40114 Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 

37 17 CFR 200.30–3(a)(12). 

1The CAT NMS Plan is a national market system 

plan approved by the Commission pursuant to 

Section 11A of the Exchange Act and the rules and 

regulations thereunder. See Securities Exchange Act 

Release No. 79318 (November 15, 2016), 81 FR 

84696 (November 23, 2016). 

2 15 U.S.C. 78k–1(a)(3). 

3 17 CFR 242.608. 

4See Notice of Filing of Amendment to the 

National Market System Plan Governing the 

Consolidated Audit Trail, Release No. 91555 (April 

14, 2021), 86 FR 21050 (‘‘Notice’’). Comments 

received in response to the Notice can be found on 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2021–63, and 

should be submitted on or before 

August 16, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15832 Filed 7–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

July 29, 2021. 

PLACE: The meeting will be held via 

remote means and/or at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

In the event that the time, date, or 

location of this meeting changes, an 

announcement of the change, along with 

the new time, date, and/or place of the 

meeting will be posted on the 

Commission’s website at https://

www.sec.gov. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

The subject matter of the closed 

meeting will consist of the following 

topics: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Resolution of litigation claims; and 

Other matters relating to examinations 

and enforcement proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting agenda items that 

may consist of adjudicatory, 

examination, litigation, or regulatory 

matters. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Dated: July 22, 2021. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–15936 Filed 7–22–21; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting; Cancellation 

FEDERAL REGISTER CITATION OF PREVIOUS

ANNOUNCEMENT: 86 FR 38391, July 20, 

2021. 

PREVIOUSLY ANNOUNCED TIME AND DATE OF

THE MEETING: Thursday, July 22, 2021 at 

2:00 p.m. 

CHANGES IN THE MEETING: The Closed 

Meeting scheduled for Thursday, July 

22, 2021 at 2:00 p.m., has been 

cancelled. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Dated: July 21, 2021. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–15907 Filed 7–22–21; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92451; File No. 4–698] 

Joint Industry Plan; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove an Amendment 

to the National Market System Plan 

Governing the Consolidated Audit Trail 

July 20, 2021. 

I. Introduction 

On March 31, 2021, the Operating 

Committee for Consolidated Audit Trail, 

LLC (‘‘CAT LLC’’ or the ‘‘Company’’), on 

behalf of the following parties to the 

National Market System Plan Governing 

the Consolidated Audit Trail (the ‘‘CAT 

NMS Plan’’ or ‘‘Plan’’): 1 BOX Exchange 

LLC; Cboe BYX Exchange, Inc., Cboe 

BZX Exchange, Inc., Cboe EDGA 

Exchange, Inc., Cboe EDGX Exchange, 

Inc., Cboe C2 Exchange, Inc., Cboe 

Exchange, Inc., Financial Industry 

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

Investors Exchange LLC, Long-Term 

Stock Exchange, Inc., Miami 

International Securities Exchange LLC, 

MEMX, LLC, MIAX Emerald, LLC, 

MIAX PEARL, LLC, Nasdaq BX, Inc., 

Nasdaq GEMX, LLC, Nasdaq ISE, LLC, 

Nasdaq MRX, LLC, Nasdaq PHLX LLC, 

The NASDAQ Stock Market LLC, New 

York Stock Exchange LLC, NYSE 

American LLC, NYSE Arca, Inc., NYSE 

Chicago, Inc., and NYSE National, Inc. 

(collectively, the ‘‘Participants,’’ ‘‘selfregulatory organizations,’’ or ‘‘SROs’’) 

filed with the Securities and Exchange 

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

pursuant to Section 11A(a)(3) of the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’),2 and Rule 608 

thereunder,3 a proposed amendment 

(‘‘Proposed Amendment’’) to the CAT 

NMS Plan to implement a revised 

funding model (‘‘Proposed Funding 

Model’’) for the consolidated audit trail 

(‘‘CAT’’) and to establish a fee schedule 

for Participant CAT fees in accordance 

with the Proposed Funding Model 

(‘‘Participant Fee Schedule’’). The 

Proposed Amendment was published 

for comment in the Federal Register on 

April 21, 2021.4


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Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 40115 

the Commission’s website at https://www.sec.gov/ 

comments/4-698/4-698-a.htm. 

5 17 CFR 242.608(b)(2)(i). 

6 17 CFR 242.613. 

7See supra note 1. 

8The CAT NMS Plan defines ‘‘Industry Member’’ 

as ‘‘a member of a national securities exchange or 

a member of a national securities association.’’ See 

CAT NMS Plan, supra note 1, at Section 1.1. See 

also id. at Section 11.1(b). 

9The CAT NMS Plan defines ‘‘CAT Reporter’’ as 

‘‘each national securities exchange, national 

securities association and Industry Member that is 

required to record and report information to the 

Central Repository pursuant to SEC Rule 613(c).’’ 

Id. at Section 1.1. 

10The CAT NMS Plan defines ‘‘Execution Venue’’ 

as ‘‘a Participant or an alternative trading system 

(‘ATS’) (as defined in Rule 300 of Regulation ATS) 

that operates pursuant to Rule 301 of Regulation 

ATS (excluding any such ATS that does not execute 

orders).’’ Id. 

11 Id. 

12 Id. at Section 11.2(c). See Article XI of the CAT 

NMS Plan for additional detail. 

13See CAT NMS Plan, supra note 1, at Section 

11.2(b) and (e). 

14See Securities Exchange Act Release No. 88890, 

85 FR 31322 (May 22, 2020). 

15 ‘‘Full Implementation of CAT NMS Plan 

Requirements’’ means ‘‘the point at which the 

Participants have satisfied all of their obligations to 

build and implement the CAT, such that all CAT 

system functionality required by Rule 613 and the 

CAT NMS Plan has been developed, successfully 

tested, and fully implemented at the initial Error 

Rates specified by Section 6.5(d)(i) or less, 

including functionality that efficiently permits the 

Participants and the Commission to access all CAT 

Data required to be stored in the Central Repository 

pursuant to Section 6.5(a), including Customer 

Account Information, Customer-ID, Customer 

Identifying Information, and Allocation Reports, 

and to analyze the full lifecycle of an order across 

the national market system, from order origination 

through order execution or order cancellation, 

including any related allocation information 

provided in an Allocation Report. This Financial 

Accountability Milestone shall be considered 

complete as of the date identified in a Quarterly 

Progress Report meeting the requirements of 

Section 6.6(c).’’ See CAT NMS Plan, supra note 1, 

at Section 1.1. 

16 Id. at Section 11.6(a)(i). 

17 Id. at Section 11.6(a)(ii) and (iii). 

18Cboe BYX Exchange, Inc. (‘‘CboeBYX’’), Cboe 

BZX Exchange, Inc. (‘‘CboeBZX’’), Cboe C2 

Exchange, Inc. (‘‘C2’’), Cboe EDGA Exchange, Inc. 

(‘‘Cboe EDGA’’), Cboe EDGX Exchange, Inc. (‘‘Cboe 

EDGX’’), Cboe Exchange, Inc. (‘‘Cboe’’), NASDAQ 

BX, Inc. (‘‘BX’’), Nasdaq GEMX, LLC (‘‘GEMX’’), 

Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq MRX, LLC 

(‘‘MRX’’), NASDAQ PHLX LLC (‘‘Phlx’’), The 

NASDAQ Stock Market LLC (‘‘Nasdaq’’) 

(collectively, the ‘‘Nasdaq and Cboe Participants’’). 

19See Securities Exchange Act Release Nos. 

91750 (May 4, 2021), 86 FR 25045 (May 10, 2021) 

(SR–BX–2021–018) (‘‘Proposed Fee Filing Notice’’); 

91751 (May 4, 2021), 86 FR 24941 (May 10, 2021) 

(SR–PHLX–2021–25); 91752 (May 4, 2021), 86 FR 

24921 (May 10, 2021) (SR–NASDAQ–2021–029); 

91753 (May 4, 2021), 86 FR 24994 (May 10, 2021) 

(SR–MRX–2021–05); 91755 (May 4, 2021), 86 FR 

25035 (May 10, 2021) (SR–ISE–2021–08); 91756 

(May 4, 2021), 86 FR 24979 (May 10, 2021) (SR– 

GEMX–2021–03); 91757 (May 4, 2021), 86 FR 24911 

(May 10, 2021) (SR–C2–2021–008); 91758 (May 4, 

2021), 86 FR 25004 (May 10, 2021) (SR–CboeEDGX– 

2021–024); 91759 (May 4, 2021), 86 FR 24956 (May 

10, 2021) (SR–CboeEDGA–2021–010); 91760 (May 

4, 2021), 86 FR 24966 (May 10, 2021) (SR–CBOE– 

2021–030); 91761 (May 4, 2021), 86 FR 25016 (May 

10, 2021) (SR–CboeBYX–2021–011); and 91762 

(May 4, 2021), 86 FR 24931 (May 10, 2021) (SR– 

CboeBZX–2021–034). 

20See Securities Exchange Act Release No. 92207 

(June 17, 2021), 86 FR 33448 (June 24, 2021). 

21The CAT NMS Plan defines ‘‘Eligible 

Securities’’ as including NMS securities and OTC 

Equity Securities.’’ See CAT NMS Plan, supra note 

1, at Section 1.1. 

This order institutes proceedings, 

under Rule 608(b)(2)(i) of Regulation 

NMS,5 to determine whether to 

disapprove the Proposed Amendment or 

to approve the Proposed Amendment 

with any changes or subject to any 

conditions the Commission deems 

necessary or appropriate after 

considering public comment. 

II. Background 

On July 11, 2012, the Commission 

adopted Rule 613 of Regulation NMS, 

which required the SROs to submit a 

national market system (‘‘NMS’’) plan to 

create, implement and maintain a 

consolidated audit trail that would 

capture customer and order event 

information for orders in NMS 

securities.6 On November 15, 2016, the 

Commission approved the CAT NMS 

Plan.7 Under the CAT NMS Plan, the 

Operating Committee of the Company, 

of which each Participant is a member, 

has the discretion (subject to the 

funding principles set forth in the Plan) 

to establish funding for the Company to 

operate the CAT, including establishing 

fees to be paid by the Participants and 

Industry Members.8

The Plan specified that, in 

establishing the funding of the 

Company, the Operating Committee 

shall establish ‘‘a tiered fee structure in 

which the fees charged to: (1) CAT 

Reporters 9 that are Execution Venues,10

including ATSs,11 are based upon the 

level of market share; (2) Industry 

Members’ non-ATS activities are based 

upon message traffic; and (3) the CAT 

Reporters with the most CAT-related 

activity (measured by market share and/ 

or message traffic, as applicable) are 

generally comparable (where, for these 

comparability purposes, the tiered fee 

structure takes into consideration 

affiliations between or among CAT 

Reporters, whether Execution Venues 

and/or Industry Members).’’ 12 Under 

the Plan, such fees are to be 

implemented in accordance with 

various funding principles, including an 

‘‘allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and operations’’ 

and the ‘‘avoid[ance of] any 

disincentives such as placing an 

inappropriate burden on competition 

and reduction in market quality.’’ 13

On May 15, 2020, the Commission 

adopted amendments to the CAT NMS 

Plan designed to increase the 

Participants’ financial accountability for 

the timely completion of the CAT 

(‘‘Financial Accountability 

Amendments’’).14 The Financial 

Accountability Amendments added 

Section 11.6 to the CAT NMS Plan to 

govern the recovery from Industry 

Members of any fees, costs, and 

expenses (including legal and 

consulting fees, costs and expenses) 

incurred by or for the Company in 

connection with the development, 

implementation and operation of the 

CAT from June 22, 2020 until such time 

that the Participants have completed 

Full Implementation of CAT NMS Plan 

Requirements 15 (‘‘Post-Amendment 

Expenses’’). Section 11.6 establishes 

target deadlines for four critical 

implementation milestones (Periods 1, 

2, 3 and 4) 16 and reduces the amount 

of fee recovery available to the 

Participants if these deadlines are 

missed.17

On April 21, 2021, the Nasdaq and 

Cboe Participants 18 filed proposed rule 

changes to adopt a fee schedule to 

establish CAT fees applicable to their 

Industry Members 19 in accordance with 

the Proposed Funding Model (the 

‘‘Industry Member Fee Filings’’). In the 

Industry Member Fee Filings, the 

Nasdaq and Cboe Participants stated 

that the fee schedule provisions will 

become operative upon the 

Commission’s approval of the Proposed 

Amendment. On June 17, 2021, the 

Commission temporarily suspended the 

Nasdaq and Cboe Participants’ Industry 

Member Fee Filings and instituted 

proceedings to determine whether those 

filings should be approved or 

disapproved.20

III. Summary of Proposal 

Under the Proposed Amendment, the 

Operating Committee proposes to revise 

certain aspects of the funding model set 

forth in Article XI of the CAT NMS Plan 

(the ‘‘Original Funding Model’’). The 

Original Funding Model uses a 

bifurcated funding approach in which 

costs associated with building and 

operating the CAT would be borne by 

(1) Industry Members (other than ATSs 

that execute transactions in Eligible 

Securities 21 (‘‘Execution Venue ATSs’’)) 

through fixed tiered fees based on 

message traffic for Eligible Securities, 

and (2) Participants and Industry 


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40116 Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 

22 In the description of the Proposed Amendment, 

the Operating Committee states that message traffic 

will be calculated based on Industry Members’ 

Reportable Events reported to the CAT, as defined 

in the CAT Reporting Technical Specifications for 

Industry Members (‘‘IM Reporting Tech Specs’’), 

and that Reporting Events in the current IM 

Reporting Tech Specs that will be counted as 

message traffic include the New Order Event, the 

Order Route Event and Trade Event, but will not 

include reporting activity related to Customer 

information as established in the CAT Reporting 

Customer and Account Technical Specifications for 

Industry Members. The Operating Committee notes 

that the Reportable Events may vary if the IM 

Reporting Tech Specs are amended. See Notice, 

supra note 4, at 21056–21057. 

23 Id. at 21053. 

24 Id. 

25 Id. 

26 Id. at 21061. 

27 Id. 

28See Notice, supra note 4, at 21061. 

29 Id. at 21055, 21060. 

30 Id. 

31See infra Section III.A.7. 

32See infra Section III.A.6.a. 

33 Id. 

34See Notice, supra note 4, at 21055, 21060. 

35 Id. at 21056. The Operating Committee notes 

that it is eliminating tiered fees for Participants for 

the same reasons it provided with regard to 

eliminating tiered fees for Industry Members. Id. 

36See supra Section III.A.3. 

37See Notice, supra note 4, at 21056. 

38 Id. at 21059, 21062. 

Members that are Execution Venue 

ATSs for Eligible Securities through 

fixed tiered fees based on market share. 

The Operating Committee proposes to 

amend the CAT NMS Plan to adopt the 

Proposed Funding Model. The Proposed 

Funding Model would continue to 

require many of the same elements as 

the Original Funding Model, including 

the bifurcated funding approach, and 

the use of market share and message 

traffic.22 The Proposed Funding Model, 

however, would revise the Original 

Funding Model in certain ways, 

including (1) dividing the CAT costs 

between Participants and Industry 

Members, rather than between 

Execution Venues and Industry 

Members (other than Execution Venue 

ATSs); (2) removing share volume in 

OTC Equity Securities from the 

calculation of market share for national 

securities associations; (3) eliminating 

the use of tiers in calculating CAT fees 

for Participants and Industry Members; 

(4) removing from the CAT NMS Plan 

funding principles the requirement that 

the fees charged to CAT Reporters with 

the most CAT-related activity be 

generally comparable; (5) eliminating 

references to fixed fees for Participants 

and Industry Members; (6) adopting 

certain minimum and maximum CAT 

fees for Industry Members and 

Participants; and (7) imposing certain 

discounts for market making activity 

when calculating Industry Member CAT 

fees. 

The Operating Committee also 

proposes to adopt a fee schedule to 

establish the CAT fees applicable to 

Participants based on the Proposed 

Funding Model. The Participant Fee 

Schedule would establish the allocation 

percentages and other variables for 

calculating the CAT fees under the 

Proposed Funding Model. 

A. Proposed Funding Model 

1. Categorization of Alternative Trading 

Systems 

The Original Funding Model employs 

a bifurcated approach in which costs 

associated with building and operating 

the CAT would be borne by (1) 

Participants and Industry Members that 

are Execution Venue ATSs for Eligible 

Securities through fees based on market 

share, and (2) Industry Members (other 

than Execution Venue ATSs) through 

fees based on message traffic. Under the 

Proposed Funding Model, the concept 

of an Execution Venue would be 

eliminated, and CAT costs would be 

divided between Participants as a group 

and Industry Members as a group; 

Execution Venue ATSs would be treated 

like other Industry Members, instead of 

like Participants.23 The Operating 

Committee explains that this would 

simplify the Proposed Funding Model 

by requiring all Industry Members 

(instead of Industry Members other than 

Execution Venue ATSs) to pay fees 

based on message traffic and would 

address any concerns that treating 

Execution Venue ATSs as Participants 

would create a barrier to entry for 

smaller ATSs.24 Accordingly, under the 

Proposed Amendment, the Operating 

Committee proposes to delete the 

definition of the term ‘‘Execution 

Venue’’ and related provisions from the 

CAT NMS Plan.25

2. Treatment of OTC Equity Securities 

The Original Funding Model includes 

reported share volume in OTC Equity 

Securities in the calculation of market 

share for national securities 

associations.26 The Operating 

Committee proposes to delete references 

to OTC Equity Securities from Section 

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

Accordingly, under the Proposed 

Funding Model, the calculation of 

market share for national securities 

associations would be based solely on 

the share volume of trades reported in 

NMS Stocks.27 The Operating 

Committee explains that the inclusion 

of OTC Equity Securities share volume 

in the calculation of market share would 

likely subject FINRA to higher fees since 

FINRA would be assessed CAT fees 

based on market share calculated by 

share volume, noting that many OTC 

Equity Securities are priced below one 

dollar and transactions in such OTC 

Equity Securities tend to involve larger 

quantities of shares than transactions in 

NMS Stocks.28

3. No Tiered Fees 

The Original Funding Model requires 

the use of tiered fees for Industry 

Members and Participants.29 The 

Operating Committee proposes to 

amend Sections 11.1(d), 11.2(c), 11.3(a) 

and 11.3(b) of the CAT NMS Plan to 

eliminate the concept of tiered fees from 

the CAT NMS Plan.30 Accordingly, 

under the Proposed Funding Model, 

each Industry Member would pay a fee 

based on its percentage of total Industry 

Member message traffic (subject to 

proposed market maker message traffic 

discounts,31 a minimum fee 32 and a 

maximum fee 33), and each Participant 

would pay a fee based on market 

share.34 The Operating Committee 

believes that tiered fees require 

continued reassessment of changes in 

message traffic, and that these 

assessments would be subjective and 

overly complex.35

4. Elimination of Fee Comparability 

Requirement From the CAT NMS Plan 

Funding Principles 

Section 11.2(c) of the CAT NMS Plan 

requires the Operating Committee to 

establish a fee structure in which the 

fees charged to CAT Reporters with the 

most CAT-related activity (measured by 

market share and/or message traffic, as 

applicable) are generally comparable. 

Section 11.2(c) explains that for 

comparability purposes, the tiered fee 

structure takes into consideration 

affiliations between or among CAT 

Reporters. The Operating Committee 

proposes to remove this requirement 

from Section 11.2(c) of the Plan. 

According to the Operating Committee, 

the comparability provision was used to 

determine tiers under the Original 

Funding Model; however, since the 

Operating Committee proposes to 

remove fee tiering from the Proposed 

Funding Model,36 they believe this 

provision is no longer relevant.37

5. No Fixed Fees 

The Operating Committee proposes to 

amend Sections 11.3(a) and (b) of the 

Plan to eliminate references to ‘‘fixed 

fees’’ to be paid by Industry Members 

and Participants from the CAT NMS 

Plan.38 Accordingly, under the 

Proposed Funding Model, the CAT fees 

to be paid by Industry Members would 


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39 Id. 

40 Id. at 21058. 

41 Id. 

42Options Market Makers and Equity Market 

Makers would be required to pay the Minimum 

Industry Member CAT Fee if their quarterly CAT 

fee calculated with the market maker discounts is 

less than $125 per quarter. Id. at 21058, n.56. 

43See Notice, supra note 4, at 21058–59. 

44 Id. at 21059. 

45 Id. 46 Id. 47 Id. at 21060. 48 Id. at 21059. 49See Notice, supra note 4, at 21061. 50 Id. at 21062. 

51 Id. at 21057. See also Securities Exchange Act 

Release No. 81067 (June 30, 2017), 82 FR 31656 

(July 7, 2017) (‘‘Suspension of and Order Instituting 

Proceedings to Determine Whether to Approve or 

Disapprove Proposed Rule Changes to Establish 

Fees for Industry Members to Fund the 

Consolidated Audit Trail’’). 

52See Notice, supra note 4, at 21057. 

53 Id. at 21058. The CAT NMS Plan defines 

‘‘Options Market Maker’’ as ‘‘a broker-dealer 

registered with an exchange for the purpose of 

making markets in options contracts traded on the 

exchange.’’ See CAT NMS Plan, supra note 1, at 

Section 1.1. 

54The CAT NMS Plan defines ‘‘CAT Data’’ as 

‘‘data derived from Participant Data, Industry 

Member Data, SIP Data, and such other data as the 

Operating Committee may designate as ‘CAT Data’ 

from time to time.’’ Id. 

55The Proposed Amendment describes the 

adjusted trade count as ‘‘the total number of trades 

for the quarter minus the total number of trade 

busts.’’ See Notice, supra note 4, at 21058. 

56For each Options Market Maker, the discount 

would apply to ‘‘(1) all message traffic reported to 

the CAT by the Options Market Maker related to an 

order originated by a market maker in its market 

making account for a security in which it is 

registered . . . and (2) all message traffic for which 

Continued 

vary in accordance with their message 

traffic and the CAT fees to be paid by 

the Participants would vary in 

accordance with their market share.39

6. Minimum and Maximum Fees 

a. Minimum and Maximum Industry 

Member CAT Fees 

The Operating Committee proposes to 

amend Section 11.3(b) of the CAT NMS 

Plan to provide that each Industry 

Member would be subject to a base 

minimum Industry Member CAT fee 

(‘‘Minimum Industry Member CAT 

Fee’’) and a maximum Industry Member 

CAT fee (‘‘Maximum Industry Member 

CAT Fee’’).40 In the Participants’ 

description of the Proposed 

Amendment, the Operating Committee 

states that the Minimum Industry 

Member CAT Fee would be $125 per 

quarter for an Industry Member whose 

CAT fee would be less than $125 per 

quarter, even if it has not yet begun to 

report to the CAT.41 If any Industry 

Member is required to pay the 

Minimum Industry Member CAT Fee, 

the total additional amount paid by all 

such Industry Members over the amount 

they otherwise would have paid as a 

result of their message traffic calculation 

would be discounted from all Industry 

Members other than those that were 

subject to a Minimum Industry Member 

CAT Fee in accordance with their 

message traffic percentage (‘‘Minimum 

Industry Member CAT Fee ReAllocation’’).42 The Operating 

Committee explains that the Minimum 

Industry CAT Fee is intended to ensure 

that all Industry Members meaningfully 

contribute to the funding of the CAT.43

The Operating Committee also states 

that the Maximum Industry Member 

CAT Fee would be the fee calculated 

based on 8% of the total message traffic 

for Industry Members.44 If an Industry 

Member’s fee is subject to the Maximum 

Industry Member CAT Fee, any excess 

amount which the Industry Member 

would have paid as a fee above such 

Maximum Industry Member CAT Fee 

will be re-allocated among all Industry 

Members (including any Industry 

Members subject to the Maximum 

Industry Member CAT Fee and any 

Industry Members subject to the 

Minimum Industry Member CAT Fee) in 

accordance with their percentage of 

total message traffic (‘‘Maximum 

Industry Member CAT Fee ReAllocation’’).45 The Operating 

Committee explains that the Maximum 

Industry Member CAT Fee is intended 

to act as a cap on fees for certain 

Industry Members that, based on 

message traffic alone, may be subject to 

‘‘a significant allocation of Total CAT 

Costs.’’ 46

b. Minimum Participant Fee 

The Operating Committee proposes to 

amend Section 11.3(a) of the CAT NMS 

Plan to impose a minimum fee to be 

payable by each Participant (‘‘Minimum 

Participant Fee’’) in addition to fees 

based on market share. The Operating 

Committee explains that this fee would 

‘‘ensure that all Participants provide a 

meaningful contribution to the funding 

of the CAT’’ 47 and facilitate billing and 

other administrative functions.48

c. Maximum Equities Participant Fee 

The Operating Committee proposes to 

amend Section 11.3(a)(i) of the CAT 

NMS Plan to provide that any 

Participant that is a national securities 

association shall pay a maximum fee 

established by the Operating Committee 

(‘‘Maximum Equities Participant Fee’’) 

instead of the higher fee calculated 

based on such Participant’s market 

share. If a Participant’s fee is limited to 

such maximum fee, any excess amount 

which the Participant otherwise would 

have paid as a fee above such maximum 

amount will be re-allocated among all 

Equities Participants, including any 

Equities Participants that are subject to 

the maximum fee, in accordance with 

their market share.49 The Operating 

Committee explains that FINRA could 

have a significant allocation of the CAT 

fees due to the large volume of NMS 

Stock activity subject to trade reporting 

on FINRA facilities, so the Maximum 

Equities Participant Fee would cap the 

costs allocated to FINRA. In addition, 

the Operating Committee states that, as 

one of the largest regulatory users of 

CAT, FINRA should pay a proportionate 

percentage of the CAT fees 

commensurate with its market share, 

and that market share is a ‘‘fair and 

reasonable basis for assessing regulatory 

usage, expense and burden among the 

Participants.’’ 50

7. Market Maker Discounts 

The Operating Committee proposes to 

amend Section 11.3(b) of the CAT NMS 

Plan to add market maker message 

traffic discounts to the Proposed 

Funding Model. Under the Original 

Funding Model, there is no distinction 

between the treatment of message traffic 

for market maker Industry Members and 

message traffic for non-market maker 

Industry Members for purposes of 

calculating Industry Member CAT fees. 

The Operating Committee explains that 

the proposed discounts are intended to 

address concerns raised previously that 

treating market maker message traffic 

the same as other message traffic for 

purposes of calculating Industry 

Member CAT fees would 

disproportionately impact market 

makers because of their continuous 

quoting obligations and result in an 

undue or inappropriate burden on 

competition or a reduction in liquidity 

and market quality.51 The Operating 

Committee believes that the proposed 

discounts would lower CAT fees for 

market makers and encourage their 

provision of liquidity to the market.52

In the Participants’ description of the 

Proposed Amendment, the Operating 

Committee states that Options Market 

Maker message traffic would be 

discounted based on the trade-to-quote 

ratio for options when calculating the 

message traffic of an Industry Member 

that is an Options Market Maker,53 and 

that the trade-to-quote ratio for the 

Options Market Maker discount would 

be calculated each quarter based on the 

prior quarter’s CAT Data.54 The 

proposed discount would be calculated 

by dividing the adjusted trade count 55

by the total number of quotes received 

by the securities information processors 

(‘‘SIP’’) from an exchange.56 Each 


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a ‘quote sent time’ is reported by an Options 

Exchange on behalf of the given Options Market 

Maker.’’ Id. 

57See infra Section III.B.2. 

58See Notice, supra note 4, at 21058. 

59 Id. 

60 Id. 

61See infra Section III.B.2. 

62See Notice, supra note 4, at 21058. 

63 Id. 

64 Id. at 21050. 

65 Id. at 21074. 

66 Id. at 21063. 

67 Id. 

68 In the Original Funding Model, costs were 

allocated between Execution Venues and certain 

Industry Members, whereas the Proposed Funding 

Model proposes to allocate costs between 

Participants and Industry Members. 

69See Notice, supra note 4, at 21054. 

70As of the date of this Order, only the Nasdaq 

and Cboe Participants have filed proposed rule 

changes. See supra note 19. 

71The proposed Participant Fee Schedule states 

‘‘[t]he Industry Member Allocation for each quarter 

shall be 75% of 1/4th of the Total CAT Costs for 

the relevant year.’’ See Notice, supra note 4, at 

21055. Under the Proposed Funding Model, each 

Industry Member would pay a CAT fee calculated 

by multiplying its message traffic percentage of total 

Industry Member message traffic per quarter by the 

Industry Member Allocation, subject to the market 

maker discounts for message traffic, as applicable, 

as well as the Minimum Industry Member CAT Fee 

and the Maximum Industry Member CAT Fee. Id. 

72 Id. at 21054. The proposed Participant Fee 

Schedule states ‘‘[t]he Participant Allocation for 

each quarter shall be 25% of 1/4th of the Total CAT 

Costs for the relevant year.’’ Id. at 21055. 

73 Id. at 21054. 

74 Id. 

75See Notice, supra note 4, at 21055. 

76 Industry Member revenue was calculated based 

on the total revenue reported in the Industry 

Member’s FOCUS reports. Participant revenue was 

calculated based on revenue information provided 

in Form 1 amendments and/or publicly reported 

figures. Participants are not required to file uniform 

FOCUS-type reports regarding revenue like Industry 

Members. Accordingly, the revenue calculation for 

Participants is not as straightforward as for Industry 

Members. Id. at 21055, n.31. 

77 Id. at 21055. 

Options Market Maker’s CAT fee would 

be calculated by multiplying its 

discounted percentage of total Industry 

Member message traffic during the 

relevant time period by the Industry 

Member Allocation,57 subject to the 

Minimum Industry Member CAT Fee 

and the Maximum Industry Member 

CAT Fee.58

Under the Proposed Funding Model, 

when calculating the message traffic of 

an Industry Member that is an equity 

market maker in NMS Stocks (‘‘Equity 

Market Maker’’), its discounted market 

making message traffic count would be 

calculated by multiplying its market 

making message traffic in NMS Stocks 

by the NMS Stock trade-to-quote ratio.59

In the Participants’ description of the 

Proposed Amendment, the Operating 

Committee states that the trade-to-quote 

ratio would be calculated each quarter 

based on the prior quarter’s CAT Data.60

The proposed discount would be 

calculated by dividing the adjusted 

trade count by the total number of 

quotes received by the SIP from an 

exchange. The Equity Market Maker’s 

CAT fee would be calculated by 

multiplying its discounted percentage of 

total Industry Member message traffic 

during the relevant time period by the 

Industry Member Allocation,61 subject 

to the Minimum Industry Member CAT 

Fee and the Maximum Industry Member 

CAT Fee.62 The discounted message 

traffic of Options Market Makers and 

Equity Market Makers would be counted 

as part of total Industry Member 

message traffic.63

B. Participant Fee Schedule 

1. Total CAT Costs 

Under the Proposed Funding Model, 

the CAT fees for the relevant period 

would be designed to cover the total 

CAT costs associated with developing, 

implementing and operating the CAT 

for the relevant period (‘‘Total CAT 

Costs’’).64 In the proposed Participant 

Fee Schedule, the Operating Committee 

proposes to define Total CAT Costs as 

‘‘the total budgeted costs for the CAT for 

the relevant year.’’ In addition: 

The total budgeted costs for the CAT for 

the relevant year shall be the total CAT costs 

set forth in the annual operating budget 

approved by the Operating Committee 

pursuant to Section 11.1(a) of the CAT NMS 

Plan. The total budgeted costs for the CAT for 

the relevant year may be adjusted on a 

quarterly basis as the Operating Committee 

reasonably deems appropriate for the prudent 

operation of the Company. To the extent that 

the Operating Committee adjusts the total 

budgeted costs for the CAT for the relevant 

year during its quarterly budget review, the 

adjusted budgeted costs for the CAT will be 

used in calculating the remaining CAT fees 

for that year.65

The Operating Committee explains 

that using Total CAT Costs budgeted for 

the year, rather than already incurred 

CAT costs, would allow the Company to 

collect fees before bills become 

payable.66 The Operating Committee 

notes that, pursuant to Section 11.1(c) of 

the CAT NMS Plan, any surpluses 

collected will be treated as an 

operational reserve to offset future fees 

and will not be distributed to the 

Participants as profits.67

2. 75%–25% Allocation Between 

Industry Members and Participants 

The Proposed Funding Model 

contemplates allocating CAT costs 

between Participants and Industry 

Members to permit the calculation of 

CAT fees based on market share for 

Participants and based on message 

traffic for Industry Members.68 The 

Operating Committee proposes to 

implement this allocation through a 

75%–25% allocation between Industry 

Members and Participants.69 The 

Participant CAT fees that are a part of 

the proposed Participant Fee 

Schedule—Appendix B to the Proposed 

Amendment—would apply this 

allocation to Participants. Participants 

would file proposed rule changes to 

apply this allocation to Industry 

Members.70 In calculating CAT fees for 

the relevant period under the Proposed 

Funding Model, Industry Members as a 

group would pay 75% of the Total CAT 

Costs for the relevant period (‘‘Industry 

Member Allocation’’) 71 and Participants 

as a group would pay 25% of the Total 

CAT Costs for the relevant period 

(‘‘Participant Allocation’’).72

In proposing a 75%–25% allocation 

between Industry Members and 

Participants, the Operating Committee 

states that it considered a variety of 

different potential allocations between 

Industry Members and Participants.73

For example, the Operating Committee 

states that it considered alternatives in 

which Participants paid larger 

contributions than 25% of the total CAT 

costs (e.g., a 50%–50% allocation 

between Industry Members and 

Participants) and alternatives in which 

Participants paid smaller contributions 

than 25% of the total CAT costs.74 In the 

scenario where the Participants paid 

larger contributions than the 25% 

allocation, the Operating Committee 

believed that this was not fair or 

equitable to the Participants.75 The 

Operating Committee came to this 

conclusion by assessing the number of 

Industry Members compared to 

Participants, noting that ‘‘there are only 

25 Participants and approximately 1,237 

Industry Members, as of December 

2020’’, and analyzing the total revenue, 

noting that ‘‘Participants only 

represented approximately 4% of the 

total CAT Reporter revenue; Industry 

Members represented 96% of the total 

CAT Reporter revenue.’’ 76 Thus, the 

Operating Committee determined that 

allocating more than 25% of the total 

CAT costs to the Participants was not 

fair and equitable. Similarly, the 

Operating Committee did not believe 

that the revenue based allocation 

approach would be fair to the Industry 

Members because it would impose such 

a significant percentage (96%) of CAT 

costs on Industry Members.77

Additionally, the Operating Committee 

determined that there would be 

practical difficulties in assessing the 

appropriate revenue figures for all CAT 


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78 Id. 

79 Id. 

80 Id. 

81See Notice, supra note 4, at 21060. 

82 Id. 

83 Id. 

84 Id. at 21061. A Participant with both options 

and equities market share would be treated as both 

an Options Participant and an Equities Participant. 

Id. 

85 Id. 

86See Notice, supra note 4, at 21061. 

87 Id. at 21062. 

88 Id. at 21062, 21063. 

89 Id. at 21063–21064. 

90 Id. at 21061. 

91 Id. at 21068. 

92See Letters to Vanessa Countryman, Secretary, 

Commission from Doug Patterson, Chief 

Compliance Officer, Cutler Group, LP, dated June 

1, 2021, available at https://www.sec.gov/ 

comments/4-698/4698-8855258-238423.pdf (‘‘Cutler 

Letter’’); Kelvin To, Founder and President, Data 

Boiler Technologies, LLC, dated May 3, 2021, 

available at https://www.sec.gov/comments/4-698/ 

4698-8749987-237362.pdf (‘‘Data Boiler Letter’’); 

Joanna Mallers, Secretary, FIA Principal Traders 

Group, dated May 7, 2021, available at https://

www.sec.gov/comments/4-698/4698-8776522- 

237685.pdf (‘‘FIA PTG May 7th Letter’’); Joanna 

Mallers, Secretary, FIA Principal Traders Group, 

dated May 12, 2021, available at https://

www.sec.gov/comments/4-698/4698-8793902- 

237843.pdf (‘‘FIA PTG May 12th Letter’’); Matthew 

Price, Chief Operations Officer, Fidelity Capital 

Markets, dated May 12, 2021, available at https:// 

www.sec.gov/comments/4-698/4698-8791746- 

237802.pdf (‘‘Fidelity Letter’’); Howard Meyerson, 

Managing Director, Financial Information Forum, 

dated April 29, 2021, available at https://

www.sec.gov/comments/4-698/4698-8736502- 

237163.pdf (‘‘FIF April 29th Letter’’); Howard 

Meyerson, Managing Director, Financial 

Information Forum, dated May 21, 2021, available 

at https://www.sec.gov/comments/4-698/4698- 

8843662-238307.pdf (‘‘FIF May 21st Letter’’); 

Marcia E. Asquith, Executive Vice President, Board 

and External Relations, Financial Industry 

Regulatory Authority, Inc., dated May 12, 2021, 

available at https://www.sec.gov/comments/4-698/ 

4698-8793900-237824.pdf (‘‘FINRA Letter’’); 

Andrew Stevens, General Counsel, IMC, dated May 

20, 2021, available at https://www.sec.gov/ 

comments/4-698/4698-8819440-238105.pdf (‘‘IMC 

Letter’’); Michael Lewin, Chief Executive Officer, 

Istra LLC, dated May 27, 2021, available at https:// 

www.sec.gov/comments/4-698/4698-8847370- 

238329.pdf (‘‘Istra Letter’’); Gary Goldsholle, Chief 

Regulatory Officer and General Counsel, Long-Term 

Stock Exchange, Inc., dated May 19, 2021, available 

at https://www.sec.gov/comments/4-698/4698- 

8815749-238025.pdf (‘‘LTSE Letter’’); Kirsten 

Wegner, Chief Executive Officer, Modern Markets 

Initiative, dated May 6, 2021, available at https:// 

www.sec.gov/comments/4-698/4698-8771339- 

237583.pdf (‘‘MMI Letter’’); Michael Blaugrund, 

Chief Operating Officer, NYSE Inc., dated May 10 

2021, available at https://www.sec.gov/comments/ 

4-698/4698-8779961-237701.pdf (‘‘NYSE Letter’’); 

William Bartlett, Chief Executive Officer, Parallax 

Volatility Advisers, L.P., dated June 28, 2021, 

available at https://www.sec.gov/comments/4-698/ 

4698-9006549-246006.pdf (‘‘Parallax Letter’’); Ellen 

Greene, Managing Director, Equity and Options 

Market Structure, Securities Industry and Financial 

Markets Association, dated May 12, 2021, available 

at https://www.sec.gov/comments/4-698/4698- 

8790951-237769.pdf (‘‘SIFMA Letter’’); James Toes, 

President and Chief Executive Officer, and Andrew 

D’Amore, Chairman of the Board, Security Traders 

Association, dated June 11, 2021, available at 

https://www.sec.gov/comments/4-698/4698- 

8905922-244113.pdf (‘‘STA Letter’’); Gunjan 

Chauhan, Senior Managing Director, Global Head of 

SPDR Capital Markets, State Street Global Advisors, 

dated May 12, 2021, available at https://

www.sec.gov/comments/4-698/4698-8793896- 

237842.pdf (‘‘SSGA Letter’’); Kevin Donohue, 

General Counsel, Tower Research Capital LLC, 

dated May 12, 2021, available at https://

www.sec.gov/comments/4-698/4698-8793895- 

237841.pdf (‘‘Tower Letter’’); and Thomas M. 

Merritt, Deputy General Counsel, dated May 12, 

2021, available at https://www.sec.gov/comments/ 

4-698/4698-8790127-237768.pdf (‘‘Virtu Letter’’). 

Reporters. Based upon its analysis, the 

Operating Committee decided that 

alternative approaches based upon 

revenue were not appropriate and could 

potentially have unfair impacts on both 

the Industry Members and the 

Participants.78 Ultimately, the Operating 

Committee believes that the 75%–25% 

allocation will create a more equitable 

fee split because the Industry Members 

with the most message traffic and the 

Participant complexes with the most 

market share would pay comparable 

CAT fees.79 The Operating Committee 

analyzed data from the fourth quarter of 

2020, and determined that the three 

Industry Members with the most 

message traffic and the Participant 

complexes with the highest CAT fees 

would pay annual CAT fees in a similar 

range of five to six million dollars.80

3. Participant CAT Fees 

As described above, the Proposed 

Funding Model provides that the 

Operating Committee shall establish a 

minimum fee to be payable by each 

Participant in addition to a fee based on 

market share. In the proposed 

Participant Fee Schedule, the Operating 

Committee establishes 0.75% of the 

Participant Allocation as the Minimum 

Participant Fee 81 regardless of market 

share.82 The total Minimum Participant 

Fees to be paid by each Participant 

would be subtracted from the 

Participant Allocation to determine the 

‘‘Adjusted Participant Allocation.’’ 83

The proposed Participant Fee 

Schedule provides that the Equities 

Participant Allocation would be 60% of 

the Adjusted Participant Allocation and 

the Options Participant Allocation 

would be 40% of the Adjusted 

Participant Allocation.84 The Operating 

Committee explained that this 

allocation was determined through 

negotiations among the Participants.85

Each Participant would pay a 

quarterly Participant CAT fee to recover 

the costs of the CAT going forward. For 

Equities Participants, the quarterly 

Participant CAT Fee would be 

calculated by multiplying the Equities 

Participant Allocation by each Equities 

Participant’s percentage of total market 

share of NMS Stocks for all Equities 

Participants for the prior quarter, subject 

to the Maximum Equities Participant 

Fee (if applicable), and in addition to 

the Minimum Participant Fee.86 For 

Options Participants, the quarterly 

Participant CAT fee would be calculated 

by multiplying the Options Participant 

Allocation by each Options Participant’s 

percentage of total market share in 

Listed Options for the prior quarter, in 

addition to the Minimum Participant 

Fee.87

The quarterly Participant CAT fee 

would be a quarterly CAT fee based on 

market share from the prior quarter and 

the allocation of Total CAT Costs under 

the Proposed Funding Model for the 

relevant year.88 The Operating 

Committee proposes a fee schedule to 

implement the quarterly Participant 

CAT fee whereby each Participant 

would be assessed a CAT fee, on a 

quarterly basis, that is 25% of 1/4th of 

the total budgeted annual CAT costs for 

the relevant year, using CAT Data to 

calculate market share from the prior 

quarter of the relevant year.89

Under the Proposed Funding Model, 

FINRA, as a national securities 

association, would be subject to the 

Maximum Equities Participant Fee as 

set by the Operating Committee. The 

Operating Committee proposes to 

establish in the Participant Fee 

Schedule a Maximum Equities 

Participant Fee equal to the greater of (x) 

20% of the Equities Participant 

Allocation or (y) the highest CAT fee 

required to be paid by any other 

Equities Participant plus 5% of such 

highest CAT fee.90 Accordingly, as 

discussed above, FINRA would pay its 

quarterly Participant CAT fee based on 

its market share in NMS Stocks, subject 

to the Maximum Equities Participant 

Fee. 

4. Collection of Fees 

The Participants’ description of the 

Proposed Amendment states that the 

Operating Committee proposes to 

establish a system for the collection of 

CAT fees pursuant to Section 11.4 of the 

CAT NMS Plan. The Company will 

provide each Participant with an 

invoice setting forth the quarterly 

Participant CAT fee for each payment 

period. Each Participant will pay its 

CAT fees to the Company via the 

centralized system for the collection of 

CAT fees.91

IV. Summary of Comments 

The Commission received 19 

comment letters on the Proposed 

Amendment.92 15 comment letters 


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93See Data Boiler Letter; Fidelity Letter; FIA PTG 

May 12th Letter; FINRA Letter; IMC Letter; Istra 

Letter; LTSE Letter; MMI Letter; NYSE Letter; 

SIFMA Letter; SSGA Letter; STA Letter; Tower 

Letter; and Virtu Letter. 

94See Cutler Letter (stating ‘‘[h]aving reviewed 

the Proposal, and having compared it to the 

previous CAT funding model, we see the 

Amendment as a vast improvement that is more fair 

and equitable to both Market Participants and 

Industry Members. We would urge that the 

Commission approve this amendment.’’). Id. at 1. 

95See FIF April 29th Letter; FIF May 21st Letter. 

96See FIA PTG May 7th Letter. 

97See Letter to Vanessa Countryman, Secretary, 

Commission from Michael Simon, CAT NMS Plan 

Operating Committee Chair, dated May 5, 2021, 

available at https://www.sec.gov/comments/4-698/ 

4698-8760381-237447.pdf (‘‘CAT Operating 

Committee May 5th Letter’’). 

98See Letters to Vanessa Countryman, Secretary, 

Commission from Michael Simon, CAT NMS Plan 

Operating Committee Chair, dated July 14, 2021, 

available at https://www.sec.gov/comments/4-698/ 

4698-9061305-246406.pdf (‘‘CAT Operating 

Committee July 14th Letter I’’); from Michael 

Simon, CAT NMS Plan Operating Committee Chair, 

dated July 14, 2021, available at https://

www.sec.gov/comments/4-698/4698-9061306- 

246406.pdf (‘‘CAT Operating Committee July 14th 

Letter II’’). CAT Operating Committee July 14th 

Letter II states, ‘‘these responses represent the 

consensus of the Participants, but that all 

Participants may not fully agree with each response 

set forth in this letter.’’ CAT Operating Committee 

July 14th Letter II at 1–2. 

99See SIFMA Letter at 4; Virtu Letter at 5–6; FIA 

PTG May 12th Letter at 5; Data Boiler Letter at 8; 

Tower Letter at 3. 

100See SIFMA Letter at 4; FIA PTG May 12th 

Letter at 5. 

101See Virtu Letter at 2. 

102 Id. at 3. 

103 Id. at 2. 

104See MMI Letter at 3. Similarly, this commenter 

also requests the rationale for why ‘‘a small number 

of brokers should pay the vast majority of the nowinflated cost without having any insight or 

authority into the methodology and rationale for the 

cost?’’ Id. at 2. The Operating Committee responds 

that its proposed Maximum Industry Member CAT 

Fee would institute a cap on fees to fairly allocate 

costs to Industry Members to avoid certain Industry 

Members paying a significant allocation of Total 

CAT Costs. See CAT Operating Committee July 14th 

Letter II at 6–7. 

105See Virtu Letter at 2–3; MMI Letter at 3. 

106See CAT Operating Committee July 14th Letter 

II at 4–5. 

107 Id. at 5–6. 

108See SIFMA Letter at 6; Virtu Letter at 5–6; 

Data Boiler Letter at 8; Istra Letter at 2–3; Tower 

Letter at 3; Fidelity Letter at 3, 5; MMI Letter at 3; 

Parallax Letter at 1. 

109See SIFMA Letter at 6; Virtu Letter at 5–6; 

Fidelity Letter at 3, 5; Tower Letter at 3; MMI Letter 

at 3. 

110See Virtu Letter at 6. 

111See Parallax Letter at 1. 

112See Virtu Letter at 6. 

113See Tower Letter at 3; SIFMA Letter at 6. 

114See Virtu Letter at 6; SIFMA Letter at 6–7. 

115See Data Boiler Letter at 8; FIA PTG May 12th 

Letter at 2; Fidelity Letter at 3, 5; Istra Letter at 2– 

3; MMI Letter at 3; SIFMA Letter at 6; Tower Letter 

at 3; Virtu Letter at 5–6. 

116See CAT Operating Committee July 14th Letter 

I at 5. 

117 Id. at 5. 

118 Id. at 5–6. 

119 Id. at 6. 

120See SIFMA Letter at 

2; STA Letter at 2–3; Data Boiler Letter at 8; FIA 

PTG May 12th Letter at 2–3; IMC Letter at 2–3; 

Fidelity Letter at 2–3, 4; Tower Letter at 7; MMI 

Letter at 2, 3, 4. 

121See FIA PTG May 12th Letter at 3. 

object to the Proposed Amendment 93

and one comment letter supports the 

Proposed Amendment.94 In addition, 

the Commission received two comment 

letters requesting data from the 

Operating Committee,95 one comment 

letter requesting data from the 

Company,96 and one comment letter 

from the Operating Committee 

providing additional details on an 

illustrative example in Exhibit B to the 

Proposed Amendment,97 and two 

response letters from the Operating 

Committee.98

Scope of Costs To Be Recovered From 

Industry Members 

Several commenters question the 

scope of the CAT costs proposed to be 

recovered from Industry Members.99

Two commenters state that Industry 

Members should only be responsible for 

the direct costs to build and operate the 

CAT, not the Participants’ costs of doing 

business as SROs, such as insurance and 

consulting costs.100 One commenter 

states that the Exchange Act and Rule 

613 do not even require the CAT NMS 

Plan to impose fees on Industry 

Members,101 and that the Participants 

have failed to justify an ‘‘additive CAT 

fee,’’ 102 and notes the Participants were 

exclusively responsible for developing 

the CAT and for making decisions about 

the implementation costs for the 

CAT.103 Another commenter asks for 

justification for why Industry Members 

should bear the costs of the CAT build 

when they had no involvement in the 

process.104

In response to comments objecting to 

the imposition of CAT costs on Industry 

Members,105 the Operating Committee 

states that Industry Members should be 

required to pay CAT costs in accordance 

with Rule 613 and the CAT NMS 

Plan.106 The Operating Committee adds 

that, because all market participants 

would benefit from the enhanced 

regulatory oversight provided by the 

CAT, Industry Members and 

Participants should both contribute to 

covering its costs.107

Six commenters object to the 

proposed imposition of historical costs 

on Industry Members.108 Several 

commenters note that Industry Members 

had no input into or control over the 

decisions resulting in the historical 

costs, including the selection of Thesys 

Technologies, LLC as the initial plan 

processor,109 and the subsequent 

transition to FINRA as the plan 

processor.110 One commenter states, 

‘‘the Participants must meet a high bar 

for the Commission to alter course and 

support any proposed rule changes that 

require non-Participants to pay the 

Thesys costs.’’ 111 One commenter 

questions the rationale for requiring 

Industry Members to pay 75% of the 

cost of the transition to FINRA, 

explaining that FINRA is completely 

funded by the industry.112 Two 

commenters object to requiring Industry 

Members to pay the legal and consulting 

fees incurred by Participants prior to the 

approval of the CAT NMS Plan.113 Two 

commenters criticize the Proposed 

Amendment for requiring new Industry 

Members to pay CAT fees to recover 

historical costs, while exempting new 

Participants from such a requirement.114

In response to comments questioning 

the scope of the costs to be recovered 

from Industry Members,115 the 

Operating Committee states that the 

recovery from Industry Members of the 

historical costs, Thesys-related costs 

and third-party expenses (including 

legal, consulting and audit expenses) is 

consistent with the CAT NMS Plan and 

the Exchange Act.116 The Operating 

Committee states that, when approving 

the CAT NMS Plan, the Commission 

noted that the Exchange Act permits the 

Participants to charge their members 

fees to fund their self-regulatory 

obligations and that the Plan funding 

model was designed to impose fees 

reasonably related to the Participants’ 

self-regulatory obligations since the fees 

would be directly associated with the 

costs to build and maintain the CAT.117

Additionally, the Operating Committee 

states that the Commission considered 

that the Participants could recover the 

costs of creating and funding the CAT 

central repository in the adopting 

release for Rule 613.118 The Operating 

Committee explains that these costs are 

critical to the creation, implementation 

and maintenance of the Plan and 

therefore should be within the scope of 

CAT fees.119

Lack of Industry Member Input 

Several commenters express concern 

that the proposal was developed 

without the involvement of Industry 

Members.120 One commenter states that 

it is ‘‘incredulous of the process used to 

construct a proposed allocation model 

in which Industry Members are 

allocated 75% of the expenses yet had 

no meaningful input into the model’s 

development.’’ 121 Another commenter 

opines that Industry Members are being 

required to shoulder most of the costs of 

the CAT without having had any insight 


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122See MMI Letter at 2, 3. 

123See Tower Letter at 7; Data Boiler Letter at 6. 

See also Parallax Letter at 2 (suggesting the 

admission of Industry Members and independent 

parties as members of the Operating Committee, 

along with full internal disclosure of costs, would 

benefit the operation of the CAT NMS Plan). 

124See Tower Letter at 7. 

125See NYSE Letter at 5. See also SIFMA Letter 

at 2 (agreeing with this statement). 

126See FIA PTG May 12th Letter at 2–3; Fidelity 

Letter at 2–4; IMC Letter at 2; SIFMA Letter at 2; 

STA Letter at 2–3; Tower Letter at 7. 

127 17 CFR 242.608. 

128 15 U.S.C. 78s. 

129See CAT Operating Committee July 14th Letter 

I at 7–8. 

130 Id. at 8. 

131See SIFMA Letter at 2; Virtu Letter at 2, 6; FIA 

PTG May 12th Letter at 2, 3, 4; Tower Letter at 1, 

5, 7; Istra Letter at 2; MMI Letter at 4. See also 

Parallax Letter at 3–4 (stating that the proposed 

market maker discounts benefit the Participants 

who have set the standards for market-making 

activity, including activity resulting in message 

traffic with low order to trade ratios). 

132See SIFMA Letter at 2; Virtu Letter at 2. 

133See FIA PTG May 12th Letter at 3. 

134See Tower Letter at 5. 

135See Tower Letter at 5. 

136See Data Boiler Letter at 6, 7; FIA PTG May 

12th letter at 2, 3; MMI Letter at 4; Parallax Letter 

at 3–4; Tower Letter at 1, 5, 7. 

137See CAT Operating Committee July 14th Letter 

I at 8. 

138See SIFMA Letter at 4–5; Virtu Letter at 4–5; 

SSGA Letter at 1–2; Fidelity Letter at 2, 4–5; NYSE 

Letter at 2; STA Letter at 1, 3–4; Tower Letter at 

2, 5, 7; MMI Letter at 2, 3–4; FIA PTG May 12th 

Letter at 2, 5; IMC Letter at 1, 2; Istra Letter at 1, 

2; Parallax Letter at 1–2, 5. 

139See SIFMA Letter at 5. 

140 Id. at 5. 

141 Id. at 4. 

142See STA Letter at 3. 

143See Virtu Letter at 4. 

144See NYSE Letter at 2. 

145 Id. at 2; Tower Letter at 2, 7; Istra Letter at 2; 

Fidelity Letter at 5; MMI Letter at 2–3, 4; FIA PTG 

May 12th Letter at 5; Parallax Letter at 1–2, 5. 

146See NYSE Letter at 2. 

147 Id. at 2. 

148See Tower Letter at 2. 

149 Id. at 2. 

150 Id. at 7. 

into the costs.122 Two commenters note 

the lack of representation of Industry 

Members on the Operating 

Committee.123 One commenter believes 

that the technical expertise of the 

industry should be involved in the 

development of a new cost allocation 

proposal that contains ‘‘a full 

explanation of the proposed operating 

costs and . . . an appropriately detailed 

public disclosure of the operating 

budget.’’ 124 Another commenter 

suggests that the Commission ask the 

Participants to engage with the industry 

‘‘to establish a workable allocation 

methodology that is simple, predictable 

and aligns responsibility for funding 

regulatory infrastructure with receiving 

economic benefits of the 

marketplace.’’ 125

In response to comments noting a lack 

of industry participation in the 

development of the Proposed Funding 

Model,126 the Operating Committee 

explains that the CAT Advisory 

Committee and the public notice and 

comment processes afforded by Rule 

608 of Regulation NMS 127 and Section 

19 of the Exchange Act 128 have 

provided Industry Members and other 

market participants the opportunity to 

express their views on the funding 

model.129 With respect to the comments 

expressing concern over a lack of 

Industry Member representation on the 

Operating Committee, the Operating 

Committee states that Industry Members 

can provide meaningful input on CAT 

matters through the current governance 

structure without compromising 

Commission and SRO oversight of 

Industry Members.130

Participant Conflicts of Interest 

Six commenters believe that the 

Participants have conflicts of interest 

that are reflected in the cost allocation 

proposed for the Participants and 

Industry Members.131 Two commenters 

believe that the Participants are 

attempting to further their commercial 

interests through the proposal at the 

expense of their Industry Member 

competitors.132 One commenter believes 

that the Participants are conflicted when 

determining how much of their own 

costs they should pay and suggests 

greater transparency to expose any 

Participant conflicts.133 Another 

commenter states, ‘‘[t]o permit for-profit 

exchanges to allocate 75% of the costs 

of the CAT to Industry Members 

furthers the Participants’ commercial 

interests at the expense of the Industry 

Members, who have no choice but to 

pay such fees or else be subject to 

regulatory actions by the 

Participants.’’ 134 This commenter 

suggests that the Commission require 

the Participants to resubmit a proposal 

with a transparent analysis and requests 

that Industry Members be permitted 

adequate representation on the 

Operating Committee.135

In response to the comments 

regarding potential conflicts of interests 

behind the proposed cost allocation for 

Participants and Industry Members,136

the Operating Committee states that it 

disagrees with the comments and notes 

that the CAT NMS Plan contains 

measures to protect against potential 

conflicts of interest related to CAT fees, 

‘‘including the fee filing requirements 

under the Exchange Act and operating 

the CAT on a break-even basis.’’ 137

Lack of Transparency 

Several commenters express concern 

that the Proposed Funding Model lacks 

sufficient transparency into the 

operating budget as well as the costs 

proposed to be recovered by the CAT 

fees.138 One commenter believes the 

lack of cost data would make it 

impossible for the Commission and 

Industry Members to determine whether 

the CAT is operating efficiently.139 The 

commenter adds that detailed cost 

information would be useful for 

Industry Members to evaluate whether 

certain of their activities are causing the 

CAT to incur higher operating costs, and 

consequently causing increases in their 

own CAT fees.140 This commenter 

added that it is impossible to evaluate 

whether the Proposed Funding Model is 

consistent with the Exchange Act due to 

lack of information; in particular, details 

concerning sources of the costs and the 

operating budget.141 Similarly, another 

commenter suggests the provision of 

non-proprietary cost information to 

allow meaningful input from Industry 

Members.142 Another commenter 

believes that it ‘‘feels like we are being 

asked to hand over [a] blank check with 

the amount to be filled in later.’’ 143 One 

commenter states, ‘‘the Amendment is 

virtually silent on the use of funds and 

offers no budget for the CAT’s ongoing 

operation.’’ 144

Commenters request detailed 

information on the historical costs and 

the operating budget.145 One commenter 

recommends that the Proposed 

Amendment disclose its costs and 

technical requirements, and detail the 

historical costs and projected annual 

budget for the Plan operating expenses, 

professional services expenses, and plan 

processor expenses.146 The commenter 

recommends that the Participants make 

the annual budget public in the 

future.147 Another commenter states 

that the Proposed Amendment lacks an 

explanation for the 2021 estimated cost 

of $133 million, including the scale of 

CAT processing, number of reported 

transactions, data storage sizes and 

processing performed.148 The 

commenter states that an operating 

budget is necessary to determine how 

much of CAT costs is variable based on 

message traffic.149 The commenter 

recommends that the Operating 

Committee propose a new cost 

allocation plan that includes a full 

accounting of the historical costs and 

justification for charging these costs to 

Industry Members.150 The commenter 

also recommends that the new proposal 

explain its proposed operating costs and 


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151 Id. at 7. 

152See Fidelity Letter at 5. 

153See FIA PTG May 12th Letter at 5. 

154See MMI Letter at 2–3. 

155 Id. at 4. 

156See SSGA Letter at 2; Fidelity Letter at 5; FIF 

April 29th Letter at 1, 2; FIA PTG May 7th Letter 

at 2. 

157See FIF April 29th Letter at 1; FIA PTG May 

7th Letter at 2; FIA PTG May 12th Letter at 2. 

158See FIF April 29th Letter at 2. This commenter 

also requests that the Operating Committee publicly 

provide the options and equity trade-to-quote ratios 

used in the Proposed Amendment’s Exhibit B and 

the aggregate number of reportable events of each 

type that are counted toward the total number of 

reportable events. Id. 

159See CAT Operating Committee May 5th Letter. 

This response was also noted by the Operating 

Committee in a response to comments. See CAT 

Operating Committee July 14th Letter II at 16. 

160See CAT Operating Committee May 5th Letter 

at 2. 

161 Id. at 2, n.8. 

162See FIF May 21st Letter at 2–3. 

163See FIA PTG May 12th Letter at 2. 

164See Tower Letter at 3; SIFMA Letter at 5, 9; 

Virtu Letter at 4. 

165See Tower Letter at 3. 

166 Id. 

167See CAT Operating Committee May 5th Letter. 

168See SIFMA Letter at 5. 

169See Virtu Letter at 4. 

170See Istra Letter at 2–3. 

171See FIA PTG May 12th Letter at 2, 5; Fidelity 

Letter at 3, 5; Istra Letter at 2; MMI Letter at 3, 4; 

NYSE Letter at 2; Parallax Letter at 1–2; SIFMA 

Letter at 4; STA Letter at 3; SSGA Letter at 1–2; 

Tower Letter at 2, 4, 7; Virtu Letter at 4. 

172See CAT Operating Committee July 14th Letter 

I at 4. 

173 Id. 

174 Id. 

175 Id. 

176 Id. at 3–4. See also CAT Operating Committee 

May 5th Letter. 

177See FIA PTG May 12th Letter at 4–5; SSGA 

Letter at 1–2; Istra Letter at 2; MMI Letter at 1–2, 

3–4; Tower Letter at 1, 2–4; Parallax Letter at 2. 

178See Parallax Letter at 2. 

publicly disclose its operating 

budget.151

Another commenter notes that the 

Proposed Amendment lacks detail on 

the historical CAT assessment costs and 

requests the Participants to provide the 

opportunity to review the costs incurred 

before the CAT NMS Plan was 

approved, noting that Industry Members 

should be permitted ‘‘to refute the 

validity of any cost and its allocation to 

Industry Members.’’ 152 Another 

commenter states that the Proposed 

Amendment provides no transparency 

into historical and annual costs.153 One 

commenter requests the Commission to 

require the Participants to provide a 

cost-sharing structure with greater 

transparency, including a full 

accounting of historical costs and a 

detailed public explanation of the 

proposed operating costs.154 The 

commenter urges greater transparency 

in the operating budget, the cost 

allocation model, and on variable costs, 

such as messaging costs, and fixed costs, 

such as payroll costs.155

Commenters also request a breakdown 

of the estimated CAT costs and 

operating budget.156 Two commenters 

request a copy of the 2021 operating 

budget with quarterly updates including 

actual and revised projections.157 One of 

the commenters also requests data to 

permit each Industry Member to 

calculate its fees, including the data 

used by the Operating Committee to 

calculate the estimates in Exhibit B to 

the Proposed Amendment.158 In a 

response, the Operating Committee 

provides the following data: (1) The 

budgeted Total CAT Costs for 2021; (2) 

total Industry Member message traffic 

counts, including the total message 

counts for Options Market Makers and 

Equity Market Makers, used in the 

proposal’s Exhibit B; (3) unrounded 

trade-to-quote ratios for Listed Options 

and NMS Stocks; and (4) the method 

used to calculate an Industry Member’s 

quarterly CAT fees.159 The Operating 

Committee states that Industry Members 

can contact FINRA CAT to learn which 

of the anonymized Industry Member 

information in Exhibit B represents its 

traffic, as well as its total message traffic 

count and percentage or number of its 

reported events that were treated as 

events of Options Market Makers or 

Equity Market Makers.160 The Operating 

Committee also agrees to provide 

information to permit an Industry 

Member to calculate its actual CAT fees 

on an ongoing basis.161 Subsequently, 

the first commenter requests further 

information to understand the impact of 

the funding proposal and help each 

Industry Member reconcile the data it 

received from the Operating Committee 

and its internal records.162 The second 

commenter finds the response from the 

Operating Committee insufficient and 

requests a copy of the 2021 operating 

budget and any quarterly updates and 

projected costs, a breakdown of fixed 

and variable expenses, and provision to 

Industry Members of data used to 

support the selected funding model and 

the funding models that were 

rejected.163

Several commenters believe the lack 

of transparency prevents Industry 

Members from estimating their costs 

and fees.164 One commenter believes 

that the Proposed Amendment lacks 

information needed by Industry 

Members to calculate their fees as well 

as to analyze the fairness and accuracy 

of the funding model.165 The 

commenter notes that 75 of 1,237 

Industry Members would be allocated 

99% of Industry Member fees, and that 

the Proposed Amendment claims that 

this is fair without factual support.166

One commenter acknowledges the data 

subsequently provided in the response 

from the Operating Committee 167 and 

suggests that the Participants regularly 

provide updated message traffic data to 

Industry Members to allow them to 

estimate their CAT fees.168 Another 

commenter opines that the 

supplementary message traffic data and 

the 2021 budget information provided 

by the Operating Committee is 

insufficient to allow Industry Members 

to project their CAT fees.169 One 

commenter suggests that cost recovery 

should have ‘‘transparent inputs’’ that 

would permit Industry Members to 

predict their costs and understand the 

costs of their actions.170

In response to comments requesting 

additional transparency into CAT 

costs,171 the Operating Committee states 

that it has made publicly available 

substantial annual cost data by 

providing, upon request, its audited 

financial statements from the inception 

of Consolidated Audit Trail LLC and 

CAT NMS, LLC through 2020, as 

required by Section 9.2(a) of the CAT 

NMS Plan.172 The Operating Committee 

explains that the audited financial 

statements contain the following cost 

categories: ‘‘technology costs, legal, 

amortization of developed technology, 

consulting, insurance, professional and 

administration, and public 

relations.’’ 173 The Operating Committee 

also states that the Proposed Funding 

Model would provide additional cost 

transparency through the provision of 

the operating budget at the start of each 

year, as well as the budgeted Total CAT 

Costs to be used in calculating the 

quarterly CAT fees, and any quarterly 

budget adjustments.174 The Operating 

Committee adds that it proposes to 

provide additional cost information to 

the industry through webinars, among 

other methods,175 and notes the costrelated information it provided in its 

May 5th letter.176

Several commenters believe the 

Proposed Amendment does not properly 

explain increases in historical and 

annual costs in excess of prior 

estimates.177 One commenter states, 

‘‘[t]here may well be appropriate—or at 

least understandable—reasoning for 

historical and ongoing costs to greatly 

exceed expectations, and that is for the 

Participants to explain and the 

Commission to review as part of its 

oversight of the SROs.’’ 178 Two 

commenters ask if any corresponding 

benefits accompany the increased cost 


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179See MMI Letter at 2; SSGA Letter at 2. 

180See FIA PTG May 12th Letter at 5. 

181See SSGA Letter at 2. 

182See Tower Letter at 4. 

183 Id. 

184See FIA PTG May 12th Letter at 4–5; Istra 

Letter at 2; MMI Letter at 1–2, 4; Parallax Letter at 

1–2; SSGA Letter at 1–2; Tower Letter at 1–4. 

185See CAT Operating Committee July 14th Letter 

I at 2. 

186 Id. 

187 Id. 

188 Id. at 3. 

189 Id. 

190 Id. 191See SIFMA Letter at 5; Fidelity Letter at 3, 5; 

Tower Letter at 2; FIA PTG May 12th Letter at 5. 192See Istra Letter at 1. 193See Fidelity Letter at 5. 194See FIA PTG May 12th Letter at 5; Fidelity 

Letter at 3; Tower Letter at 2, 7. 

195See CAT Operating Committee July 14th Letter 

I at 4–5. 

196 Id. at 5. 

197 Id. 

198See Fidelity Letter at 3, 5. 

199 Id. at 5. 

200See CAT Operating Committee July 14th Letter 

I at 6. 

201 Id. at 6–7. 

202 Id. at 7. 

203 Id. 

204See Fidelity Letter at 2–4; NYSE Letter at 1– 

2; Tower Letter at 4–5; MMI Letter at 4–5; Istra 

Letter at 3; SIFMA Letter at 5–8; Virtu Letter at 3– 

6; Data Boiler Letter at 7; FIA PTG May 12th Letter 

at 3, 4; FINRA Letter at 3, 4–5; Parallax Letter at 

2–3. 

205See Fidelity Letter at 3–4; NYSE Letter at 1– 

2; Tower Letter at 4–5; MMI Letter at 4–5; Istra 

Letter at 3; Virtu Letter at 3–4; SIFMA Letter at 5– 

6. 

206See SIFMA Letter at 5–6; Virtu Letter at 3. 

207See SIFMA Letter at 5–6. 

208See Fidelity Letter at 4. 

estimates.179 One commenter expresses 

concern that the Participants have no 

accountability for the costs of the 

project.180 Another commenter requests 

assurances that the CAT will not 

become an ‘‘ever-growing expense’’ for 

the industry and investors.181 Another 

commenter, a proprietary trading firm, 

states that it ‘‘captures real time market 

data feeds from over 100 venues around 

the world, in a variety of different 

products . . . The processing of this 

historical market data might reasonably 

be compared to the kind of processing 

that the CAT is expected to do . . . 

While we do not claim that this is a 

perfect comparison, we do posit that the 

cost to build and maintain the CAT 

should be reasonably comparable.’’ 182

The commenter states that its annual 

cost for this platform is ten times less 

than the cost provided in the Proposed 

Amendment.183

In response to comments questioning 

the increases in CAT costs from prior 

estimates,184 the Operating Committee 

explains that data processing and 

storage costs are the primary CAT cost 

drivers and that these costs have 

increased significantly each year.185

First, the Operating Committee states 

that these costs are directly related to 

data volumes reported to the CAT and 

that the markets have experienced 

record high volumes, noting that in 

2019 and 2021, data volumes were five 

times greater than estimated.186 To 

address the increased volume, the 

CAT’s storage and computing needs 

have accordingly increased.187 Second, 

the Operating Committee explains that 

the phased introduction of CAT 

reporting and functionality results in ‘‘a 

substantial increase in message traffic, 

processing complexity and storage 

requirements.’’ 188 Third, the Operating 

Committee states that the processing 

and storage of the many complex 

reporting scenarios relating to Industry 

Member market activity require 

complicated algorithms that result in 

‘‘significant data processing and storage 

costs.’’ 189 Finally, the Operating 

Committee notes that the combination 

of record CAT Data volumes with the 

stringent performance timelines and 

operational requirements applicable to 

the processing of CAT Data do not allow 

much flexibility for cost reductions.190

Some commenters believe that the 

Proposed Funding Model lacks the 

transparency needed to incentivize the 

Participants to manage CAT costs 

efficiently.191 One commenter states the 

lack of transparency precludes the 

Operating Committee’s accountability 

and suggests a full audit of the CAT’s 

historical costs, ongoing budget and a 

comparison to its estimated benefits.192

Another commenter believes that 

allowing Industry Members greater 

visibility into CAT’s expenses would 

increase the Participants’ accountability 

to manage costs.193

In response to comments urging more 

transparency to ensure the Participants 

manage CAT Costs efficiently,194 the 

Operating Committee states that it ‘‘has 

a strong focus on cost management and 

is significantly incented to keep costs at 

an appropriate level.’’ 195 The Operating 

Committee notes that it actively pursues 

cost saving measures and has a Cost 

Management Working Group to address 

cost management needs.196

Additionally, the Operating Committee 

states that the plan processor regularly 

reviews options to lower compute and 

storage needs and works with CAT 

technology providers to provide services 

in a cost-effective manner.197

Finally, one commenter states that the 

Proposed Amendment needs to explain 

what would happen if actual CAT 

operating costs exceed the budget and 

what would happen if the CAT becomes 

over-budget. The commenter believes 

that a revised amendment should 

provide further details on the CAT 

budget and potential budget 

surpluses.198 In response to the 

comment,199 the Operating Committee 

explains that it would address budget 

shortfalls or excess fees through updates 

to the budgets and operational 

reserves.200 The Operating Committee 

states that to recover the costs of CAT 

on an ongoing basis, it will use the costs 

in the annual operating budget as the 

Total CAT Costs to be used to calculate 

CAT fees, and that these budgeted costs 

may be adjusted on a quarterly basis to 

address any changes to the budget.201

The Operating Committee states that if 

CAT fees exceed the CAT costs, despite 

quarterly budget adjustments, any 

surplus would be treated as an 

operational reserve to offset fees in 

future payments, in accordance with 

Section 11.1(c) of the CAT NMS Plan.202

If CAT fees are less than CAT costs, the 

Operating Committee states that it ‘‘may 

address the shortfall by using the 

operational reserve, including the 

amount of the shortfall in future fees 

and/or seeking to recover the costs via 

other measures in accordance with the 

Exchange Act.’’ 203

Allocation of Costs Between Industry 

Members and Participants 

Many commenters raise concerns 

about the proposed allocation of costs 

between Industry Members and 

Participants.204 Several commenters 

argue that the allocation lacks 

justification for the decision to recover 

75% of Total CAT Costs from Industry 

Members and 25% from Participants.205

Two commenters believe the allocation 

to Industry Members is ‘‘arbitrary and 

unsupportable’’ under the Exchange 

Act.206 One commenter challenges the 

Participants’ justification for the 

allocation—that there are more Industry 

Members than Participants and Industry 

Members receive much more revenue 

than Participants—as not providing a 

rational basis on which to claim that the 

Proposed Amendment provides for a 

fair allocation of reasonable fees and 

does not impose an undue burden on 

competition.207 Another commenter 

states, ‘‘[i]t is unclear from the proposal 

why the ability to pay is a corollary to 

CAT costs and an appropriate factor in 

justifying the split.’’ 208 One commenter 

states that costs are not deemed 

reasonable because a party can afford 

the costs, because the costs are not large 

enough to be material, or because the 

costs can be shared among thousands of 


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209See Parallax Letter at 2. 

210See Virtu Letter at 3–4. 

211See Data Boiler Letter at 6, 7. 

212 Id. at 6. 

213 Id. at 7. 

214 Id. at 8. 

215See FIA PTG May 12th Letter at 4. The 

Operating Committee acknowledges the 

commenter’s support of the elimination of tiering. 

See CAT Operating Committee July 14th Letter II at 

8, 13. 

216See FIA PTG May 12th Letter at 4. 

217 Id. 

218See MMI Letter at 4–5. 

219 Id. at 5. 

220See FINRA Letter at 5. Section 11.2(a) of the 

CAT NMS Plan requires the Operating Committee, 

in establishing the funding of the Company, to 

create transparent, predictable revenue streams for 

the Company that are aligned with the anticipated 

costs to build, operate and administer the CAT and 

the other costs of the Company. Section 11.2(b) 

requires the Operating Committee to establish an 

allocation of the Company’s related costs among 

Participants and Industry Members that is 

consistent with the Exchange Act, taking into 

account the timeline for implementation of the CAT 

and distinctions in the securities trading operations 

of Participants and Industry Members and their 

relative impact upon Company resources and 

operations. 

221See Istra Letter at 5–6. 

222 Id. 

223See NYSE Letter at 4. 

224 Id. at 5. 

225See Parallax Letter at 3. 

226 Id. 

227 Id. 

228See SIFMA Letter at 7–8; FIA PTG May 12th 

Letter at 5; Tower Letter at 4–5. See also Fidelity 

Letter at 2 (stating that Industry Members have 

spent much time and money on building systems 

to comply with CAT requirements but will not be 

reimbursed for these costs). 

229See SIFMA Letter at 7–8. See also STA Letter 

at 3 (describing collaborative efforts by Industry 

Members and Participants to develop technical 

specifications). 

230See SIFMA Letter at 7–8. 

231See Tower Letter at 4–5. 

232See FIA PTG May 12th Letter at 5. 

233See SIFMA Letter at 8. 

234 Id. 

Industry Members.209 Another 

commenter believes that the cost 

allocation should have focused on what 

market participants should pay based on 

costs and benefits, rather than ability to 

pay based on aggregate revenues.210

One commenter believes the cost 

allocation is inequitable and an undue 

burden on Industry Members.211 The 

commenter believes that CAT fees 

should only be imposed on beneficiaries 

of CAT services,212 allocated in 

proportion to benefit received.213 The 

commenter believes that market 

participants that pose higher risks and 

potential conflicts of interest should pay 

higher fees than other market 

participants.214

One commenter approves the 

proposed elimination of tiering, but 

expresses concern at the allocation, 

stating that allocating set percentages of 

total costs to one group over another is 

the wrong approach.215 The commenter 

criticizes the Proposed Amendment for 

basing the allocation on ensuring that 

the highest paying Industry Members 

pay the same as the highest paying 

Participants.216 Additionally, this 

commenter believes that Participants 

would have no incentive to manage 

costs if they are only responsible for 

25% of Total CAT Costs.217 For the 

same reason, another commenter 

believes there is little incentive for 

Participants to justify their historical 

costs or manage a reasonable and 

efficient operating budget.218 The 

commenter believes the cost allocation 

methodology differences between the 

Industry Members and the Participants 

warrants further discussion and 

transparency.219

One commenter notes that the 

Proposed Funding Model does not 

explain how the 75% allocation to 

Industry Members relates to overall CAT 

costs resulting from Industry Member 

reporting and therefore may not be 

supported by Section 11.2(a) and 

Section 11.2(b) of the CAT NMS Plan.220

Another commenter suggests a 50%– 

50% cost allocation between Industry 

Members and Participants and argues 

that any allocation should be 

transparent and predictable and 

supported by evidence.221 The 

commenter suggests that Industry 

Member costs be allocated based on the 

value any Industry Member receives 

from the market.222 One commenter 

believes the proposal lacks information 

for commenters to understand how CAT 

costs are allocated across asset 

classes.223 The commenter suggests the 

creation of a predictable cost allocation 

methodology reached through 

engagement with Industry Members that 

aligns costs with the receipt of benefits 

from the market.224

One commenter believes the proposed 

allocation is arbitrary because the 

Participants override the allocation with 

adjusted allocations, such as the 

proposed market maker discounts, the 

Minimum Industry Member CAT Fee 

and the Maximum Industry Member 

CAT Fee, and the treatment of OTC 

Equity Security share volume.225 The 

commenter believes the Proposed 

Funding Model would shift the 

regulatory cost of overseeing one 

Industry Member to another Industry 

Member, with the potential effect of 

retail investors who transact with small 

Industry Members indirectly 

subsidizing sophisticated investors who 

transact with large market-makers.226

The commenter states, ‘‘the Operating 

Committee has not provided a sufficient 

regulatory case for a proposed funding 

model which imposes different costs for 

the same CAT reportable events.’’ 227

Several commenters believe the 

proposed cost allocation between 

Industry Members and Participants 

ignores the time investment and costs 

already incurred by Industry Members 

to report to the CAT.228 One commenter 

notes that Industry Members have had 

to develop internal systems for CAT 

reporting and that Industry Members 

have provided critical assistance to the 

Participants in developing Industry 

Member CAT Technical 

Specifications.229 The commenter 

opines that an analysis of the costs 

incurred by Industry Members for 

internal compliance would demonstrate 

that the Industry Allocation is not an 

equitable allocation of reasonable 

fees.230 Another commenter notes that 

the Proposed Amendment does not 

mention the substantial time and cost 

invested by Industry Members into 

refining reporting specifications and 

building CAT reporting platforms,231

and one other commenter believes that 

the Proposed Amendment ignores the 

substantial costs that Industry Members 

have incurred associated with the 

development, testing and 

implementation of the CAT.232

One commenter states that the 

Proposed Funding Model treats 

affiliated Participants differently than 

affiliated Industry Members without 

explaining how this inconsistency is 

consistent with the Exchange Act.233

The commenter explains that affiliated 

Participants would be charged based on 

aggregate market share as a single 

complex, while affiliated Industry 

Members would be charged individually 

based on individual message traffic. The 

commenter states, ‘‘[t]his methodology 

seems to be rooted in the Participants’ 

view that it provides for a fair allocation 

of fees under the proposal because it 

results in the largest Participant 

complexes being charged approximately 

the same level of fees as the largest 

Industry Members.’’ The commenter 

notes that the result is not a fair 

allocation of reasonable fees as the 

largest Industry Members have multiple 

affiliates that, if viewed as a single 

aggregated complex like affiliated 

Participants, would pay greater CAT 

fees than the largest Participant 

complexes.234

One commenter questions why 

equities and options message traffic is 

combined for Industry Member cost 

allocation purposes, unlike the 

Participant Allocation where 60% of the 

Total CAT Costs would be allocated to 


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235See Istra Letter at 3–4. 

236 Id. at 4. 

237See Virtu Letter at 4, 6; Fidelity Letter at 4; 

SIFMA Letter at 7; Tower Letter at 5. 

238See SIFMA Letter at 7. 

239 Id. 

240See Fidelity Letter at 4. 

241 Id. 

242See FINRA Letter at 9. 

243 Id. 

244See Data Boiler Letter at 7; FIA PTG May 12th 

Letter at 4; Fidelity Letter at 2–4; FINRA Letter at 

5; Istra Letter at 3; MMI Letter at 4; NYSE Letter 

at 2; Parallax Letter at 2; SIFMA Letter at 5–8; STA 

Letter at 4; Tower Letter at 4; Virtu Letter at 3–4. 

245See CAT Operating Committee July 14th Letter 

II at 2. 

246 Id. at 2–4; Notice, supra note 4 at 21054– 

21055. 

247See Tower Letter at 5; SIFMA Letter at 7; Virtu 

Letter at 3; FIA PTG May 12th Letter at 5; Parallax 

Letter at 4. See also Data Boiler Letter at 7 

(suggesting that fines and settlements should fund 

the CAT). 

248See SIFMA Letter at 7. See also MMI Letter at 

5–6 (stating that information is needed concerning 

any potential cost-savings to FINRA from OATS 

retirement that could offset the cost of running the 

CAT, as well as a proposed TAF increase in 2022); 

Virtu Letter at 4 (stating that the Proposed 

Amendment should have analyzed whether 

FINRA’s TAF could offset CAT costs after OATS 

has been retired). 

249See SIFMA Letter at 7. 

250 Id. 

251See Virtu Letter at 3. 

252See FIA PTG May 12th Letter at 5. 

253 Id.; MMI Letter at 5–6; SIFMA Letter at 7; 

Tower Letter at 5; Virtu Letter at 4. 

254See CAT Operating Committee July 14th Letter 

I at 6. 

255 Id. 

256See FINRA Letter at 2–4. 

257On May 9, 2017, the Operating Committee for 

the Company filed proposed Amendment No. 2 to 

the CAT NMS Plan to establish the CAT fees to be 

paid by the Participants. See Letter from Michael 

Simon, CAT NMS Plan Operating Committee Chair, 

to Brent J. Fields, Secretary, Commission, dated 

May 9, 2017. See also Securities Exchange Act 

Release No. 80930 (June 14, 2017), 82 FR 28180 

(June 20, 2017). The Commission issued an order 

of summary abrogation of Amendment No. 2 on July 

21, 2017. See Securities Exchange Act Release No. 

81189 (July 21, 2017), 82 FR 35005 (July 27, 2017). 

The Participants subsequently filed proposed 

Amendment No. 3 to the CAT NMS Plan on October 

30, 2017 to establish the Participant CAT fees. See 

Letter from Michael Simon, CAT NMS Plan 

Operating Committee Chair, to Brent J. Fields, 

Secretary, Commission, dated October 30, 2017. On 

December 11, 2017, the Operating Committee filed 

proposed Amendment No. 4 to the CAT NMS Plan, 

which replaced and superseded Amendment No. 3 

in its entirety. See Letter from Michael Simon, CAT 

NMS Plan Operating Committee Chair, to Brent J. 

Fields, Secretary, Commission, dated December 11, 

2017. See also Securities Exchange Act Release No. 

82451 (January 5, 2018), 83 FR 1399 (January 11, 

2018). The Participants withdrew Amendment No. 

4 to the CAT NMS Plan on January 11, 2018. See 

Letter from Michael Simon, CAT NMS Plan 

Operating Committee Chair, to Brent J. Fields, 

Secretary, Commission, dated January 10, 2018. See 

also Securities Exchange Act Release No. 82892 

(March 16, 2018), 83 FR 12633 (March 22, 2018). 

258See FINRA Letter at 4. 

259 Id. 

260 Id. at 7, n.17. 

261 Id. at 2–4. 

Equities Participants and 40% would be 

allocated to Options Participants.235 The 

commenter states, ‘‘[i]f message traffic is 

indeed the major driver of CAT costs, 

then it stands to reason that at least 40% 

of the Industry Member costs be 

allocated to options (as in the 

Participants’ allocation framework), if 

not significantly more.’’ 236

Four commenters note that, under the 

proposed allocation, Industry Members 

must not only cover their allocation of 

the Total CAT Costs, but they must also 

fund FINRA, which would owe its own 

share of Participant CAT fees.237 One 

commenter believes that, including 

FINRA’s allocation, the Industry 

Member Allocation would exceed 

80%.238 The commenter notes that the 

Proposed Amendment does not explain 

why FINRA should be treated the same 

way as exchanges for allocation 

purposes when Industry Members pay 

FINRA’s operation costs through 

regulatory fees and fines.239 Another 

commenter believes that FINRA will 

raise its fees to help pay for its own 

Participant Allocation, further 

increasing the cost to be borne by 

Industry Members.240 This commenter 

suggests that the Participants should 

submit a new proposal with a cost 

methodology supported by data that 

Industry Members can evaluate.241

FINRA itself comments, ‘‘[o]ne effect of 

adopting these unsupported allocation 

criteria would be an unjustified increase 

in FINRA’s fee assessments . . .’’ 242

FINRA also states that because it relies 

on regulatory fees from members, the 

Proposed Funding Model would 

reallocate FINRA’s costs to Industry 

Members in addition to the CAT fees to 

be borne by Industry Members.243

In response to comments questioning 

the justification for the proposed 75%– 

25% allocation,244 the Operating 

Committee states that this allocation 

‘‘continues to be an equitable allocation 

of reasonable CAT fees between 

Industry Members and Participants that 

balances the costs paid by each CAT 

Reporter and the regulatory benefits 

each receives.’’ 245 The Operating 

Committee reiterates the arguments it 

made in support of the allocation from 

the Proposed Amendment.246

Several commenters state that the 

Proposed Amendment does not consider 

whether regulatory fees and fines paid 

by Industry Members could offset the 

costs of CAT.247 One commenter asserts 

that the Proposed Funding Model did 

not consider using exchange regulatory 

revenues or profits as sources of funding 

and did not explain why fines paid by 

Industry Members for CAT reporting 

violations could not offset the costs of 

operating the CAT.248 In addition, the 

commenter states that the Proposed 

Funding Model did not analyze whether 

FINRA’s Trading Activity Fee (‘‘TAF’’) 

could offset the costs of CAT when 

OATS is retired, or whether FINRA 

could reduce the TAF rate.249 The 

commenter said that inclusion of this 

analysis would reveal that the Industry 

Allocation is not an equitable allocation 

of reasonable fees.250 Another 

commenter argues that Industry 

Members pay membership fees, 

registration and licensing fees, and 

regulatory fees to Participants, yet the 

Proposed Funding Model did not 

address how these fees are allocated and 

why Industry Members must be 

responsible for a new funding 

requirement.251 One commenter 

believes that revenues from fines should 

be allocated to the Company’s operating 

reserve in order to decrease CAT 

costs.252

In response to comments suggesting 

that regulatory fines and cost savings 

due to the retirement of OATS should 

be used to decrease CAT costs,253 the 

Operating Committee states that it will 

not reduce CAT fees based on the 

ancillary effects of the CAT.254 The 

Operating Committee explains that the 

proposed CAT fees account for the costs 

to create, implement and maintain the 

CAT, not other aspects of the 

Participants’ regulatory operations.255

Finally, one commenter argues that 

the elimination of comparability as a 

funding principle removes support for 

the proposed cost allocation.256 The 

commenter explains that comparability 

was key to the decision to propose the 

75%–25% allocation to Industry 

Members and Participants when the 

Participants previously proposed CAT 

fees in 2017.257 The commenter 

explains that the Participants removed 

comparability from the funding model 

because the Proposed Funding Model 

no longer assesses fees through tiers.258

The commenter states, ‘‘if the principle 

driving the change to a no-tier approach 

is to assess fees more transparently on 

CAT Reporters in direct relation to the 

costs that each creates for the CAT with 

its reporting activity, the Proposed 

Funding Model fails to apply this 

principle consistently.’’ 259 The 

commenter adds that the Proposed 

Amendment does not discuss the 

impact of the removal of the tiers and 

the comparability principle on the 

funding model.260

In response to the comment,261 the 

Operating Committee explains that the 

comparability provision was used to 

determine fee tiers. Since a tiered fee 


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262See CAT Operating Committee July 14th Letter 

II at 4. 263See LTSE Letter at 5; FINRA Letter at 6. See 

also NYSE Letter at 2 (describing the proposed 

allocation as part of ‘‘an incomprehensible, 

distorted program’’); MMI Letter at 5 (requesting 

further transparency and discussion on cost 

allocation methodology differences between 

Participants and Industry Members). 264See LTSE Letter at 5; FINRA Letter at 6. 265See FINRA Letter at 6. 266 Id. 267See Section 11.2(a) and Section 11.2(b) of the 

CAT NMS Plan. 

268See FINRA Letter at 6. 

269See LTSE Letter at 5. 

270 Id. 

271See FINRA Letter at 6; LTSE Letter at 5; MMI 

Letter at 5; NYSE Letter at 2. 

272See CAT Operating Committee July 14th Letter 

II at 13–14. 

273See SIFMA Letter at 8–10; Istra Letter at 3, 5; 

Virtu Letter at 5; SSGA Letter at 2; Data Boiler 

Letter at 7. See also NYSE Letter at 1, 3 

(recommending a cost allocation framework based 

on executed share volume) and STA Letter at 4 

(agreeing with the suggestion to use executed share 

volume); Fidelity Letter at 4 (stating that the 

Proposed Amendment has not explained why 

Industry Members must pay CAT fees based on 

message traffic while Participants will pay based on 

market share). 

274See SIFMA Letter at 8–9. 

275 Id. at 9. 

276 Id. 

277 Id. 

278See MMI Letter at 4. 

279See FINRA Letter at 3–4. 

280See supra note 257. 

281See Istra Letter at 2; SIFMA Letter at 9. 

282See Istra Letter at 2. 

283See SIFMA Letter at 9. 

284See Istra Letter at 4–5; MMI Letter at 4; SIFMA 

Letter at 8–9. 

285See CAT Operating Committee July 14th Letter 

II at 6. 

286 Id. 

287See Fidelity Letter at 2, 3. 

288 Id. 

289See CAT Operating Committee July 14th Letter 

II at 6. 

290See SIFMA Letter at 9; Virtu Letter at 5; Istra 

Letter at 5; SSGA Letter at 2. 

structure would not be used under the 

Proposed Funding Model, the Operating 

Committee believes it is appropriate to 

delete the comparability provision as it 

is no longer relevant.262

Allocation of Costs Between Equities 

and Options Participants 

Two commenters argue that the 

Proposed Amendment failed to justify 

the proposed 60%–40% allocation of 

costs between Equities and Options 

Participants.263 Both commenters 

believe the Proposed Amendment lacks 

justification to support the allocation.264

One commenter notes that the 

Participants previously stated that 

message traffic is a key cost driver of the 

CAT.265 The commenter attests that the 

Proposed Funding Model would assess 

Options Participants, which generate 

significantly more message traffic than 

Equities Participants, a lesser amount of 

the total CAT costs than Equities 

Participants.266 This commenter 

believes the result is inconsistent with 

the CAT’s cost alignment principles 267

and that the Operating Committee does 

not explain how the result is consistent 

with the funding principles or the 

Exchange Act.268 The other commenter 

believes the allocation is arbitrary and 

unfairly discriminatory.269 The 

commenter opines that the explanation 

provided by the Participants—that the 

allocation was ‘‘subject to negotiations 

among the Participants’’—is not a basis 

for approval under the Exchange Act, 

and notes that the majority of votes on 

the Operating Committee are held by 

Participants that operate options 

exchanges.270

In response to the comments,271 the 

Operating Committee states that the 

proposed 60%–40% allocation of costs 

between Equities Participants and 

Options Participants is an appropriate 

allocation that is consistent with the 

CAT NMS Plan, which contemplates 

allocating Participant CAT fees based on 

activity in options and equities, and 

explains that the allocation was the 

subject of negotiations among the 

Participants.272

Use of Message Traffic for Industry 

Members 

Several commenters object to the use 

of message traffic as the basis of 

Industry Member CAT fees.273 One 

commenter believes that message traffic 

is not an appropriate measure for 

allocating fees to Industry Members.274

The commenter notes that the 

Participants ‘‘control how message 

traffic is defined, how message traffic is 

processed, and whether steps can be 

taken to reduce message traffic.’’ 275 The 

commenter argues that charging only 

Industry Members based on message 

traffic is not a fair allocation of 

reasonable fees because it creates no 

incentive for the Participants to control 

CAT message traffic and CAT costs.276

The commenter believes the 

proliferation of exchanges has resulted 

in higher CAT message traffic, and thus 

higher costs, but notes that this is not 

analyzed in the funding model.277

Another commenter suggests that 

additional data is needed to support the 

apportionment of CAT costs according 

to message count.278

One commenter notes that the 

elimination of comparability as a 

funding principle removes support for 

the proposed requirement to base 

Industry Members CAT fees on message 

traffic and Participant CAT fees on 

market share.279 The commenter 

explains that comparability was key to 

the decision to propose message traffic 

as the basis of Industry Member CAT 

fees and market share as the basis of 

Execution Venue CAT fees when the 

Participants previously proposed CAT 

fees in 2017.280

Two commenters believe that the 

Proposed Funding Model needs to 

examine the impact of options quoting 

activity on CAT.281 One commenter 

states that Options Market Maker 

quoting comprises the ‘‘vast majority’’ of 

CAT messaging and that the design of 

the CAT should be reevaluated in case 

CAT is being ‘‘weighed down by options 

activity with little impact on market 

quality and traded volume.’’ 282 The 

other commenter states that the 

Proposed Funding Model lacks an 

analysis of the message traffic and costs 

generated by Options Market Makers 

that are required by SRO rules to 

provide quotes in over a million options 

series, even those that do not trade.283

In response to comments questioning 

the use of message traffic as a basis of 

Industry Member CAT fees,284 the 

Operating Committee states that ‘‘the 

use of message traffic for allocating CAT 

costs among Industry Members is 

consistent with the CAT NMS Plan as 

approved by the Commission, and the 

proposal did not seek to change the use 

of message traffic for this purpose in the 

Proposed Funding Model.’’ 285 The 

Operating Committee notes that it 

explored allocating the Industry 

Member Allocation based on revenue 

related to activities in Eligible 

Securities, but decided it would be 

difficult to determine the types of 

Industry Member revenue to include in 

the calculation of a CAT fee using this 

approach.286

One commenter suggests that the 

Reportable Events that will constitute 

message traffic be defined in the CAT 

NMS Plan, rather than in the IM 

Reporting Tech Specs, so that any 

changes to the Reportable Events that 

would be defined as message traffic 

would be subject to the notice and 

comment process.287 In response to the 

comment,288 the Operating Committee 

states that ‘‘delineating the method for 

reporting Reportable Events used in the 

message traffic count in the Technical 

Specifications, rather than the CAT 

NMS Plan, is appropriate because the 

technical approach to reporting specific 

Reportable Events may vary over 

time.’’ 289

Commenters also believe that the use 

of message traffic as a basis of Industry 

Member CAT fees could affect market 

participant behavior with harmful 

consequences to the markets.290 Two 


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291See SIFMA Letter at 9; Virtu Letter at 5. 

292See SIFMA Letter at 9. 

293See Virtu Letter at 5. 

294See Istra Letter at 5. 

295 Id. 

296 Id. 

297See SSGA Letter at 2. 

298 Id. 

299 Id. 

300See Istra Letter at –5; MMI Letter at 4; SIFMA 

Letter at 9; SSGA Letter at 2; Tower Letter at 1; 

Virtu Letter at 5. 

301See CAT Operating Committee July 14th Letter 

II at 7. 

302See FIA PTG May 12th Letter at 3; LTSE Letter 

at 2–3; FINRA Letter at 6–7, 9. 

303See FIA PTG May 12th Letter at 3; LTSE Letter 

at 2; FINRA Letter at 6–7, 9. 

304See FIA PTG May 12th Letter at 3. See also 

SIFMA Letter at 9 (stating that message traffic is a 

key driver of CAT costs and that the Participants 

generate a significant amount of message traffic, yet 

the Participants propose to base their own CAT fees 

on market share). See also Parallax Letter at 3 

(recommending an analysis of the amount of 

message traffic that is driven by the Participants, 

such as market maker quoting). 

305See FIA PTG May 12th Letter at 3. 

306See IMC Letter at 2. 

307See Fidelity Letter at 4. See also LTSE Letter 

at 2–3 (stating that the Participants have provided 

no metrics to support their rationale that message 

traffic is not an appropriate basis for Participant 

CAT fees because their message traffic is derivative 

of quotes and orders received from Industry 

Members that the Participants are required to 

display) and NYSE Letter at 2 (stating that the 

Proposed Amendment does not justify why some 

costs should be split by message traffic and other 

costs should be split by market share). 

308See Virtu Letter at 5; LTSE Letter at 3. 

309See supra note 267. 

310See FINRA Letter at 6. 

311 Id. at 9. 

312 Id. at 7–9. 

313 Id. at 8. 

314 Id. at 7. 

315 Id. at 7. 

316See FINRA Letter at 7–8. 

317 Id. at 8. 

318 Id. 

commenters believe the Participants 

have not analyzed the impact of the 

proposed approach on the markets.291

One commenter states that the Proposed 

Funding Model does not address 

whether market makers would reduce 

their quoting activity in order to reduce 

their CAT fees, even with the proposed 

market maker discounts.292 The other 

commenter believes that such a 

reduction in message traffic could 

impact liquidity.293

One commenter believes that using 

message traffic as the basis of Industry 

Member CAT fees will hurt the 

provision of liquidity and harm market 

quality.294 The commenter explains, 

‘‘[a] message that becomes displayed on 

an exchange has obvious value to the 

entire market and not only to the broker 

(or its customer) providing that 

liquidity. Taxing the message will 

naturally discourage its provision.’’ 295

The commenter emphasizes the benefits 

of displayed quoting on the markets and 

the negative consequences of the 

potential reduction in this activity that 

could result from the proposed 

approach.296

One commenter discusses the 

potential negative impact on ETFs 

caused by the use of message traffic as 

the basis for Industry Member CAT 

fees.297 The commenter believes that the 

proposed approach would result in a 

reduction in quoting to minimize CAT 

fees.298 The commenter states that ETF 

market making activity is messageintensive and any changes in behavior 

caused by the proposed approach could 

‘‘interfere with the arbitrage mechanism 

and negate the work by Industry 

Members and exchanges to promote 

tighter bid-ask spreads, deeper markets 

and greater participation among 

liquidity providers.’’ 299

In response to comments questioning 

the effects of the use of message traffic 

to calculate fees on the markets,300 the 

Operating Committee states that its 

proposed market maker discounts and 

the proposed Maximum Industry 

Member CAT Fee are designed to 

address potential disincentives. 

Additionally, the Operating Committee 

states that the market maker discounts 

‘‘recognize the value of the market 

making activity to the market as a 

whole.’’ 301

Use of Market Share for Participants 

Several commenters believe that 

Participants should be assessed fees 

based on message traffic rather than 

market share.302 The commenters note 

that the primary driver of CAT costs is 

the processing and storage of message 

traffic; therefore, Participants should be 

assessed CAT fees based on message 

traffic.303

One commenter believes that using 

market share to determine Participant 

CAT fees ‘‘gives a free pass to Plan 

Participants who generate high levels of 

message traffic but have very little 

market share.’’ 304 This commenter 

believes that using message traffic as the 

basis of Industry Member CAT fees and 

market share as the basis of Participant 

CAT fees is inherently discriminatory, 

maximizes Industry Member costs and 

minimizes Participant costs, and 

appears to result from Participant 

conflicts of interest and a lack of 

industry input until the funding 

model.305 Another commenter believes 

that using message traffic as the basis of 

Industry Member CAT fees and market 

share as the basis of Participant CAT 

fees is discriminatory and 

unsupportable.306 One commenter 

believes the Proposed Amendment fails 

to explain why Industry Members will 

be assessed fees based on message traffic 

while Participants will be assessed fees 

based on market share.307 Two 

commenters believe that the 

Participants will have no incentives to 

limit message traffic to lower costs if 

they are not being charged CAT fees 

based on message traffic.308

Another commenter, FINRA, believes 

that requiring market share to be the 

basis of Participant costs is inconsistent 

with CAT cost alignment principles 309

because message traffic is the key driver 

of costs, not market share.310 The 

commenter notes that if the Participants 

believe FINRA’s CAT fee would be too 

low based on its message traffic, FINRA 

would consider paying a more 

appropriate amount or an allocation 

based on a combination of message 

traffic and market share.311

This commenter also objects to the 

use of market share in determining its 

CAT fees.312 The commenter states that 

it would be responsible for 20% of the 

Equities Participant Allocation even 

though it generates less than 1% of 

equities message traffic reported to the 

CAT.313 The commenter explains that 

its market share would be based on 

trade reporting volume reported through 

its facilities, which is also reported by 

Industry Members.314 The commenter 

asks how this is consistent with the 

Operating Committee’s rationale for the 

use of market share to determine 

Participant CAT fees—that message 

traffic is not an appropriate basis for 

Participants because their message 

traffic is derivative of Industry Member 

reporting activity.315 In addition, the 

commenter states that the Operating 

Committee justifies the use of market 

share for Participants because their 

business models are focused on 

executions; however, the commenter 

notes that ‘‘given FINRA’s unique role, 

trade volume is reported through FINRA 

for regulatory purposes, not to serve 

FINRA’s business purposes.’’ 316 The 

commenter adds that the Operating 

Committee justifies the use of market 

share as a basis for FINRA’s CAT fees 

as FINRA would be one of the largest 

regulatory users of the CAT.317 The 

commenter asks ‘‘why regulatory usage 

is offered only to justify FINRA’s 

allocation of the proposed fee that is 

based on unrelated criteria (market 

share), particularly when all 

Participants may use CAT data for 

regulatory purposes.’’ 318 The 

commenter argues that the Operating 

Committee has not analyzed the costs of 

regulatory usage, and states that if a 


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319 Id. at 8–9. 

320See FIA PTG May 12th Letter at 3; Fidelity 

Letter at 4; FINRA Letter at 6–7; IMC Letter at 2; 

LTSE Letter at 2–3; MMI Letter at 5; NYSE Letter 

at 2; SIFMA Letter at 8–9. 

321See CAT Operating Committee July 14th Letter 

II at 12–13; Notice, supra note 4, at 21060. 

322See Data Boiler Letter at 8–9; LTSE Letter at 

5. See also NYSE Letter at 2 (noting the added 

complexity of the ‘‘bespoke fee structure for 

FINRA’’). 

323See Data Boiler Letter at 8–9. 

324 Id. at 9. 

325 Id. at 8. 

326 Id. 

327See CAT Operating Committee July 14th Letter 

II at 14; Notice, supra note 4, at 21061. 

328See LTSE Letter at 5. 

329 Id. 

330 Id. 

331See supra text accompanying notes 312–319. 

332See Data Boiler Letter at 9; FINRA Letter at 7– 

9; LTSE Letter at 5; NYSE Letter at 2. 

333See CAT Operating Committee July 14th Letter 

II at 15; Notice, supra note 4, at 21062. 

334See LTSE Letter at 4. 

335See LTSE Letter at 4. See also NYSE Letter at 

2 (noting the added complexity of the Minimum 

Participant Fee). 

336See LTSE Letter at 4. 

337 Id. at 4–5. 

338 Id. at 4, n.9. 

339 Id. at 4–5; NYSE Letter at 2. 

340See CAT Operating Committee July 14th Letter 

II at 15; Notice, supra note 4, at 21060. 

341See Data Boiler Letter at 7–8; Tower Letter at 

6; FINRA Letter at 5–6; MMI Letter at 5; SIFMA 

Letter at 9. 

342See Data Boiler Letter at 7. 

343 Id. 

344See SIFMA Letter at 9. 

345 Id. 

346See Tower Letter at 6. 

347See FINRA Letter at 5. 

348See Data Boiler Letter at 7–8; FINRA Letter at 

5–6; MMI Letter at 5; SIFMA Letter at 9; Tower 

Letter at 6. 

regulatory usage fee is appropriate, it 

should apply to all Participants.319

In response to comments questioning 

the use of market share to calculate 

Participant fees,320 the Operating 

Committee states that the CAT NMS 

Plan contemplates that Participants pay 

a CAT fee that is based on market share. 

After considering alternatives to the use 

of market share, the Operating 

Committee concluded that market share 

would equitably allocate CAT fees 

among Participants. The Operating 

Committee reiterates arguments it made 

in support of the use of market share in 

the Proposed Amendment.321

Maximum Equities Participant Fee 

Two commenters object to the 

Maximum Equities Participant Fee 

because they believe that the sole 

Participant subject to the fee—FINRA— 

would be unfairly afforded preferential 

treatment.322 One commenter believes 

that FINRA should receive a higher 

portion of CAT costs than Participants 

that lack a surveillance business 

because FINRA can capitalize off of the 

predecessor plan processor’s 

development work and its technology 

will benefit from CAT.323 The 

commenter believes that FINRA should 

not be permitted re-allocation of its CAT 

fee under the Maximum Equities 

Participant Fee.324 The commenter also 

states, ‘‘[a]lthough we acknowledge that 

the nature of OTC trading in penny level 

may inherently be different from the 

proposed message traffic measurement 

use in Equity/Listed Option Group 

Split, similar arguments may apply to 

thinly traded securities, ESG stocks, 

etc., which SEC rule should avoid ‘craftout.’’’ 325

In response to the comment noting the 

nature of trading in OTC Equity 

Securities,326 the Operating Committee 

states that it proposes to exclude OTC 

Equity Securities share volume from the 

calculation of market share for national 

securities exchanges. The Operating 

Committee reiterates the arguments it 

made in support of the proposed 

exclusion of OTC Equity Securities 

share volume in the Proposed 

Amendment.327

The other commenter believes that the 

Maximum Equities Participant Fee 

market share caps and re-allocation are 

arbitrary and unfairly discriminatory.328

The commenter believes that the 

proposal lacks justification for requiring 

other Equities Participants to be 

allocated FINRA’s market share when 

FINRA’s activity does not occur on their 

markets.329 The commenter notes, ‘‘[t]he 

stated rationale that this is necessary for 

the FINRA fees to be ‘fair and 

reasonable’ is subjective, unsupported 

by any data, and further highlights the 

shortcomings of a fee model based on 

market share.’’ 330

One commenter, FINRA, also objects 

to the Maximum Equities Participant 

Fee because it is based on the use of 

market share for calculating FINRA’s 

CAT fees, which FINRA believes is 

inconsistent with the funding principles 

of the CAT NMS Plan and ill-suited to 

FINRA’s unique model.331

In response to comments received on 

the Maximum Equities Participant 

Fee,332 the Operating Committee 

reiterates the arguments it made in 

support of the proposed Maximum 

Equities Participant Fee in the Proposed 

Amendment.333

Minimum Participant Fee 

One commenter objects to the 

proposed Minimum Participant Fee as 

inconsistent with the notion that market 

share is a fair method of allocation,334

and as arbitrary and unfairly 

discriminatory.335 The commenter states 

that this fee would be paid by every 

Participant, regardless of its market 

share, and notes that this fee can 

significantly increase even if a 

Participant itself is not creating 

increased costs to the CAT.336 The 

commenter questions why some 

Participants would incur a higher 

Minimum Participant Fee when only 

certain Participants engage in activity 

that results in increased CAT message 

traffic.337 The commenter also notes that 

a Participant that operates both an 

options and equities exchange would be 

assessed only one Minimum Participant 

Fee.338

In response to the comments on the 

Minimum Participant Fee,339 the 

Operating Committee reiterates the 

arguments it made in support of the 

proposed Minimum Participant Fee in 

the Proposed Amendment.340

Maximum Industry Member CAT Fee 

Several commenters express concern 

about the Maximum Industry Member 

CAT Fee.341 One commenter believes 

the Maximum Industry Member CAT 

Fee ‘‘exacerbates inequalities’’ 342 and 

believes that small firms should not be 

responsible for subsidizing the CAT fees 

for the top 36 firms that generate the 

vast majority of message traffic.343

Similarly, another commenter believes 

that a lack of transparency into the reallocation of CAT fees for Industry 

Members in excess of the Maximum 

Industry Member CAT Fee adds 

complexity and makes it difficult for 

Industry Members to calculate their 

costs under the Proposed Funding 

Model.344 This commenter also believes 

the cap of 8% of total Industry Member 

CAT message traffic is arbitrary.345

Another commenter objects to the 8% 

cap, explaining that the proposal has 

not fully justified the cap, and that it 

provides large brokers an unfair 

advantage by requiring other Industry 

Members, including their direct 

competitors, to pay the large brokers’ reallocation of fees in excess of the 

Maximum Industry Member CAT 

Fee.346 Finally, one commenter believes 

the Proposed Funding Model 

insufficiently analyzes the ‘‘crosssubsidization that results from the 

proposed minimum and maximum 

Industry Member fees’’ nor does it 

explain the reasoning behind the 

creation of the Maximum Industry 

Member CAT Fee.347

In response to comments on the 

Maximum Industry Member CAT 

Fee,348 the Operating Committee 

reiterates the arguments it made in 

support of the proposed Maximum 


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349See CAT Operating Committee July 14th Letter 

II at 12; Notice, supra note 4, at 21059. 

350See Data Boiler Letter at 7; FINRA Letter at 5– 

6. 

351See Data Boiler Letter at 7. 

352See FINRA Letter at 5–6. 

353See FINRA Letter at 5–6. 

354See Data Boiler Letter at 7; FINRA Letter at 5– 

6. 

355See CAT Operating Committee July 14th Letter 

II at 7; Notice, supra note 4, at 21058–21059. 

356See Data Boiler Letter at 7, 8, 9; SIFMA Letter 

at 9; Tower Letter at 5–6; Istra Letter at 3–5; Parallax 

Letter at 3. 

357See Istra Letter at 3–5. 

358 Id. at 4–5. See also Parallax Letter at 3 (stating 

that the trade-to-quote ratio needs further analysis). 

359See Istra Letter at 4. 

360 Id. at 5. 

361 Id. at 4. 

362 Id. 

363See Parallax Letter at 3. This commenter also 

suggests that there should be a process to confirm 

that Industry Members accurately identify 

themselves as market makers to receive the 

proposed market maker discounts, and penalties for 

those who wrongfully identify themselves or their 

activities to receive a discount. Id. 

364See Tower Letter at 6. 

365 Id. at 5–6. See also Parallax Letter at 4 (stating 

that it is important to understand the extent to 

which Industry Members would benefit from the 

discounts). 

366See Tower Letter at 5. 

367 Id. at 6. 

368 Id. at 3. 

369 Id. at 6. 

370See CAT Operating Committee July 14th Letter 

II at 7. 

371See Data Boiler Letter at 9. 

372See SIFMA Letter at 9. 

373See FIA PTG May 12th Letter at 4; IMC Letter 

at 2; Data Boiler Letter at 7; SIFMA Letter at 9; Istra 

Letter at 2–4; Parallax Letter at 3; Tower Letter at 

5–6. 

374See CAT Operating Committee July 14th Letter 

II at 9; Notice, supra note 4, at 21057–21058. 

375See IMC Letter at 2; FIA PTG May 12th Letter 

at 4. 

Industry CAT Fee in the Proposed 

Amendment.349

Minimum Industry Member CAT Fee 

Two commenters object to the 

Minimum Industry Member CAT Fee.350

One of the commenters believes the 

Minimum Industry Member CAT Fee 

poses an undue burden on Industry 

Members and, by charging a ‘‘de 

minimis fee,’’ is inconsistent with 

Section 11.2(d), which requires the 

Operating Committee to provide for ease 

of billing and other administrative 

functions.351

The other commenter believes the 

proposal lacks justification for the 

Minimum Industry CAT Fee, explaining 

that the fee could increase for firms with 

little message traffic due to the 

redistribution of CAT fees in excess of 

the Maximum Industry Member CAT 

Fee.352 The commenter states this result 

was not discussed in the Proposed 

Funding Model nor was there a 

discussion of how the result is 

consistent with the CAT funding 

principles.353

In response to the comments,354 the 

Operating Committee reiterates the 

arguments it made in support of the 

proposed Minimum Industry Member 

CAT Fee in the Proposed 

Amendment.355

Market Maker Discounts 

Five commenters object to the 

proposed market maker discounts.356

One commenter objects to the market 

maker discounts due to what it deems 

the improper discounting of Equity 

Market Maker message traffic and the 

preferential treatment of Options Market 

Makers at the expense of equities 

Industry Members.357 The commenter 

criticizes the trade-to-quote ratio that is 

the basis of the proposed market maker 

discounts, explaining that it ‘‘ignores 

the realities of the market.’’ 358 The 

commenter suggests only including 

trades executed on-exchange and not 

off-exchange in the ratio.359

Additionally, the commenter objects to 

the use of the SIP best bid and offer 

information in deriving the trade-toquote ratio, explaining that this method 

undercounts the ‘‘activity and value 

contribution of equities market makers 

and further underestimates any market 

maker discount.’’ 360 The commenter 

also argues that, after the Options 

Market Maker discount, equities 

Industry Members would be required to 

pay 95% of the CAT cost when only 

responsible for 12% of the message 

traffic, a ‘‘grossly unfair crosssubsidy.’’ 361 The commenter states that 

at least 40% of Industry Member costs 

should be borne by options Industry 

Members if message traffic is the key 

driver of CAT costs.362 Another 

commenter states that the ‘‘massive 

discounts’’ demonstrate that the 

Participants ‘‘have not found a way to 

perform the core functions needed for 

market surveillance, without the cost of 

it putting at risk an entire segment of the 

industry.’’ 363

Similarly, another commenter states 

that 89% of all Industry Member CAT 

Reportable Events comes from Options 

Market Makers, but the proposed 

Options Market Maker discount reduces 

99% of the billable events for Options 

Market Makers, with the result being 

94% of Industry Members’ share 

allocated to equities non-market 

makers.364 The commenter urges the 

Participants to justify this shift of costs 

to Industry Members that are not 

Options Market Makers and notes that 

the Proposed Amendment has not 

analyzed the effects of the discounts or 

has demonstrated that the discounts 

will be effective.365 The commenter 

states that the Proposed Amendment is 

lacking in several other areas with 

respect to these discounts; there is no 

discussion of: (1) How the proposed 

market maker discount provides a 

pricing advantage to market makers that 

is unavailable to other market 

participants; (2) how the trade-to-quote 

ratio is the correct metric to use for 

determining the market maker 

discounts; (3) how the discount 

incentivizes market makers to quote 

more without trading more; (4) how/ 

whether the discount calculation will 

change if the trade-to-quote ratio 

significantly changes; and (5) any 

impacts on liquidity and market 

participant behavior.366 The commenter 

also believes the Proposed Amendment 

lacks a discussion of its potential impact 

on business lines across the industry, 

such as, for example, its effect on ATSs, 

which would not be considered market 

makers and thus could incur high 

costs.367 The commenter attests that the 

Proposed Amendment lacks the 

information necessary to assess the 

effect of the proposed market maker 

discounts, such as the number of 

transactions resulting from market 

makers and how market-makers 

transactions should be discounted from 

the total number of transactions using 

the trade-to-quote ratio.368

In response to the comment on the 

proposal’s potential effects on business 

lines across the industry,369 the 

Operating Committee states that it 

sought to limit any negative effects on 

certain CAT Reporters resulting from 

the use of message traffic to calculate 

fees, such as through the proposed 

market maker discounts and the 

proposed Maximum Industry Member 

CAT Fee.370

One commenter opposes any market 

maker discounts, but notes that smaller 

market makers that do not pay or 

receive rebates deserve subsidies to 

encourage their participation.371

Another commenter believes the impact 

of market maker discounts, as well as 

the Maximum Industry Member CAT 

Fee, adds complexity and makes it 

difficult for Industry Members to 

calculate their costs.372 In response to 

comments on the market maker 

discounts,373 the Operating Committee 

reiterates its rationale for proposing the 

discounts from the Proposed 

Amendment.374

Two commenters endorse the 

proposed market maker discounts.375

One commenter believes any funding 

plan should include these discounts and 

that additional product-specific 


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376See IMC Letter at 2. 

377See FIA PTG May 12th Letter at 4. 

378See MMI Letter at 5. 

379 Id. 

380See NYSE Letter at 2–5; Data Boiler Letter at 

7–8; STA Letter at 4; FIA PTG May 12th Letter at 

4; Istra Letter at 5–6; IMC Letter at 3; MMI Letter 

at 5. 

381See Data Boiler Letter at 8. 

382 12 CFR 21.11. 

383See Data Boiler Letter at 7–8. 

384 Id. 

385 Id. In response to this comment, the Operating 

Committee states that the Proposed Funding Model 

would treat ATSs as Industry Members, requiring 

all Industry Members to pay a fee based on message 

traffic rather than requiring some ATSs to pay a fee 

based on market share and some ATSs to pay a fee 

based on message traffic, and would also address 

concerns that treating Execution Venue ATSs as 

Participants could create a barrier to entry for 

smaller ATSs. See CAT Operating Committee July 

14th Letter II at 7–8. 

386See MMI Letter at 5; Istra Letter at 5–6; FIA 

PTG May 12th Letter at 4; IMC Letter at 2–3; STA 

Letter at 4; NYSE Letter at 2–5. 

387See MMI Letter at 5; FIA PTG May 12th Letter 

at 4. 

388See FIA PTG May 12th Letter at 4. 

389See MMI Letter at 5. 

390See Istra Letter at 5. 

391 Id. at 5–6. 

392 Id. 

393See NYSE Letter at 2–5. 

394 Id. at 3. 

395 Id. 

396 Id. 

397 Id. 

398 Id. 399See NYSE Letter at 5. 400See IMC Letter at 3; STA Letter at 4. 401See IMC Letter at 2–3; STA Letter at 4. 402See STA Letter at 4. 403See Parallax Letter at 4–5. 404 17 CFR 242.608. 405 17 CFR 201.700; 17 CFR 201.701. 

discounts should be considered.376

Another commenter believes the 

discounts prevent market makers from 

incurring ‘‘a disproportionate 

percentage of CAT costs, which could 

impact their provision of liquidity.’’ 377

One commenter requests clarification 

on the proposed market maker 

discounts, specifying ‘‘cost allocation 

data and projections on market maker 

vs. non-market maker liquidity 

providers.’’ 378 The commenter also asks 

for further transparency and discussion 

on the application of the discounts on 

Industry Members with the most 

message traffic, at the expense of other 

Industry Members.379

Proposed Alternative Funding Models 

Several commenters suggest 

alternatives to the Proposed Funding 

Model.380 One commenter believes that 

fines and settlements should fund the 

CAT and that market participants that 

pose higher risks should pay higher 

CAT fees due to regulators’ ‘‘extra 

efforts in deciphering their complex 

business activities.’’ 381 The commenter 

also suggests the Suspicious Activity 

Report (‘‘SAR’’) 382 as a basis for 

determining Industry Member CAT fees, 

stating that Industry Members that 

underreport on the SAR should have 

increased fines.383 The commenter 

believes that dark pools should pay 

higher CAT fees than SROs because they 

pose higher potential risks due to lack 

of transparency and ‘‘vulnerability to 

conflicts of interest,’’ 384 and also notes 

that internalizers or market makers may 

pose more of a risk than dark pools due 

to greater vulnerability to conflicts of 

interest.385

Other commenters recommend a 

funding model administered similar to 

the Commission’s Section 31 fees.386

Two commenters explain that the 

Participants could be assigned all of the 

CAT costs and then they would decide 

how to reallocate those costs to their 

market participants, like Section 31 

fees.387 One of the commenters believes 

that this method would incentivize 

Participants into better managing CAT 

costs and possibly incentivize them into 

competing over how to allocate costs 

their market participants.388 Another 

commenter also suggests that the 

Commission could instead increase the 

rate of Section 31 fees to fund the 

CAT.389

One commenter believes that a 50%– 

50% cost allocation among Industry 

Members and Participants would be 

preferable to the proposed 75%–25% 

cost allocation,390 but notes a simpler 

and direct way of allocating costs 

through derived value, which the 

commenter believes would not deter the 

provision of liquidity.391 The 

commenter suggests using a 

methodology similar to the Section 31 

fee or the Section 31 fee methodology 

itself.392

Another commenter, a national 

securities exchange, provides a detailed 

alternative funding model administered 

similarly to Section 31 fees.393

According to the alternative model, CAT 

costs would be allocated based on 

executed share volume, which is 

already tracked by market 

participants.394 A per share or per 

contract fee would be calculated by 

dividing the annual budget cost base by 

projected total industry volume.395 Onethird of the fee would be allocated to the 

purchasing broker-dealer, one-third to 

the selling broker-dealer, and one-third 

to the exchange or trade reporting 

facility reporting the transaction.396 The 

commenter believes that this allocation 

would align funding responsibility with 

the receipt of economic benefits from 

the marketplace and would result in 

transparent and predicable CAT funding 

costs.397 The commenter notes that OTC 

equities would be treated differently 

due to their significantly higher share 

volumes, and suggests that they receive 

a small portion of the CAT budget that 

would be allocated among the buyer, 

seller and the Over-the-Counter 

Reporting Facility on a per share 

basis.398 The commenter believes that 

requiring all parties active in each 

transaction to evenly fund the CAT 

would allocate costs transparently, and 

that billing in accordance with Section 

31 fee billing processes would be ‘‘an 

efficient method to administer funding 

program and provide clarity to market 

participants of their trading 

expenses.’’ 399

Two commenters believe the national 

securities exchange’s suggested 

alternative funding model deserves 

review.400 Both commenters support the 

alternative’s suggestion to base funding 

on executed volume rather than message 

traffic via a structure administered like 

Section 31 fees volume rather than 

message traffic.401 However, one 

commenter expresses concern about the 

alternative’s suggested allocation of the 

per share cost, explaining that FINRA’s 

costs would be passed to Industry 

Members through the TAF.402

Additionally, one commenter warns that 

this alternative, and the suggestions to 

use Section 31 fees as a model, could 

result in costs assessed against investors 

and urges the Commission to consider 

the possibility of increased costs and 

whether investors should be responsible 

for these costs.403

V. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Amendment 

The Commission is instituting 

proceedings pursuant to Rule 

608(b)(2)(i) of Regulation NMS,404 and 

Rules 700 and 701 of the Commission’s 

Rules of Practice,405 to determine 

whether to disapprove the Proposed 

Amendment or to approve the Proposed 

Amendment with any changes or 

subject to any conditions the 

Commission deems necessary or 

appropriate after considering public 

comment. Institution of proceedings 

does not indicate that the Commission 

has reached any conclusions with 

respect to any of the issues involved. 

Rather, the Commission seeks and 

encourages interested persons to 

provide additional comment on the 

Proposed Amendment to inform the 

Commission’s analysis. 

Rule 608(b)(2) of Regulation NMS 

provides that the Commission ‘‘shall 

approve a national market system plan 

or proposed amendment to an effective 


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406 17 CFR 242.608(b)(2). 407 Id. 408See Notice, supra note 4. 409 17 CFR 242.608(b)(2)(i). 410 17 CFR 242.608(b)(2). 411 15 U.S.C. 78f(b)(4). 412 15 U.S.C. 78o–3(b)(5). 413 15 U.S.C. 78f(b)(5). 

414 15 U.S.C. 78o–3(b)(6). 

415 15 U.S.C. 78f(b)(8). 

416 15 U.S.C. 78o–3(b)(9). 

417Section 11.2(a) of the CAT NMS Plan. 

418Section 11.2(b) of the CAT NMS Plan. 

419Section 11.2(d) of the CAT NMS Plan. 

420Section 11.2(e) of the CAT NMS Plan. 

421 17 CFR 242.608(b)(2). 

422 17 CFR 201.701(b)(3)(ii). 

423 Id. 

424 Id. 

425 17 CFR 242.608(b)(2)(i). 

426Rule 700(c)(ii) of the Commission’s Rules of 

Practice provides that ‘‘[t]he Commission, in its sole 

discretion, may determine whether any issues 

relevant to approval or disapproval would be 

facilitated by the opportunity for an oral 

presentation of views.’’ 17 CFR 201.700(c)(ii). 

427See Notice, supra note 4. 

national market system plan, with such 

changes or subject to such conditions as 

the Commission may deem necessary or 

appropriate, if it finds that such plan or 

amendment is necessary or appropriate 

in the public interest, for the protection 

of investors and the maintenance of fair 

and orderly markets, to remove 

impediments to, and perfect the 

mechanisms of, a national market 

system, or otherwise in furtherance of 

the purposes of the Exchange Act.’’ 406

Rule 608(b)(2) further provides that the 

Commission shall disapprove a national 

market system plan or proposed 

amendment if it does not make such a 

finding.407 In the Notice, the 

Commission sought comment on the 

Proposed Amendment, including 

whether the Proposed Amendment is 

consistent with the Exchange Act.408 In 

this order, pursuant to Rule 608(b)(2)(i) 

of Regulation NMS,409 the Commission 

is providing notice of the grounds for 

disapproval under consideration: 

• Whether, consistent with Rule 608 

of Regulation NMS, the Participants 

have demonstrated how the Proposed 

Amendment is necessary or appropriate 

in the public interest, for the protection 

of investors and the maintenance of fair 

and orderly markets, to remove 

impediments to, and perfect the 

mechanisms of, a national market 

system, or otherwise in furtherance of 

the purposes of the Exchange Act; 410

• Whether the Participants have 

demonstrated how the Proposed 

Amendment is consistent with Section 

6(b)(4) 411 and Section 15A(b)(5),412 of 

the Exchange Act, which require that 

the rules of a national securities 

exchange ‘‘provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other persons using its 

facilities’’ and that the rules of a 

national securities association ‘‘provide 

for the equitable allocation of reasonable 

dues, fees, and other charges among 

members and issuers and other persons 

using any facility or system which the 

association operates or controls;’’ 

• Whether the Participants have 

demonstrated how the Proposed 

Amendment is consistent with Section 

6(b)(5) 413 and Section 15A(b)(6),414 of 

the Exchange Act, which require that 

the rules of a national securities 

exchange or national securities 

association ‘‘promote just and equitable 

principles of trade . . . protect investors 

and the public interest; and [to be] not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers;’’ 

• Whether the Participants have 

demonstrated how the Proposed 

Amendment is consistent with Section 

6(b)(8) 415 and Section 15A(b)(9) 416 of 

the Exchange Act, which require that 

the rules of a national securities 

exchange or national securities 

association ‘‘do not impose any burden 

on competition not necessary or 

appropriate in furtherance of the 

purposes of [the Exchange Act];’’ 

• Whether the Participants have 

demonstrated how the Proposed 

Amendment is consistent with the 

funding principles of the CAT NMS 

Plan, which state that the Operating 

Committee shall seek, among other 

things, ‘‘to create transparent, 

predictable revenue streams for the 

Company that are aligned with the 

anticipated costs to build, operate and 

administer the CAT and the other costs 

of the Company,’’ 417 ‘‘to establish an 

allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations,’’ 418 ‘‘to provide for ease of 

billing and other administrative 

functions,’’ 419 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 420

• Whether, and if so how, the 

Proposed Amendment would affect 

efficiency, competition or capital 

formation; and 

• Whether modifications to the 

Proposed Amendment, or conditions to 

its approval, would be necessary or 

appropriate in the public interest, for 

the protection of investors and the 

maintenance of fair and orderly markets, 

to remove impediments to, and perfect 

the mechanisms of, a national market 

system, or otherwise in furtherance of 

the purposes of the Exchange Act.421

As discussed in Section IV., above, 

the Participants made various 

arguments in support of the Proposed 

Amendment and the Commission 

received comment letters that expressed 

concerns about the Proposed 

Amendment, including that the 

Participants did not provide sufficient 

information to establish that the 

Proposed Amendment is consistent with 

the Exchange Act and the rules 

thereunder. 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a NMS plan filing is consistent with 

the Exchange Act and the rules and 

regulations issued thereunder . . . is on 

the plan participants that filed the NMS 

plan filing.’’ 422 The description of the 

NMS plan filing, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding.423 Any 

failure of the plan participants that filed 

the NMS plan filing to provide such 

detail and specificity may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

the NMS plan filing is consistent with 

the Exchange Act and the applicable 

rules and regulations thereunder.424

VI. Commission’s Solicitation of 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

Proposed Amendment. In particular, the 

Commission invites the written views of 

interested persons concerning whether 

the Proposed Amendment is consistent 

with Section 11A or any other provision 

of the Exchange Act, or the rules and 

regulations thereunder. Although there 

do not appear to be any issues relevant 

to approval or disapproval that would 

be facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 608(b)(2)(i) of Regulation NMS,425

any request for an opportunity to make 

an oral presentation.426 The 

Commission asks that commenters 

address the sufficiency and merit of the 

Participants’ statements in support of 

the Proposed Amendment,427 in 

addition to any other comments they 


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428Section 11.2(a) of the CAT NMS Plan. 

429Section 11.2(b) of the CAT NMS Plan. 

430Section 11.2(e) of the CAT NMS Plan. 

431Section 11.2(a) of the CAT NMS Plan. 

432Section 11.2(b) of the CAT NMS Plan. 

433Section 11.2(e) of the CAT NMS Plan. 

434Section 11.2(a) of the CAT NMS Plan. 

435Section 11.2(b) of the CAT NMS Plan. 

436Section 11.2(e) of the CAT NMS Plan. 

437Section 6.4(d)(iii) of the CAT NMS Plan states, 

‘‘With respect to the reporting obligations of an 

Options Market Maker with regard to its quotes in 

Listed Options, Reportable Events required 

pursuant to Section 6.3(d)(ii) and (iv) shall be 

reported to the Central Repository by an Options 

Exchange in lieu of the reporting of such 

information by the Options Market Maker. Each 

Participant that is an Options Exchange shall, 

through its Compliance Rule, require its Industry 

Members that are Options Market Makers to report 

to the Options Exchange the time at which a quote 

in a Listed Option is sent to the Options Exchange 

(and, if applicable, any subsequent quote 

modifications and/or cancellation time when such 

modification or cancellation is originated by the 

Options Market Maker). Such time information also 

shall be reported to the Central Repository by the 

Options Exchange in lieu of reporting by the 

Options Market Maker.’’ 

may wish to submit about the proposed 

rule changes. In particular, the 

Commission seeks comment on the 

following: 

A. Requests for Comment on the 

Proposed Funding Model 

1. Commenters’ views on the 

proposed inclusion of ATSs as Industry 

Members for purposes of allocating CAT 

costs; 

2. Commenters’ views on the 

exclusion of reported OTC Equity 

Securities share volume from the 

calculation of market share for national 

securities associations; 

3. Commenters’ views on the 

proposed elimination of tiered fees in 

favor of CAT fees that may vary based 

on message traffic or market share, as 

applicable; 

4. Commenters’ views on the 

proposed elimination from Section 

11.2(c) of the CAT NMS Plan of the 

requirement that the fees charged to 

CAT Reporters with the most CATrelated activity be generally comparable; 

5. Commenters’ views on the 

proposed Minimum Industry Member 

CAT Fee and the requirement that all 

Industry Members pay such fee, even if 

they have not yet started reporting to the 

CAT, and any views on whether the 

Proposed Funding Model has provided 

sufficient information on the operation 

of the fee and on whether the Proposed 

Funding Model has sufficiently 

explained the operation of the 

Minimum Industry Member CAT Fee 

Re-Allocation; 

6. Commenters’ views on the 

proposed Maximum Industry Member 

CAT Fee; any views on whether the 

Proposed Amendment contains 

sufficient justification for the 8% cap 

chosen for the fee; and any views on 

whether a maximum fee is consistent 

with the funding principles expressed 

in the CAT NMS Plan that states that the 

Operating Committee shall seek, among 

other things, ‘‘to create transparent, 

predictable revenue streams for the 

Company that are aligned with the 

anticipated costs to build, operate and 

administer the CAT and the other costs 

of the Company,’’ 428 ‘‘to establish an 

allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations,’’ 429 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 430

7. Commenters’ views on why 

Industry Member CAT fees should be 

capped; views on how such a cap would 

benefit or harm efficiency, competition, 

and capital formation; and any views on 

whether there are other benefits or costs 

of adopting such an approach; 

8. Commenters’ views on the 

proposed Minimum Participant Fee and 

the Maximum Equities Participant Fee, 

including views on the calculation of 

the proposed fees and any views on 

whether the proposed fees raise any 

competitive issues among the 

Participants; and any views on whether 

the proposed fees are consistent with 

the funding principles expressed in the 

CAT NMS Plan, which state that the 

Operating Committee shall seek, among 

other things, ‘‘to create transparent, 

predictable revenue streams for the 

Company that are aligned with the 

anticipated costs to build, operate and 

administer the CAT and the other costs 

of the Company;’’ 431 ‘‘to establish an 

allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations;’’ 432 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 433

9. Commenters’ views on whether 

FINRA’s CAT fee should be capped; any 

views on how such a cap benefits or 

harms efficiency, competition, and 

capital formation; and any views on 

whether there are other benefits or costs 

of adopting such an approach; 

10. Commenters’ views on why 

Participants should be charged the 

Minimum Participant Fee; views on 

how such a minimum would benefit or 

harm efficiency, competition, and 

capital formation; and any views on 

whether there are other benefits or costs 

of adopting such an approach; 

11. Commenters’ views on the 

proposed market maker discounts, any 

views on the potential impact of the 

discounts on market participant 

behavior, including the provision of 

liquidity; and any views on whether the 

proposed market maker discounts are 

consistent with the funding principles 

expressed in the CAT NMS Plan, which 

state that the Operating Committee shall 

seek, among other things, ‘‘to create 

transparent, predictable revenue streams 

for the Company that are aligned with 

the anticipated costs to build, operate 

and administer the CAT and the other 

costs of the Company,’’ 434 ‘‘to establish 

an allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations,’’ 435 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 436

12. Commenters’ views on how 

market-making activity should be 

defined for purposes of the proposed 

market maker discounts; views on 

whether there is activity included in the 

definition of market making that should 

not be included for purposes of 

allocation of CAT fees; and any views 

on whether such a discount should 

apply to market-making activities in all 

types of securities without regard to 

security characteristics; 

13. Commenters’ views on whether 

other Industry Members (including 

those that do not transact in options) 

would subsidize the activity of Options 

Market Makers under the proposal; any 

views on whether Section 6.4(d)(iii) 437

of the CAT NMS Plan effectively 

reduces the message traffic of Options 

Market Makers relative to what it would 

be otherwise, and thus ultimately 

reduce the CAT fees they would be 

assigned under the Participants’ 

proposal; views on how this 

subsidization would benefit or harm 

efficiency, competition, and capital 

formation; views on whether there are 

other benefits or costs of adopting such 

an approach; views (in detail) on 

whether there is an alternative approach 


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438Section 11.2(b) of the CAT NMS Plan. 

439Section 11.2(e) of the CAT NMS Plan. 

440Section 11.2(b) of the CAT NMS Plan. 

441Section 11.2(e) of the CAT NMS Plan. 

that would be more beneficial to 

efficiency, competition, or capital 

formation; and any views on whether 

the discount to fees allocated to 

Industry Members for market making 

activity described in the Participants’ 

proposal provide a similar magnitude of 

benefit to Equity Market Makers; 

B. Requests for Comment on the 

Proposed Fee Schedule 

1. Commenters’ views on the 

determination to allocate 75% of the 

Total CAT Costs to Industry Members 

and 25% of the Total CAT Costs to 

Participants; and any views on whether 

this proposed allocation is consistent 

with the funding principles expressed 

in the CAT NMS Plan, which state that 

the Operating Committee shall seek, 

among other things, ‘‘to establish an 

allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations,’’ 438 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 439

2. Commenters’ views on the rationale 

provided that the proposed 75%–25% 

allocation ensures that Industry 

Members with the most message traffic 

pay comparable fees to Participant 

complexes with the most market share, 

considering the proposed deletion from 

Section 11.2(c) of the CAT NMS Plan of 

the requirement that the fees charged to 

CAT Reporters with the most CATrelated activity be generally comparable; 

3. Commenters’ views on whether 

allocating Participant fees by market 

share while allocating Industry Member 

fees by message traffic, when combined 

with the proposed 75%–25% split 

between Participants and Industry 

Member aggregate fees, introduces 

frictions (such as effectively double 

counting the message traffic sent and 

received by Industry Members, into the 

CAT fee model due to FINRA’s 

allocation of fees from trade volume 

reported to trade reporting facilities); 

views on how frictions would result; 

any views on how this would benefit or 

harm efficiency, competition, and 

capital formation; any views on whether 

there are other benefits or costs of 

adopting such an approach; and any 

views on whether capping FINRA’s 

contribution to CAT fees as described in 

the Participants’ proposal mitigate any 

benefits or costs and to what extent; 

4. Commenters’ views on potential 

alternative allocations of Total CAT 

Costs to Industry Members and 

Participants, including the allocations 

considered, but rejected, by the 

Participants, and the alternative 

allocations suggested by commenters as 

discussed in this order; 

5. Commenters’ views on how fees 

would be passed on to Industry 

Members and investors if all CAT costs 

were allocated to Participants; views on 

how this outcome would be different 

than under the Participants’ proposal; 

views on whether such an approach 

would benefit or harm efficiency, 

competition, and capital formation; and 

any views on whether there are other 

benefits or costs of adopting such an 

approach; 

6. Commenters’ views on whether 

Industry Members have sufficient 

information to estimate and budget for 

their expected allocation of CAT fees 

each quarter; if not, any views on what 

additional information would Industry 

Members need to develop an estimate of 

these fees; 

7. Commenters’ views on whether a 

Section 31 fee-like cost allocation 

framework (i.e., a transaction-based fee 

framework) would benefit or harm 

efficiency, competition, and capital 

formation, and any views on whether 

there are other benefits or costs of 

adopting such an approach; 

8. Commenters’ views on the 

calculation of the Participant Allocation 

and the Adjusted Participant Allocation; 

9. Commenters’ views on the 

determination to allocate 60% of the 

Adjusted Participant Allocation to 

Equities Participants and 40% to 

Options Participants, including views 

on whether the proposed allocation is 

consistent with the funding principles 

expressed in the CAT NMS Plan that 

state that the Operating Committee shall 

seek, among other things, ‘‘to establish 

an allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations,’’ 440 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 441

10. Commenters’ views on an 

alternative approach that would split 

costs between Participants and Industry 

Members by proportion of aggregate 

message traffic, then allocate the 

Participants’ portion of fees across 

Participants by market share, with or 

without the proposed 60%–40% split 

between Equities and Options 

Participants; any views on whether this 

would benefit or harm efficiency, 

competition and capital formation when 

compared to the Participants’ proposal; 

and any views on whether there are 

other benefits or costs of adopting such 

an approach; 

11. Commenters’ views on whether 

elements of the Participants’ proposal 

entail cross-subsidization of activities 

(for example: Allocating 60% of 

Participants’ fees to Equities 

Participants and 40% to Options 

Participants is unlikely to reflect these 

groups’ relative message traffic; and 

discounting fees associated with 

message traffic for market-making 

activities based on quote/trade ratios 

reduces fees paid by Industry Members 

who are market makers); any views on 

how these cross-subsidizations benefit 

or harm efficiency, competition, and 

capital formation; and any views on 

whether there are other benefits or costs 

of adopting such an approach; 

12. Commenters’ views on whether 

the lack of Industry Member 

participation on the Operating 

Committee prevents the Participants 

from arriving at an equitable allocation 

of CAT fees between Participants and 

Industry Members, and across members 

of those groups; 

13. Commenters’ views on how any 

inherent conflicts of interest may be 

addressed in the proposal; 

14. Commenters’ views on how 

allowing the Operating Committee to 

determine by vote how Participant fees 

are allocated across Participants would 

benefit or harm efficiency, competition, 

and capital formation, assuming that 

some proportion of CAT fees are to be 

allocated to Participants as a group; and 

any views on whether there are other 

benefits or costs of adopting such an 

approach; 

15. Commenters’ views on the 

proposed quarterly Participant CAT fee, 

including views on its calculation; any 

views on whether the proposed fee 

raises any competitive issues; and any 

views on whether the proposed fee is 

consistent with the funding principles 

expressed in the CAT NMS Plan, which 

state that the Operating Committee shall 

seek, among other things, ‘‘to create 

transparent, predictable revenue streams 

for the Company that are aligned with 

the anticipated costs to build, operate 

and administer the CAT and the other 


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40134 Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 

442Section 11.2(a) of the CAT NMS Plan. 

443Section 11.2(b) of the CAT NMS Plan. 

444Section 11.2(e) of the CAT NMS Plan. 445 17 CFR 200.30–3(a)(85). 

costs of the Company;’’ 442 ‘‘to establish 

an allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act taking into account . . . 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

the Company resources and 

operations;’’ 443 and ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality;’’ 444

and 

16. Commenters’ views on the 

decision to use total budgeted costs for 

the CAT for the relevant year as the 

Total CAT Costs for calculating fees for 

Participants and Industry Members, 

rather than costs already incurred; 

views on the statement that the total 

budgeted costs for the CAT may be 

adjusted on a quarterly basis by the 

Operating Committee; and views on the 

treatment of any surpluses. 

The Commission also requests that 

commenters provide analysis to support 

their views, if possible. 

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposals should be approved or 

disapproved by August 16, 2021. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by August 30, 2021. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number 

4–698 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to: Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number 4–698. This file number should 

be included on the subject line if email 

is used. To help the Commission 

process and review your comments 

more efficiently, please use only one 

method. The Commission will post all 

comments on the Commission’s internet 

website (http://www.sec.gov/rules/ 

sro.shtml). Copies of the submission, all 

subsequent amendments, all written 

statements with respect to the proposed 

rule change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the 

Participants’ principal offices. All 

comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number 4–698 and should be 

submitted on or before August 16, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.445

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15810 Filed 7–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #17041 and #17042; 

Georgia Disaster Number GA–00124] 

Administrative Declaration of a 

Disaster for the State of Georgia 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the State of Georgia dated 

07/20/2021. 

Incident: Severe Storms and 

Tornadoes. 

Incident Period: 03/25/2021 through 

03/26/2021. 

DATES: Issued on 07/20/2021. 

Physical Loan Application Deadline 

Date: 09/20/2021. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 04/20/2022. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street SW, Suite 6050, 

Washington, DC 20416, (202) 205–6734. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

Administrator’s disaster declaration, 

applications for disaster loans may be 

filed at the address listed above or other 

locally announced locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties: Coweta. 

Contiguous Counties: 

Georgia: Carroll, Fayette, Fulton, 

Heard, Meriwether, Spalding, 

Troup. 

The Interest Rates are: 

Percent 

For Physical Damage: 

Homeowners with Credit Available Elsewhere ...................... 2.500 

Homeowners without Credit 

Available Elsewhere .............. 1.250 

Businesses with Credit Available Elsewhere ...................... 6.000 

Businesses without Credit 

Available Elsewhere .............. 3.000 

Non-Profit Organizations with 

Credit Available Elsewhere ... 2.000 

Non-Profit Organizations without Credit Available Elsewhere ..................................... 2.000 

For Economic Injury: 

Businesses & Small Agricultural 

Cooperatives without Credit 

Available Elsewhere .............. 3.000 

Non-Profit Organizations without Credit Available Elsewhere ..................................... 2.000 

The number assigned to this disaster 

for physical damage is 17041 C and for 

economic injury is 17042 0. 

The State which received an EIDL 

Declaration # is Georgia. 

(Catalog of Federal Domestic Assistance 

Number 59008) 

Isabella Guzman, 

Administrator. 

[FR Doc. 2021–15829 Filed 7–23–21; 8:45 am] 

BILLING CODE 8026–03–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

[Summary Notice No. 2021–2074] 

Petition for Exemption; Summary of 

Petition Received; Joshua Aaron 

Alameda 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Notice. 


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