.
    \700\ Standards for Covered Clearing Agencies for U.S. Treasury 
Securities and Application of the Broker-Dealer Customer Protection 
Rule with Respect to U.S. Treasury Securities, Release No. 34-99149 
(Dec. 13, 2023) [89 FR 2714 (Jan. 16, 2024)] (``Treasury Clearing 
Adopting Release''). Among other things, the amendments require 
covered clearing agencies for U.S. Treasury securities to have 
written policies and procedures reasonably designed to require that 
every direct participant of the covered clearing agency submit for 
clearance and settlement all eligible secondary market transactions 
in U.S. Treasury securities to which it is a counterparty. The 
compliance date was Mar. 18, 2024, for covered clearing agencies to 
file any proposed rule changes pursuant to Rules 17Ad-22(e)(6)(i), 
17Ad-22(e)(18)(iv)(c), and 15c3-3, which must be effective by Mar. 
31, 2025. With respect to the changes to Rule 17Ad-22(e)(18)(iv)(A) 
and (B), (i) covered clearing agencies were required to file any 
proposed rule changes regarding those amendments no later than June 
14, 2024, and (ii) those changes must be effective by Dec. 31, 2025, 
for cash market transactions encompassed by section (ii) of the 
definition of an eligible secondary market transaction, and by June 
30, 2026, for repo transactions encompassed by section (i) of the 
definition of an eligible secondary market transactions. Finally, 
the Commission amended the broker-dealer customer protection rule to 
permit margin required and on deposit with covered clearing agencies 
for U.S. Treasury securities to be included as a debit in the 
reserve formulas for accounts of customers and proprietary accounts 
of broker-dealers, subject to certain conditions. Compliance by the 
direct participants of a U.S. Treasury securities covered clearing 
agency with the requirement to clear eligible secondary market 
transactions is not required until Dec. 31, 2025, and June 30, 2026, 
respectively, for cash and repo transactions. See Treasury Clearing 
Adopting Release, section III.
    \701\ Disclosure of Order Execution Information, Release No. 34-
99679 (Mar. 6, 2024) [89 FR 26428 (Apr. 15, 2024)] (``Rule 605 
Adopting Release''). The Commission adopted amendments to rules 
requiring disclosures for order executions in NMS stocks, including 
expanding the scope of reporting entities, modifying the scope of 
orders covered by the rule, and modifying the information required 
to be reported under the rule. The rule had an effective date of 
June 14, 2024, and, with a few exceptions, a compliance date of Dec. 
14, 2025. See Rule 605 Adopting Release, section VII.
    \702\ Regulation S-P: Privacy of Consumer Financial Information 
and Safeguarding Customer Information, Release Nos. 34-100155; IA-
6604; IC-35193 (May 15, 2024) [89 FR 47688 (June 3, 2024)] 
(``Customer Notification Adopting Release''). The Commission amended 
Regulation S-P to require brokers, dealers, funding portals, 
investment companies, registered investment advisers, and transfer 
agents registered with the Commission or another appropriate 
regulatory agency to adopt written policies and procedures for 
incident response programs to address unauthorized access to or use 
of customer information. These must include procedures for providing 
timely notification to individuals affected by an incident involving 
sensitive customer information with details about the incident and 
information designed to help affected individuals respond 
appropriately. Among other things, the amendments also extended to 
transfer agents the requirements to safeguard customer records and 
information, and they broadened the scope of the information covered 
by those requirements. The compliance date for larger entities is 
Dec. 3, 2025, and June 3, 2026, for smaller entities. See Customer 
Notification Amendments, section II.F
    \703\ Regulation NMS: Minimum Pricing Increments, Access Fees, 
and Transparency of Better Priced Orders, Release No. 34-101070 
(Sept. 18, 2024) [89 FR 81620 (Oct. 8, 2024)] (``Tick Size and 
Access Fee Adopting Release''). These amendments introduce one 
minimum pricing increment that is less than $0.01, i.e., $0.005, for 
quotes and orders priced $1.00 or more for NMS stocks that have a 
time weighted average quoted spread of $0.015 or less. The 
amendments also reduce the access fee caps under Reg NMS Rule 610 
and require national securities exchanges to make the amounts of all 
fees and rebates determinable at the time of trade execution. The 
amendments also accelerate the implementation of the round lot and 
odd-lot information definitions adopted in 2020 and add information 
about the best odd-lot order to the definition of odd-lot 
information. The amendments are effective Dec. 9, 2024. For Rules 
610 and Rule 612, and the round lot definition, the compliance date 
will be Nov. 3, 2025. For odd-lot information, the compliance date 
will be May 1, 2026. See Tick Size and Access Fee Adopting Release, 
section VI.
    \704\ Covered Clearing Agency Resilience and Recovery and 
Orderly Wind-Down Plans, Release No. 34-101446 (Oct. 25, 2024) 
(``Recovery/Wind-Down Adopting Release''). These amendments add new 
requirements related to the collection of intraday margin by a 
covered clearing agency (``CCA'') and the use of substantive inputs 
in its risk-based margin system. They also establish required 
elements of a CCA's recovery and orderly wind-down plan. The 
effective date is Jan. 17, 2025. Each covered clearing agency will 
be required to file with the Commission any proposed rule changes 
required under Rule 19b-4 and any Advance Notices required under 
Title VIII of the Dodd-Frank Act and Rule 19b-4(n) no later than 
Apr. 17, 2025. The proposed rule changes and the Advance Notices 
must be effective by Dec. 13, 2025. See Recovery/Wind-Down Adopting 
Release, section III.
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1. Affected Entities
    The entities primarily affected by the requirements include the 
filers or submitters of the affected documents and the users of the 
affected documents. Other affected entities include third parties that 
may be involved with the preparation and filing or submission of the 
affected documents and in facilitating the use of structured data filed 
or submitted with the Commission, as well as parties that may 
indirectly benefit from the use of the affected documents by others.
Filers or Submitters of Affected Documents
    Entities that file or submit the affected documents include SROs, 
including: national securities exchanges and exempt exchanges; notice-
registered Security Futures Product Exchanges; registered national 
securities associations; and registered and exempt clearing agencies. 
Filers or submitters of the affected documents also include broker-
dealers and SBS Entities (and certain affiliates thereof).\705\
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    \705\ Not all of the affected documents listed for a particular 
entity type below apply to every entity that falls within that 
entity type. For details on the subsets of affected entities that 
file or submit particular affected documents, see supra section IX. 
With particular respect to SBS Entities, the counts above include, 
as of June 21, 2024, 10 SBS Entities that relied on orders granting 
substituted compliance under Exchange Act Rule 3a71-6 in complying 
with the requirements under Exchange Act Rule 15fk-1, 9 non-bank SBS 
Entities that relied on orders granting substituted compliance under 
Exchange Act Rule 3a71-6 in complying with the reporting 
requirements under Exchange Act Rule 18a-7(c), and 19 SBS Entities 
that relied on orders granting substituted compliance under Exchange 
Act Rule 3a71-6 in complying with the notice requirements under 
Exchange Act Rule 15fi-3. See Substituted Compliance Notices, 
available at https://www.sec.gov/tm/Substituted-compliance-Notices.

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[[Page 7333]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.028

Users of Affected Documents
    The entities that use (e.g., examine, store, analyze) each affected 
document vary based on whether the particular document is publicly 
available.\706\ If a document is confidential, only the Commission 
(and, in certain cases, other regulators and regulatory organizations) 
will be able to directly access and use the documents. Documents that 
are not confidential will be publicly available, and as such can be 
directly used by public entities in addition to the Commission, such as 
investors and other market participants, financial and market analysts, 
financial press, and other regulatory agencies or organizations.\707\
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    \706\ See supra section IX.F. As stated above in section X.A, 
whether any filed material is confidential is determined pursuant to 
applicable law, including but not limited to the Freedom of 
Information Act and Commission rules governing requests for 
confidential treatment.
    \707\ See, e.g., Arun Gupta, supra note 479 (Federal Reserve 
Board staff research paper using balance sheet data from Form X-17A-
5 Part III to examine the internal capital markets of dealer banks); 
K. Srinivasan, The Securitization Flash Flood, (July 27, 2016; rev. 
June 4, 2024), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2814717 (academic research paper using data 
from Form X-17A-5 Part III to assess repo activities of large 
broker-dealers) (retrieved from SSRN Elsevier database).
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Third-Party Service Providers
    In addition to the preparers and users of the affected documents, 
the other entities affected by the rule amendments are third-party 
service providers that assist in electronic filing and, in some cases, 
structuring, of regulatory documents and help facilitate the use of 
structured data. As discussed in further detail below, the cost to 
filers or submitters of the amended rules includes, in some instances, 
the cost of paying third-party service providers to prepare electronic 
and structured documents.\708\ Conversely, such third-party service 
providers will benefit from increased demand for electronic filing and 
structured data services under the amended rules.
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    \708\ See infra section X.C.2.b.
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    With particular respect to structured data, entities currently 
subject to structured data requirements under Commission rules often 
pay third-party

[[Page 7334]]

service providers to structure their disclosures, or to license 
structuring compliance software that allows filers or submitters to 
structure their disclosures internally. The specific amounts paid to 
third-party providers of structured data compliance services and/or 
software vary significantly based on a number of factors, such as the 
particular filing or submission on which structured data is required, 
the number of data points to be structured, the size of the filer or 
submitter, the industry to which the filer or submitter belongs, the 
number of individual users of the structured data compliance software, 
and the extent to which the structuring is fully outsourced. For 
example, smaller reporting companies are particularly likely to fully 
outsource their structured data preparation requirements to third-party 
service providers, leading to different cost dynamics than other 
companies that license third-party structured data preparation software 
and structure their disclosures in-house.\709\ Based on the Staff's 
understanding of third-party structured data compliance pricing, 
smaller filers typically pay between $1,500 and $5,000 per year for 
third-party structured data compliance services and/or software, while 
larger filers typically pay between $5,000 and $30,000 per year for 
such services and/or software.\710\
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    \709\ See supra note 246 (stating that ``for the sake of 
compliance, many firms, especially smaller firms that lack extensive 
resources, have outsourced the creation and filing process. . .''). 
See also infra section X.C.2.b (discussing a cost survey conducted 
by the Association of International Certified Professional 
Accountants, in which 1,032 smaller reporting companies reported 
full outsourcing of their XBRL structuring requirements).
    \710\ Some compliance service providers publicly disclose or 
advertise pricing information on their websites. See, e.g., EDGAR 
Filing Services, Advanced Comp. Innovations, Inc., http://www.edgar-services.com/ (last visited Apr. 3, 2024). Other compliance service 
providers do not publicly disclose pricing information on their 
websites, instead requiring individual pricing consultations. See 
also infra section X.C.2.b.
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    In some cases, rather than use a third-party structured data 
compliance service or software provider, filers or submitters will have 
already structured their data in-house, independently of any Commission 
disclosure requirements. For example, rather than paying third-party 
structured data compliance service providers, some filers or submitters 
use ERP systems or other data management platforms that include a data 
structuring component.\711\ In some instances, filers or submitters of 
a custom XML document may already be using Inline XBRL to structure 
similar data for internal business purposes (such as through the use of 
ERP systems).\712\ Furthermore, companies that are affiliated with one 
another may be able to leverage each other's compliance software 
licenses or service agreements and experience in complying with the 
structured data requirements.
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    \711\ See, e.g., Feng Guo et al.; Enterprise Resource Planning 
Systems and XBRL Reporting Quality, 35 J. Info. Sys. 77, Sept. 1, 
2021 (defining ERP systems as ``large-scale, modularly packaged 
information systems that have been widely adopted by midsize and 
larger firms in recent decades'' and stating that ``most ERP systems 
integrate an eXtensible Business Reporting Language (XBRL) component 
in their core modules. . .'').
    \712\ See supra sections II.A.3 and II.D.5.
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    In addition, with particular respect to custom XML requirements on 
EDGAR forms, some filers or submitters may comply by inputting their 
disclosures into fillable web forms on the EDGAR website; EDGAR then 
converts these inputted disclosures into the applicable custom XML data 
language. In such instances, filers or submitters forgo the cost of 
paying third-party structured data compliance service providers. With 
respect to the rule amendments, because use of the fillable form 
permits filers or submitters to forgo the costs of structuring, we 
expect most entities affected by the custom XML requirements will opt 
to use fillable forms rather than structure directly in custom XML.
    Other filers or submitters of custom XML documents choose not to 
use the fillable web form; instead, they structure their disclosures in 
the applicable custom XML data language and file or submit that 
structured custom XML document on EDGAR. These filers or submitters 
typically incur implementation costs to integrate any new or updated 
custom XML schemas into their data systems, and then incur decreased 
structured data costs after such integration. Such filers or submitters 
may find direct submission in custom XML beneficial, because it allows 
for greater automation for filing or submitting already structured data 
without the need for a final manual step of converting structured data 
into unstructured text to be typed into fillable web fields. For this 
reason, the Commission expects the SROs that file Form 1 and Form CA-1, 
because they are likely to have existing data management systems (or 
have the internal resources and technical capability to establish such 
systems) that cover some of the disclosures required to be structured 
in custom XML, will opt to structure disclosures directly in custom XML 
rather than using the fillable EDGAR web form.\713\ Nonetheless, 
providing both the fillable web form option and the direct custom XML 
structuring option for the custom XML requirements in the rule, as is 
done for most other custom XML forms on EDGAR, will provide useful 
flexibility for any current or future affected entities that opt to 
take an approach that differs from our preliminary assumptions, without 
compromising the usefulness and accessibility of the resulting 
disclosures.
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    \713\ Such disclosures could include, for example, schedules of 
fees (Exhibit H to Form 1), lists of participants or applicants for 
participation (Exhibit N to Form CA-1), and schedules of traded 
securities (Exhibit N to Form 1).
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    While not required for structured data use, some data users 
(including some investors and analysts) pay third-party service 
providers for software that can facilitate their usage and analysis of 
structured data. As with structured data compliance, the specific 
amounts paid for third-party structured data research software vary 
significantly based on a number of factors, such as the number of 
individual software users, whether the user is an individual or an 
enterprise, and the particular type of functionality offered. Based on 
the Staff's understanding of third-party structured data research 
software pricing, data users typically pay between $1,000 and $15,000 
per year for third-party structured data research software.\714\ Other 
data users, especially those with more technical experience and 
sophistication, import structured data into their own systems and 
analyze the data without paying for third-party software.\715\
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    \714\ Some research service providers publicly disclose or 
advertise pricing information on their websites. See, e.g., 
Calcbench, https://www.calcbench.com/payment/pricing (last visited 
Apr. 3, 2024); TagniFI, https://about.tagnifi.com/pricing/ (last 
visited Apr. 3, 2024); FinDynamics, https://findynamics.com/subscriptions/ (last visited Apr. 3, 2024). Other research service 
providers do not publicly disclose pricing information on their 
websites, instead requiring individual pricing consultations.
    \715\ Structured data filed with or submitted to the Commission 
(other than structured data filed or submitted on non-public 
documents) are freely available to access and download. See DERA 
Data Library, available at https://www.sec.gov/dera/data; Structured 
Disclosure RSS Feeds, available at https://www.sec.gov/structureddata/rss-feeds-submitted-filings.
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2. Paper and Limited Electronic Submission
    Certain of the affected documents are currently filed or submitted 
in paper format. Specifically, the Commission's regulatory framework 
requires an entity seeking to be registered as a national securities 
exchange, as a clearing agency, or as a security futures product 
exchange, to file in a paper-based format certain forms that are 
mandated by rules under the Exchange Act. Filers are also

[[Page 7335]]

required to submit paper-based amendments to their respective forms. 
The forms required to be filed in paper format include Forms 1, 1-N, X-
15AA-1, X-15AJ-1, X-15AJ-2, CA-1. Form 19b-4(e) also is required to be 
submitted in paper format. In addition, paragraphs (d)(6) of Rule 17a-5 
and (c)(6) of Rule 18a-7 provide that broker-dealer and SBS Entity 
annual reports, respectively, must be sent to the Commission's 
principal office in Washington, DC, and appropriate regional office or 
they may be submitted to the Commission electronically in accordance 
with directions provided on the Commission's website. Some broker-
dealers voluntarily file annual reports electronically on EDGAR,\716\ 
and instructions for doing so are posted on the Commission's website. 
For the 12 months ending December 31, 2023, the Commission received 
1,498 filings of the annual reports in paper form and 1,769 
electronically via EDGAR. The proportion of annual reports filed 
electronically has been steadily increasing over the years since it was 
first permitted in 2015.
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    \716\ We note that Commission staff previously stated that it 
would not recommend enforcement action to the Commission under Rule 
17a-5 or Rule 17a-12 if a broker-dealer or OTC derivatives dealer 
files the annual and supplemental reports required under those rules 
electronically through the EDGAR system in accordance with the 
instructions and conditions contained on the Commission's website in 
lieu of filing them with the Commission in paper form. See Letter to 
Kris Dailey Vice President, Risk Oversight and Operational 
Regulation, FINRA, from Michael Macchiaroli, Associate Director, 
Division, Commission (Jan. 27, 2017), available at https://www.sec.gov/divisions/marketreg/mr-noaction/2017/finra-012717-electronic-filing-annual-reports.pdf.
---------------------------------------------------------------------------

    OTC derivatives dealer annual reports filed under Rule 17a-12 must 
be filed at the Commission's principal office under paragraph (p) of 
that rule. Further, Rule 17h-2T permits quarterly and annual risk 
assessment reports to be filed with the Commission in paper-based 
format, and Rule 17a-19 currently requires every national securities 
exchange and registered national securities association to file a Form 
X-17A-19 with the Commission in paper format at its principal office. 
In some circumstances, the Commission's regulatory framework requires 
or permits submission of documentation by email. Specifically, Exchange 
Act Rule 3a71-3(d)(1)(vi) requires the Registered Entity to provide the 
ANE Exception Notice by submitting it to the electronic mailbox 
described on the Commission's website. Further, notices made pursuant 
to Rule 15fi-3(c) may be made via email or on EDGAR. Annual compliance 
reports provided pursuant to Rule 15fk-1(c) may be submitted by an SBS 
Entity as a paper or electronic submission.
    In addition, current Rule 17a-22 under the Exchange Act requires 
that within 10 days after issuing, or making generally available, to 
its participants or to other entities with whom it has a significant 
relationship, such as pledgees, transfer agents, or self-regulatory 
organizations, any material (including, for example, manuals, notices, 
circulars, bulletins, lists or periodicals), a registered clearing 
agency shall file three copies of such material with the 
Commission.\717\ Commission staff, however, released the Staff 
Statement on COVID-19 flexibility in early April 2020 and updated it in 
June 2020. Since that time, consistent with the Updated Staff 
Statement, filers and registrants have made alternate arrangements for 
the delivery, execution, and notarization of certain filings, including 
filings to be made pursuant to Rule 17a-22.\718\ These alternate 
arrangements have included electronic submission, similar to what is 
being adopted.
---------------------------------------------------------------------------

    \717\ 17 CFR 240.17a-22.
    \718\ Division Staff Statement Regarding Requirements for 
Certain Paper Submissions in Light of COVID-19 Concerns (Apr. 2, 
2020), available at https://www.sec.gov/tm/paper-submission-requirements-covid-19; see also Updated Staff Statement, supra note 
7.
---------------------------------------------------------------------------

    When a paper filing is received, the Commission staff scan it into 
PDF format, and upload it to EDGAR or make it available to Commission 
staff. For some filings, such as broker-dealer's annual reports, this 
process can take an average of several weeks from the date of receipt 
of a paper filing until it is scanned and the public portion published 
on EDGAR, and the confidential portion is available to Commission 
staff.
3. Structured Data
    Previously, four of the affected documents could be filed or 
submitted electronically using EDGAR--Form X-17A-5 Part III, Form 17-H, 
VDNs, and CCO reports.\719\ Form X-17A-5 Part III, the facing page for 
annual reports required to be filed with the Commission under Exchange 
Act Rules 17a-5, 17a-12, and 18a-7 (which generally must be audited), 
is filed by broker-dealers (including OTC derivatives dealers) and non-
bank SBS Entities; Form 17-H is filed by broker-dealers subject to 
paragraph (a) of Rule 17h-2T; and the VDNs and CCO reports are 
submitted by SBS Entities. Each of Form X-17A-5 Part III, and Form 17-
H, and the CCO reports was, when filed or submitted electronically, 
partially structured (i.e., machine-readable).\720\ None of the other 
affected documents was previously structured, either in whole or in 
part.
---------------------------------------------------------------------------

    \719\ See supra sections IV.A, IV.B, V.C, and V.D.
    \720\ More precisely, the CCO report filed on EDGAR was 
accompanied by a custom XML execution page with information about 
the submitting SBSE and the submission. The CCO report itself, 
however, was in unstructured PDF format. See EDGAR Filer Manual Vol. 
II at 8.2.20.6.
---------------------------------------------------------------------------

    Form X-17A-5 Part III elicits registrant and accountant identifying 
information and includes an oath or affirmation in a custom XML-based 
data language specific to that form.\721\ As is the case with most of 
the Commission's other custom XML forms, filers of Form X-17A-5 Part 
III had (and will continue to have) the option of manually inputting 
information into a fillable form that EDGAR subsequently converts into 
the custom XML data language for Form X-17A-5 Part III.\722\ Form X-
17A-5 Part III filers were then able (and will continue to be able) to 
attach the remaining documents required by the applicable rules, 
including financial statements and supplemental reports, in 
unstructured formats such as PDF and HTML.\723\
---------------------------------------------------------------------------

    \721\ See EDGAR X-17A-5 Part III Technical Specification, 
available at https://www.sec.gov/info/edgar/specifications/form-x-17a-5-xml-tech-specs.htm.
    \722\ See EDGAR Filer Manual Vol. II at 8.2.22.
    \723\ See id.
---------------------------------------------------------------------------

    Form 17-H is similar to Form X-17A-5 Part III in that its facing 
page, when filed electronically through EDGAR, was (and will continue 
to be) structured in a custom XML-based data language specific to Form 
17-H.\724\ In addition, Part II of Form 17-H, which consists of 
securities and commodities position disclosures for the filing broker-
dealer's material associated persons, was (and will continue to be) 
submitted in the Form 17-H-specific custom XML when filed 
electronically through EDGAR.\725\ Form 17-H filers have had (and will 
continue to have) the option of manually inputting Part I facing page 
information and Part II positions information into a fillable web form 
that EDGAR subsequently converts into the custom XML for Form 17-
H.\726\
---------------------------------------------------------------------------

    \724\ See EDGAR 17-H Technical Specification, available at 
https://www.sec.gov/info/edgar/specifications/form-17-h-xml-tech-specs.htm.
    \725\ See id.
    \726\ See EDGAR Filer Manual, Volume II at 8.2.24.
---------------------------------------------------------------------------

    In addition, the CCO reports were (and will continue to be), when 
filed electronically through EDGAR, partially structured in a custom 
XML-based data language specific to the reports.\727\ SBS

[[Page 7336]]

Entities had (and will continue to have) the option of manually 
inputting the execution page information into a fillable web form that 
EDGAR subsequently converts into the custom XML-based data language 
specific to EDGAR submissions by SBS Entities.\728\
---------------------------------------------------------------------------

    \727\ See EDGAR SBS Entity Forms Technical Specification, 
available at https://www.sec.gov/info/edgar/specifications/form-sbs-entity-xml-tech-specs.htm.
    \728\ See EDGAR Filer Manual, Volume II at 8.2.20.6. As stated 
above, the CCO report filed on EDGAR was accompanied by a custom XML 
execution page with information about the submitting SBSE and the 
submission. The CCO report itself, however, was in unstructured PDF 
format.
---------------------------------------------------------------------------

    The broker-dealers (including OTC derivatives dealers) and non-bank 
SBS Entities that file Form X-17A-5 Part III and, where applicable, 
Form 17-H, are also subject to other structuring requirements under 
Commission rules. As discussed, all of these entities are required to 
file FOCUS Reports under Exchange Act Rule 17a-5, Rule 17a-12, or Rule 
18a-7, as applicable.\729\ Broker-dealers, SBSDs, MSBSPs, and OTC 
derivatives dealers file these FOCUS Reports using a fillable web form 
that the relevant eFOCUS system converts into a custom XML.\730\ In 
addition, SBSDs and MSBSPs must file in EDGAR Form SBSE, SBSE-A, or 
SBSE-BD, as applicable, to register as an SBS Entity, as well as 
amendments to those Forms if the information in them is or has become 
inaccurate or incomplete; Forms SBSE, SBSE-A and SBSE-BD are structured 
using a custom XML-based data language specific to the form.\731\ 
Broker-dealers, SBSDs, MSBSPs, and OTC derivatives dealers were not 
previously subject to any Inline XBRL requirements under Commission 
rules.
---------------------------------------------------------------------------

    \729\ See 17 CFR 240.17a-5; 17 CFR 240.17a-12; 17 CFR 240.18a-7.
    \730\ See eFOCUS--Fin. & Operational Combined Unif. Single 
Reports, https://www.finra.org/filing-reporting/regulatory-filing-systems/efocus (last visited Apr. 4, 2024); eFocus Filing 
Transmission, https://www.finra.org/filing-reporting/focus/efocus-filing-transmission (last visited Apr. 4, 2024); FINRA eFOCUS User 
Guide: Training and Reference Manual, https://www.finra.org/sites/default/files/p118798.pdf (last visited Apr. 4, 2024).
    \731\ See EDGAR Filer Manual, Volume II at 8.2.19 and 8.2.20.
---------------------------------------------------------------------------

    Since the publication of the proposing release in March 2023, the 
Commission has finalized rules with new structured data obligations. 
These structured data obligations, which are now part of the baseline, 
may increase the familiarity that some affected filers or submitters 
have with EDGAR and custom XML filing. Specifically, beginning in 
January 2025, any broker-dealers and registered SBS Entities that are 
``institutional investment managers'' as defined in section 13(f)(6)(A) 
of the Exchange Act, and that meet the thresholds set forth in Rule 
13f-2 under the Exchange Act, will be required to file in EDGAR monthly 
short sale position and activity reports requirements on Form SHO using 
a custom XML-based language specific to Form SHO.\732\ To the extent 
there is any overlap between broker-dealers that are ``institutional 
investment managers'' and meet the thresholds associated with Form SHO 
filing obligations, and broker-dealers that file Form X-17A-5 Part III 
using paper rather than EDGAR,\733\ those broker-dealers will gain 
experience with custom XML EDGAR filing as a result of the 
rulemaking.\734\
---------------------------------------------------------------------------

    \732\ See 17 CFR 240.13f-2(a)(3); Short Position Adopting 
Release at 75105 (stating that ``institutional investment 
managers,'' which will be subject to Form SHO filing requirements, 
``typically can include brokers and dealers, investment advisers, 
banks, insurance companies, pension funds and corporations'').
    \733\ SBS Entities and some broker-dealers already have 
experience with EDGAR and custom XML filing. SBS Entities file 
variants of Form SBSE on EDGAR in custom XML. Broker-dealers that 
file Form X-17A-5 Part III electronically do so on EDGAR using 
custom XML for the execution page. See Commission, ``XML Technical 
Specifications,'' available at https://www.sec.gov/edgar/filer/technical-specifications#xml (last visited June 5, 2024).
    \734\ The rule does not alter the compliance cost estimates 
associated with the custom XML requirements on Form X-17A-5 Part 
III, because, as explained later in the economic analysis, the 
Commission expects broker-dealers to comply with the custom XML 
requirement by inputting their disclosures into a fillable EDGAR web 
form rather than structuring the disclosures themselves.
---------------------------------------------------------------------------

    Similarly, beginning with the twelve-month period ending December 
31, 2024, a limited subset of clearing agencies (specifically, those 
clearing agencies that provide a central matching service) will be 
required to file annual reports on straight-through processing on EDGAR 
in Inline XBRL.\735\ This experience with EDGAR and Inline XBRL may, 
for those clearing agencies, decrease the cost of compliance with 
Inline XBRL requirements for Form CA-1, relative to the costs described 
in the Proposing Release.\736\
---------------------------------------------------------------------------

    \735\ See 17 CFR 240.17ad-27(d); Settlement Cycle Adopting 
Release at 13910.
    \736\ See infra note 860. Clearing agencies that do not provide 
a central matching service, as well as national securities exchanges 
subject to Form 1 filing requirements, were not previously subject 
to Inline XBRL requirements under the Commission's rules and do not 
have this experience.
---------------------------------------------------------------------------

    The affected documents previously included only a limited amount of 
structured data. For execution pages of Form X-17A-5 Part III reports, 
Form 17-H reports and CCO reports filed or submitted on EDGAR, the 
inclusion of structured identifying information on the facing page 
facilitates the filtering and retrieval of reports from particular 
subsets of filers or submitters. For Part II of electronically 
submitted Form 17-H reports, the inclusion of structured material 
associated person disclosures enables more efficient mathematical 
calculations of the disclosed numerical information. For any Structured 
Documents or portions thereof under a successful confidential treatment 
request, such enhanced functionality will be unavailable to parties 
other than Commission staff; for all other Structured Documents or 
portions thereof, including those which are not subject to a 
confidential treatment request or for which the Commission determined 
not to grant confidential treatment, such enhanced functionality will 
be available to Commission staff and to the public.

C. Economic Effects

1. Benefits
a. Electronic Submission and Posting; Revisions to the FOCUS Report
    Electronic submissions can save time, improve efficiency, and 
reduce errors. After an initial setup cost described below,\737\ these 
changes can potentially reduce the cost for reporting entities because 
the shift to electronic submission can obviate the need for printing 
costs and improve the efficiency of filing preparation. In addition, 
the improved accuracy, speed, and efficiency of the documents provided 
to the Commission can reduce the costs associated with receiving and 
processing submissions, in part by reducing the time, processing, and 
search costs relative to the manual nature of non-electronic document 
processing, and accordingly aid the Commission's examination and 
oversight functions. For some filings, such as broker-dealer annual 
reports, eliminating the need to scan paper documents could reduce 
processing time by as much as several weeks. An increase in the 
accuracy and timeliness of processing submissions boosts the efficiency 
of Commission document review, processing, and quality assurance. 
Furthermore, electronic submissions allow reporting entities and 
Commission staff to more easily access or submit documents during 
disruptive events--like the COVID-19 pandemic--when their physical work 
facilities may be inaccessible. Commenters were nearly unanimous in 
their support of electronic submission and posting generally, and 
focused their comments on the specific structured data requirements.
---------------------------------------------------------------------------

    \737\ See infra section X.C.2.
---------------------------------------------------------------------------

    The release also includes several amendments designed to update the 
FOCUS Report and related requirements. First, the release amends FOCUS 
Report Part II by adding data

[[Page 7337]]

fields to the income statement so firms can report more complete data, 
updating the CFTC Minimum Capital Requirements section for consistency 
with the CFTC's Form 1-FR, and updating the customer reserve and PAB 
computations for consistency with recent amendments to Rule 15c3-3a. 
The Commission received comment in favor of these amendments.\738\
---------------------------------------------------------------------------

    \738\ See SIFMA 11/21/2023 Letter at 1-2.
---------------------------------------------------------------------------

    Second, the Commission is aligning the text in FOCUS Report Part 
IIC with the text in FFIEC Form 031. Making these amendments should 
reduce the overall burden because information input in the amended form 
will be consistent with FFIEC Form 031 (i.e., the Call Report), which 
many Part IIC filers are already required to complete.\739\ The 
amendments also remove ambiguity about how to complete the Part IIC, 
which have resulted in SEC staff receiving a number of phone calls 
seeking assistance on how to reconcile these incompatibilities. The 
Commission received comment agreeing with the benefits and supporting 
these proposed changes.\740\
---------------------------------------------------------------------------

    \739\ Of the affected entities in this release, 29 filed FOCUS 
Report Part IIC as of Dec. 31, 2023. See supra section IX.C.9.
    \740\ See SIFMA 5/22/2023 Letter at 1, OCC 5/22/2023 Letter at 
1, XBRL Letter at 1, Umbs Letter, Pathiakis Letter, Till Letter, 
Anonymous 4/18/2023 Letter, Sage Letter, Kulodzik Letter, Jorgensen 
Letter, Mack Letter, Anonymous 4/17/2023 Letter, Wohlfahrt Letter, 
Brady Letter, McMahon Letter, Smith Letter.
---------------------------------------------------------------------------

    Third, the Commission is requiring only two of the three signature 
lines to be signed on the FOCUS Report's cover page and allows these 
signatures to be signed either manually or electronically. Since the 
revised FOCUS Report was adopted, it has come to the Commission's 
attention that obtaining the signatures of all three principal officers 
on or close to the same day may be burdensome, especially for larger 
firms with thousands of employees. Therefore, the Commission is 
requiring only two of the three principal officers' signatures to 
balance the Commission's desire for individual accountability with the 
burden on the filer. Reducing the number of required signatures reduces 
the burden of submitting FOCUS reports. The use of electronic 
signatures would also reduce the burden in the long run because firms 
would not need to obtain and store wet signatures, especially due to 
the increase in remote work. Commenters agreed with the benefits of the 
use of electronic signatures and the reduction in the number of 
required signatures, with some suggesting further reducing the number 
of required signatures.\741\
---------------------------------------------------------------------------

    \741\ See Wichkoski Letter, OCC 5/22/2023 Letter, SIFMA 5/22/
2023 Letter, Anonymous 4/17/23 Letter, and Wohlfahrt Letter.
---------------------------------------------------------------------------

    Finally, the Commission is requiring OTC derivatives dealers to 
file the FOCUS Report electronically on the SEC eFOCUS system instead 
of in paper. The SEC eFOCUS system offers benefits of electronic filing 
of forms over paper, reducing costs and making information more easily 
usable and timely.
b. Structured Data
    In general, the structured data requirements will benefit investors 
and markets by increasing the accessibility and usability of the 
disclosures in the Structured Documents, thereby increasing 
transparency and insight into the operations, governance, management, 
financial condition, and other characteristics of the affected 
entities. Requiring machine-readability for the disclosures will enable 
significantly more efficient retrieval, sorting, filtering, comparison, 
aggregation, and other analysis of the disclosures across reporting 
entities and time periods. The Commission expects the exact nature and 
magnitude of such benefits will vary based on several factors, which 
are discussed herein.
    As discussed subsequently in further detail, some commenters agreed 
that the structured data requirements will provide such benefits, while 
other commenters did not. One commenter stated that the structured data 
requirements for forms, reports, and notices provided by broker-dealers 
and SBS Entities, coupled with the required electronic filing or 
submission on EDGAR, will promote greater standardization and 
consistency in reporting and facilitate investor comparison and 
analysis of information across different entities.\742\ Another 
commenter stated that the machine-readability of the Structured 
Documents will render them significantly easier, faster, and more 
efficient to process than unstructured PDF, HTML, or text versions, 
will improve the accessibility of the data for retrieval, aggregation, 
and analysis, and will facilitate validation to improve the quality of 
reported data.\743\
---------------------------------------------------------------------------

    \742\ See Wohlfahrt Letter.
    \743\ See XBRL Letter at 3, 7, and 9.
---------------------------------------------------------------------------

    By contrast, one commenter stated that XBRL requirements for 
broker-dealer reports will not provide benefits that justify compliance 
burdens.\744\ The commenter stated that, because regulators receive 
periodic FOCUS reports that are encoded as they have been for decades, 
regulators do not need encoded (i.e., machine-readable) broker-dealer 
financial statements.\745\ The Commission disagrees with the 
commenter's view, because the amended rules include XBRL requirements 
for the annual broker-dealer audited reports (Form X-17A-5 Part III), 
and those reports include additional disclosure that the periodic FOCUS 
reports do not include.\746\ Because regulators will be able to analyze 
this additional information much more efficiently when it is provided 
in a structured, machine-readable format (rather than in paper or PDF 
format), regulators--and ultimately the market--will derive a 
significant benefit from the Inline XBRL requirement for Form X-17A-5 
Part III.
---------------------------------------------------------------------------

    \744\ See Integrated Solutions Letter at 2-3.
    \745\ See id. at 4.
    \746\ See supra sections IV.A and VII.A.
---------------------------------------------------------------------------

    The same commenter also stated that customers of broker-dealers do 
not read Form X-17A-5 Part III, and investors in broker-dealers do not 
need Form X-17A-5 Part III.\747\ The Commission disagrees with this 
statement--there are multiple examples of public market participants 
using Form X-17A-5 Part III information to the benefit of broker-dealer 
investors and customers.\748\
---------------------------------------------------------------------------

    \747\ See Integrated Solutions Letter at 4.
    \748\ See supra note 479.
---------------------------------------------------------------------------

    Another commenter stated that structured data requirements will 
provide no clear benefit and emphasized that the use of Inline XBRL for 
narrative-based reports in particular will provide no material 
benefit.\749\ According to this commenter, the benefits the Commission 
cited in the proposal (e.g., keyword searching and redlining) are not 
exclusive to structured data languages like XBRL and custom XML, 
because PDF documents can also be searched and redlined.\750\ However, 
while PDF documents can be searched and redlined, structuring textual 
disclosures in Inline XBRL enables users to perform targeted searches 
and redline comparisons of specific disclosure items, rather than 
having to search through (or redline) entire documents. For example, 
under the rule amendments, a data user will be able to search for a 
particular phrase of interest within only the significant accounting 
policies financial statement footnote across all Form X-17A-5 Part III 
filers, rather than having to search the entirety of all Form X-17A-5 
Part III filings for that phrase, and manually reviewing the results 
from each Form X-17A-5 Part III filings to determine which results were 
located in the significant accounting policies footnote.

[[Page 7338]]

This is an overall benefit to the market and end users because the 
Commission will be able to efficiently assess common significant 
accounting policies disclosures across all Form X-17A-5 Part III 
filers.
---------------------------------------------------------------------------

    \749\ See SIFMA 5/22/2023 Letter at 1, 6, and 7.
    \750\ See id. at 6.
---------------------------------------------------------------------------

    The commenter also stated that the requirement to submit fillable 
web forms on EDGAR in lieu of PDFs would undermine the rule amendments' 
goals by removing efficiencies in firms' existing systems (such using 
existing systems to populate a PDF automatically) and introducing 
opportunities for human error.\751\ The Commission disagrees. To the 
extent that firms manually input data, inputting values into a fillable 
form would not incur substantially higher costs and or opportunities 
for error compared to inputting the same information and submitting the 
form via other means. To the extent firms automatically populate forms 
by using their own existing systems to create XML files, the EDGAR 
Filer Manual provides for submission of certain filings in a custom 
XML-based data language, which can be used to reach a similar 
result.\752\ In addition, the structured data requirement enables EDGAR 
to perform technical validations (i.e., programmatic checks to ensure 
the documents are appropriately standardized, formatted, and complete) 
upon intake, thus improving the quality of the filed data by decreasing 
the incidence of errors (such as the omission of values from fields 
that should always be populated).\753\ Furthermore, allowing firms to 
submit PDF documents would not achieve the benefits associated with the 
structured data requirements under the rule amendments to the same 
extent. The structured data requirements under the rule amendments will 
increase the accessibility and usability of the disclosures in the 
Structured Documents, for example by enabling more efficient retrieval, 
sorting, filtering, comparison, aggregation, and other analysis of the 
disclosures, thereby increasing transparency and insight into the 
operations, governance, management, financial condition, and other 
characteristics of the affected entities.
---------------------------------------------------------------------------

    \751\ See id. at 2, 11.
    \752\ See id. at 11 (suggesting, in the context of VDNs, that 
the Commission allow firms to submit a structured data file rather 
than filling in a web form); see supra section V.C.2 (discussing the 
option to use custom XML-based data language).
    \753\ See, e.g., Semi-Annual Report to Congress Regarding Public 
and Internal Use of Machine-Readable Data for Corporate Disclosures 
(June 2024) at 4, https://www.sec.gov/files/fdta-report-6-2024.pdf 
(explaining that technical validation rules allow issuers to check 
for certain errors before the machine-readable data is submitted, 
which can streamline the compliance process by reducing Commission 
staff time that would otherwise be spent pinpointing and 
communicating the existence of technical errors to issuers, and by 
reducing issuer time that would otherwise be spent resolving such 
errors and resubmitting the machine-readable data file).
---------------------------------------------------------------------------

Structured Data Benefits
    As an initial point of comparison, some research on XBRL 
requirements for public operating company financial statement 
disclosures has found that such requirements have mitigated information 
asymmetry by reducing information processing costs, thereby 
facilitating access and analysis of the disclosures on a large-scale 
basis.\754\ This reduction in information processing cost has been 
observed to facilitate the monitoring and analysis of firms by external 
parties.
---------------------------------------------------------------------------

    \754\ See, e.g., Joung W. Kim, Jee-Hae Lim, & Won Gyun No, The 
Effect of First Wave Mandatory XBRL Reporting Across the Financial 
Information Environment, 26 J. Info. Sys. 127, 127-53 (2012) 
(finding evidence that ``mandatory XBRL disclosure decreases 
information risk and information asymmetry in both general and 
uncertain information environments'').
---------------------------------------------------------------------------

    These external parties include investors themselves, as well as 
other entities that process firm disclosures into conclusions that 
often influence investors and markets; such entities include financial 
analysts, data aggregators, academic researchers and financial media 
(collectively, ``information intermediaries'').\755\ Institutional 
investors are more likely to access XBRL data directly, whereas retail 
investors are more likely to benefit from the use of XBRL data by 
information intermediaries.\756\
---------------------------------------------------------------------------

    \755\ See, e.g., N. Trentmann, ``Companies Adjust Earnings for 
Covid-19 Costs, But Are They Still a One-Time Expense?'', Wall St. 
J. (2020) (citing an XBRL research software provider as a source for 
the analysis described in the article); Bloomberg Lists BSE XBRL 
Data, XBRL.org (Mar. 17, 2019), https://www.xbrl.org/news/bloomberg-lists-bse-xbrl-data/; R. Hoitash & U. Hoitash, Measuring Accounting 
Reporting Complexity with XBRL, 93 Account. Rev. 259 (Jan. 1, 2018).
    \756\ See, e.g., A. Lawrence, et al., Investor Demand for Sell-
Side Research, 92 Account. Rev. 123 (Mar. 1, 2017) (finding ``the 
average retail investor appears to rely on analysts to interpret 
financial reporting information rather than read the actual 
filings''); but see S. Chi & D. Shanthikumar, Do Retail Investors 
Use SEC Filings? Evidence from EDGAR Search, (Nov. 8, 2018), 
available at https://ssrn.com/abstract=3281234 (retrieved from SSRN 
Elsevier database) (finding ``retail investor trading, both buying 
and selling, is significantly related to EDGAR search for 10-K and 
10-Q filings, more so than to Google search,'' especially for ``the 
most easily readable 10-K and 10-Q filings''); see also N. Brown, et 
al., How do Disclosure Repetition and Interactivity Influence 
Investors' Judgments?, 60 J. Account. Res. 1775 (Dec. 2022) (``Brown 
et al. iXBRL study'') (indicating that disclosure interactivity, 
which is promoted by Inline XBRL, may improve investors' direct 
processing of financial information).
---------------------------------------------------------------------------

    Regulators, including the Commission and the Federal Deposit 
Insurance Corporation (``FDIC''), have also been observed to leverage 
XBRL disclosure benefits in better fulfilling their mandates.\757\ The 
Commission staff uses XBRL data to efficiently analyze large quantities 
of information in support of risk assessment, rulemaking, and 
enforcement activities, including as part of its internally developed 
Financial Statement Query Viewer and Inline Viewer applications.\758\ 
The regulatory use of XBRL is particularly relevant to affected 
documents that are subject to confidential treatment and thus only 
accessible by the Commission and its staff.\759\
---------------------------------------------------------------------------

    \757\ With respect to Commission use of XBRL data, see infra 
note 767. With respect to FDIC use of XBRL data, see Meet Mark 
Montoya, Chief of Data Strategy, FDIC, Xcential Co. (Sept. 29, 
2021), https://xcential.com/blog/meet-mark-montoya-chief-data-officer-fdic/ (noting in an interview with the FDIC's Chief Data 
Officer that XBRL requirements for quarterly bank call reports have 
facilitated FDIC staff analysis of the regulated banks); see also 
Government Use of Data Standards--Conversation with the FDIC, XBRL 
US (Sept. 2, 2020), https://xbrl.us/news/regulator-video/ (noting in 
an interview with the FDIC's Chief Data Officer that, ``. . . Prior 
(to XBRL) the data that the (FDIC) examiners used to examine the 
banks was probably about 2-3 months old which is old data . . . 
(with XBRL) the data can be pulled down in real time''); see also 
Lizhong Hao & Mark J. Kohlbeck, The Market Impact of Mandatory 
Interactive Data: Evidence from Bank Regulatory XBRL Filings, 10 J. 
Emerging Tech. Acct. 41 (Dec. 2013) (finding that banks experienced 
a ``reduction in systematic risk in connection with filing their 
regulatory reports in XBRL'').
    \758\ See, e.g., Semi-Annual Report to Congress Regarding Public 
and Internal Use of Machine-Readable Data for Corporate Disclosures 
(June 2024), https://www.sec.gov/files/fdta-report-6-2024.pdf 
(describing Commission staff use of machine-readable data, including 
XBRL data, across various Divisions and Offices); T. Knutson, As 
XBRL in Financial Reporting Matures, Focus is on Accuracy, CFO Dive 
(Feb. 25, 2020), available at https://www.cfodive.com/news/xbrl-financial-reporting-accuracy/572948/.
    \759\ As stated above in sections X.A and X.B, whether any filed 
material is confidential is determined pursuant to applicable law, 
including but not limited to the Freedom of Information Act and 
Commission rules governing requests for confidential treatment.
---------------------------------------------------------------------------

    The enhanced monitoring facilitated by XBRL requirements has been 
observed to influence the behavior of firms relevant to governance and 
compliance, including firms' disclosure and reporting choices. For 
example, one study found that firms increase quantitative footnote 
disclosures upon implementation of detailed tagging requirements.\760\ 
Also, multiple studies

[[Page 7339]]

have shown that XBRL requirements have increased firms' investment 
efficiency by decreasing information processing cost and improved 
effective decision-making by managers, effects that appear to be 
heightened for Inline XBRL requirements.\761\
---------------------------------------------------------------------------

    \760\ See Elizabeth Blankespoor, The Impact of Information 
Processing Costs on Firm Disclosure Choice: Evidence from the XBRL 
Mandate, 57 J. Acct. Res. 919 (2019) (finding ``firms increase their 
quantitative footnote disclosures upon implementation of XBRL 
detailed tagging requirements designed to reduce information users' 
processing costs,'' and ``both regulatory and non-regulatory market 
participants play a role in monitoring firm disclosures,'' 
suggesting ``that the processing costs of market participants can be 
significant enough to impact firms' disclosure decisions''); see 
also Kim, Jeong-Bon, Kim, Joung W., &Lim, Jee-Hae, Does XBRL 
Adoption Constrain Earnings Management? Early Evidence from Mandated 
U.S. Filers, 36 Contemp. Acct. Res. 2610 (2019) (indicating that 
XBRL adoption ``constrains earnings management via discretionary 
accrual choices'').
    \761\ See, e.g., Xin Cheng, et al., How Does Information 
Processing Efficiency Relate to Investment Efficiency? Evidence from 
XBRL Adoption, 35 J. Info. Sys. 1 (2021) (finding firms ``improve 
their investment efficiency after the adoption of XBRL,'' especially 
for firms that ``have inferior external monitoring, . . . operate in 
more uncertain information environments, . . . and have less 
readable financial reporting''); see also Hyun Woong (Daniel) Chang, 
et al., The Effect of iXBRL Formatted Financial Statements on the 
Effectiveness of Managers' Decisions when Making Inter-Firm 
Comparisons, 35 J. Info. Sys. 149 (2021) (``Chang et al. iXBRL 
study'') (finding ``iXBRL filings facilitate information search and 
information match by allowing users to view XBRL data in HTML 
filings,'' and ``managers make more (less) effective decisions when 
presented with financial information formatted in iXBRL (XBRL)'').
---------------------------------------------------------------------------

    XBRL requirements have also been observed to impact the timeliness 
and effectiveness of firms' disclosure preparation and related 
processes. For example, one study found XBRL to have decreased audited 
report lags, especially among firms with strong internal control 
systems and no prior XBRL reporting experience.\762\ Other studies have 
found XBRL requirements to have improved the timeliness of financial 
reports, with such improvements limited to larger firms only.\763\ For 
instance, one public company executive stated that XBRL facilitates his 
firm's disclosure preparation procedures by enabling efficient review 
of disclosures made by peer companies.\764\ Increasing the timeliness 
and effectiveness of the auditing and disclosure process would improve 
the speed (and, with respect to enhanced auditing processes, 
confidence) with which users of the affected entities' disclosures 
(such as investors, analysts, and regulators) could assess and 
ultimately draw conclusions from, and act upon, the disclosed 
information.\765\
---------------------------------------------------------------------------

    \762\ See K. Amin, J. Daniel Eshleman, & C. (Qian) Feng, The 
Effect of the SEC's XBRL Mandate on Audit Report Lags, 32 Acct. 
Horiz. 1 (Mar. 1, 2018) (finding ``audit report lags decrease 
following the mandatory adoption of XBRL,'' with results 
``concentrated among filers with strong internal control systems and 
no prior XBRL reporting experience'').
    \763\ See, e.g., Hui Du & Kean Wu, XBRL Mandate and Timeliness 
of Financial Reporting: Do XBRL Filings Take Longer? 15 J. Emerg. 
Tech. Acct. 57 (2018) (finding decreased reporting lags for XBRL 
annual and quarterly filings compared to non-XBRL filings from 
accelerated and large accelerated filers, but not for non-
accelerated filers); see also J. Zhou, Does One Size Fit All? 
Evidence on XBRL Adoption and 10[hyphen]K Filing Lag. 60 Acct Fin. 
3183 (Sept. 2020) (noting that 10-K filing lag decreased for all 
filers in the XBRL reporting period except smaller reporting 
companies, for which 10-K filing lag increased). However, these 
studies were based on XBRL filings that were made before the 
adoption of Inline XBRL requirements, which may facilitate the 
filing preparation process by including the machine-readable and 
human-readable data in the same disclosure document.
    \764\ See Olivia Berkman, XBRL: What are the Benefits, FEI Daily 
(Aug. 29, 2019), https://www.financialexecutives.org/FEI-Daily/August-2019/XBRL-What-are-the-Benefits.aspx (noting in an interview 
with a public company's chief financial officer that the company is 
able to ``search through XBRL filings to find similar companies 
within [its] industry that have had to present certain similar 
[disclosures] in the past,'' which has helped the company ``craft[ ] 
[its] disclosures to make sure that [the company is] complying with 
the spirit of GAAP and providing the information that [the company 
is] supposed to be providing'').
    \765\ See Proposing Release at 23946 (discussing the time lag 
between the date of receipt of a paper filing of a broker-dealer's 
annual reports until it is scanned and the public portion published 
on EDGAR, and the confidential portion available to Commission 
staff).
---------------------------------------------------------------------------

    One commenter stated that the empirical evidence the Commission 
provided to justify the use of XBRL and XML was limited to a single 
study that does not analyze Inline XBRL. However, the discussion above 
cites multiple studies, not a single study, providing evidence of 
benefit from XBRL.\766\ Further, while most of the cited studies 
discuss XBRL rather than Inline XBRL (presumably because the phase-in 
from XBRL requirements to Inline XBRL requirements for Commission 
filings was completed relatively recently, in 2021), two of the cited 
studies discuss Inline XBRL specifically.\767\
---------------------------------------------------------------------------

    \766\ See supra notes 763 to 765 and 769 to 772.
    \767\ See Brown et al. iXBRL study; Chang et al. iXBRL study.
---------------------------------------------------------------------------

Applicability and Variability of Structured Data Benefits
    The structured data benefits discussed above, while largely 
specific to public operating company financial statement disclosures, 
generally indicate that the structured data requirements under the rule 
amendments will facilitate the use and analysis of the information 
disclosed on the affected documents. One commenter agreed with this 
statement, stating that data processing is significantly faster with 
XBRL than with unstructured data types.\768\ Several of the affected 
documents that are required to be structured in Inline XBRL--namely, 
Form X-17A-5 Part III, Form 17-H, Form 1, and Form CA-1--include 
financial statements that were not previously provided in a structured 
data language, but will be provided in a structured data language 
(specifically, Inline XBRL) under the rule amendments. The probability 
that, and extent to which, the observed effects can be extrapolated are 
thus likely greater for those affected documents than for the remaining 
affected documents, which do not contain financial statements.
---------------------------------------------------------------------------

    \768\ See XBRL Letter at 11.
---------------------------------------------------------------------------

    In addition, unlike the public company financial statement 
information evaluated in the literature referenced above, several of 
the affected documents are submitted confidentially or are otherwise 
non-public, either in whole or in part. This includes Form 17-H, Form 
X-17A-19, Form X-17A-5 Part III (in part), Form CA-1 (in part), and the 
CCO reports.\769\ The expected benefits of structuring non-public 
information will accrue to investors and markets indirectly, by 
enhancing the Commission's regulatory capabilities.\770\ By contrast, 
the expected benefits of structuring public information will accrue 
directly to public users of the data (which could include investors and 
the previously discussed information intermediaries), as well as 
indirectly to investors and markets through the enhancement of the 
Commission's regulatory capabilities (and, where relevant, those of 
other regulators).
---------------------------------------------------------------------------

    \769\ Additionally, the Commission does not automatically make 
public the information provided to it pursuant to Rule 15fi-3(c); 
however, the Commission may make the information available upon 
appropriate request (including requests made pursuant to the Freedom 
of Information Act) or otherwise as permitted under applicable law, 
subject to SBS Entities making appropriate requests for confidential 
treatment. See supra section IX.F. Whether any material is 
confidential is determined pursuant to applicable law, including but 
not limited to the Freedom of Information Act and Commission rules 
governing requests for confidential treatment. If the Commission 
makes the information provided pursuant to Rule 15fi-3(c) available, 
the information made available may not be in structured format.
    \770\ See supra sections II.D, IV.A, IV.B, V.A, and V.D. An 
example of a structured non-public disclosure form is Form PF, which 
registered investment advisers file with the Commission to disclose 
information regarding private funds under their management. See 17 
CFR 275.204(b); Division of Investment Management: Electronic Filing 
of Form PF for Investment Advisers on PFRD, available at https://www.sec.gov/divisions/investment/pfrd.shtml.
---------------------------------------------------------------------------

    The benefits of structuring will also vary based on the number of 
entities in a particular population of reporting entities. As stated, 
one benefit of structured disclosure is the ability to run large-scale 
comparisons across reporting entities and across reporting periods. For 
those affected documents that have a small population of reporting 
entities, this benefit will be

[[Page 7340]]

limited largely (or, in the case of Form 15A, wholly) to the latter. 
For those affected documents that have a large population of reporting 
entities (such as Form X-17A-5 Part III, which is filed by over 3,000 
entities), the benefits of efficient cross-entity comparisons will be 
much more relevant.\771\ Similarly, the benefits of efficient access, 
retrieval, sorting, and filtering structured disclosures will be 
heightened for those affected documents generated in high volume (such 
as Form 19b-4(e) and Form X-17A-19) compared to those affected 
documents that the Commission receives in low volume (such as Form CA-
1).\772\
---------------------------------------------------------------------------

    \771\ See supra section IX.C.9.
    \772\ See supra sections IX.D.5, IX.D.6, and IX.D.11.
---------------------------------------------------------------------------

    Finally, the benefits of structuring data will vary based on the 
type of disclosures included in each affected document. Structured 
numerical disclosures lend themselves to mathematical functionality, 
such as the calculation of leverage or other ratios to assess potential 
exposure to insolvency or other risk. Structured textual disclosures 
lend themselves to period-over-period redline comparisons, targeted 
keyword searching, and more sophisticated sentiment analysis. The CCO 
report consists primarily of textual descriptions, so the latter 
benefit will be relevant for that document.\773\ Other affected 
documents feature both numeric and textual disclosures, so both 
benefits will be relevant.
---------------------------------------------------------------------------

    \773\ See 17 CFR 240.15fk-1(c)(2)(i). SBS Entities may, in 
providing the narrative descriptions required by Rule 15Fk-
1(c)(2)(i), include numeric values nested within such narrative 
descriptions.
[GRAPHIC] [TIFF OMITTED] TR21JA25.029

    One commenter disagreed with the Commission's characterization of 
benefits for structuring the CCO report (as well as other unstructured, 
narrative-based reports such as the compliance and exemption sections 
of the annual audited report on Form X-17A-5 Part III).\774\ According 
to this commenter, adding an Inline XBRL requirement for narrative 
reports will not facilitate analysis or comparison, because those 
reports do not contain standardized, easily comparable elements.\775\ 
However, all narrative reports must include disclosure responsive to 
applicable disclosure requirements set forth in the Commission's rules 
and regulations (e.g., the disclosure requirements set forth in the 
subparagraphs of Rule 15fk-1(c)(2)(i) under the Exchange Act). While 
there may be variation on the particulars on how different filers or 
submitters respond to those requirements, the Inline XBRL requirement 
will facilitate analysis by enabling efficient assessment of such 
variations, and by enabling efficient comparisons of a single filer or 
submitter's narrative disclosure over various time periods, allowing 
the data user to determine how that filer's or submitter's disclosure 
has evolved over time.
---------------------------------------------------------------------------

    \774\ See SIFMA 5/22/2023 Letter at 7.
    \775\ See id.
---------------------------------------------------------------------------

    The same commenter also questioned why the Commission cited 
sentiment analysis as a benefit of Inline XBRL requirements.\776\ 
According to the commenter, sentiment analysis is typically used for 
marketing purposes, and thus it was not clear why such analysis would 
be necessary or beneficial for narrative reports. However, sentiment 
analysis is often used for purposes beyond marketing, including by 
third parties to assess regulatory disclosures, such as disclosures in 
Commission filings in

[[Page 7341]]

order to assess the usefulness of disclosures to end users in the 
market.\777\ Thus, the sentiment analysis benefit is applicable to the 
narrative reports that are structured in Inline XBRL under the rule 
amendments.
---------------------------------------------------------------------------

    \776\ See id.
    \777\ See, e.g. H. Kim, E. Lee, & D. Yoo, Do SEC Filings 
Indicate Any Trends? Evidence from the Sentiment Distribution of 
Forms 10-K and 10-Q with FinBERT, 57 Data Tech. & Applications 293 
(Apr. 25, 2023); see generally, Yong Chen et al., Sentiment Trading 
and Hedge Fund Returns, 76 J. Fin. 2001 (Apr. 8, 2011).
---------------------------------------------------------------------------

    For Rule 19b-4(e), numeric disclosures are required only when the 
disclosure of position limits for new derivative securities products is 
applicable.\778\ For VDNs, SBS Entities must notify the Commission of 
any valuation disputes in excess of $20,000,000 if not resolved within 
three or five business days, depending on the counterparty.\779\ SBS 
Entities are provided flexibility to submit the required 
information.\780\ For CCO reports, while Rule 15fk-1(c) does not 
expressly call for numeric values, an SBS Entity could include numeric 
values nested within textual responses, such as by including dollar 
amounts within the description of financial, managerial, operational, 
and staffing resources set aside for compliance with the Exchange 
Act.\781\
---------------------------------------------------------------------------

    \778\ See Item 9 of Form 19b-4(e).
    \779\ See 17 CFR 240.15fi-3(c)(1). See also 17 CFR 240.15fi-
3(c)(2) regarding required amendments.
    \780\ See supra section V.C.
    \781\ See 17 CFR 240.15fk-1(c)(2)(i)(E).
---------------------------------------------------------------------------

    For Form 15A, its execution page (i.e., the portion of new Form 15A 
that would precede section I) will include a series of structured 
checkboxes to indicate the basis for filing the Form, and the reporting 
period to which the Form applies. Structured checkboxes and pick lists 
are more relevant to the filtering and sorting benefits enabled by 
structured data requirements. For example, structuring the checkboxes 
on the Form 15A execution page will enable a data user to retrieve only 
those Form 15As that are current supplements to registration reported 
pursuant to Rule 15aa-2(b) of the Exchange Act, and further filter 
those results to only those Form 15A filings that include a change to 
Exhibit C (list of members).
    The Commission is requiring a specific structured data language for 
each Structured Document, rather than leaving the structured data 
language requirement open-ended (i.e., requiring only that the 
Structured Document be provided in a structured, machine-readable data 
language). Specifying a single structured data language that a filer or 
submitter must use for each Structured Document will benefit users of 
the disclosed information, including investors, market participants, 
other filers or submitters, information intermediaries, and the 
Commission, because it will help ensure the disclosures are provided in 
a uniform structured data language that is most suitable for the 
document in question, and will prevent a potential coordination failure 
that could occur if different respondents chose to provide inputs in 
different data languages.
    One commenter disagreed with requiring a specific structured data 
language for each Structured Document, stating that the Commission 
should instead adopt a principles-based approach where affected filers 
or submitters are required to provide disclosures in a machine-readable 
format.\782\ According to this commenter, such an approach would 
facilitate data analysis without imposing burdensome and ambiguous 
requirements on affected filers or submitters. However, adopting a 
principles-based approach (i.e., an open-ended data language 
requirement) to data structuring would have created issues for users of 
the data. Specifically, such an approach would have allowed different 
filers or submitters of the same document to provide their disclosures 
in different data languages. In such instances, data users such as 
Commission staff and market participants would have been unable to 
incorporate disclosures from filers or submitters using one data 
language into the same datasets and applications as disclosures of 
other filers or submitters using different data languages without 
undertaking data conversion processes that are frequently burdensome 
and imprecise. This may have hindered investors, the Commission, and 
market participants from efficiently comparing disclosures across the 
complete set of entities within a given filer population and could 
therefore have dampened the benefits that would otherwise accrue from 
requiring the disclosures to be machine-readable. Instead, specifying 
the data language to be used will likely increase the probability of 
realizing the anticipated benefits of machine-readability for users of 
the Structured Documents.
---------------------------------------------------------------------------

    \782\ See SIFMA 5/22/2023 Letter at 6.
---------------------------------------------------------------------------

2. Costs
    The rule amendments alter the way the affected entities provide the 
affected documents, specifically by requiring electronic submission or 
posting of the affected documents, and by requiring most of the content 
of the affected documents to be provided in a structured data language. 
The affected entities already are required to prepare and submit the 
affected documents with the Commission pursuant to Exchange Act rules 
that currently govern each category of affected entity.\783\ Thus, we 
generally do not expect the affected entities to incur incremental 
costs associated with preparing (e.g., collecting, drafting, reviewing) 
the information required to be disclosed in the affected documents 
prior to filing or posting under the rule amendments.\784\ Rather, we 
expect certain entities to incur incremental costs associated with 
structuring the prepared information.
---------------------------------------------------------------------------

    \783\ ANE Exception Notice withdrawals currently are not 
required. However, a Registered Entity seeking withdrawal could send 
a request to a designated electronic mailbox. See supra note 291 and 
accompanying text, and section IX.D.13.
    \784\ A subset of security-based swap broker-dealers would incur 
additional costs associated with filing, due to the FOCUS report 
amendments that would require them to file information that under 
the baseline they currently do not file.
---------------------------------------------------------------------------

a. Electronic Submission and Posting; Clarifying Changes to the FOCUS 
Report
    As discussed above, a significant number of the entities subject to 
the rule amendments already have experience with EDGAR due to other 
reporting obligations and thus are not expected to incur EDGAR-related 
costs incremental to the rule amendments. Entities that use EDGAR for 
purposes of complying with reporting obligations under existing rules 
generally are not expected to incur additional EDGAR access costs due 
to the rule amendments.\785\ Reporting entities that do not have 
experience with EDGAR may incur initial compliance burdens, including 
the one-time burden associated with filing a Form ID for the first time 
to obtain the access codes needed to submit an application on the 
Commission's EDGAR system.\786\ One commenter agreed with our 
assessment, stating that there would be an initial fixed cost to 
electronic submission posting, but that ongoing additional costs would 
be minimal.\787\ The Commission estimates that the cost for entities 
that do not have experience with EDGAR will be around $5,000 on a one-
time basis to become familiar with the EDGAR system for the purposes of 
filing for Rules 17a-5, 18a-7, and 17a-12.\788\
---------------------------------------------------------------------------

    \785\ If reporting entities with EDGAR experience require time 
to switch the affected documents from paper to EDGAR, they may incur 
an additional initial cost.
    \786\ See 17 CFR 232.10(b).
    \787\ See XBRL Letter at 3 and 7.
    \788\ See supra section IX.D.9. The one-time cost is estimated 
to require sixteen hours of labor from a programmer. 16 hours x $316 
per hour = $5,056.
---------------------------------------------------------------------------

    Due to the widespread use of the internet, the cost of establishing 
and maintaining internet access is not

[[Page 7342]]

expected to stem from the amendments. The Commission preliminarily 
believes that the costs associated with providing materials pursuant to 
Rule 17a-22 by registered clearing agencies on websites, and the costs 
associated with posting information currently required on Form 19b-4(e) 
by SROs, in addition to the reduced timeframe for compliance, is likely 
not to add significant costs to a registered clearing agency's 17a-22 
obligations or an SRO's 19b-4(e) obligations.
    Several amendments related to FOCUS Reports could impose burdens on 
market participants. The amendments to FOCUS Report Part II are 
expected to result in an initial burden of $2,130 on each Part II filer 
so firms can familiarize themselves with the amendments to FOCUS Report 
Part II.\789\ These amendments are expected to either have no impact on 
or reduce the ongoing burden on most filers, because they will reduce 
questions about where and how to report items on the form. However, 
because the amendments require stand-alone swap dealers and stand-alone 
introducing brokers to complete a new section of FOCUS Report Part II 
that these types of firms were not previously required to complete 
(i.e., Computation of CFTC Minimum Capital Requirements), these 
amendments are likely to result in an ongoing annual burden of $426 
hour per stand-alone swap dealer or stand-alone introducing 
broker.\790\
---------------------------------------------------------------------------

    \789\ 5 hours x $426 per hour (compliance attorney) = $2,130.
    \790\ 1 hour x $426 per hour (compliance attorney) = $426.
---------------------------------------------------------------------------

    The amendments to Part IIC are expected to result in an initial 
burden of five hours on each bank SBS Entity so that firms can compare 
the revised FOCUS Report Part IIC with FFIEC Form 031.\791\ However, 
these amendments are expected to either have no impact on or reduce the 
ongoing burden on bank SBS Entities, because they will reduce questions 
about how to complete FOCUS Report Part IIC consistently with FFIEC 
Form 031.
---------------------------------------------------------------------------

    \791\ See supra note 658 and accompanying text,
---------------------------------------------------------------------------

    The amendment to signature requirements for the FOCUS Report is 
expected to result in an initial burden of $426 on each filer so that 
the firm can review the standards for an electronic signature on the 
FOCUS Report Part II, IIA, or IIC, as applicable.\792\ However, this 
amendment is expected to either have no impact on or reduce the ongoing 
burden on FOCUS Report filers, because they will not be required to 
furnish as many signatures as before the amendment, and it may be 
easier to prepare electronic signatures rather than manual signatures 
since firms will already be familiar with the process and can easily 
obtain these signatures while working remotely.
---------------------------------------------------------------------------

    \792\ 1 hour x $426 per hour (compliance attorney) = $426. See 
supra note 659 and accompanying text.
---------------------------------------------------------------------------

    The amendment to OTC derivatives dealer requirements is expected to 
result in an initial burden of $4,740 on each OTC derivatives dealer so 
that the firm can familiarize itself with the SEC eFOCUS system.\793\ 
However, this amendment is expected to either have no impact on or 
reduce the ongoing burden on OTC derivatives dealers, because filing 
the FOCUS Report electronically is an automated process as compared to 
filing by paper. In addition, OTC derivatives dealers are required to 
be affiliated with a broker-dealer, which means that OTC derivatives 
dealers' operational staff already are familiar with the FINRA eFOCUS 
system's interface, and can use the same preexisting templates, 
software, and procedures currently used by the broker-dealer to file 
FOCUS Reports on the FINRA system.
---------------------------------------------------------------------------

    \793\ 15 hours x $316 per hour (programmer) = $4,740.
---------------------------------------------------------------------------

b. Structured Data
    Certain structured data requirements under the amendments will 
impose additional compliance costs on affected entities. Specifically, 
the Inline XBRL requirements for Form 1, Form CA-1, Form X-17A-5 Part 
III and related annual filings, Form 17-H, and the CCO reports (or home 
country reports submitted pursuant to a substituted compliance order 
under Exchange Act Rule 3a71-6) will result in additional compliance 
costs, both initial and ongoing, for the SROs, broker-dealers 
(including OTC derivatives dealers), and SBS Entities filing or 
submitting those documents relative to the baseline, because those 
entities will be newly required to apply Inline XBRL tags to the 
documents before filing or submitting them to the Commission (or pay a 
third-party tagging service provider to do so). The Commission does not 
expect the requirements to provide Form X-17A-19, the execution pages 
of the Covered SRO Forms, the facing page of Form X-17A-5 Part III, the 
facing page and Part II of Form 17-H, and the VDNs to the Commission 
using custom XML-based data languages will impose similar structured 
data implementation costs on the SROs, broker-dealers, and SBS Entities 
that will be subject to those requirements. For the custom XML 
requirements on EDGAR filings, EDGAR will provide filers or submitters 
with the option of using a fillable web form that will convert inputted 
disclosures into the relevant custom XML.\794\ Other than the exchanges 
and clearing agencies filing Form 1 and Form CA-1, respectively, the 
Commission expects these entities to input their disclosures into the 
fillable EDGAR web form, and thus not be required to incur compliance 
costs associated with structuring disclosures in custom XML data 
languages.
---------------------------------------------------------------------------

    \794\ See EDGAR Filer Manual, Volume II, Chapter 8. As discussed 
in section V.C, supra, one commenter stated that the Commission 
should allow SBS Entities to submit a structured data file for the 
VDN (rather than completing a fillable web form) to preserve 
efficiencies arising from firms' existing systems. See SIFMA 5/22/
2023 Letter at 11. Under the rule amendments, as under the proposal, 
SBS Entities will have this option.
---------------------------------------------------------------------------

    By contrast, the Commission expects exchanges and clearing 
agencies, which will be subject to more extensive custom XML disclosure 
requirements as a result of the rule amendments, to have the requisite 
sophistication to encode their Exhibit disclosures in custom XML and 
will submit the custom XML Exhibits to EDGAR directly rather than 
manually completing lengthy fillable forms to be converted into custom 
XML documents.\795\ This will cause exchanges and clearing agencies to 
incur implementation costs associated with integrating any new or 
updated custom XML schemas into their existing data systems.\796\ 
Nonetheless, exchanges and clearing agencies may find direct submission 
in custom XML beneficial, because it allows for greater automation in 
the process of submitting data that is already structured directly to 
EDGAR, and removes the need for the final manual step of converting 
structured data into unstructured information to be typed into fillable 
web fields.
---------------------------------------------------------------------------

    \795\ See supra sections II.A.3, II.D.4, and VII.A.
    \796\ See infra text accompanying notes 844 and 852 for related 
cost estimates.
---------------------------------------------------------------------------

    With respect to the requirement for SROs to post Rule 19b-4(e) 
information using the custom XML schema for this information (such 
schema will be posted on the Commission's website), the Commission 
expects that the SROs will incur higher implementation costs than those 
affected entities that are subject to EDGAR custom XML requirements, 
because SROs will need to encode the posted information in accordance 
with the schema rather than using a fillable web form on EDGAR. This 
will also be the case for any entities that choose to submit EDGAR 
documents directly in the relevant custom XML data language rather than 
use the fillable form that EDGAR provides.
    Multiple commenters generally agreed that the structured data 
requirements

[[Page 7343]]

under the rule amendments will impose additional costs on affected 
entities, but disagreed with the Commission's estimates on the specific 
nature and magnitude of such costs.\797\ A commenter, in stating that 
the proposed structured data cost estimates were too low, stated that 
using XBRL and XML for the affected documents would require firms to 
expend substantial resources and undergo fundamental operational 
changes.\798\ According to the commenter, the Inline XBRL and custom 
XML requirements would, in particular, require firms to: hire 
additional personnel that are proficient in Inline XBRL and custom XML; 
develop processes for converting the relevant data into Inline XBRL and 
custom XML and uploading that data to EDGAR; train new and existing 
personnel on such processes; and overhaul systems and operations to 
integrate the Inline XBRL/custom XML production and processing.\799\ 
The commenter also conveyed one firm's estimates that it would cost 
$20,000 to $40,000 per year per registrant to retain an XBRL tagging 
service provider and $20,000 to $30,000 per year per entity to purchase 
the tagging software.
---------------------------------------------------------------------------

    \797\ See Integrated Solutions Letter; SIFMA 5/22/2023 Letter.
    \798\ See SIFMA 5/22/2023 Letter at 4.
    \799\ See id. at 5.
---------------------------------------------------------------------------

    As explained in the sections IV.A and VII.A above, the Commission 
disagrees with the commenter that the structured data requirements will 
require firms to undergo all the changes the commenter described. For 
the custom XML requirements, most firms will comply with those 
requirements by completing fillable web forms on EDGAR; other firms 
will have the requisite sophistication to encode disclosures using 
custom XML schemas without the need for substantial additional training 
or hiring of personnel. For Inline XBRL requirements, firms that 
outsource compliance to a third-party service provider will not need to 
hire additional personnel proficient in XBRL and XML, develop processes 
for converting data into XBRL and XML and uploading that data to EDGAR, 
train new and existing personnel on such processes, or overhaul systems 
and operations to integrate XBRL or XML production, because these tasks 
will have been performed by the third-party service provider, and not 
by the firm itself. Firms that instead comply with structured data 
requirements internally will not need to hire additional personnel that 
are proficient in XBRL, because these firms can license software tools 
that allow staff without XBRL proficiency to apply Inline XBRL tags to 
regulatory disclosures without any need to overhaul the firm's systems 
or operations. These firms will, however, likely need to implement 
processes for the use of such software tools and train staff on these 
processes. The Commission includes these process implementation and 
training costs in its estimates of initial structured data costs and 
burdens.\800\
---------------------------------------------------------------------------

    \800\ Specific cost ranges for initial structured data 
implementation costs are set forth later in this section (X.C.2.b).
---------------------------------------------------------------------------

    As to the magnitude of the structured data compliance costs, the 
Commission estimated at proposal, and continues to estimate for the 
rule amendments, that certain affected filers or submitters 
(specifically, clearing agencies and exchanges not affiliated with 
public companies) will incur costs of $20,000 to $30,000 to structure 
the Structured Documents, but that other affected filers or submitters 
will incur lower costs.\801\ These estimates are based on 
considerations such as: (i) prior surveys regarding structured data 
costs; (ii) publicly available information on XBRL tagging service and 
software pricing; (iii) the expected extent and complexity of 
disclosures to be structured in each type of Structured Document; (iv) 
certain affected entities' affiliations with companies that have 
experience structuring disclosures; and (v) for custom XML 
requirements, the availability of a fillable web form option that 
enables affected filers or submitters to, at their option, forgo 
structuring their disclosures. The Commission provides further detail 
on these factors later in this section. None of the aforementioned 
considerations has changed or lost relevance since the amended rules 
were proposed in March 2023.
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    \801\ As discussed in further detail later in this section, the 
Commission estimates clearing agencies will incur approximately 
$9,650 to $28,910 to structure Form CA-1 in the initial year of 
compliance, and $6,430 to $19,270 to structure Form CA-1 in 
subsequent years. The Commission expects exchanges unaffiliated with 
public reporting companies will incur approximately $10,140 to 
$30,380 to structure Form 1 in the initial year of compliance, and 
approximately $6,760 to $20,250 to structure Form 1 in subsequent 
years.
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    The Commission is, however, adjusting the extent to which the 
structured data cost estimates reflect reduced burdens for filers or 
submitters affiliated with reporting companies that have existing 
Inline XBRL experience. In the proposing release, the Commission 
requested comment on whether it is reasonable to assume that affected 
entities with affiliates subject to Inline XBRL requirements would be 
able to leverage the Inline XBRL compliance software licenses and/or 
service agreements, as well as the Inline XBRL tagging processes and 
experience, of those affiliates.\802\ In response, one commenter stated 
that this is dependent on the contractual arrangements that the 
affiliates may have with their providers, and with the internal 
staffing structure for each company.\803\ The Commission is therefore 
adjusting its structured data cost estimates to reflect that the extent 
to which affiliates of entities subject to Inline XBRL requirements may 
be able to leverage the Inline XBRL tagging processes, experience, 
software licenses, or service agreements of those affiliates could be 
limited.\804\ The Commission is also making two revisions to the 
estimates of initial implementation costs related to structured data 
requirements; those initial implementation cost estimates, including 
the revisions thereto, are discussed later in this section.
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    \802\ See Proposing Release at 24002.
    \803\ See XBRL Letter at 11.
    \804\ Specifically, as detailed in the subsequent discussions of 
estimated cost ranges for each affected document, the Commission is 
applying the cost reductions to only half of all filers or 
submitters affiliated with reporting companies.
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    Another commenter, whose letter addressed only the proposals 
involving Rule 17a-5 under the Exchange Act and the FOCUS report, 
stated that requiring XBRL structuring will result in significant 
burdens for most broker-dealers.\805\ The Commission agrees that the 
Inline XBRL requirements under the rule amendments will impose costs on 
broker-dealers, and estimates the extent of those costs below. As those 
estimates indicate, the Commission continues to expect the compliance 
costs for broker-dealers will vary based on factors such as the size of 
the broker-dealer and the extent to which the broker-dealer has 
experience (or has affiliates with experience) structuring their data.
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    \805\ See Integrated Solutions Letter at 1. The commenter also 
suggested that, should the Commission nonetheless include a 
structuring requirement for Form X-17A-5 Part III under the rule 
amendments, the filing period for annual financial statement filers 
be extended by fifteen days to allow for XBRL encoding to be 
accomplished. See id. at 4. As the Commission explains in Section 
VII.A of this release, because the infrastructure for compliance 
with XBRL requirements in Commission filings (including the market 
for compliance software and service providers) has been in place for 
more than a decade, it will not be difficult for broker-dealers to 
comply with Inline XBRL tagging requirements within the existing 
filing period for Form X-17A-5 Part III. See supra section VII.A.
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Surveys on Structured Data Costs
    Various XBRL and Inline XBRL preparation solutions have been 
developed and used by operating companies and investment companies to 
fulfill their existing structuring

[[Page 7344]]

requirements under the Commission's rules. These existing requirements 
include multiple types of data, including numerical data in the context 
of financial statements, numerical data in the context of tables (along 
with the tables themselves), simple text strings, longer textual 
narratives, numerical data nested within textual narratives, and 
checkboxes.\806\
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    \806\ For example, an operating company's annual report on Form 
10-K includes iXBRL-tagged checkboxes on the cover page, iXBRL-
tagged company name on the cover page (text string), iXBRL-tagged 
numbers on the balance sheet (face of the financial statement), 
iXBRL-tagged tables and numbers therein in the financial statement 
footnotes, and iXBRL-tagged textual narratives and numbers therein, 
also in the financial statement footnotes.
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    With respect to the magnitude of Inline XBRL compliance costs, an 
American Institute of Certified Public Accountants (``AICPA'') survey 
of XBRL pricing data for 1,032 public operating companies with $75 
million or less in market capitalization in 2018 found an average cost 
of $5,850 per year, a median cost of $2,500 per year, and a maximum 
cost of $51,500 per year for fully outsourced XBRL creation and 
filing.\807\ These figures represent tagging costs over an entire year, 
which typically encompasses the Inline XBRL structuring of financial 
statements each quarter. A separate survey of 139 Nasdaq-listed issuers 
in 2018 found higher XBRL compliance costs, including an average XBRL 
compliance cost of $20,000 per quarter, a median XBRL compliance cost 
of $7,500 per quarter, and a maximum XBRL compliance cost of $350,000 
per quarter in XBRL costs per quarter.\808\ Unlike the AICPA survey, 
the Nasdaq survey was not limited to smaller reporting companies (i.e., 
companies with $75 million or less in market capitalization), nor did 
it assess trends in compliance costs over time.
---------------------------------------------------------------------------

    \807\ See AICPA, XBRL Costs for Small Companies Have Declined 
45% since 2014 (2018), available at https://us.aicpa.org/content/dam/aicpa/interestareas/frc/accountingfinancialreporting/xbrl/downloadabledocuments/xbrl-costs-for-small-companies.pdf. As 
discussed below in this section, the population of affected filers 
or submitters most analogous in size to the companies sampled here 
are certain registered broker-dealers.
    \808\ See Letter from Nasdaq, Inc. (Mar. 21, 2019), Request for 
Comment on Earnings Releases and Quarterly Reports, Release No. 33-
10588 (Dec. 18, 2018), 83 FR 65601 (Dec. 21, 2018). Like the above-
cited AICPA survey, this survey was limited to operating companies. 
In addition, both surveys were conducted before the transition from 
XBRL to Inline XBRL and before the implementation of cover page 
tagging requirements for periodic reports.
---------------------------------------------------------------------------

    This observed variance in XBRL and Inline XBRL compliance costs is 
likely attributable to variance in the number of discrete disclosures 
(including numbers, blocks of narrative text, checkboxes, etc.) 
contained in a tagged document, as well as the complexity of the 
specific disclosures to be tagged. Larger, more organizationally 
complex entities are likely to have more detailed and complex financial 
statements (including footnotes and schedules), and thus have more tags 
that they will need to apply to their documents, typically resulting in 
higher compliance costs (as described in further detail below in this 
section).\809\ To that end, a random sample of annual reports on Form 
10-K filed by Nasdaq-listed companies for fiscal year 2023 with a 
parallel sample for companies with a public float of $75 million or 
less showed approximately 60 percent more tagged Inline XBRL facts in 
the Nasdaq-listed sample.\810\
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    \809\ See, e.g., Bok Baik, et al., Organizational Complexity, 
Financial Reporting Complexity, and Firms' Information Environment 
(Mar. 31, 2023), available at https://ssrn.com/abstract=4413814 
(retrieved from SSRN Elsevier database).
    \810\ Targeted samples were obtained using data from Inline XBRL 
EDGAR filings through the Commission's internal Financial Statement 
Query Viewer tool. Tagged fact counts were obtained by analyzing 
Inline XBRL data filed in EDGAR.
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    One commenter stated that the number of required tags in a 
Structured Document will be a key consideration in determining the cost 
of preparing reports in Inline XBRL, and that the number of required 
tags depends on the granularity of the taxonomy.\811\ However, the 
presence of tags in a taxonomy does not dictate the inclusion of each 
tag in every Inline XBRL document; rather, an XBRL taxonomy provides a 
glossary of tags from which a filer or submitter can select when 
tagging a document in Inline XBRL. The US-GAAP Taxonomy, for example, 
contains approximately 17,000 tags, but public operating companies 
filing a report use only the subset that is applicable to the filing. 
The number of XBRL tags to be used, and thus (in many cases) the cost 
of structuring an XBRL document, depends on the extensiveness and 
complexity of the substantive disclosure a filer provides in response 
to legal disclosure requirements, and not on the particulars of the 
taxonomy created to implement the technical process of tagging those 
substantive disclosures.
---------------------------------------------------------------------------

    \811\ See SIFMA 5/22/2023 Letter at 5.
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Applicability and Variability of Structured Data Costs
    The affected documents that the Commission is requiring to be 
structured in Inline XBRL under the rule amendments consist of the same 
data types as the documents that are currently required to be 
structured in Inline XBRL (e.g., numerical data in the context of 
financial statements, numerical data in the context of tables (along 
with the tables themselves), simple text strings, longer textual 
narratives, numerical data nested within textual narratives, and 
checkboxes). Because Inline XBRL tagging software has already been 
developed to provide this functionality and is already in use by public 
reporting companies to fulfill Inline XBRL requirements, the Commission 
expects that vendors will update their Inline XBRL tagging software to 
accommodate the Inline XBRL requirements for Form 1, Form CA-1, Form X-
17A-5 Part III, Form 17-H, and the CCO report. Some filers or 
submitters of these documents were not previously subject to Inline 
XBRL requirements, so it is unlikely that they previously used the 
Inline XBRL compliance products offered by these vendors. However, as 
discussed further below in this section, some filers or submitters are 
affiliated with public reporting companies subject to existing Inline 
XBRL requirements, and will potentially be able to leverage their 
affiliates' Inline XBRL compliance software licenses or service 
agreements and experience in complying with the Inline XBRL 
requirements.
    One commenter stated that the ability of filers or submitters to 
leverage the experience of their affiliates is dependent on the 
contractual arrangements the affiliate may have with its tagging 
compliance software or service providers, and on the internal staffing 
structure of the affiliate.\812\ Another commenter stated that the 
burden of structuring filings will be greater for firms that are not 
affiliates of public reporting companies, and that the XBRL resources 
that public filers have developed for Form 10-K and 10-Q filings would 
be minimally useful for other reports such as CCO reports, because 
those reports rely on different systems, personnel, divisions, 
processes, and timelines, and would be subject to different 
taxonomies.\813\
---------------------------------------------------------------------------

    \812\ See XBRL Letter at 11.
    \813\ See SIFMA 5/22/2023 Letter at 4.
---------------------------------------------------------------------------

    While the Commission agrees that the Structured Documents 
(including CCO reports) will be, at least in part, subject to different 
taxonomies than those used for tagging disclosures in Forms 10-K and 
10-Q, the Commission disagrees that existing resources for tagging 
public companies in Inline XBRL would be minimally useful. As discussed 
above, while the specific disclosures in the Structured Documents 
differ from the disclosures in existing XBRL filings, the content type 
(e.g., tables, numeric values, text blocks) of the disclosures in

[[Page 7345]]

the Structured Documents is the same as the content type of the 
disclosures in existing XBRL filings. Existing XBRL compliance tools 
and processes will therefore be relevant to the Structured Documents, 
although they will need to be updated to import newly developed and 
applicable taxonomies.
    The Commission expects the compliance costs associated with the 
structured data requirements, as adjusted for inflation, will likely 
decrease over time. Affected entities will likely comply with 
structuring requirements more efficiently after gaining experience over 
repeated filings, though such an effect will likely be diminished for 
affected entities that have pre-existing experience structuring similar 
data in other documents. Third-party vendors of structured data 
compliance software or services may decrease the prices of their 
products over time; the XBRL compliance costs reported in the 2018 
AICPA survey of XBRL pricing data for smaller operating companies 
reflect such a trend, as they represented a 45% decline in average cost 
and a 69% decline in median cost from 2014.\814\
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    \814\ See supra note 806.
---------------------------------------------------------------------------

    The Commission expects the direct relationship between filer size 
and compliance costs described earlier in this section will apply to 
Inline XBRL compliance costs that arise under the rule amendments, and 
will be particularly relevant to Form X-17A-5 Part III filers (which 
include broker-dealers--including OTC derivatives dealers--and non-bank 
SBS Entities) for two reasons. First, like public operating companies, 
Form X-17A-5 Part III filers will be tagging financial statements 
(including footnotes and schedules) in Inline XBRL under the rule 
amendments.\815\ Second, like public operating companies, Form X-17A-5 
Part III filers vary widely in size. For example, on December 31, 2023, 
approximately 300 broker-dealers reported over $100 million in total 
assets, while approximately 1,600 broker-dealers reported less than $1 
million in total assets.\816\ Thus, as discussed in further detail 
later in this section, the Commission expects the Inline XBRL 
compliance costs for Form X-17A-5 Part III will vary inversely with 
size, as has been observed for public operating companies.\817\
---------------------------------------------------------------------------

    \815\ In addition to financial statements and footnotes, Form X-
17A-5 Part III filers will also need to tag their auditor's reports 
and other annual reports in Inline XBRL under the rule amendments. 
By contrast, public operating companies only need to tag auditor 
identification information in their auditor's reports. See Exchange 
Act Release No. 93701 (Dec. 2, 2021), 86 FR 70027, 70031 (Dec. 9, 
2021).
    \816\ We derive the broker-dealer financial data in this 
economic analysis from FOCUS Reports that broker-dealers filed 
through FINRA's eFOCUS system for the fiscal period ending Dec. 31, 
2023. See supra section X.B.3.
    \817\ See supra notes 815 and 816 accompanying text for 
additional detail on this observed correlation.
---------------------------------------------------------------------------

    The Commission expects the correlation between entity size and 
tagging cost to be less relevant to the other populations of entities 
that will be subject to Inline XBRL requirements under the rule 
amendments, because those populations are more limited in number and in 
the variation of size and complexity across entities within those 
populations. For example, Form CA-1 is filed by clearing agencies, 
including registered and exempt clearing agencies; there were 11 such 
entities in operation as of December 31, 2023.\818\ Form 1 is filed by 
national securities exchanges, of which there were 24 as of December 
31, 2023 (and by exempt exchanges, of which there were none as of 
December 31, 2023).\819\ The CCO report is submitted by SBS Entities, 
of which there were 53 as of June 21, 2024.\820\
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    \818\ See supra section IX.C.3.
    \819\ See supra section IX.C.1.
    \820\ See supra section IX.C.15.
---------------------------------------------------------------------------

    Some entities that will file or submit the documents to be 
structured in Inline XBRL under the rule amendments may be affiliated 
with entities that are subject to Inline XBRL requirements in other 
filings. For example, as of December 31, 2023, 17 of the 24 national 
securities exchanges were affiliated with public companies that file 
financial statements and cover page information in EDGAR in Inline 
XBRL.\821\ In addition, of the largest 20 broker-dealers by asset size 
as of December 31, 2023, 19 were affiliated with public companies that 
file financial statement and cover page information in Inline XBRL on 
EDGAR.\822\ As discussed above, to the extent that an affected entity 
shares compliance systems with an affiliated company, or can otherwise 
leverage the affiliated company's processes, licenses, service 
agreements, and/or experience in complying with Inline XBRL 
requirements, the affected entity's compliance costs incurred will 
likely be mitigated in part.\823\
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    \821\ See Commission, ``Self-Regulatory Organization 
Rulemaking,'' available at https://www.sec.gov/rules/sro.shtml (last 
visited June 6, 2024).
    \822\ This data is derived from FOCUS Reports filed through 
FINRA's eFOCUS system for the fourth quarter of 2023. See supra 
section X.B.3.
    \823\ See supra section IX.D.2.
---------------------------------------------------------------------------

    As discussed above, the Commission is requiring specific structured 
data languages for each Structured Document, rather than leaving the 
structured data language requirement open-ended (i.e., requiring only 
that the Structured Document be provided in a structured, machine-
readable data language). A cost associated with this approach is that 
it will constrain the flexibility that filers or submitters of a 
Structured Document would otherwise have had in preparing the 
Structured Document. For instance, some filers or submitters of a 
custom XML document may have already been using Inline XBRL to 
structure similar data for internal business purposes, such as through 
the use of ERP systems, and may therefore have preferred to use Inline 
XBRL rather than the required custom XML data language for that 
document.\824\ In addition, requiring a specific structured data 
language for each Structured Document may extend the amount of time it 
would take were the Commission to change the particular structured data 
language to be used, such as to accommodate any future developments in 
which newly developed structured data languages prove to be more apt 
for the disclosures in question.
---------------------------------------------------------------------------

    \824\ See supra section X.B.1 (discussing the prevalence of XBRL 
integration in ERP systems).
---------------------------------------------------------------------------

    For Form 1, Form CA-1, Form X-17A-5 Part III, Form 17-H, and the 
CCO reports, the approach of requiring Inline XBRL for some parts of 
the document and custom XML for other parts of the document will entail 
drawbacks for users of the information (including Commission staff and 
market participants). Specifically, data users will be unable to 
incorporate the Inline XBRL disclosures on a given filing or submission 
into the same datasets and applications as the custom XML disclosures 
on that filing or submission, and will be unable to run analyses that 
incorporate both types of information without undertaking data 
conversion processes that are frequently burdensome and imprecise. 
Similarly, any technical validations programmed into EDGAR will be 
unable to check for any inappropriate inconsistencies between 
disclosures on Inline XBRL portions and disclosures on custom XML 
portions of a given filing, thus reducing the benefit of improved data 
quality that will likely result from structured data requirements.
Structured Data Cost Estimates: Form X-17A-5 Part III and Form 17-H
    With respect to specific estimated cost ranges for Form X-17A-5 
Part III and Form 17-H filers to structure their filings, the 
Commission expects the aforementioned AICPA study, which

[[Page 7346]]

surveyed XBRL tagging price data across roughly 1,000 small reporting 
companies and found in 2018 a median and average annual cost of XBRL 
filing of $2,500 and $5,850, respectively, will likely be relevant to 
the majority of Form X-17A-5 Part III filers. In 2017, the 1,000 
smallest reporting companies by asset size reported total assets of 
approximately $8 million or less. As of December 31, 2023, 
approximately 75% of Form X-17A-5 Part III filers fell within that $8 
million total asset size threshold. For these smaller Form X-17A-5 Part 
III filers, the Commission estimates the approximate median cost of 
tagging financial statements on Form X-17A-5 Part III by using the 
median annual cost estimate from the AICPA survey ($2,500) and dividing 
it by four, because the small reporting companies in the AICPA study 
prepared tagged financial statements on a quarterly rather than annual 
basis. Using the resulting figure ($625) as a midpoint and establishing 
lower and upper bounds at 50% of the midpoint, the Commission estimates 
smaller Form X-17A-5 Part III filers will incur an approximate median 
per filing cost of $310 to $940 to structure their financial statements 
in Inline XBRL.\825\
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    \825\ The Commission rounds the estimated structured data cost 
ranges in this section to the nearest $10 because they represent 
approximations rather than exact costs. The estimated cost ranges in 
this section encompass internal time costs for preparing the 
structured reports (e.g., applying the relevant tag from the XBRL 
taxonomy or custom XML schema to the relevant disclosure) and 
external monetary costs (e.g., licensing structured data compliance 
software and/or services from third-party vendors). For annualized 
population-wide corollaries to the structured data cost estimates in 
this section, see supra section IX.D.
---------------------------------------------------------------------------

    For the larger Form X-17A-5 Part III filers (i.e., those with total 
assets greater than $8 million), the Commission estimates that the 
higher median compliance cost from the Nasdaq survey ($7,500 per 
quarter) will be a more suitable approximation. Using that median 
compliance cost as a midpoint yields an estimate of $3,750 to $11,250 
per filing for larger Form X-17A-5 Part III filers to structure their 
financial statements.
    Some larger Form X-17A-5 Part III filers are subsidiaries of, or 
otherwise affiliated with, public reporting companies that are already 
required to tag their financial statements.\826\ In the proposing 
release, the Commission stated its expectation that these filers will 
incur significantly lower costs to tag their financial statements than 
other large Form X-17A-5 Part III filers, because they will likely be 
able to leverage the software licenses and/or service agreements and 
the Inline XBRL tagging processes and experience of their affiliates. 
Consequently, the Commission estimated these Form X-17A-5 Part III 
filers will incur 25% of the tagging cost of other large Form X-17A-5 
Part III filers, resulting in an annual estimated cost of $940 to 
$2,820 to tag their financial statements on Form X-17A-5 Part III. As 
discussed earlier in this section, the Commission is adjusting its 
structured data cost estimates to reflect that the extent to which 
affiliates of entities subject to Inline XBRL requirements may be able 
to leverage the Inline XBRL tagging processes, experience, software 
licenses, or service agreements of those affiliates could be limited. 
With respect to Form X-17A-5 Part III, rather than estimating all 226 
broker-dealers affiliated with public reporting companies will incur 
the lower estimated cost of $940 to $2,820 to tag their financial 
statements on Form X-17A-5 Part III, the Commission is now estimating 
that only half, or 113, of those affiliated broker-dealers will incur 
reduced structured data costs, with the other half incurring the higher 
estimated cost of $3,750 to $11,250.
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    \826\ The Commission has identified 226 such broker-dealers, 
including 19 of the largest 20 broker-dealers by asset size, using 
broker-dealer FOCUS Reports and XBRL data through the Commission's 
Financial Statement Query Viewer for the fiscal period ending Dec. 
31, 2023. This group of filers also includes all 9 non-bank SBSDs 
that relied on orders granting substituted compliance under Exchange 
Act 3a71-6 in complying with the reporting requirements under 
Exchange Act Rule 18a-7(c) for the fiscal period ending Dec. 31, 
2023.
---------------------------------------------------------------------------

    In addition to the financial statements, footnotes, and schedules, 
Form X-17A-5 Part III also requires a series of reports (including 
accountant's reports, compliance reports, exemption reports, and 
supplemental reports). Form X-17A-5 Part III filers are now required to 
tag these reports in Inline XBRL. Typically, these reports consist of a 
short series of narrative text blocks with limited nested details, so 
tagging them in Inline XBRL will likely cost significantly less than 
tagging the financial statements and schedules in Inline XBRL will 
cost.\827\ The Commission therefore estimates the approximate cost of 
tagging these reports will amount to 5% of the cost to tag financial 
statements and schedules, yielding a total estimated Inline XBRL 
tagging cost per filing of approximately $330 to $990 for smaller Form 
X-17A-5 Part III filers; $3,940 to $11,820 for larger Form X-17A-5 Part 
III filers that are not affiliated with public reporting companies, and 
$990 to $2,960 for larger Form X-17A-5 Part III filers that are 
affiliated with public reporting companies.\828\
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    \827\ The ANC broker-dealer supplemental reports, which average 
approximately 100 pages in length, are an exception. Only five 
filers (the five ANC broker-dealers) are required to provide these 
reports.
    \828\ See also supra section IX.D.9.a (discussing estimated 
burdens associated with structuring Form X-17A-5 Part III 
information under the amendments). The structured data cost 
estimates here apply to all Form X-17A-5 Part III filers, including 
the 9 non-bank SBSDs that relied on orders granting substituted 
compliance under Exchange Act 3a71-6 in complying with the reporting 
requirements under Exchange Act Rule 18a-7(c) for the fiscal period 
ending Dec. 31, 2023. In each case, Form X-17A-5 Part III filers 
will incur the cost of applying Inline XBRL tags to the financial 
statements, footnotes, schedules, and supplemental reports in the 
annual audited report, or to corresponding disclosures in reports 
submitted under a substituted compliance order.

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[[Page 7347]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.030

    A subset of larger Form X-17A-5 Part III filers also file Form 17-H 
and will thus be required to tag their quarterly financial statements 
in addition to their annual financial statements.\829\ However, unlike 
Form X-17A-5 Part III, Item 4 of Form 17-H permits filers to omit the 
statement of cash flows and the notes to the financial statements. 
Thus, the Commission continues to use considerably lower Inline XBRL 
cost estimates for Form 17-H than for Form X-17A-5 Part III. As in the 
proposal, the Commission begins with the same cost estimate ranges for 
structuring financial statements--but not schedules or supplemental 
reports, because Form 17-H does not require them--on Form X-17A-5 Part 
III: $3,750 to $11,250 per filing for larger broker-dealers that are 
unaffiliated with public reporting companies, and $940 to $2,820 per 
filing for larger broker-dealers that are affiliated with public 
reporting companies.\830\ The Commission then reduces the estimated 
costs by 30% to reflect the omission of notes and schedules, and 
further reduce the estimated costs by 30% to reflect the omission of 
the statement of cash flows. This yields an estimated cost of $350 to 
$1,050 for Form 17-H filers that are unaffiliated with public reporting 
companies, and $100 to $300 for Form 17-H filers that are affiliated 
with public reporting companies.\831\
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    \829\ See supra section IX.C.10. The Commission does not include 
smaller Form X-17A-5 Part III filers (i.e., those with $8 million or 
fewer in total assets) in this discussion because they do not meet 
the asset threshold for Form 17-H filing requirements. See supra 
section IV.B (discussing the thresholds that determine whether 
broker-dealers are subject to Form 17-H filing requirements).
    \830\ The Commission has identified 81 Form 17-H filers that, as 
of Dec. 31, 2023, were affiliated with public reporting companies 
that structure Commission filings in Inline XBRL, and estimates that 
40 of these filers (approximately half) will incur costs within the 
lower estimated cost range. See supra text accompanying note 812.
    \831\ See also supra section IX.D.11 (discussing estimated 
burdens associated with structuring Form 17-H information under the 
amendments).
---------------------------------------------------------------------------

    Other portions of Form 17-H (namely, the facing page and the 
material associated positions and holdings disclosure) were previously 
structured in a custom XML data language specific to Form 17-H, and 
this will remain the case. Because nearly all broker-dealers subject to 
Form 17-H filing requirements previously filed Form 17-H via EDGAR, 
they have already been submitting the information in that custom XML 
language.\832\ Thus, the Commission has not included an approximate 
custom XML structuring cost estimate for Form 17-H.
---------------------------------------------------------------------------

    \832\ As of Dec. 31, 2023, approximately 99% of the 241 broker-
dealers that were then subject to Form 17-H filing requirements used 
EDGAR to file Form 17-H. See supra section IV.D.11.
[GRAPHIC] [TIFF OMITTED] TR21JA25.031

Structured Data Cost Estimates: Covered SRO Forms, Form X-17A-19, and 
Rule 19b-4(e) Information
    Under the rule amendments, the Covered SRO Forms (Form CA-1, Form 
1, Form 1-N, Form 15A), Form X-17A-19, and the information required to 
be posted under Rule 19b-4(e) will require some or all the information 
reported on the forms or postings to be provided in a structured data 
language. Here, the Commission provides estimated ranges for the 
approximate cost that affected entities will incur to structure Forms 
CA-1, Form 1, and the Rule 19b-4(e) information. With respect to Form 
X-17A-19, due to the brevity and simplicity of that Form, the 
Commission anticipates SROs will not structure their disclosures in 
custom XML themselves, but will instead simply input their disclosures 
in the fillable web form that EDGAR would provide. Thus, a cost 
estimate for the structuring of Form X-17A-19 in custom XML is not 
relevant or appropriate to include. For the same reason, the Commission 
has not included estimated custom XML structuring cost ranges for the 
facing

[[Page 7348]]

pages to Form CA-1, Form 1, Form 1-N, and Form 15A. Because the facing 
pages of Form 1-N and Form 15A will be the only structured portion of 
those forms, the Commission has not provided any estimated structuring 
cost ranges for them.
    Clearing agencies filing Form CA-1 will be required to tag their 
financial statements and a series of schedules containing largely 
narrative disclosures in Inline XBRL. For the financial statements, 
because clearing agencies likely operate at a higher level of 
complexity than the median Nasdaq-listed reporting company, the 
Commission estimates a 25% higher cost than the cost reported in the 
Nasdaq survey, resulting in an approximate per filing cost estimate of 
$4,690 to $14,070 for clearing agencies to tag financial statements in 
Inline XBRL. For the disclosures other than financial statements, the 
disclosure schedules on Form CA-1 to be tagged in Inline XBRL are 
considerably lengthier than the supplemental reports on Form X-17A-5 
Part III discussed above. The Commission therefore estimates tagging 
the non-financial statement disclosures on Form CA-1 will add 25% of 
the costs to tag financial statements in Inline XBRL, resulting in a 
median per filing cost estimate of approximately $1,180 to $3,530 for 
clearing agencies to tag the non-financial statement disclosures on 
Form CA-1 in Inline XBRL. This results in a total estimated Inline XBRL 
tagging cost of $5,870 to $17,600 per filing on Form CA-1.\833\
---------------------------------------------------------------------------

    \833\ See supra section IX.D.5 (discussing estimated burdens 
associated with Form CA-1 under the amendments).
---------------------------------------------------------------------------

    Clearing agencies will be required to structure other Form CA-1 
disclosures using a custom XML data language specific to that Form. The 
Commission recently estimated that the structuring of disclosures of 
Form N-CR event reports in custom XML will cost approximately $555 per 
filing. Here, the Form CA-1 disclosures to be structured in custom XML 
are lengthier than the Form N-CR disclosures that money market funds 
will structure in custom XML, so the Commission estimates an 
approximate cost per filing of $560 to $1,670 (using a 50% increase 
over the Form N-CR estimate) that clearing agencies will incur to 
structure the Form CA-1 schedules in custom XML.\834\ The Commission 
therefore estimates that the total cost of structuring Form CA-1 
(including Inline XBRL and custom XML disclosures) will amount to 
$6,430 to $19,270 per filing.\835\
---------------------------------------------------------------------------

    \834\ See Investment Company Act Release No. 34441 (Dec. 15, 
2021), 87 FR 7248, 7332 (Feb. 8, 2022).
    \835\ See id.
---------------------------------------------------------------------------

    For national securities exchanges, the Commission estimates the 
cost to tag financial statements on Form 1 in Inline XBRL will be 
similar to the cost that large broker-dealer affiliates of reporting 
companies will incur to tag financial statements on Form X-17A-5 Part 
III (estimated above at $940 to $2,820), because most exchanges are 
affiliated with reporting companies.\836\ However, Form 1 also requires 
exchanges to provide balance sheets and income statements for its 
affiliates and subsidiaries, so the Commission continues to use an 
increase of 50%, yielding an estimated median per filing cost of $1,410 
to $4,230 that exchanges affiliated with reporting companies will incur 
to tag financial statements on Form 1 in Inline XBRL.\837\ For national 
securities exchanges that are not affiliated with reporting companies, 
the Commission continues to base its Inline XBRL cost estimate on 
larger broker-dealers unaffiliated with reporting companies, but with a 
50% increase to account for the additional balance sheets and income 
statements for the exchange's affiliates and subsidiaries. This results 
in an estimated median per filing cost of $5,630 to $16,880 that 
exchanges unaffiliated with reporting companies will incur to tag 
financial statements on Form 1 in Inline XBRL.\838\
---------------------------------------------------------------------------

    \836\ As of Dec. 31, 2023, 17 of the 24 national securities 
exchanges were affiliated with public reporting companies. See supra 
note 830. The Commission estimates that approximately half, or 8, of 
these affiliated exchanges will fall within the lower set of cost 
estimates for Form 1 structured data compliance. See supra text 
accompanying note 812.
    \837\ See supra section IX.D.2 for a description of the burdens 
associated with tagging financial statements on Form 1.
    \838\ See id.
---------------------------------------------------------------------------

    Exchanges also are now required under the rule amendments to tag 
their manner of operation disclosure in Inline XBRL.\839\ This 
disclosure consists of a series of tagged narrative text blocks and 
could also include some quantitative amounts (such as those related to 
fee disclosures) that will also be tagged. We estimate an additional 
10% cost that exchanges will incur to tag their manner of operation 
disclosure, resulting in a total estimated compliance cost of $1,550 to 
$4,650 per filing for exchanges affiliated with reporting companies and 
$6,200 to $18,580 for exchanges unaffiliated with reporting companies 
would incur to tag Form 1 in Inline XBRL.\840\ Also, like clearing 
agencies, exchanges will be required to structure other portions of 
Form 1 in a custom XML data language specific to that Form.\841\ 
Because these requirements are similar, the Commission continues to use 
the same custom XML structuring cost estimate of $560 to $1,670 here, 
resulting in a total per filing cost of structuring Form 1 (including 
Inline XBRL and custom XML) of $2,110 to $6,320 for exchanges 
affiliated with reporting companies and $6,760 to $20,250 for exchanges 
unaffiliated with reporting companies.\842\
---------------------------------------------------------------------------

    \839\ This tagging requirement does not include the copy of the 
users' manual. See supra section II.A.3.
    \840\ See id.
    \841\ See supra section IX.D.2 for a description of the burdens 
associated with structuring portions of Form 1 in a custom XML data 
language.
    \842\ See also supra section IX.D.2 (discussing estimated 
burdens associated with structuring disclosures filed on Form 1 
under the amendments).
---------------------------------------------------------------------------

    By contrast, for the Rule 19b-4(e) information that exchanges will 
post on their websites in a custom XML data language (i.e., schema) 
specific to that information, exchanges will not have the benefit of a 
fillable web form, and will thus be required to structure their 
disclosures in custom XML themselves. Rule 19b-4(e) information 
consists only of a short series of disclosures that are mostly text 
strings, so the Commission estimates a per response cost for 
structuring, rendering, and posting Rule 19b-4(e) information that is 
50% lower than the Commission's aforementioned estimate for structuring 
Form N-CR in a previous proposal. This yields an approximate cost of 
$140 to $420 that exchanges will incur to structure each Rule 19b-4(e) 
website posting in custom XML.\843\
---------------------------------------------------------------------------

    \843\ See also supra section IX.D.6 (discussing estimated 
burdens associated with structuring, rendering, and posting Rule 
19b-4(e) information under the amendments).

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[[Page 7349]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.032

Structured Data Cost Estimates: VDNs and CCO Reports
    Under the rule amendments, SBS Entities will be required to 
structure the VDNs required under Exchange Act Rule 15fi-3(c) in a 
custom XML data language specific to those notices, and they will also 
be required to structure the CCO report required under Exchange Act 
Rule 15fk-1(c)(2)(ii)(A) in Inline XBRL. In addition, non-bank SBS 
Entities will be required to file Form X-17A-5 Part III and related 
annual filings in Inline XBRL; the structuring costs associated with 
that form are discussed above.
    For VDNs, which are not required to include specific fields, and 
for dispute reports submitted by SBS Entities relying on substituted 
compliance pursuant to a Commission order with respect to the 
requirements of Rule 15fi-3(c), the Commission expects SBS Entities 
will use the fillable web form that EDGAR would provide rather than 
structure the disclosures in the custom XML data language 
themselves.\844\ Thus, the Commission has not included a cost estimate 
for the custom XML structuring of the disclosures.
---------------------------------------------------------------------------

    \844\ See supra section V.C. As of Dec. 31, 2023, 19 SBS 
Entities relied on orders granting substituted compliance under 
Exchange Act Rule 3a71-6 in complying with the notice requirements 
under Exchange Act Rule 15fi-3(c). See List of Registered Security-
Based Swap Dealers and Major Security-Based Swap Participants, 
available athttps://www.sec.gov/tm/List-of-SBS-Dealers-and-Major-SBS-Participants.
---------------------------------------------------------------------------

    For the Inline XBRL tagging of the CCO report (or, for an SBS 
Entity relying on substituted compliance orders for Rule 15fk-1 under 
the Exchange Act, the home country report submitted pursuant to that 
substituted
compliance order), the information to be tagged in those reports 
consists of a series of narrative text blocks, some of which could 
contain nested quantitative values (such as the description of 
financial resources set aside for compliance).\845\ This content is 
similar to the content of the narrative disclosures on Form CA-1 that 
clearing agencies will structure in Inline XBRL under the amendments, 
which the Commission estimates as costing $1,180 to $3,530. Most SBS 
Entities, however, are affiliated with public reporting companies that 
already structure disclosures in Inline XBRL.\846\ For those entities, 
that are able to leverage the Inline XBRL compliance experience, 
processes, software, and/or service agreements that their affiliates 
have already implemented, the Commission estimates a cost range of $300 
to $880, which represents 25% of the cost incurred by SBS Entities that 
are not affiliated with public reporting companies.\847\
---------------------------------------------------------------------------

    \845\ As of Dec. 31, 2023, 10 SBS Entities relied on orders 
granting substituted compliance under Exchange Act Rule 3a71-6 in 
complying with the reporting requirements under Exchange Act Rule 
15fk-1(c). See id.
    \846\ Of the 53 entities that had submitted applications for 
registration as an SBS Entity as of June 21, 2024, 43 are affiliated 
with public companies that file financial statement and cover page 
information in Inline XBRL. This includes 5 of the 10 SBS Entities 
that relied on orders granting substituted compliance under Exchange 
Act Rule 3a71-6 in complying with the reporting requirements under 
Exchange Act Rule 15fk-1(c). See id. The Commission estimates that 
approximately half, or 21, of the 43 affiliated SBS Entities will 
incur costs that fall within the lower set of cost estimates for VDN 
and CCO report structured data compliance.
    \847\ See also supra section IX.D.15 (discussing estimated 
burdens associated with structuring CCO reports under the rule 
amendments).
---------------------------------------------------------------------------

    The Inline XBRL cost estimates described here apply to all SBS 
Entities, including SBS Entities that rely on substituted compliance 
orders. In each case, SBS Entities, which previously were not required 
to apply Inline XBRL tags to the narrative descriptions in their CCO 
reports or home country reports submitted under a substituted 
compliance order, will incur the cost of applying Inline XBRL tags to 
the narrative descriptions responsive to Rule 15fk-1(c) of the Exchange 
Act in their CCO reports, or to narrative descriptions that correspond 
to the descriptions addressed in Rule 15fk-1(c)(2)(i) that are included 
in reports submitted to the Commission under a substituted compliance 
order.

[[Page 7350]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.033

Structured Data Cost Estimates: Initial Implementation Costs
    The structured data cost estimates discussed above relate to the 
ongoing costs of structuring various disclosures in Inline XBRL and in 
custom XML-based data languages. The Commission estimates that certain 
of the affected entities will also incur costs associated with the 
initial implementation of the structured data requirements. In the 
proposing release, the Commission specifically estimated that affected 
entities that do not have structured data compliance experience and are 
not affiliated with entities that have structured data compliance will 
experience a 50% increase in compliance costs in the first year of the 
structured data requirements, and explained that these initial 
implementation costs could include establishing new procedures and 
training staff.
    The Commission estimates a 50% increase in first-year compliance 
costs for most of these affected filers or submitters, but now also 
estimates an additional 25% increase in compliance for firms relying on 
a substituted compliance order to file Form X-17A-5 Part III or fulfill 
the reporting requirements of Exchange Act Rule 15fk-1(c). On an 
ongoing basis, firms relying on substituted compliance will incur the 
same costs to tag home country reports as firms that do not rely on 
substituted compliance, because in each case, the SBS Entity will incur 
the cost of applying Inline XBRL tags to the information addressed in 
Exchange Act Rule 15fk-1(c)(2)(i)(whether that information is provided 
in the report required by Rule 15fk-1(c) or included within the home 
country report required to be provided to the Commission by a 
substituted compliance order). In the first instance of compliance, 
however, the Commission estimates that firms relying on substituted 
compliance (or their third-party tagging service providers) will incur 
additional costs associated with identifying the particular disclosures 
in their home country reports that correspond to the descriptions 
addressed in Rule 15fk-1(c)(2)(i) and must therefore be tagged in 
Inline XBRL.
    In the proposing release, the Commission stated that it expected 
the initial implementation costs to apply only to those filers or 
submitters that do not fully outsource their structured data 
preparation requirements to a third-party tagging service provider 
(i.e., all filers or submitters other than smaller broker-dealers, 
which the Commission expects will outsource their structured data 
preparation requirements like many smaller reporting companies 
do).\848\ One commenter, in describing structured data implementation 
costs, included costs associated with diligencing, negotiating with, 
and onboarding third parties.\849\ The Commission agrees that the 
process of negotiating with, diligencing, and onboarding third parties 
is a relevant initial structured data implementation cost, and is 
revising its estimates here to reflect that affected filers or 
submitters that choose to fully outsource their tagging requirements to 
third-party tagging service providers will incur this implementation 
cost. Therefore, the Commission is revising its estimates to indicate 
that fully outsourcing firms (i.e., smaller broker-dealers) will incur 
an additional 35% of the ongoing cost in the initial implementation 
year.
---------------------------------------------------------------------------

    \848\ See supra note 816.
    \849\ See SIFMA 5/22/2023 Letter at 4.
---------------------------------------------------------------------------

    The impact of the estimated initial implementation costs overall is 
reflected in the following chart:

[[Page 7351]]

[GRAPHIC] [TIFF OMITTED] TR21JA25.034

    Form 17-H is excluded from the table above, because Form 17-H 
filers also file Form X-17A-5 Part III. Including initial 
implementation costs for structuring financial statements on Form 17-H 
would be duplicative of the initial implementation costs for 
structuring financial statements on Form X-17A-5 Part III, which are 
reflected in the table.\850\ Form CA-1 initial implementation costs do 
not apply to clearing agencies that provide a central matching service, 
because such clearing agencies are subject to Inline XBRL requirements 
for annual straight-through processing reports required by Rule 17ad-
27(b) under the Exchange Act.\851\
---------------------------------------------------------------------------

    \850\ See 17 CFR 240.15fk-1(c)(2)(i)(E).
    \851\ See 17 CFR 240.17ad-27(b); 17 CFR 232.405(b)(5)(i) (to be 
redesignated as 232.405(b)(5)(vi) under the rule amendments).
---------------------------------------------------------------------------

    For Rule 19b-4(e) information, the Commission anticipates the 
initial implementation costs will apply only to the first posting, and 
not to subsequent postings during the first year of compliance. The 
content required by Rule 19b-4(e) is limited to less than 10 individual 
items of disclosure regarding the newly traded derivative securities 
product for each posting. The Commission expects the process of 
structuring, rendering, and posting the first response will entail 
additional implementation time to map the associated (and 
commensurately simple) custom XML schema to the information regarding 
the new derivative securities product traded on the exchange; the 
Commission expects subsequent responses will entail a less burdensome 
process of applying the newly mapped schema to each derivative 
securities product.\852\
---------------------------------------------------------------------------

    \852\ See also supra section IX.D.6 (discussing estimated 
burdens associated with structuring, rendering, and posting Rule 
19b-4(e) information).
---------------------------------------------------------------------------

c. Other Compliance Costs
    One commenter suggested that there would be costs because of ``the 
time it will take firms to hire and train staff, identify and retain 
service providers and software, overhaul their systems, and engage in 
robust testing with the Commission'' combined with ``other Commission 
initiatives that firms are implementing.'' \853\ We have considered

[[Page 7352]]

the potential effects on entities that are implementing other recently 
adopted rules during the compliance period for these amendments.
---------------------------------------------------------------------------

    \853\ See SIFMA 5/22/2023 Letter at 14 (commenting on ``the time 
it will take firms to hire and train staff, identify and retain 
service providers and software, overhaul their systems, and engage 
in robust testing with the Commission, as well as attend to the 
numerous other Commission initiatives that firms are implementing 
(e.g., T+1)''). Although the date of the T+1 transition has passed, 
we consider other recently adopted rules in this analysis. See also 
supra section IV.A. for a discussion of phased compliance dates.
---------------------------------------------------------------------------

    Consistent with its long-standing practice, the Commission's 
economic analysis in each adopting release considers the incremental 
benefits and costs for the specific rule--that is, the benefits and 
costs stemming from that rule compared to the baseline. The Commission 
acknowledges the possibility that complying with more than one rule in 
the same time period may entail compliance costs that will be higher 
than if the rules were to be complied with separately. Although no 
commenter named specific rules in this context, the Commission 
identified several rules for which the compliance periods overlap, in 
part, with the compliance periods for the amendments, but the phased 
compliance dates for forms and filings affected by these amendments 
will limit the extent to which overlap occurs.\854\
---------------------------------------------------------------------------

    \854\ See supra section X.B.1 (listing recent rule adoptions and 
their respective compliance dates) and section VIII (listing 
compliance dates).
---------------------------------------------------------------------------

    Entities subject to the amendments may be subject to one or more 
other recently adopted rules depending on whether those entities' 
activities fall within the scope of the other rules. Specifically, the 
Short Position Reporting Adopting Release applies to some investment 
managers,\855\ and the Rule 605 Adopting Release applies to market 
centers, which include exchanges, and certain brokers and dealers.\856\ 
The Tick Size and Access Fee Adopting Release applies to national 
securities exchanges and certain brokers and dealers.\857\ The Rule 
10c-1a, Customer Notification, and Beneficial Ownership Adopting 
Releases also apply to certain brokers and dealers \858\--although due 
to differing requirements, these rules may not all apply to any given 
broker or dealer. The Clearing Agency Governance Adopting Release 
applies to registered clearing agencies, the Recovery/Wind-Down 
Adopting Release applies to covered clearing agencies, and the Treasury 
Clearing Adopting Release applies to certain clearing agencies for U.S. 
Treasury securities and certain participants of the covered clearing 
agencies which could include broker-dealers.\859\ Where overlap in 
compliance periods exists, the Commission acknowledges that there may 
be additional costs on those entities that are subject to one or more 
other rules.
---------------------------------------------------------------------------

    \855\ See Short Position Reporting Adopting Release at 75150.
    \856\ See Rule 605 Adopting Release at 26496-97.
    \857\ See Tick Size and Access Fee Adopting Release at section 
VII.C.4.
    \858\ See Rule 10c-1a Adopting Release at 75647, 75717-18; 
Customer Notification Adopting Release at 47689, 47725; Beneficial 
Ownership Adopting Release at 76897, 76945.
    \859\ See Clearing Agency Governance Adopting Release at 84498; 
Recovery/Wind-Down Adopting Release at nn. 5-6 and section IV.B.1; 
Treasury Clearing Adopting Release at 2717, 2791. All registered 
clearing agencies are currently CCAs. See Clearing Agency Governance 
Adopting Release at 84468.
---------------------------------------------------------------------------

D. Efficiency, Competition, and Capital Formation

    Mandated electronic submission and posting will increase the 
timeliness of public access to the affected documents that are made 
publicly available. Insofar as market participants use the information 
in these documents, easier or quicker access could result in lower 
search costs or more efficient decision making. These benefits are 
potentially magnified during disruptive events, such as a pandemic, 
when investors may place a premium on electronic and timely access to 
information. Furthermore, the efficiency benefits of electronic 
submission or posting may be augmented by the structured data 
requirements, as structured data requirements have been observed to 
decrease information asymmetries, increase liquidity, and reduce the 
cost of capital.\860\ The structured data requirements for those 
affected documents that are used by information intermediaries (such as 
financial analysts and data aggregators) may also increase competition 
and encourage market entry by reducing their information processing 
costs.\861\
---------------------------------------------------------------------------

    \860\ See, e.g., N. Bhattacharya, Y.J. Cho, & J.B. Kim, Leveling 
the Playing Field Between Large and Small Institutions: Evidence 
from the SEC's XBRL Mandate, 93 Account. Rev. 51 (Sept. 1, 2018); B. 
Li, et al., The Impact of XBRL Adoption on Local Bias: Evidence from 
Mandated U.S. Filers, 39 J. Account. Pub. Pol. Article No. 106767 
(Nov. 2020); W. Sassi, H. Ben Othman, & K. Hussainey, The Impact of 
Mandatory Adoption of XBRL on Firm's Stock Liquidity: A Cross-
Country Study, 19(J. Fin. Report. Account. 299 (May 28, 2021); C. Ra 
& H. Lee, XBRL Adoption, Information Asymmetry, Cost of Capital, and 
Reporting Lags, 10 iBusiness 93 (Sept. 2018); S.C. Lai, et al., XBRL 
Adoption and Cost of Debt, 25 Intl. J. Account. Info. Mgmt (May 
2015); Y. Cong, J. Hao, & L. Zou, The Impact of XBRL Reporting on 
Market Efficiency, 28 J. Info. Sys. 181 (2014).
    \861\ See supra section X.C.1.b.
---------------------------------------------------------------------------

    Moreover, as mandated electronic submission or posting leads to 
lower ongoing, marginal costs for reporting entities, compared to non-
electronic submission, the submission or posting process may become 
more efficient, especially over the medium and longer term. In 
addition, electronic submission or posting standards in the amendments 
are expected to make the submission or posting process more efficient 
by making it easier and less costly for reporting entities to assure 
timely receipt and/or availability of the submitted information. We 
expect, however, that any such efficiency gains would be small. The 
efficiency gains that will arise under the rule amendments will likely 
be further mitigated in the near term because, as noted, the Inline 
XBRL requirements will impose initial implementation costs on affected 
entities subject to the requirements that do not have prior experience 
with Inline XBRL.
    As discussed above, similar implementation costs are unlikely to 
arise for most of the EDGAR custom XML forms, because EDGAR will 
provide a fillable web form in which affected entities will be able to 
input their disclosures without having to structure them in the 
relevant custom XML data language. By contrast, implementation costs 
are likely to arise for SROs subject to the custom XML schema 
requirement for posting Rule 19b-4(e) information, because those will 
be posted on the SROs' websites rather than filed through EDGAR; 
however, due to the relatively small amount of data to be structured, 
rendered, and posted for each new derivative securities product, the 
Commission expects the cost of structuring each Form 19b-4(e) will be 
lower than the cost of structuring Commission filings in Inline 
XBRL.\862\
---------------------------------------------------------------------------

    \862\ See supra sections IX.D.6 and X.C.2.b.
---------------------------------------------------------------------------

    The costs and benefits of electronic submission or posting under 
the rule amendments may have differential impacts on some categories of 
reporting entities, resulting in potential competitive effects. To the 
extent that the EDGAR cost has a fixed component, smaller entities that 
do not have experience with EDGAR may be at a relative competitive 
disadvantage to larger entities. In addition, smaller registrants might 
use third party service providers to meet the requirements of the 
amendments. The use of these providers could reduce the costs of EDGAR 
access and reduce the competitive effects of the requirements.\863\ In 
addition, many of the reporting entities already are familiar with 
electronic submission in EDGAR due to changes in market practices and 
an increase in electronic submission due to the pandemic.
---------------------------------------------------------------------------

    \863\ The rule might increase demand for third party services, 
but is unlikely to have significant effects on efficiency, 
competition, or capital formation in these markets.

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[[Page 7353]]

    For the Inline XBRL requirements, it is less likely that the 
associated compliance costs will be fixed, because the documents filed 
or submitted by smaller entities (such as smaller broker-dealers) are 
likely shorter and less complex than documents filed or submitted by 
larger entities (such as larger broker-dealers), and will thus require 
less time and sophistication to tag in Inline XBRL. By contrast, 
compliance costs for the custom XML requirements will, in most 
instances, be fixed, because except for Form 1 and Form CA-1 filers and 
SROs posting Rule 19b-4(e) information, the Commission expects affected 
filers or submitters will comply with such requirements by completing 
fillable web forms rather than structuring their disclosures in custom 
XML.\864\
---------------------------------------------------------------------------

    \864\ See supra section X.A.
---------------------------------------------------------------------------

    In addition, one commenter requested the Commission consider 
interactions between the economic effects of the proposed rule and 
other recent Commission rules, as well as practical realities such as 
implementation timelines.\865\ As discussed above, the Commission 
acknowledges that overlapping compliance periods may in some cases 
increase costs. This may be particularly true for smaller entities with 
more limited compliance resources. This effect can negatively impact 
competition because these entities may be less able to absorb or pass 
on these additional costs, making it more difficult for them to remain 
in business or compete. We acknowledge that to the extent overlap 
occurs between the compliance periods of this rule and the compliance 
periods of other rules, there could be costs that could affect 
competition. However, phased compliance dates for forms and filings 
affected by the amendments will limit overlap between compliance 
periods, which may be particularly helpful for smaller entities. We 
therefore do not expect the risk of negative competitive effects from 
increased compliance costs from overlapping compliance periods to be 
significant.
---------------------------------------------------------------------------

    \865\ See supra section X.C.2.c. (discussing SIFMA 5/22/2023 
Letter at 14).
---------------------------------------------------------------------------

    The final rule will have an indirect effect on capital formation, 
namely through a more efficient financial marketplace. Improving the 
efficiency of financial markets will incentivize investors to invest, 
indirectly promoting the formation of capital.
    To the extent that market practices are already consistent with the 
Updated Staff Statement, many of the expected effects of the amendments 
on efficiency, competition, and capital formation may be mitigated. For 
example, for broker-dealer registrants that file reports pursuant to 
Rule 17a-5 electronically, the efficiency gains of electronic 
submission will be mitigated, and the effects of the amendments will be 
limited to those associated with the use of structured data.

E. Reasonable Alternatives

1. Exempt Certain Entities or Disclosures From Structured Data 
Requirements
    As an alternative, the Commission could have changed the scope of 
the structured data requirements (e.g., Inline XBRL tagging 
requirements for Form X-17A-5 Part III, Form 17-H, Form CA-1, Form 1, 
and the CCO reports) by exempting certain subsets of reporting entities 
or documents. For example, the Commission could have exempted some 
broker-dealers from the requirement to structure Form X-17A-5 Part III 
and related annual filings based on size (e.g., total reported assets) 
or other characteristics. One commenter supported such an approach, 
stating that XBRL requirements should be limited only to very large 
broker-dealers or broker-dealers that are custodians.\866\ Specific 
potential exemption thresholds could have been broker-dealers with 
$500,000 or less in total assets (which would have exempted 1,260, or 
37%, of registered broker-dealers as of December 31, 2023), or broker-
dealers with $250,000 or less in total annual revenues (which would 
have exempted 1,080, or 31%, of registered broker-dealers as of 
December 31, 2023).\867\ Such thresholds would have prevented smaller 
broker-dealers from incurring the compliance costs associated with the 
Inline XBRL tagging requirements for Form X-17A-5 Part III. Another 
alternative would have been to limit the Inline XBRL tagging 
requirements only to those broker-dealers that carry customer or 
broker-dealer accounts and receive or hold funds or securities for 
customers (which would have exempted 3,246, or 96%, of registered 
broker-dealers, as of December 31, 2023). This approach may have been 
useful in targeting the Inline XBRL requirements towards those broker-
dealers that may have the most impact on financial markets due to the 
funds or securities they hold for customers, while reducing compliance 
costs for all other broker-dealers. However, any cost savings arising 
from the exemption of certain subsets of reporting entities or 
disclosures from the Inline XBRL requirements would not have justified 
the reduction in informational benefits to data users such as 
Commission staff and market participants, who would have been required 
to manually collect unstructured data from the exempted reporting 
entities or disclosure items in order to analyze it (or rely on and 
incur costs to third parties to do so).
---------------------------------------------------------------------------

    \866\ See Integrated Solutions letter at 4.
    \867\ See supra section X.B.3.
---------------------------------------------------------------------------

2. Require Structured Data on Form 1-N, Form 15A, and ANE Exception 
Notices to Same Extent as Structured Documents
    As another alternative, the Commission could have required 
structuring Form 1-N, Form 15A, and the ANE Exception Notices to the 
same extent as comparable Structured Documents. For example, the 
Commission could have required Form 1-N and Form 15A, which are similar 
to Form CA-1 and Form 1 in that they contain substantive disclosures in 
exhibits to an execution page, to be structured using a mix of Inline 
XBRL and custom XML data languages. The Commission could also have 
required ANE Exception Notices, which contain only a limited number of 
data points, to be structured using a custom XML data language. 
Structuring these documents would have extended the analytical 
capabilities associated with the other structured data requirements in 
this release to these additional documents.
    However, the limited number of filers and filings (for Form 1-N and 
Form 15A) and the limited number of data points on each document (for 
the ANE Exception Notices) would have limited the potential utility of 
functionality enabled by structured data (such as large-scale 
comparisons across populations of entities). Given this limitation on 
expected benefits, the additional structuring requirements would not 
have been justified.
3. Replace Inline XBRL Requirements With Custom XML Requirements or 
Vice Versa
    As another alternative, the Commission could have replaced the 
custom XML requirements with Inline XBRL requirements for some or all 
of the relevant Structured Documents (which include Form X-17A-5 Part 
III, Form 17-H, Form CA-1, Form 1, Form 1-N, Form 15A, Form X-17A-19, 
Rule 19b-4(e) information, VDNs, and CCO reports). For example, rather 
than requiring Inline XBRL structuring for certain of the affected 
documents, and custom XML structuring for other affected documents, the 
Commission could have required Inline XBRL for all of the affected 
documents required to be structured (i.e., require Form X-17A-19,

[[Page 7354]]

the execution pages of Forms 1-N and 15A, VDNs, the information 
required to be posted under Rule 19b-4(e), and the entirety of the 
other Covered SRO Forms, Form X-17A-5 Part III, and Form 17-H, to be 
provided using Inline XBRL rather than using custom XML-based data 
languages).
    This alternative could have benefited users of the data in that the 
reported information could have been used compatibly (e.g., using the 
same software tools) with the disclosures in the other affected 
documents (and with existing Inline XBRL data). However, the 
alternative would also have imposed the costs and complexity associated 
with Inline XBRL tagging on Forms and notices and reports that are each 
limited to a constrained set of non-financial, non-narrative data 
elements or are otherwise less suitable for Inline XBRL, thus 
potentially making the structured disclosures more burdensome to 
prepare and use than is called for by these particular 
disclosures.\868\ The difficulties in preparing and using such data 
under an Inline XBRL requirement would likely not have been justified 
by any compatibility benefits that would arise from such an 
alternative.
---------------------------------------------------------------------------

    \868\ See supra section VII.A.
---------------------------------------------------------------------------

    One commenter generally supported adding XBRL requirements 
throughout the proposal rather than relying on a mixture of XBRL and 
custom XML requirements, stating that XBRL requirements provide greater 
benefit than custom XML requirements.\869\ The commenter stated that a 
fillable web form that automatically generates XBRL files can be 
created just as easily as one that creates a custom XML file. While the 
Commission agrees that this is technically feasible, the EDGAR system 
is (with limited exception) currently built to provide fillable web 
forms for custom XML filings, not for XBRL filings, and changing the 
system would incur costs and burdens that would not justify the related 
benefit.
---------------------------------------------------------------------------

    \869\ See XBRL Letter at 2.
---------------------------------------------------------------------------

    The Commission could alternatively have replaced the Inline XBRL 
requirements with custom XML requirements for some or all of the 
relevant Structured Documents (which include Form X-17A-5 Part III, 
Form 17-H, Form CA-1, Form 1, and CCO reports). However, while this 
could have led to benefits such as smaller file sizes and lower 
compliance burdens (to the extent entities would have inputted 
disclosures into fillable forms rather than structuring the disclosures 
themselves), Inline XBRL is more technically suited to handle financial 
statement disclosures (and was originally designed to so), as well as 
extended narrative discussions (including those with individual values 
nested within the discussions). Accordingly, Inline XBRL as required 
for these forms is appropriate.
4. Require Structured Data Languages Other Than Inline XBRL and Custom 
XML
    As another alternative, the Commission could have required 
structured data languages other than Inline XBRL and custom XML for 
some or all the affected documents. For example, the Commission could 
have required other variants of XBRL, such as XBRL-CSV (``Comma-
Separated Values'') or XBRL-JSON (``JavaScript Object Notation''). As 
stated in the Proposing Release, public commenters in other rulemakings 
had indicated that using these XBRL variants could entail benefits, 
such as smaller file sizes and greater ease of use.\870\ One commenter 
conveyed its support for XBRL requirements and stated that the type of 
XBRL (such as XBRL-CSV, XBRL-JSON, or Inline XBRL) that should be used 
depends on the type of data collected.\871\ This commenter encouraged 
the Commission to explore XBRL-CSV as an alternative to the proposed 
custom XML requirements, stating that XBRL-CSV files are smaller than 
custom XML files because files generated in XBRL-CSV can rely on 
references to taxonomies to include the necessary labels, definitions, 
and relationships, whereas a custom XML file must contain all necessary 
labels, definitions, and relationships itself.\872\
---------------------------------------------------------------------------

    \870\ See Letter from Campbell Pryde, President and CEO, XBRL 
US, ``RE: Enhanced Reporting of Proxy Votes by Registered Management 
Investment Companies; Reporting of Executive Compensation Votes by 
Institutional Investment Managers, File Number S7-11-21'' (Dec. 14, 
2021), available at https://www.sec.gov/comments/s7-11-21/s71121-20109496-263895.pdf (stating, ``The XBRL-CSV specification allows 
data to be prepared in a simple CSV file which can then be opened in 
Excel. Data prepared using XBRL-CSV can be loaded automatically with 
no need to understand the meaning of individual columns (which would 
need to be reviewed if ingesting a custom XML file)''); Letter from 
Gregory Babyak, Global Head of Regulatory Affairs, Bloomberg, L.P., 
Bloomberg L.P. ``Enhanced Reporting of Proxy Votes by Registered 
Management Investment Companies; Reporting of Executive Compensation 
Votes by Institutional Investment Managers Release No. 34-93169/File 
No. S7-11-21'' (Dec. 14, 2021), available at https://www.sec.gov/comments/s7-11-21/s71121-20109566-263925.pdf (stating, ``JSON makes 
for significantly smaller files, does not need specialized tools and 
libraries, and is both easier to consume and generate'').
    \871\ See XBRL Letter at 11.
    \872\ See id. at 2.
---------------------------------------------------------------------------

    The Commission agrees with the commenter that using an XBRL-CSV 
requirement in place of the custom XML requirements under the amended 
rules would have yielded smaller files than custom XML files and could 
therefore have incremental usability benefits for data users. However, 
unlike custom XML and Inline XBRL, no EDGAR filings are currently filed 
using the XBRL-CSV format or the XBRL-JSON format, and the EDGAR system 
currently does not accept these formats.\873\ As such, the usability 
benefit associated with XBRL-CSV or XBRL-JSON would not have justified 
the burden of expanding reporting and intake capability to accommodate 
JSON or CSV.
---------------------------------------------------------------------------

    \873\ See Regulation S-T, 17 CFR 232.101(a)(1)(iv); 17 CFR 
232.301; EDGAR Filer Manual, Volume II, at 5.1 (requiring EDGAR 
filers generally to use ASCII or HTML for their document 
submissions, subject to certain exceptions).
---------------------------------------------------------------------------

    Other structured data languages that could have been used include 
the Financial Information eXchange Markup Language (``FIXML''), which 
the Commission recently proposed for security-based swap position 
reporting, and pipe-delimited ASCII, which the Rule 605 NMS Plan 
currently requires for market centers' order execution reports.\874\ 
However, FIXML is generally designed to accommodate the communication 
of information related to securities trading, whereas the information 
required by the Structured Documents is broader.\875\ For pipe-
delimited ASCII, unlike custom XML, EDGAR does not currently provide 
fillable forms or rendering applications for that format. In addition, 
the use of pipe-delimited ASCII rather than custom XML and Inline XBRL 
would have precluded more complex technical validations (such as checks 
on any disclosures nested within narrative descriptions).
---------------------------------------------------------------------------

    \874\ See Exchange Act Release No. 93784 (Dec. 15, 2021), 87 FR 
6652, 6675 (Feb. 4, 2022); 17 CFR 242.605(a)(2) and Securities and 
Exchange Commission File No. 4-518 (National Market System Plan 
Establishing Procedures Under Rule 605 of Regulation NMS) at 2 
(``Section V . . . provides that market center files must be in 
standard, pipe-delimited ASCII format'').
    \875\ See What Is FIX?, available at https://www.fixtrading.org/what-is-fix/ (last visited Apr. 19, 2024) (``The FIX Protocol 
language is comprised of a series of messaging specifications used 
in trade communications''). FIXML is the machine-readable data 
language associated with the Financial Information eXchange 
(``FIX'') Protocol. See FIXML Online, Technical Specification, 
Version 1.1. (May 2014), https://www.fixtrading.org/standards/fixml-online/ (last visited Apr. 19, 2024).
---------------------------------------------------------------------------

5. Permit, Not Require, Structured Data for Affected Documents
    As another alternative, the Commission could have replaced some or 
all the structured data requirements with voluntary structuring 
provisions. This would have provided greater

[[Page 7355]]

flexibility to respondents and eased compliance burdens on any 
respondents that chose not to structure their filings or postings. For 
instance, Form X-17A-5 Part III and Form 17-H were previously partially 
subject to custom XML structured data requirements when voluntarily 
filed on EDGAR, and approximately half of broker-dealers chose to 
voluntarily file their annual reports on EDGAR.\876\ Some respondents 
may have been incentivized by the benefits of structured data, such as 
reduced audit fees, and the ability to review of peer respondents' 
structured disclosures in order to assist with their own disclosure 
preparations,\877\ and thus may have pursued those benefits even in the 
absence of structured data requirements. However, as shown by the 
number of broker-dealers that did not voluntarily file on EDGAR, 
relying on all affected entities to pursue such incentives would likely 
have resulted in the incomplete provision of structured data. This 
would have resulted in incomplete datasets, thereby adversely affecting 
the informational benefits that will accrue from structured data 
requirements.
---------------------------------------------------------------------------

    \876\ See infra note 916 and accompanying text.
    \877\ See supra section X.C.1.b.
---------------------------------------------------------------------------

    One commenter, in the particular context of CCO reports, stated 
that the Commission should require a single reporting process to avoid 
confusion and added expense to the marketplace.\878\ According to the 
commenter, allowing reporting entities to choose from a variety of 
approaches will require data users to employ different data collection 
methodologies to extract the data they need.\879\ The Commission agrees 
that allowing reporting entities to choose from different reporting 
approaches--such as allowing some reporting entities to submit 
documents in an unstructured format--would add burden to data users, 
because they would have to manually collect and process unstructured 
information from entities choosing not to structure their reports, and 
compare it to the results of analyses of structured information from 
entities that do choose to structure those same reports. The Commission 
is therefore not including voluntary structuring requirements under the 
amended rules.
---------------------------------------------------------------------------

    \878\ See XBRL Letter at 9-10; see also id. at 10 (``Processing 
data in structured, machine-readable XBRL format takes seconds 
compared to HTML which takes at least 20 minutes, PDF around 30 
minutes, and an image file, about 50 minutes.'').
    \879\ See id.
---------------------------------------------------------------------------

6. Exempt Smaller Entities From Electronic Submission or Posting 
Requirements
    As another alternative, the Commission could have exempted smaller 
entities from electronic submission or posting requirements for some or 
all of the affected documents. This could take the form of some 
thresholds based on total assets, total annual revenues, net capital 
requirements, a combination of factors, or the type of entity (e.g., 
whether the broker-dealer carries customer accounts and receives or 
holds customer cash and securities, or whether the broker-dealer is an 
OTC derivatives dealer).
    While this alternative could have reduced the cost burden to 
smaller entities, this alternative would also have eliminated the 
benefits of electronic submission and posting for these entities, such 
as the reduction of costs and the improved efficiency of the submission 
process. In addition, exempting smaller entities from the submission or 
posting requirements might have reduced the value of publicly available 
data if the result was that only a portion of the submissions are 
machine-readable or if multiple methods were required to access all the 
data as might occur if some portion of forms were submitted 
electronically via EDGAR while other submissions of the same form are 
made publicly available as PDFs of paper submissions.
7. Require SROs To Submit Form 19b-4(e) Via EDGAR
    As another alternative, rather than requiring the information 
required by Rule 19b-4(e) under the Exchange Act to be posted on an 
SRO's website in custom XML, the Commission could have amended Rule 
19b-4, Form 19b-4(e), and the instructions thereto to require SROs to 
submit Form 19b-4(e) with the Commission via EDGAR using custom XML. 
One commenter stated that Form 19b-4(e) should be submitted to EDGAR 
(or, alternatively, that the Commission or another party should create 
a registry where links to these documents can be posted).\880\ The 
commenter stated that this would facilitate ease of use for market 
participants, who would be able to collect all needed data in one 
location rather than set up mechanisms to track new form postings on 
multiple websites.\881\ The commenter also stated that such an approach 
would be unlikely to increase the reporting burden for SROs.\882\
---------------------------------------------------------------------------

    \880\ See XBRL Letter at 6.
    \881\ See id.
    \882\ See id.
---------------------------------------------------------------------------

    The Commission disagrees with the commenter and is adopting the 
rule as proposed, because SROs provide thousands of Forms 19b-4(e) each 
year, and the Commission expects the products subject to Rule 19b-4(e) 
will continue to number in the thousands going forward. In addition, 
the information to be provided under Rule 19b-4(e) is limited to no 
more than eight basic information items, including ticker symbol, type 
of issuer, and whether the underlying instrument is a broad or narrow-
based index. Given the quantity of these products and the limited set 
of information required to be provided under Rule 19b-4(e) for each new 
product, requiring EDGAR submission would be an unduly burdensome 
process compared to SRO website posting, which will provide a readily 
accessible interface for market participants to access this data 
without necessitating submission to EDGAR. Similarly, a registry of 
links would add an unnecessary layer of complexity in making the 
information publicly available when many market participants are 
already familiar with accessing SROs' public websites.
8. Require the Use of Dedicated Mailbox
    As another alternative, the Commission could require registrants 
submit by sending some or all the affected documents to a dedicated 
email inbox in addition to eliminating the paper requirement. For 
example, rather than requiring registered clearing agencies to post 
Rule 17a-22 materials on their websites, the Commission could require 
registered clearing agencies to submit electronic copies of Rule 17a-22 
materials to a dedicated email inbox at the Commission, as they have 
been doing recently, consistent with the Updated Staff Statement.\883\ 
Similarly, another example would be to require SROs to send Form 19b-
4(e) materials to a dedicated email inbox at the Commission, rather 
than publicly posting the materials on their websites. This alternative 
would facilitate Commission staff access to the Rule 17a-22 and 19b-
4(e) materials compared to the requirements being adopted, as 
Commission staff would receive the materials directly rather than 
having to navigate to each registered clearing agency's individual 
website. However, this alternative could delay or preclude their 
availability for market participants and require Commission staff to 
upload these documents to EDGAR, imposing costs and delays on

[[Page 7356]]

the process.\884\ One commenter agreed with the proposed amendments, 
stating that it already posts material on its website and that email 
submission is duplicative.\885\ In addition, to the extent that market 
participants have already developed the practice of submitting the 
affected documents via EDGAR--for these documents, the alternative, 
requiring submission to an electronic mailbox would entail both a 
higher cost and a lower benefit for market participants.
---------------------------------------------------------------------------

    \883\ See Updated Staff Statement.
    \884\ See XBRL Letter at 8, which argued against giving SBS 
entities flexibility to choose from reporting options, claiming that 
data users would be disadvantaged, and that it would impose costs on 
the reporting ecosystem. See also Sage Letter, stating support for 
making Form 19b-4(e) publicly posted on the SRO website.
    \885\ See OCC 5/22/2023 Letter at 4.
---------------------------------------------------------------------------

XI. Final Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act requires Federal agencies, in 
promulgating rules under section 553 of the Administrative Procedure 
Act,\886\ to consider the impact of those rules on small entities. The 
Commission has prepared the following Final Regulatory Flexibility 
Analysis in accordance with section 4(a) of the RFA.\887\ An Initial 
Regulatory Flexibility Analysis (``IRFA'') was prepared in accordance 
with the RFA and was included in the Proposing Release.\888\
---------------------------------------------------------------------------

    \886\ 5 U.S.C. 553.
    \887\ 5 U.S.C. 604(a).
    \888\ See Proposing Release at section XI.
---------------------------------------------------------------------------

A. Regulatory Flexibility Act Certification

    The final amendments include changes that will affect brokers, 
dealers, national securities exchanges, clearing agencies, Securities 
Futures Product Exchanges, and SBS Entities. With regard to a national 
securities exchange subject to Rule 17a-19, a small entity is an 
exchange that has been exempt from the reporting requirements of Rule 
601 under Regulation NMS and is not affiliated with any person (other 
than a natural person) that is not a small business or small 
organization. With respect to a clearing agency, a small entity is a 
clearing agency that: (1) compared, cleared and settled less than $500 
million in securities transactions during the preceding fiscal year (or 
in the time that it has been in business, if shorter); (2) had less 
than $200 million of funds and securities in its custody or control at 
all times during the preceding fiscal year (or in the time that it has 
been in business, if shorter); and (3) is not affiliated with any 
person (other than a natural person) that is not a small business or 
small organization.\889\ When used with reference to an ``issuer'' or a 
``person,'' other than an investment company, a small entity includes 
an ``issuer'' or ``person'' that, on the last day of its most recent 
fiscal year, had total assets of $5 million or less.\890\
---------------------------------------------------------------------------

    \889\ 17 CFR 240.0-10(d).
    \890\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

    No national securities exchange, Security Futures Product Exchange, 
or national securities association is a ``small entity'' as currently 
defined. With regard to clearing agencies, based on publicly reported 
data the Commission does not believe that any registered or exempt 
clearing agency is a ``small entity'' as currently defined. With 
respect to registrants subject to Rule 17a-12, based upon financial 
reports and other information filed with the Commission by such 
entities, none of the entities subject to Rule 17a-12 is a ``small 
entity'' as currently defined. With respect to SBS Entities, based on 
feedback from market participants and staff experience with the 
security-based swap markets, and consistent with the Commission's 
position in prior Dodd-Frank Act rulemakings, the Commission continues 
to believe that (1) the types of entities that register with the 
Commission as SBSDs (i.e., because they engage in more than a de 
minimis amount of dealing activity involving security-based swaps)--
which generally would be large financial institutions--would not be 
``small entities'' for purposes of the RFA and (2) the types of 
entities that may have security-based swap positions above the level 
required to be MSBSPs would not be ``small entities'' for purposes of 
the RFA.\891\ The Commission thus continues to believe that SBS 
Entities providing notices (and any amendments to the notices) required 
by Rule 15fi-3(c) \892\ or filing annual reports required by Rule 18a-7 
would not be ``small entities'' for purposes of the RFA. The Commission 
also continues to expect that all Relying Entities making use of the 
ANE Exception from the de minimis threshold to SBSD status would not be 
``small entities'' for purposes of the RFA.\893\ As a result, any 
Registered Entity filing an ANE Exception Notice or withdrawal of an 
ANE Exception Notice also would not be a ``small entity.'' \894\ 
Consequently, with respect to the entities described in this paragraph, 
the Commission certifies that the amendments, as adopted, will not have 
a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \891\ See Registration Process for Security-Based Swap Dealers 
and Major Security-Based Swap Participants, Exchange Act Release No. 
75611 (Aug. 5, 2015), 80 FR 48964, 49013 (Aug. 14, 2015); 
Prohibition Against Fraud, Manipulation, or Deception in Connection 
with Security-Based Swaps; Prohibition against Undue Influence over 
Chief Compliance Officers; Position Reporting of Large Security-
Based Swap Positions, Exchange Act Release No. 93784 (Dec 15, 2021), 
87 FR 6652, 6702-03 (Feb 4, 2022).
    \892\ See Risk Mitigation Adopting Release, 85 FR at 6411-12.
    \893\ See Cross-Border Adopting Release, 85 FR at 6345.
    \894\ Because the Commission does not expect any Relying Entity 
to be a ``small entity'' for purpose of the RFA, any affiliated 
broker serving as the Registered Entity for purposes of the ANE 
Exception also would not be a ``small entity.'' See Cross-Border 
Adopting Release, 85 FR at n.737. Moreover, any registered SBSD 
serving as the Registered Entity for purposes of the ANE Exception 
would likely be registered as such because it engages in security-
based swap dealing above the de minimis threshold, and therefore 
also would not, in the Commission's view, be a ``small entity.'' See 
supra note 900 and accompanying text. Even in the unlikely event 
that some Relying Entities satisfy the ANE Exception's conditions 
via the use of an affiliated Registered Entity that is a registered 
security-based swap dealer and a ``small entity'' for purposes of 
the RFA, the Commission continues to believe that there would not be 
a substantial number of such entities. See Cross-Border Adopting 
Release, 85 FR at 6345.
---------------------------------------------------------------------------

B. Regulatory Flexibility Act Analysis

    The analysis below applies to broker-dealers that are considered 
``small entities'' for Regulatory Flexibility Act purposes.
1. Need for, and Objectives of, the Final Amendments
    The purpose of the final amendments is to modernize the filing and 
submission of certain Commission forms by requiring these forms to be 
filed or submitted electronically, often in structured data format. 
With respect to the amendments relating to the FOCUS Report, the 
purpose is to harmonize the form with other rules, make technical 
corrections, and provide clarifications. The need for, and objectives, 
of the final amendments are discussed in sections I through VII above. 
The economic impact and potential alternatives to the amendments are 
discussed in section X, and the estimated compliance costs and burdens 
of the amendments under the PRA are discussed in section IX.
2. Significant Issues Raised by Public Comments
    In the Proposing Release, the Commission requested comment on any 
aspect of the IRFA, and particularly on the number of small entities 
that would be affected by the proposed amendments, whether there are 
more efficient or less burdensome ways for the Commission to modernize 
its collection of information from registrants, the existence or nature 
of the potential impact of the proposed

[[Page 7357]]

amendments on small entities discussed in the IRFA, and whether there 
are any Federal rules that duplicate, overlap, or conflict with the 
proposed amendments.\895\
---------------------------------------------------------------------------

    \895\ See Proposing Release, 88 FR at 24003.
---------------------------------------------------------------------------

    One commenter disagreed that structuring broker-dealer reports is 
necessary because regulators receive periodic FOCUS reports that are 
already encoded and there is no need to make broker-dealer financial 
statements machine-readable.\896\ As discussed earlier in this 
release,\897\ the Commission disagrees with the commenter's point, 
because the annual broker-dealer audited reports include more 
disclosure--such as the notes to the financial statements and the 
exemption reports--than the periodic FOCUS reports do. Another 
commenter stated that requiring firms to file documents in structured 
data puts a greater burden on smaller firms than larger firms, and 
requested that the Commission amend Regulation S-K to require larger 
investors to convert their material contracts into XBRL format and then 
file them with the Commission.\898\ However, the types of firms that 
are subject to the structured data formatting requirements in this 
release are generally not the same types of firms that are subject to 
Regulation S-K, so this additional requirement would not equalize the 
burden between small and large firms.
---------------------------------------------------------------------------

    \896\ See Integrated Solutions Letter at 4.
    \897\ See supra sections IV.A, VII.A, X.C.2.b, and X.E.1.
    \898\ See Greg Medcraft, Chairman of Australian Finance Group 
Ltd (May 22, 2023).
---------------------------------------------------------------------------

3. Small Entities Subject to Final Amendments
    The final amendments include changes that will affect brokers. For 
purposes of Commission rulemaking in connection with the RFA,\899\ a 
small entity includes a broker or dealer that: (1) had total capital 
(net worth plus subordinated liabilities) of less than $500,000 on the 
date in the prior fiscal year as of which its audited financial 
statements were prepared pursuant to paragraph (d) of Rule 17a-5 under 
the Exchange Act,\900\ or, if not required to file such statements, a 
broker-dealer with total capital (net worth plus subordinated 
liabilities) of less than $500,000 on the last day of the preceding 
fiscal year (or in the time that it has been in business, if shorter); 
and (2) is not affiliated with any person (other than a natural person) 
that is not a small business or small organization.\901\ Based on FOCUS 
Report and Form BD data, the Commission estimates that as of March 31, 
2024, approximately 723 broker-dealers might be deemed small entities 
for purposes of this analysis.
---------------------------------------------------------------------------

    \899\ Although Section 601(b) of the RFA defines the term 
``small entity,'' the statute permits agencies to formulate their 
own definitions. The Commission has adopted definitions for the term 
``small entity'' for the purposes of Commission rulemaking in 
accordance with the RFA. Those definitions, as relevant to this 
rulemaking, are set forth in Rule 0-10 under the Exchange Act, 17 
CFR 240.0-10. See Exchange Act Release No. 18451 (Jan. 28, 1982), 47 
FR 5215 (Feb. 4, 1982) (File No. AS-305).
    \900\ 17 CFR 240.17a-5(d).
    \901\ See 17 CFR 240.0-10(c). See also 17 CFR 240.0-10(i) 
(providing that a broker or dealer is affiliated with another person 
if: such broker or dealer controls, is controlled by, or is under 
common control with such other person; a person shall be deemed to 
control another person if that person has the right to vote 25% or 
more of the voting securities of such other person or is entitled to 
receive 25% or more of the net profits of such other person or is 
otherwise able to direct or cause the direction of the management or 
policies of such other person; or such broker or dealer introduces 
transactions in securities, other than registered investment company 
securities or interests or participations in insurance company 
separate accounts, to such other person, or introduces accounts of 
customers or other brokers or dealers, other than accounts that hold 
only registered investment company securities or interests or 
participations in insurance company separate accounts, to such other 
person that carries such accounts on a fully disclosed basis).
---------------------------------------------------------------------------

4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    In general, the amendments to Rule 17a-5 that implicate broker-
dealers that are small entities would require that a broker-dealer: (1) 
file its annual reports and related annual filings electronically on 
EDGAR using structured data; and (2) keep the original oath or 
affirmation for a period of not less than six years, the first two in 
an easily accessible place in accordance with the requirements of Rule 
17a-4.\902\
---------------------------------------------------------------------------

    \902\ 17 CFR 240.17a-5. The substantive amendments to the FOCUS 
Report that impact broker-dealers are limited to stand-alone swap 
dealers which are not expected to be small entities. The amendment 
to allow electronic signatures will not impact small broker-dealers 
because they will continue to have the option to use manual 
signatures.
---------------------------------------------------------------------------

    As stated above, it has been the staff's experience that electronic 
filing has been practical and efficient. It also has been the staff's 
experience that electronic filing has been positively received by the 
broker-dealers who are currently filing their annual reports 
electronically on EDGAR. Based on these positive experiences with 
electronic filing and as part of its efforts to modernize the methods 
by which it collects information from registrants, the Commission is 
amending certain rules and forms, including certain rules and forms 
that would impact broker-dealers that are small entities.
    With respect to the structured data requirements, XBRL requirements 
for public company financial statements have been observed to increase 
the ease and efficiency of analyzing those structured disclosures 
(e.g., allowing for efficient comparisons of disclosures across 
multiple reporting entities and multiple time periods).\903\ Such 
benefits have encompassed small public companies as well as large 
public companies, and have accrued to both public and regulatory 
entities.\904\ Therefore, the structured data requirements under the 
amendments would facilitate the use of the information reported by 
broker-dealers in their annual reports and related filings to support 
Commission staff conducting risk assessment and enforcement 
activities,\905\ or, with respect to the public portion of the annual 
reports and related filings, information intermediaries (analysts, 
researchers and media) and investors conducting research to interpret 
or improve processing of financial information.\906\
---------------------------------------------------------------------------

    \903\ See supra section X.C.1.b.
    \904\ See id.
    \905\ See supra note 767767.
    \906\ See supra notes 764764 and 765765.
---------------------------------------------------------------------------

    The compliance costs of the amendments relating to the requirement 
to file on EDGAR will not be significant. Smaller entities that are 
broker-dealers will need to familiarize themselves with the EDGAR 
system; however, the familiarization process will not be particularly 
burdensome. Approximately 1,769 out of an estimated 3,267 broker-
dealers, which constitutes more than half of broker-dealers, have 
chosen to voluntarily file their respective annual reports on EDGAR. 
Furthermore, with respect to the structured data requirements, based on 
observed trends in XBRL compliance costs for small public 
companies,\907\ the compliance costs for broker-dealers that are small 
entities would be modest and would continue to decrease over time.
---------------------------------------------------------------------------

    \907\ See supra note 816816.
---------------------------------------------------------------------------

    There will be benefits to small entities resulting from filing on 
EDGAR. For example, once a smaller entity has familiarized itself with 
EDGAR, that entity can be confident that required filings will be 
timely because the public portion of the filing is immediately 
available on the Commission's website and the filer has received a 
confirming email. Such regulatory certainty is of benefit to 
registrants generally, including broker-dealers that are small 
entities.
    With respect to the requirement to maintain a copy of the oath or 
affirmation, this requirement will not be unduly burdensome to small 
entities

[[Page 7358]]

that are broker-dealers. A broker-dealer filing its annual reports in 
paper maintains a hard copy of the filing cover sheet as a record of 
the oath or affirmation. The amendment in paragraph (e)(2)(iii) of Rule 
17a-5 is designed to ensure that this requirement is preserved in the 
context of a broker-dealer filing its annual reports electronically on 
EDGAR.
5. Significant Alternatives
    The RFA directs the Commission to consider alternatives that would 
accomplish our stated objectives, while minimizing any significant 
economic impact on small entities. The Commission considered 
alternatives with respect to whether to utilize the EDGAR system. 
However, given that approximately half of all broker-dealers are 
voluntarily utilizing EDGAR for filing their respective annual audited 
reports, and that EDGAR is the primary system for companies and others 
submitting documents under the Federal securities laws and available 
for all registered filers, alternative electronic platforms would not 
be practical or efficient. Further, developing an alternative 
technology platform for intake of annual audited reports or change in 
SRO membership would be time consuming and expensive relative to using 
an existing Commission system that is in use by a large number of 
broker-dealers. The Commission considered exempting small entities from 
the EDGAR filing requirement and allowing small entities to make 
submissions via dedicated email or similar means, but there are 
significant efficiencies for Commission staff and other users of 
regulatory disclosure information in having the forms submitted to a 
single, uniform platform, and, as mentioned, EDGAR is the Commission's 
primary system for the receipt and publication (in the case of non-
confidential submission) of such information. Exempting small entities 
from the EDGAR filing requirement would make aggregation of the data 
from regulatory disclosures less complete, which could detract from the 
usefulness of such data in illustrating the conditions of Commission-
regulated entities in the financial markets.
    The Commission also considered alternatives with respect to the 
structured data requirements, including the alternative of removing 
broker-dealers that are smaller entities from the structured data 
requirements.\908\ However, given users of the information disclosed by 
broker-dealers such as investors, broker-dealer customers, other market 
participants, and/or regulatory users would be required to manually 
collect unstructured data in order to analyze it (or rely on third 
parties to do so), any cost savings arising from such an alternative 
would not justify the limitations and difficulties that would arise for 
these users of the information. .
---------------------------------------------------------------------------

    \908\ See supra section X.E.1.
---------------------------------------------------------------------------

    Likewise, the Commission considered changing the actual forms 
themselves--either by consolidating or simplifying the information to 
be submitted--for small entities, but allowing a subset of entities to 
submit different forms--and accompanying information--would reduce the 
usability and comparability of the information contained in 
disclosures. The cost savings that might arise from devising different 
forms for small entities would not justify the limitations and 
difficulties that would arise for investors, market participants and/or 
regulatory users of the information.\909\
---------------------------------------------------------------------------

    \909\ To be clear, this release would not require small entities 
to submit more--or different--information on particular forms. As 
mentioned previously, the release would not change the substantive 
content of Commission forms with this rulemaking, but would change 
the manner in which such forms are submitted to the Commission.
---------------------------------------------------------------------------

    Finally, the Commission considered allowing small broker-dealers a 
longer timeframe to file on EDGAR so they have time to familiarize 
themselves with the system. However, the Commission does not believe an 
additional extension of time would provide meaningful additional 
benefit to these entities and could result in inordinately stale 
financial data being available to the Commission staff, investors and 
other market participants.

XII. Other Matters

    Pursuant to the Congressional Review Act,\910\ the Office of 
Information and Regulatory Affairs has designated these amendments as 
not a ``major rule'', as defined by 5 U.S.C. 804(2). The Commission 
considers the provisions of the final amendments to be severable to the 
fullest extent permitted by law. ``If parts of a regulation are invalid 
and other parts are not,'' courts ``set aside only the invalid parts 
unless the remaining ones cannot operate by themselves or unless the 
agency manifests an intent for the entire package to rise or fall 
together.'' \911\ ``In such an inquiry, the presumption is always in 
favor of severability.'' \912\ Consistent with these principles, while 
the Commission believes that all provisions of the final amendments are 
fully consistent with governing law, if any of the provisions of these 
amendments, or the application thereof to any person or circumstance, 
is held to be invalid, the Commission intends that such invalidity 
shall not affect other provisions or application of such provisions to 
other persons or circumstances that can be given effect without the 
invalid provision or application. In particular, the amendments 
relating to the requirement to file materials on EDGAR operate 
independently from the amendments requiring those materials to be filed 
or submitted in a structured data format.
---------------------------------------------------------------------------

    \910\ 5 U.S.C. 801 et seq.
    \911\ Bd. of Cnty. Commissioners of Weld Cnty. v. EPA, 72 F.4th 
284, 296 (D.C. Cir. 2023); see K Mart Corp. v. Cartier, Inc., 486 
U.S. 281, 294 (1988).
    \912\ Cmty. for Creative Non-Violence v. Turner, 893 F.2d 1387, 
1394 (D.C. Cir. 1990).
---------------------------------------------------------------------------

Statutory Authority

    The amendments contained in this release are being adopted under 
the authority in sections 6, 7, 8, 10, and 19(a) of the Securities Act 
of 1933,\913\ sections 3, 12, 13, 14, 15, 15A, 15F, 17, 17A, 19, 23, 
30, and 35A of the Securities Exchange Act of 1934,\914\ section 319 of 
the Trust Indenture Act of 1939,\915\ sections 8, 30, 31, and 38 of the 
Investment Company Act of 1940 \916\ and section 761(b) of the Dodd-
Frank Wall Street Reform and Consumer Protection Act.\917\
---------------------------------------------------------------------------

    \913\ 15 U.S.C. 77f, 77g, 77h, 77j, and 77s(a).
    \914\ 15 U.S.C. 78c, 78l, 78m, 78n, 78o, 78o-3, 78o-10, 78q, 
78q-1, 78s, 78w, 78dd and 78ll.
    \915\ 15 U.S.C. 77sss.
    \916\ 15 U.S.C. 80a-8, 80a-29, 80a-30, and 80a-37.
    \917\ 15 U.S.C. 8341.
---------------------------------------------------------------------------

List of Subjects

17 CFR Part 202

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Securities.

17 CFR Part 232

    Administrative practice and procedure, Electronic filing, 
Investment companies, Reporting and recordkeeping requirements, 
Securities.

17 CFR Part 240

    Administrative practice and procedure, Brokers, Confidential 
business information, Fraud, Reporting and recordkeeping requirements, 
Securities, Swaps.

17 CFR Part 249

    Brokers, Investment companies, Reporting and recordkeeping 
requirements, Securities.

17 CFR Part 249b

    Brokers, Reporting and recordkeeping requirements, Securities.


[[Page 7359]]


    In accordance with the foregoing, title 17, chapter II of the Code 
of Federal Regulations is amended as follows:

PART 202--INFORMAL AND OTHER PROCEDURES

0
1. The general authority citation for part 202 continues to read as 
follows:

    Authority: 15 U.S.C. 77s, 77t, 77sss, 77uuu, 78d-1, 78u, 78w, 
78ll(d), 80a-37, 80a-41, 80b-9, 80b-11, 7201 et seq., unless 
otherwise noted.
* * * * *

0
2. Amend Sec.  202.3 by revising and republishing paragraphs (b)(2) and 
(3) to read as follows:


Sec.  202.3  Processing of filings.

* * * * *
    (b) * * *
    (2) Applications for registration as national securities exchanges, 
or exemption from registration as exchanges by reason of such 
exchanges' limited volume of transactions filed with the Commission are 
routed to the Division of Trading and Markets, which examines these 
applications to determine whether all necessary information has been 
supplied and whether all required financial statements and other 
documents have been furnished in proper form. Defective applications 
may be returned. The files of the Commission and other sources of 
information are considered to determine whether any person connected 
with the applicant appears to have engaged in activities which would 
warrant commencement of proceedings on the question of denial of 
registration. The staff confers with applicants and makes suggestions 
in appropriate cases for amendments and supplemental information. Where 
it appears appropriate in the public interest and where a basis 
therefore exists, denial proceedings may be instituted. Within 90 days 
of the date of publication of a notice of the filing of an application 
for registration as a national securities exchange, or exemption from 
registration by reason of such exchanges' limited volume of 
transactions (or within such longer period as to which the applicant 
consents), the Commission shall by order grant registration, or 
institute proceedings to determine whether registration should be 
denied as provided in Sec.  240.19(a)(1) of this chapter.
    (3) Notice forms for registration as national securities exchanges 
pursuant to section 6(g)(1) of the Securities Exchange Act of 1934 (15 
U.S.C. 78f(g)(1)) filed with the Commission are routed to the Division 
of Trading and Markets, which examines these notices to determine 
whether all necessary information has been supplied and whether all 
other required documents have been furnished in proper form. Defective 
notices may be returned.

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

0
3. The general authority citation for part 232 continues to read as 
follows:

    Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 
77sss(a), 78c(b), 78l, 78m, 78n, 78n-1, 78o(d), 78w(a), 78ll, 80a-
6(c), 80a-8, 80a-29, 80a-30, 80a-37, 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.

0
4. Amend Sec.  232.100 by revising paragraph (c) to read as follows:


Sec.  232.100  Persons and entities subject to mandated electronic 
filing.

* * * * *
    (c) Persons or entities whose filings are subject to review by the 
Division of Trading and Markets; and
* * * * *

0
5. Amend Sec.  232.101 by:
0
a. Adding new paragraphs (a)(1)(xxxii), (xxxiii), (xxxiv), (xxxv), 
(xxxvi), (xxxvii), and (xxxviii);
0
b. Revising paragraph (c)(9); and
0
c. Revising paragraph (d).
    The revisions and additions read as follows:


Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (xxxii)(A) The annual reports filed with the Commission under Sec.  
240.17a-5(d) of this chapter, the supplemental reports and statements 
filed with the Commission under Sec.  240.17a-5(k) of this chapter, the 
annual reports filed with the Commission under Sec.  240.17a-12(b) of 
this chapter, the accountant's reports filed with the Commission under 
Sec.  240.17a-12(k), (l), and (m) of this chapter, the reports filed 
with the Commission under Sec.  240.17a-19 of this chapter, and the 
annual reports filed with the Commission under Sec.  240.18a-7(c) of 
this chapter. The submissions must be made on EDGAR in the electronic 
format required by the EDGAR Filer Manual, as defined in Sec.  232.11 
(Rule 11 of Regulation S-T) and must be filed in accordance with the 
requirements of this part 232 (Regulation S-T);
    (B) The reports filed and furnished, as applicable, with the 
Commission under Sec.  240.17h-2T of this chapter. The submissions must 
be made on EDGAR in the electronic format required by the EDGAR filer 
Manual, as defined in Rule 11 of Regulation S-T, and must be filed in 
accordance with the requirements of Regulation S-T;
    (xxxiii) Notices (and withdrawals of notices) filed with the 
Commission pursuant to Sec.  240.3a71-3(d)(1)(vi) of this chapter (Rule 
3a71-3(d)(1)(vi));
    (xxxiv) Notices (and amendments, including notices of dispute 
termination) provided to the Commission pursuant to Sec.  240.15fi-3(c) 
of this chapter (Rule 15fi-3(c));
    (xxxv) Compliance reports submitted with the Commission pursuant to 
Sec.  240.15fk-1(c)(2)(ii)(A) of this chapter (Rule 15fk-
1(c)(2)(ii)(A));
    (xxxvi) Form 1 (Sec.  249.1 of this chapter);
    (xxxvii) Form 1-N (Sec.  249.10 of this chapter); and
    (xxxviii) Form 15A (Sec.  249.801 of this chapter).
* * * * *
    (c) * * *
    (9) Exchange Act filings submitted to the Division of Trading and 
Markets other than those that are submitted in electronic format as 
mandated or permitted electronic submissions under paragraphs (a) and 
(b) of this section or that are submitted electronically in a filing 
system other than EDGAR;
* * * * *
    (d) The following must be filed or submitted, as applicable, in 
electronic format:
    (1) All documents, including any information with respect to which 
confidential treatment is requested, filed pursuant to section 13(n) 
(15 U.S.C. 78m(n)) and section 13(f) (15 U.S.C. 78m(f)) of the Exchange 
Act and the rules and regulations thereunder and the instructions to 
Form N-PX (Sec. Sec.  [thinsp]249.326 and 274.129 of this chapter);
    (2) All documents, including any information with respect to which 
confidential treatment is requested, filed pursuant to Sec. Sec.  
240.17a-5(d), 240.17a-5(k), 240.17a-12(b), 240.17a-12(k) through (m), 
240.17a-19, 240.17h-2T, or 240.18a-7(c) of this chapter;
    (3) All notices (and amendments, including notices of dispute 
termination), including any information with respect to which 
confidential treatment is requested, provided to the Commission 
pursuant to Sec.  240.15fi-3(c) of this chapter; and
    (4) All compliance reports, including any information with respect 
to which confidential treatment is requested, submitted to the 
Commission pursuant to Sec.  240.15fk-1(c)(2)(ii)(A) of this chapter.

0
6. Amend Sec.  232.201 by revising paragraph (a) introductory text to 
read as follows:

[[Page 7360]]

Sec.  232.201  Temporary hardship exemption.

    (a) If an electronic filer experiences unanticipated technical 
difficulties preventing the timely preparation and submission of an 
electronic filing, other than a Form 3 (Sec.  249.103 of this chapter), 
a Form 4 (Sec.  249.104 of this chapter), a Form 5 (Sec.  249.105 of 
this chapter), a Form ID (Sec. Sec.  239.63, 249.446, 269.7 and 274.402 
of this chapter), a Form TA-1 (Sec.  249.100 of this chapter), a Form 
TA-2 (Sec.  249.102 of this chapter), a Form TA-W (Sec.  249.101 of 
this chapter), a Form D (Sec.  239.500 of this chapter), an application 
for an order under any section of the Investment Company Act of 1940 
(15 U.S.C. 80a-1 et seq.), an application for an order under any 
section of the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et 
seq.), a notice or withdrawal of a notice filed with the Commission 
pursuant to Rule 3a71-3(d)(1)(vi) (Sec.  240.3a71-3(d)(1)(vi) of this 
chapter) under the Exchange Act (15 U.S.C. 78a et seq.), an Interactive 
Data File (as defined in Sec.  232.11), an Asset Data File (as defined 
in Sec.  232.11), or a Schedule 13D or Schedule 13G (Sec. Sec.  
240.13d-101 and 240.13d-102 of this chapter), the electronic filer may 
file the subject filing, under cover of Form TH (Sec. Sec.  239.65, 
249.447, 269.10 and 274.404 of this chapter), in paper format no later 
than one business day after the date on which the filing was to be 
made.
* * * * *

0
7. Amend Sec.  232.202 by revising paragraph (a) introductory text to 
read as follows:


Sec.  232.202  Continuing hardship exemption.

    (a) An electronic filer may apply in writing for a continuing 
hardship exemption if all or part of a filing, group of filings or 
submission, other than a Form ID (Sec. Sec.  239.63, 249.446, 269.7, 
and 274.402 of this chapter), a Form D (Sec.  239.500 of this chapter), 
a notice or withdrawal of a notice filed with the Commission pursuant 
to Sec.  240.3a71-3(d)(1)(vi) of this chapter (Rule 3a71-3(d)(1)(vi)) 
under the Exchange Act (15 U.S.C. 78a et seq.), or an Asset Data File 
(Sec.  232.11), otherwise to be filed or submitted in electronic format 
cannot be so filed or submitted, as applicable, without undue burden or 
expense. Such written application shall be made at least ten business 
days before the required due date of the filing(s) or submission(s) or 
the proposed filing or submission date, as appropriate, or within such 
shorter period as may be permitted. The written application shall 
contain the information set forth in paragraph (b) of this section.
* * * * *

0
8. Amend Sec.  232.405 by:
0
a. Revising the introductory text;
0
b. Revising and republishing paragraph (a);
0
c. Revising paragraphs (b)(1) introductory text, (b)(5), and Note 1 to 
Sec.  232.405.
    The revisions and additions read as follows:


Sec.  232.405  Interactive Data File submissions.

    This section applies to electronic filers that submit Interactive 
Data Files. Section 229.601(b)(101) of this chapter (Item 601(b)(101) 
of Regulation S-K), General Instruction F of Sec.  249.311 (Form 11-K), 
Sec. Sec.  240.15fk-1(c)(2)(ii)(A), 240.17a-5(d)(6)(i), 240.17a-
5(k)(2), 240.17a-12(b)(6), 240.17a-12(k), 240.17a-12(l), 240.17a-12(m), 
240.17h-2T(a)(2), and 240.18a-7(c)(6) of this chapter (Rules 15fk-
1(c)(2)(ii)(A), 17a-5(d)(6)(i), 17a-5(k)(2), 17a-12(b)(6), 17a-12(k), 
17a-12(l), 17a-12(m), 17h-2T(a)(2), and 18a-7(c)(6) under the Exchange 
Act), paragraph (101) of Part II--Information Not Required to be 
Delivered to Offerees or Purchasers of Sec.  239.40 of this chapter 
(Form F-10), paragraph 101 of the Instructions as to Exhibits of Sec.  
249.220f of this chapter (Form 20-F), paragraph B.(15) of the General 
Instructions to Sec.  249.240f of this chapter (Form 40-F), paragraph 
C.(6) of the General Instructions to Sec.  249.306 of this chapter 
(Form 6-K), Sec.  240.17ad-27(d) of this chapter (Rule 17ad-27(d) under 
the Exchange Act), Note D.5 of Sec.  240.14a-101 of this chapter (Rule 
14a-101 under the Exchange Act), Item 1 of Sec.  240.14c-101 of this 
chapter (Rule 14c-101 under the Exchange Act), General Instruction L of 
Sec.  240.14d-100 of this chapter (Rule 14d-100 under the Exchange 
Act), General Instruction I of Sec.  249.333 of this chapter (Form F-
SR), General Instruction C.3.(g) of Sec. Sec.  239.15A and 274.11A of 
this chapter (Form N-1A), General Instruction I of Sec. Sec.  239.14 
and 274.11a-1 of this chapter (Form N-2), General Instruction C.3.(h) 
of Sec. Sec.  239.17a and 274.11b of this chapter (Form N-3), General 
Instruction C.3.(h) of Sec. Sec.  239.17b and 274.11c of this chapter 
(Form N-4), General Instruction C.3.(h) of Sec. Sec.  239.17c and 
274.11d of this chapter (Form N-6), General Instruction 2.(l) of Sec.  
274.12 of this chapter (Form N-8B-2), General Instruction 5 of Sec.  
239.16 of this chapter (Form S-6), General Instruction C.4 of 
Sec. Sec.  249.331 and 274.128 of this chapter (Form N-CSR), General 
Instruction A of Sec.  249.1 of this chapter (Form 1), General 
Instruction A of Sec.  249b.200 of this chapter (Form CA-1), Sec. Sec.  
242.829 and 831 of this chapter (Rules 829 and 831 of Regulation SE), 
and the Registration Instructions to Form SBSEF (Sec.  249.1701 of this 
chapter) specify when electronic filers are required or permitted to 
submit an Interactive Data File (Sec.  232.11), as further described in 
note 1 to this section. This section imposes content, format and 
submission requirements for an Interactive Data File, but does not 
change the substantive content requirements for the financial and other 
disclosures in the Related Official Filing (Sec.  232.11).
    (a) Content, format, and submission requirements--General. An 
Interactive Data File must:
    (1) Comply with the content, format, and submission requirements of 
this section;
    (2) Be submitted only by an electronic filer either required or 
permitted to submit an Interactive Data File as specified by Sec.  
229.601(b)(101) of this chapter (Item 601(b)(101) of Regulation S-K), 
General Instruction F of Sec.  249.311 (Form 11-K), Sec. Sec.  
240.15fk-1(c)(2)(ii)(A), 240.17a-5(d)(6)(i), 240.17a-5(k)(2), 240.17a-
12(b)(6), 240.17a-12(k), 240.17a-12(l), 240.17a-12(m), 240.17h-
2T(a)(2), and 240.18a-7(c)(6) of this chapter (Rules 15fk-
1(c)(2)(ii)(A), 17a-5(d)(6)(i), 17a-5(k)(2), 17a-12(b)(6), 17a-12(k), 
17a-12(l), 17a-12(m), 17h-2T(a)(2), and 18a-7(c)(6) under the Exchange 
Act), paragraph (101) of Part II--Information Not Required to be 
Delivered to Offerees or Purchasers of Sec.  239.40 of this chapter 
(Form F-10), paragraph 101 of the Instructions as to Exhibits of Sec.  
249.220f of this chapter (Form 20-F), paragraph B.(15) of the General 
Instructions to Sec.  249.240f of this chapter (Form 40-F), paragraph 
C.(6) of the General Instructions to Sec.  249.306 of this chapter 
(Form 6-K), Sec.  240.17ad-27(d) of this chapter (Rule 17ad-27(d) under 
the Exchange Act), Note D.5 of Sec.  240.14a-101 of this chapter (Rule 
14a-101 under the Exchange Act), Item 1 of Sec.  240.14c-101 of this 
chapter (Rule 14c-101 under the Exchange Act), General Instruction L of 
Sec.  240.14d-100 of this chapter (Rule 14d-100 under the Exchange 
Act), General Instruction C.3.(g) of Sec. Sec.  239.15A and 274.11A of 
this chapter (Form N-1A), General Instruction I of Sec. Sec.  239.14 
and 274.11a-1 of this chapter (Form N-2), General Instruction C.3.(h) 
of Sec. Sec.  239.17a and 274.11b of this chapter (Form N-3), General 
Instruction C.3.(h) of Sec. Sec.  239.17b and 274.11c of this chapter 
(Form N-4), General Instruction C.3.(h) of Sec. Sec.  239.17c and 
274.11d of this chapter (Form N-6), General Instruction 2.(l) of Sec.  
274.12 of this chapter (Form N-8B-2), General Instruction 5 of Sec.  
239.16 of this chapter (Form S-6), General Instruction C.4 of 
Sec. Sec.  249.331 and 274.128 of this chapter (Form N-CSR), General 
Instruction A of

[[Page 7361]]

Sec.  249.1 of this chapter (Form 1), General Instruction A of Sec.  
249b.200 of this chapter (Form CA-1), Sec. Sec.  242.829 and 242.831 of 
this chapter (Rules 829 and 831 of Regulation SE), and the Registration 
Instructions to Form SBSEF (Sec.  249.1701 of this chapter), as 
applicable;
    (3) Be submitted using Inline XBRL:
    (i) If the electronic filer is not a management investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a et 
seq.), a separate account as defined in Section 2(a)(14) of the 
Securities Act (15 U.S.C. 77b(a)(14)) registered under the Investment 
Company Act of 1940, a registered non-variable annuity issuer as 
defined in Rule 405 under the Securities Act (17 CFR 230.405), a 
business development company as defined in Section 2(a)(48) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(48)), a unit 
investment trust as defined in Section 4(2) of the Investment Company 
Act of 1940 (15 U.S.C. 80a-4), an entity subject to Sec. Sec.  
240.15fk-1, 240.17a-5, 240.17a-12, 240.17h-2T, or 240.18a-7 of this 
chapter (Rule 15fk-1, 17a-5, 17a-12, 17h-2T, or 18a-7 under the 
Exchange Act), an exchange as defined in 15 U.S.C. 78c(a)(1) (Section 
3(a)(1) of the Exchange Act), or a clearing agency as defined in 15 
U.S.C. 78c(a)(23)(A) (Section 3(a)(23)(A) of the Exchange Act), or 
subject to Sec. Sec.  242.800 through 242.835 (Regulation SE), and is 
not within one of the categories specified in paragraph (f)(1)(i) of 
this section, as partly embedded into a filing with the remainder 
simultaneously submitted as an exhibit to:
    (A) A filing that contains the disclosure this section requires to 
be tagged; or
    (B) An amendment to a filing that contains the disclosure this 
section requires to be tagged if the amendment is filed no more than 30 
days after the earlier of the due date or filing date of the filing and 
the Interactive Data File is the first Interactive Data File the 
electronic filer submits; or
    (ii) If the electronic filer is a management investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a et 
seq.), a separate account (as defined in Section 2(a)(14) of the 
Securities Act (15 U.S.C. 77b(a)(14)) registered under the Investment 
Company Act of 1940, a registered non-variable annuity issuer as 
defined in Rule 405 under the Securities Act (17 CFR 230.405), a 
business development company as defined in Section 2(a)(48) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(48)), a unit 
investment trust as defined in Section 4(2) of the Investment Company 
Act of 1940 (15 U.S.C. 80a-4), an entity subject to Sec. Sec.  
240.15fk-1, 240.17a-5, 240.17a-12, 240.17h-2T, or 240.18a-7 of this 
chapter (Rule 15fk-1, 17a-5, 17a-12, 17h-2T, or 18a-7 under the 
Exchange Act), an exchange as defined in 15 U.S.C. 78c(a)(1) (Section 
3(a)(1) of the Exchange Act), or a clearing agency as defined in 15 
U.S.C. 78c(a)(23)(A) (Section 3(a)(23)(A) of the Exchange Act), or is 
subject to Sec. Sec.  242.800 through 242.835 (Regulation SE), and is 
not within one of the categories specified in paragraph (f)(1)(ii) of 
this section, as partly embedded into a filing with the remainder 
simultaneously submitted as an exhibit to a filing that contains the 
disclosure this section requires to be tagged; and
    (4) Be submitted in accordance with the EDGAR Filer Manual and, as 
applicable, Sec.  229.601(b)(101) of this chapter (Item 601(b)(101) of 
Regulation S-K), General Instruction F of Sec.  249.311 of this chapter 
(Form 11-K), Sec. Sec.  240.15fk-1(c)(2)(ii)(A), 240.17a-5(d)(6)(i), 
240.17a-5(k)(2), 240.17a-12(b)(6), 240.17a-12(k), 240.17a-12(l), 
240.17a-12(m), 240.17h-2T(a)(2), and 240.18a-7(c)(6) of this chapter 
(Rules 15fk-1(c)(2)(ii)(A), 17a-5(d)(6)(i), 17a-5(k)(2), 17a-12(b)(6), 
17a-12(k), 17a-12(l), 17a-12(m), 17h-2T(a)(2), and 18a-7(c)(6) under 
the Exchange Act), paragraph (101) of Part II--Information Not Required 
to be Delivered to Offerees or Purchasers of Sec.  239.40 of this 
chapter (Form F-10), Sec.  240.13a-21 of this chapter (Rule 13a-21 
under the Exchange Act), paragraph 101 of the Instructions as to 
Exhibits of Sec.  249.220f of this chapter (Form 20-F), paragraph 
B.(15) of the General Instructions to Sec.  249.240f of this chapter 
(Form 40-F), paragraph C.(6) of the General Instructions to Sec.  
249.306 of this chapter (Form 6-K), Sec.  240.17ad-27(d) of this 
chapter (Rule 17ad-27(d) under the Exchange Act), Note D.5 of Sec.  
240.14a-101 of this chapter (Rule 14a-101 under the Exchange Act), Item 
1 of Sec.  240.14c-101 of this chapter (Rule 14c-101 under the Exchange 
Act), General Instruction L of Sec.  240.14d-100 of this chapter (Rule 
14d-100 under the Exchange Act), General Instruction I to Sec.  249.333 
of this chapter (Form F-SR), General Instruction C.3.(g) of Sec. Sec.  
239.15A and 274.11A of this chapter (Form N-1A), General Instruction I 
of Sec. Sec.  239.14 and 274.11a-1 of this chapter (Form N-2), General 
Instruction C.3.(h) of Sec. Sec.  239.17a and 274.11b of this chapter 
(Form N-3), General Instruction C.3.(h) of Sec. Sec.  239.17b and 
274.11c of this chapter (Form N-4), General Instruction C.3.(h) of 
Sec. Sec.  239.17c and 274.11d of this chapter (Form N-6); General 
Instruction 2.(l) of Sec.  274.12 of this chapter (Form N-8B-2); 
General Instruction 5 of Sec.  239.16 of this chapter (Form S-6); 
General Instruction C.4 of Sec. Sec.  249.331 and 274.128 of this 
chapter (Form N-CSR); General Instruction A of Sec.  249.1 of this 
chapter (Form 1); General Instruction A of Sec.  249b.200 of this 
chapter (Form CA-1); Sec. Sec.  242.829 and 831 of this chapter (Rules 
829 and 831 of Regulation SE); or the Registration Instructions to Form 
SBSEF (Sec.  249.1701 of this chapter), as applicable.
    (b) * * *
    (1) If the electronic filer is not a management investment company 
registered under 15 U.S.C. 80a et seq. (the Investment Company Act of 
1940), a separate account as defined in 15 U.S.C. 77b(a)(14) (Section 
2(a)(14) of the Securities Act) registered under the Investment Company 
Act of 1940, a registered non-variable annuity issuer as defined in 
Rule 405 under the Securities Act (17 CFR 230.405), a business 
development company as defined in Section 2(a)(48) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2(a)(48)), a unit investment trust 
as defined in Section 4(2) of the Investment Company Act of 1940 (15 
U.S.C. 80a-4), an entity subject to Sec. Sec.  240.15fk-1, 240.17a-5, 
240.17a-12, 240.17h-2T, or 240.18a-7 of this chapter (Rule 15fk-1, 17a-
5, 17a-12, 17h-2T, or 18a-7 under the Exchange Act), an exchange as 
defined in 15 U.S.C. 78c(a)(1) (Section 3(a)(1) of the Exchange Act), 
or a clearing agency as defined in 15 U.S.C. 78c(a)(23)(A) (Section 
3(a)(23) of the Exchange Act), an Interactive Data File must consist of 
only a complete set of information for all periods required to be 
presented in the corresponding data in the Related Official Filing, no 
more and no less, from all of the following categories:
* * * * *
    (5) If an electronic filer is an entity subject to Sec. Sec.  
240.15fk-1, 240.17a-5, 240.17a-12, 240.17h-2T, or 240.18a-7 of this 
chapter (Rule 15fk-1, 17a-5, 17a-12, 17h-2T, or 18a-7 under the 
Exchange Act), an exchange as defined in 15 U.S.C. 78c(a)(1) (Section 
3(a)(1) of the Exchange Act), a clearing agency as defined in 15 U.S.C. 
78c(a)(23)(A) (Section 3(a)(23)(A) of the Exchange Act), or is subject 
to Sec. Sec.  242.800 through 242.835 (Regulation SE), an Interactive 
Data File must consist of only a complete set of information for all 
periods required to be presented in the corresponding data in the 
Related Official Filing, no more and no less, from all of the following 
categories, as applicable:

[[Page 7362]]

    (i) For electronic filers of Sec.  249.617 of this chapter (Part 
III of Form X-17A-5): the disclosures required by Items (a) through (y) 
of that Form.
    (ii) The disclosure provided pursuant to Item 4 of Sec.  249.328T 
of this chapter (Form 17-H).
    (iii) The report provided pursuant to Sec.  240.15fk-1(c)(2)(ii)(A) 
of this chapter (Rule 15fk-1(c)(2)(ii)(A) under the Exchange Act).
    (iv) The exhibits specified by General Instruction A to Sec.  249.1 
of this chapter (Form 1).
    (v) The disclosure provided pursuant to Schedule A and Exhibits C, 
F, H, J, K, L, M, O, R, and S to Sec.  249b.200 of this chapter (Form 
CA-1).
    (vi) The information provided pursuant to Sec.  240.17ad-27 of this 
chapter (Rule 17ad-27 under the Exchange Act).
    (vii) For electronic filers subject to Regulation SE, the content 
of documents required to be filed electronically under Sec. Sec.  
242.829 and 242.831 of this chapter (Rules 829 and 831 of Regulation 
SE); and the Registration Instructions to Sec.  249.1701 of this 
chapter (Form SBSEF), as applicable.
* * * * *

    Note 1 to Sec.  232.405:  Section 229.601(b)(101) of this 
chapter (Item 601(b)(101) of Regulation S-K) specifies the 
circumstances under which an Interactive Data File must be submitted 
and the circumstances under which it is permitted to be submitted, 
with respect to Sec. Sec.  239.11 of this chapter (Form S-1), 239.13 
of this chapter (Form S-3), 239.25 of this chapter (Form S-4), 
239.18 of this chapter (Form S-11), 239.31 of this chapter (Form F-
1), 239.33 of this chapter (Form F-3), 239.34 of this chapter (Form 
F-4), 249.310 of this chapter (Form 10-K), 249.308a of this chapter 
(Form 10-Q), and 249.308 of this chapter (Form 8-K). General 
Instruction F of Sec.  249.311 of this chapter (Form 11-K) specifies 
the circumstances under which an Interactive Data File must be 
submitted, and the circumstances under which it is permitted to be 
submitted, with respect to Form 11-K. Paragraph (101) of Part II--
Information not Required to be Delivered to Offerees or Purchasers 
of Sec.  239.40 of this chapter (Form F-10) specifies the 
circumstances under which an Interactive Data File must be submitted 
and the circumstances under which it is permitted to be submitted, 
with respect to Form F-10. Paragraph 101 of the Instructions as to 
Exhibits of Sec.  249.220f of this chapter (Form 20-F) specifies the 
circumstances under which an Interactive Data File must be submitted 
and the circumstances under which it is permitted to be submitted, 
with respect to Form 20-F. Paragraph B.(15) of the General 
Instructions to Sec.  249.240f of this chapter (Form 40-F) and 
Paragraph C.(6) of the General Instructions to Sec.  249.306 of this 
chapter (Form 6-K) specify the circumstances under which an 
Interactive Data File must be submitted and the circumstances under 
which it is permitted to be submitted, with respect to Sec. Sec.  
249.240f (Form 40-F) and 249.306 (Form 6-K) of this chapter. Note 
D.5 of Sec.  240.14a-101 of this chapter (Schedule 14A) and Item 1 
of Sec.  240.14c-101 of this chapter (Schedule 14C) specify the 
circumstances under which an Interactive Data File must be submitted 
with respect to Schedules 14A and 14C. General Instruction L of 
Sec.  240.14d-100 of this chapter (Schedule TO) specifies the 
circumstances under which an Interactive Data File must be submitted 
with respect to Schedule TO. Section 240.13a-21 of this chapter 
(Rule 13a-21 under the Exchange Act) and General Instruction I to 
Sec.  249.333 of this chapter (Form F-SR) specify the circumstances 
under which an Interactive Data File must be submitted, with respect 
to Form F-SR. Sec. Sec.  242.829 and 242.831 of this chapter (Rules 
829 and 831 of Regulation SE) and the Registration Instructions to 
Sec.  249.1701 of this chapter (Form SBSEF), as applicable, specify 
the circumstances under which an Interactive Data File must be 
submitted with respect to filings made under Regulation SE. Item 
601(b)(101) of Regulation S-K, paragraph (101) of Part II--
Information not Required to be Delivered to Offerees or Purchasers 
of Form F-10, paragraph 101 of the Instructions as to Exhibits of 
Form 20-F, paragraph B.(15) of the General Instructions to Form 40-
F, and paragraph C.(6) of the General Instructions to Form 6-K all 
prohibit submission of an Interactive Data File by an issuer that 
prepares its financial statements in accordance with 17 CFR 210.6-01 
through 210.6-10 (Article 6 of Regulation S-X). For an issuer that 
is a management investment company or separate account registered 
under the Investment Company Act of 1940 (15 U.S.C. 80a et seq.), a 
registered non-variable annuity issuer as defined in Rule 405 under 
the Securities Act (17 CFR 230.405), a business development company 
as defined in Section 2(a)(48) of the Investment Company Act of 1940 
(15 U.S.C. 80a-2(a)(48)), or a unit investment trust as defined in 
Section 4(2) of the Investment Company Act of 1940 (15 U.S.C. 80a-
4), General Instruction C.3.(g) of Form N-1A (Sec. Sec.  239.15A and 
274.11A of this chapter), General Instruction I of Form N-2 
(Sec. Sec.  239.14 and 274.11a-1 of this chapter), General 
Instruction C.3.(h) of Form N-3 (Sec. Sec.  239.17a and 274.11b of 
this chapter), General Instruction C.3.(h) of Form N-4 (Sec. Sec.  
239.17b and 274.11c of this chapter), General Instruction C.3.(h) of 
Form N-6 (Sec. Sec.  239.17c and 274.11d of this chapter), General 
Instruction 2.(l) of Form N-8B-2 (Sec.  274.12 of this chapter), 
General Instruction 5 of Sec. &thnsp;239.16 of this chapter (Form S-
6), and General Instruction C.4 of Form N-CSR (Sec. Sec.  249.331 
and 274.128 of this chapter), as applicable, specifies the 
circumstances under which an Interactive Data File must be 
submitted. For entities subject to Sec. Sec.  240.15fk-1, 240.17a-5, 
240.17a-12, 240.17h-2T, or 240.18a-7 of this chapter (Rule 15fk-1, 
17a-5, 17a-12, 17h-2T, or 18a-7 under the Exchange Act), Sec. Sec.  
240.15fk-1(c)(2)(ii)(A), 240.17a-5(d)(6)(i), 240.17a-5(k)(2), 
240.17a-12(b)(6), 240.17a-12(k), 240.17a-12(l), 240.17a-12(m), 
240.17h-2T(a)(2), and 240.18a-7(c)(6) of this chapter (Rules 15fk-
1(c)(2)(ii)(A), 17a-5(d)(6)(i), 17a-5(k)(2), 17a-12(b)(6), 17a-
12(k), 17a-12(l), 17a-12(m), 17h-2T(a)(2), and 18a-7(c)(6) under the 
Exchange Act), as applicable, specify the circumstances under which 
an Interactive Data File must be submitted. For an exchange as 
defined in 15 U.S.C. 78c(a)(1) (Section 3(a)(1) of the Exchange 
Act), General Instruction A of Sec.  249.1 of this chapter (Form 1) 
specifies the circumstances under which an Interactive Data File 
must be submitted. For a clearing agency as defined in 15 U.S.C. 
78c(a)(23)(A) (Section 3(a)(23)(A) of the Exchange Act), General 
Instruction A of Sec.  249.200b of this chapter (Form CA-1) 
specifies the circumstances under which an Interactive Data File 
must be submitted with respect to Sec.  249.200b of this chapter 
(Form CA-1), and Sec.  240.17ad-27(d) of this chapter (Rule 17ad-
27(d) under the Exchange Act) specify the circumstances under which 
an Interactive Data File must be submitted with respect to the 
reports required under Sec.  249.200b of this chapter (Form CA-1) 
and Sec.  240.17ad-27 of this chapter (Rule 17ad-27 under the 
Exchange Act).

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
9. Amend the authority citation for part 240 by:
0
a. Removing the authority citation for Sec. Sec.  240.15Fh-1 through 
240.15Fh-6 and 240.15Fk-1; and
0
b. Adding an authority citation for Sec. Sec.  240.15Fh-1 through 
240.15Fh-6 and 240.15fk-1 in numerical order.
    The addition reads as follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 
78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 
78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 
78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 
1681w(a)(1), 6801-6809, 6825, 7201 et seq., and 8302; 7 U.S.C. 
2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L. 111-203, 
939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 
126 Stat. 326 (2012), unless otherwise noted.
* * * * *
    Sections 240.3a67-10, 240.3a71-3, 240.3a71-4, and 240.3a71-5 are 
also issued under Pub. L. 111-203, section 761(b), 124 Stat. 1754 
(2010), and 15 U.S.C. 78dd(c).
    Sections 240.3a71-3 and 240.3a71-5 are also issued under Pub. L. 
111-203, sec. 761(b), 124 Stat. 1754 (2010), and 15 U.S.C. 78dd(c).
* * * * *
    Sections 240.15Fh-1 through 240.15Fh-6 and 240.15fk-1 are also 
issued under sec. 943, Pub. L. 111-203, 124 Stat. 1376.
* * * * *
    Section 240.19b-4 is also issued under 12 U.S.C. 5465(e).
* * * * *

0
10. Amend Sec.  240.3a71-3 by revising paragraph (d)(1)(vi) to read as 
follows:

[[Page 7363]]

Sec.  240.3a71-3  Cross-border security-based swap dealing activity.

* * * * *
    (d) * * *
    (1) * * *
    (vi) Notices and withdrawals of notices by registered entity. 
Before an associated person of the registered entity described in 
paragraph (d)(1)(i) of this section commences the activity described in 
paragraph (d)(1)(i) of this section, such registered entity shall have 
filed a notice with the Commission (that has not been withdrawn) that 
its associated persons may conduct such activity. Such registered 
entity shall file this notice electronically on EDGAR in accordance 
with the EDGAR Filer Manual, as defined in 17 CFR 232.11 (Rule 11 of 
Regulation S-T), and in accordance with the requirements of 17 CFR part 
232 (Regulation S-T). A registered entity whose associated persons will 
no longer conduct the activity described in paragraph (d)(1)(i) of this 
section may withdraw, and an entity that no longer is described in 
paragraph (d)(1) of this section shall promptly withdraw, its 
previously filed notice by filing a withdrawal electronically on EDGAR 
in accordance with the EDGAR Filer Manual, as defined in Rule 11 of 
Regulation S-T, and in accordance with the requirements of Regulation 
S-T. Such notices and withdrawals shall be publicly disseminated 
through the Commission's EDGAR system.
* * * * *

0
11. Amend Sec.  240.6a-1 by adding paragraph (e) to read as follows:


Sec.  240.6a-1  Application for registration as a national securities 
exchange or exemption from registration based on limited volume.

* * * * *
    (e) Filings on Form 1 (Sec.  249.1 of this chapter) submitted 
pursuant to this chapter shall be filed electronically on EDGAR in 
accordance with the requirements of 17 CFR part 232 (Regulation S-T). 
Except as otherwise specified on Form 1, the disclosure required to be 
included in Exhibits D, E, and I must be provided as an Interactive 
Data File in accordance with Sec.  232.405 of this chapter (Rule 405 of 
Regulation S-T).

0
12. Amend Sec.  240.6a-2 by revising and republishing paragraphs (a), 
through (d) to read as follows:


Sec.  240.6a-2  Amendments to application.

    (a) A national securities exchange, or an exchange exempted from 
such registration based on limited volume, shall electronically file an 
amendment to Form 1 (Sec.  249.1 of this chapter), in accordance with 
Sec.  240.6a-1(e), which shall set forth the nature and effective date 
of the action taken and shall provide any new information and correct 
any information rendered inaccurate, on Form 1 (Sec.  249.1 of this 
chapter), within 10 days after any action is taken that renders 
inaccurate, or that causes to be incomplete, any of the following:
    (1) Information filed on Sections I and II of Form 1, or amendment 
thereto; or
    (2) Information filed as part of Exhibits C, F, G, H, J, K or M, or 
any amendments thereto.
    (b) On or before June 30 of each year, a national securities 
exchange, or an exchange exempted from such registration based on 
limited volume, shall electronically file, as an amendment to Form 1, 
in accordance with Sec.  240.6a-1(e), the following:
    (1) Exhibits D and I as of the end of the latest fiscal year of the 
exchange; and
    (2) Exhibits K, M, and N, which shall be up to date as of the 
latest date practicable within 3 months of the date the amendment is 
filed.
    (c) On or before June 30, 2025, and every three years thereafter, a 
national securities exchange, or an exchange exempted from such 
registration based on limited volume, shall electronically file, as an 
amendment to Form 1, in accordance with Sec.  240.6a-1(e), complete 
Exhibits A, B, C, and J. The information filed under this paragraph (c) 
shall be current as of the latest practicable date, but shall, at a 
minimum, be up to date within 3 months as of the date the amendment is 
filed.
    (d)(1) If an exchange, on an annual or more frequent basis, 
publishes, or cooperates in the publication of, any of the information 
required to be filed by paragraphs (b)(2) and (c) of this section, in 
lieu of filing such information, an exchange may:
    (i) Identify on Form 1 the publication in which such information is 
available, the name, address, and telephone number of the person from 
whom such publication may be obtained, and the price of such 
publication; and
    (ii) Certify on Form 1 to the accuracy of such information as of 
its publication date.
    (2) If an exchange keeps the information required under paragraphs 
(b)(2) and (c) of this section up to date and makes it available to the 
Commission and the public upon request, in lieu of filing such 
information, an exchange may certify on Form 1 that the information is 
kept up to date and is available to the Commission and the public upon 
request.
    (3) If the information required to be filed under paragraphs (b)(2) 
and (c) of this section is available continuously on an internet 
website controlled by an exchange, in lieu of filing such information 
with the Commission, such exchange may:
    (i) Provide on Form 1 the Uniform Resource Locator(s) (URL(s)) of 
the location(s) on the internet website where such information may be 
found; and
    (ii) Certify on Form 1 that the information available at such 
location(s) is accurate as of its date and is free and accessible 
(without any encumbrances or restrictions) by the general public.
* * * * *

0
13. Amend Sec.  240.6a-3 by revising and republishing paragraph (a) and 
revising paragraph (b) introductory text to read as follows:


Sec.  240.6a-3  Supplemental material to be filed by exchanges.

    (a)(1) A national securities exchange, or an exchange exempted from 
such registration based on limited volume, shall file with the 
Commission any material (including notices, circulars, bulletins, 
lists, and periodicals) issued or made generally available to members 
of, or participants or subscribers to, the exchange. Such material 
shall be electronically filed with the Commission on Form 1 (Sec.  
249.1 of this chapter), in accordance with Sec.  240.6a-1(e), within 10 
days after issuing or making such material available to members, 
participants or subscribers.
    (2) If the information required to be filed under paragraph (a)(1) 
of this section is available continuously on an internet website 
controlled by an exchange, in lieu of filing such information with the 
Commission, such exchange may:
    (i) Provide on Form 1 the Uniform Resource Locator(s) (URL(s)) of 
the location(s) on the internet website where such information may be 
found; and
    (ii) Certify on Form 1 that the information available at such 
location(s) is accurate as of its date and is free and accessible 
(without any encumbrances or restrictions) by the general public.
    (b) Within 15 days after the end of each calendar month, a national 
securities exchange or an exchange exempted from such registration 
based on limited volume, shall electronically file on Form 1 (Sec.  
249.1 of this chapter), in accordance with Sec.  240.6a-1(e), a report 
concerning the securities sold on such exchange during the calendar 
month. Such report shall set forth:
* * * * *

[[Page 7364]]


0
14. Revise and republish Sec.  240.6a-4 to read as follows:


Sec.  240.6a-4  Notice of registration under Section 6(g) of the Act, 
amendment to such notice, and supplemental materials to be filed by 
exchanges registered under Section 6(g) of the Act.

    (a) Notice of registration. (1) An exchange may register as a 
national securities exchange solely for the purposes of trading 
security futures products by filing Form 1-N (Sec.  249.10 of this 
chapter) (``notice of registration''), in accordance with the 
instructions contained therein, if:
    (i) The exchange is a board of trade, as that term is defined in 
the Commodity Exchange Act (7 U.S.C. 1a(6)), that:
    (A) Has been designated a contract market by the Commodity Futures 
Trading Commission and such designation is not suspended by order of 
the Commodity Futures Trading Commission; or
    (B) Is registered as a derivative transaction execution facility 
under Section 6(a) of the Commodity Exchange Act (7 U.S.C. 8(a)) and 
such registration is not suspended by the Commodity Futures Trading 
Commission; and
    (ii) Such exchange does not serve as a marketplace for transactions 
in securities other than:
    (A) Security futures products; or
    (B) Futures on exempted securities or on groups or indexes of 
securities or options thereon that have been authorized under Section 
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)).
    (2) Promptly after the discovery that any information filed on Form 
1-N (Sec.  249.10 of this chapter) was inaccurate when filed, the 
exchange shall file with the Commission an amendment correcting such 
inaccuracy.
    (b) Amendment to notice of registration. (1) A national securities 
exchange registered pursuant to Section 6(g)(1) of the Act (15 U.S.C. 
78f(g)(1)) (``Security Futures Product Exchange'') shall file an 
amendment to Form 1-N (Sec.  249.10 of this chapter), which shall set 
forth the nature and effective date of the action taken and shall 
provide any new information and correct any information rendered 
inaccurate, on Form 1-N (Sec.  249.10 of this chapter), within:
    (i) Ten days after any action is taken that renders inaccurate, or 
that causes to be incomplete, any information filed on Sections I 
through III of Form 1-N (Sec.  249.10 of this chapter), or amendment 
thereto; or
    (ii) 30 days after any action is taken that renders inaccurate, or 
that causes to be incomplete, any information filed as part of Exhibit 
F to Form 1-N (Sec.  249.10 of this chapter), or any amendments 
thereto.
    (2) A Security Futures Product Exchange shall maintain records 
relating to changes in information required in Exhibits C and E to Form 
1-N (Sec.  249.10 of this chapter) which shall be current of as of the 
latest practicable date, but shall, at a minimum, be up-to-date within 
30 days. A Security Futures Product Exchange shall make such records 
available to the Commission and the public upon request.
    (3) On or before June 30, 2023, and by June 30 every year 
thereafter, a Security Futures Product Exchange shall file, as an 
amendment to Form 1-N (Sec.  249.10 of this chapter), Exhibits F, H, 
and I, which shall be current as of the latest practicable date, but 
shall, at a minimum, be up to date within three months as of the date 
the amendment is filed.
    (4) On or before June 30, 2025, and by June 30 every three years 
thereafter, a Security Futures Product Exchange shall file, as an 
amendment to Form 1-N (Sec.  249.10 of this chapter), complete Exhibits 
A, B, C, and E, which shall be current as of the latest practicable 
date, but shall, at a minimum, be up to date within three months as of 
the date the amendment is filed.
    (5)(i) If a Security Futures Product Exchange, on an annual or more 
frequent basis, publishes, or cooperates in the publication of, any of 
the information required to be filed by paragraphs (b)(3) and (4) of 
this section, in lieu of filing such information, a Security Futures 
Product Exchange may:
    (A) Identify on Form 1-N the publication in which such information 
is available, the name, address, and telephone number of the person 
from whom such publication may be obtained, and the price of such 
publication; and
    (B) Certify on Form 1-N to the accuracy of such information as of 
its publication date.
    (ii) If a Security Futures Product Exchange keeps the information 
required under paragraphs (b)(3) and (4) of this section up to date and 
makes it available to the Commission and the public upon request, in 
lieu of filing such information, a Security Futures Product Exchange 
may certify on Form 1-N that the information is kept up to date and is 
available to the Commission and the public upon request.
    (iii) If the information required to be filed under paragraphs 
(b)(3) and (4) of this section is available continuously on an internet 
website controlled by a Security Futures Product Exchange, in lieu of 
filing such information with the Commission, such Security Futures 
Product Exchange may:
    (A) Provide on Form 1-N the Uniform Resource Locator(s) (URL(s)) of 
the location(s) of the internet website where such information may be 
found; and
    (B) Certify on Form 1-N that the information available at such 
location(s) is accurate as of its date and is free and accessible 
(without any encumbrances or restrictions) by the general public.
    (6)(i) The Commission may exempt a Security Futures Product 
Exchange from filing the amendment required by this section for any 
affiliate or subsidiary listed in Exhibit C to Form 1-N (Sec.  249.10 
of this chapter), as amended, that either:
    (A) Is listed in Exhibit C to Form 1 (Sec.  249.1 of this chapter) 
or to Form 1-N (Sec.  249.10 of this chapter), as amended, of one or 
more other national securities exchanges; or
    (B) Was an inactive affiliate or subsidiary throughout the 
affiliate's or subsidiary's latest fiscal year.
    (ii) Any such exemption may be granted upon terms and conditions 
the Commission deems necessary or appropriate in the public interest or 
for the protection of investors, provided however, that at least one 
national securities exchange shall be required to file the amendments 
required by this section for an affiliate or subsidiary described in 
paragraph (b)(6)(i) of this section.
    (7) If a Security Futures Product Exchange has filed documents with 
the Commodity Futures Trading Commission, to the extent that such 
documents contain information satisfying the Commission's informational 
requirements, copies of such documents may be filed with the Commission 
in lieu of the required written notice.
    (c) Supplemental material to be filed by Security Futures Product 
Exchanges. (1)(i) A Security Futures Product Exchange shall file with 
the Commission any material related to the trading of security futures 
products (including notices, circulars, bulletins, lists, and 
periodicals) issued or made generally available to members of, 
participants in, or subscribers to, the exchange. Such material shall 
be filed with the Commission within ten days after issuing or making 
such material available to members, participants, or subscribers.
    (ii) If the information required to be filed under paragraph 
(c)(1)(i) of this section is available continuously on an internet 
website controlled by an exchange, in lieu of filing such

[[Page 7365]]

information with the Commission, such exchange may:
    (A) Provide on Form 1-N the Uniform Resource Locator(s) (URL(s)) of 
the location(s) of the internet website where such information may be 
found; and
    (B) Certify on Form 1-N that the information available at such 
location(s) is accurate as of its date and is free and accessible 
(without any encumbrances or restrictions) by the general public.
    (2) Within 15 days after the end of each calendar month, a Security 
Futures Product Exchange shall file a report concerning the security 
futures products traded on such exchange during the previous calendar 
month. Such a report shall state:
    (i) For each contract of sale for future delivery of a single 
security, the number of contracts traded on such exchange during the 
relevant calendar month and the total number of shares underlying such 
contracts traded; and
    (ii) For each contract of sale for future delivery of a narrow-
based security index, the number of contracts traded on such exchange 
during the relevant calendar month and the total number of shares 
represented by the index underlying such contracts traded.
    (d) Filings on Form 1-N (Sec.  249.10 of this chapter) submitted 
pursuant to this section shall be filed electronically on EDGAR in 
accordance with the requirements of 17 CFR part 232 (Regulation S-T).

0
15. Redesignate Sec.  240.15Aa-1 as Sec.  240.15aa-1 and revise newly 
redesignated Sec.  240.15aa-1 to read as follows:


Sec.  240.15aa-1  Registration of a national or an affiliated 
securities association.

    Any application for registration of an association as a national, 
or as an affiliated, securities association shall be submitted on Form 
15A. Filings on Form 15A (Sec.  249.801 of this chapter) submitted 
pursuant to this section shall be filed electronically on EDGAR in 
accordance with the requirements of 17 CFR part 232 (Regulation S-T).

0
16. Redesignate Sec.  240.15Aj-1 as Sec.  240.15aa-2 and revise and 
republish newly redesignated Sec.  240.15aa-2 to read as follows.


Sec.  240.15aa-2  Amendments and supplements to registration statements 
of securities associations.

    Every association applying for registration or registered as a 
national securities association or as an affiliated securities 
association shall keep its registration statement up-to-date in the 
manner prescribed below:
    (a) Amendments. Promptly after the discovery of any inaccuracy in 
the registration statement or in any amendment or supplement thereto 
the association shall file with the Commission an amendment correcting 
such inaccuracy.
    (b) Current supplements. Promptly after any change which renders no 
longer accurate any information contained or incorporated in the 
registration statement or in any amendment or supplement thereto the 
association shall file with the Commission a current supplement setting 
forth such change, except that:
    (1) No current supplements need be filed with respect to changes in 
the information called for in Exhibit B.
    (2) Supplements setting forth changes in the information called for 
in Exhibit C need not be filed until 10 days after the calendar month 
in which the changes occur.
    (3) If changes in the information called for in Items (1) and (2) 
of Exhibit C are reported in any record which is published at least 
once a month by the association and promptly filed with the Commission, 
no current supplement need be filed with respect thereto.
    (c) Annual supplements. (1) Promptly after March 1 of each year, 
the association shall file with the Commission an annual consolidated 
supplement as of such date on Form 15A (Sec.  249.801 of this chapter) 
except that:
    (i) If the securities association publishes or cooperates in the 
publication of the information required in Items 6(a) and 6(b) of Form 
15A on an annual or more frequent basis, in lieu of filing such an item 
the securities association may:
    (A) Identify on Form 15A the publication in which such information 
is available, the name, address, and telephone number of the person 
from whom such publication may be obtained, and the price thereof; and
    (B) Certify on Form 15A to the accuracy of such information as of 
its date.
    (ii) Promptly after March 1, 2025, and every three years thereafter 
each association shall file complete Exhibit A to Form 15A. The 
information contained in this exhibit shall be up-to-date as of the 
latest practicable date within 3 months of the date on which these 
exhibits are filed. If the association publishes or cooperates in the 
publication of the information required in this exhibit on an annual or 
more frequent basis, in lieu of filing such exhibit the association 
may:
    (A) Identify on Form 15A the publication in which such information 
is available, the name, address, and telephone number of the person 
from whom such publication may be obtained, and the price thereof; and
    (B) Certify on Form 15A to the accuracy of such information as of 
its date. If a securities association keeps the information required in 
the exhibit up-to-date and makes it available to the Commission and the 
public upon request, in lieu of filing such an exhibit a securities 
association may certify on Form 15A that the information is kept up-to-
date and is available to the Commission and the public upon request.
    (2) Promptly after the close of each fiscal year of the 
association, it shall file with the Commission a supplement setting 
forth its balance sheet as of the close of such year and its income and 
expense statement for such year.
    (d) Filing, dating, etc. (1) Each amendment or supplement, 
including the annual consolidated supplement, shall be submitted 
electronically on Form 15A in a manner prescribed in Sec.  240.15aa-1 
(Rule 15aa-1).
    (2) One amendment or supplement may include any number of changes. 
In addition to the formal filing of amendments and supplements above 
described, each association shall electronically file with the 
Commission copies of any notices, reports, circulars, loose-leaf 
insertions, riders, new additions, lists or other records of changes 
covered by amendments or supplements when, as and if such records are 
made available to members of the association.

0
17. Redesignate Sec.  240.15Fi-3 as Sec.  240.15fi-3 and amend newly 
redesignated Sec.  240.15fi-3 by revising paragraph (c) to read as 
follows:


Sec.  240.15fi-3  Security-based swap portfolio reconciliation.

* * * * *
    (c) Reporting of security-based swap valuation disputes--(1) Notice 
requirement. Each security-based swap dealer and major security-based 
swap participant shall promptly notify the Commission, electronically 
through the Commission's EDGAR system, in accordance with the EDGAR 
Filer Manual, as defined in Sec.  232.11 of this chapter (Rule 11 of 
Regulation S-T), and in accordance with the requirements of 17 CFR part 
232 (Regulation S-T), and any applicable prudential regulator, in a 
form and manner acceptable to such applicable prudential regulator, of 
any security-based swap valuation dispute in excess of $20,000,000 (or 
its equivalent in any other currency), at either the transaction or 
portfolio level, if not resolved within:
    (i) Three business days, if the dispute is with a counterparty that 
is a security-

[[Page 7366]]

based swap dealer or major security-based swap participant; or
    (ii) Five business days, if the dispute is with a counterparty that 
is not a security-based swap dealer or major security-based swap 
participant.
    (2) Amendments. Each security-based swap dealer and major security-
based swap participant shall notify the Commission, electronically 
through the Commission's EDGAR system, in accordance with the EDGAR 
Filer Manual, as defined in Rule 11 of Regulation S-T, and in 
accordance with the requirements of Regulation S-T, and any applicable 
prudential regulator, in a form and manner acceptable to such 
applicable prudential regulator, if the amount of any security-based 
swap valuation dispute that was the subject of a previous notice made 
pursuant to paragraph (c)(1) of this section increases or decreases by 
more than $20,000,000 (or its equivalent in any other currency), at 
either the transaction or portfolio level. Such amended notice shall be 
provided to the Commission and any applicable prudential regulator no 
later than the last business day of the calendar month in which the 
applicable security-based swap valuation dispute increases or decreases 
by the applicable dispute amount.
* * * * *

0
18. Redesignate Sec.  240.15Fk-1 as Sec.  240.15fk-1 and amend newly 
redesignated Sec.  240.15fk-1 by revising paragraph (c)(2)(ii)(A) to 
read as follows:


Sec.  240.15fk-1  Designation of chief compliance officer for security-
based swap dealers and major security-based swap participants.

* * * * *
    (c) * * *
    (2) * * *
    (ii) * * *
    (A) Be submitted to the Commission electronically through the EDGAR 
system as an Interactive Data File in accordance with 17 CFR 232.405 
(Rule 405 of Regulation S-T) within 30 days following the deadline for 
filing the security-based swap dealer's or major security-based swap 
participant's annual financial report with the Commission pursuant to 
section 15F of the Act and rules and regulations thereunder;
* * * * *

0
19. Amend Sec.  240.17a-5 by:
0
a. Revising paragraphs (a)(2) and (d)(6);
0
b. Adding new paragraph (e)(2)(iii);
0
c. Revising paragraphs (e)(3), (f)(3)(v)(B), (i)(1)(ii), and (k);
0
d. Removing paragraph (o);
0
e. Redesignating paragraph (p) as paragraph (o); and
0
f. Adding new paragraph (p).
    The revisions and additions read as follows:


Sec.  240.17a-5  Reports to be made by certain brokers and dealers.

* * * * *
    (a) * * *
    (2) The reports provided for in this paragraph (a) that must be 
filed with the Commission will be considered filed when received at the 
Commission's principal office in Washington, DC, and the regional 
office of the Commission for the region in which the broker or dealer 
has its principal place of business. All reports filed pursuant to this 
paragraph (a) will be deemed confidential for the purposes of section 
24(b) of the Act.
* * * * *
    (d) * * *
    (6)(i) Filing with the Commission. The annual reports must be filed 
with the Commission electronically on EDGAR in accordance with the 
EDGAR Filer Manual, as defined in 17 CFR 232.11 (Rule 11 of Regulation 
S-T) and must be filed in accordance with the requirements of 17 CFR 
part 232 (Regulation S-T). The annual reports must be provided as an 
Interactive Data File in accordance with 17 CFR 232.405 (Rule 405 of 
Regulation S-T).
    (ii) Filing with other organizations. The annual reports also must 
be filed with the designated examining authority for the broker or 
dealer and with the Securities Investor Protection Corporation 
(``SIPC'') if the broker or dealer is a member of SIPC. Copies of the 
reports must be provided to all self-regulatory organizations of which 
the broker or dealer is a member, unless the self-regulatory 
organization by rule waives this requirement.
    (e) * * *
    (2) * * *
    (iii) The broker or dealer must keep the original oath or 
affirmation for a period of not less than six years, the first two 
years in an easily accessible place and in accordance with the 
requirements of Sec.  240.17a-4 of this chapter (Rule 17a-4) under the 
Exchange Act.
    (3) The annual reports filed under paragraph (d) of this section 
may be filed as:
    (i) One public document; or
    (ii) Two documents:
    (A) A document consisting of the Statement of Financial Condition, 
the notes to the Statement of Financial Condition, and the report of 
the independent public accountant covering the Statement of Financial 
Condition, which is not confidential; and
    (B) A document containing the balance of the annual reports for 
which confidential treatment may be requested and which will be deemed 
confidential for the purposes of section 24(b) of the Act. However, the 
annual reports, including the confidential portions, will be available 
for official use by any official or employee of the U.S. or any State, 
by national securities exchanges and registered national securities 
associations of which the broker or dealer filing such a report is a 
member, by the Public Company Accounting Oversight Board, and by any 
other person if the Commission authorizes disclosure of the annual 
reports to that person. Nothing contained in this paragraph (e)(3) may 
be construed to be in derogation of the rules of any registered 
national securities association or national securities exchange that 
give to customers of a broker or dealer the right, upon request to the 
broker or dealer, to obtain information relative to its financial 
condition.
    (f) * * *
    (3) * * *
    (v) * * *
    (B) The details of any issues arising during the 24 months (or the 
period of the engagement, if less than 24 months) preceding the 
termination or new engagement relating to any matter of accounting 
principles or practices, financial statement disclosure, auditing scope 
or procedure, or compliance with applicable rules of the Commission, 
which issues, if not resolved to the satisfaction of the former 
independent public accountant, would have caused the independent public 
accountant to make reference to them in the report of the independent 
public accountant. The issues required to be reported include both 
those resolved to the former independent public accountant's 
satisfaction and those not resolved to the former accountant's 
satisfaction. Issues contemplated by this section are those that occur 
at the decision-making level--that is, between principal financial 
officers of the broker or dealer and personnel of the accounting firm 
responsible for rendering its report. The notice must also state 
whether the accountant's report filed under paragraph (d)(1)(i)(C) of 
this section for any of the past two fiscal years contained an adverse 
opinion or a disclaimer of opinion or was qualified as to 
uncertainties, audit scope, or accounting principles, and must describe 
the nature of each such adverse opinion, disclaimer of opinion, or 
qualification. The broker or dealer must also request the former 
independent public accountant to furnish the broker or dealer with a 
letter addressed to the

[[Page 7367]]

Commission stating whether the independent public accountant agrees 
with the statements contained in the notice of the broker or dealer 
and, if not, stating the respects in which the independent public 
accountant does not agree. The broker or dealer must file three copies 
of the notice and the accountant's letter, one copy of which must be 
signed by the sole proprietor, a general partner, or a duly authorized 
corporate, limited liability company, or limited liability partnership 
officer or member, as appropriate, and by the independent public 
accountant, respectively.
* * * * *
    (i) * * *
    (1) * * *
    (ii) Be signed;
* * * * *
    (k) Supplemental reports. (1) Each broker or dealer that computes 
certain of its capital charges in accordance with Sec.  240.15c3-1e 
shall file concurrently with the annual reports a supplemental report 
on management controls, which must be prepared by a registered public 
accounting firm (as that term is defined in section 2(a)(12) of the 
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.)). The supplemental 
report must indicate the results of the accountant's review of the 
internal risk management control system established and documented by 
the broker or dealer in accordance with Sec.  240.15c3-4. This review 
shall be conducted in accordance with procedures agreed upon by the 
broker or dealer and the registered public accounting firm conducting 
the review. The agreed upon procedures are to be performed and the 
report is to be prepared in accordance with the rules promulgated by 
the Public Company Accounting Oversight Board. The purpose of the 
review is to confirm that the broker or dealer has established, 
documented, and is in compliance with the internal risk management 
controls established in accordance with Sec.  240.15c3-4. Before 
commencement of the review and no later than December 10 of each year, 
the broker or dealer must file a statement with the Commission that 
includes:
    (i) A description of the agreed-upon procedures agreed to by the 
broker or dealer and the registered public accounting firm; and
    (ii) A notice describing changes in those agreed-upon procedures, 
if any. If there are no changes, the broker or dealer should so 
indicate.
    (2) The supplemental report and statement to be filed under 
paragraph (k)(1) of this section must be filed with the Commission 
electronically on EDGAR in the manner described by the EDGAR Filer 
Manual, as defined in 17 CFR 232.11 (Rule 11 of Regulation S-T), and 
must be filed in accordance with the requirements of 17 CFR part 232 
(Regulation S-T). The supplemental report and statement must be 
provided as an Interactive Data File in accordance with 17 CFR 232.405 
(Rule 405 of Regulation S-T).
* * * * *
    (p) Signatures. Any signature required by this section may be a 
manual or electronic signature. The signing process for an electronic 
signature must, at a minimum:
    (1) Require the signatory to present a physical, logical, or 
digital credential that authenticates the signatory's individual 
identity;
    (2) Reasonably provide for non-repudiation of the signature;
    (3) Provide that the signature be attached, affixed, or otherwise 
logically associated with the signature page or document being signed; 
and
    (4) Include a timestamp to record the date and time of the 
signature.

0
20. Amend Sec.  240.17a-12 by:
0
a. Revising paragraphs (a)(2), (b)(6);
0
b. Revising and republishing paragraph (c);
0
c. Revising paragraphs (g)(2), (j)(1), (k), (l)(1), (m)(1), and (p); 
and
0
d. Adding paragraph (q).
    The revisions and addition read as follows:


Sec.  240.17a-12  Reports to be made by certain OTC derivatives 
dealers.

    (a) * * *
    (2) The reports provided for in this paragraph (a) must be filed 
with the Commission electronically on the SEC eFOCUS system. All 
reports filed pursuant to paragraph (a) of this section shall be deemed 
to be confidential for the purposes of section 24(b) of the Act.
* * * * *
    (b) * * *
    (6) The annual audit report shall be filed with the Commission 
electronically on EDGAR in the manner described by the EDGAR Filer 
Manual, as defined in 17 CFR 232.11 (Rule 11 of Regulation S-T), and 
must be filed in accordance with the requirements of 17 CFR part 232 
(Regulation S-T). The annual audit report must be provided as an 
Interactive Data File in accordance with 17 CFR 232.405 (Rule 405 of 
Regulation S-T).
    (c) Nature and form of reports. The financial statements filed 
pursuant to paragraph (b) of this section shall be prepared and filed 
in accordance with the following requirements:
    (1) An audit shall be conducted by a certified public accountant 
who shall be in fact independent as defined in paragraph (f) of this 
section, and it shall give an opinion covering the statements filed 
pursuant to paragraph (b) of this section.
    (2) Attached to the report shall be an oath or affirmation that, to 
the best knowledge and belief of the person making such oath or 
affirmation, the financial statements and schedules are true and 
correct and neither the OTC derivatives dealer, nor any partner, 
officer, or director, as the case may be, has any significant interest 
in any counterparty or in any account classified solely as that of a 
counterparty. The oath or affirmation shall be made before a person 
duly authorized to administer such oaths or affirmations. If the OTC 
derivatives dealer is a sole proprietorship, the oath or affirmation 
shall be made by the proprietor; if a partnership, by a general 
partner; or if a corporation, by a duly authorized officer.
    (3) The OTC derivatives dealer must keep the original oath or 
affirmation for a period of not less than six years, the first two 
years in an easily accessible place and in accordance with the 
requirements of Sec.  240.17a-4 (Rule 17a-4 under the Exchange Act).
    (4) An OTC derivatives dealer may request confidential treatment 
for all of the statements filed pursuant to paragraph (b) of this 
section and such statements will be deemed confidential for the 
purposes of section 24(b) of the Act. However, such statements shall be 
available for use by any official or employee of the United States or 
by any other person if the Commission authorizes disclosure of such 
information to that person.
* * * * *
    (g) * * *
    (2) Such notice shall state the date of notification of the 
termination of the engagement of the former certified public accountant 
or the engagement of the new certified public accountant, as 
applicable, and the details of any disagreements existing during the 24 
months (or the period of the engagement, if less) preceding such 
termination or new engagement relating to any matter of accounting 
principles or practices, financial statement disclosure, auditing scope 
or procedure, or compliance with applicable rules of the Commission, 
which disagreements, if not resolved to the satisfaction of the former 
certified public accountant, would have caused the former certified 
public accountant to make reference to them in connection with the 
report on the subject matter of the disagreements. The disagreements 
required to be

[[Page 7368]]

reported in response to the preceding sentence include both those 
resolved to the former certified public accountant's satisfaction and 
those not resolved to the former certified public accountant's 
satisfaction. Disagreements contemplated by this section are those that 
occur at the decision-making level (i.e., between principal financial 
officers of the OTC derivatives dealer and personnel of the certified 
public accounting firm responsible for rendering its report). The 
notice shall also state whether the certified public accountant's 
report on the financial statements for any of the past two years 
contained an adverse opinion or a disclaimer of opinion or was 
qualified as to uncertainties, audit scope, or accounting principles, 
and describe the nature of each such adverse opinion, disclaimer of 
opinion, or qualification. The OTC derivatives dealer shall also 
request the former certified public accountant to furnish the OTC 
derivatives dealer with a letter addressed to the Commission stating 
whether the former certified public accountant agrees with the 
statements contained in the notice of the OTC derivatives dealer and, 
if not, stating the respects in which the former certified public 
accountant does not agree. The OTC derivatives dealer shall file three 
copies of the notice and the accountant's letter, one copy of which 
shall be signed by the sole proprietor, a general partner, or a duly 
authorized corporate, limited liability company, or limited liability 
partnership officer or member, as appropriate, and by the independent 
public accountant, respectively.
* * * * *
    (j) * * *
    (1) Technical requirements. The certified public accountant's 
report shall be dated; be signed; indicate the city and State where 
issued; and identify without detailed enumeration the financial 
statements and schedules covered by the report.
* * * * *
    (k) Accountant's report on material inadequacies and reportable 
conditions. The OTC derivatives dealer shall file concurrently with the 
annual audit report a supplemental report by the certified public 
accountant describing any material inadequacies or any matter that 
would be deemed to be a reportable condition under U.S. Generally 
Accepted Auditing Standards that are unresolved as of the date of the 
certified public accountant's report. The report shall also describe 
any material inadequacies found to have existed since the date of the 
previous audit. The supplemental report shall indicate any corrective 
action taken or proposed by the OTC derivatives dealer with regard to 
any identified material inadequacies or reportable conditions. If the 
audit did not disclose any material inadequacies or reportable 
conditions, the supplemental report shall so state. This supplemental 
report shall be filed with the Commission electronically on EDGAR in 
the manner described by the EDGAR Filer Manual, as defined in 17 CFR 
232.11 (Rule 11 of Regulation S-T), and must be filed in accordance 
with the requirements of 17 CFR part 232 (Regulation S-T). This 
supplemental report must be provided as an Interactive Data File in 
accordance with 17 CFR 232.405 (Rule 405 of Regulation S-T).
    (l) * * *
    (1) The OTC derivatives dealer shall file concurrently with the 
annual audit report a supplemental report by the certified public 
accountant indicating the results of the certified public accountant's 
review of the OTC derivatives dealer's internal risk management control 
system with respect to the requirements of Sec.  240.15c3-4. This 
review shall be conducted in accordance with procedures agreed to by 
the OTC derivatives dealer and the certified public accountant 
conducting the review. The purpose of the review is to confirm that the 
OTC derivatives dealer has established, documented, and maintained an 
internal risk management control system in accordance with Sec.  
240.15c3-4, and is in compliance with that internal risk management 
control system. This supplemental report shall be filed with the 
Commission electronically on EDGAR in the manner described by the EDGAR 
Filer Manual, as defined in 17 CFR 232.11 (Rule 11 of Regulation S-T) 
and must be filed in accordance with the requirements of 17 CFR part 
232 (Regulation S-T). This supplemental report must be provided as an 
Interactive Data File in accordance with 17 CFR 232.405 (Rule 405 of 
Regulation S-T).
* * * * *
    (m) * * *
    (1) The OTC derivatives dealer shall file concurrently with the 
annual audit report a supplemental report by the certified public 
accountant indicating the results of the certified public accountant's 
review of the broker's or dealer's inventory pricing and modeling 
procedures. This review shall be conducted in accordance with 
procedures agreed to by the OTC derivatives dealer and by the certified 
public accountant conducting the review. The purpose of the review is 
to confirm that the pricing and modeling procedures relied upon by the 
OTC derivatives dealer conform to the procedures submitted to the 
Commission as part of its OTC derivatives dealer application, and that 
the procedures comply with the qualitative and quantitative standards 
set forth in Sec.  240.15c3-1f. This supplemental report shall be filed 
with the Commission electronically on EDGAR in the manner described by 
the EDGAR Filer Manual, as defined in 17 CFR 232.11 (Rule 11 of 
Regulation S-T), and must be filed in accordance with the requirements 
of 17 CFR part 232 (Regulation S-T). This supplemental report must be 
provided as an Interactive Data File in accordance with 17 CFR 232.405 
(Rule 405 of Regulation S-T).
* * * * *
    (p) Unless otherwise stated in this rule, for purposes of filing 
requirements as described in Sec.  240.17a-12, these filings shall be 
deemed to have been accomplished upon receipt at the Commission's 
principal office in Washington, DC.
    (q) Any signature required by this section may be a manual or 
electronic signature. The signing process for an electronic signature 
must, at a minimum:
    (1) Require the signatory to present a physical, logical, or 
digital credential that authenticates the signatory's individual 
identity;
    (2) Reasonably provide for non-repudiation of the signature;
    (3) Provide that the signature be attached, affixed, or otherwise 
logically associated with the signature page or document being signed; 
and
    (4) Include a timestamp to record the date and time of the 
signature.

0
21. Revise Sec.  240.17a-19 to read as follows:


Sec.  240.17a-19  Form X-17A-19 Report by national securities exchanges 
and registered national securities associations of changes in the 
membership status of any of their members.

    Every national securities exchange and every registered national 
securities association must file with the Commission and with the 
Securities Investor Protection Corporation such information as is 
required by Sec.  249.635 of this chapter on Form X-17A-19 within five 
business days of the occurrence of the initiation of the membership of 
any person or the suspension or termination of the membership of any 
member. Form X-17A-19 must be filed with the Commission electronically 
on EDGAR

[[Page 7369]]

in accordance with the EDGAR Filer Manual, as defined in 17 CFR 232.11 
(Rule 11 of Regulation S-T), and must be filed in accordance with the 
requirements of Regulation S-T. Nothing in this section shall be deemed 
to relieve a national securities exchange or a registered national 
securities association of its responsibilities under Sec.  240.17a-
5(b)(5) except that, to the extent a national securities exchange or a 
registered national securities association promptly files a report on 
Form X-17A-19 including therewith, inter alia, information sufficient 
to satisfy the requirements of Sec.  240.17a-5(b)(5), it shall not be 
required to file a report pursuant to Sec.  240.17a-5(b). Upon the 
occurrence of the events described in this paragraph, every national 
securities exchange and every registered national securities 
association shall notify in writing such member of its responsibilities 
under Sec.  240.17a-5(b).

0
22. Revise Sec.  240.17a-22 to read as follows:


Sec.  240.17a-22  Supplemental material of registered clearing 
agencies.

    Within two business days after issuing, or making generally 
available, to its participants or to other entities with whom it has a 
significant relationship, any material (including, for example, 
manuals, notices, circulars, bulletins, lists or periodicals) that are 
not otherwise required to be posted on its internet website pursuant to 
any requirement under Section 19(b) of the Exchange Act or any rule 
under Sec.  240.19b-4, a registered clearing agency shall prominently 
post such material on its internet website.

0
23. Amend Sec.  240.17h-2T by revising paragraph (a) to read as 
follows:


Sec.  240.17h-2T  Risk assessment reporting requirements for brokers 
and dealers.

    (a) Reporting requirements of risk assessment information required 
to be maintained by section 240.17h-1T. (1) Every broker or dealer 
registered with the Commission pursuant to section 15 of the Act, and 
every municipal securities dealer registered pursuant to section 15B of 
the Act for which the Commission is the appropriate regulatory agency, 
unless exempt pursuant to paragraph (b) of this section, shall file a 
Form 17-H within 60 calendar days after the end of each fiscal quarter. 
The Form 17-H for the fourth fiscal quarter shall be filed within 60 
calendar days of the end of the fiscal year. The cumulative year-end 
financial statements required by section 240.17h-1T may be filed 
separately within 105 calendar days of the end of the fiscal year.
    (2) The reports required to be filed pursuant to paragraph (a)(1) 
of this section must be filed with the Commission electronically on 
EDGAR in accordance with the EDGAR Filer Manual, as defined in 17 CFR 
232.11 (Rule 11 of Regulation S-T), and must be filed in accordance 
with the requirements of 17 CFR part 232 (Regulation S-T). The filings 
must be provided as Interactive Data Files in accordance with 17 CFR 
232.405 (Rule 405 of Regulation S-T).
    (3) For purposes of this section, the term Material Associated 
Person shall have the meaning used in Sec.  240.17h-1T.
* * * * *

0
24. Redesignate Sec.  240.17Ab2-1 as Sec.  240.17ab2-1 and revise newly 
redesignated Sec.  240.17ab2-1 to read as follows:


Sec.  240.17ab2-1  Registration of clearing agencies.

    (a) An application for registration or for exemption from 
registration as a clearing agency, as defined in section 3(a)(23) of 
the Act, or an amendment to any such application shall be filed 
electronically with the Commission on Form CA-1, in accordance with the 
instructions thereto and paragraph (g) below.
    (b) Any applicant for registration or for exemption from 
registration as a clearing agency whose application is filed with the 
Commission on or before November 24, 1975, on and in accordance with 
the instructions to Form CA-1, with respect to the clearing agency 
activities described in the application shall, during the period from 
December 1, 1975, until the Commission grants registration, denies 
registration or grants an exemption from registration, be exempt from 
the registration provisions of section 17A(b) of the Act and the rules 
and regulations thereunder and, unless the Commission shall otherwise 
provide by rule or by order, the provisions of the Act and the rules 
and regulations thereunder which would be applicable to clearing 
agencies as a result of registration under the Act.
    (c)(1) The Commission, upon the request of a clearing agency, may 
grant registration of the clearing agency in accordance with sections 
17A(b) and 19(a)(1) of the Act but exempt the registrant from one or 
more of the requirements as to which the Commission is directed to make 
a determination pursuant to paragraphs (A) through (I) of section 
17A(b)(3) of the Act, provided that any such registration shall be 
effective only for eighteen months from the date the registration is 
made effective (or such longer period as the Commission may provide by 
order).
    (2) In the case of any clearing agency registered in accordance 
with paragraph (c)(1) of this section, not later than nine months from 
the date such registration is made effective the Commission either will 
grant registration in accordance with sections 17A(b) and 19(a)(1) of 
the Act, without exempting the registrant from one or more of the 
requirements as to which the Commission is directed to make a 
determination pursuant to subparagraphs (A) through (I) of section 
17A(b)(3) of the Act, or will institute proceedings in accordance with 
section 19(a)(1)(B) of the Act to determine whether registration should 
be denied at the expiration of the registration granted in accordance 
with paragraph (c)(1) of this section.
    (d) The electronic filing of an amendment to an application for 
registration or for exemption from registration as a clearing agency, 
which registration or exemption has not been granted, or the electronic 
filing of additional information or documents prior to the granting of 
registration or an exemption from registration shall extend to ninety 
days from the date such electronic filing is made (or to such longer 
period as to which the applicant consents) the period within which the 
Commission shall grant registration, institute proceedings to determine 
whether such registration shall be denied, or conditionally or 
unconditionally exempt registrant from the registration and other 
provisions of section 17A of the Act or the rules or regulations 
thereunder.
    (e) If any information reported at Items 1-3 of Form CA-1 is or 
becomes inaccurate, misleading or incomplete for any reason, whether 
before or after registration or an exemption from registration has been 
granted, the registrant shall electronically file promptly an amendment 
on Form CA-1 correcting the inaccurate, misleading or incomplete 
information.
    (f) Every application for registration or for exemption from 
registration as a clearing agency or amendment to, or additional 
information or document electronically filed in connection with, any 
such application shall constitute a ``report'' or ``application'' 
within the meaning of sections 17, 17A, 19, and 32(a) of the Act.
    (g)(1) Filings on Form CA-1 made pursuant to this section shall be 
made electronically and shall contain an electronic signature.
    (2) For the purposes of this section, the term electronic signature 
means an electronic entry in the form of a magnetic impulse or other 
form of

[[Page 7370]]

computer data compilation of any letter or series of letters or 
characters composed of a name, executed, adopted or authorized as a 
signature.
    (3) If the conditions of this section and Form CA-1 are otherwise 
satisfied, all filings submitted electronically on or before 5:30 p.m. 
eastern standard time or eastern daylight saving time, whichever is 
currently in effect, on a business day, shall be deemed filed on that 
business day, and all filings submitted after 5:30 p.m. eastern 
standard time or eastern daylight saving time, whichever is currently 
in effect, shall be deemed filed on the next business day. A filing 
would be deemed timely filed if it is required to be filed on a day 
that is not a business day and it is filed on the next available 
business day.
    (4) For purposes of this section, the term business day means any 
day other than a Saturday, Sunday, Federal holiday, a day that the 
Office of Personnel Management has announced that Federal agencies in 
the Washington, DC, area, are closed to the public, a day on which the 
Commission is subject to a Federal Government shutdown, or a day on 
which the Commission's Washington, DC, office is otherwise not open for 
regular business.

0
25. Amend Sec.  240.18a-7 by revising paragraphs (c)(6), (d), 
(e)(3)(v)(B), (h)(1)(ii), and (j) to read as follows:


Sec.  240.18a-7  Reports to be made by certain security-based swap 
dealers and major security-based swap participants.

* * * * *
    (c) * * *
    (6) Filing with the Commission. The annual reports must be filed 
with the Commission electronically on EDGAR in accordance with the 
EDGAR Filer Manual, as defined in 17 CFR 232.11 (Rule 11 of Regulation 
S-T), and must be filed in accordance with the requirements of 17 CFR 
part 232 (Regulation S-T). The annual reports must be provided as an 
Interactive Data File in accordance with 17 CFR 232.405 (Rule 405 of 
Regulation S-T).
    (d) Nature and form of reports. The annual reports filed pursuant 
to paragraph (c) of this section must be prepared and filed in 
accordance with the following requirements:
    (1)(i) Oath or affirmation. The security-based swap dealer or major 
security-based swap participant must attach to the annual reports an 
oath or affirmation that, to the best knowledge and belief of the 
person making the oath or affirmation:
    (A) The financial report is true and correct; and
    (B) Neither the registrant, nor any partner, officer, director, or 
equivalent person, as the case may be, has any proprietary interest in 
any account classified solely as that of a customer.
    (ii) The oath or affirmation must be made before a person duly 
authorized to administer such oaths or affirmations. If the security-
based swap dealer or major security-based swap participant is a sole 
proprietorship, the oath or affirmation must be made by the proprietor; 
if a partnership, by a general partner; if a corporation, by a duly 
authorized officer; or if a limited liability company or limited 
liability partnership, by the chief executive officer, chief financial 
officer, manager, managing member, or those members vested with 
management authority for the limited liability company or limited 
liability partnership.
    (iii) The security-based swap dealer or major security-based swap 
participant must keep the original oath or affirmation for a period of 
not less than six years, the first two years in an easily accessible 
place in accordance with the requirements of Sec.  240.18a-6 of this 
chapter (Rule 18a-6 under the Exchange Act).
    (2) Confidentiality. The annual reports filed under paragraph (c) 
of this section may be filed as:
    (i) One public document; or
    (ii) Two documents:
    (A) A document consisting of the Statement of Financial Condition, 
the notes to the Statement of Financial Condition, and the report of 
the independent public accountant covering the Statement of Financial 
Condition, which is not confidential; and
    (B) A document containing the balance of the annual reports for 
which confidential treatment may be requested and which will be deemed 
confidential for the purposes of section 24(b) of the Act. However, the 
annual reports, including the confidential portions, will be available 
for official use by any official or employee of the U.S. or any State, 
and by any other person if the Commission authorizes disclosure of the 
annual reports to that person. Nothing contained in paragraph (d)(2) of 
this section may be construed to be in derogation of the rights of 
customers of a security-based-swap dealer or major security-based swap 
participant, upon request to the security-based swap dealer or major 
security-based swap participant, to obtain information relative to its 
financial condition.
    (e) * * *
    (3) * * *
    (v) * * *
    (B) The details of any issues arising during the 24 months (or the 
period of the engagement, if less than 24 months) preceding the 
termination or new engagement relating to any matter of accounting 
principles or practices, financial statement disclosure, auditing scope 
or procedure, or compliance with applicable rules of the Commission, 
which issues, if not resolved to the satisfaction of the former 
independent public accountant, would have caused the independent public 
accountant to make reference to them in the report of the independent 
public accountant. The issues required to be reported include both 
those resolved to the former independent public accountant's 
satisfaction and those not resolved to the former accountant's 
satisfaction. Issues contemplated by this section are those which occur 
at the decision-making level--that is, between principal financial 
officers of the security-based swap dealer or major security-based swap 
participant and personnel of the accounting firm responsible for 
rendering its report. The notice must also state whether the 
accountant's report filed under paragraph (c)(1)(i)(C) of this section 
for any of the past two fiscal years contained an adverse opinion or a 
disclaimer of opinion or was qualified as to uncertainties, audit 
scope, or accounting principles, and must describe the nature of each 
such adverse opinion, disclaimer of opinion, or qualification. The 
security-based swap dealer or major security-based swap participant 
must also request the former independent public accountant to furnish 
the security-based swap dealer or .major security-based swap 
participant with a letter addressed to the Commission stating whether 
the independent public accountant agrees with the statements contained 
in the notice of the security-based swap dealer or major security-based 
swap participant and, if not, stating the respects in which the 
independent public accountant does not agree. The security-based swap 
dealer or major security-based swap participant must file three copies 
of the notice and the accountant's letter, one copy of which must be 
signed by the sole proprietor, or a general partner or a duly 
authorized corporate, limited liability company, or limited liability 
partnership officer or member, as appropriate, and by the independent 
public accountant, respectively.
* * * * *
    (h) * * *
    (1) * * *
    (ii) Be signed;
* * * * *
    (j) Signatures. Any signature required by this section may be a 
manual or

[[Page 7371]]

electronic signature. The signing process for an electronic signature 
must, at a minimum:
    (1) Require the signatory to present a physical, logical, or 
digital credential that authenticates the signatory's individual 
identity;
    (2) Reasonably provide for non-repudiation of the signature;
    (3) Provide that the signature be attached, affixed, or otherwise 
logically associated with the signature page or document being signed; 
and
    (4) Include a timestamp to record the date and time of the 
signature.

0
26. Amend Sec.  240.19b-4 by revising paragraphs (e)(2)(ii) and (j) to 
read as follows:


Sec.  240.19b-4  Filings with respect to proposed rule changes by self-
regulatory organizations.

* * * * *
    (e) * * *
    (2) * * *
    (ii) When relying on paragraph (e) of this section, a self-
regulatory organization shall post the following information, using the 
most recent versions of the XML schema and the associated PDF renderer 
as published on the Commission's website for all reports required by 
this section, on its publicly available internet website within five 
business days after commencement of trading a new derivative securities 
product:
    (A) Type of issuer of new derivative securities product;
    (B) Class of new derivative securities product;
    (C) Name of underlying instrument;
    (D) If the underlying instrument is an index, identify whether it 
is broad-based or narrow-based;
    (E) Ticker symbol(s) of new derivative securities product;
    (F) Market(s) upon which securities composing the underlying 
instrument trade;
    (G) Settlement methodology of new derivative securities product; 
and
    (H) Position limits of new derivative securities product (if 
applicable).
* * * * *
    (j) Filings by a self-regulatory organization submitted under 17 
CFR 249.819 on Form 19b-4 electronically shall contain an electronic 
signature. For the purposes of this section, the term electronic 
signature means an electronic entry in the form of a magnetic impulse 
or other form of computer data compilation of any letter or series of 
letters or characters composing a name, executed, adopted or authorized 
as a signature.
* * * * *

0
27. Amend Sec.  240.24b-2 by:
0
a. Revising and republishing paragraph (b) introductory text; and
0
b. Adding paragraphs (j) and (k).
    The revisions and additions read as follows:


Sec.  240.24b-2  Nondisclosure of information filed with the Commission 
and with any exchange.

* * * * *
    (b) Except as otherwise provided in paragraphs (g), (h), (i), (j), 
and (k) of this section, the person shall omit from material filed the 
portion thereof which it desires to keep undisclosed (hereinafter 
called the confidential portion). In lieu thereof, it shall indicate at 
the appropriate place in the material filed that the confidential 
portion has been so omitted and filed separately with the Commission. 
The person shall file with the copies of the material filed with the 
Commission:
* * * * *
    (j)(1) A broker or dealer shall not omit the confidential portion 
from the material filed in electronic format pursuant to Sec. Sec.  
240.17a-5(d), 240.17a-5(k), 240.17a-12, or 240.17h-2T of this chapter. 
In lieu of the procedures described in paragraph (b) of this section, a 
broker or dealer shall request confidential treatment electronically 
for any material filed in electronic format pursuant to pursuant to 
Sec. Sec.  240.17a-5(d), 240.17a-5(k), 240.17a-12, or 240.17h-2T, of 
this chapter.
    (2) A security-based swap dealer shall not omit the confidential 
portion from the material filed in electronic format pursuant to Sec.  
240.18a-7(c) of this chapter. In lieu of the procedures described in 
paragraph (b) of this section, a security-based swap dealer shall 
request confidential treatment electronically for any material filed in 
electronic format pursuant to Sec.  240.18a-7(c) of this chapter.
    (k) An entity shall not omit the confidential portion from the 
material filed in electronic format on Form CA-1 pursuant to Sec.  
240.17ab2-1, and, in lieu of the procedures described in paragraph (b) 
of this section, may request confidential treatment of information 
provided on Form CA-1 by completing Section X of Form CA-1.

PART 249-FORMS, SECURITIES EXCHANGE ACT OF 1934

0
28. The authority citation for part 249 continues to read, in part, as 
follows:

    Authority:  15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C. 
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b) Pub. L. 111-203, 124 Stat. 
1904; Sec. 102(a)(3) Pub. L. 112-106, 126 Stat. 309 (2012), Sec. 107 
Pub. L. 112-106, 126 Stat. 313 (2012), Sec. 72001 Pub. L. 114-94, 
129 Stat. 1312 (2015), and secs. 2 and 3 Pub. L. 116-222, 134 Stat. 
1063 (2020), unless otherwise noted.
* * * * *
    Section 249.617 is also issued under Pub. L. 111-203, 939, 939A, 
124. Stat. 1376 (2010) (15 U.S.C. 78c, 15 U.S.C. 78o-7 note).
* * * * *

0
29. Revise Form 1 (referenced in Sec.  249.1).

    Note: Form 1 is attached as Appendix 1 to this document. Form 1 
will not appear in the Code of Federal Regulations.


0
30. Revise Form 1-N (referenced in Sec.  249.10).

    Note:  Form 1-N is attached as Appendix 2 to this document. Form 
1-N will not appear in the Code of Federal Regulations.


0
31. Amend Form X-17A-5 (referenced in Sec.  249.617) by.
0
a. In Part II:
0
(i) In the Cover Page section of the instructions, adding the following 
text after ``The cover page must be completed in its entirety. If a 
line does not apply, the firm should write ``None'' or ``N/A'' on the 
line, as applicable.'': ``The cover page of the FOCUS Report includes 
signature lines for the principal executive officer or comparable 
officer, principal financial officer or comparable officer, and 
principal operations officer or comparable officer. The firm must 
obtain manual or electronic signatures from at least the firm's 
principal executive officer or principal financial officer (or the 
comparable officer). The signing process for an electronic signature 
must, at a minimum: (1) Require the signatory to present a physical, 
logical, or digital credential that authenticates the signatory's 
individual identity; (2) Reasonably provide for non-repudiation of the 
signature; (3) Provide that the signature be attached, affixed, or 
otherwise logically associated with the signature page or document 
being signed; and (4) Include a timestamp to record the date and time 
of the signature.'';
0
(ii) Revising the Computation of Minimum Regulatory Capital 
Requirements section, Line 1 in the Statement of Income (Loss) or 
Statement of Comprehensive Income, As Applicable section, the 
Computation for Determination of Customer Reserve Requirements section, 
the Computation for Determination of PAB Requirements section, and the 
Computation of CFTC Minimum Capital Requirements section;
0
(iii) Removing the following instruction from the Computation of 
Minimum Regulatory Capital Requirements (Broker-Dealer) section:

[[Page 7372]]

    3870 Ratio requirement--2% of aggregate debit items. FCMs must 
report here the greater of:
     2% of aggregate debit items, or
     8% of funds required to be segregated pursuant to the 
Commodity Exchange Act.
    (iv) Replacing the instructions for the Computation of CFTC Minimum 
Capital Requirements section;
0
b. In Part IIA:
0
(i) On the cover page, removing the words ``Manual signatures of:'' and 
adding in their place ``Signatures of:'';
0
(ii) In lines 11 and 15 of the ``Computation of Net Capital 
Requirement'' section, removing the words ``line 19'' and adding in 
their place ``line 18''.
[GRAPHIC] [TIFF OMITTED] TR21JA25.224

0
(iv) In the instructions, adding the following text in the ``Filing 
Requirements for Part IIA'' section as a second new paragraph after 
``Part IIA shall be filed monthly by such of these firms which receive 
written notice pursuant to Rule 17a-5(a)(2)(iv) that they have exceeded 
parameters set by the self-regulators.'': ``The cover page of the FOCUS 
Report includes signature lines for the principal executive officer or 
managing partner, principal financial officer or partner, and principal 
operations officer or partner. The firm must obtain manual or 
electronic signatures from at least the firm's principal executive 
officer or principal financial officer (or the comparable officer). The 
signing process for an electronic signature must, at a minimum: (1) 
Require the signatory to present a physical, logical, or digital 
credential that authenticates the signatory's individual identity; (2) 
Reasonably provide for non-repudiation of the signature; (3) Provide 
that the signature be attached, affixed, or otherwise logically 
associated with the signature page or document being signed; and (4) 
Include a timestamp to record the date and time of the signature.''
0
c. In Part IIC:
0
(i) Revising the Balance Sheet, Regulatory Capital, and Income 
Statement sections; and
0
(ii) Amend the instructions to the Cover Page section of Part IIC of 
Form X-17A-5 (referenced in Sec.  249.617 of this chapter) by adding 
the following text after ``The cover page must be completed in its 
entirety. If a line does not apply, the firm should write ``None'' or 
``N/A'' on the line, as applicable.'': ``The cover page of the FOCUS 
Report includes signature lines for the principal executive officer or 
comparable officer, principal financial officer or comparable officer, 
and principal operations officer or comparable officer. The firm must 
obtain manual or electronic signatures from at least the firm's 
principal executive officer or principal financial officer (or the 
comparable officer). The signing process for an electronic signature 
must, at a minimum: (1) Require the signatory to present a physical, 
logical, or digital credential that authenticates the signatory's 
individual identity; (2) Reasonably provide for non-repudiation of the 
signature; (3) Provide that the signature be attached, affixed, or 
otherwise logically associated with the signature page or document 
being signed; and (4) Include a timestamp to record the date and time 
of the signature.''
0
d. In Part III removing the notary public signature line.

    Note: Form X-17A-5 is attached as Appendix 3 to this document. 
Form X-17A-5 will not appear in the Code of Federal Regulations.


0
32. Amend Form X-17A-19 (referenced in Sec.  249.635) by:
0
a. Revising lines 1, 4, and 5;
0
b. In General Instructions by:
0
i. Revising instructions 2 and 3;
0
ii. Removing instruction 4;
0
iii. Redesignating instructions 5 through 8 as instructions 4 through 
7; and
0
iv. Revising newly redesignated instruction 6.

    Note:  Form X-17A-19 is attached as Appendix 4 to this document. 
Form X-17A-19 will not appear in the Code of Federal Regulations.


0
33. Revise and republish Sec.  249.801 to read as follows:


Sec.  249.801  Form 15A, for application for registration as a national 
securities association or affiliated securities association.

    This form shall be filed as an application for registration as a 
national securities association or as an affiliated securities 
association pursuant to Sec.  240.15aa-1 of this chapter (Rule 15aa-1).

0
34. Redesignate Form X-15AA-1 (referenced in Sec.  249.801) as Form 15A 
and revise newly redesignated Form 15A.

    Note:  Form 15A is attached as Appendix 5 to this document. Form 
15A will not appear in the Code of Federal Regulations.

Sec.  249.802  [Removed and Reserved]

0
35. Remove and reserve Sec.  249.802.


Sec.  249.803  [Removed and Reserved]

0
36. Remove and reserve Sec.  249.803.

0
37. Amend Form 19b-4 (referenced in Sec.  249.819) by revising General 
Instructions section F.

    Note: Form 19b-4 is attached as Appendix 6 to this document. 
Form 19b-4 will not appear in the Code of Federal Regulations.

PART 249b--FURTHER FORMS, SECURITIES EXCHANGE ACT OF 1934

0
38. The general authority citation for part 249b continues to read as 
follows:

    Authority: 15 U.S.C. 78a et seq., unless otherwise noted;
* * * * *

0
39. Revise Form CA-1 (referenced in Sec.  249b.200).


[[Page 7373]]


    Note:  Form CA-1 is attached as Appendix 7 to this document. 
Form CA-1 will not appear in the Code of Federal Regulations.


    By the Commission.
    Dated: December 16, 2024.
Sherry R. Haywood,
Assistant Secretary.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendix 1--Form 1

BILLING CODE 8011-P

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[[Page 7386]]


[GRAPHIC] [TIFF OMITTED] TR21JA25.047


[[Page 7387]]


[GRAPHIC] [TIFF OMITTED] TR21JA25.048

BILLING CODE 8011-C

Section VI--Contact Employee Information

    Provide the following information of the person at {entity 
name{time}  prepared to respond to questions for this submission:

First name:                           Last name:
Title:
Email:                                Telephone:
 

Section VII--Consent to Service and Attestation

    [squ] By checking this box, {Name of Entity{time}  consents that 
service of any civil action brought by, or notice of any proceeding 
before, the Securities and Exchange Commission in connection with 
the exchange's activities may be given to the contact employee by 
registered or certified mail at the main address, or mailing address 
if different, given in Section I above; and represents that the 
information and statements contained herein, including exhibits, 
schedules, or other documents attached hereto, and other information 
filed herewith, all of which are made a part hereof, are current, 
true, and complete.

Form 1 General Instructions

A. Use of the Form

    Form 1 is the form used by: (a) an applicant for registration as 
a national securities exchange under Section 6 of the Securities 
Exchange Act of 1934 (``Exchange Act'') or for an exemption from 
registration pursuant to Section 5 of the Exchange Act by reason of 
the limited volume of transactions effected on such exchange 
(``applicant'') to provide to the Securities and Exchange Commission 
(``SEC'' or ``Commission'') specific items of information about the 
applicant and its operations, or to amend such application, as 
required under Rule 6a-1; and (b) a national securities exchange 
(``registered exchange'') or an exchange exempted from such 
registration by reason of the limited volume of transactions 
effected on such exchange (``exempt exchange'') uses to provide the 
information required by Rule 6a-2 and Rule 6a-3.
    Filings on Form 1 submitted pursuant to Rule 6a-1, Rule 6a-2 or 
Rule 6a-3 of the Exchange Act shall be filed in an electronic format 
on the Commission's Electronic Data Gathering, Analysis, and 
Retrieval system (EDGAR) in accordance with EDGAR rules set forth in 
Regulation S-T (17 CFR part 232). All pages of an electronically 
filed Form 1, including exhibits, shall be numbered consecutively, 
consistent with Rule 0-3 under the Exchange Act (17 CFR 240.0-3). 
For assistance with EDGAR issues, please consult the EDGAR--
Information for Filers web page on SEC.gov.
    The disclosure required to be included in the following exhibits 
to Form 1 must be provided as an Interactive Data File in accordance 
with Rule 405 of Regulation S-T. This requirement does not extend to 
copies of existing documents:
    (1) Exhibit D;
    (2) Exhibit E, except for the copy of the users' manual; and
    (3) Exhibit I.

[[Page 7388]]

B. Need for Careful Preparation of the Completed Form, Including 
Exhibits

    Applicants and registered and exempt exchanges must provide all 
the information required by the form, including the exhibits, and 
must present the information in a clear and comprehensible manner. A 
filing that is incomplete or similarly deficient may be returned to 
the applicant or registered or exempt exchange. Any filing so 
returned shall for all purposes be deemed not to have been filed 
with the Commission. See also Rule 0-3 under the Exchange Act (17 
CFR 240.0-3). If any exhibit required is inapplicable, a statement 
to that effect shall be furnished in lieu of such exhibit.

C. When To Use the Form 1

    Form 1 is composed of 6 types of submissions to the Commission 
pursuant to Rules 6a-1, 6a-2 and 6a-3 under the Exchange Act. In 
completing Form 1, an applicant or exchange shall select the type of 
filing and provide all information required by the relevant rules. 
The types of submissions are:
    (1) ``Rule 6a-1 Application'' submissions are applications for 
registration as a national securities exchange or for exemption from 
such registration based on limited volume. The applicant must select 
the type of application during the initial filing. An exchange that 
is filing Form 1 as an application may not satisfy the requirements 
to provide certain information by means of an internet website. All 
materials must be filed with the Commission as part of the Form 1 
application. Amendments to applications as required by Rules 6a-
1(b), (c) or (d) must be filed as amending the Rule 6a-1 application 
type, and marked to number the amendments consecutively. An 
applicant may withdraw a Rule 6a-1 application submission type prior 
to Commission action to issue any order granting registration, or 
institute proceedings to determine whether registration should be 
denied.
    (2) ``Rule 6a-2(a) Amendment to Registration'' submissions are 
for amendments to the Form 1 by registered exchanges and exempt 
exchanges. The amendments shall set forth the nature and effective 
date of the action taken and shall provide any new information and 
correct any information rendered inaccurate within 10 days after any 
action that is taken renders inaccurate, or that causes to be 
incomplete, any of the following:
    (i) Information in Section I-Entity Contact Information, or any 
amendments thereto; or
    (ii) Information filed as part of Exhibits C, F, G, H, J, K or 
M, or any amendments thereto.
    (3) ``Rule 6a-2(b) Annual Filing'' submission shall be filed on 
or before June 30 of each year and include the following:
    (i) Exhibits D and I as of the end of the latest fiscal year of 
the exchange; and
    (ii) Exhibits K, M, and N, which shall be up to date as of the 
latest date practicable within three (3) months of the date the 
amendment is filed.
    (4) ``Rule 6a-2(c) Triennial Filing'' submission shall be filed 
on or before June 30, 2025, and every three years thereafter and 
shall include complete Exhibits A, B, C and J. The information filed 
under this submission type shall, at a minimum, be up to date within 
three (3) months as of the date the amendment is filed.
    (5) ``Rule 6a-3(a) Supplemental Material'' submission shall be 
filed with the Commission within 10 days after issuing or making any 
materials (including notices, circulars, bulletins, lists and 
periodicals) issued or made generally available to members of, or 
participants or subscribers to, the exchange.
    (6) ``Rule 6a-3(b) Report of securities sold'' submission type 
shall be filed within 15 days after the end of each calendar month 
and shall include a report concerning the securities sold on such 
exchange during the calendar month. The report shall set forth:
    (i) The number of shares of stock sold and the aggregate dollar 
amount of such stock sold;
    (ii) The principal amount of bonds sold and the aggregate dollar 
amount of such bonds sold; and
    (iii) The number of rights and warrants sold and the aggregate 
dollar amount of such rights and warrants sold.

D. Documents Composing the Completed Form

    The completed form filed with the Commission shall consist of 
Form 1, responses to all applicable items, and any exhibits required 
in connection with the filing.

E. Contact Information and Filing of Completed Form

    Each time an applicant or exchange submits a filing to the 
Commission on Form 1, the applicant or exchange must provide the 
contact information required by Section II of Form 1. The contact 
employee must be authorized to receive all contact information, 
communications and mailings and must be responsible for 
disseminating that information within the applicant or exchange's 
organization.
    For assistance with EDGAR issues, please consult the EDGAR--
Information for Filers web page on SEC.gov.

F. Recordkeeping

    A copy of this Form 1 must be retained by the exchange and made 
available for inspection upon request of the SEC.

G. Paperwork Reduction Act Disclosure

    Form 1 requires an applicant seeking to register as a national 
securities exchange or seeking an exemption from registration as a 
national securities exchange pursuant to Section 5 of the Exchange 
Act to provide the SEC with certain information regarding the 
operation of the exchange. Form 1 also requires national securities 
exchanges or exchanges exempt from registration based on limited 
volume to update certain information on a periodic basis and to 
provide supplemental material as required.
    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. Sections 3(a)(1), 5, 6(a) 
and 23(a) authorize the Commission to collect information on this 
Form 1 from exchanges. See 15 U.S.C. 78c(a)(1), 78e, 78f(a) and 
78w(a).
    Any member of the public may direct to the Commission any 
comments concerning the accuracy of the burden estimate on the 
facing page of Form 1 and any suggestions for reducing this burden.
    Form 1 is designed to enable the Commission to determine whether 
an exchange applying for registration is in compliance with the 
provisions of Sections 6 and 19 of the Exchange Act. Form 1 is also 
designed to enable the Commission to determine whether a national 
securities exchange or exchange exempt from registration based on 
limited volume is operating in compliance with the Exchange Act.
    It is estimated that an exchange will spend approximately 901 
hours completing the initial application on Form 1 pursuant to Rule 
6a-1. It is also estimated that each exchange will spend 
approximately 26 hours to prepare each periodic amendment to Form 1 
pursuant to Rules 6a-2(a) and 6a-2(c), and approximately 40 hours to 
prepare each annual amendment to Form 1 pursuant to Rule 6a-2(b). It 
is also estimated that each exchange will spend approximately 0.5 
hours to prepare each submission pursuant to Rule 6a-3.
    It is mandatory that an exchange seeking to operate as a 
national securities exchange or as an exchange exempt from 
registration based on limited volume file Form 1 with the 
Commission. It is also mandatory that national securities exchanges 
or exchanges exempt from registration based on limited volume file 
amendments to Form 1 under Rule 6a-2. It is further mandatory that 
national securities exchanges or exchanges exempt from registration 
based on limited volume file supplemental information and monthly 
reports under Rule 6a-3.
    No assurance of confidentiality is given by the Commission with 
respect to the responses made in Form 1. The public has access to 
the information contained in Form 1.
    This collection of information has been reviewed by the Office 
of Management and Budget (``OMB'') in accordance with the clearance 
requirements of 44 U.S.C. 3507. The Commission has determined that 
the information collection does not constitute a system of record 
for purposes of the Privacy Act.

H. Explanation of Terms

    Affiliate--Any person that, directly or indirectly, controls, is 
under common control with, or is controlled by, the national 
securities exchange or exchange exempt from registration based on 
the limited volume of transactions effected on such exchange, 
including any employees.
    Control--The power, directly or indirectly, to direct the 
management or policies of a company, whether through ownership of 
securities, by contract, or otherwise. Any person that (i) is a 
director, general partner or officer exercising executive 
responsibility (or having similar status or functions); (ii) 
directly or indirectly has the right to vote 25% or more of a class 
of voting securities or has the power to sell or direct the sale of

[[Page 7389]]

25% or more of a class of voting securities; or (iii) in the case of 
a partnership, has the right to receive, upon dissolution, or has 
contributed, 25% or more of the capital, is presumed to control that 
entity.
    Direct Owners--Any person that owns, beneficially owns, has the 
right to vote, or has the power to sell or direct the sale of, 5% or 
more of a class of a voting security of the applicant. For purposes 
of this Form 1, a person beneficially owns any securities (i) owned 
by his/her child, stepchild, grandchild, parent, stepparent, 
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-
law, daughter-in-law, brother-in-law, sister-in-law, sharing the 
same residence; or (ii) that he/she has the right to acquire, within 
60 days, through the exercise of any option, warrant or right to 
purchase the security.
    Member--Shall have the same meaning as under Exchange Act 
Section 3(a)(3).
    National Securities Exchange--Shall mean any exchange registered 
pursuant to Section 6 of the Exchange Act.
    Person Associated With a Member--Shall have the same meaning as 
under Section 3(a)(21) of the Exchange Act.

Appendix 2--Form 1-N

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BILLING CODE 8011-C

Appendix 3--Form X-17A-5

BILLING CODE 8011-P

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BILLING CODE 8011-C

Appendix 4--Form X-17A-19

BILLING CODE 8011-P

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BILLING CODE 8011-C

Form 15A General Instructions

A. General Instructions for Preparing and Filing Form 15A

    Form 15A is to be used by an entity for registration with the 
Securities and Exchange Commission (the ``Commission'') as a 
national securities association or an affiliated securities 
association, and for any amendments or supplements to such 
registration statement under Section 15A of the Exchange Act. As 
used hereinafter, the term ``Form 15A'' includes the form and any 
required exhibits and schedules thereto.
    Form 15A shall be filed in an electronic format through the 
Commission's Electronic Data Gathering, Analysis, and Retrieval 
System (EDGAR) in accordance with EDGAR rules set forth in 
Regulation S-T (17 CFR Part 232).
    Unless the context clearly indicates otherwise, the terms used 
in Form 15A have the meanings given in the Act. Note: The granting 
of registration is not to be deemed permanent approval of the 
association's rules and practices.

B. Need for Careful Preparation of the Completed Form, Including 
Schedules and Exhibits

    A Form 15A that is not prepared and executed in compliance with 
applicable requirements may be returned as not acceptable for 
filing. Any filing so returned shall for all purposes be deemed not 
to have been filed with the Commission. See also Rule 0-3 under the 
Act (17 CFR 240.0-3). However, acceptance of Form 15A shall not 
constitute a finding that it has been filed as required or that the 
information submitted is true, current or complete.

C. When To Use the Form 15A

    Form 15A is composed of seven types of submissions to the 
Commission pursuant to Section 15A of the Act and Rules 15aa-1 and 
15aa-2 thereunder. In completing the Form 15A, a registrant shall 
select the type of filing and provide all information required by 
the rules and instructions thereunder. In submitting this Form, its 
exhibits, and its schedules, the person by whom it is executed 
represents that all information contained within is true, current 
and complete. The types of submissions are:
    (1) Rule 15aa-1 submissions are applications for registration as 
a national securities association or an affiliated securities 
association. If Form 15A is being filed as an application for 
registration as a national securities association, all applicable 
items are required to be answered in full, except for items in 
Section IX. If Form 15A is being filed as an application for 
registration as an affiliated securities association, all applicable 
items are required to be answered in full. Note: The granting of 
registration is not to be deemed permanent approval of the 
association's rules and practices.
    (2) Rule 15aa-2(a) submissions shall be filed promptly after the 
discovery of any inaccuracy in the registration statement or in any 
amendment or supplement thereto. All amended items are required to 
be answered in full. All amended exhibits or schedules are

[[Page 7417]]

required to be provided completely. Any item that is not being 
amended may be left blank. If no item in a section is being amended, 
the association may check the box next to the applicable section 
heading labeled ``Check if information has not changed since 
previous filing.''
    (3) Rule 15aa-2(b) submissions shall be filed promptly after any 
change which renders no longer accurate any information contained or 
incorporated in the registration statement or in any amendment or 
supplement thereto, except that no current supplements need be filed 
with respect to changes in the information called for in Exhibit B. 
All supplemented items are required to be answered in full. All 
supplemented exhibits or schedules are required to be provided 
completely. Any item that is not being amended may be left blank. If 
no item in a section is being supplemented, the association may 
check the box next to the applicable section heading labeled ``Check 
if information has not changed since previous filing.'' Supplements 
setting forth changes in the information called for in Exhibit C 
need not be filed until 10 days after the calendar month in which 
the changes occur. If the submission is being filed solely to 
supplement changes in the information called for in Exhibit C, 
association should check the applicable box and provide the month 
and year in which the changes occurred. The association need not 
provide a current supplement to Exhibit C if it checks the box 
indicating it has complied with the requirements of Rule 15aa-
2(b)(3).
    (4) Rule 15aa-2(c) submissions are annual consolidated 
supplements to a registration statement as a national securities 
association or an affiliated securities association and shall be 
filed promptly after March 1 of each year. If the association is 
filing an annual consolidated supplement to a registration statement 
as a national securities association, all applicable items are 
required to be answered in full, except for items in Section IX. If 
the association is filing an annual consolidated supplement to a 
registration statement as an affiliated securities association, all 
applicable items are required to be answered in full. The 
association need not answer Item 6 if it checks the box indicating 
it has complied with the requirements of Rules 15aa-2(c)(1)(i)(A)-
(B) and provides the applicable information.
    (5) Rule 15aa-2(c)(2) submissions shall be filed promptly after 
the close of each fiscal year of the association. The association is 
required to provide a complete Exhibit B.
    (6) Rule 15aa-2(c)(1)(ii) submissions shall be filed promptly by 
March 1, 2025, and every three years thereafter. The association is 
required either to provide a complete Exhibit A or check the boxes 
indicating it has complied with the requirements of Rules 15aa-
2(c)(1)(ii)(A)-(B) and provide the applicable information.
    (7) Rule 15aa-2(d)(2) submissions require the association to 
electronically file any notices, reports, circulars, loose-leaf 
insertions, riders, new additions, lists or other records of changes 
when, as, and if such records are made available to members of the 
association.

D. Documents Composing the Completed Form

    The completed form filed with the Commission shall consist of 
Form 15A, responses to all applicable items, and any exhibits and 
schedules required in connection with the filing. Any item may be 
answered by reference to the page, article, section or paragraph of 
any document filed as an exhibit herewith which contains the 
information required. Unless the context otherwise requires, the 
terms ``rule of the association,'' as used in Form 15A shall include 
any provision of the association's constitution, charter, articles 
of incorporation or association and bylaws, and any rule of the 
association or any of its committees and any settled practice 
association or of any of its committees having the effect of a rule.

E. Contact Information and Filing of Completed Form

    Each time an association submits a filing to the Commission on 
Form 15A, the association must provide the contact information 
required by Section X of the form. The contact employee must be 
authorized to receive all contact information, communications and 
mailings and must be responsible for disseminating that information 
within the association's organization.
    Consult the EDGAR Filer Manual for EDGAR filing instructions, 
including the instructions for becoming an EDGAR Filer.

Appendix 6--Form 19b-4

* * * * *

General Instructions for Form 19b-4

* * * * *

F. Signature and Filing of the Completed Form

    All proposed rule changes, amendments, extensions, and 
withdrawals of proposed rule changes shall be filed through the 
EFFS. All security-based swap submissions, advance notices, and 
amendments, extensions, and withdrawals of security-based swap 
submissions and advance notices shall be filed to a dedicated email 
address established by the Commission, [email protected] 
for security-based swap submissions and [email protected] 
for advance notices. In order to file Form 19b-4 through EFFS, self-
regulatory organizations must request access to the SEC's External 
Application Server by completing a request for an external account 
user ID and password. Initial requests will be received by 
contacting the Trading and Markets Administrator located on our 
website (https://www.sec.gov). An email will be sent to the 
requestor that will provide a link to a secure website where basic 
profile information will be requested.
    A duly authorized officer of the self-regulatory organization 
shall electronically sign the completed Form 19b-4 as indicated on 
Page 1 of the Form. A registered clearing agency for which the 
Commission is not the appropriate regulatory agency also shall file 
with its appropriate regulatory agency three copies of the form, one 
of which shall be manually signed, including exhibits. A clearing 
agency that also is a designated clearing agency shall file with the 
Board of Governors of the Federal Reserve System (``Federal 
Reserve'') three copies of any form containing an advance notice, 
one of which shall be manually signed, including exhibits; provided, 
however, that this requirement may be satisfied instead by providing 
the copies to the Federal Reserve in an electronic format as 
permitted by the Federal Reserve. The Municipal Securities 
Rulemaking Board also shall file copies of the form, including 
exhibits, with the Federal Reserve, the Comptroller of the Currency, 
and the Federal Deposit Insurance Corporation.
* * * * *

Appendix 7--Form CA-1

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BILLING CODE 8011-C

Section VIII: Application for Exemption

Exhibit S:

    If this is an application for an exemption from registration as 
a clearing agency, attach a statement demonstrating why the granting 
of an exemption from registration as a clearing agency would be 
consistent with the public interest, the protection of investors and 
the purposes of Section 17A of the Act, including the prompt and 
accurate clearance and settlement of securities transactions and the 
safeguarding of securities and funds.

Section IX: Sec. 17A(b)(1) Documents

Exhibit T:

    For any conditions, reports, notices or other submissions to the 
Commission required as directed in any order approving applications 
for exemption from registration as a clearing agency attach such 
document(s) as Exhibit T.

Section X: Request for Confidential Treatment

    The registrant is requesting confidential treatment be accorded 
with respect to certain of the information disclosed, and is 
furnishing a statement requesting confidential treatment, detailing 
the specific responses, schedules and exhibits for which 
confidential treatment is sought, and specifying both the exemptive 
provision under the Freedom of Information Act (5 U.S.C. 552(b)) on 
which the request is based and the considerations which make the 
exemptive provision applicable to the information for which 
confidential treatment is requested.

Section XI: Execution

    {Name of Registrant{time}  who is submitting this Form, its 
schedules, its exhibits and its attachments and the person by whom 
it is executed represent hereby that all information contained 
herein is true, current and complete. Submission of any amendment 
after registration has become effective represents that Items 1-3 
and any schedules, exhibits and attachments related to Items 1-3 
remain true, current and complete as previously submitted.
    {Name of Registrant{time}  agrees and consents that the notice 
of any proceedings under Sections 17A or 19 of the Act involving 
{name of registrant{time}  may be given by sending such notice by 
registered or certified mail, or by whatever other means are allowed 
by law, to the person named, and at the address given, in response 
to Item 2.
    Date {auto fill{time}  {Name of Registrant{time} 
    By: ____[Digital Signature] ____
    Title____

Form CA-1 General Instructions

A. General Instructions for Preparing and Filing Form CA-1

    Form CA-1 is to be used by clearing agencies, as defined in 
Section 3(a)(23) of the Securities Exchange Act of 1934 (``the 
Act''), which perform the functions of a clearing agency with 
respect to any security other than an exempted security, as defined 
in Section 3(a)(l2) of the Act, to apply for registration or for 
exemption from registration or to amend registration with the

[[Page 7425]]

Securities and Exchange Commission (the ``Commission''). As used 
hereinafter, the term ``Form CA-1'' includes the form and any 
required schedules, exhibits or attachments thereto. A response is 
required for every exhibit. For any exhibit that is inapplicable, a 
statement to that effect shall be furnished in lieu of such exhibit.
    Form CA-1 shall be filed in an electronic format through the 
Commission's Electronic Data Gathering, Analysis, and Retrieval 
System (EDGAR) in accordance with EDGAR rules set forth in 
Regulation S-T (17 CFR part 232).
    With the exception of certain attachments, Form CA-1 must be 
provided as an Interactive Data File in accordance with Rule 405 of 
Regulation S-T. This requirement does not extend to submissions that 
constitute copies of existing documents other than the financial 
statements (e.g., the copy of the clearing agency's currently 
effective constitution, articles of incorporation or association, 
bylaws, rules, procedures and instruments corresponding thereto, 
that is required to be provided as Exhibit E; the copy of a form of 
participant agreement that is required to be provided as Exhibit P; 
any reports, assessments, or formal opinions provided by internal or 
external auditors, attorneys, or similar assessors, or other similar 
documents that were prepared for a purpose other than submission of 
the Form CA-1). The requirement to provide Form CA-1 as an 
Interactive Data File applies to each of the 3 submissions described 
in General Instruction H below.
    In addition, with respect to a clearing agency for which the 
Commission is not the appropriate regulatory agency, as defined in 
Section 3(a)(34)(B) of the Act, Section 17(c)(1) of the Act requires 
such clearing agency to file with the appropriate regulatory agency 
for such clearing agency a signed copy of any application, document 
or report filed with the Commission. Each clearing agency should 
retain an exact copy of Form CA-1 for the clearing agency's records.
    Unless the context clearly indicates otherwise, the terms used 
in Form CA-1 have the meanings given in the Act.
    Unless the context otherwise requires, ``registrant'' means the 
entity on whose behalf Form CA-1 is filed, whether filed as a 
registration, as an application for exemption from registration or 
as an amendment to a previously filed Form CA-1.

B. Need for Careful Preparation of the Completed Form, Including 
Schedules and Exhibits

    A Form CA-1 which is not prepared and executed in compliance 
with applicable requirements may be returned as not acceptable for 
filing. Any filing so returned shall for all purposes be deemed not 
to have been filed with the Commission. See also Rule 0-3 under the 
Act (17 CFR 240.0-3). However, acceptance of Form CA-1 shall not 
constitute a finding that it has been filed as required or that the 
information submitted is true, current or complete.
    Individuals' names, except for executing signatures, shall be 
given in full wherever required (last name, first name, and middle 
name). The full middle name, if one exists, is required. Initials 
are not acceptable unless the individual legally has only an 
initial.

C. When to Use the Form CA-1

    Form CA-1 is composed of 3 types of submissions to the 
Commission pursuant to Section 17A(b)(1) of the Act and Rule 17ab2-1 
thereunder. In completing the Form CA-1, a registrant shall select 
the type of filing and provide all information required by the rules 
and instructions thereunder. For any exhibit that is inapplicable, a 
statement to that effect shall be furnished in lieu of such exhibit. 
In submitting this Form, its schedules, its exhibits and its 
attachments, the registrant and the person by whom it is executed 
represents that all information contained within is true, current 
and complete. The types of submissions are:
    (1) Rule 17ab2-1(a) submissions are applications for 
registration as a clearing agency or for exemption from registration 
as a clearing agency. If Form CA-1 is being filed as a registration 
form or an application for exemption from registration, all 
applicable items are required to be answered in full. If any item is 
not applicable respond with ``none'' or ``N/A'' (not applicable) as 
appropriate. If the Form is filed as a registration, indicate 
whether the applicant requests the Commission to consider granting 
registration in accordance with paragraph (c)(1) of Rule 17ab2-1. If 
Form CA-1 is being filed as an application for exemption from 
registration, it must be accompanied by a statement, marked as 
Exhibit S, demonstrating why the granting of an exemption from 
registration as a clearing agency would be consistent with the 
public interest, the protection of investors and the purposes of 
Section 17A of the Act.
    (2) Rule 17ab2-1(e) submissions shall be filed promptly 
following the date on which information reported on Items 1-3 on 
Form CA-1 becomes inaccurate, incomplete or misleading. Submission 
of any amendment after registration has become effective represents 
that Items 1-3 and any schedules, exhibits and attachments related 
to Items 1-3 remain true, current and complete as previously 
submitted.
    (3) Sec. 17A(b)(1) submissions shall be filed as directed by any 
order approving an application for exemption from registration as a 
clearing agency. Such submissions may include any report, notice or 
other submission as ordered by the Commission as a condition of 
granting exemption from registration.

D. Documents Composing the Completed Form

    The completed form filed with the Commission shall consist of 
Form CA-1, responses to all applicable items, and any schedules and 
exhibits required in connection with the filing. Each filing shall 
be marked on Form CA-1 with the initials of the registrant, the 
four-digit year, and the number of the filing for the year (e.g., 
CA1-initials-YYYY-XXX).

E. Contact Information; Signature; and Filing of Completed Form

    Each time a registrant submits a filing to the Commission on 
Form CA-1, the registrant must provide the contact information 
required by Section II of the form. The contact employee must be 
authorized to receive all contact information, communications and 
mailings and must be responsible for disseminating that information 
within the registrant's organization.
    Consult the EDGAR Filer Manual for EDGAR filing instructions, 
including the instructions for becoming an EDGAR Filer.
    If Form CA-1 is filed by a corporation, it shall be signed in 
the name of the corporation by a principal officer duly authorized; 
if it is filed other than by a corporation it shall be signed by a 
duly authorized principal of the organization filing the Form. As 
used in this Form, principal officer means the president, vice 
president, treasurer, secretary, comptroller or any other person 
performing a similar function.
    The EDGAR receipt confirmation that demonstrates who filed the 
Form CA-1 shall be preserved pursuant to the requirements of Section 
17 of the Act and any rules and regulations thereunder. See, e.g., 
Rule 17a-1 under the Act (17 CFR 240.17a-1).

Request for Confidential Treatment

    In responding to, and furnishing the schedules required by, the 
items on Form CA-1, the registrant may request that confidential 
treatment be accorded with respect to the information disclosed. The 
registrant must furnish a statement requesting confidential 
treatment, detailing the specific responses, schedules and exhibits 
for which confidential treatment is sought, and specifying both the 
exemptive provision under the Freedom of Information Act (5 U.S.C. 
552(b)) on which the request is based and the considerations which 
make the exemptive provision applicable to the information for which 
confidential treatment is requested.

F. Notice

    Disclosure to the Commission of the information requested in 
Form CA-1 (except for the disclosure by an individual registrant of 
his Social Security number as an IRS Employee Identification Number, 
which is voluntary) is a prerequisite to the processing of 
applications for registration or for exemption from registration as 
a clearing agency.
    An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it 
displays a current valid control number. Under Sections 17, 17A(b) 
and 23(a) of the Act and the rules and regulations thereunder, the 
Securities and Exchange Commission is authorized to solicit the 
information required to be supplied by this Form from applicants for 
registration or for exemption from registration as a clearing 
agency. See 15 U.S.C. 78q, 78q-1(b) and 78w(a).
    The information will be used for the principal purpose of 
determining whether the Commission should grant registration or an 
exemption from registration or institute proceedings to deny 
registration. Social Security numbers, if furnished, will be used 
only to assist the Commission in identifying

[[Page 7426]]

applicants and, therefore, in promptly processing applications.
    It is estimated that a clearing agency will have an average 
burden of approximately 338 hours completing a new application on 
the Form CA-1, and 58 hours completing an amendment to an 
application on the Form CA-1. Any member of the public may direct to 
the Commission any comments concerning the accuracy of the burden 
estimate on the facing page of Form CA-1 and any suggestions for 
reducing this burden.
    It is mandatory that an applicant seeking to operate as a 
clearing agency or as an exempt clearing agency file Form CA-1 with 
the Commission. It is also mandatory that registrants file 
amendments to Form CA-1 under Rule 17ab2-1(e).
    Information supplied on this Form will be included routinely in 
the public files of the Commission.

[FR Doc. 2024-30433 Filed 1-17-25; 8:45 am]
 BILLING CODE 8011-01-P`